The Successes and Failures of the Nordic Model: Kjell Ostberg on Swedish Social Democracy

We have come further in realising socialism than the countries that usually call themselves socialism. —Olof Palme

For many on the American left the “Nordic” model of social democracy has an irresistible attraction. Democratic socialists like Bernie Sanders and Alexandria Ocasio Cortez refer to the countries as models to emulate. Well-known authors, like Bhaskar Sunkara in The Socialist Manifesto, are critical of the rollbacks to Nordic social democracy that have taken place since the 1990s. But Sunkara acknowledges that even though “social democracy never achieved its desired ends,” the “reforms it brought about proved successful far beyond expectations” and it is the site where “socialists got furthest along in undermining capital’s power.” Even hardened Marxists like Robert Wolff have defended “Nordic Socialism” as a progressive step. Given this, it's perhaps no surprise that conservatives like Dinesh D’Souza have taken to denouncing the Nordic model or “Sven Socialism” for producing coddled “last men” whose every need is pandered to.

The attraction is easy to understand. For many on the left the Nordic countries constitute, as Sunkara put it, the most successful and enduring movement towards a democratic socialism yet achieved. More importantly, it is a movement that managed to move towards economic democracy and equality while not only retaining but often expanding respect for basic liberal rights. This narrative has induced a considerable pushback from more centrist and conservative commentators eager to describe the Nordic model as still fundamentally capitalistic, with redistributive flourishes. But as D’Souza himself notes this is a dangerous rhetorical move for proponents of markets to make, since it suggests one can enact very substantial—even transformative—reforms to capitalism without compromising liberal freedoms or economic efficiency.  This runs very afoul of the fearmongering of many on the American right that even a small step towards Nordic democracy paves the road to serfdom. After all, how many American conservatives this side of Sohrab Ahmari would be comfortable with 70 per cent unionization rates?

The rise of social democracy

The successes and failures of the Nordic model generally weigh heavily on Kjell Ostberg’s engaging new book The Rise and Fall of Swedish Social Democracy. Ostberg’s book is admiring but critical of Swedish progressivism and social democracy generally, which he observed ultimately faltered and then gave way when neoliberalism came knocking in the 1980s and 90s. Nevertheless he observes there are some core strengths to social democracy which are very much recovering.

One of the myths which Ostberg shatters is that Nordic social democracy emerged where it did because there were high levels of social solidarity in countries like Sweden, or that it succeeded on the back of previous industrial and social development. As he put it, in the “mid-nineteenth century, Sweden was a backward country by European standards—economically, socially, and politically. The Industrial Revolution, which had been underway for a century in England, had barely reached the country…Politically power rested safely with a small layer of landowners, noble bureaucrats, and military men in the king’s shadow. The new constitution, adopted in 1809 in the wake of the French Revolution, stated that the king alone was entitled to rule the country. Under the new monarch, Karl XIV Johan, one of Napoleon’s marshals, this applied almost literally. Calls for democratic reform went unheeded for a long time.”

The ideal of Nordic social democracy gestated for a long time in theory; including I’d add in disputes between Nietzsche popularizer Georg Brandes and socialist-curious liberals like Harald Hoffding. But it took a wave of riots, strikes, and unrest to create the conditions where major labor movements could form in Sweden and it was only in 1897 that the Swedish Social Democrats adopted their first formal party program. Both labor and the Social Democratic party faced major opposition from conservative groups, making it a long road to becoming the largest party in 1921 and eventually winning long-term power in 1932. In Viking Economics: How the Scandiavians Got it Right—and How We Can, Too the sociologist George Lakey notes that big ideas were in the air. Creative economists like Gunnar Myrdral argued that “classical economists were unable to imagine an economy that included well-being for workers because they were not holistic enough. He believed that it was possible to design an egalitarian economy that would prevent poverty and be productive at the same time. His theory encouraged an investment in the individual person as a resource for economic growth—a pillar of what came to be called the Nordic model.”

Once in office Ostberg describes social democratic government as going through something of a crisis. Long used to being the perennial activist opposition, it struggled to develop a positive philosophy that coupled the radical desire for economic equality with a commitment to parliamentary democracy and basic rights. They eventually settled on what became their signature approach. They combined a commitment to retaining many features of market society and encouraging high levels of growth with what Ostberg describes as three distinct features: “first, institutionalized cooperation between labour market partners…second, a corporate political system, often referred to as ‘Harpsund democracy,’ in which formal and informal cooperation between the state and other interested organisations plays an important role, and third, a relatively large and tax-financed welfare state…” This produced many successes: economic growth, low unemployment, low levels of strikes, and redistribution expansive enough that social democratic bigwigs mused that they’d moved from thinking about policies to reduce poverty to policies which provided a good life for all. As the social democratic Prime Minister Tage Erlander put it:

People who live in poverty with constant feat of unemployment and illness have little ability to plan for anything other than the day. But in a welfare society, families would have a very difference chance to plan for the future. This must have profound implications for politics. Its task will be to try to adapt society to people’s long-term aspirations. It is of extraordinary interest to note that while improved living standards have given people much greater freedom of advance, they have used this increased freedom to bind themselves more tightly than before.

