WHY DID THE SWEDISH MODEL FAIL ?
this can requires several posts
first topic :
"full employment and price stability were
conflicting goals "
"Total demand, exercised through fiscal and monetary measures, should be high
but not high enough to ensure the full use of all productive resources
and all skills in each branch and in each region"
". Beveridge's definition of full
employment "
permanntly more jobs than those to fill them
was, we LO economists argued, at the same time a good
definition of inflation."
"To avoid inflation. total demand must fall below the level where
practically all labour dan be absorbed. 'Islands of unemployment' should
be eliminated, not by increasing general demand but by selected and
targeted labour market policy measures such as retraining, mobility
-
promoting allowances, wage subsidies for disabled workers and public
work for older and immobile labour. From the very beginning, active
labour market policy was a central component of the non-inflationary full
. ~ employment proposal which was presented and intensively debated at the
1951 LO Convention"
"The stabilization dilemma is important because full employment, the
goal with the highest priority for labour, must be reconciled with the need
of price stability. In the words of Gunnar Myrdal, inflation is a deadly
threat to socialism; and Gosta Rehn, one of the architects of the LO model,
coined the slogan that socialists must 'hate inflation"
"the development of the Swedish economy in the 1970s and 1980s
verified these warnings:
the failure of the stabilization policy has been a decisive reason for the
shrinking popular support for the social democrats, for the enfeeblement
of the unions and for the continuous decay of the Swedish Model as a whole "