Library:Riding the Wave

Riding the Wave: Sweden's Integration into the Imperialist World System
Author	Torkil Lauesen
Publisher	Kersplebedeb Publishing
First published	2021
Type	Book
Source	https://annas-archive.li/md5/0e7e0ae20903230aa84c142a06344d2b
PDF	https://annas-archive.li/md5/827b991d49a65d4e2679d4eaf7400b17
Audiobook

Introduction

This book is about Sweden’s integration and role within global capitalism. It covers the period from 16th-century colonialism to the present day of transnational production chains. Sweden’s economic and political system cannot be understood without this long and global perspective. The development of global capitalism has significantly influenced the national contradictions that have come to define capitalism’s special “Swedish model.”

Globalization is not a new phenomenon. Capitalism has always been a world system. The breakthrough of industrial capitalism was closely linked to the Portuguese and Spanish looting of gold and silver from Latin America in the 16th century and Dutch, English, and French colonialism in the 17th and 18th centuries. The creation of the world system was at the same time a polarization of the world between a Northwest European core and the rest of the world, a colonial periphery. This process also shaped the birth and development of capitalism in Sweden. The inter-imperialist contradictions of the late 19th century and the first half of the 20th century, between England, France, the USA, and Germany, were of great importance to the economic and political development of Sweden. Up until the Second World War, Sweden was economically and politically tied to Germany. The German defeat in the Second World War, however, changed and broadened Sweden’s pattern of alliances in the direction of the USA and the rest of Europe. Simultaneous with the further development of the social democratic welfare state—the “people’s home” (folkhem)—Sweden expanded its global economic and political influence in the 1950s and 60s. In the mid-1970s, the neoliberal counteroffensive hit Sweden’s model welfare state hard, putting an end to 44 years of continuous social democratic rule. Outsourcing of industry, global finance, and migration flows have changed Swedish society. One cannot understand Sweden without an analysis of how national contradictions interact with capitalism’s principal global contradictions. This may sound familiar, obvious, and trivial. However, most studies of Sweden’s economy and politics start from a national perspective, with the global perspective merely presented as background information.

In this book, I will use examples from history, from early colonialism to the present day, to trace the development of “the Swedish model.” The “folkhem” is, according to the Swedish self-perception, a special progressive form of capitalism with social features. “Capitalism with a human face.” The Scandinavian capitalist welfare states are often regarded as semi-socialist societies, by both left-wing politicians in the United States—like Bernie Sanders—as well as politicians in many Third World countries. For the latter, the Scandinavian countries’ progressive image is bolstered by the fact that they were not significant colonial powers and, even moreso, because Sweden supported many Third World liberation struggles in the 1970s. Even on the more radical left, I have come across the view that the social democratic welfare state is a step towards socialism and that, “we can go with the Social Democrats halfway to our goal.” Such views are manifestations of a lack of a global perspective. The global perspective is not only important for analyzing the world; it is equally important for strategies to change the world. In order to develop effective anti-capitalist strategies, it is necessary to start from the global contradictions. First of all, because they have a decisive influence on the outcome of national contradictions, but even moreso because we, as socialists, must be internationalists, not only in words but also in deeds. We are not struggling for the specific benefit of the citizens of privileged nations like Sweden, but for the proletariat regardless of national or ethnic background. Finally, the global perspective is necessary because capitalism can only be defeated through a coordinated struggle. Internationalism is necessary if we want another, more equal and democratic, world order.

In what follows, I will describe how Sweden became part of the imperialist core—how it tried to be a significant European colonial power but was outmaneuvered by the great colonial powers. Instead, Sweden had to ride on the coattails of colonialism, especially that of Germany and Belgium. I describe the interaction between the breakthrough of industrial capitalism, the rise of social democracy, and the development of the Swedish welfare state, in the context of an increasingly globalized capitalism. Finally, I describe how neoliberalism has brought about economic change and altered the pattern of politics in Sweden, and provide an overview of the current economic and political situation.

Although the Scandinavian countries may seem more progressive than the leading imperialist powers, we will see that when you scratch the surface they are no different in their practice or ideology. For working-class people, they are certainly more comfortable than most countries, whether in the Global North or South—their exploits, however, are just as unscrupulous as those of the “hard-core” imperialist powers. While I focus on Sweden in the following pages, it is not because Norway or Denmark, my home country, are better or worse. It is because Sweden is the most important in economic terms; “the Swedish model” is the ideal type of capitalist welfare state and social democracy there is most advanced.

Louis Proyect’s 2015–2016 series about Sweden in his blog “The Unrepentant Marxist” served as an inspiration to write this book, as did many other sources. I attempt to take this material and show how it fits within an overarching process of imperialist polarization and shifting global contradictions. Of course, these conclusions are mine alone. I would like to thank everyone who has read drafts of this book and provided me with useful comments. In addition, I would like to thank Karl Kersplebedeb for assuming the task of editing the book, both in terms of language and content.

SWEDEN: NATIONAL AND HISTORICAL CONTEXT

Early colonialism and the slave trade

The rise of capitalism in Europe and colonialism are two inseparable phenomena. It was the conquest of the Americas and the looting of Africa and Asia that boosted the development of capitalism in Europe. The Spanish colonies in Latin America provided the silver and gold that Europe needed so desperately for its growing trade. The European kings, nobility, and Church were insatiable in their lust for luxury; following in their footsteps, the growing bourgeoisie and members of the state apparatus also became consumers of more and new kinds of goods. Gold and silver coins were the necessary medium for the growing trade. The limited amount of these two metals hampered the circulation of goods. That is why the thirst for gold and silver from the “New World” was so great. Precious metals were looted—or mined by slave labor—in Mexico and Peru and were then transported in huge quantities, mainly to Spain. From there, they spread throughout Europe and quenched the budding capitalism’s thirst for a means of exchange.^[1] Between 1500 and 1800, approximately 100 million kg of silver were transported from South America to Europe.^[2] The silver coins developed European manufacturing and paid for the import of goods from Asia—at the time, Europe had nothing of interest to Asia except gold and silver.

1. “The discovery of America was due to the thirst for gold which had previously driven the Portuguese to Africa, because the enormously extended European industry of the fourteenth and fifteenth centuries and the trade corresponding to it demanded more means of exchange than Germany, the great silver country from 1450 to 1550, could provide. The conquest of India by the Portuguese, Dutch and English between 1500 and 1800 had imports from India as its object—nobody dreamt of exporting anything there. And yet what a colossal reaction these discoveries and conquests, solely conditioned by the interests of trade, had upon industry: they first created the need for exports to these countries and developed large-scale industry.” Frederick Engels, “Letter to Schmidt, C. London, October 27, 1890.” In Marx and Engels Correspondence (Moscow: International Publishers, 1968).

2. Bill Warren, “Myths of Underdevelopment: Imperialism and Capitalist Industrialization,” New Left Review 81 (September–October, 1973): 41.

Slavery was expanded and systematized in the colonies in South America and the Caribbean. The Spaniards and Portuguese initially used Latin America’s Indigenous population as slaves in the mines and plantations. The Incan, Aztec, and Mayan peoples had developed societies that organized collective irrigation, production, and the distribution of food. The violent colonization broke down the structures of these Indigenous societies and famine ensued. In addition, Europeans brought epidemic diseases, such as smallpox, which killed millions of people. The colonization process brought the population to the brink of extinction in parts of South America, falling from an estimated 50 million in 1492 to 4 million in the late 1600s.^[3] Because of a lack of labor, the Spaniards and Portuguese began a slave hunt in Africa, transporting their prey to their colonies in America. This business was so lucrative that England, France, the Netherlands, and Denmark soon got involved. Approximately 15 million captive Africans were thus transported across the Atlantic between 1700 and 1850.

Sweden attempted to become a colonial power but was not very successful. Around 1650, Sweden established a number of forts in present-day Ghana on the West Coast of Africa, intending them to be a staging area for looting, slave-hunting, and trade. The Swedish merchants did not manage to undertake more than fifty slave transports, however, before the forts were conquered by Denmark in 1663. Sweden also established a trading colony on the southern tip of South Africa in 1649, but it was conquered by the Netherlands in 1663. In 1784, King Gustav III purchased the Caribbean island of Saint-Barthélemy from France, but he was cheated: the island was small, had no drinking water, poor quality soil, and few inhabitants—and so could not be used to produce the sought after products: sugar and tobacco. It did serve as a free port until the 1870s, however, generating a modest revenue. Subsequently, the island became less important and was sold back to France in 1878. Sweden also tried to establish colonies in India, but England and France prevented this.

As a curiosum, I will mention that Sweden attempted, under King Karl XII (1682–1718), to establish a colony on Madagascar in the Indian Ocean. The idea was that it should serve as a trade post and a pit stop for ships from the Swedish East Asian Company, on the important trade route between Europe and China. Madagascar was, at the time, an important base for pirates, mainly of Indian origin. In 1718, the pirates offered Karl XII the island of Sainte Marie near the coast and an area on the mainland in exchange for being protected by Sweden and “legalized” as Swedish citizens.

