STOCKHOLMS UNIVERSITET

Actors and Driving

Forces in the Histor o!
the S"edish #e$!are
State !ro% a &o$itica$
Theoretica$
&ers'ective(
Internationa$ Master in Socia$ &o$ic and
Socia$ #or)(
Wilfer David Rodrguez Ortiz
28.10.13 In recent decades the individ*a$ res'onsi+i$it disco*rse has
gained territor "ith the conse,*ence o! 'ro%oting
targeting-'overt 'rogra%s !ro% the high 'o$ic%a)er
s'heres( A$tho*gh. this 'a'er is 'art o! the e/a%ination o!
the Internationa$ Master in Socia$ &o$ic and Socia$ #or) its
goa$ is a$so to sho" that the S"edish E/'erience sho*$d +e
ta)en as an e/a%'$e !or the sha'ing o! a ne" internationa$
societ res'onsi+$e !or it citi0ens "ith an *niversa$istic and
de%ocratic !oc*s(
There are three 'arts in this 'a'er( The !irst one is a
Historica$ evo$*tion o! the S"edish #e$!are State *nti$ recent
ears( The second 'art dea$s "ith the %ain actors and
driving !orces !orging the distinct #e$!are State %ode$s(
Third$. a re!$ection on the o*tco%es o! di!!erent %ode$s and
conte%'orar trends( Fina$$. short conc$*sions are stated(
Formation and Transformation
of the Swedish Model in a
Historical Perspective.
Before 1932
There are several factors that converge in the
beginning of the formation of the welfare state in
Sweden. From a main rural population Sweden
started to experience a process of
industrialization and urbanization in the late 19
th
century.
In some uropean nations! as the "ismarc#ian
$ermany! at the end of the 19
th
century the
concern about %dangerous classes&! which were
those that could threat the social peace of the
moment! made those governments to start
drawing a draft of a social policy to aim to calm
the demands of the wor#ing class and avoid the
growing empowerment of a strong 'abor
movement. These ideas came soon to Sweden
where they were applied in a more inclusive and
softer way. ()lsson! 199*+
Farmers! industry wor#ers! urban intellectuals!
and the urban upper middle class were also
involved in the formation of the first social
policy discourse. It was a broad scope of people
from very different bac#grounds with the
ob,ective of modernizing society with politics
rather than economics as their preferred tool.
-mong those important intellectuals! -dolf
.edin stands out for being a leader and
inspiration for a whole generation. -dditionally!
important essays appeared by that time as the
$ustav /assel0s Socialpolitik and the -dolf
.edin0s bill from 1112. These writings had
influeces from the French revolution!
Scandinavian nationalism and 3topism that
deeply influenced the beginning of the Swedish
4elfare State.
-long these intellectuals and leaders there was
also a good institutional bac#ground fostered
with the foundation of the /S-!
Centralfrbundet fr socialt arbete! in 19*5
which gathered people from different
bac#grounds that loo#ed and critized the
situation of poors and destitutes and promoted a
change in society ()lsson! 199*+. -longside
with the existence of a strong intellectual civil
society there was a raise of strong social
movements. 6emar#able was the 3ppsala
Verdandi movement.
It is also important to mention the importance of
the rural population on the construction of the
welfare state. Sweden at the end of the 19
th
century was a rural country on which farmers
had a strong representation in the parliament and
were one of the largest groups of taxpayers.
-lready in 1915 the parliament approved the
national pension7s act which was more a sign of
willingness rather than a strong economic tool.
1
1 . The new pension system consisted of two parts.
The first one was a pension paid by the insured and
the second part was an invalid pension financed by
the state. The first part reproduced the initial
distribution of incomes which did not help for
re8distributional purposes
2
The initial welfare state was gender biased and
still favoure the male breadwinner model
('undberg 9 :mar#+.
From 1932-1970
In 195; the Social <emocratic =arty got the
power and #ept it for 22 years and played an
important role in the creation of the Folkhemmet
and the expansion of 4elfare State.
In 1951 the Salts,>baden agreement or "asic
-greement was reached between Svens#a
-rbetgivaref>reningen (S-F+ and
'andsorganisation (')+ the main representatives
of capital and labor respectevely. The state was
formally excluded at this stage and soon
Salts,>baden became a symbol of the Swedish
model. ()lsen! 199?+
In 192? there was a pension reform related to the
end of the II44 and the expansion of the
Swedish industry due to its neutrality in the war
and the new demands of industrial wor#ers.
