Deregulation and privatisation, free trade, low taxes, labour-market flexibility and low public spending - these are the painful but essential preconditions for national success in the high-tech, globalised world, right? Wrong. Such notions may hold much of the world in thrall (and have largely paralysed thought on the European left), but there is one country which has proved that it is perfectly possible to have economic success without throwing away social cohesion: Sweden.
But hold on, weren't we told 20 years ago that the Swedish model was dead, that the engine which, in the mid-20th century, created one of the most affluent societies and the most effective welfare states in the world had come off the rails? Did it not burst its boilers when confronted by the old obstacles of wage inflation, budget and trade deficits and an uncompetitive exchange rate?
Ask the OECD, the UN, the World Economic Forum or the Economist Intelligence Unit, all of which have confirmed in the past year Sweden's status as one of the most successful economies in the world. Reports of the model's demise were premature, for the country has once again demonstrated its ability to reshape itself, harnessing external forces of change to modernise - without abandoning its commitment to equality, liberty and solidarity.
So successful is modern Sweden, in fact, that it stands as a provocation to the neoliberals. It boasts surpluses on its current account, trade balance and public spending programmes. Unemployment is low and employment high, while productivity is among the highest in the industrialised world. It attracts foreign inward investment. Its manufacturing sector and financial services are open to overseas competition. It embraces new technologies and pours more public funding into research and innovation than almost any other country.
At the same time, environmental standards are high and greenhouse-gas emissions low. Sweden has one of the most generous foreign aid budgets and an enlightened attitude to refugees. Income distribution is more equitable than almost anywhere else and women have greater equality. Swedish education is among the best in the world and the workforce is skilled and adaptable.
This reflects in part the extraordinary dominance of social democracy. The Social Democrats have ruled for 64 of the past 73 years, always with a commitment to what a postwar prime minister called the "strong society". This means, for example, nationwide childcare, substantial pension provision and generous social insurance. And it doesn't come cheap: Sweden has relatively high income tax.
The key to modern Sweden's success, however, has been the remarkable triangular relationship between the state, powerful trade unions committed to modernisation, and a number of global corporations that practise social responsibility while still competing in open markets. There is consensus about resisting the advance of market principles into every facet of life, and about coping with modernisation through strong intermediate institutions such as trade unions, professional associations, pressure groups and companies. The state leads in the use of information technology, stimulates new markets and fosters social responsibility.
Wanting popular support for their policies, the Social Democrats believe neither in authoritarian populism nor the cult of personality, but favour rational discussion and empirical investigation. This gives reform deeper roots.
It would be naive to suggest this could be imported in its entirety into the UK, but Sweden's performance does offer us important lessons, notably by showing how a democratic state can encourage a wider public-interest ethic and carry through necessary change by consent.
Another lesson for the European left lies in the Swedish commitment to freedom. This doesn't mean freeing people merely to gratify material wants and appetites; it is a freedom that balances rights and responsibilities while affirming the genuine liberation of men and women of all classes, races and creeds from the rapacious power of a deregulated market economy.
As the Social Democrats like to assert: "We need each other. We live our lives in the here and now together with others, caught up in the midst of change. We will all be the richer if all of us are allowed to participate and nobody is left out. We will all be stronger if there is security for everybody and not only for a few. Together we will achieve much more than we do on our own."
It is a language rarely heard on the British left today, but we cannot dismiss it as impractical, dewy-eyed idealism. As the Swedes have demonstrated, it works.
Robert Taylor's Sweden's New Social Democratic Model is published by Compass, the democratic left pressure group
