In this series, Dr. Carson examines the connection between ideology and the revolutions of our time and traces the impact on several major countries and the spread of the ideas and practices around the world.
To the north, Sweden extends into the Arctic circle. In summer, that portion of the country is in the land of the midnight sun. In winter, there is darkness at noon. Even as far south as Stockholm the sun does not ascend very high in the midst of winter. Such light as it gives for a short time is more like twilight than daylight. Indeed, it is appropriate to think of Sweden as a Twilight Zone.
Physically, Sweden lies very near to the twilight zone between Soviet Communism and the Europe that yet enjoys considerable freedom. Its northern boundary is not far from that of the Soviet Union. Its southern boundary is across the Baltic Sea from East Germany. Socially, Sweden is in the twilight zone between tradition and the compulsion of socialism. Economically, Sweden is in the twilight zone between private enterprise and the controlled economy. Internationally, Sweden has long been neutral, a twilight zone inhabited by nations which refuse to take sides. Gradualism, or evolutionary socialism, is a twilight zone, and Sweden has for a good many years been the reputed showpiece of that ideology.
Why Sweden?
There are several good reasons for selecting Sweden as one of the exemplars of evolutionary socialism. The most obvious reason is in some ways the least convincing: namely, Sweden’s reputation as a socialist country. This, it turns out, is largely press a gentry. There should be no doubt that the idea that has the world in its grip has a firm grasp on Sweden; but Sweden is not socialist by conventional definitions, an important point to which we will return. Nevertheless, Sweden has had some forty years under the political leadership of Social Democrats, a party that is professedly socialist and has its roots in Marxism. Nowhere is the welfare state aspect of the idea more firmly imbedded.
Another reason for selecting Sweden is the place that tradition still formally holds in the country. Evolutionary socialism is everywhere national socialism (which is to say that it occurs within the framework of nations and partakes of the character of each particular nation), but even so there are two distinct political settings in which it has taken place: monarchies and republics. Sweden is a monarchy. As such, it belongs to a configuration of nations, largely on the periphery of Europe, such as Denmark, Norway, the Netherlands, and England, which have thus far survived the thrust to republicanism which had its onset in Europe with the French Revolution. At any rate, Sweden has a monarch, an established church, and an hereditary nobility.
Such things are, of course, anathema to socialists. Every good socialist is ipso facto a republican, an anti-monarchist, an opponent of the religious establishment, and despises all signs of inequality—in theory, anyway. In practice, it has not worked quite that way. Evolutionary socialism has made some of its deepest inroads in lands with hereditary monarchs. Gradualism has proceeded most smoothly and with the least disturbance in these lands.
There is a reason for this. In republics, men are theoretically equal before the law, and they do not relish or readily accept the intrusions in their affairs that come with gradualism. To put it another way, republicans are generally anti-authoritarian, and socialists are bent on using the political authority to accomplish their ends.
By contrast, monarchs are the very symbols of authoritarianism. People living under them have been conditioned to accept the imposition of authority by those who rule.
Socialists may not be comfortable bedfellows with kings, but the exercise of arbitrary power is made easier for them when they have the royal authority behind them. Tradition, too, accommodates change, even those changes made by evolutionary socialism which destroy tradition at its roots. For these reasons, it is important to examine gradualism against a monarchical background.
There is yet another reason for selecting Sweden. Sweden is an industrialized country with a relatively high standard of living. As such things go, it is a prosperous country. When choosing examples, it is better to take from what are reckoned to be the best than to take the worst.
Evolutionary Socialism
It is a considerable transition to shift from examining revolutionary socialism to evolutionary socialism. The existing differences should not be ignored. Revolutionary socialism is brutal, tyrannical, destructive, and dictatorial. Its most conspicuous fruits are totalitarianism and total war. The "law school" of revolutionary socialism is the concentration camp, as has been pointed out. Citizens in such countries are only by some degrees removed from slavery. Gradualism, in a country such as Sweden, is clearly an improvement over such conditions. It is, however, only a shift from darkness into the twilight.