The pirates with their twenty-five ships and their fortune were to have the right to obtain land and settle in Sweden. Karl XII accepted the offer and a contract was drawn up; how- ever, the king died before he could sign it. His daughter and successor, Queen Ulrike Eleonora, equipped an expedition in 1721 to realize the plan, but a lack of funds left the ships stranded in Cadiz in Spain, and the project came apart.^[4]

In terms of acquiring colonies, Denmark was more successful than Sweden. It established 30 forts and trade posts along the West African coast. Between 1626 and 1825, Danish vessels carried approximately 100,000 captive Africans from West Africa to the Caribbean. Some of the slaves were sold in the Danish colonies in the Caribbean—St. Thomas (1672), St. John (1718), and St. Croix (1733)—where they mainly produced sugar and tobacco. The Danish East India Company also established trade posts in Tamil Nadu (Sri Lanka), in the Nicobar Islands, and in India in Tranquebar (1620) and Serampore (1755). In the North Atlantic, Greenland was recolonized by Denmark in 1721, joining Iceland and the Faroe Islands as part of the Danish kingdom. Denmark sold its pos- sessions in India to England in the mid-1800s, and the Danish West Indies—now called the Virgin Islands—to the United States for 25 million dollars in 1917. As Lenin commented:

'Who says that in our day there is no trade in human beings? There is quite a brisk trade. Denmark is selling to America for so many millions (not yet agreed upon) three islands, all populated, of course.'^[5]

Sweden did not manage to become a major slave trader, and yet the chains and bars on the Danish ships were made of Swedish iron. Sweden was the leading European iron exporter in the 17th century. Iron was involved in the colonial triangular trade between Africa, America, and Europe in several ways. It was used as a trading currency to buy slaves in Africa, for the production of chains and bars to keep the slaves locked up, and for tools for farming in the colonies. Denmark—and also England and Germany—bought large quantities of Swedish iron for these purposes.^[6] Besides iron, Sweden exported timber and salted herring to feed the slaves who labored on the Caribbean plantations, and imported sugar, tobacco, and cotton.^[7]

One possible reason for the lack of tenacity in Swedish attempts to acquire overseas colonies may be that there were prospects closer to home. In 1634, Peder Olofsson found a smooth and shiny black stone at Nasafjäll in the Arjeplog mountain region, in the north near the border with Norway. Upon closer examination, the stone was found to contain silver and lead. A “silver rush” broke out. Senator Karl Bonde expressed hopes that the discovery might solve Sweden’s economic troubles. “With God’s help, this will become the Swedish est Indies.” Swedish Chancellor Axel Oxenstierna added: “In Norrland we have an ‘India’ within our borders, if only we realize we should be taking advantage of it.”^[8] The northern part of today’s Sweden was at the time a very unpromising terrain, inhabited only by Sami and their herds of reindeer. National borders in the Scandinavian far north were not precisely established before 1700 and the Sami were to some extent an independent nation; therefore, the silver mining project was in fact a colonial venture.

The Sami were forcibly recruited to transport the silver ore to the south. However, it turned out that the ore was not as rich in silver as hoped, and production was abandoned after a few years. Still, the venture was the first industrial project in the region and as such signaled the beginning of the colonization of Sami territory, with the construction of roads and harbors to be used to service future iron and copper mines. At that point, the Sami were again used as cheap labor for the transport of ore to the harbors, from where it would be shipped further south in Sweden.

Sweden also colonized areas in the Baltic region in the 17th century. The country developed a strong militarized state machinery based on the landed aristocracy, which needed new territories to supplement its limited income from the lean farmlands in Sweden, which could barely sustain the peasantry.^[9] Finland was a Swedish province until 1808, when Russia conquered it during the Napoleonic Wars. Over the centuries, many Finns immigrated to Sweden, where they served as cheap labor, especially in the forestry and mining industries.

Imperialism without colonies

In the first part of the 19th century, before the breakthrough of industrial capitalism, mercantile capital was dominant. Throughout the 18th century, European and North American naval power had enabled their mercantile capital to acquire a dominant position in world trade. Trade in Europe and North America flourished because of cheap commodities based on the exploitation of slave labor in the colonies.

Meanwhile, in Denmark and Sweden, a mercantile bourgeoisie based in shipping was gaining power. In the latter part of the 18th century, big merchants dominated economic life in Copenhagen, Gothenburg, and Stockholm. At first, they participated in the various trading and colonial companies controlled by the absolute monarchy. Later, they established independent trading companies, which challenged the power of the monarchy. The Scandinavian mercantile bourgeoisie blossomed from around 1750, in part due to the many wars at the time between the competing nations of England, France, Germany, the Netherlands, and the United States. The Scandinavian countries managed to remain neutral in most of these conflicts, and their merchant fleet could therefore provide the warring countries and their colonies with transport.

Founded in 1731, the Swedish East India Company (Svenska Ostindiska Companiet) made 132 expeditions to Asia, mainly to Guangzhou (Canton) in China. Between 1739 and 1767, a total of 16,533 tons of Bohea tea were imported by the company.^[10] Cantonese tea was probably the fastest growing commodity in the 18th-century global economy. In England and Holland, drinking tea with lots of sugar became a part of everyday life, even for the lower classes, as early as the 1730s. The Swedish East India Company accounted for about 10–20 percent of European tea imports from 1730 to 1784. Together with the Danish Asiatic Company, the two enterprises accounted for a third of all Guangzhou’s trade in tea.^[11] Only 2–3 percent of the tea was consumed in Scandinavia, the rest being sold to independent dealers who smuggled it into Great Britain, the major tea-drinking nation in Europe, much to the chagrin of the mighty English East India Company.^[12]

Metals in the form of semi-finished or finished products constituted the bulk of the Swedish East India Company’s exports, predominantly bar iron at the beginning of the eighteenth century.^[13] However, it turns out that most, if not all, of the bar iron did not get all the way to China but only to Cádiz, in Spain, where it was sold to pay for chests of silver. Silver was practically the only thing the Swedes could sell in China: “the cargo of Spanish piasters was the sine qua non of the Company’s trade.”^[14] The lucrative tea imports came to an end in 1784 when the British parliament passed a law that reduced the sales duties on tea from 119 percent to 12.5 percent. As the British market for illegal teas more or less disappeared so did the profitability of the Swedish company.

The Scandinavian merchant fleets found other products and customers, however, and maintained a very strong position into the next century.^[15] As a result of the political union between Sweden and Norway in 1814, the administration of Norway’s merchant fleets ended up under the Ministry of Foreign Affairs in Stockholm. Between 1875 and 1905, the combined Swedish/Norwegian merchant fleets were the third or fourth most important in the world. The English merchant fleet was the largest, the American was number two, then came the Swedish/Norwegian fleet, which was the same size as the German but larger than the French, Dutch, and Italian fleets.^[16] Without a colonial territory of its own, Sweden had to set up a network of trade envoys in the service of this fleet. By the end of the 19th century, Sweden possessed more than one hundred consulates in different port cities around the globe.^[17] The Norwegian and Danish merchant fleets are still of great importance; for instance, the Danish A. P. Møller-Maersk Line is one of the largest container shipping companies in the world today.

Mercantile and industrial capital from all the imperialist powers of Europe and North America demanded access to the global market; however, it was not always necessary to exercise territorial control over colonies in order to make a profit. The main goal of capital was to integrate the resources and markets of the colonial territory into one’s own economic sphere. For a country like Sweden, whether this was possible depended on relations with the ruler of the colonial territory. Sweden could make special arrangements or, with luck, the colonial power might advocate free trade, as England did in the late 19th century.

In general, the Scandinavian countries did not have the necessary military power and administrative capacity to establish and operate their own colonies. They had to ride the wave of the great colonial powers in order to enjoy the benefits offered by imperialism.

There was no difference, however, between the Scandinavian countries and the great colonial powers regarding their attitude towards colonialism. European colonialism can be seen as a unified whole in which large and small countries played different roles. Some managed territories and opened up markets, others provided capital, built infrastructure, or transported goods to and from the colonies. The Scandinavian countries earned large sums by navigating in the wake of the major colonial powers. The Frederiksstaden district of Copenhagen is full of mansions built with the profits made from the trade in slaves and colonial goods.

From emigrants to settlers

There is another way in which Swedes played a significant role in colonialism: as settler-colonists. This began as early as 1638, when Sweden established “New Sweden,” financed by Swedish, Dutch, and German shareholders. New Sweden was located along the Delaware River, in present-day Pennsylvania, an area in which Swedish tobacco planters and fur traders had settled since 1610. New Sweden did not last long; it was conquered by the Netherlands in 1655 and became part of the New Holland colony. The Dutch governor Stuyvesant allowed the Swedish settlers to retain their land and continue as a “Swedish nation,” governed by their own legal system and with their own militia. All able-bodied adult male settlers were part of the militia, whose primary task was to keep the Indigenous people in check and to gain access to land and other natural resources. The semi-sovereign “Swedish nation” was maintained until 1681, when England conquered the area. Throughout the 18th century, Swedes continued to settle in New Jersey, Delaware, and Pennsylvania, though it was not until the 19th century that emigration from Sweden really took off. At which point, settlerism became more than just a strategy for a trading company to acquire goods—the new wave of emigration was partly a consequence of the poverty and distress that resulted from the rise of industrial capitalism in Europe, partly a result of the possibilities created by colonialism and the new means of transport, which enabled millions of Europeans to settle in the “New World.”

