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Sweden’s Public Sector Crisis, Before and After the 1982 Elections

Published online by Cambridge University Press:  28 March 2014

Peter Walters
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Extract

‘WHEN THE SWEDES BEAT A RETREAT FROM KEYNES THAT surely signals a climacteric.’ Thus Andrew Shonfield clinched his argument that the unwillingness of the industrialized countries to offset the deflationary consequences of the 1979 oil shock reflected a general crisis of confidence in the principles of the mixed economy. The loss of Keynesian innocence in the 1970s came to different countries in different ways. In Sweden it came comparatively late and abruptly when, in 1980, after six years in which public expenditure had grown from 46 per cent to 64 per cent of GDP, the coalition non-socialist government acknowledged that the budget deficit, amounting to 10 per cent of GDP, had reached crisis proportions. From 1980 the problem of curbing the recalcitrant deficit became a corner-stone of the non-socialists’ economic policy. Eschewing any increase in the tax-burden, which it was committed to reduce, the government launched a comprehensive attack on public spending. Its persistence on this course in the face of protests that it was eroding the welfare state and tolerating rising unemployment was a major factor in its defeat in the general election of September 1982.

Type
Original Articles
Information
Government and Opposition , Volume 18 , Issue 1 , 01 January 1983 , pp. 23 - 39
Copyright
Copyright © Government and Opposition Ltd 1983

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References

1 Shonfield, Andrew, ‘The Politics of the Mixed Economy in the International System of the 1970s’, International Affairs, Vol. 56, No. 1, 1980, pp. 3–4 CrossRefGoogle Scholar.

2 OECD Economic Surveys, Sweden, July 1981, Paris, OECD, p. 23.

3 The composition of Swedish government between 1976 and varied. In 1976 the Social Democrats in office since 1932 were replaced by a coalition of the three ‘non‐socialist’ or ‘bourgeois’ parties: the Conservatives, the Liberals and the Centre Party. This coalition broke up in 1978 after disagreeing over Sweden’s nuclear energy programme. It was replaced by a minority Liberal government. After the 1979 election the three non‐socialist parties formed a coalition government. The Conservatives withdrew from this coalition in 1981 following which the Centre Party and the Liberals formed a minority coalition government.

4 OECD, op. cit., table 8, p. 23.

5 In the early 1970s the Social Democrat government’s nuclear energy programme came under attack primarily from the Centre Party. The 1976 coalition broke up because the Centre Party could not reach agreement with its partners over cutting back the programme. In 1978 the Social Democrats split on the issue and there followed all‐party agreement to hold a referendum on the issue after the 1979 general election. For a good, brief analysis of the issue see Elder, Neil et al., The Consensual Democracies?: The Government and Politics of the Scandinavian States, Oxford, Martin Robertson, 1982 Google Scholar.

6 This intellectual current is illustrated in a volume of essays by Swedish academics and politicians edited by Ryden, Bengt and Bergstrom, Villy, Sweden: Choices for Economic and Social Policy in the 1980s, London, Allen & Unwin, 1982 Google Scholar.

7 Tarschys, Daniel, ‘Public policy innovation in a zero‐growth economy: A Scandinavian perspective’, International Social Sciences Journal, Vol. XXXI, No. 4, p. 699 Google Scholar.

8 Carl Hamilton, Public Subsidies to Industry: The Case of Sweden and its Shipbuilding Industry, Stockholm University, Seminar Paper, No. 174, Institute for International Economic Studies, June 1981.

9 For a brief outline of the funds issue see Elder, op. cit., p. 183–4. The issue is discussed more fully from a theoretical and Marxist perspective in Himmelstrand, Ulf et al., Beyond Welfare Capitalism, London, Heinemann, 1981, pp. 255–308 Google Scholar.

10 1982 General Election: major party support as percentage of total vote and Parliamentary seats. 1979 figures in brackets.