Revolutionary and evolutionary socialists are brothers under the skin. To put it in the terms of this work, communists, Nazis, and gradualists are ideological brothers. All of them derive their spring from the same central idea. That is, they aim to concert all energies toward common goals, to root out and destroy all cultural supports to the individual’s pursuit of his own self-interest, and use government power to impose their programs. They differ as to methods, not as to goals.
There are two major differences between revolutionary and evolutionary socialism, along with subsidiary ones. One major difference is that evolutionary socialists are pragmatic rather than dogmatic. That is, they are pragmatic as to method though they may be equally dogmatic with revolutionary socialists as to goals. When they are being pragmatic, they may, for example, prefer the control of industry over ownership. In like manner, they may abandon one sort of approach in favor of another without any sense of betraying their goals. One way to say it is that they do not know exactly how socialism will be achieved, or when, but they believe that they are headed in the right direction so long as more and more control over affairs is being collectivized.
Democratic Methods
Another major difference between gradualists and revolutionaries is that gradualists propose to achieve their ends democratically. They advocate and generally hold free elections, advance near universal suffrage, and permit a variety of candidates to enter the races for office. There is, however, a fundamental contradiction in their position. The implicit theory on which they operate holds that by the process of voting and election the government becomes the voice and arm of society. Society is, so to speak, politicized and empowered. (Rousseau’s theory of the "general will" is the best known and probably most thorough exposition of this notion. It is set forth in The Social Contract.)
In fact, however, modern democracies operate by the rule of majorities and pluralities. Even if we assume that the output from voting machines could somehow be the will of society—a notion which puts considerable strain on the imagination—society is divided by democratic elections. Nor can it be otherwise if there are to be choices of candidates and positions.
Whatever the virtues of majoritarian rule, unity is not one of them. Yet it is essential to the idea that has the world in its grip that government should act to concert all efforts for the common good. If society is divided as to what constitutes the common good, this can be but a forcing of some people’s notions of the common good on others. Hitler’s plebiscites and Soviet Communism’s one-party slates are much more nearly consistent with the idea. It is fundamentally inconsistent to suppose that real choices can be made politically, that society can be politicized, and that there can be general accord on actions taken. If society could be politicized it would be polarized by every election.
Gradualists attempt to paper over this contradiction. Their programs are what "the people" want, they are given to saying. Theirs are "social reforms," they declare, implying somehow that they arise from society. Too, they attempt to narrow the gap between parties by having them all support similar ideas and policies. To the extent that they can get agreement that whatever is at issue is a legitimate concern of government, they tend to succeed in this. To the extent that they are able to keep the issue in the frame of how much and when, rather than whether, they tend to succeed also. These tactics tend both to obscure the real divisions among a people and enable gradualists to advance toward their goal step by step.
Gradualists generally preserve the procedural protections of civil liberties. Thus far, this is a critical difference between evolutionary and revolutionary socialism. Procedures tend only to be a facade for revolutionaries, something to be ignored if they get in the way of the desired line of action. Procedural protections have generally enabled citizens in lands where gradualism holds sway to enjoy a considerable variety of civil liberties. But procedures are just that—established ways for government to act—not anything substantial.
Utilitarian Justification of Liberties
There is no place in socialist ideology for liberties to be natural rights; their only theoretical justification is utilitarian. Utility is a slippery concept at best, and where the common good is arbiter of utility, utility is whatever those who have the power to determine it say it is. There are two other supports to civil liberty: tradition (which includes constitutions) and private property. Since gradualists are devoted to eroding away tradition and private property, the more they succeed the more precarious will be civil liberties.
Be all that as it may, there are important differences between revolutionary and evolutionary socialism. The differences become blurred in many countries of what is called the Third World. But in the constitutional democracies of Western Europe and America the differences are thus far clear and distinct.
The tyranny of communism is on a different scale and order from anything yet occurring in these lands. Gradualists operate within the framework of laws, however attenuated these may become, to achieve their ends. They do not usually crush groups; rather, they empower them within a framework of controls. It is the individual, then, who usually feels the weight of their force. He is isolated if he does not belong to some group. He is powerless, or nearly so, if he cannot conjure up some popular support. If he does not yield voluntarily to the weight of numbers, he will most likely be punished by the state. The individual’s last line of defense is his property, but that is increasingly circumscribed as gradualism advances.
