307Many of the central early Social Democrats had grown up in the slums of Stockholm and had a strong political drive to literally build a new society with centralized public means and authority standing above private property (Blücher, 2006). This drive was formulated in Social Democrat leader and later Prime Minister Per Albin Hansson’s famous Home of the people speech in 1928. – On solemn and, incidentally, sometimes even on everyday occasions, we like to

talk about society—the state, the municipality—as the common home for all of us,

the people’s home, the citizens’ home. After the last great constitutional reform

this reﬂection has perhaps been used more frequently than before, but even

during the time of oligarchy it was used by those in power, especially when it

came to imprinting on the masses the feeling of obligation to the public, the

obligation to bear burdens and make sacriﬁces. (. . . .) K. A. M. Eriksson and R. Nykvist

308– Per Albin Hansson, Home of the People speech; Swedish parliament January

18, 1928. From 1932 to 1976—when the Social Democrats held near-uninterrupted government power—Hansson’s vision was realized through large-scale governmentinitiated, governments-funded, and government-planned, urban and housing projects in coalition with selected material suppliers, building contractors, and building developers from the private sphere. Instead of renovating and modernizing the old historical housing districts of the city-center Klara neighborhood in Stockholm, large-scale demolition of the area was launched. These projects—which were grounded in the home of the people ideology and identity—had to be realized through a strong and centralized municipal planning and building monopoly. In 1947, this system was largely formed through the Planning and Building Law, the fundamental structure, aim, and scope of which is largely intact today.3 Over the next three decades, private land and real estate were harshly regulated or expropriated to serve the purposes of large-scale city developments like the Norrmalm regulation,4 and the Million program.5 Twenty-four hectares of Stockholm’s historical inner city was demolished and rebuilt according to modern architectural and city planning ideals. The city aimed to demolish 54 hectares but ran out of money before completion (Lundevall, 2021). Critics of the city transformation used to say that Sweden, which was not bombed during World War Two, bombed itself through this large-scale city demolition. The new modern city structure resulted in very harsh criticism and many of its city districts have been unpopular and characterized by social problems. This large, activist municipal planning monopoly and state-funded housing and city development politics has resulted in a strong, centralized coalition between the public sector, selected private companies, including public-private cooperatives,6 and special interest groups. Meyerson et al. (1990) called this coalition the iron triangle. These are large, powerful organizations that receive rents through this

3New versions of this law were launched in 1987 and 2010 but the fundamentals of the 1947 version remain. 4The Norrmalm regulation was an instance of public–private cooperation for modernization of the city center in Stockholm during the 1950s, 1960s, and 1970s. The larger part of the old city center stemming from the seventeenth, eighteenth, and nineteenth centuries in lower Norrmalm was demolished and replaced by modern and functionalistic architecture. 5The Million Program was a building project aiming to create one million new dwellings within a 10-year period, 1965–1974. The project was arranged as public–private cooperation and has been severely criticized for creating neighborhoods that most people do not what to live in. Swedish areas labeled socially troubled (high crime rate, unemployment, etc.) are dominated by areas built within the Million Program. 6Note the differences between the word “cooperative” and “cooperation.” Cooperative is a company owned by the members including workers, CEOs and sometimes politicians. “Cooperation” is simply cooperation between actors—in this paper it mainly regards cooperation between private companies and government on certain projects.

309Public-Steering and Private-Performing Sectors: Success and Failures in the. . .

centralized system and hence have an interest in its survival.7 A relatively small number of large private companies, public–private cooperatives, and special interest groups have managed to become business partners with the public sector and thus take enormous market shares and avoid competition from other actors. This is probably a key reason why this monopoly sector was not deregulated during the liberalizing reforms of the 1980s. Despite technology and the political zeitgeist, there were no powerful insiders who engaged in corporate political activity to fundamentally transform the institutional settings of the sector from a centralized monopoly into a system of free competition. A small group aiming for deregulation—which Karlson (2018) calls the “central zone”—with members from different inﬂuential spheres in a society aiming for the same institutional change was lacking members from the sector itself. The favoring of the status quo by the iron triangle still dominates to the extent that reform is impossible. The planning and building sector in Sweden is an example of public steering and private performing policy that Mazzucato would embrace for innovation policy.

In the academic architectural and city planning discipline, ideas and policy proposals for deregulation and the abolishment of the monopoly have been made, although they are very rare, even in the academic literature. An exception is the so-called libertarian planning theory that proposes that state municipalities and realestate owners develop plans within a judicial system framework and then have them approved or denied by an independent legal authority; hence an abolishment of the municipal monopoly (Strömgren, 2007). However, ideas like these have had little practical inﬂuence. New versions of the Planning and Building Law were launched in 1987 and 2010 which largely build on the same structure as the 1947 version,8 even though problems of inertia, information, and corruption have been linked to this system. Problems that relate to the current planning system include: • A housing shortage in 80% of Swedish municipalities. • Incentives from municipalities to plan very small parts of land in order to retain its

value. • An average of 7 years from idea to practical building activity in Stockholm. • Rent control (which is arguably a necessary evil during a housing shortage)

creates welfare losses of 10 billion SEK (about US$ 1.2 billion) a year (Boverket,

2013). • Public discontent with architecture has been palpable for more than half a century.

However, there are slow but signiﬁcant signs of eventual change in the Planning and Building Law. Even though changes have been marginal since 1947, there has been a tendency to slowly diminish centralization in the sector. This is seen with the planning monopoly, through the power of citizen involvement, but also with its subsectors, like the diminished subsidies to housing and attempts to deregulate the

7Rents are undeserved proﬁts. 8The Planning and Building Law (often abbreviated PBL) is the most fundamental law for regulating planning and building activity in Sweden.

310K. A. M. Eriksson and R. Nykvist

ﬁrst and secondhand market for rental apartments. These slow, step-by-step policy changes also characterized telecommunications and the stock exchange.

A way forward for deregulation could be if a large actor primarily active in other sectors wanted to engage in these issues and work toward deregulation and competition in the housing and real estate sector with a relatively small real-estate business that could afford to make losses over several years. Together with academics, politicians, and pro-market organizations, this actor could be a key ﬁgure in what Karlson (2018) calls the “central zone” of inﬂuential people changing an old and inefﬁcient system. This was essentially what happened in the Televerket case.

3 Discussion

In this section, we will provide a general understanding and comparison of the three cases. We discuss the commonalities and look into what was lacking in the failed case; see the list of points in Table 1. In this chapter, we have showcased some of the key characteristics of three cases in which change was imminent in Sweden in the late 1980s. While the technological changes, a general zeitgeist of the time, and the industrial dynamics in the respective cases were all highly complicated matters, we were able to distinguish key similarities in the successful cases that set them apart from the failed reform of the Swedish city planning monopoly. Theoretically, the centrality of powerful actors as key drivers of organizational and industrial change resonates with previous literature on institutional entrepreneurship that states that successful change is often dependent on such actors being able to leverage their sociopolitical environment, including both technologies and interest groups (Fligstein & McAdam, 2011).

In both the telecommunications and the ﬁnancial exchange examples, entrant actors managed to change institutions and regulatory frameworks and launch immensely successful ventures. Historically speaking, these examples have been the anomaly rather than the rule. Perhaps what is more informative is the failed example of the city planning monopoly as a representation of all the other sectors in the Swedish economy where driven, skillful entrepreneurial change agents (Battilana et al., 2009; DiMaggio, 1988) with the ﬁnancial backing of old industrial groups and