Birth of a Labor Movement

Socialist ideas were brought to Sweden during the final decades of the nineteenth century by labor activists, like August Palm, who came from Germany through Denmark. They were planted in a fertile soil. The conditions in Sweden at the time allowed socialist activists to forge solidaristic, class-based political organizations and alliances with relative ease.

Relatively late and rapid industrialization enabled the formation of broader, industry-based trade unions, circumventing the fragmented guild-based forms that prospered in other countries. Larger workplaces made it easier to organize and coordinate activists.

Since organized labor was able to become the central force for winning democratic rights, it facilitated the formation of national parties anchored in classes instead of pre-industrial social groups.

These factors rapidly established a pattern of centralized collective bargaining and helped the Left create a new working-class identity. The country’s high degree of dependence on exports precluded the formation of strong protectionist alliances between the Right and the farmers — who, having avoided serfdom, entered the industrial era as an independent force strong enough to form a sizable Farmers’ League, with the potential for tactical alliances with organized labor.

Two decades into the twentieth century, labor militancy in Sweden was the highest in the world. In 1938, a stalemate in the class struggle culminated in a historic compromise between the LO and the employers’ organization, the Confederation of Swedish Enterprise (SAF), which institutionalized centralized negotiations between labor and capital. This agreement seemed to lock into place an arrangement favorable to workers, but it also constrained rank-and-file militancy.

Initially, the SAP and the LO constituted a fairly broad umbrella for socialist activists. After the defeat of the 1909 Swedish general strike and the outbreak of World War I in 1914, however, mounting tactical and strategic disagreements within the movement translated into a series of organizational splits.

One split from the LO formed a syndicalist trade union (SAC). A split from the SAP led by a left opposition and the youth organization transformed itself into the Communist Party (SKP), and became a founding member of the Comintern in 1919. Today, after several reformations and name changes, it remains as the Left Party, the main parliamentary force to the left of the SAP.

During the 1920s, the SKP had relatively strong ties to the unions, even though the SAP actively tried to marginalize its rival. The SKP’s early antiwar position was soon sharpened into militant anti-imperialism and the party became instrumental in the antifascist struggle. Its parliamentary strength, however, remained limited in the shadow of an existing mass workers party.

Its ability to broaden its working-class support was hampered by a preexisting and prevalent Russophobia from which anticommunists could draw ideological strength, and undermined further by the zig-zag directives from the Comintern. Internal conflicts led to a further split in the SKP in 1929, out of which one faction eventually returned to the SAP.

After these splits, progressive reformers and reformist socialists like Per Albin Hansson and Ernst Wigforss dominated the SAP and the LO. Both groups aimed to solve the problems of inequality and unemployment generated by capitalist production. But the reformers focused on social engineering through state institutions while the socialists sought gradual reforms that would transform the structure of the economy.

Neither group, however, articulated a challenge to the actual property relations that undergirded the capitalist system as a whole. The only programmatically articulated strategy for doing so was nationalization, but it was shelved shortly after the SAP assumed office with support from the non-socialist Farmers’ League in 1932.

With the state lacking vast productive assets of its own, state managers relied on taxation of labor and capital incomes earned in the capitalist sector to implement expansive reforms. Because income growth and employment in this sector is largely determined by the level of private investment, business confidence and the willingness of capitalists to invest became a significant constraint and concern for the state.

This concern restricted the first reform offensive of the SAP-led government. Its rather limited public-works program during the Great Depression made a minor dent on the soaring levels of unemployment. Full employment was only obtained once wartime economic management became necessary.

The devastating impact of World War II changed the power relations between the state and the capitalist sector. Along with the defeat of fascism and rise of the Soviet bloc, it fundamentally altered the balance of class forces on the European continent.

In Sweden, the state was formally neutral during the war and the capitalist sector remained intact, but the effects of wartime management profoundly demonstrated the efficacy of state intervention and employment-generating policies.

The SKP was treated harshly by the war. It was the only party kept out of the government of national unity and some of its members were put in internment camps. Wage increases and living standards were held back during this period, leading to mounting opposition from the communist left.

The combined popular vote of the two workers parties exceeded 50 percent for the first time during the war and the SKP’s share tripled to 10 percent in 1944. This increase in popularity is partly explained by the role of the Soviet Union in defeating fascism militarily and the party’s adamant opposition to fascist appeasement in a country that remained neutral in the war.