So it is in Sweden and in other lands where gradualism holds sway. Even so, Sweden is not a socialist country by conventional definition. By the usual definition, socialism prevails when the government owns the means of production and distribution of goods. This is hardly the case in Sweden. Most of the productive enterprises in Sweden are privately owned. A London newspaper said, "Sweden has proportionately more private enterprise than any other country in west Europe."’ The usual figures cited run something like this: about 4 per cent of the enterprises are state owned; 4 percent cooperatively owned; and the remainder privately owned. The state is deeply involved in iron mining, the railways, the airlines, atomic energy, making of alcoholic beverages, and such like. Most of the rest of manufacturing is privately owned.2 It is most important to understand this when we come to discuss the sources of Swedish prosperity.
Astute Publicity
The notion that Sweden is socialist, in the conventional sense, is made up partly of assumption and partly of astute publicity. Until very recently, the Social Democrats have headed the governments in Sweden since the 1930′s. The Social Democratic Party originated as a Marxist party, shifted toward gradualism, but continued to claim to be socialist. The long years of rule gave the impression, which Social Democrats found more advantage to claiming than denying, that Sweden was socialist.
Many Americans got their notions about Sweden from a little book by Marquis Childs. It is called Sweden: The Middle Way, was first published in 1936, and has appeared in several editions and a good many printings. Childs hailed Sweden as the exemplar of the middle way between communism and fascism. The "wave of the future" which Childs thought he beheld in Sweden was collectivism largely by way of cooperatives. However, Sweden did not develop along the lines that Childs foresaw in the mid-1930′s. Cooperatives never gained much of a foothold in manufacturing and related enterprises, though they were somewhat more successful in merchandising. However mistaken his prophecy, Childs helped to spread the notion of a socialist Sweden.
If the Social Democrats had been bent on nationalizing Swedish industry, which some no doubt were, they never gained the kind of majorities that would have given them a free hand. Usually, they had only a plurality and had to govern along with some other party. They could ordinarily command only a slight majority in the Riksdag for much less controversial undertakings than the wholesale nationalizing of industries. But it is by no means clear that they would have gone that route had their support been much more substantial.
In any case, Swedish prosperity can hardly be attributed to socialism as it is usually defined. Moreover, it is greatly to be doubted that socialism, however it may be defined or extended in meaning, plays any significant role in that prosperity. There are other and more cogent reasons which provide a sufficient explanation for that.
Sweden has some important natural resources and advantages of location. Perhaps the most impressive natural resource is the huge reserve of some of the finest iron ore in the world. Much of Sweden is forested, and lumbering, paper, and pulp are major industries. Streams in the north with their origins in the mountains provide the basis for numerous hydroelectric dams. Although Sweden lies north of the United States in latitude the climate is much milder than might be supposed, particularly in the south, owing to warming by the Gulf Stream. Hence, farming flourishes in southern Sweden. For the same reason, ports are generally open year round on the Baltic. Shipping and shipbuilding are major industries in Sweden.
A Trading Nation
What Sweden lacks, above all, are deposits of coal, oil, and gas. These must be imported, and Swedish industry and prosperity depend upon foreign trade. Indeed, Sweden is one of the major trading nations in the world. Fine Swedish steel has long enjoyed an international reputation, and Swedes compete on the world market in some of the most advanced products of modern technology. It may well be that the Swedes are addicted to modernity as much as or more than any other people in the world.
Sweden has enjoyed and benefited from over 160 years of being at peace at home and abroad. The country has not gone to war since the end of the Napoleonic wars. The Swedes have been in our era if not the most peaceful people at least among the most neutral. Their energy and vitality have not been sapped by war, and their cities and countryside have not been destroyed by an invader. True, the Swedes maintain a considerable military establishment, and their troops have gone forth in recent times on call from the United Nations, but Sweden continues to enjoy the benefits of peace.
The Swedes have been a remarkably homogenous people ethnically and religiously. This may have contributed little to their prosperity in recent times, but it has probably made it much easier to remain at peace. Minorities, when they are very numerous, sometimes—of times—make for internal discord, and if they are recently from other lands they may well promote involvement in wars.