In 19@? was implemented the centralized wage
bargaining and the Solidaristic 4age =olicy
based on &eAual wage for eAual wor#&. This
policy accelerated a process of capital
accumulation on dynamic growing firms and at
the same time the ban#rupcy of several firms
that could not afford to pay the wages reAuired
by the Solidaristic 4age =olicy ()lsen! 199?+.
-lthough! some people that ,oined the Social
<emocratic =arty were considered social
engineers they still promoted the male
breadwinner and the female housewife model in
the sense that the first policies of the 4elfare
State were aimed at strengthening the ability of
the male breadwinner to support their families.
4omen certainly saw their position improved
since the state wanted more children fearing a
depopulation of the country due to the increase
on the proportion of old people in the population
and the low fertility rate that Sweden reached by
the time. 4omen saw their role reinforced also
by the economic boom of those years that made
the industry to want more and cheap labor.
;
The
government understood the new needs of the
wor#ing mothers and expanded the construction
of #inder gardens and the entitlements to child
allowances and housing benefits (.irdman+.
The womenBs empowerment was fostered also
by the reduction on the wage dispersion between
men and women. There was also a sharp
reduction between white and blue collar wor#ers
wage dispersion by C2 D between 19?@ and19C@
()lsen! 199?+.
-lready in the 19@*s poverty was a marginal
problem in all Scandinavian countries in the
sense that strong policies 8 as a progressive tax
system! generous benefits! regulation of
capitals!8 economic egineering and the reduction
2 -round 192*s and 19@*s the women played a dual
role both in the wor#ing world and at home as
mothers. From 19@* to 19?@ the number of married
wor#ing women increased from 1@.?D to 5?.CD as
the economy grew. (.irdman+
3
of wage dispersion had led to a high standard of
living based on %decommodification& as
sping8-ndersen mentioned.
From 1970 o!ard"
In 19C? a centre8right coalition won the elections
and soon reduced the tax pressure resulting in an
increasing budget deficit. -lthough in the
beginning their popularity grew due to the
reduction of the tax pressure the unbalance in the
budget made soon feel the impact on the
economy and the coalition lost its originally
gained popularity.
In 191; the Social <emocrats won the elections
and devaluated the #rona in an attempt to
increase the competitiveness of the Swedish
conomy. In 1915 the centralized wage
bargaining brea#s up when Eer#stadsf>reningen
(EF+ ,ump out of the agreement and then it is
followed by S-F. -lso during the 1*s Sweden0s
credit control over international capitals was
deregulated and the tool used to even the
business cycle was partially eliminated. ()lsen!
199?+
<ue to the unmanageable economy in 1991 the
Social <emocrats were forced out of power. The
policies trying to avoid economy overheating
were no popular and the Foderates leaded the
coalition that won the elections. 3nemployment
was high and the situation was considered as a
Gational emergency. 'ater on! Sweden ,oint 3
to attract Foreign <irect Investment and they
changed the economic priority from full
employment policies to inflation targeting.
=rivatization started and the efficiency argument
was used endlessly to reduce the public sector
and the welfare benefits entitlements.
The solidaristic wage was intended to give eAual
payment to eAual wor#. This policy made the
less competitive firms to ban#rupt due to their
inability to pay solidaristic wages. )n the other
hand! however! it pushed the capital towards the
most dynamic side of the economy! towards
those firms who had good profits and on which
the solidaristic wage was wor#ing as a ceiling
avoiding the rise on wages for high productive
wor#ers. This policy created concentration on
large firms.
Technical change brought also changes in the
industrial relations and the balance of power was
bro#en. "y 191? ?*.?D of Swedish wor#ers
wor#ed in firms with @** or more wor#ers
showing the concentration of labour on few
firms ()lsen! 199?+.
<uring the period of the crisis of the 4elfare
State the balance of power was bro#en for the
side of the capital from a Farxist perspective.
This was not only due to the larger power of the
local capital but also due to international trends
that pushed against the national state and
favoured the international mar#ets.
Gowadays! the driving forces shaping the
Swedish society are no longer industrialization!
class struggle and urbanization but globalization!
gender and post industrialism. -ctions from both
4
sides of the political spectrum have promoted the
policies demanded by the international capital.
Key actors and driving forces of
the Swedish model and the
political theories of welfare
state.
