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Class Struggle Built the Swedish Welfare State

Swedish social democracy produced one of the most humane societies in history. That wouldn’t have happened without a militant labor movement and a working-class political party.

A 1968 demonstration in Stockholm., Sten-Åke Stenberg / Flickr

Sweden is often held up as the gold standard of postwar social democracy.  At its height, Sweden was one of the most egalitarian societies in the world, with a generous welfare state committed to assuring all its citizens a comfortable standard of living. Even compared to other European countries, which also developed relatively strong social democratic movements and welfare states,  Sweden stood out for its accomplishments: achieving the lowest level of income inequality and remarkably low unemployment levels, in large part due to unrivaled redistributive policies.

How did Sweden’s remarkable welfare state come about? The answer is simple: decades of class struggle and organization.

In his classic 1983 study of Swedish social democracy, The Democratic Class Struggle, sociologist Walter Korpi challenged prevailing orthodoxies on the evolution of class conflict in economically developed societies. Against theorists who claimed that class was less and less important for conflicts over economic distribution in advanced industrial societies, Korpi argued that conflict between the classes was still central; it simply took on new forms. And against those who held that workers’ organization and parliamentary politics did little to further working-class interests, Korpi argued that trade union organization and socialist control of government allowed workers to fundamentally change the balance of power in society and extract major concessions from the capitalist class.

Korpi tried to show how the class struggle in Sweden had evolved to encompass not just industrial shop-floor disputes but electoral contests and policy fights, leading to the development of an exceptionally equal society — and also why Sweden’s decades-long social democratic advance was ultimately halted. Today, as the Left grapples with the task of revitalizing the socialist movement — winning social democracy along the way — and the political significance of class is again being called into question, Korpi’s arguments can provide key insights for socialists.

“Power Resources”

omparing data from a number of developed countries and using Sweden as his central case study, Korpi argued that working-class organization and control of government were essential to explaining the generosity of Sweden’s welfare state and its high degree of social equality. Central to this argument was the “power resources” theory.

Capitalists’ control over the means of production gives them inordinate power over the working class, whose members have nothing to sell but their labor power and little ability to influence state policy. Capitalists use their advantage here — in what Korpi calls power resources — to dominate workers and to direct the state to serve their interests at workers’ expense.

But by organizing and acting collectively in unions and political parties, workers can organize and fight back. If they build strong enough organizations, they can challenge the power structure of capitalism itself.

That is exactly what Swedish workers did. Starting in the late nineteenth century, workers built a strong and well-organized trade union movement, organized along industrial lines and united by a central trade union federation, the Landsorganisationen (LO), which worked closely with the Social Democratic Workers’ Party of Sweden (SAP).

Early twentieth-century Sweden was characterized by a series of bitter shop-floor disputes, including general strikes and industrywide lockouts. “Measured in terms of the number of working days per worker,” Korpi writes, “from the turn of the century up to the early 1930s, Sweden had the highest level of strikes and lockouts among the Western nations.” From 1900–13, there were 1,286 days of idleness due to strikes and lockouts per thousand workers in Sweden. From 1919–38, there were 1,448. (By comparison, in the United States last year, according to National Bureau of Economic Research data, there were fewer than 3.7 days of idleness per thousand workers due to work stoppages.)

Instead of attempting to make gains primarily through strikes, the labor movement turned to government policy as the means for advancing its interests. Social democratic leaders believed that, through a tactical compromise with capital, it could use government policy to gradually shift socioeconomic trends in its favor. Similarly, business on the whole shifted from a stance of intransigent opposition to labor to one of compromise. According to Korpi, a dominant faction of business believed that the Social Democrats would not be easily displaced from government, so they might as well compromise with the Left rather than continue open hostilities.

So began forty-four years of nearly uninterrupted Social Democratic rule, during which time Sweden constructed the world’s greatest welfare state and massively shrank inequality. Government policy successfully aimed at maintaining full employment, established generous national pension and health care systems, and embarked on an ambitious social housing program, funded through progressive taxation.

The unrivaled nature of Sweden’s welfare state can be attributed, in large part, to its powerful trade union movement and nearly half-century of uninterrupted social democratic governance. But the shift from workplace fights to policymaking was not a retreat from class struggle, in Korpi’s view; rather, it was a strategic reorientation of the class struggle to the realm of democratic politics. Nor did the new strategic centrality of Social Democratic government policy mean a decline in union power or significance.

The unions and the LO have often been the driving force behind Social Democratic policy. The LO was responsible, first, for directing the government to adopt “solidarity wage” and active labor market policies in the 1950s. Solidarity wage policy, enacted through nationwide collective bargaining agreements between the workers’ and employers’ federations, ensured that workers received similar pay for similar work and that wages of the highest-paid workers did not rise too far above those of the lowest-paid.

The government also pursued an active labor market policy, intervening to help match unemployed workers with employers — including through relocation and retraining services, as well as public employment for those who couldn’t find jobs in the private sector. This interventionist labor market approach was meant to facilitate full employment; it was also meant to correct for effects of the solidarity wage policy, which accelerated the closure of less profitable firms and prevented the most profitable firms from raising wages as high as they might to attract scarce labor.

These policies allowed the Swedish left to achieve multiple goals at once.

First, they served the government’s macroeconomic policy goal of increasing firm productivity. This allowed Sweden to rapidly develop its economy and encourage the concentration of capital that Social Democratic leaders believed was a necessary prerequisite to socialism.

Second, they advanced the moral goal of a more equal distribution of wealth and income.

Third, by equalizing wages and employment opportunities, they built solidarity within the labor movement and therefore helped maintain a political base for redistributive policies over time.

During its tenure, the Social Democratic government facilitated the growth and radicalization of the labor movement. Union density continued to grow: from the end of World War II to 1976, nonagricultural union density shot from 30 percent to 76 percent, by far the highest level of union density in the developed world. Labor’s increasing dissatisfaction with capitalists’ continued autocracy in the workplace, among other factors, led it to push for the revolutionary wage-earners’ funds policy (the “Meidner plan”) in the 1970s.