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Sweden, Success, and the Myths of Social Democracy

The left, in looking to justify the unjustifiable, seek to find a model to idolise, and seek to find a success story to take credit for. The success story that those on the left often use is Sweden. To them, the success of Sweden in GDP, happiness, HDI, wages, and unemployment is down to its apparent system of “social democracy”, and to some, down to its “socialist” style economic system. But upon closer analysis, you can observe a few facts which show a view diametrically opposite to this idolisation. Among other things, you can see that Sweden’s current wealth is not down to some socialist system, quite the opposite; it is instead down to its long history of laissez-faire capitalism. You can see that Sweden, although bolstered as a wealthy social democratic utopia, isn’t really that wealthy at all. And you can see that most people, looking in more detail at what laws and taxes they would be compelled to live with, wouldn’t want to live here at all.

Much of the growth in the Swedish economy, in fact the most rapid growth in its history, occurred between 1850 and 1950. In this time period, incomes grew eight fold, infant mortality fell from 15 to 2 percent, and life expectancy rose by 28 years. During this period, its GDP per capita growth was the highest in the world. It is impossible to regard this as anything less than a remarkable transformation from a poor, agrarian nation into, what was at the time, one of the world’s richest countries. But those on the left, mostly outside of Sweden itself, claim that this advance was due to the success of the Swedish Social Democratic Party, and its model of social democracy. But the statistics show something different. In fact, during that time period, up to and including 1950, Sweden’s taxes and public sector were much lower and smaller than the rest of Europe and even the United States. Sweden in other words, up to 1950, was more capitalist than the United States and even more capitalist than Manchester liberal, nineteenth century Great Britain. Only beyond 1950 did two things start to happen. First, its public sector, taxes, and redistribution grew massively. Second, its proportion of OECD GDP per capita fell, and the successes of other economic factors grew more stagnant than their pre 1950 statistical counterparts.

In reality, this shows that Sweden is not rich because of its social democracy. It is not rich because of its redistributive, high tax, high welfare economy. It is rich because it opened itself up to free markets, free trade, and because government stayed out of the way allowing innovation and economic growth to run their course.

But since the 1950s, Sweden has remained a relatively prosperous and rich nation. In spite of popular belief, this too is certainly not for reasons of social democracy. Sweden today remains prosperous not because it is attached to the big government “tax and spend” progressivism Bernie Sanders ascribes to it, but because it remains one of the most economically free countries in the world. In 23rd place, the Index of Economic Freedom gives Sweden the second highest ranking of economic freedom. In fact, all of the Scandinavian nations, seeing a similar level of prosperity, rank in the top 30 nations for economic freedom (the absence of government interference in the economy). These nations are not planned economies, they are scarcely even mixed economies; Sweden and Scandinavia as a whole are market economies, as was clarified by the former Prime Minister of Denmark in his eagerness to deflect claims that Scandinavia was a collection of “socialist” systems.

But even if we assume that modern day Sweden is a social democratic utopia, it is successful not for that reason; any success it may have achieved has been built off of a century of free market capitalism, and its respective benefits, and built in a country which has not engaged in war since the nineteenth century. The free market allows for innovation, it allows for people to pursue self-interest and by doing so, allows them to assist the wider society unintentionally. Sweden is the prime example of where free markets work, not of where the economics of the left has apparently brought success.

However, it is undeniable to say that Sweden is not currently a social democratic state. It is. The question is, would you really want to live there? Some say yes, it has one of the largest welfare states in the world, one that will cover you in all scenarios and give you free money at the simple click of your fingers. But like all welfare states, it comes at a cost. That cost is tax and bureaucracy. Estimates of the Swedish tax burden vary, depending on how the great mass of stealth taxes and indirect taxes are calculated. These estimates tend to range from around 47 to 70 percent of all income earned by the average worker; that is up to 70 percent being taken by the state, and spent by the state on whatever it sees fit. Of course, this pointless loop of taking taxpayers’ money and then spending that same money on those same taxpayers adds an extra unnecessary cost in the form of bureaucracy. But beyond this, the existence of such high tax rates shows the implicit complacency and ignorance of Scandinavian governments, governments that assume they know how to spend the money better than the individual they are spending the money on. They take the traditional belief of the technocrat; that a bureaucrat at a desk in Stockholm knows how to spend the money of a poor worker in the suburbs of Malmo better than the worker himself does. To them, the state knows better what you should sell, what you should buy, at what price it should be traded, how much should be traded, and how much you should earn, than the firms or individuals doing the trading. While true in some scenarios, most people will accept that in most scenarios, the people actually engaging in the transaction know more about the transaction. This Swedish social democracy is, in other words, not only anti-freedom, but inefficient, bureaucratic, and technocratic. If Sweden wishes to maintain its status as one of the richest, healthiest, most innovative, most enterprise-friendly, and most free countries in the world, it ought to look beyond the economic system it today ascribes itself to, and instead look to its past successes for inspiration.

And I would ask readers whether or not they would be happy living in a country where 70 percent of their income does not remain in their pocket, and a country where they are then expected to pay for the over-inflated cost of living forced upon them by over-bearing regulation and corporate taxation. Yes, Sweden may have high wages, but when most of that wage is taken by the state, and the cost of buying things is much higher, higher wages do little to compensate. Who would want to live in a state with lower incomes and higher prices? In reality, very few people.

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