At any rate, the Swedes are very nearly separated from the mainland of continental Europe by the sea, joined by land only to Norway and Finland, and have not been troubled for a long while by invasions or propulsive migrations of other peoples. Until the twentieth century, the flow of Swedes was outward rather than of other peoples toward them. The Vikings pressed downward upon Europe in the Middle Ages, and many of them settled there. Even as late as the latter part of the nineteenth century, there was a massive Swedish migration to the United States. By contrast, other peoples have not been drawn to Sweden. Before the twentieth century, the people were generally poor, and the climate is such that only Eskimos, Finns, and some Norwegians would find it an improvement.
Religion and Other Factors
As to religion, most Swedes are technically Lutherans, as their forebears have been for centuries. There is only a scattering of Jews and Roman Catholics among them, and the "free" Protestant churches have drawn but a few into their fold. Motorcycle riders are more numerous than any of these minorities, are probably more influential, and are certainly more likely to disturb the peace.
Resources, location, peace, and other such conditions are but potentialities, however. What makes the difference is the use of resources, the taking advantage of location, and the following of productive peaceful pursuits. Location and relative weakness may have contributed to Sweden’s neutrality, but the peace achieved has been the result of a more positive concept than that. It has been the concept of a world drawn together in trade, in intellectual interchange, free movement of people, and living in mutual tolerance of one another. The Swedes appear to have grasped more clearly than most that their prosperity and well-being was dependent on a far-flung trade which worked best in times of peace.
More than anything else, it was the triumph of liberalism in nineteenth century Sweden which loosed the energies of the people who began to change the potentialities of their condition into the actuality of productivity and prosperity. The foundations of Swedish prosperity were laid in a series of developments which took place between 1750 and the third quarter of the nineteenth century.
Land Reforms
The first major development was the break-up of the medieval pattern of farming. This occurred by two related developments: the enclosure of land into consolidated holdings, and the acquiring of more and more land privately owned as small and medium-sized farms. Swedish tenants had customarily tended several small strips of land spread out over an estate. The consolidation of holdings began in the latter part of the eighteenth century and continued apace in the nineteenth century. As a result, there was considerable increase in agricultural production.
Another major development was the freeing of trade. Sweden was, in the Age of Mercantilism (seventeenth and eighteenth centuries most notably and disastrously), under the sway of mercantile practices. The Swedish government levied tariffs on exports and imports, granted monopolies, subsidized production, and restricted domestic trade. These restrictions may well have peaked just after the Napoleonic wars when hundreds of items were placed on a forbidden list. The results were disastrous.
By the 1820′s a counter trend was getting underway, and by 1860 trade was substantially free so far as the Swedes were concerned. Accompanying the establishment of free-trade was the freeing of enterprise generally from the fetters of mercantilism. Free trade is often thought of as an absence of or very low tariffs. This, however, is only its most obvious surface feature. What is more deeply involved is the opening of the way for whoever will to offer his custom in the market-place. At its outermost reaches, it is free enterprise.
When enterprise was substantially freed, there was a rapid growth in industrial and agricultural production. These developments are well described by a historian of Sweden:
Previously, most of Sweden’s iron had been exported, but during the last decades of the nineteenth century, a rising proportion of it was used to feed her own industries. . . . While factories and work shops were widely scattered, the town of Eskilstuna became the "Sheffield" of Sweden. And Norrköping became her Manchester for this and Boras . . . were the leading textile centers of the country. Expansion here was not so dramatic, but twice as much cotton was spun in 1900 as in 1870. In addition to these key enterprises, a host of other forms of manufacture either, like the chemical, electrical and cement industries, appeared for the first time, or were greatly expanded during the period.