The resurgence of labor militancy pushed the SAP and the LO to adopt a radical postwar program, which was supported by the communists. Its social policy reforms were passed within a few years and laid the basis for the welfare state, but its policies of planning and nationalization were vigorously opposed by the business community.

Unlike in France and Britain, Sweden’s capitalist sector was not in ruins by war and still could credibly flout threats of withholding investment. Predictably, the SAP leadership abandoned the planning reforms, unwilling to confront capital and challenge business confidence, despite being backed by a mass labor movement.

The relationship between the communists and social democrats evolved with time. As the prospects of European revolutions abated and the Comintern dissolved, the SKP adopted a “national road to socialism.”

The shifting international context of the Cold War and the rivalry with the SAP created a peculiar situation in which the party lent crucial parliamentary support to the SAP while still being excluded from the unions and government.

After the War

In 1951, not long after the planning reforms were thwarted, the LO devised the imaginative “Rehn-Meidner model,” which became the centerpiece of Sweden’s postwar institutional configuration. It was designed to accelerate market-based industrial restructuring while reducing income inequality.

The Rehn-Meidner model used centralized bargaining to compress wage differentials, bringing wages up in low-productivity firms while moderating their rise in high-productivity firms.

This policy of wage compression rewarded high-productivity firms with higher profits and potential investments, while low-productivity firms were destroyed by wage increases. This curtailed inflation and any residual unemployment was combated by active state intervention to provide worker retraining and employment.

Together with a progressive taxation system and the incorporation of women into the labor movement, the Rehn-Meidner model produced the most egalitarian wage structure in the capitalist world. At the same time, it sustained the rapid industrial development that had already transformed the country from one of the poorest in Europe per capita into one of the richest on the eve of World War II. The average rate of growth and return on capital soared as the immediate reconstruction of postwar Europe provided a demand stimulus to Sweden’s export industry.

Across Europe, the welfare state and an institutional commitment to full employment emerged out of the ruins of war. In Sweden, it assumed a distinctly public character based on universal rights.

Public institutions not only provided services and security, they also produced ideological effects by forging a solidaristic identity within its mass base of beneficiaries and employees. Furthermore, the class base of the social-democratic project widened as the universalist welfare state educated and employed an ascending professional middle class.

As elsewhere in Western Europe, the expansion of tertiary education also led to an influx of students from working-class backgrounds. In conjunction with a growing awareness of the US Civil Rights Movement and the anti-imperialist struggle in Vietnam and elsewhere, the changing composition of the student body led to campus radicalization, which only grew stronger in opposition to the proposal to streamline university programs in May 1968. This provided fertile ground for a crop of small Maoist and Trotskyist groups.

The SAP confronted these developments with great suspicion. The party’s leading figure, Olof Palme, took an anti-imperialist stance that attracted young people as he marched side-by-side with the North Vietnamese ambassador in 1968 and famously compared the US bombings of Hanoi in 1972 with Nazi war crimes, causing the US ambassador to leave in protest.

But at the same time, it was revealed that an illegal intelligence bureau, working under the auspices of high-ranking members of the SAP, had registered leftist radicals and infiltrated the international solidarity movement.

The SAP’s exclusion of radicals, and the limited number of secure positions in the establishment, meant that a generation of radicalized intelligentsia flocked into the New Left and initiated a flourishing of Marxism in Sweden.

A leading intellectual voice of this generation was the journal Zenit, formed by radicals such as Göran Therborn and inspired by the New Left Review. It introduced Marxist thinkers such as Antonio Gramsci, Ernest Mandel, and Andre Gorz to a Swedish audience.

Similar rejuvenating currents started to flow in the SKP, still a fairly orthodox party at the time. The election of party secretary Carl-Henrik Hermansson marked the organization’s move towards Eurocommunism, and in 1967 it re-branded itself as the Left Party Communists (VPK).

The next year, it stood out in its vocal condemnation of Soviet intervention in Czechoslovakia. In 1965, Hermansson published an influential study on the exceptional concentration of capital in Sweden, and in 1977 he founded the Center for Marxist Social Studies, which brought the New Left and the VPK closer.

