The Swedish Model: What, why and whereto?

Lars Niklasson, Associate ProfessorPolitical Science

Linköping University, Sweden

Collective bargaining since 1938 Welfare for work (”Arbetslinjen”) since the

1950s (?) A welfare state since the 1970s (?)

A ”high tax equilibrium”: high taxes and high quality (?)

”Good government” generates trust in government?

Reforms since the 1990s A new ”supermodel” (The Economist,

February 2013)

What is the Swedish Model?

The roots: from the Vikings to the present days ---1809-1932-1968-1995

The effects: quality of life and competitive advantage? (Better than the alternatives?)

The logic: self-supporting trust (”equilibrium”) (Only in Sweden?)

Operations: central/local, fragmented/coordinated

Whereto? Europeanization, globalization

Topics of the course

After completion of the course, the student should…

…be able to show a fundamental knowledge of the origins and structure of the Swedish government and the Swedish social system

…have the capacity to deal with the many myths concerning Sweden and Swedish society

The ambition of the course

Introduction to Statebuilding Lars Niklasson Swedish history to 1600 Sofia Gustafsson Swedish history 1600-1800 Henrik Ågren Swedish history 1800-2000 Björn Ivarsson Lilieblad Good government from 1850 Lars Niklasson The early politics of the WS Elin Wihlborg Seminar on the literature Seminar on individual papers

1: The roots of the Swedish Model

Introduction to politics Lars Niklasson Education and training Lars Niklasson Governance & privatization Bo Persson Legitimacy & efficiency Lars Niklasson Drivers of change Elin Wihlborg Seminar on the literature Seminar on individual papers

2: The Swedish Welfare System

Active participation at the seminars Questions on the literature will be provided

Submit and defend a short individual paper 1,000-1,500 words A topic related to the course A question and a short analysis Only few extra sources (use the literature) Collaboration is encouraged High grades for clarity and creativity

Course requirements

A history compendium Articles by Bo Rothstein et al

Quality of Government Institute, Gothenburg Morel, Palier & Palme 2012: Towards a Social

Investment Welfare State? Ideas, Policies and Challenges, Bristol: The Policy Press

Articles from Oxford Handbook on Swedish Politics (forthcoming)

Articles on higher education policy

The literature

States are different Nordic, Anglo-Saxon, German, French, Asian etc. Parliaments, governments, bureaucracies etc. Comparison helps us understand and see causalitys

The historical process helps explain present variety What was before states? Why have they dominated from 1648? How were patterns formed?

1. Introduction to Statebuilding

Estates (the nobility) vs absolutist kings Strong peasants or towns (Not West/East) A military state vs separation ”Corruption” until 1870s vs 1730s

The legal systems, university education Gradual shift from conservatism to corporatism vs radical

break and strong liberalism (by the farmers) S: Protectionism, administrative corp., social corp. (statism) D: Radical break 1848-49, farmers and towns, little

corporatism More private providers in the Danish WS, less paternalism

Sweden and Denmark:Different paths and outcomes

What are ”western” and ”eastern” patterns? How do Sweden and Denmark fit these patterns? Sweden’s bureaucracy was more corrupt for a longer

time than Denmark’s; How? Why? What were the important steps in Sweden’s ”road to

mass politics”? How did it differ from Denmark’s? How did the popular movements differ? Can we see differences in the welfare states? (1993)

(Why is Sweden more similar to Denmark now? A new path?)

Knudsen & Rothstein 1993:State-building in Scandinavia

Lecture 2: Swedish history to 1600 Lecture 3: Swedish history 1600-1800 Lecture 4: Swedish history 1800-2000 Based on the compendium Excursion to western Östergötland

Swedish history

The puzzle: What causes what? A. Economic development, industrialization B. ”Good government” without corruption C. Welfare policies

Rothstein et al: the quality of the government is the key Corruption is a barrier to welfare and development (Co-evolution with early industrialization?)

