Social Democracy and Alternatives to Capitalism in Sweden and Britain, 1969-83

The conventional narrative on neoliberalism tends to suggest that the neoliberal turn since the 1980s was a natural, if not inevitable, adjustment to the realities of the globalized economy and the changing class structure due to deindustrialization. Based on a comparative analysis of labor politics in Sweden and Britain, I suggest instead that it was rather an outcome of the political contestations in the 1970s, when the previous Fordist regime of accumulation was thrown into deep crisis, opening up a systemic question on the mode of production. By the 1970s, the structural power of the workers had been strengthened by full employment conditions and the welfare state under the postwar Keynesian regime of political economy, and wage workers formed the majority of the whole population; these factors created the conditions for militant labor mobilizations and challenges to the relations of domination that form the basis of capitalism itself. It was the political defeat of the left alternative that opened a way for the neoliberal solution to the crisis, based on stimulation of growth and production by enhancing profitability of private capital.

The Swedish labor movement was the strongest in the advanced capitalist world, measured in terms of union density, as well as electoral success and membership of the Social Democrats. While the postwar Social Democrats in government were steadfastly committed to reforms within capitalism, Swedish labor was radicalized in the 1970s by militant strikes from below, securing substantial gains on industrial democracy and codetermination. The process of radicalization culminated in the “Wage-Earner Funds” proposed by the union confederation LO in 1976, which would mandate annual transfer of a portion of corporate profits to unions, leading to gradual socialization of much of the economy. The WEF offered a concrete institutional basis for a socialist alternative amidst the contradictions of Keynesianism, by dissociating productive activity from private capital accumulation, hence posing an institutional challenge to the fundamental basis of capitalist hegemony. The defeat of the WEF, due to the capitalist offensive, insufficient mobilizations and the obstruction by the Social Democratic party leadership, was decisive in neoliberalization of Sweden after 1982.

While British labor was institutionally much weaker than their Swedish counterparts, they developed greater levels of labor militancy and grassroots mobilizations than in Sweden. The level of strikes in Britain in the 1970s was more than ten times higher, and the shop stewards were also much more active in Britain. While British labor had the capacity to challenge capital accumulation to a significant degree, and the shop stewards led the movement for industrial demoracy such as the Lucas Aerospace plan, the failure of many years of militancy to give rise to a new political paradigm and a structural program of transformation opened a way for the intensely neoliberal alternative promoted by Thatcher. The comparative study of Sweden and Britain demonstrates both common patterns of the rise and fall of radical labor politics as well as the distinctive ways in which it occurred, shedding a light on the origins of neoliberalism.