In the early 19th century, Europeans experienced few political restrictions on the movement of labor across national borders. Passports were rarely used and immigrants gained relatively easy access to new homelands. Approximately 70 million people emigrated from Europe throughout the 19th century. They were often “surplus” labor in the countryside who could not find work in the cities. Poverty, even famine as in Ireland, drove the emigrants across the globe: 36 million to the United States, 6.6 million to Canada, 5.7 million to Argentina, 5.6 million to Brazil, and others to Australia, New Zealand, Rhodesia, South Africa, and Algeria. A significant number of the emigrants settled—claimed land—often displacing and dispossessing the original population in bloody conflicts. Overall, the proportion of emigrants accounted for more than 17 percent of the 408 million people living in Europe in 1900. By acquiring land or work in the New World, emigrants helped to reduce “reserve army of labor” in their old homelands, thus securing the remaining workers a better starting point in the struggle for higher wages. Emigration was a safety valve alleviating social unrest in Europe. The businessman, politician, and later Prime Minister of the Cape Colony in South Africa, Cecil Rhodes, described the situation well:

I was in the East End of London (a working-class quarter) yesterday and attended a meeting of the unemployed. I listened to the wild speeches, which were just a cry for ‘bread! bread!’ and on my way home I wondered over the scene and I became more than ever convinced of the importance of imperialism. ... My cherished idea is a solution for the social problem, i.e., in order to save the 40,000,000 inhabitants of the United Kingdom from a bloody civil war, we colonial statesmen must acquire new lands to settle the surplus population, to provide new markets for the goods produced in the factories and mines. The Empire, as I have always said, is a bread and butter question. If you want to avoid civil war, you must become imperialists.^[18]

Throughout the 19th and early 20th centuries, 1.2 million people emigrated from Sweden—about 25 percent of the population at the time, a proportion which is surpassed only by Ireland. By comparison, only 300,000 emigrated from Denmark, corresponding to 10 percent of the population. Approximately one million Swedes settled in North America, the rest went to other destinations, including Denmark, referred to as “the poor person’s America” because the trip there was so much more affordable. Wages in Denmark were higher than in Sweden, in both agriculture and the growing industrial sector, and Swedish labor was sought after, considered diligent and cheap. Swedes found work in Danish quarries, railroad construction, shipyards, and especially in agriculture, which had prospered due to growing exports of grain, butter, and meat to the English market.^[19]

Sweden was a poor country in the early 19th century. The high standard of living and level of equality that would come later had no precedent in Swedish peasant society. Poverty in the Swedish countryside gave way to regular famines in the years 1867–69, when first cold weather and then drought made the crops fail.^[20] A simultaneous economic boom in the United States accelerated emigration. The message home from the settlers was that life in the United States was so much easier. By 1910, approximately 665,000 Swedes had settled in the United States; in addition, approximately 700,000 second-generation Swedes lived there.^[21] In 1900, just over 100,000 Swedes lived in Chicago, making it the second-largest “Swedish” city in the world.^[22]

In the United States, impoverished European workers and peasants turned into settlers, in a nation that was on the verge of replacing England as the leading global power. The success of the settler state was based on the dispossession of the Indigenous population and the exploitation of African slaves. Land speculation and slavery generated the capital for the fast-growing US economy. The wealth of the first president of the United States, George Washington, came from speculating in land from which the Indigenous population had been displaced; 317 slaves labored to maintain his household and plantation.^[23] This racist hierarchy, embedded in the foundations of the American state, positioned immigrants from Northwestern Europe as an upper part of the working class. Between 1830 and 1860, 4.5 million immigrants from Europe arrived in the United States. These new Irish, German, Scandinavian, Italian, and Polish workers supplemented the former generations of European immigrants, Blacks, Latin Americans, and Asians, in the rapidly expanding agricultural and industrial sectors. Indians and Chinese were imported on what were known as “coolie contracts.” Together with slaves and the remaining Indigenous population, the Asians were given the hardest work at the lowest wages. They built railroads and worked in mines and on plantations. The original settlers, the first generations of Anglo-Saxon origin, retained their privileged positions in skilled jobs or as foremen in charge of teams of workers. At the time, they received the highest wages of any worker in in the world, approximately double the wages in Britain. The Swedish immigrants were ranked just below the workers of Anglo-Saxon origin.

The result being that, by 1900, the American working class was divided by national origin into three main groups: At the top, the Euro-American labor aristocracy, a privileged layer of “born in the USA” workers who constituted approximately 25 percent of the industrial working class. They got the best-paid skilled jobs, protected by the American Federation of Labor (AFL). Below them was a layer of workers made up of the new immigrants from Europe, which comprised between 50 and 75 percent of the industrialized working class in the northern states. They were mostly unorganized and were systematically excluded from the AFL, and thus from the better-paid jobs. However, their wage levels were significantly above salaries in Northwestern Europe at the time. At the bottom was the “colonial proletariat” of African, Latin American, and Asian origin. They did the hardest work for the lowest wages, on the railways and in construction, in mining, as well as on the plantations of the southern states. Cotton production, mainly carried out by labor of African origin, remained important to the economy. Between 1870 and 1910, cotton production tripled, accounting for 25 percent of total US exports. Blacks also worked in Alabama’s coal mines and steel plants. Likewise, Mexicans, Asians, and the Indigenous population constituted an intensively exploited proletariat in the southwestern states, as field workers, on cattle and sheep ranches, in the mines, in railroad construction, and in the urban service industry. The salary of these proletarians was about $4 a week. The industrial proletariat in the northern states from Eastern and Southern Europe earned $6–$10 a week, while the skilled labor aristocracy received $15–$20 a week.^[24]

Gerald Horne describes how Europeans settlers could climb up “the class ladder with sugar stalks and Africans as the rungs,” by acquiring a share of the profits from land privatization and speculation and the benefits from slavery. A racist ideology of white supremacy was gradually shaped as a “pan-Europeanism: an invented solidarity between Europeans that transcended class, ethnic, and religious lines.”^[25] Through the journey across the Atlantic and the confrontation with the Indigenous population as well as slavery, an identification of belonging to the white race was strengthened. Racism against Indigenous people, Blacks, Latin Americans, Indian and Chinese immigrants, combined with an identity as Anglo-Saxon Protestants of Northwest European origin, lent a particular quality to American nationalism. The United States was God’s own land ruled by the white man. Racism and nationalism blocked the development of solidarity based on class consciousness. The trade unions and socialist and communist movements never succeeded in establishing as strong a foothold as they did in Europe. Not even social democracy developed in the United States. But racism and, as a consequence, the anti-racist struggle have been prominent recurring features of US history, and the ideology of white supremacy has characterized US domestic and foreign policy right up to the present day.

As mentioned above, emigration to the US helped alleviate pressures that might have led to social upheaval in Northwestern Europe. It significantly reduced the “reserve army of labor,” which led to more favorable conditions for the wage struggles of those workers who remained behind.^[26] An analysis of Swedish emigration shows that it led to increased membership in trade unions and the Social Democratic Workers’ Party. Furthermore, the tendency to strike and to vote for left-wing parties in parliamentary elections increased.^[27]

It was not only poor workers and peasants who immigrated to the colonies seeking lands of opportunity; British imperialism also provided an opening for Scandinavian entrepreneurs to participate in colonial exploitation. Take, for example, the case of Joseph Stephens, born in Stockholm in 1841 of two British parents. Like so many other sons from the middle classes, Stephens hoped to make his fortune through a career in the colonies. When he was just 19 years old, his father took out a loan to finance the journey from Sweden, and he arrived in India in December 1859. Stephens became an apprentice in civil engineering, and after completing his apprenticeship became a railway contractor with the Great India Peninsular Railway Company, which built railways and infrastructure in the Bombay region, the cotton belt of India. The American Civil War had disrupted the supply of cotton produced by slaves and this increased the demand for Indian cotton to feed the booming textile industry in England. Stephens’s firm organized the construction of railway stations and fencing for the railway company and storage houses and ginning factories for the cotton industrialists. By 1865, Stephens employed thousands of workers; his archive provides a detailed account of the contracts with carpenters, masons, stone workers, and headmen. If a worker failed to provide services in the agreed upon time and manner, they were liable to be fined and jailed.

By 1867, after only seven years, Stephens’s colonial activities had made him a fortune. Now 26 years old, he wrote to his father explaining that he had two options: to be a construction manager in England and live as a member of the bourgeoisie or to buy an estate with a manor house in Sweden and live like landed gentry. He chose the latter, purchasing a 600-acre forest and industrial estate in Huseby, in Småland in southern Sweden. He married a woman of “class” and sat in the Swedish parliament. In the following years, Joseph Stephens turned his estate into an ironworks and timber lot. His colonial experience informed his business regime in Sweden, as he pursued new connections in imperial England and attempted to sell his timber to the Indian railways. He also managed workers and artisans on his estate through contractual relationships, as he had done in India.

Stephens’s life story recently came to light when his personal archive was discovered at his old manor house, the Huseby Bruk.^[28] Discussing the discovery of the archive, Arun Kumar wrote:

“The Stephens’ archive weave together India (the colony), England (the coloniser), and Sweden (a Western nation state) in one thread which, otherwise, may appear totally disconnected in the mid-nineteenth century. Stephens’ life history forces us to rethink our understanding of India’s railway development, the wider distribution of colonial wealth in the Western world, and the transnational nature of British imperialism.”^[29]

German imperialism and the “Congo Conference” in Berlin

In the 1890s, Sweden underwent rapid industrialization, which led to a rise in wages in the mining, iron, and timber industries, forestry, and agriculture. The industrial breakthrough in Sweden was linked to the development of capitalism, specifically in Germany.

