Introduction

In the beginning of the 1970s the whole world flocked to Stockholm to discover the secrets of the Swedish Model...the middle way between Communism and Capitalism. But nowadays it seems only economic historians show any interest in the model. Yet it was never what it seemed. What you saw was not what you got but whatever you wanted...wysiwoolly rather than wysiwyg. The Swedish Model was all things to all men.

For a start Capitalism itself has always been a moving target with phrases like Contract Capitalism and even Guerrilla Capitalism currently in vogue. Swedish economic historians talk of four periods of capitalism: Classic Capitalism from 1840 to 1890; Organised Capitalism from 1890 to 1939; Participatory Capitalism from 1945 to 1970; and Corporate Capitalism from 1970 onwards.

The Golden Age of the Swedish Model coincides with the period of Participatory Capitalism starting after the Hitler War (1939-1945) and ending with the oil crisis of 1973.

During this time Sweden's economic power came from a small group of multinational corporations, based in Sweden but spreading first their wares and then their workforces around the globe. International competitiveness was maintained by a continuing policy of devaluating the krona against the mighty dollar...a somewhat hazardous operation in Sweden where the big exporters were in the shipbuilding, engineering and raw materials sectors (forestry, mining and paper) so that any devaluation tended to suck in consumer goods from abroad. But they stuck to Gustav Cassel's recommendations and kept their eye on the purchasing power of the krona rather than the vagaries of the currency markets. The policy has served Sweden well.

Between 1950 and 1970 Sweden's agricultural workforce declined by 75% to about one in twenty of the population...100 000 smallholdings vanishing in the process. Farmers specialised and no family farm could survive without its tractor. Meanwhile exports and imports increased rapidly throughout the period at between 7% and 8% per year...an astounding growth rate to sustain for such a long period from a mature base.

During this period the three city regions, Stockholm, Gothenberg and Malmö, expanded rapidly at the expense of the rural provinces. Industrial employment in these three city regions declined slightly from 26% to 24%. But something relatively new, a waged service sector, grew up...fuelled at an ever increasing rate by a female workforce...on the back of an expanding public sector to take up the slack and keep unemployment, not just 'low', but 'non-existent'.

It was perhaps no wonder that the Swedish Model was able to replace the 'dole' with 'reschooling' and 'active measures'. There was only Sven and Lars to worry about on Monday morning when the AMS staff arrived for work. Contrast this with the thousands flocking into the dole queues in the north of England at the same time.