By Sally Low
The famous Swedish model died on September 15. Along with all things left of centre, it has been, say many commentators, swept into the dustbin of history by wise voters: stifled by high taxes and too many bureaucratic rules, they supposedly cast their ballots for free enterprise and the market economy.
In fact, the Social Democrats themselves started killing off the model just as soon as economic conditions demanded it. Sweden's general elections marked, not the sudden execution, but the end of the slow death of the model.
Its demise was not a symptom of the "end of communism" but of the illness of Western capitalism. Sweden's economic prosperity grew out of the arms trade to both sides in the second world war and has relied on a strong export market ever since. Now the permanent trade war between leading industrialised countries has squeezed its high-cost export economy.
The Social Democrats, lead by Ingvar Carlsson, received 38.2% of the vote, 5% less than in 1988. Other losers were the Greens, who with 3.4% received less than the minimum required for parliamentary representation, the Left Party (formerly the Communist Party) down 1.3% to 4.5% and the Liberals (9.2%) and Centre Party (8.6%), both of which lost about 3%.
Carl Bildt's Moderate (conservative) Party won 22.1%. Two other right-wing parties, the Christian Democrats and New Democracy, with 7.2% and 6.8% respectively, entered parliament for the first time.
New Democracy, formed in February by businessmen Count Ian Wachtmeister and Bert Karlsson, ran on a populist platform that combined calls for lower alcohol prices, legalisation of pubs and abolition of traffic wardens with anti-refugee racism and far right economic rhetoric.
Bildt hopes for a coalition with the Liberals, Centre Party and Christian Democrats, but this is by no means certain. He may have to form a minority government dependent on support from New Democracy. However, Bengt Westerberg, leader of the Moderates' closest ally, the Liberal Party, has said he would refuse to participate in such a government.
The groundwork for Bildt's policies of privatisation, cuts in social welfare and conservative foreign policy has already been laid. "We set the agenda for Swedish politics in the 1980s", he boasted just after the election.
Sweden has suffered high inflation, a worsening current account deficit, declining industrial production and falling capital investment, especially in manufacturing. Throughout the '80s, and particularly over the last three years, public spending was cut and wage restraint imposed. Unemployment has been allowed to rise from almost nothing to 3.1% and is expected to reach 4% next year. Last October's crisis package cut government spending by A$3 billion. As well as cuts to public employment spending, sickness benefits and child-care, it allowed for partial privatisation of the state sector and watered down plans to phase out nuclear power by the year 2010. The government dropped its previous opposition to EC membership and in July formally applied to join. Over the last year, regressive tax changes were introduced.
SAF (Svenska Arbetsgivareforeningen), the country's employer organisation, responded that these measures were not enough. It wants to privatise all state-owned manufacturers and dismantle much of the state welfare system.
Social Democracy's concessions had not been enough to satisfy the employers, for whom their social contract with government and unions had become less attractive. On the other hand, they had alienated many of the party's traditional supporters. During the election campaign they could neither present a left alternative to the Moderates' program, nor, for fear of losing further support, could they run on their recent record in office.