Abstract
For the left, especially in the United States, Sweden is still regarded as a social democratic utopia. A country that has solved many of its social ills through taxing the rich and implementing broad welfare reforms. An equal society where the hand of the state has been firm enough to rein in the market. Is this a true impression? A short but very academic answer is that the image is both true and false. Sweden ranks number ten on the Heritage Foundation’s Index of Economic Freedom, well ahead of countries often perceived to be much more economically liberal, such as the US at number 25 or the UK at 28. While it is true that Sweden’s cradle to grave welfare state remains, it is a country where market-oriented reforms have fundamentally changed the functioning of the economy in the last 40 years. In this essay I will explain why. The main argument is that in the 1970s, the Social Democrats went too far in their ambition to curb capitalism in Sweden. The pushback from business and the centre-right, fuelled by the market-oriented ideas of the 1980s and the collapse of the rigid state-centred world economic order of the Bretton Woods era, led to a fundamentally different society than the one that Bernie Sanders thinks we live in. What are the historical reasons behind the rise of deregulation and private competition in the public sector in a nation so long characterised by social democracy?