How can you go from corruption to non-corruption? Corruption is a stable equilibrium Now: one of the least corrupt countries in the world

Lessons applicable to Russia, Africa etc

5. The roots of good government

The French ambassador 1771: Two serious problems, love for democracy and total corruption A patrimonial, nepotistic state A blurred line between public office and private interest

Heckscher: Marshy (försumpad) administration Hiring not based on merit Offices were sold to finance retirement Hold several offices and hire others to do the job Fees, housing and grain instead of salary Bribery was a crime only for judges

Sweden was a thirld world country

How to stop taking bribes? More control presumes a benevolent principal

How to control state leaders? Democratic elections, accountability, presumes…

A social trap, a suboptimal equilibrium (”collective action theory of corruption”), explains persistence ”Big bang” as a way out: impossible? An endogenous way out? (Ostrom 1990)

How can we explain the transformation?

Supply of a solution, Comitment, Monitoring A cooperation game (as overfishing etc) A high payoff from cooperation ”Another world is possible” New ideas: Liberalism Exogenous factors?

Ostrom’s solution

Appeals Court cases on malfeasance peaked twice, i.e. there was increased attention to the problem A new High Court in 1789, by the absolutist king but

with a long-term positive impact A need to save money after the wars 1808-09, 1814 A new political situation after the collapse of the

government 1809. A new constitution and a new king A threat to national survival, becoming a small state

Corruption was mainly in the rural administration

Data shows the transformation

The separation of public and private money: punishment for taking private ”loans” 1823

Several initiatives to outlaw promotion based on fees (pension system introduced in the 1870s)

A new tax system and the introduction of salaries A Weberian perspective: an impartial bureaucracy

was needed to strengten the legitimacy of the public sector (not divinity, heritage, tradition etc) The bureaucracy as a machine (hierarchy) to handle

routine cases in governments (and companies)

Debates in the Parliament (the Diet with four estates)

Enlightenment liberalism: meritocracy, impartiality, professionalism, accountability Britain, France, Prussia, Bavaria

(Schiller/Beethoven…) Stronger from 1830 due to a liberal press

and more liberals in the Parliament/Diet (industrialists)

Demand for a more representative parliament and a government that respected the constitution

Where did the ideas come from?

From feudal loyalty (back) to Roman legal traditions

Need for education and good universities More rational government: Railway Board 1862,

Telegraph Board 1865, Road and Waterway Commission 1841

Feudal guilds abolished 1864: free trade and commerce

Industrialization started around 1870

Bureaucracy and the economy

What are the key elements in a theory inspired by Ostrom to explain the abolishment of corruption?

What are the key evidence that Sweden confirms to Ostrom’s explanation?

What external (exogenous) factors can have helped in the transformation of Sweden?

Teorell & Rothstein 2012: Getting to Sweden: Malfeasance and

bureaucratic reforms 1720-1850

What are the key elements of a bureaucracy according to Max Weber?

How did the Swedish civil service differ from the Weberian model?

What are the benefits of a bureaucratic government?

Is the bureaucratic model still appropriate for governments? How can it be improved?

Rothstein 1998: State Building and Capitalism: The Rise of the Swedish Bureaucracy

Popular protest and organized civil society Free trade vs. protectionism Democracy for men and women Saltsjöbaden 1938: corporatism The dominance of the labor movement 1932-76 ATP as a key event and major conflict ”The solidaristic pay policy” and the booming

1960s 1968 and the 1970s: triumph or hubris?

6. The politics of the early welfare state

Benefits for all (universal vs. selective) Compare: Bismarckian systems, company-based

welfare Everyone pays Creates loyalty, if it works well The cynical interpretation: a way to buy votes Does it create social capital or is SC a prerequisite? Only possible in homogenous societies? A gradual development, small steps, pragmatism

What is a universal welfare state?

What are universal welfare states? What are its electoral and political effects? What are the alternative explanations for a

relation between big governments and social capital?

What evidence points to the welfare state as an outcome of social capital?

What evidence points to the welfare state as a producer of social capital?

Rothstein 2008b: Is the universal welfare state a

cause or an effect of social capital?

What is the Power Resource Theory? What are the problems with PRT? What is ”bringing the state back in”? What are the key ideas in the Quality of

Government (QoG) theory? What does the empirical evidence show? Are

there any problems with the evidence?

