This is the story of how a group of powerful individuals recently carried out a coup d’état in Sweden, and how most politicians and Swedes didn’t even notice it until it was too late.
Let’s start from the beginning:
In the 1930s, the economic crisis following the 1929 stock market crash led to a depression and growing unemployment. The Swedish Krona had previously been tied to the gold standard, a monetary system where the currency unit is linked to a specific amount of gold. This system aimed to stabilize the value of money and maintain stable exchange rates between countries on the gold standard. It also restricted the influence of less scrupulous politicians on fiscal policy, as a fixed measure of currency value limited the ability to pursue inflationary policies to promote state interests at the expense of citizens.
During these years, the so-called macroeconomic development in the global economy was successful. There was relatively high growth, price stability, and low interest rates, while the global financial market managed large capital flows without destabilizing speculation against fixed exchange rates. Economist John Maynard Keynes developed a theory that suggested the government could stimulate the economy in hard times by, for example, employing people in the public sector. A stable social balance can only be achieved if unemployment is reduced to a manageable level, and wage differences between high and low incomes are minimized, according to Keynes.
The economic implication of such a policy is that lower income groups would spend their wage increases, thus stimulating economic growth. Budget deficits were acceptable as long as employment remained high. When the economy turned upward, it could quickly recover, as most people were employed. These ideas had already begun to flourish in Sweden within the so-called ”Stockholm School” with figures like Gunnar Myrdal, Bertil Ohlin, and Dag Hammarskjöld, advocating for a more active fiscal policy. They suggested that government expenses and public works could be financed through borrowing during bad times, known as countercyclical fiscal policy.
This relatively fair and solidarity-based system was adopted by several countries, and Sweden was the country that implemented it most successfully. Some right-wing forces had questioned and attempted to fight the system, but in Sweden, it was applied with great success and had its heyday in the 1970s and 1980s. Unemployment was minimal, class divisions were small, and the economy was relatively stable. There were challenges, of course; shipbuilding and the steel industry were in crisis, and inflation was rising, but compared to other countries, Sweden was a very good place to live, and the world had a positive view of us.
If the 1960s and 1970s were dominated by leftist propaganda, the 1980s and 1990s would become the heyday of right-wing propaganda. As early as 1970, the newly appointed Director of Information for the Confederation of Swedish Enterprise (SAF), Sture Eskilsson, one of the pioneers of neoliberalism in Sweden, had begun to plan the transformation of the Swedish system and its replacement with neoliberal reforms. In 1971, he wrote a somewhat legendary memorandum in which he explained that an important factor in how the business sector would face the country’s leftward shift was to take control of the ”primary debate,” which takes place in small groups of influential opinion leaders.
However, the time was not ripe, as Sweden was functioning well, Swedes were happy with the system, and even right-wing politicians of the time did not want to promote unemployment as a cure for inflation.
Nonetheless, the neoliberals received a boost from the oil crisis that hit the world in the 1970s and the fact that international neoliberal figure Milton Friedman, Pinochet’s advisor, emerged as a star with his theories on ”unemployment” and everyone’s greed as something natural. To the extent that Assar Lindbäck and a few others at the central bank came up with the ”brilliant” idea to award him the ”Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel,” better known as the Nobel Prize in Economics.
Now, the neoliberal hawks could triumphantly argue that it was a scientific fact that unemployment was good, benefiting only the state and business. In 1976, Curt Nicolin became chairman of SAF, and now the Swedish Employers Association had a man at the helm who was determined to steer the neoliberal flagship to its destination. From now on, public opinion was the primary goal of SAF.
They had learned from the strategies of the leftist movement, and now they did not intend to leave anything to chance in the battle to dismantle the detested welfare system and replace it with Friedman-style neoliberalism. The message was clear: The problem with Sweden was the idea of the welfare state. The public sector was outdated and costly, and the Swedish people just wanted higher salaries and were constantly taking sick leave. It was argued that the crises that had forced a new policy were a result of the state coddling the spoiled Swedish population.
Those who wanted to give more influence and power to ordinary workers were demonized and portrayed as mad communists who wanted to establish a Soviet society. A large part of the leftist movement lived in a kind of confused romantic notion that the Soviet or Maoist systems were actually GOOD, while they were just a variant of the slavery that was more explicit and repugnant than the capitalist wage slavery that existed then and still exists today.
The manipulation was successful, and the 1980s were a shining triumph for SAF, which, through think tanks, study circles in the workplace, and a massive public relations campaign in the press, radio, and TV, brainwashed Swedes with corporate propaganda. With rhetoric as bold as it was dishonest, they managed to hypnotize and paralyze both political opponents, trade unions, and the Swedish people.
Just over 50 years earlier, Keynes had summarized it very well with the following quote:
”The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.” (1)
During the 1980s, secret discussions were held at the central bank’s office. Several economists at the central bank and then Finance Minister Kjell-Olof Feldt were impressed by neoliberal ideas, as was the newly appointed Governor of the central bank, Bengt Dennis. The problem was that Gunnar Sträng was on the central bank’s board, and he realized the dangers of credit deregulation that the neoliberals desired. They bided their time, and when Sträng retired, Feldt appointed another friend of neoliberal ideas, Erik Åsbrink, as his successor.
In November 1985, they took action. Without any debate or discussion in either the parliament or the government, they decided to deregulate the credit market, contrary to what Swedish democracy and the model stood for. The neoliberal coup meant that banks could lend unlimited amounts of money without the central bank doing anything about it. Previously, the central bank could raise the policy rate, but now it was impossible because Sweden had a fixed exchange rate.
The so-called November Revolution had begun, and soon Sweden would be shaken to its foundations.
(1) John Maynard Keynes, “The General Theory of Employment, Interest and Money,” Stellar Classics, 2016, (sidan 197)
The Swedish Coup d’état – Part 1