The VPK’s Eurocommunist leanings, in turn, led to the breakaway of a few Marxist-Leninist and Maoist challengers that have now either disbanded, drifted into obscurity, or maintained a marginal presence in municipal elections.

The late 1960s also saw the resurgence of a strong women’s movement, which had a huge impact on the public consciousness and, in the longer run, on social policy. The movement comprised a plethora of organizations, but Group 8, founded by women with academic credentials who were nevertheless confined by the social division of labor to household work, came to symbolize the era.

The movement critiqued the secondary role given to women in the welfare state project, and it pushed for improved educational and employment rights for women, as well as subsidized collective child care.

These struggles, along with the rising unionization of women workers, made huge strides towards gender equality in Sweden. In 1977, one in ten children had access to subsidized kindergartens, and by 1980 it was one in every three.

In expenditure, the expansion of the universal welfare state accelerated towards the end of the 1960s as a response to rising social demands. Over the following two decades, the number of public employees nearly tripled and accounted for more than one-third of the labor force. This late expansive phase, made possible by high rates of investment in the capitalist sector, set Sweden apart from most other countries.

To sustain profitability in the capitalist sector, however, productivity and employment growth must keep up with the rate of investment. Due to the long period of high investment and concentration of capital in Sweden, the average annual rate of return on fixed capital was lower than in several European countries by the 1960s. And it kept declining.

In 1975, the average rate of return was 5 percentage points lower than in 1965. A reestablishment of profitability to the level in 1965, at the ongoing productivity growth, would have required the labor force to grow at a rate faster than 5 percent a year, a rate demographically implausible and all but impossible under full employment.

At the same time, the high rates of investment sustained full employment and workplace concentration. This strengthened the bargaining power of labor and challenged employers’ ability to dictate the work process. As in the rest of Western Europe, the combination of rising rank-and-file discontent and bargaining power led to a resurgence in labor militancy.

The spark for renewed class struggle in Sweden was the 1969 wildcat strike at a state-owned mining company. One of its slogans, “We are not machines,” resonated with the broader radicalizing tendencies of the period. In response to this wave of militancy, the LO began to formulate a set of labor-rights demands and capital responded to wage demands by raising prices.

The welfare state was dependent on a high level of investment in the capitalist sector. But the long-term political and economic effects of such levels undermined the very basis of this arrangement. This resulted in a crisis of profitability and confidence for capital during the mid 1970s, and posed a challenge to the reformist socialist strategy.

To maintain sufficient levels of investment, the Left was now forced to think beyond the Rehn-Meidner model as well as the SAP’s meager attempts to use active industrial policies to halt the relative decline. Once again, the most creative ideas came from the LO.

From the union federation’s point of view, the exercise of wage restraint in the high-productivity sectors yielded “excess profits” and deepened the concentration of private capital, but also strained relations with the workers. To alleviate this issue and provide investment funds, ideas about collective rights to these excess profits were revived at the 1971 LO convention.

It commissioned an investigation headed by former LO economist and reformist socialist Rudolf Meidner. Amid rising demands for workers’ codetermination and falling investment, the wage-earner funds proposal drafted in 1975 aimed to address these issues in an ingenious way.

Firms of a certain size were to be legally required to issue shares, corresponding to a proportion of annual profits, to a union-controlled central fund. The dividends would then be allocated to expand collective ownership, vested in funds with boards on which union representatives held a majority, and to finance the training of union activists and workers.

The buildup of the wage-earner funds would therefore also enable a democratization of macroeconomic investment decision-making. Under the proposed scheme, it was estimated that within thirty-five years, the bulk of the capitalist sector in Sweden would be collectively controlled.

The proposal was received enthusiastically by union activists and adopted at the LO convention in 1976 to outbursts of applause and singing of “The Internationale.” The business community and the Right reacted with predictable hostility.

The Left too, from the VPK to smaller far-left groups, initially objected to the proposal, charging that it was a means of deepening corporatism and displacing rank-and-file militancy. It had been adopted without consulting the SAP leadership who, unwilling to confront capital, wanted to avoid the issue during an election year.

Due to the influence of the LO, the SAP was forced to consider the wage-earner funds proposal but succeeded in sidestepping it by formulating drastically watered-down versions over the subsequent years.