The most important drivers of the creation of the
Swedish 4elfare State are the process of
industrialization! the labor movement! the
influence from the "ismarc#ian $ermany.
'ater on and after the golden age the #ey drivers
are the politics of austerity! the accommodation
of the welfare state to new needs as the post
industrialism ta#es over! the globalization of the
economy and gender issues.
There are different theories that tried to explain
the evolution of the 4elfare State in different
4estern countries. The main focus of these
theories was based mainly on the level of social
expenditure as a percentage of the country $<=.
This was a bipolar theory that sorted out the
different 4elfare regime from the residual model
to the institutional model characterized by 3S-
and Sweden respectively. ()lsen 9 )0/onnor+
In addition to this theory there are several
theories that try to explain the development and
actors of the 4elfare State. -mong the most
important theories there are two. The
industrialism of 4ilens#y according to which
impersonal economic and demographic forces
are the main responsible for the development of
the 4elfare State! especially the population
aging after the Second 4orld 4ar. ()lsen 9 )
0/onnor+ Gevertheless! this thesis lac#ed an
important explanation of the role of politics in
the determination of the different welfare
regimes. -nother important theory that
reinforces the role of politics is the one of
spiger8-ndersen state in the boo# The Three
Worlds of the Welfare Capitalism where he sorts
out the different welfare regimes into three
categories! i.e.! the Social <emocratic model
represented mainly by Scandinavian countries!
the corporatist! conservative! /hristian Fodel
represented by continental urope and the liberal
model represented by the -nglo8Saxon
countries! especially 3S-. The main actors for
this theory are the 'abor Fovements and the
degree of unionization that determines the
%decommodification& of human labor or in other
words taht frees citizens from depending
completely on the labor mar#et for their survival
(Fyles 9 Huadagno! ;**;+.This last theory has
received several critics for being a simplistic
way of categorizing the welfare regimes and for
overloo#ing other aspects relevant for the
development of 4elfare 6egime as gender and
race. (Fyles 9 Huadagno! ;**;+
The feminist theories also critize this theory and
want to emphasize the role played by women in
the shaping of the welfare state. 4hen the
economy started growing and demanding more
labor! women went from a dual role as wor#ing
mothers to a eAual status with men regarding the
labor mar#et. -ll these developments
5
empowered women and gave them an active role
in the shaping of the 4elfare State. Gew needs
for child care as #inder gardens! and the reliance
on the state for caring rather than on the family
was liberating for many women that did not
depend on the mar#et nor on the family to
achieve their professional and motherhood goals
(.irdman+. Furthermore! this facts had an effect
on the family model used until that time which
was the one of male breadwinner and housewife.
Gowadays! the rethoric from the functionalist
point of view is bac# to the scene as it is again
the economy that plays an important role in
shaping the different welfare states. -ccording to
some research the institutions are #ey elements
when determining the effects of the economic
globalization on the welfare state regimes. The
more committed are the political institutions in
the country the more positive effects may the
economic globalization have on the most
exposed sectors of the national economies.
(Swan#+
"eside all these theories there are more theories
that try to better reflect reality. Gevertheless
every time a new factor is introduced into the
analysis this becomes more complex and harder
to explain.
very theory stress different points of the reality
and sheds some light on different factors
affecting the development of the 4elfare State.
The most influecncial theory is the =ower
6esources Theory. -s Iorpi states! constant
fluency of change in political terms depends on
the distribution of power among different
collectivities and classes (Iorpi! 19C1+. )n one
hand! it is true that the 'abor movement played
an important role in shaping the 4elfare State as
stated above and some neo8Farxist and =6T
theories may explain the class struggle that
originally created the "asic -greement and the
=ension System in Sweden. S-= and ') were
#ey actors on the determination of the power
relations between capital and labour on the
beginning of the Swedish welfare state.
It can also be applied the functionalism theory in
the sense that the process of industrialization and
the demand for new wor#ers including women
was a strong driving force for the shaping of the
4elfare State. The need of reconstruction of the
contenders of the war made the Swedish
economy grow fast and created a demand for
social insurance and other social policies that
covered those who could not sell their labor on
the mar#et.
Gevertheless! institutions do matter since the
results achieved by the Swedish 4elfare Fodel
would have not been possible without the
compromise and the bargaining process between
capital and labor! i.e. between S-F and ').
