The Collapse of the "Swedish Model"

MOTTO: There will be increased competition between countries due to internationalization. But it won’t be the country with the lowest tax rates that wins. It will be the countries wich have the most efficient use of the resources that win.

Knut Rexed

Sweden has held a special place in the academic literature and in the popular imagination for two separate reasons: first, it has often been viewed as the archetypical example of socio-corporatism; and, second, it is even more widely known as the country with the most expansive (and expensive) welfare state in the world.
The Swedish model (which comprises corporatist decision-making institutions, solidaristic wage policies and perhaps even the ‘politics of compromise’) may well now be dead. But the ambition and the political support for a largely egalitarian polity with a very large welfare state (and the taxes to support it) live on quite healthily in Sweden today. The Swedish model as a decision-making system was an historically bounded institutional setup. It did, however, enable the construction of a kind of social welfare state that now has its own political force. In short, though the model may be dead, its legacy is alive and well.
Sweden clearly faces important and difficult political and economic challenges. As in all advanced democracies, the ageing of the population will mean that an increasing share of its workers will be recipients of social benefits instead of contributors. Potentially more troubling is the possibility that the growing ethnic heterogeneity of this nation will one day undermine the traditional ‘nordic’ Swede’s willingness to pay taxes for social programmes that may increasingly go to racial and ethnic minorities. At this point, however, we see little direct evidence of this problem erupting in Sweden to anything like the same extent seen in several other European countries. The sky is not falling in in Sweden, at least not yet.

References:
1. Jason Coronel – Foundations, Decline and Future Prospects of the Swedish Welfare Model: From the 1950’s to the 1990’s and Beyond, DePaul University, 2002 (link)
2. Torben Iversen – The Choises for Scandinavian Social-Democracy in Comparative Perspective, Oxford Review of Economic Policy, vol 14, no.1, 1998 (PDF)
3. Kimberly Earles - The Gendered Effects of the Reregulation of the Swedish Welfare State, Issue #36, Vol 18, No. 2, 2004 (link)
4. Christopher S. Allen – Social Democracy and Capital Investment: A Democratic Left Option in Western Europe?, Department of International Affairs, School of Public and International Affairs, University of Georgia, 2oo4 (PDF)
5. Sven Steinmo – Bucking the Trend? The Welfare State and the Global Economy: The Swedish Case Up Close, New Political Economy, Vol. 8, No. 1, 2003, pp. 31-48 (PDF)