In the early 19th century, present-day Germany was regarded as a relatively backward part of Europe. In the second half of the century, however, Germany moved from a semi-peripheral position to the core of the capitalist world system. The development of the English colonial empire gave way to an expansion of the core which encompassed the northwestern part of continental Europe.^[30] Between 1840 and 1870, British foreign trade increased by 500 percent, part of which included imported agricultural products from Germany and Scandinavia.^[31]

The German industrial revolution occurred between 1850 and 1875, under the Prussian military regime of Otto von Bismarck. The German rural nobility, known as “Junkers,” had made their fortunes by supplying food to the expanding English market; they would become a cornerstone of the emerging industrial and financial bourgeoisie, together with the new industrial capitalists. Both the industrialists and the Junkers wanted the Prussian state to build a strong navy and to pursue an active military colonial policy in order to secure access to commodities such as copper, rubber, cotton, and vegetable and mineral oils. Raw materials were considered necessary if Germany was to compete with England, France, and the new ascendant power—the United States. As the general and future president Paul Von Hindenburg stated: “Without colonies, no security regarding the acquisition of raw materials, without raw materials, no industry, without industry, no adequate standard of living and wealth. Therefore Germans, do we need colonies.”^[32]

Like Cecil Rhodes in England, in the 1890s the German Junker and colonialist Ernst von Weber argued that a colonial empire would save Germany from recurring crises of overproduction and unemployment. According to Weber, Germany needed a “mass export of revolutionary tinder” in order to avoid a bloody social revolution.^[33] Germany, like the other European powers and the United States, regarded the rest of the world as a resource to be used and exploited at will. The problem was how to divide up the world, as imperialist rivalry was becoming a principal contradiction in the world system. For that reason, in 1884 a conference was held in Berlin to agree upon how to divide up Africa between twelve countries and thereby avoid “unnecessary” expenditures on warfare.

In this power game, smaller states such as Sweden sought to secure their interests. The problem was explained by Swedish diplomat Carl R. A. Georgsson Fleetwood, immediately before the conference:

“It is a well-established fact that European politics is hardly European any more, but Asian or African—it is in these remote parts of the world that the fate of Europe is being decided. Are we at the beginning of a new era in colonial politics? In which case, will we second- or third-rank state powers become even more insignificant than before—or might commercial interests possibly give us increased influence—or might we possibly act as colonizers on a smaller scale, so as to benefit in some way from the drain caused by the growing emigration?”^[34]

Sweden’s top representative at the Berlin conference was Gillis Bildt, who a few years later briefly served as the country’s prime minister (1888–1889). Sweden did not manage to acquire any colonies at the conference but did endorse the division of Africa adopted by the major colonial powers.^[35] Sweden’s strategy was to try to secure its trade interests by obtaining special agreements from the major colonial powers. For example, Sweden managed to be “particularly favored” by Belgian King Leopold’s International Congo Association. As a result, Swedish soldiers, sailors, businessmen, and missionaries would eagerly participate in the colonization of the Congo.^[36] King Leopold welcomed Sweden’s participation in the “civilizing” mission; in a letter to Swedish King Oskar II, he wrote that Sweden already had “authorised several outstanding officers from her splendid army to enter into the service of the International Congo Association. Important stations, central nodes for vast areas in the middle of Africa, are today managed by Swedes.”^[37] King Leopold’s International Congo Association is today known to have been one of the most brutal colonial regimes, as reflected in the drastic decline in the Congo’s population from 20–30 million in 1884 to only 8.5 million in 1911.^[38]

Sweden’s main strategy, however, was to strengthen its ties with Germany by supporting its positions at the conference. On December 7, 1884, as negotiations were coming to an end, King Oskar II wrote to Bildt: “I have followed the ongoing Congo conference with interest; however, one question above all others has been on my mind. Are Germany’s new and, in some cases, surprisingly active colonial policies, the main goal (if a goal it can still be said to be?) or is this really just a means of luring its western neighbor even further along the same road and thus, for a long time, weakening its power and diverting its attention from Alsace Lorraine? [emphasis in the original]”^[39]

Bildt answered the king, stating that, in terms of European power politics, the goal of Germany’s colonial ambitions was partly to neutralize France’s desire for revenge for its defeat in 1871 and partly to exacerbate tensions between France and England, but that the main purpose was to obtain resources and open markets as well as to bolster Germany’s national prestige.^[40]

In the 1890s, Germany built a sizeable merchant and navy fleet and established naval bases as far away as the South Coast of China. The German Navy was very active in the Mediterranean, north of the African coast and east of Turkey, in fierce competition with England and France. Within a few years, Germany built up a colonial empire. By 1906, East Africa (Tanzania), South West Africa (Namibia), Cameroon, New Guinea, Togo, the Caroline, Paula, and Marianne Islands, the Marshall Islands, Samoa, and Kiauchau were German colonies, with a combined land mass the size of India. Besides which, German economically dominated Bulgaria, Romania, and Turkey.^[41]

It was in this colonial context that the idea of the German Herrenvolk, or master race, developed. The basic elements of Nazi race theory were developed during this period and practiced in South West Africa, present-day Namibia. However, it would be a mistake to label German colonialism as especially brutal—English, French, Dutch, and Belgian colonialism were no less so. The racism, national chauvinism, and brutality of Nazism were later condemned by the other European powers, but as poet and politician Aimé Césaire wrote:

Yes, it would be worthwhile to study clinically, in detail, the steps taken by Hitler and Hitlerism and to reveal to the very distinguished, very humanistic, very Christian bourgeois of the twentieth century that without his being aware of it, he has a Hitler inside him, that Hitler inhabits him, that Hitler is his demon, that if he rails against him, he is being inconsistent and that, at bottom, what he cannot forgive Hitler for is not crime in itself, the crime against man, it is not the humiliation of man as such, it is the crime against the white man, the humiliation of the white man, and the fact that he applied to Europe colonialist procedures which until then had been reserved exclusively for the Arabs of Algeria, the coolies of India, and the niggers of Africa.^[42]

In parallel with the expansion of the colonial empires, there developed the idea of Europe as the historical cradle and center of civilization. The myth imagined a thousand-year continuity, from ancient Greece’s philosophy and culture to the liberal values of Western capitalism. In actual fact, however, it was not until the Renaissance and the dawn of capitalism that Europe began to cultivate the idea of Greek antiquity as its origin. The problem with this idea is that the Renaissance is separated from classical Greece by centuries, during which neither the European economy nor its philosophy or culture were by any means the center of world civilization. Christianity was also an element of this construction, supposedly a central element of specifically European values. Yet Christianity was not founded in Paris, Rome, or Berlin, but in the Middle East. The “Holy Family” and the Egyptian and Syrian Church Fathers had to be Europeanized and Jesus portrayed as a blond Northern European to fit the myth.

Along with colonialism, it was the breakthrough of industrial capitalism in England that made Europe rich and powerful. Science and culture fused with rationality and technical efficiency. Values of democracy and social justice developed within the framework of Europe and North America while the same states killed, enslaved, and exploited people throughout the world. European ideas of a racial and ethnic hierarchy were bestowed a scientific legitimacy. Colonial practice was translated into the social and biological sciences, as theories about the superiority of the Aryan race and its birthright and duty to rule over the “primitive races.” Eugenics was widely accepted, in Scandinavia as elsewhere. Racism was popularized with the concept of “the white man’s burden” and in literature. In zoos and fairs all over Europe, Africans, Asians, Indigenous peoples of North America, Bedouins, and Inuit were exhibited like animals.

European racism reflects the hierarchical division of humanity that colonialism created. Colonialism is a shared European responsibility. The racism and national chauvinism that characterize modern-day right-wing populism—including in Sweden—have their origins in the ideas of colonialism. The dehumanization of the peoples of the colonies was a prerequisite for the idea of Europe and the West as the center of civilization.

How industrial capitalism came to Denmark

Industrial capitalism had its breakthrough in England in the first decades of the 19th century, followed by France, Germany, the Netherlands, and Belgium in the middle of the century. In Scandinavia, the breakthrough occurred first in Denmark in the 1870s and then in Sweden in the late 1880s.

The development of capitalism in Denmark is the story of a special kind of bourgeoisie. This bourgeoisie was not a “classic” industrial bourgeoisie as in England—the conditions for that were simply not present. Denmark had no raw materials for the development of heavy industry, no large domestic market to provide the basis for large-scale industry, and when against these odds small industries did nonetheless take form, they encountered crushing competition from England and others. When industrial development finally took off in the last quarter of the 19th century, it was based on the processing of agricultural products for export and the production of agricultural machinery. It was all about agriculture in Denmark.

An important prerequisite for Denmark’s integration into the imperialist core was the export of agricultural goods to feed the rapidly growing working class in England. In September 1910, Lenin was participating in the 8th International Socialist Congress, which was being held in Copenhagen; while there, he went frequently to the King’s Library to research Danish agricultural development. As he would later note:

In addition, a specific feature of Danish imperialism is the superprofits it obtains from its monopolistically advantageous position in the meat and dairy produce market: using cheap maritime transport, she supplies the world’s biggest market, London. As a result, the Danish bourgeoisie and the rich Danish peasants (bourgeois of the purest type, in spite of the fables of the Russian Narodniks) have become “prosperous” satellites of the British imperialist bourgeoisie, sharing their particularly easy and particularly fat profits.^[43]

From 1820 to 1880, grain exports from Denmark to England doubled, as did their prices. Later, when a duty on live cattle and meat was abolished in England, the export pattern shifted towards animal products and Danish meat prices nearly tripled. In the 1870s, when wage levels in England began to rise, this led to an increased demand for meat and animal products including butter, eggs, and bacon from Denmark. In this period, 80–90 percent of Danish exports were agricultural goods, and by far the largest market was England.^[44] Thus, the Danish bourgeoisie acted as an intermediary between family-run farms and the growing English market, in the form of agricultural processing industries, the manufacture of agricultural and dairy machinery, not to mention transport and logistics in connection with exports across the North Sea. New roads, railways, and harbors, with steamship routes connecting the agricultural producers to European markets, all added to the infrastructure.

