Liberalization without Retrenchment: Understanding the Consensus on Swedish Welfare State Reforms

Abstract

In 1980, Sweden was a highly regulated economy with several state monopolies and low levels of economic freedom. Less than twenty years later, liberal reforms turned Sweden into one of the world's most open economies with a remarkable increase in economic freedom. While there is resilience when it comes to high levels of taxes and expenditure shares of GDP, there has been a profound restructuring of Sweden's economy in the 1980s and 1990s that previous studies have under‐estimated. Furthermore, the degree of political consensus is striking, both regarding the welfare state expansions that characterized Sweden up to 1980, as well as the subsequent liberalizations. Since established theories have difficulties explaining institutional change, this article seeks to understand how the Swedish style of policy making produced this surprising political consensus on liberal reforms. It highlights the importance of three complementary factors: policy making in Sweden has always been influenced by, and intimately connected to, social science; government commissions have functioned as ‘early warning systems’, pointing out future challenges and creating a common way to perceive problems; and, as a consequence, political consensus has evolved as a feature of Swedish style of policy making. The approach to policy making has been rationalistic, technocratic and pragmatic. The article concludes that the Swedish style of policy making not only explains the period of welfare state expansion – it is also applicable to the intense reform period of the 1980s and 1990s.

Incorporation and Individualization of Collective Voices: Public Service User Involvement and the User Movement’s Mobilization for Change

“…Just as Meeuwisse and Sunesson (1998) note, the user organizations were often treated as a source of (individual) expertise rather than a socio-political counterpart, and being entangled in the co-opting relationship made it difficult for the user organizations to renounce this individualization, while they at the same time became directly exposed to it. This tendency to individualize collective action and organizational-level user involvement can be understood against the background of broader liberalizing and individualizing trends that permeate contemporary society (see Bergh and Erlingsson 2008;Bauman 2001). …”

The Interaction of Entrepreneurship and Institutions

“…In many ways the Swedish system outperformed others, not necessarily in an absolute sense, but compared to the likely outcome in other countries had they ventured this far in expanding the The high degree of productive political entrepreneurship in the Swedish system became most apparent as the problems of the welfare state grew in its mature phase. The country responded by rolling back some of the most far-reaching reform programs in history (Bergh andErlingsson 2009, Steinmo 2010). This included a fundamental tax reform, financial deregulation, restructuring of macroeconomic policy, reduction of the generosity of social insurance programs, transformation of the pension system, and modification of labor market policies.…”

Social Trust and Central-Bank Independence

“…Den Butter and Mosch (2003) find that trust among policymakers and among other key actors on the political scene in the Netherlands greatly facilitated the implementation of reforms that contributed to a strong economic development. Bergh and Erlingsson (2009) likewise find that a key explanation for important policy reforms in Sweden, such as a major pension reform and economic liberalization, was the result of a pragmatic consensus orientation that is arguably rooted in the high level of social trust in this country.…”