Rothstein, Samanni & Teorell 2012: Explaining the welfare state:

Power resources vs the quality of government

Introduction to politics Lars Niklasson Education and training Lars Niklasson Governance & privatization Bo Persson Legitimacy & efficiency Lars Niklasson Drivers of change Elin Wihlborg Seminar on the literature Seminar on individual papers

The Swedish Model, part 2

1976-82-91-94: Challenges and decentralization 1995: Membership of the European Union Late 90s: Cutbacks to save the welfare state

Too generous to work? 2006: Back to ”work for welfare” (Arbetslinjen) = Reforms to save the welfare state? Influence from 1997: The European Social Model Whereto? A Social Investment State?

7. Introduction to the politics of the welfare state

1. Social investments in skills and modern needs/risks (work/family life, change of careers etc.) = an Economist’s perspective on welfare: utility rather than

social rights, ”productive social policy” = Collective responsibility Alva and Gunnar Myrdal: families and women

(Wanted selective policies) 2. Keynes: the macro economy, more traditional/male 3. Neoliberals: rigidities, market distortions, gov’t failure Three paradigms (table 1.1) SIWS as a hybrid

A new type of welfare state?(Morel, Palier & Palme, intro)

Critique: Less support for passive unemployment with the focus on

”activation” Less support to stay outside the labor market Bad implementation of policies against exclusion in the

Lisbon strategy An instrumental view on women and children (as labor force)

Divergent views (Nordic vs Anglo-Liberal): Esping-Andersen on positive effects of social rights, aim for

equality, combination of investment and protection Giddens on moral hazard and duties, beneficial inequalities,

support as springboard, from passive to active measures

A new type of welfare state, continued

1. Keynesianism after WWII (the Depression) From charity to right, taming capitalism, class compromise,

embedded liberalism (Bretton Woods) 2. Neoliberalism after the 70s (Stagflation)

Monetarism (balanced budgets, low inflation, stable currency), flexibility, gov’t as problem, selective policies

OECD Jobs Study 1994: high unemployment in Europe, EMU to limit politics, social pacts/not cutbacks

3. Social investment since 90s (the Third Way) OECD 1996, EU 1997, Esping-Andersen et al 2002. A balance.

The welfare state can be positive for competitiveness. Structural (not cyclical) unemployment needs capacitating services

Waves of transformation(Hemerijk 2012)

Beyond neoliberalism: critics on the left and right Investment (not spending) = future profits Responsibility mix: market, family, community, state Universal coverage Fostering prevention, rights and duties Governance through networks: communities (?) (Sweden: Learning accounts, citizen choice?) Neoliberalism failed: high spending & problems in

Europe, experiments in Asia, revised ideas 1997 (World Bank)

Social investment(Jenson 2012)

Demographic transition: problem and opportunity Ageing population effect in 2030-40 National variety, National Transfer Accounts Transfers over the life cycle: independence, retirement Life expectancy, fertility rates: dependency rates Work longer, have more babies: welfare support Pensions: savings or pay-as-you-go Parental leave Consequences for jobs: more services, less goods

Ageing populations(Lindh 2012)

More barriers to European social policy due to aftershocks of the crisis, especially public finance Direct effects: unemployment, austerity EU divergence Globalisation winners and losers Demography Migration

The state remains big but changes its role (NPM) An opportunity for a European Social Model?

Post-crisis policy(Diamond & Liddle 2012)

Social policies to support climate policy Market-based climate policies: emissions trading Income equality leads to better climate (?)

Public ethos, economic instruments regressive Sectoral impact: less agriculture, energy-intensive

industries, more transport Need for industrial policy, employment policy, dialogue,

public investments (-- a role for markets, banks?) The new economics of sustainable development (Stern) Long-term investments in public goods: education etc.

Climate policy(Sommestad 2012)

The Lisbon Strategy (2000): wide and with a goal: ”The most competitive region in the world”

”Europe 2020” (2010): narrower, with priorities Smart, sustainable, inclusive growth (+targets)

Continuity with the focused Lisbon Strategy 2005-10 Still weak implementation (OMC), change of majority, SGP

European Employment Strategy: quality jobs? Flexicurity? Less competitiveness with less cohesion?