The fall of social democracy

For Ostberg, as for Sunkara and others, the high tide of Swedish social democracy was in the 1970s. Under ambitious leader Olof Palme the Social Democrats became concerned that their very success had essentially robbed the party of a raison d’etre. Young people inspired by the worldwide New Left began to demand that social democracy dream bigger. The Social Democratic party answered by proposing the Meidner plan. This was essentially a proposal to slowly but steadily grant worker’s unions shares in the companies they worked at, gradually making them majority shareholders. This would effectively transfer the mode of production to worker’s hands, while retaining markets and price mechanisms: a combination of worker cooperatives a la John Stuart Mill and market socialism. This panicked major firms who mobilized against what they took to be a step too far.

Some critics contend this is what brought an end to Sweden’s efforts to stretch the limits of social democracy, but in Ostberg’s telling the more pivotal issues were getting outflanked on the issue of nuclear power and the general feelings of malaise after decades of Social Democratic rule. The Social Democrats began losing elections, and though they remain significant players in the county’s politics, they’ve largely lost any kind of notable identity. Through the 1990s and 2000s they conceded to more and more neoliberal reforms, until by 2022 they’d completed a “transition from a socialist worker’s party with the ambition to build a robust welfare state and fundamentally transform society to a party without ideas, led by a professional leadership with increasingly fragile working class roots.”

Nevertheless he thinks there were some core strengths to Swedish social democracy which proved illuminating lessons. The first is that any long-term progressive party requires integration with strong trade unions, alongside a broader social and organizational base that animates enthusiasm and can be mobilized for political actions. The second is a degree of ideological continuity, which was occasionally a strength and occasionally a weakness of the Social Democratic party. The third is a commitment to both political democracy and the extension of democratic principles into the workplace. This is a point Ostberg spends considerable time on, and he recurrently stresses how the failure to adequately confront the entrenched power of economic elites by changing workplace structures contributed to the decline of the Swedish model. Fourthly, Sweden undeniably produced a solidarity based welfare system that was “possibly the most comprehensive ever undertaken anywhere.” But he points out that these redistributive policies have since been rolled back, including by the Social Democrats, in line with the neoliberal emphasis on supply side economics.

Lessons for the future

Ostberg is right to be somewhat dour on the merits of Swedish social democracy, let alone the prospect that its core achievements will be replicated given that its heyday is now 50 years past. But I think that his cynicism goes too far, coming across more as chronically disappointed optimism rather than a realistic appraisal of the situation. Many liberals responded with alarm and elitist bunkering in the aftermath of the populist waves in 2016, with some even calling for elites to strike back against the vulgar masses. This is shortsighted. Conservative social scientists like Eatwell/Goodwin and democratic socialists like Thomas Piketty might not agree on much. But they both stress how data suggests populism is largely driven by feelings that political elites are not responsive to the needs of ordinary people, and are more beholden to the rich and powerful. Sadly data by figures like Martin Gilens suggests these feelings have a basis in reality.

The solution is not to abandon liberalism by replacing a neoliberal elite with a conservative one a la Patrick Deneen. It is to recover the radically egalitarian and democratic impulses of the liberal tradition at its best (what I’ve called liberal socialism), and to channel them into a programme of proven success which can deliver tangible material benefits for ordinary people while increasing their power and freedom from domination.  In this respect Swedish social democracy, for all of the flaws Ostberg points out, looks like a captivating example: warts and all.

The first step to such a liberal renewal would be a much commitment to rejuvenating the labor movement in the United States and elsewhere. Joe Biden has taken some steps on this front, but not enough that conservatives don’t feel they can outflank him via populist gestures to the white working class.  The second step would be commitment to a cogent ideology of liberal progressivism which was sufficiently expansive to encourage variation within it, but overall committed to abandoning right-wing “Cold War” liberalism as an increasingly dead end.  Thirdly, liberal progressives would need to advance more imaginative policy that could capture the public’s imagination and galvanize attention. Many Democrats in the United States complain that Biden isn’t being given enough credit for his management of the economy. But his term in office lacked a galvanizing policy achievement, even before he became accused of schilling to Netanyahu’s violence. Whether that would be a UBI, fostering workplace democracy, or introducing public healthcare can be debated. But it would ideally accomplish the simultaneous goals of redistributing wealth to those who need it while changing relations of power in an increasingly stratified society.

I by no means contend that these proposals should be comprehensive, or even accepted. They’re largely intended to provoke thought about the future of progressivism liberalism. That my own thoughts were so inspired by Ostberg’s The Rise and Fall of Swedish Social Democracy is a testament to the books many virtues. It’s a wonderful and sobering volume with a lot of hard won wisdom that should profit those who wish to be wise.  

Featured image is Election poster Sweden Social Democrats