. . . In 1860 farming methods were fundamentally little different from what they had been in the seventeenth century. The following decades, however, brought a great transformation. Iron ploughs and harrows began to be widely used, and harvesters and other mechanical devices were rapidly adopted. The use of chemical fertilizers and the improvement of seed by selection raised the productivity of land already under cultivation, while many marshes were drained and wasteland made fertile. . . . In dairying, the use of the mechanical cream separator, invented by the Swede Gustaf de Laval in 1878, greatly increased the output of butter, which again became one of Sweden’s major exports. . . 3
These were the conditions within which the Swedes became much more productive and relatively prosperous. No sooner, however, did they substantially increase their productivity than did the gleam of redistribution appear in the eyes of their politicians. The justification of both redistribution and control over production was found in socialist ideology. The Social Democrats, carriers of revisionist Marxism, have been the main proponents of this ideology in twentieth century Sweden, but they have been aided and abetted in their endeavors quite often by the members of other political parties. They have made great headway in putting many of these ideas into practice.
Welfare State Capitalism
Before getting into that, however, one point needs to be re-emphasized and a new one made. The point that needs to be re-emphasized is that most industry in Sweden has remained in private hands. Thus, private enterprise (not to be confused here with free enterprise) is the basic source of such prosperity as the Swedes enjoy. The new point is that the economic system which prevails in Sweden might best be described as Welfare State Capitalism.
Some little explanation of the phrase—Welfare State Capitalism—may be helpful. There are those who use the word "capitalism" in a laudatory sense, and they are apt to equate it with the free market and free enterprise. Socialists usually use the term invidiously. Even so, capitalism is a socialist concept; Karl Marx popularized it. Those who think to pre-empt the term and give it a favorable connotation might do well to reconsider.
"Ism" smacks of ideology; and ideology smacks of some scheme to use the power of government. However that may be, capitalism denotes a preference for or bias in favor of capital expenditure or investment. Socialists use the term to connote a system in which private capital and capitalists are accorded special privileges. The connotative uses of capitalism have entered into the rhetoric which those of all persuasions employ, and there is little likelihood that will change in the foreseeable future; but it is important here that the word be used with as much analytical precision as can be attained.
How Capital Originates
All peoples use capital, i.e., make capital investments. The savage who has an instrument to remove the husk of a coconut is a user of capital. The primitive who saved seed and used an implement to furrow the soil was a capitalist. Every economic system is, in this sense, capitalistic in that capital is employed to increase production. The only possible difference is in how the capital is provided. There are two basic ways of doing this. One is for individuals to save and invest voluntarily. The other is for the government to take the money from individuals—to confiscate it, that is—and for the investment decisions to be made by those who rule. When the first system prevails it is sometimes called private capitalism. When the second prevails it can be called state capitalism. Such a system is generally employed in the Soviet Union, for example.
Variations and combinations of these two basic systems are possible. The most common combination has been joint financing of projects by private investors and money raised in some fashion by government. Another variation is for government to promote saving and capital investment by tax policies. Sweden has used both these methods, but predominately it has provided tax advantages in order to foster capital formation and investment.
One way this is done is by the Investment Funds. These were first authorized by law in 1938, and the enactment has since been amended several times. "The current position is that by law, every company is permitted to set aside 40 per cent of its profits before tax in any year to an investment fund. There are, however, restrictions attached to this concession. Forty-six per cent of this money must be deposited interest free in a blocked account in the Central Bank of Sweden and can only be spent on authorisation either by the Crown or by the Labour Market Board for specific projects concerned with investment—the only exception is that after five years a company can spend up to 30 per cent of the money set aside without authority from the Board provided this is on a capital project."4 Since taxes on profits of corporations are high, on the average about 54 per cent when those of the central and regional governments are combined, there is considerable incentive to place money in the Investment Funds.
Investment Funds
The other major device for promoting investment is the depreciation policy of the government. All capital expenditure from the Investment Funds must be fully depreciated within twelve months of the outlay. All other capital expenditures must be depreciated fully within five years, either in equal installments or on a pre-arranged scale. The result: "There is pressure on the companies to maintain a steady stream of investment with a major installation at least every five years, both to obtain the depreciation tax allowance and to even after-tax profits."5
It would help in clarifying our thinking if the word capitalism were reserved for use to refer to those systems in which the compulsive power of the state is used to form capital and direct its investment or to instances of it. Why?