In the aftermath of the oil crisis two theories may
be applied. The power resource theory
recognizes the role of different classes and
means of production and the functionalism of
4ilens#y emphasizes the economic forces as an
6
influence changing societies. The brea# in the
power balance can be one of the main drivers for
the crisis and reshaping of the welfare state in an
era of austerity.
In the words of 6amesh Fishra
By providing capital with an exit
option, globalization has strengthened
the bargaining power of capital very
considerably against government as
well as labour (Mishra, 1999
The functionalist theory can be brought bac#
when trying to explain the change on ruling
parties along the Swedish elections .istory. The
right8center governments from 19C? and 1991
were short8lived also because of the economic
setting on which they were elected! close to an
economic recession.
There was a moment on time on which new
administrative units were created and both S-=
and ') loo#ed for conAuering of as much as
possible units for their respective bands. -t this
moment the balance of power is bro#en also
within the public administration (Iorpi 9
TJhlin! ;*1*+.
There are other driving forces li#e the
international economy that pushes every time
more and more.
Relationships between
distribution policies and
outcomes and contemporary
trends.
From some time ago there has been the need for
classifying the different models of welfare state
and the different outcomes coming from these
distinct models. Following the classification
made by Iorpi and =alme! there are five
different models of 4elfare StateK The targeted
model! the voluntary state8subsidized model! the
corporatist model! the basic security model and
the encompassing model.
There are also important Auestions to be address
when trying to assess the outcomes and the
Auality of the distinct models. Important
Auestions as should be the Social =rograms
targeted with means8testing or on the other hand
should they be universal. -nd should the benefits
be related to income or should they be eAual for
all beneficiaries.
There is also some literature that points out the
fact of universalism being a determinant in the
formation of the coalition in the government.
The thesis of Iorpi and =alme (Iorpi 9 =alme!
1911+ is that 4elfare Structure Institutions are
determined by distinct interest groups operating
in society but once this institutions are put in
place they played an important role in the
formation of citizens coalitions. For example
they found out that the corporatist model that
foster the segregation in different occupational
7
categories helps to maintain ineAualties and
more li#ely avoid the union of wor#ers from
different professional bac#grounds and in
different situations. In this perspective both the
targeted model and the basic security model
create a conflict of interests between the poor
and the rest of the society. (Iorpi 9 =alme!
1911+ )n the other hand! the encompassing
model represented by the Scandinavian countries
is more li#ely to promote alliances between the
poor and the better8off wor#ers given the fact
that all of them participate in the same social
protection schemes.
)ther important aspect that differs among the
different models is the size of the budget to be
distributed. The largest budget is li#ely to
correspond to the encompassing model where
more population is included as payers and as
beneficiaries. )n the other hand the model with
the smallest budget would be the targeted one.
The corporatist model is apparently able to rise a
considerable big budget even if it discourage the
formation of coalitions between the middle class!
the poor and the wor#ers. (Iorpi 9 =alme! 1911+
The smallest income dispersion was found in
Finland! Sweden and Gorway. The 3nited States
of -merica! basic security model country! has the
largest coefficient for wage dispersion according
to the study presented by Iorpi and =alme.
(Iorpi 9 =alme! 1911+ They also found that
$ermany and France representatives of the
corporatist model occupied intermediate
possitions when tal#ing about income ineAuality.
)ther important result is the poverty rates
defined in their study as being below the @*D of
the median income. -gain the encompassing
model countries had the lowest poverty rates and
the 3nited States the highest one while the
coporatist countries fell into an intermediate
position.
)ne of the schemes that is prefered to calibrate
and analyse the different welfare state models
and their outcomes is the pension system. It is
used due to the influece received from past
incomes in income8related pensions systems and
because of the relevance of the public provision
in contrast to other social protection schemes. -s
Iorpi and =alme found out in their research
(Iorpi 9 =alme! 1911+ the encompassing
countries have the most ineAual pension systems
while the basic security and targeted model
countries have a less ineAual pension system.
Gevertheless! they noticed that considering the
gross income that is influenced by other factors
this scenario changes completely.
The lowest inequality in total gross
income occurs in the four countries
with the most unequal public pensions
inland, !weden, "ermany and
#orway$ %n contrast, &ustralia, with
pensions targeted at low groups, has
much higher inequality in total gross
income among the elderly (Iorpi 9
=alme! 1911+.
8
They also found that the level of expenditures on
private alternatives to public pensions is higher
in the targeted and the basic security models than
in the encompassing and the corporatist model.