No understanding of the learning economy (or EMU) A transnational welfare state needed = European identity

From Lisbon to Europe 2020(Lundvall & Lorenz 2012)

A paradigm in search of a new economic model Modernising ideas Capacitating policies: education, family, employment Weak implementation:

Increase in expenditure, not investments Protection and promotion: the Nordics (NL, UK)

Activation = third way = ”too close to neoliberalism” The analysis: disincentives, lack of flexibility The solution: working poor. (Conservation?) Skills are

needed.

A new economic model(Morel, Palier & Palme, conclusion)

With high skill jobs, more difficult to employ migrants

New national accounts? Investments vs consumption

Political triggers: competition for the female vote

Against neoliberalism (– a new coalition of socialists and conservatives? mercantilism, competitiveness)

Germany not a viable alternative (?) Gradual change may lead to paradigmatic

change

A new economic model, contd.

1. What are the differences between Giddens and Esping-Andersen on Social Investment policies?

2. What are the three waves reactions against? 3. What are the differences between investments and

savings? 10. In what sense is demography an opportunity? 11. Is the crisis an opportunity for a European Social Model? 12. What is the link between social and climate policies? 13. What is missing in Europe 2020? 14. What kind of coalition(-s) would support a European

Social Model based on the idea of social investments?

Morel, Palier & Palme 2012: Towards a social investment welfare state? Ideas,

policies and challenges

Two parts: Primary, secondary, tertiary education Skills development and training for adults

Structures, actors, processes, achievements Challenges European comparisons (Morel, Palier & Palme

2012)

8. Case study: Education and training

Pre-school, primary school 1-9, secondary 10-12

National curricula, framework legislation and control

Local and private implementation A strong focus on results since 2006: more

uniform A debate on segregation, vocational

programs

Education policy

Xx universities (PhD-granting) Yy colleges (limited PhD-granting) Several private, two independent Also some vocational tertiary education (YH)

Student loans to study in Sweden and abroad Quasi-market since 1993:

Formula funding, deregulation, quality control Fees for non-EES students (except exchange)

What drives innovation in higher education? Competition and/or top-down inititives?

Higher education

Active labor market policy, ALMP = training programs A national policy: people need to move to the jobs Formerly regional and corporatist, now centralized Performance targets lead to creaming Exclusion: difficult to help clients with many needs Local collaboration or competition? Training programs by local and regional gov’ts too ”One door in”, joined-up government bottom-up:

Infotek = guidance, Lärcentrum = co-location

Labor market policy: training

The policies overlap in adult education Are the systems integrated? Do they promote equality (of

opportunity/outcomes)? Do they support individual development? Do they support economic growth? Next lecture on governance and privatization

Consistent? Efficient?

More integrated public services? More adaptable services? Not good at solving complex problems, or

these problems are now more visible? Fighting exclusion Support for economic growth (better skills

development? A strong business climate?) Accountability?

Good for the citizens?

Compensatory policies: unemployment, old age Investment policies: ALMP, family, education Spending convergence over time Spending in cash or in kind (services) Expansion of old age insurance and family benefits ALMP: more activation, less spending Four clusters (low/high) Figure 4.3-4.6 Increased spending but less on education Convergence on Scandinavia or the UK?

OECD comparisons(Nikolai 2012)

The European Employment Strategy, EES 1997 After EMU, to develop skills, part of the Lisbon Strategy Synergies of economic, labor market and social policies Targets the continental and Mediterranean countries

Soft policy, OMC: increased employment due to EES? Policy frame: problem, goal, benchmarks, instruments Contradicts the economic policy frame (EMU) Flexi+curity, employability, a role for social partners EES has become a reference point, but little change

Employment policies(de la Porte & Jacobsson 2012)

The Nordic countries: big fit Less quality in activation, structural issues not reformed

The English-speaking countries: fit UK: Domestically driven reforms, Ireland: ESF

The Continental countries: misfit More activation, ”Modèle danois”, Hartz reforms

The Mediterranean countries: misfit More flexibility, less security (opposite of social investment)

The East European countries: low spending Activation and flexibility, weak social partners

Employment policies, contd

Female employment, gender equality, child care Pioneers: France, Norway, Sweden Path-shifters: Germany, Netherlands, UK Slow-movers: Austria, Italy, Spain

Political forces: new ideas? Barriers? Electoral strategies (Sweden and Norway) The representation of women in politics General conservatism in the slow-moving countries

Work-family policies(Morgan 2012)

Ambiguous concept. Four (six) types (table 7.1): Investment in human capital? (or incentives to work?) Pro-market orientation? (or temporary jobs?)