As early as 1846, the liberal bourgeoisie entered into an alliance with the farmers, in the form of the Society of the Friends of Peasants (Bondevennernes Selskab). In the following period, a peasant class, mainly consisting of mid-size farmers, established itself as a petty bourgeois faction closely linked to the emerging industrial bourgeoisie. The Danish bourgeoisie was thus a peculiar mix of rural and urban bourgeoisie, represented by the (liberal) Left Party and opposed to the (conservtaive) Right.

With the development of industrialization, the contradiction between the bourgeoisie and a growing working class was deepening. The first trade unions were founded in 1869. Louis Pio, a clerk in the postal service, founded the Danish Social Democratic Party in 1871 as part of Marx’s First International. Despite this fact, the Marxist influence was marginal. The Communist Manifesto was mentioned for the first time in 1883 in an obituary of Marx, which was not very laudatory and displayed ignorance as to his ideas. Early Danish social democracy was influenced by Ferdinand Lassalle’s ideas and focused on how the existing state could address the problems of unemployment and social needs in general. In Copenhagen, specifically, the miserable conditions in the new working-class districts proved fertile ground for socialist ideas. From the start, the party had strong ties to the trade unions. Besides support for the trade union struggle for higher wages and better working conditions, the strategy was always to acquire legislative power by getting representatives into parliament. There was no talk or plans of revolution, only political reform within the existing society. Still, the bourgeoisie and state power were terrified by even those moderate socialist ideas.

The reason why, despite its moderation, Danish social democracy in this early period had a revolutionary flavour was because of what became known as the Battle of the Common. The incident occurred in the context of a bricklayers’ strike in 1872. Acting on behalf of the Danish section of the International Working Men’s Association, Louis Pio convened a support meeting at a central park in Copenhagen. Even though the demands were not radical, on May 4, 1872, the night before the meeting, the leadership—Louis Pio, Harald Brix, and Paul Geleff—were arrested and imprisoned. This resulted in a confrontation between workers and police at the Common, a park in the working-class neighborhood of Nørrebro in Copenhagen. Pio was sentenced to six years in prison, Geleff to five, and Brix to four, for crimes against the state constitution.^[45]

As a consequence of these verdicts, the Minister of Justice issued a ban on the International Working Men’s Association. This was serious blow to the movement. When the leadership was released, they were marked by their years in isolation in prison. Pio and Geleff were paid by the police to emigrate to the United States and internal divisions in the party encouraged reformism.46 In 1889, the leaders of the party’s left-wing faction were purged.

(As a fitting postscript to this sorry state of affairs, once in the United States Pio became active in the Danish immigrant community, moving first to Chicago and then helping to found an ill-fated “socialist colony” in Kansas, while publishing various works including a Danish cookbook and a Scandinavian-English dictionary and guide for young people. At the World’s Fair in Chicago in 1893, Pio managed to get himself hired as a kind of PR agent for the state of Florida. He managed to secure funding to found a new city in Florida on the banks of the St. Locie River, to be known as “White City.” While the official story was that this name was in hommage to Chicago—known as the “White City” because of its white buildings—in a letter to a close friend, the “socialist” Pio explained that “The colony has started ... [If] the absent Madams and legitimate kids are counted in, the city will amount to c. 500 souls, all white as snow. Chinese, Negroes and other Coloreds are expressly excluded from Access.”)^[47]

At the turn of the century, the Danish bourgeoisie continued to profit from growing exports of refined agricultural goods to England, which made it possible to provide significant wage increases and better working conditions to the labor force. In the period from 1870 to 1913, real wages doubled.^[48] This also led to a reduction in the level of class conflict. In 1899, after four months of strikes and lock outs, the trade union movement and the employers’ union entered into what was known as the September settlement. The trade union movement recognized the right of employers to manage and allocate work and employers recognized the trade union movement. Furthermore, the settlement stated that all disputes should be decided by negotiation and mediation. If this failed, the case should be brought before a Labor Court to resolve the conflict. Class struggle was to be settled in a fixed institutional framework, to put an end to strikes and labor unrest. Reforms were introduced in 1901, establishing parliamentary rules and extending voting rights. Prior to then, only 15 percent of the population had had the right to vote; women, so-called “imbeciles,” and the poor were excluded. It was 1915 before women and domestic servants received the right to vote in general elections. The September settlement and the consolidation of the parliamentary system meant that trade unions and the Social Democrats were recognised as legitimate political movements. Social Democrats were elected to parliament and in 1916 they entered a coalition government with two ministers. Lenin wrote about this in his article “Ten ‘Socialist’ Ministers!”:

Huysmans, the Secretary of the International Social-Chauvinist Bureau, has sent a telegram of greetings to Danish Minister without portfolio Stauning, the leader of the Danish quasi-“Social-Democratic” Party. The telegram reads: “I learn from the newspapers that you have been appointed Minister. My heartiest congratulations. And so, we now have ten socialist Cabinet Ministers in the world. Things are moving. Best wishes.^[49]

Lenin was not impressed:

'The Danish “Social-Democratic” Party completely succumbed to this international situation, and staunchly supported and supports the Right wing, the opportunists in the German Social-Democratic Party. The Danish Social-Democrats voted credits for the bourgeois-monarchist government to “preserve neutrality”—that was the euphemistic formula. At the Congress of September 30, 1916, there was a nine tenths’ majority in favour of joining the Cabinet, in favour of a deal with the government! The correspondent of the Berne socialist paper reports that the opposition to ministerialism in Denmark was represented by Gerson Trier and the editor J. P. Sundbo. Trier defended revolutionary Marxist views in a splendid speech, and when the party decided to go into the government, he resigned from the Central Committee and from the party, declaring that he would not be a member of a bourgeois party. In the past few years the Danish “Social-Democratic” Party has in no way differed from the bourgeois radicals.'

Greetings to Comrade G. Trier! “Things are moving,” Huysmans is right—moving towards a precise, clear, politically honest, socialistically necessary division between the revolutionary Marxists, the representatives of the masses of the revolutionary proletariat, and the Plekhanov-Potresov Huysmans allies and agents of the imperialist bourgeoisie, who have the majority of the “leaders,” but who represent the interests, not of the oppressed masses, but of the minority of privileged workers, who are deserting to the side of the bourgeoisie.

The social history of 19th-century Denmark is relatively peaceful. There was no showdown with the nobility as in the French Revolution of 1789 or as in the violent bourgeois revolutions that swept across Europe in 1848; certainly nothing like the communist Paris Commune of 1871. This relatively peaceful quality to Danish history persisted into the 20th century.

The Social Democrats’ chief ideologue in Denmark, Gustav Bang, laid out the strategy in 1904:

'There are two ways to get to a new society. One is to knock over the game—overturn the pieces; the other is to move the pieces, one by one. Our opponents want nothing better than that we opt for the first, but we are going the other way—we move the red pieces of the Social Democrats further and further forward, until we finally put the enemy in checkmate.'^[50]

As the game unfolded, however, the Social Democrats were drawn into the system—finally in fact becoming the system.

How industrial capitalism came to Sweden

Due to natural preconditions, the structure of the economy, and the character of the bourgeoisie, the industrialization of Sweden occurred very differently from in Denmark.

As early as the first half of the 17th century, Sweden had been an important iron exporter, largely to the Netherlands, the hegemonic power in Europe at the time. Wars had deprived the Dutch of their sources of iron in Spain and Germany. At the same time, the demand for iron to produce armaments was on the rise, thanks to what was to become known as the Thirty Years' War. Dutch capital, entrepreneurs, and technicians were attracted by Sweden's plentiful iron ore, easily accessible charcoal, and waterpower. The Dutch entrepreneur Louis de Geer organized the immigration of Walloons as skilled workers and introduced the Walloon iron refining process in Sweden. A cannon factory was established using ore from the Dannemora mine, 100 miles north of Stockholm and less than 30 miles from the Baltic Sea. Later, the Dutch established factories at Ullfors, Wessland, Hillebola, and Strömsberg, causing Swedish iron production to increase from 6,650 tons in 1620 to more than 17,300 in 1650.^[51]

The first industrial factories in Sweden were established in the early 19th century. As in England, it was the textile industry that pioneered the use of spinning and weaving machines operated by wage-workers. The raw cotton was produced by slave labor in the plantations of the southern states of the United States and the technology was imported from England, but the emergence of the Swedish textile industry was primarily based on the domestic market: at first, finer fabrics for the upper class; later came cotton linen for the working class and peasantry.^[52] By the 1860s, Sweden's industrialization was based on the processing of raw materials such as iron ore, copper, and timber, and benefited from access to cheap energy in the form of hydropower.

One example of an early Swedish industrial enterprise is Bofors Bruk. Bofors had refined iron and manufactured weapons since 1646. In the 1870s, the craft manufacturing methods were replaced by industrial production, and Bofors become one of Europe's leading steelmakers. In 1883, it took up the production of cannons again. In 1894, Bofors was purchased by Alfred Nobel, who modernized arms production and expanded it to include various types of explosives, especially his invention dynamite—and yes, he also established the Nobel Prize in 1895.

While Denmark is characterized by small-scale industry, the exception being its shipyards, Swedish industry is dominated by larger companies. While Denmark was primarily tied to English imperialism, Sweden navigated in the wake of Germany, not least through the export of iron for manufacturing and timber for the construction of housing for the rapidly expanding urban German working class.

