A renewed political interest in profit sharing and employee codetermination prompts an analysis of the Swedish wage-earner funds, implemented by a Social Democratic government in 1983 and dismantled by a center-right government in 1991. This article explains the funds’ financial performance and the political decisions surrounding their dismantlement. It finds that the funds underperformed slightly in relation to financial targets. Reasons include inexperienced boards, limited investment opportunities, and a hostile attitude from the business community. For the center-right parties, getting rid of the funds was an ideological decision. Transferring the assets to research foundations and public venture capital funds would improve the business climate, compensate firms for taxes paid to finance the wage-earner funds, and ensure that the Social Democrats would not be able to reinstate the funds. The intense debate surrounding the wage-earner funds, their implementation, how they functioned in practice, and their dismantlement clearly contributed to Sweden’s sharp market turn in the 1980s and 1990s.