Because in a free economy there is no preference for or bias in favor of capital expenditure. Nor is it at all clear why there should be preference for capital expenditure over any other in public policy. It may appear that in view of all the benefits that accrue from capital a bias in favor of it might be in order. But appearances can be deceiving, and they are in this case. It happens that capital expenditure can be wasteful and counterproductive. No benefit would presumably result from expenditure to produce a product which no one wanted. Such expense would be a waste of scarce resources.
There will undoubtedly be instances of malinvestment in a free economy, for there is no certainty that any investment will pay off. But there is a sure way to achieve wasteful and counterproductive capital expenditure. It is to separate the ultimate investor from the responsibility and benefits of careful management as occurs in state capitalism, or to make capital expenditures profitable by tax breaks and depreciation allowances. (In a free economy, taxes would fall only on individuals, not on fictitious entities such as corporations and companies. Hence, there would be no occasion for depreciation allowances and some portion of the present crop of Certified Public Accountants.) It would be descriptive to refer to such systems as capitalism and capitalistic, and they could have whatever onus anyone wished to attach to them. They would describe a preference for or bias in favor of capital expenditure.
Identifying the Ideas
Since current usage is generally either rhetorical or propagandic, it is necessary to add qualifiers in order to make them as nearly as may be descriptive. The terms private capitalism and state capitalism may be reasonably precise. I here add the phrase, Welfare State Capitalism, by which I understand government policies, such as those in Sweden, aimed at promoting capital expenditure in support of the welfare state. A Swede put it this way, "The state keeps the cow fat in order to increase the amount of milk it can get from it." That is, of course, only a felicitously phrased half-truth. There is evidence that the "cow" is bloated rather than healthily fat in some industries, such as shipbuilding, for instance; and there are critical shortages, such as in housing, due to misallocation of funds. It is well to keep in mind, too, that Sweden’s tax policies are aimed not only at fueling the welfare state but also at bringing industry under centralized planning.
Even so, the main point here is that Sweden does not have socialism as that word is understood. The government may be gradually killing the goose that lays the golden eggs, but to date it has put maximum pressure on the goose to lay more eggs. So much has been told to make it clear that the sources of such prosperity as Sweden enjoys are in private industry.
Yet Sweden is deeply under the sway of the idea that has the world in its grip. And that idea can be identified with socialism usually. To understand how this can be, it is necessary to expand our understanding of socialism. The heart of socialist doctrine is the idea of purging the individual of his pursuit of self-interest. The main line of attack is on the inherited culture and tradition—on the family, the church, education, morality, and society itself. In place of these will come government power. That is what has been happening in Sweden.
On the face of it, tradition is honored and preserved in Sweden. This is largely an illusion. Sweden has a monarch, but he does not rule. He sits in at the formal cabinet meetings for the perfunctory presentation of matters that have already been decided, but he may only enliven proceedings by remarks, not by participating in the decisions. Sweden has an established church with beautiful buildings lavishly furnished, but few people attend except at Christmas and Easter. Sweden’s industry is largely privately owned, but the independence of investors has been eroded away. Sweden has an elected legislature, but the fount of decisions is usually the advice of experts. What remains of tradition has perhaps more importance than the restored hull of a medieval Viking ship which has been raised from the bottom of the sea to be put on display in one of the cities, but not much more. Tradition has been eviscerated in favor of gradualism.
The story of how this has taken place needs now to be told.
Next: 16. Sweden: The Paternal State.
—FOOTNOTES—
‘Quoted in Donald S. Connery, The Scandinavians (New York: Simon and Schuster, 1966), p. 66.
²Paul B. Austin, The Swedes: How They Live and Work (New York: Praeger, 1970), pp. 89-90.
3Stewart Oakley, A Short History of Sweden (New York: Praeger, 1966), pp. 208-09.
4H. G. Jones, Planning and Productivity in Sweden (Totowa, N.J.: Rowman and Littlefield, 1976), pp. 22-23.
5Ibid., p. 31.
Clarence Carson
Clarence Carson (1926-2003) was a historian who taught at Eaton College, Grove City College, and Hillsdale College. His primary publication venue was the Foundation for Economic Education. Among his many works is the six-volume A Basic History of the United States.