Planning & Regulating

By 'planning' Myrdal himself meant a sort of indicative planning rather than a Soviet style Five-Year Plan. At that time housing in particular was crying out for this sort of approach. A two year planning horizon was what the Myrdal Commission suggested.

Unfortunately within any public sector agency what starts out as a two-year indicative planning exercise rapidly deteriorates into a 'nooks and crannies' regulating of everything within its planing orbit. Only strong leadership, intent on avoiding this, can limit the meddling.

Social Democratic instincts were quite the reverse so in Sweden another characteristic of the Swedish Model that developed over the years was regulation...particularly in housing, in agriculture and in the money markets.

In the housing sector it took the form of minimum standards in housing construction and in freezing rents by regulation. The results are impressive and speak for themselves.

As for the agricultural sector, by the 1970s it was a maze of regulation into which only the hardiest of souls ventured.

In the credit and money markets a system of strong regulation evolved and remained in place well into the 1980s.

In the 1960s the government used the capital adequacy ratio as its control lever on the credit and money economy. This is a very effective mechanism and a lot of Sweden's recent economic problems could have been averted had this lever been taken up again in the 1980s and 1990s (see ' Capital Adequacy Ratios' in appendix B).

In agriculture, in housing and in the money sector...through the dominant position of housing mortgage finance in the post-war Sweden...there has been another characteristic feature of the Swedish Model. This has been the presence of a third player...the Cooperative Movement...alongside the public and private players.

In these sectors the cooperatives regularly took a third of the market. But the cooperative movement was part of the social democratic coalition and so was effectively the commercial arm of the one-party state...shocktroopers for party, government and union policy.