The ranks of the SDP are getting thinner. Among the slogans displayed in this recent Labour Day march in Stockholm: "No more right-wing politics!" Bordering the route are the equally red trademarks of McDonald's and Burger King.


It was to be expected that the Social Democratic Party would offer stubborn resistance to the wave of neo-liberalism that has engulfed the world since the end of the Cold War. But that has not happened. Instead, the party leaders who succeeded Palme have actively contributed to neo-liberalism's mounting influence in Sweden.

It has been a gradual and apparently semi-conscious process that began in the 1980s, when a little coterie of economists steeped in the current conventional wisdom ended up in control of the government's economic policy. In the years that followed, these neo-liberals in social democratic clothing perpetrated a series of departures from traditional policy which bore a striking resemblance to the previously rejected demands of political opponents-- financial market deregulation, privatization, a fixation with low inflation at the expense of full employment, membership in the European Union, and the rest of the standard package.

Neo-liberal depression

The cumulative effect was a neo-liberal depression with a galloping budget deficit that happened to culminate at the start of the 1990s, during the brief and unhappy reign of Prime Minister Carl Bildt and his conservative-liberal coalition. In opposition, the SDP reverted to Keynesianism, arguing in no uncertain terms that, ”It is impossible to save one's way out of a recession by cutting back on expenditures.” Upon returning to power in 1994, however, the government of Ingvar Carlsson attempted to do just that. The ensuing sequence of events can be summarized thus:
  • The SDP government compounded the austerity measures of its conservative predecessor, including deep cuts in the public sector, primarily for the purpose of appeasing international financial markets.
  • Sweden had become dependent on those markets as a result of the neo-liberal policies initiated earlier by the SDP, including deregulation and application for membership in the European Union with its restrictive rules on public financing.
  • Otherwise, it would have been entirely possible to resolve the budget crisis by borrowing from oneself, i.e. from the Swedish people, as in the good old days. There were more than ample resources already accumulated in funds controlled by the government.
  • For the Swedish economy as a whole, nothing was gained by the budget cuts. In fact, the net result was a staggering loss: The total costs of the resulting unemployment and related effects far exceeded the presumptive ”savings”.
  • Essentially what the government did was to shift the costs of its austerity programme from the fiscal budget to the social insurance system (unemployment insurance, social allowances, etc.). This sufficed to dazzle the financial markets and the business press, whose general approval moved Göran Persson, Ingvar Carlson's finance minister and successor as prime minister, to bestow upon himself the title of ”World Champion in Savings”.
  • They were very expensive savings. If all the negative ”dynamic effects” are factored in-- the powerful suppression of consumer demand, occupational burn-out and related illness, deterioration of public services, etc.-- the net result is a gigantic loss for society as a whole.
  • Among the consequences has been serious damage to the public sector, which in turn has led to increasing pressures and opportunities for private solutions that will inevitably lead to steadily increasing socio-economic divisions. The stage had been set for the final curtain to be dropped on the Nordic model within the next decade or two.
Science for the elite

None of this was necessary and, for the vast majority of the population, the outcome can hardly be described as favourable. But the architects of the disaster have been amply rewarded with well-paid positions in the upper reaches of business, from which lofty heights they continue to lend their amplified voices to the neo-liberal coup that they initiated. The ancient profession of providing oral services to the wealthy has turned out to be as lucrative in Sweden as anywhere else, confirming August Strindberg's definition of economics as the science by which the economic elite remains the economic elite.

Not surprisingly, neo-liberals in the Social Democratic leadership and elsewhere interpret the economic upswing that began in the late 1990s as the fruit of their heroic efforts and argue for more of the same. A more plausible interpretation is that the depression which they inflicted on the nation delayed an economic expansion that otherwise would have begun much earlier. In any event, it is indisputable that their policies have caused severe damage to the fabric of Swedish society.

