Nordic social democracy is back. This weekend saw victory for the Swedish centre-left securing a combined 43.7 per cent of the vote against 39.3 per cent for the centre-right bloc. The left’s win occurred against the backdrop of resurgent Swedish growth of 2.5 per cent per annum, among the best in the G7 economies, with strong employment performance that ought to have improved the incumbent centre-right government’s re-election chances.
Friedrich Reinfeld’s liberal conservative coalition pursued an aggressive tax-cutting agenda while undertaking a radical restructuring of the Swedish public sector, keeping the left out of government for much of the last decade.
So does the Social Democrats’ victory mark the beginning of a decisive European-wide centre-left renaissance? In one sense, the result merely confirms the structural fragmentation of the Swedish political system: the social democratic party achieved among its lowest vote shares for more than a century. Moreover, the anti-immigration Swedish Democrats significantly increased their support to 12.9 per cent, highlighting that populist pressures are now afflicting even the historically stable Nordic model.
Nonetheless, there are certainly important lessons for the British Labour party, which has increasingly looked to Sweden as a model of how to combine economic efficiency with social justice. The Labour leader, Ed Miliband, apparently admires Sweden so much his aides once feared he might seek asylum there.
The first lesson for British Labour is that the Swedish Social Democrats displayed iron discipline on the public finances: as the social democratic Finance Spokesperson, Magdalena Andersson, insists, the party that cares most about Sweden’s public services has to show it can control the public purse. More borrowing means higher net interest payments, denuding the public sector of long-term investment. The Social Democrats proposed to raise taxes in order to reduce the structural deficit, which was only 1.1 per cent of national income in 2013-14.
This was essential to protect the future funding of public services. As Andersson said in a recent newspaper interview, ‘Our path is to increase taxes right now. In the future we don’t see a need for further tax cuts, but rather for more investment in the public sector’. The centre-left is a trusted custodian of the Swedish state with a historical reputation for fiscal rectitude.
A further lesson is that the Social Democrats were astute in not opposing every public service reform proposed by Reinfeld’s government. They were admirably strategic, identifying precisely which battles to fight, recognising the ongoing imperative of restructuring in an ageing society with rising cost pressures.
Acknowledging that the Swedish public sector had to adapt to a rapidly changing society forging new models of delivery, the Swedish centre-left broadly accepted the case for greater competition where appropriate.
However, the Social Democrats were assiduous in highlighting where reforms were palpably undermining equity and efficiency, notably profit-making schools that led to polarisation and falling standards in urban areas, and care homes where hedge-fund owners were squeezing out quality and neglecting patients. Swedish social democracy firmly embraced diversity of provision breaking with the monolithic centralised state, but without conceding the argument about the fundamental importance of the public interest – the principle that public provision should serve citizens, not promote the interests of either bureaucratic states or privatised markets.
Finally, the Swedish Social Democrats were victorious as they forged an agenda combining the politics of dynamic production with the politics of fair distribution: wealth creation and social equality are treated not as opposites, but as two sides of the same coin. The Swedish left not only stood for a fairer society underpinned by a strong welfare state. It explicitly recognised that public goods have to be paid for through sustained economic growth driven by high-value production in a service-led, knowledge-driven economy. Decent ‘cradle to grave’ public services, most importantly universal early years’ provision, increase long-term employment rates, especially among women with children.
Getting more skilled people into work further enhances productivity and economic growth.
The Social Democratic leader, Stefan Lofven, insisted during the campaign: “I talk about jobs, jobs every hour, every day.”
Swedish social democracy recognises that the basis of collective action must always be dynamic wealth creation. Centre-left parties elsewhere in Europe, particularly Britain, should heed these lessons, imbibing the strategic play-book that has once again returned the Swedish Social Democrats to government.
Patrick Diamond is lecturer in Public Policy at Queen Mary, University of London, and former adviser to Tony Blair and Gordon Brown