Louis Proyect: The Unrepentant Marxist

September 3, 2015

Who rules Sweden?

Filed under: Sweden — louisproyect @ 9:00 pm

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Who rules Sweden? They do.

(This is the seventh in a series of articles on “the Swedish model”. Part one is here. It is an introduction that relates Swedish socialism to Bismarck’s reforms. Part two is here. It is about the persecution of the Samis. Part three is here. It deals with Sweden and the “scramble for Africa”. Part four took up the Myrdal enthusiasm for eugenics. Part five deals with Sweden’s economic partnership with Hitler. Part six covers the social pact that labor and capital agreed upon in 1938.)

For most people, Sweden has an egalitarian mystique that is best sustained by knowing as little as possible about the nation’s economy. Furthermore, using the term “socialism” to describe Sweden is an exercise that works best when you know as little about the political economy of capitalism, especially as explained in the writings of Karl Marx.

To start with, there is a ruling class in Sweden. As Lennart Bernston pointed out in a chapter titled “The State and Parliamentarianism in Sweden” in a 1979 collection edited by John Fry and titled “Limits of the Welfare State: Critical Views on post-WWII Sweden”, about 100 large companies account for more than a half of industrial production and sixty of those are owned by 15 families, which in turn are clustered around 3 banks—at the top of which sits the Wallenberg’s Stockholms Enskilda Bank referenced below. It is a sad commentary on radical analysis of Sweden, at least in English-language volumes and articles, that no other book except Fry’s could be located in the Columbia University library.

When you study the history of American capitalism, family fortunes come to mind generally associated with a quote misattributed to Balzac’s “Pere Goriot”: “Behind every great fortune there is a great crime.” This is what comes to mind when you think of the Robber Barons whose as a group constituted the big bourgeoisie of the late 19th and early 20th century.

Who are the Swedish Rockefellers and did they accumulate wealth based on criminal behavior? As it turns out, it is the Wallenberg family that is the Rockefellers, Morgans, and Duponts rolled into one. Despite the aura that surrounds the name due to Raul Wallenberg’s efforts on behalf of Hungarian Jews during WWII, the family bank—the Stockholms Enskilda Bank—aided Nazi Germany during the same time through money-laundering and other criminal activities as I indicated in the first installment in this series.

The Wallenbergs took control of this bank in 1886 and used it as its primary tool of intervention in the Swedish economy until the formation of Investor AB in 1916. The array of companies that are within the Wallenberg bailiwick is staggering. It includes some of the biggest names in the Swedish economy (from Wikipedia):

  • AstraZeneca – pharmaceuticals (4.1% stake, 4.1% voting rights)
  • Electrolux – consumer appliances (15.5% stake, 30.0% voting rights)
  • Ericsson – telecommunications (5.3% stake, 21.5% voting rights)
  • Husqvarna – outdoor power tools, chainsaws, lawnmowers and robotic mowers (15.7% stake, 30.8% voting rights)
  • NASDAQ – stock and securities exchange (11.5% stake, 11.5% voting rights)
  • Saab – aviation and military technology (30.0% stake, 39.5% voting rights)

By the late 1990s, the Wallenbergs owned forty percent of the shares traded in the Swedish stock market and two cousins –Jacob and Marcus– sit on the board of virtually every large company in Sweden.

Around the time that neoliberalism was on the rise in the USA and Britain, crowned by the election of Reagan and Thatcher respectively, the Wallenbergs were instrumental in setting Sweden’s path down the same road. While the “third way” was never really anything except welfare state capitalism, it was certainly a concession to working class interests wrested partly from the power of Swedish labor in the 1930s. In a book by Magnus Ryner titled “Capitalist Restructuring, Globalization and the Third Way: Lessons from the Swedish Model”, you can find the details:

On a national popular level in advertisements ‘Meidner Funds’ [trade union shares in a corporation] were connotatively linked with central planning and totalitarianism, presented in black and white images, and were juxtaposed with free enterprise, connotatively linked with freedom of choice, decentralised ownership, initiative and democracy, which were presented in colour. The material was also often targeted so as to interpellate certain groups or towns (‘free enterprise —good for Vaxjo’; `wage-earner funds concern us barbers too, whether we like it or not’; ‘us gas-station owners too, whether we like it or not’). On an intellectual level, the publishing house Timbro published 22 books between 1978 and 1982, half of which were on free markets and wage-earner funds. The publishing house Ratio was oriented towards theoretical and philosophical debate, and also arranged seminars in philosophy and the social sciences on topics pertaining to freedom, democracy and the market. (In the process, some prominent figures of the Swedish New Left, such as Lennart Berntsson, were converted.) In addition to this, SAF and SI continued their support of the more technical think-tanks, SNS and IUI. This elaborate apparatus provided support for the bourgeois parties in the elections of 1979 and 1982, and thus the prerogatives of capital could be defended.

In other words, just as the time the Kochs were providing seed money for the Cato Institute, the Heritage Foundation, and universities all over the USA to promote the free market, the Wallenbergs were up to the same shenanigans in Sweden.

What accounts for the Wallenbergs suddenly discovering that Swedish industry had to become “lean and mean”? Like the USA and Britain, it was confronted by the rise of Japan and Germany as major competitors. Despite the advantage enjoyed by Sweden over a half-century of peace and steady increases in productivity, global competition was catching up with it in the 1960s. In 1959, a great year for capitalism in the major industrialized countries, the operating profit for Swedish industry as a whole was 8.1 percent. In 1967 it had fallen to 4.3 percent. In Fry’s collection, you can find another article by Lennart Berntson titled “Postwar Swedish Capitalism” that summarizes these developments:

Many current problems confronting the working class arise from the new phase which Swedish capitalism has entered since the mid-sixties. Among other things, this new phase is characterised by the fact that Sweden can no longer exploit the exceptionally advantageous conditions it previously enjoyed in comparison with the rest of Europe — the avoidance of domestic industrial and civilian destruction in two wars and a comparatively milder political and economic crisis during the thirties. The positive impact of these factors however declined at about the same time that the domestic market became increasingly unable to absorb monopoly capital’s growing capabilities for investment and commodity production. Parallel to this was the emergence of the special problem of the tariff protected European Common Market and the rise of increasingly keen international competition since the mid-sixties. These new conditions, which to a certain degree Swedish capitalism had in common with many other advanced capitalist countries, have given rise to a situation where the bourgeoisie’s rate of profit has begun to decline.

It is quite mystifying why Bernie Sanders can embrace a Swedish (or Scandinavian) model that disappeared decades ago. It is one thing for an aging politician to be living in the past. It is another for young people who occupied Wall Street and who seek fundamental social change in the USA to do so. Unless the new generation of leftists comes to terms with what “socialism” means and what that term has or has not to do with Sweden, it will be led hopelessly astray.


  1. Great series of articles

    Comment by Anthony Boynton — September 15, 2015 @ 4:05 pm

  2. […] with Hitler. Part six covers the social pact that labor and capital agreed upon in 1938. Part seven addressed the question of “Who Rules […]

    Pingback by The economic theory and policies of Swedish social democracy | Louis Proyect: The Unrepentant Marxist — September 25, 2015 @ 7:24 pm

  3. […] with Hitler. Part six covers the social pact that labor and capital agreed upon in 1938. Part seven addressed the question of “Who Rules Sweden” Part eight looked into the Stockholm School of […]

    Pingback by How Swedish Social Democracy became neoliberal | Louis Proyect: The Unrepentant Marxist — November 10, 2015 @ 9:49 pm

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