This is due to the fact that the maximum level of
pension is relatively higher in the encompassing
and corporatist models which discourage
better8off citizens to loo# for private alternatives
for their pensions. Furthermore! a process of
loo#ing for not only private alternatives but also
other sources of income will ma#e ineAuality
increase beyond the ineAuality generated only by
an income8related pension system as the one
implemented in the encompassing model. The
main finding of their study is the %paradox of
distribution& which states that
the more we target benefits at the
poor only and the more concerned we
are with creating equality via equal
public transfers to all, the less li'ely
we are to reduce poverty and
inequality ()orpi * +alme, ,-../
Gow we are going towards a world based on
economics where the ideological discourse is
mainly based in efficiency and the social
<arwinism is applied as a rule. The individual
responsibility will bring the bread to our homes.
It is nature! and natural selection that determines
who survives and who does not. It is not the
society problem if there are some individuals
that cannot afford to live. %It0s life& and as in
nature the big fish eats the small fish.
The economic setting has not helped to this
purpose in the sense that fiscal deficit is the new
excuse under which governments are
determined. Those governments that treat now
the deficit as an exogenous variable are the same
that made the cutbac#s in the welfare state and
the same that pushed away millions of people
because they could not find their way in their
home countries. The same people that bail out
the ban#s. It is the same ideology that has bro#en
entire countries and has created the conflict of
interest embedded in targeting programs and the
capital accumulation.
Gowadays! we are facing a democratic gap on
which the national governments have no say
when facing extraordinary strong forces and
large capitals that are able to determine the
whole social policy of entire countries. This is
also a crisis of principles! of solidarity and a
negation of our nature as social animals and our
origins in the communities.
!onclusions
The Swedish 4elfare model has prooved that
people7s agency is fundamental in the shaping of
their societies. -lso that institutions matter eAual
or more than economics and the principles of
universalism are the one that brings better results
in terms of an eAual! modern and ,ust society. It
has shown that is not through the denial of the
hard wor# that the society will wor# better but
thourgh the inclusion of all citizens rich and poor
in a democratic an close8to8the people way. The
challenge now is to go bac# to the ethic of the
9
social animals and reshape the global society for
the wellbeing of its citizens.
1:
Re!erences
Hird%an. ;( <n(d(=( State &o$ic and >ender Contracts( The S"edish E/'erience(
Kor'i. #( <1978=( The 0or'ing 1lass in 0elfare 1apitalism2 0or', 3nions and +olitics
in !weden$ London(
Kor'i. #(. ? &a$%e. @( <1988. Oct=( The &arado/ o! Redistri+*tion and Strategies o!
E,*a$itA #e$!are States Instit*tions. Ine,*a$it and &overt in the #estern
Co*ntries( Vo$ 63 No 5 '' 661-687(
Kor'i. T(. ? TBh$in. M( <2:1:=( Changing "or)-$i!e ine,*a$it in S"edenA >$o+a$i0ation
and other ca*ses( !wedish %nstitute for !ocial 4esearch(
L*nd+erg. U(. ? C%ar). K( <n(d(=( Socia$ Rights and Socia$ Sec*ritA The S"edish
#e$!are State. 199:-2:::( !cand$ 5$ 6istory. Edition 26(
Mishra. R( <1999=( "lobalization and the welfare !tate$
M$es. @(. ? D*adagno. @( <2::2=( &o$itica$ Theories o! the #e$!are State( !ocial
!ervice 4eview. Vo$ 76 No( 1 '' 34-57(
O$sen. >( M( <1996=( Re-Mode$ing S"edenA The Rise and De%ise o! the Co%'ro%ise
in a >$o+a$ Econo%( !ocial +roblems, 7ol 89, #o$,. 1-2:(
O$sen. >( M(. ? OEConnor. @( S( <s(!(=( Introd*ction( Understanding the #e$!are StateA
&o"er Reso*rces Theor and Its Critics(
O$sson. S( E( <199:=( Fe!ore Socia$ De%ocracA the Ear$ For%ation o! a Socia$ &o$ic
Disco*rse in S"eden( In S( E( O$sson. !ocial +olicy and 0elfare !tate in
!weden <''( 83-84=( L*ndA Ar)iv(
S"an). D( <n(d(=( >$o+a$ Ca'ita$. &o$itica$ Instit*tions and &o$ic Change in Deve$o'ed
#e$!are States(
11