Spending profiles in six countries (figure 7.1) General decline 1995-2005, except the UK Reduction of ”job creation”, increase of ”employment

assistance”, decline of ”training” Spending levels: Nordic, Continental, UK

From education (60s), via occupation (70s) to re-entry (90s). Laggards become leaders: Denmark, UK.

Active labor market policy(Bonoli 2012)

Investment policies are related to knowledge-inten-sive services and discretionary learning employment Problems: overeducation? Inhibiting business

investment? Relevant adjustment of content? But: markets aren’t perfect, education is

undersupplied (?), a need to recruit internationally Data: (1) 1972-99, (2) cross-sectional correlations

USA at top and bottom Investments lead to employment and quality jobs

More and better jobs?(Nelson & Stephens 2012)

A need for organizational learning and networking Discretionary learning = more autonomy than in ”lean

production” (But: standardized processes!) North vs south High skill jobs less exposed to foreign competition Flexicurity makes it easy for firms to upgrade and makes

individuals less risk-averse Vocational training and informal learning Equality, openness and trust Learning by doing and by interaction with customers etc. Social investments on an international scale for migrants?

The globalizing learning economy(Lundvall & Lorenz 2012)

4. What spending patterns can we see over time? 5. Which groups of countries have increased the

policies of activation? 6. What are the political drivers and barriers for

and against equal rights for women? 7. How did the laggards become leaders in ALMP? 8. How can social investments lead to better jobs? 9. What are the pros and cons of flexicurity?

Morel, Palier & Palme 2012: Towards a social investment welfare state?

1. What is the difference between ”market by design” and ”market by interaction”?

2. In what sense did the regulation of the universities converge on a common model?

3. In what sense did Sweden and the UK move in opposite directions?

Niklasson 1996: ”Quasi-markets in higher education – A

comparative analysis”

The operations ”behind the scenes” National, regional and local programs Collaboration in networks Private providers Agencies for control and evaluation

9. Multi-level governance, networking and privatization

Marks & Hooghe (1995): MLG 1 and 2 Traditional relationship (MLG 1):

Framework laws and control by the national gov’t Funding and operations by regional and local

governments Separated roles (schools, health care)

New relation (MLG 2) Actors at different levels overlap Shared clients (”exclusion”) Similar instruments (training, subsidies for firms)

Multi-level governance

MLG 2 = collaboration = networking in projects Often informal, social skills are needed Different from Weberian bureaucracy (hierarchy) Leadership through vision and persuasion Common goals, common strategies Territorial integration means greater variety, less

control from the center (performance targets?) Functional integration means specialization

(silos), works best when problems are NOT shared

Networking

”Phase 3”: the furthest away from regular jobs Unemployed, on sick-leave or on general welfare

Agencies and local gov’ts collaborate in projects Often co-funded by the EU (ESF, ERDF)

Returning clients count as new clients in the statistics = targets are met, problems remain unsolved Gaming, creaming etc.

Local initiatives to collaborate on a holistic view

An example: Fas 3

Public funding, private provision: Client choice: schools, health care Procurement: garbage collection for a local gov’t

Private funding, public provision: Fees Pro: competition, greater variety (?), empowerment Con: segregation, bancruptcy, difficult for planners Quality/costs? Innovativeness? Legal rights? Cities vs rural areas

Privatization

Many agencies for control and evaluation More performance targets by the central

gov’t The center regains control?

More central control

Niklasson: Challenges and reforms Consolidation 1970 to provide welfare services Decentralization after 1976 for local

adjustments Regionalization and collaboration 90s (EU?)

weak center Now centralization? Cutbacks top-down =

fairness? Montin: Overview of local and regional

governments Feltenius: Multi-level governance (Lidström: International comparisons)

Oxford handbook on Swedish Politics (2014): Regional and local gov’ts

Niklasson: What are the main waves of reform? Why did they take this shape?

Montin: How much autonomy do local governments in Sweden have? Is Sweden a federal country? Why/why not?

Feltenius: How has multi-level governance changed over time?