Symbolizing the importance of iron and steel exports for the Swedish economy, a fountain was erected in the port city of Gothenburg in 1927, on the Järntorget (the Iron Square).53 It was at this square that iron produced in Swedish ironworks was measured before being loaded and shipped to the rest of the world. The official name of the fountain is The Five Continents. In the five corners of the fountain are statues of naked women who, by their ethnicity, are meant to symbolize the five continents of the world. From the center of the fountain, water springs from a bowl towards the women, just as Swedish iron flows out to the whole world, which responds gratefully by sending gifts back from the five continents, symbolized by water spraying back towards the center of the fountain. A symbol of Sweden's integration into the imperialist world system.

A revolutionary beginning and a breakthrough for reformism

The 1890s were in many ways a turning point in Sweden's history. The breakthrough of industrial capitalism created many new jobs, massive emigration removed much of the reserve army of labor, and, consequently, wages doubled over the course of the decade. The Swedish Social Democratic Party was established and the foundations of the welfare state were laid.

All this had a revolutionary prelude, however. The history of Swedish socialism dates back to 1847, when Per Götrek, a Stockholm bookseller, published On the proletariat and its emancipation through true communism, inspired by the writings of the French utopian socialist Etienne Cabet.54 Götrek was religious—for him, communism was synonymous with the original ideals of Christianity. Marx's ideas about religion being the "opium of the people" had apparently not reached or convinced him. In addition, Götrek was what today would be called "straight edge and sober living": he did not use alcohol or other drugs and he was a vegetarian. Götrek was also engaged in the struggle for equal rights for women, something unusual amongst socialists at the time, and agitated for women's political education:

through this, she will learn to realize her position, realize that she is missing out on everything that a sensible human being has the right to demand from society, namely education, the right to work and to choose her work, the right to make decisions concerning her person and her actions, the right to participate in establishing the laws she must obey.^[55]

Götrek brought together a group of people, mainly artisans who had picked up new ideas while traveling and working in France, some typesetters, and Johan Ellmin, a doctor who worked among the poor in Stockholm. The group met regularly in an apartment in the center of Stockholm. In February 1848, The Communist Manifesto was published in German. Two weeks later, it was for sale in Götrek's bookstore, and he immediately began translating it into Swedish. Before he could finish, however, riots broke out in Paris and other European cities; on March 2, 1848, news of the unrest reached Stockholm. The uprising was a bourgeois revolution against absolutism and for civil liberties, universal suffrage, and parliamentarianism. Stockholm's revolutionary communists saw 1848 as a dress rehearsal for the socialist revolution.

Götrek's group participated in disseminating leaflets and posters to mobilize for a "banquet" on Saturday, March 18. The "banquet" took place in the afternoon at De la Croix's large hall at Brunkeberg Square in Stockholm. It was organized by the Society of Friends of Reform, an association of liberals and radicals. The men in the main hall were members of parliament, intellectuals, teachers, and shopkeepers. An elite, certainly, and yet many of them did not have the right to vote for the political assembly because they did not belong to any of the "venerable" traditional four estates: nobles, clergy, large landowners, and upper bourgeoisie. This left-leaning political elite now made fiery speeches calling for an uprising—a common tactic at the time for revolutionaries trying to spark rebellions in the streets. Outside at Brunkeberg Square, an excited crowd quickly gathered. They demanded the removal of the king and the introduction of a republic. The authorities intervened, cleared the street, and arrested the most active protesters, but the demonstration just moved to the area between the royal castle and the great cathedral. On the way, the demonstrators passed by the house of August von Hartmansdorff, the president of the high court, who was very unpopular because of his suppression of freedom of the press; all twelve windows of his third-floor apartment were smashed. King Oscar I, who was returning to the palace from the opera, met the demonstrators at the square in front of the cathedral. He promised the crowd that the arrested protesters would be released. Some hailed the king as he left the scene, believing that the danger was over, but the demonstration marched on to Gustav Adolf's square. Stones were thrown at the houses of Archbishop Wingård, Governor C. F. Horns, and Minister of War Peyron—and also at some houses belonging to Jewish businessmen. Doors and windows were smashed, and the king's guard intervened to put an end to the unrest. There was street fighting and the guard shot into the crowd.

The next day, Sunday March 19, the unrest continued. The regular army was deployed against the protesters in the center of the city, where barricades had gone up. The troops were met with a volley of stones. The king gave the order to fire on the protesters—twenty were killed and approximately two hundred were seriously injured in the fighting. In the following days there were army patrols in the streets around the clock. And so the March 1848 revolt in Stockholm came to an end.

These events had consequences, however. The police kept a close watch on Götrek's activities. It became difficult for him to find a print shop willing to print the Manifesto. Nevertheless, he finally managed to find a printer and, in December 1848, Götrek published The Voice of Communism, as his version of the Manifesto was called.56 In order to not further provoke the state, he modified Marx and Engels's text—where they wrote "a violent overthrow of the present social order," Götrek's translation read "a radical reorganization of the present social order." Marx and Engels would not be satisfied with Götrek's translation of the slogan "Proletarians of all countries, unite!"—which he turned into "The voice of the people is the voice of God."57 But Götrek's modifications did him no good: in early 1849 he and members of his group were brought to justice and the organization was dissolved by the court.

There was a broad and severe crackdown on the left in the years that followed. Sweden became one of the most reactionary and undemocratic political regimes in Europe.58 All women and 80 percent of men were denied the right to vote in late 19th-century Sweden. The state and the bourgeoisie feared the "dangerous classes." The French Revolution of 1789 was still fresh in their memories and the revolutionary uprisings in many European cities in 1848 had reached Stockholm. At this point in history, the bourgeoisie could not afford the "luxury" of introducing parliamentary democracy or the right to form trade unions, as this would have threatened the system's very existence. As Marx and Engels wrote: "A spectre is haunting Europe—the spectre of communism."^[59]

It remained a spectre, however. Gradually, the European state powers changed their tactics based on the motto: better reform than revolution. In 1871, the English parliament recognized the right of workers to organize themselves in trade unions. In France, Napoleon III introduced the Loi Ollivier in 1864, which gave workers the right to organize, issued a decree regulating the treatment of apprentices, and limited working hours. By including "the dangerous classes" in the political process and thereby turning them into citizens of the state, the ruling class hoped that social conflict would take a more controlled course. Suffrage was expanded to include working-class men and the first public social and health insurance policies were introduced in Northwestern Europe in the last quarter of the 19th century.

The struggle of the proletariat for better living conditions and political rights combined with European colonialism and became the driving force in a new dynamic of capitalist accumulation on a global scale. Colonialism was a centrifugal force that propelled capitalism across the globe, at the same time as it was a polarizing force that divided the world into a core and a periphery. A periphery drained of value, which maintained the profit levels and a growing consumer market in the core. This dynamic solved capitalism's inherent contradiction between the need to expand production and the lack of sufficient consumption power to realize a profit. In the second half of the 19th century, the proletariat's living conditions began to improve in England. For the first time in the history of capitalism, capitalists had to pay a wage above subsistence level. This development spread from England to Germany and the rest of Northwestern Europe, including Sweden.^[60]

Initially, the rising wages affected only a small fraction of the working class, being limited to the skilled and best-organized industrial workers. However, compared to living standards in the first half of the century—and compared to the workers and slaves in the colonies—there were definite improvements in wages and working conditions for the working class as a whole. By the turn of the century, widespread hunger—as we still see today in the Third World—had disappeared from Western Europe.

This trend changed the character of the class struggle. The economic improvements and political concessions that the capitalist class was neither able nor willing to provide to the working class in the core in the first half of the 19th century became possible towards its end. The concessions were not given voluntarily, nor were they a cunning bribe.

In Sweden, less than 25 percent of men and no women had the right to vote for parliament; this exclusion of the larger part of the population from political influence led to the emergence of a particularly broad coalition for democratic rights, which took the form of a Liberal–Social Democratic alliance. This laid the basis for the social reformism that came to characterize 20th-century Sweden.^[62]

In Europe and the United States, the working class fought for the improvements to their economic and political conditions. Rising wages, better working conditions, and expanded political rights, however, lent credence to the possibility of winning reforms within the system, which in turn made it less risky for the capitalists to grant the working class additional political rights. These compromises made the class struggle less hostile. The revolutionary part of the labor movement weakened as reformism grew stronger. The Paris Commune was defeated and the International disintegrated in 1871, while trade union and political struggles for reforms met with success. Reformist Social Democratic parties were gaining popularity everywhere in Northwestern Europe.

These reforms and compromises between capital and the working class gradually expressed themselves on the institutional level in the form of state administration. The state began to act on behalf of capitalist society as a whole. As the "dangerous classes" were transformed into citizens, the state began to pay attention to the welfare of its population, their health, personal safety, level of education, and so on. The wellbeing of citizens of the state was increasingly seen as a source of national prosperity and strength. This led to a host of new scientific methods and practical policies for the development of welfare, or what the philosopher Michel Foucault called "biopolitics" or "biopower"—the governance of the power of life.63 Ruling class concern for people's wellbeing was something new. The rulers of medieval and early modern Europe governed the population with brutality. Subjects were to make their bodies and lives available to the rulers at all times, to maximize the extraction of wealth. This was accomplished by physical punishment and the threat of death. In contrast to this, the new forms of biopolitics sought to control and promote the health and general wellbeing of the population, in order to strengthen the power of the state. A healthy population was considered the prerequisite for a well-functioning economy and a peaceful and orderly society.