While the original proposal was capable of mobilizing the union movement, the socialization of investments was not articulated in ways that linked it to popular demands that could broaden its support base, unlike earlier demands for a public pension system and other universal welfare reforms. The narrowness of its appeal proved to be fatal to the reformist-socialist project.

Unable to address the crisis in the capitalist sector and facing growing discontent with its long rule, especially on the question of nuclear power, the SAP was defeated in the 1976 elections.

This marked the end of forty-four uninterrupted years in office. But the two subsequent bourgeois governments, headed by the successor to the old Farmers’ League, were unable to reverse the economic decline and built up huge government and current account deficits. The more successful SAP state managers were returned to power in 1982.

Retreat and Decline

The class compact that strengthened organized labor after World War II simultaneously strengthened the capitalist class. Not only did it accelerate the concentration and centralization of capital, it also benefited the competitive export-oriented and increasingly multinational firms — reducing the capitalist sector’s dependence on the domestic market.

In the pursuit of counter-cyclical monetary policies, the postwar system had also regulated Sweden’s credit-based and bank-dominated financial system. But during the period of decline, banks and firms created financial intermediaries and subsidiaries to evade restrictions imposed by the central bank. These changes reduced the efficacy of national economic policies.

The SAP remained intact despite these changes. It has always been an effective vehicle to win parliamentary elections. But after it abandoned its halfhearted attempts at interventionist industrial policy and eschewed the reformist socialist content of the wage-earner funds, there remained no realistic left-wing proposals to address the crisis of the 1970s and the welfare state’s dependence on private investment. The subsequent reorientation towards a profit-led capitalist recovery became a foregone conclusion.

The SAP drifted into a neoliberal trajectory along with other European social-democratic parties. The social democrats’ key economic policy-makers prescribed a steep currency devaluation to boost exports, then public expenditure cuts and the phasing out of financial regulations and instruments of control.

But the new policies boosted neither domestic private investment nor productivity growth. On the contrary, Swedish investments abroad took off in 1985, and lending from the newly unleashed finance sector led to an unsustainable rise in housing prices and debt, which crashed in 1991 under a neoliberal center-right government.

When the SAP was called back into office in 1994, the party’s commitment to full employment had been eradicated. It did little to reverse many of the right-wing policies established in its absence, and offered nothing to the working class beyond “budget cuts with a human face.”

These policies often put the SAP at loggerheads with the LO unions and economists, and occasionally led them into open conflict. Ultimately, the LO was subordinated to the SAP’s protracted reorientation towards neoliberal austerity, and in the 1990s the party’s political hegemony began to decompose.

The SAP’s minority governments could always count on the VPK’s commitment to a “labor majority” in parliament because the alternative was worse. The VPK’s parliamentary alliance with the SAP also reflected its ambition to be a broad left-socialist party and shift away from its communist tradition. During the 1980s, it distanced itself from the Soviet Union and its foreign policy.

Hermansson, the party’s former chairperson, argued that since its program called for the absolute extension of all democratic rights, the party could therefore not maintain credibility if it overlooked abuses of such rights in the Soviet bloc.

In a new party program, developed and presented by a commission headed by Göran Therborn in 1986, the VPK’s Marxist theoretical outlook was supplemented with feminism, environmental concerns, and civil liberties advocacy.

The VPK’s new direction was criticized by those who perceived it as a watering-down of the party’s political identity, and a revised version of the program was adopted instead. After the disintegration of the Soviet bloc, a narrow party congress majority voted to re-brand the VPK once more, dropping the K (for communist) to become simply the Left Party.

Parliamentary support for the party remained around 5 percent. In 1998, however, the party’s explicit feminist stance broadened its electoral base, and combined with an attempt by left-wing voters to halt the rightward drift of the SAP, the party’s support peaked at 12 percent.

Important structural changes since the 1970s facilitated ideological shifts in the population. Industrial restructuring led to smaller and skill-diversified workplaces, thereby vitiating the organizational forms on which trade-union cohesiveness and solidarity had been built. National unions with no historical affinity to reformist socialism began to organize in the rising service sector.

