The Swedish Invasion: Does a Mixed Economy Lead to Domestic Bliss

by | Jan 6, 2003

“We want to produce the soundtrack to the ongoing war against capitalism.” That’s the creed of Sweden’s new garage band The (International) Noise Conspiracy. They’re avowed socialists, to the point of caricature. A comically self-indulgent manifesto posted on the band’s official website attempts to justify, for example, how a band so averse to capitalism could […]

“We want to produce the soundtrack to the ongoing war against capitalism.”

That’s the creed of Sweden’s new garage band The (International) Noise Conspiracy. They’re avowed socialists, to the point of caricature. A comically self-indulgent manifesto posted on the band’s official website attempts to justify, for example, how a band so averse to capitalism could be as eager to jump feet-first into the MTV-Rolling Stone marketing machine as TINC has been. “We use media and industry – which we hate – to get our message across,” the rationalization goes.

TINC is just the latest in a long line of “new garage” (“old garage” might include Iggy Pop, or the Velvet Underground) bands in what’s become something of a Swedish rock n’ roll invasion. TINC follows the stateside success of The Vines and The Hives. Others, like Division of Laura Lee and the Hellacopters wait in the wings.

Much has also been made of late about Swedish socialism. Pundits on the right have culled selective economic data to suggest that the common Swede lives no better than, for example, the poorest sharecropper in Mississippi. Advocates on the left have held up Sweden as the anti-Soviet Union, a shining example of how a hybrid of economic socialism and political freedom can yield a domestic bliss. They point out that the Swedish assault on the America rock charts is, in fact, a direct result of Sweden’s public support for the arts. In Sweden, it’s been written, musicians can apply for aspiring-artist welfare from the federal government. Keep track of when and where you practice, how long the band’s been together, fill out the appropriate forms, and a wannabe rock star can take in as much as $18,000 U.S. in public assistance.

So what’s the real scoop?

In truth, the Swedish economy is pretty similar to the politics of its rock bands: avowedly socialist by most outward appearances, but more than willing to embrace the machinery of capitalism behind the scenes in order to make the whole thing work.

You might call it “boutique socialism.”

Perhaps a brief layman’s history of Swedish politics is order.

It’s true that Sweden was socialist for most of the twentieth century. The socialists took power in the early 1930s and held it until the early 1990s. It’s also true that in comparison to the rest of Europe, the Swedish economy flourished until the 1960s. But that’s not really because of Sweden’s socialist proclivities. Rather, it’s more because of that notorious economy-killer called World War II, an endeavor that Milton Friedman noted “Sweden had the good economic sense to avoid.”*

Advocates of the “Sweden as the anti-Soviet” line of thought might also want to take note: Early socialist Sweden was hardly a utopia of political freedom and civil liberties. Mengele-ian social engineering projects saw government-enforced sterilization of thousands of “unfit” Swedes in the 1930s and 40s. As late as 1950, the Swedish government was still experimenting with lobotomies on alcoholics and convicts – often without their consent – in researching possible “cures” for such undesirable behavior.

By the late 1960s and early 1970s, the Swedish economy was tanking. Western Europe’s post-war capitalist economies caught and passed Sweden relatively quickly. And by the 1980s, Sweden was on the verge of collapse. Businesses fled for more friendly tax jurisdictions in continental Europe and the U.S. Sweden experienced a brain drain as its sharpest minds fled to market-driven economies that rewarded knowledge and know-how with wealth. Entrepreneurs in Sweden were painted as pariahs. Ikea founder Ingvar Kamprad told Fortune magazine that Sweden’s tax bureaucrats and politicians at the time routinely accused him of “using people” and “just wanting to make a profit.”

By 1989, Sweden’s unemployment rate had risen to 12%. Social spending had driven the government’s budget deficit to 35% of government spending and 13% of GDP. Swedish welfare provisions stipulated that anyone fired or laid off from a job could get up to 80% of his original salary in public assistance. Consequently, absenteeism in the private sector approached 25%. Free, comprehensive national health care made Sweden the “sickest” country in Europe – so long as government picked up the tab, Swedes demanded the highest care for the feeblest illnesses. The system buckled. Because almost everything was provided for, and because of income tax rates approaching 90% in the highest brackets, Swedish households accumulated almost no savings, making them even more dependent on social programs once the economy soured.

In the early 1990s, the Swedes revolted at the ballot box. A neoliberal coalition led by Carl Bildt took power. Bildt quickly went to work. He capped national income taxes at 50%. He set corporate taxes at 28%. He rolled back regulations on telecommunications and banking. While hardly the epitome of laissez faire capitalism, those modest changes alone set in motion the path to Sweden’s economic rebirth.

In 1994, the Social Democrats regained power – mostly because Bildt’s slashing of government services ignited a backlash. But the signs of recovery were already in place, and so the Social Democrats, led by finance minister Goran Persson, followed Bildt’s lead. More privatization of government-controlled industries. More tax cuts. To that they added more cuts in government spending, and a real effort to balance the federal budget.

The result? Native Swedish entrepreneurs who fled the oppressive tax and regulation codes to start businesses elsewhere brought their businesses and payrolls back to Sweden. Sweden today is home to some of the world’s top telecommunications firms. In sharp contrast to the eugenicist philosophy of Sweden’s ruling 1940s socialists, the streets of Stockholm and Goteborg teem with entrepreneurial immigrants from Asia and the Middle East. Fortune reports, “from 1995 to 1999, venture capital and private equity investment in Sweden rose 201% annually, against 40% in the U.S.”

Sweden of course is in no danger of becoming a shelter for tax-oppressed U.S. business. Education and health care are still free (and, consequently, still on the verge of collapse). Though corporate tax rates are reasonable, personal income tax rates are still inordinately high. And the lingering haze of conformity that comes with rampant socialism still holds a good number of Swedes in despair. Sweden’s suicide rates are among the highest in the world (much higher than latitudinally similar, low-sunlight communities in, for example, Alaska). Alcoholism is rampant, and this in a country where the state owns all the liquor stores. Even Per Stalberg, singer for the socialism-espousing Division of Laura Lee admits that the everything’s-taken-care-of life of a Swede leaves something to be desired.

“You have to go to school, and then you have to work in an office, then drink a lot of booze, and then beat the s*** out of your wife,” he told Rolling Stone. “There are a lot of personal problems here. I don’t know many people who haven’t been to a shrink.”

So what about that Swedish music invasion allegedly spurred on by rock star welfare? Well, it’s probably telling that the program was phased out as part of finance minister Persson’s mid-1990s cuts in social programs. If you give, say, five to eight years for a band to mature and catch on, you might make the case that the Swedish invasion is the product of ending rock star welfare, not institutionalizing it. And The Hives – easily Sweden’s most successful band so far, and probably its most talented – were never on the public dole to begin with (bandleader Pelle Amlqvist told Rolling Stone, “We thought that was like working for The Man. Plus, we were crap at filling out all the forms.”).

Sixty years of Swedish socialism gave us ABBA and Ace of Base. Ten years of quasi-capitalism, and Sweden’s holding the flag for the new garage revolution. That’s as convincing a case for markets as I need.

* Or perhaps Sweden was fortunate that its neighbors were able to defeat Hitler.–Editor

Radley Balko is a freelance writer living in Arlington, Virginia. He writes for, and Tech Central Station, and the

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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