However, this transformation had a negative consequence. Biopolitics created unity between the citizens and nation-states of Northwestern Europe and North America—against the populations of their colonial empires. The interests of the nation-state became the interests of the working class. As it was in the interest of the nation to acquire colonies, it was in the interest of the working class to support the colonial empire. Biopolitics meant that the welfare of the citizens of one nation spelled death and misery for those of another. This is what Mark G. E. Kelly calls biopolitical imperialism:

One might imagine that biopolitical imperialism would mean a flow of biopolitics itself outward into the periphery. I ... argue that, though some movement in this direction does exist, it is not the main way in which biopolitical imperialism operates. Imperialism is a form of power that by and large does not care about the lives of its victims. Imperialism, therefore, is primarily thanatopolitical, a politics of death, contrasting with the biopolitics of the population found in the imperial metropole. There is, I ... contend, a direct relation between the two things, in which death is figuratively exported and life imported back, in a systematic degradation of the possibilities for biopolitics in the periphery, arising out of the operation of biopolitics in the center.^[64]

Kelly cites the historian Mike Davis for a number of specific examples of biopolitical imperialism. In case studies of India, China, and Brazil, Davis shows how the imperialist powers, through direct government intervention and economic policies, destroyed the health and welfare of these countries' populations in order to accommodate their own citizens. One example was the massive export of food that took place from India to Britain, even while the people of India were starving:

'Between 1875–1900—a period that included the worst famines in Indian history—annual grain exports increased from 3 to 10 million tons, equivalent to the annual nutrition of 25 million people. Indeed, by the turn of the century, India was supplying nearly a fifth of Britain's wheat consumption at the cost of its own food security ... . During the famine of 1899–1900, when 143,000 Beraris died directly from starvation, the province exported not only thousands of bales of cotton but an incredible 747,000 bushels of grain. [Equivalent to 20,330 tons of corn —TL]^[65]

The "power of life" in Northwestern Europe was premised on the "power of death" in the colonies.

The birth of the welfare state

The idea of a capitalist state providing welfare for its working class did not originate in Sweden but in Germany, in the state capitalist regime of Otto von Bismarck. The Prussian Duke Bismarck represented the interests of the conservative landowners, the Junkers, against the liberal bourgeoisie and republicans. Bismarck, an ardent supporter of the monarchy and Reich Chancellor from 1871 to 1890, was an important architect of the German Empire, which was based on a strong central state with the emperor (or Kaiser) as unifying figure at the top. To secure his strong central state, Bismarck chose to forge an alliance with the working class against the liberal bourgeoisie’s desire for less state regulations and expenditures.

Thus, in 1881, Bismarck first attempted to introduce an accident insurance law to compensate workers for workplace injuries, to be paid for by employers. The purpose was twofold: to isolate the working class from the influence of more radical forces, and to gain its support in opposing the liberal bourgeoisie’s demand for a new constitution, which would have weakened the Kaiser’s power. In 1883, a broader Health Insurance Law was passed, with workers contributing one-third of the cost and employers the rest. In 1884, an accident insurance law was finally passed, completely financed by employers. In 1889, a pension plan and disability insurance for workers were adopted. Bismarck also introduced other forms of government intervention in the economy, including a state monopoly on tobacco imports and sales and the nationalization of the railway system.^[66]

Thus, the German state developed legislation against the immediate interests of capital. But make no mistake—Bismarck was no socialist. At the same time as these social reforms were being implemented, a number of repressive laws were adopted to restrict the ability of the more radical wing of the socialist movement to organize. This combination of policies split the German Social Democrats into a reformist and a revolutionary wing, laying the groundwork for social democracy’s capitulation to imperialism in the form of support for armaments and nationalism, which contributed to the outbreak of World War I.

The goal of Bismarck’s policy was to make Germany a world power on a par with Britain and France. The social reforms were intended to ensure internal unity and class peace while the state pursued an aggressive foreign policy with demands for colonies and increased access to foreign markets—a policy that was also expected to compensate capital for the costs of the social reforms.

As in England, the establishment of the German colonial empire contributed favorably to domestic economic development. From 1886 to 1911, wages in Germany grew significantly. Following this increased economic and political influence, the center of gravity of the socialist movement moved from England and France towards Germany. The German socialist movement grew rapidly, taking organizational form in trade unions and political parties, but at the same time a division arose between revolutionary communists and reformist socialists.

The German Social Democratic Party (SPD) came to play a prominent role in the development of reformism in Europe. The SPD found strong support among the upper strata of the German working class. Wilhelm Liebknecht, founder of the German Social Democrats, stated at the 1892 party congress: “You who sit here are also, most of you, aristocrats to a certain extent, among the workers—I mean in so far as income is concerned. The laboring population in the mining regions of Saxony and the weavers of Silesia would regard such earnings as yours as the income of a veritable Croesus.”^[67]

The leading ideologue of the German social democrats, Eduard Bernstein, believed that Marx had been proved wrong on several points. Writing in 1889, Bernstein explained that Marx’s thesis of capitalism’s polarization between poverty and wealth was wrong, pointing to how the standard of living of the German working class was actually rising.^[68] Furthermore, Bernstein criticized Marx’s statement in The Communist Manifesto that “The working men have no country.” Bernstein conceded that this may have been the case in 1848, when the Manifesto was written, but insisted that by the end of 19th century it was no longer true. According to Bernstein, the working class had gained political and social rights by virtue of social democratic political struggle, and in that process they had become citizens of the nation-state. Social democratic political struggle was therefore from that point on fundamentally national, their task being to reconcile the interests of the working class and the nation. Following this logic, social democrats supported German colonialism. In “On the Military Question, Foreign Policy and the Colonial Question,” Bernstein argued that Germany had every right to conquer new colonies in order to be able to produce industrial products from tropical raw materials.^[69] He concluded that it was possible for the working class to achieve improvements in wages and living standards and to win more and more political rights, all within the framework of capitalism. By means of parliamentary struggle, the working class—which, after all, constituted the majority of the population—could acquire state power and introduce socialism, nice and quietly, with no need for revolution. Bernstein’s revision of Marx became the DNA of social democrats, which, at future critical historical junctures, repeatedly caused them to take the side of capital and the nation-state against socialism and international solidarity. The split between social democrats and communists in Germany had severe consequences. A Social Democratic government under the leadership of Friedrich Ebert and Defense Minister Gustav Noske used the army and paramilitary forces to bloodily suppress the socialist/communist uprisings of 1919. Colonialist and racist attitudes spread fast within the SPD. In 1900, the party supported German participation in the Eight-Nation Alliance, a multinational military coalition set up in response to the Boxer Rebellion in Imperial China. The forces consisted of 45,000 troops from the German Empire, Japan, Russia, Britain, France, the United States, Italy, and Austria-Hungary. At the German Social Democratic Congress in Mainz later that year, Rosa Luxemburg was the only member to condemn this imperialist aggression. At the same time, the SPD opposed Chinese (so-called “coolie”) immigration to Germany. Chinese workers were viewed as competing with the European working class and had to be excluded from the labor market in Europe.^[70]

The Social Democrats’ position on colonialism was also reflected in meetings of the Second International. In the first years of the Second International, there was a consensus on a clear position against colonialism. However, at its 7th Congress, in Stuttgart in 1907, the anti-colonial line was challenged by the German Social Democrats. There, just three years after the German army and settlers had committed genocide against the people of South West Africa, SPD president Eduard Bernstein—agreeing with party founder Ferdinand Lasalle—stated that: “People who do not develop may be justifiably subjugated by people who have achieved civilisation ... . Socialists too should acknowledge the need for civilized peoples to act like the guardians of the uncivilized ... our economies are based in large measure on the extraction from the colonies of products that the native peoples have no idea how to use.”^[71]

Another leading Social Democrat, Eduard David, put it bluntly: “Europe needs colonies; it does not have enough of them. Without them, we would be economically like China.”^[72] (May I add: Exactly!)

The German Social Democrats’ nationalist strategy was successful in terms of attracting voters. With Karl Kautsky at the forefront, it became Europe’s strongest and most influential social democratic party. In the 1912 German elections, the party won the most seats in the Reichstag, with 34.8 percent of the votes. Like the other social democratic parties in Europe, the SPD voted for war credits in 1914, thereby aligning itself with capital in Germany’s conflicts with France and England over the imperialist division of the world.

The first Swedish socialist party program was written in 1882 by August Palm, a tailor. He had returned to Malmö in 1881 after working and traveling in Germany and Denmark. It is therefore no wonder that it was largely a translation of the Danish Social Democrats’ program from 1876, which in turn was more or less a copy of the German Social Democrats’ Gotha Program of 1875.^[73] Marx had these harsh words to say about the Gotha Program, regarding its split from internationalism:

'Lassalle, in opposition to the Communist Manifesto and to all earlier socialism, conceived the workers’ movement from the narrowest national standpoint ... Not a word, therefore, about the international functions of the German working class! And it is thus that it is to challenge its own bourgeoisie—which is already linked up in brotherhood against it with the bourgeois of all other countries—and Herr Bismarck’s international policy of conspiracy ... . Bismarck’s Norddeutsche was absolutely right when it announced, to the satisfaction of its master, that the German Workers’ party had sworn off internationalism in the new program.'^[74]