In Sweden, a large part of this service-sector growth occurred in the public sector, which offset the rollback of support for social-democratic policies. While the social provisions of the welfare state retained solid support, there was mounting discontent with its bureaucracy, rigidity, and degree of social control.

This criticism originated on the Left, but it was quickly picked up by the well-organized business community, which had, in response to the crisis of the 1970s, militated for a break with the postwar arrangement.

The business community’s central organ, the SAF, invested huge resources in neoliberal think-tanks and in 1983 mobilized a record-breaking 75,000 protesters in opposition to the gutted wage-earner funds proposal.

Almost two decades after the start of this neoliberal offensive, the SAP formally excised reformist socialism from its party program. It shed its declared aim of transforming society by “placing the control of social production into the hands of the people,” a promise that had been the first clause in every program since 1944.

In its place, the SAP vowed to “strive for an economic order” in which every human being can “influence the direction and redistribution of production.”

The 1980s also saw the rise of a small but militant white supremacist movement and, consequently, antifascist resistance. By the 1990s, antifascism had become the recruiting ground and backbone for other radical left mobilizations. Together with emerging militant feminist and animal-rights groups, it eschewed parliamentary tactics altogether, practicing direct action and physical confrontation.

Its historical predecessors could be found in extra-parliamentary struggles waged by past environmental and social movements, but its diverse ideological roots lay in Italian and German autonomist Marxism and anarchism.

This current was set back significantly in 2001, however, during a mass protest against an EU summit police provocation that led to full-scale riots and the eventual shooting of three protesters.

Nevertheless, the far left still possesses a high capacity for mobilization on the streets and in campaigning. Indeed, antifascist mobilizations managed to break the back of one of the largest fascist marches in Europe that took place annually between 2000 and 2010 and at its peak gathered three thousand marching fascists. A war of attrition was waged through large-scale counter-mobilizations each year, and after ten years of confrontations the fascists hung up their boots.

While antifascism provided experience in militant organizing that could be applied to other fields of politics, it was also a defensive position ill-equipped to combat the more “respectable” far right that during the same period successively made its entry into Swedish parliament — the last parliament in Scandinavia to host an explicitly anti-immigrant party.

Rising from total obscurity, the xenophobic Sweden Democrats (SD) transformed the political scene in 2006, when it entered parliament and began polarizing the electorate on the issue of immigration.

Formed in 1988 as a conglomerate of ultra-nationalist and fascist sects, it later made itself more broadly palatable by banning uniforms, bomber jackets, and boots at its rallies and focusing on the issue of immigration in its official rhetoric.

With the rise of austerity and the decline of economic security, presided over by the SAP and bourgeois governments alike, many disgruntled voters turned to the SD’s revivalist appeal and self-image as the “true opposition.” In the SD’s rendering, the welfare state of the past depended on the country’s ethnic homogeneity, which was being undermined by “politically correct” elites.

In truth, between 2006 and 2014 the country was ruled by a neoliberal coalition government with passive parliamentary support from the SD. Led by the center-right Moderate Party, which branded itself as a party of “those who work,” this government succeeded more than any previous one in weakening the welfare state’s institutions and charting a neoliberal course.

Under a social-democratic veneer, its combination of tax cuts, changes to insurance policies, and privatizations produced the fastest rise of income inequality in the OECD. These policies also pitted the employed against the unemployed and drove a wedge into the compact support of the professional middle class towards the universalist welfare state. The SAP’s intellectually bankrupt leadership provided no opposition to this agenda.

Paths Forward

Today, an SAP-led government administers Sweden and relies on passive support from the Left Party and bipartisan compromise with the opposition to quarantine the Sweden Democrats.

The compromise has created a passive administration, unable and unwilling to push for reform of any kind and content to maintain the radical tax cuts and privatizations established by the previous right-wing governments.

As wars and conflicts in the Middle East bring flows of refugees into Sweden, immigration and asylum rights occupy the center stage of political debate. The Right asserts that the country must now choose between general welfare and generous immigration — or more truthfully, that the country must give up both.

It is on this challenging terrain — with the very premise of the welfare state, much less something more radical, called into question — that a revival of the Left in Sweden must take place. The great deal of thinking and experimenting that such a project requires must draw from the Left’s historical experiences of both victory and defeat.