It has taken some time for the party faithful to grasp that, what appears to be a betrayal of traditional values and principles, is exactly that. But after an unprecedented period of high unemployment, and nearly a decade of governments which have effectively delivered the country into the hands of international money markets and their instrument, the European Union, the smouldering resentment amidst the grassroots has finally begun to express itself-- primarily in the form of defections to other political parties and, to an even greater extent, to the TV sofa.

Bones of rhetoric

The hard-pressed leadership, caught in a bind of its own devisement between a ”market” it fears and a constituency it fears less, has responded by submitting to the demands of the former and tossing bones of traditional rhetoric to the latter. There does not appear to be any conscious duplicity in this pattern of behaviour: All indications are that, since the mid-1980s, party leaders have been suffering from a persistent case of compulsive wishful thinking. Among the symptoms is a pronounced tendency to believe that they are preserving the ancestral “people's home”, while systematically hacking away at its foundations.

The syndrome assumes many curious expressions, such as a tendency to discover kindred spirits in the most unlikely places. For example, party leaders proclaimed the dawn of a new social democratic awakening in the United States upon the election to the presidency of Bill Clinton-- the charming fellow who subsequently acquiesced to the elimination of that country's minuscule social safety net. Similar vain expectations have been lavished upon England's tarnished neo-thatcherite, Tony Blair. In short, the behaviour of Sweden's Social Democratic leadership since the death of Palme has amply demonstrated the significant role of self-delusion in politics.

The growing rift between the SDP's grassroots and the leadership has, of course, been paralleled by mounting discontent within the labour movement from which the party emerged over a century ago. In addition to their political offspring's neo-liberalization, the predicament of the unions has been aggravated by the loss of membership and revenues that are associated with high unemployment rates. Then, there are the additional challenges posed by accelerating automation, capital flight/blackmail, social dumping, international mergers, and other modern perplexities that have drastically altered conditions for labour everywhere.

Crisis of leadership

The net result is a severe crisis for the labour movement, whose current leadership seems to be somewhat bewildered by recent developments. It occasionally issues noises of displeasure at repeated provocations by the political party that was established and is still financially sustained by labour. But thus far, it has held its nose and allowed itself to be carried along with the mounting tide of social democratic neo-liberalism.

Meanwhile, the majority of rank-and-file members are voting with their feet: Less than half now adhere to the political party which their predecessors once established to serve their interests. In this they have been encouraged by Prime Minister Persson who has proclaimed that the labour movement is merely a pressure group of no greater importance than any other in society. By his actions, he has certainly confirmed the sincerity of those words, but in context they are quite extraordinary-- rather like a Tory prime minister or a Republican president announcing that he cares not a fig for the private sector.

The neo-liberalization of the SDP continues unabated, and is not restricted to Sweden. All of the European Social Democratic parties have, in varying degrees, exhibited the same tendency. Among them, the most stubborn resistance to neo-liberalism has been offered by the government of Lionel Jospin in France. This is a circumstance with considerable ironic resonance in Sweden, where Olof Palme's successors have justified their submission to the forces of neo-liberalism by citing a battle against the financial establishment lost during the 1980s by the Social Democratic government of François Mitterrand.

It would appear that in France, at least, losing a battle does not necessarily mean losing the war. In Sweden, on the other hand, the Social Democratic leadership has surrendered and handed over the entire nation without firing a shot.

The submissive behaviour of Social Democratic leaders in Sweden and the rest of Europe has inevitably been the subject of much speculation. The most common interpretation is that it is a consequence of the economic elite's success in pushing through its neo-liberal revolution with the help of propaganda churned out by the mass media it controls. That revolution is based on deregulation and globalization of the economy, especially the financial sector, which in turn has been made possible by rapid advances in communications technology.

There is much that is plausible in such an explanation. But there are good reasons to ask what it all might have to do with the present historical moment's only global superpower, whose heavy investments in the strengthening of conservative political parties and the weakening of social democratic parties are well documented.

Against that background, the logical question becomes: To what extent has the decline of social democracy throughout Europe been expedited by the United States? It is a question of particular relevance in the case of Sweden.

Continue. . .