Lidström: What are the unique characteristics of local government in the Nordic/Scandinavian countries?

Oxford handbook on Swedish Politics (2014): Regional and local gov’ts

Economists ask for efficiency – what is it? Productivity: do things efficently Effectiveness: do the right things

More central control? More power to clients? Competition? Incentives? (Individual services vs solving complex problems)

Sociologists ask for legitimacy Organize services to maximize trust? Public ethos to avoid corruption

10. Legitimacy and efficiency

Complex problems are adressed in many pieces Exclusion, economic growth etc. Collaboration is a pragmatic solution Reorganization, mergers (Norway) Vouchers, learning accounts etc. (supported by

Parliament but never implemented) Efficiency-losses by decentralization – or efficiency

gains? Difficult to evaluate, redirect or terminate programs

Efficiency-losses due to organization

Voters elect the parliament, which selects the government, which controls agency heads, who control staff, who run programs to influence citizens

Who controls whom? Only in one direction? Principals can’t control agents Information asymmetries, lack of effort Cooperation in a situation of Prisoners’

Dilemma The long-term win-win solution

Efficiency-lossesin the chain of command

Swedish higher education 1993: a new kind of game? The Minister of Education vs the Rector (vice

chancellor): trust or attempt to control/shirking?

Minister-Rector-Dean-Dept chair-Teacher-Student

Late 80s: a need for transparency and long-term perspectives (lobbying, detailed regulation)

Framework legislation, funding formula (input and output), quality control, decentralization, competition

Game-like regulation: An attempt to promote cooperation

The policies were introduced at a time of expansion, i.e. everyone was a winner overall

A later minister reclaimed surpluses, eroded trust

Funding eroded with more detailed regulation, more performance targets, more quality control

More central control, less innovation at the bottom?

Or: teachers and students live by traditional norms?

Did it work?

Legitimacy of input vs output Adjustment to particular situations by professionals ”The black hole of democracy”: too many details

Five models: theoretical legitimacy? Practice? Motive for choice? Legal-bureaucratic: impartial = predictable but rigid Professional: evidence-based, very engaged in each client Corporatist: decisions by affected groups Pseudo-market: competition = balance of power Lottery: can be better than the alternatives (Local politicians: hostages?)

What are the effects of collaboration and privatization?

Legitimacy as a guiding principle

How can the ”game” played by the Minister of Education and each Rector/Vice-Chancellor help us understand the regulation of the universities (and other agencies)?

What are the limitations of the model?

Niklasson 1996: ”Game-like regulation of the universities – will the new regulatory frame-work for higher

education in Sweden work?”

What are the pros and cons of each model, in terms of making the public trust the public sector?

What type of empirical evidence is provided in the article?

Rothstein 2008a: ”Political legitimacy and the welfare state: Five

basic models”

How can we understand the ongoing politics? ”The three new institutionalisms”

Rationality, legitimacy and paths Actors

Politicians, bureaucrats, epistemic communities Situations

Many interrelated games Ideas

11. The drivers of change: Welfare policies in new institutional framing

What is an ”institution” in Rational Choice Institutionallism?

What is it in Historical Institutionalism? What is it in Sociological Institutionalism? To what extent are the three models

compatible? Contradictory?

Hall & Taylor 1996: ”Political science and the three new institutionalisms”

In what way did civil servants influence the outcomes of the bargaining during the crisis of 1992-3?

Dahlström 2009: ”The bureaucratic politics of welfare state crisis:

Sweden in the 1990s”

Why are Active Labour Market Policy and ”the Social investment welfare state” popular in the EU?

Is it the best set of ideas? How strong are competing ideas? Is it a useful set of ideas for the EU? Is it evidence of a new path? Or continuity? How important are ”the rules of the game”?

(Morel, Palier & Palme 2012)

How can we explain the shifts from centralization to decentralization and back?

How much can be explained by ”necessity”? Is Sweden following trends? Give some

examples Who are the conflicting actors in the article? What other conflicts may there be, which

can explain the outcomes?

(Niklasson 2014)

What? A high-tax equilibrium with a capacity to

reform itself Why? A workable model, based on traditions Whereto? A northern European model?

Conclusions about the Swedish Model?