The dynamic between the SAP leadership, trade unions, socialist organizations, and social movements, from which the postwar program and subsequent reform wave emerged, dissipated long ago. The material and institutional outcomes of that program affirmed and expanded a collective and solidaristic identity throughout the country.

Reconstructing such an arrangement in everyday life — by strengthening access to public goods, guaranteeing affordable housing, and promoting democratic initiatives in public-sector workplaces — may not directly challenge the power of capital today but it is a precondition for renewing a left in the country.

There is an urgent need to develop organizational forms and specific policies that can build a popular sense of collective and solidaristic identity in opposition to the prevailing neoliberal individualistic or national-conservative identities.

The potential to re-establish such a sense of solidarity is visible in the extraordinary surge in popular mobilizations by the refugee solidarity movement, but the SAP-led government has ruled out progressive policy responses to the crisis.

The influx of immigrants could be met with public-sector investments in housing, education, and labor-market reforms that would enable a swift integration of immigrants into the domestic working population while strengthening the latter.

In other words, there is an excellent opportunity for social-democratic reformism, and ironically we now see a social-democratic government squandering that opportunity.

The Left Party is the only organization on the Swedish left with any reasonable chance of parliamentary influence. Likewise, the organizational resources of the LO-affiliated unions are unmatched by any social movement.

But neither party nor union will be an effective vehicle for social reform without a rejuvenation of internal membership participation and a willingness to collaborate with outside forces.

At the moment, it is therefore hard to see any viable strategy for the Swedish left other than the establishment of a more federal and pluralist Left party with strong ties to social movements, along the lines of Syriza, Rifondazione Comunista, and Podemos.

Today neither the Left Party nor social movements are strong enough on their own to be able to effect institutional change. In the best of possible futures they present the answers to each other’s shortcomings.

The Left Party has a strategy for reforms that could challenge the institutional strength of capital and establish trenches for social struggles, whereas the social movements have the capacity for popular mobilization and struggle that the parties are desperately trying to regain.

Of course, the aforementioned Southern European parties also invoke the pitfalls and potential catastrophes of such a strategy, especially with regard to gaining state power from a position where the Left lacks sufficient strength to quickly push through reforms.

For a radical left party, the window of opportunity for progressive reforms after deciding to participate in government is narrow, since any risk of an investment strike or economic downturn threatens the expansive welfare and employment policies that brought the party to power in the first place.

In short, if the party is too small or lacks the necessary strategy to be able to affect investment decisions, its premature entry into government could possibly eliminate not only the party but all credible left alternatives for a long time thereafter.

In light of the history outlined here, we believe two elements are necessary for any strategic path to lasting success. First, parliamentary tactics must be formally subordinated to long-term goals and used to strengthen extra-parliamentary capacities.

Such subordination would stand in stark contrast to the experience of European social-democratic governance and ensure that workers are mobilized enough to defend counter-attacks from the Right.

Second, the Left must devote significant intellectual and organizational attention toward the development of a plan for the socialization of investment. This is the only way to overcome the welfare state’s dependence on capital.

Unlike the wage-earner funds proposal, such policies for socialized investment must be directly tied to pertinent issues – welfare, housing, sustainability – that can mobilize people beyond the trade union movement.

Failure to address these issues has turned socialist movements that aim to change the world — from the Swedish Social Democrats to Syriza — into state managers whose electability depends on their ability to maintain business confidence.

Three decades into the deterioration of one of the most successful reformist social-democratic projects in history, the current generation of the Swedish left has waged a mostly defensive fight. The social-democratic strategy that was once the middle ground in the struggle between socialists and progressive reformers has been pushed to the margins.

In these bleak times, it is easy to fall to conservative “realism.” But even at the peak of its success, Swedish reformism was a failure. It could never fundamentally challenge capital enough to prevent many of its gains from being reversed.

There is therefore no “realism” in lowering our ambitions. The fact that these ambitions are now more difficult to achieve means only that we have to change our strategy, not our goals.

The history of the Swedish left offers us substantial strategic lessons. The ability to build a universal welfare society was won by a left that could plausibly threaten to go further, but a movement that is unable to go further will eventually start moving backwards. In Sweden, as in any other country, no egalitarian reform can stand for long without a vigorous offensive effort to deepen and extend the socialist project.