In April 1889, the Swedish Social Democratic Party (officially the Social Democratic Workers’ Party of Sweden, the Sveriges Socialdemokratiska Arbetareparti, or SAP) was formed with the support of the trade union movement. In 1896, Hjalmar Branting was elected to the Riksdag—the parliament—as Sweden’s first Social Democratic member of parliament. In 1897, the SAP released its first official party program—written by Axel Danielsson and based on the German Social Democrats’ Erfurt Program—in which nationalism and reformism were taken even further. It was not only the Social Democrats who were inspired by political ideologies from Germany. The Swedish conservative social scientist and politician Rudolf Kjellén (1864–1922) developed the idea of the Swedish folkhemmet—the “people’s home”—inspired by Bismarck’s German state. Folkhemmet would become a core concept in the ideology of the Swedish Social Democrats. Kjellén was a member of parliament from 1905 to 1917 and an acclaimed professor at Gothenburg University, known today as “the father of geopolitics.” In his book Introduction to the Geography of Sweden, published in 1900, he described the Swedish people as having Germanic origins and the state as a living organism in need of “lebensraum”—living space. Kjellén hoped to reconcile conservatism with an anti-Marxist form of socialism that eschewed class struggle in favor of nationalism: the state was to provide the basis for a national community, a unified national people, without any division of citizens into separate economic classes.^[75] He wrote in 1915:

One thing is certain: only on its own soil can Sweden build up the happy “folkhem” [people’s home], which it is meant to be. Nationalism provides the only salvation from the voices of our age who, in the name of a misunderstood internationalism, wish to lure wide sections of the people into relinquishing their providential living conditions—i.e. their own innermost personality.^[76]

As the two countries were meant to share a common destiny, Kjellén was a keen advocate of Swedish participation in the First World War, on Germany’s side. According to Kjellén, war had an educational and healing effect on the character of the nation. In 1910 he wrote that war “is like a bath for the renewal of nationalism. Nothing teaches us so tangibly as war that we are our own nation, that we belong to a common homeland.”^[77]

With Germany’s defeat in the First World War, Kjellén—himself a member of parliament—became opposed to parliamentary democracy. In one article he stated that “parliamentary democracy is not an idea suited for 1914.” In a lecture delivered in Uppsala in 1921, he envisaged the collapse of democracy in Germany, predicting that a leader would emerge from the broad strata of the people to create a new society.

There is much disagreement as to the extent to which Sweden’s Social Democrats were influenced by Kjellén in the development of their version of folkhemmet, but it is certainly clear that there are some similarities. The chairperson of the Social Democrats at the turn of the century, Hjalmar Branting, hoped to forge a socialism based on cross-class alliances: “The goal ... is through struggle to achieve a solidarity that ... extends across the nation and through this ... to include all people.”^[78]

In 1925, Swedish Prime Minister Per Albin Hansson (1865–1946) used the term in a speech, emphasizing that the social democratic “folkhem”—unlike Kjellén’s—should be built on a firm foundation of equality and democracy.^[79] The Social Democrats, however, were in fact moving away from class politics by adopting this concept. In one article in the social democratic journal Ny Tid (autumn 1929), Hansson evoked the folkhem in a polemic against the communists:

'That is where ... the class concept seems self-limiting and isolating, whereas the concept of the people instead opens the path to cooperation ... . There is hardly any doubt that the concept of the people is much more unifying than the class concept and thus also in terms of agitation the former gives better results than the latter.'^[80]

The folkhem was to be managed by a political party representing the people of the nation, not special class interests. The “home” should provide security for everyone. In Hansson’s folkhem one is a “fellow citizen.” Economic class disparities were to be leveled out, class power replaced by parliamentary democracy. In folkhemmet, the emphasis was on reducing differences in income rather than changing the relations of property ownership. Although Kjellén’s Bismarckian national conservatism differed from social democracy, the two shared a common ground of nation-based state capitalism.

Getting Rid of Lenin

Sweden was not unaffected by the split between social democrats and communists that developed in the years before the First World War. The crises of the Second International and the formation of factions such as the Zimmerwald Movement divided the social democrats and led to the emergence of a left-wing opposition. One of the points of disagreement concerned the possibility of revolution in Russia. The German Social Democratic leaders Bernstein and Kautsky were of the opinion that socialist revolution could only take place in the most developed parts of Europe, not in backwards Russia. Lenin, on the other hand, saw the possibility of a socialist revolution in the weakest link of European capitalism and hoped that such an event might trigger revolutions in the more developed European countries.

In the spring of 1917, this possibility began to materialize. The German government allowed Lenin to travel home in a sealed train from his exile in Switzerland, hoping that his presence in Russia would help to end the war. Lenin left Germany at the Sassnitz seaport on April 12, traveling by ferry to Trelleborg in Sweden. He planned to pass through Sweden to Finland and from there to Russia. It is not known whether the Swedish government was informed about this journey by the German authorities; however, the Social Democrats were well aware of the arrival of the Russian revolutionary. Erik Palmstierna (1877–1959), an aristocrat and naval officer—and a leading Social Democrat—sprang into action; as he would recall in his memoirs:

When Lenin passed through Stockholm at that time, I heard about it and called Branting [the leader of the Social Democratic Party and later Prime Minister] with the words: “You know Kerensky. Tell him that Lenin will arrive on the next train and must be shot down or imprisoned when he crosses the border. Send him a telegram.” Branting just laughed and said, “You’re really crazy; one does not do that,” but I interrupted him and replied on the phone: “You are an old-fashioned liberal and you think like it was the 1880s. What we need now are men who dare to act!”^[81]

Six months later, in October 1917, Palmstierna became Minister of Naval Affairs in the Liberal–Social Democratic government and later, in 1920, Minister of Foreign Affairs in the first Social Democratic government, led by Branting. He never made any secret of his wish to see Lenin dead. In his memoirs, he also recounted a meeting with the Russian Tsar’s minister-in-exile, in Stockholm in 1918:

Gulkevitj, the Russian minister, who attended one of my wife’s “Tuesdays for the diplomatic corps,” had many interesting things to say about the situation in Russia. I told Gulkevitj that when Lenin had passed through Stockholm, I found out about it and phoned Branting ... ^[82]

Gulkevitj was disappointed that Branting had not taken the suggestion to kill Lenin seriously. Palmstierna recalled his reaction:

Gulkevitj understood the situation and said with tears in his eyes: “Mon cher baron, vous aviez le sort de la Russie entre mains.” [My dear Baron, you held Russia’s fate in your hands.] Just think if Branting had listened to my advice.^[83]

Things did not turn out that way; instead, Lenin crossed the Torne River at Haparanda, out of Swedish territory and into the center of world history.

The civil war in Finland

The inter-imperialist rivalry of the First World War opened a window of opportunity for revolutionary change in Europe. Lenin’s Bolsheviks succeeded in Russia and that inspired a more or less spontaneous uprising in Germany from November 1918 to January 1919, which was crushed by right-wing militias supported by the Social Democratic government. On March 21, 1919, the Hungarian Soviet Republic was proclaimed—it was not long-lived, however: on August 1, 133 days later, the revolution was brought to a close by the entry of the White Romanian army into Budapest. The Russian Revolution also affected Finland, Sweden neighbor. Between January and May 1918, Finland experienced a bitter civil war. On one side stood the “reds,” socialists and communists, consisting primarily of urban and rural workers living in the south of the country. On the other side stood the “whites,” made up of the Swedish-speaking middle and upper classes and the farmers who dominated the north. The whites received military support from Germany, which was concerned by the spread of revolutionary socialism in the East. The attitude of the Swedish Social Democrats toward the revolutionary movement in Finland was not much different from that of the German Social Democrats.

The Swedish Social Democrats, who at the time were participating in a government coalition alongside the Liberal Party, were worried about the possibility of a “red” victory and its potential to generate radical left-wing political activity in Sweden. In his diary, Palmstierna disclosed how the leader of the white forces, General Mannerheim, had asked the Swedish government for permission to transport arms through Sweden and to send a contingent of Swedish soldiers and officers to assist the white army. The Swedish government could not do so openly, however. Palmstierna explained:

Overall, is impossible for us to act as a party, as the situation has developed along pure class lines. On one side the Socialist Party, workers and small farmers, on the other side state power, ruled by the Swedish upper class—who have our sympathies. It is not possible to openly take sides. Doing so would immediately trigger serious struggles here at home.^[84]

The government secretly favored the whites but was under domestic and foreign pressure. Officially, the Swedish king and the Liberal–Social Democratic government declared that Sweden was neutral in the civil war. Many Swedish socialists opposed supporting the whites, as did the allied powers of England and France, wary of their ties with the German Empire. This formal neutrality, however, did not prevent the Swedish government from extending covert support. General Mannerheim had eighty-four Swedish volunteer officers on his staff. What’s more, a Swedish brigade of approximately one thousand soldiers, under the command of Hjalmar Frisell, participated in the fighting against red forces in and around Tampere. The government secretly authorized the export of 2,000 rifles, 100,000 cartridges, 10 machine guns, and 50,000 hand grenades to the white army. In addition, Swedish volunteers were allowed to carry large quantities of arms. The total quantity of arms and supplies smuggled across the border remains unknown, but it was not uncommon for fully loaded train carriages to cross bringing weapons to the white side. In February 1918, the Swedish government also supplied naval escorts, aircraft patrols, and icebreakers to the German cargo ships that sailed from Germany, heavily laden with arms and one thousand white Finnish elite soldiers who had received special military training in Germany.

The Swedish government, and Minister of Naval Affairs Palmstierna himself, had their own agenda, in addition to opposing the reds: to take advantage of the civil war to acquire the Åland Islands from Finland. The islands were strategically located in the middle of the Gulf of Bothnia in the Baltic Sea. The Swedish government sent a military expedition to the islands in February 1918. Swedish propaganda justified this on humanitarian grounds, but the actual motive was to strengthen Sweden’s geopolitical standing in the Baltic Sea.^[85]

After the white victory in May 1918, suspected reds were hunted down and interned in concentration camps where thousands were executed or died due to malnutrition and illness. A total of 37,000 people perished in connection with the civil war in Finland.^[86]

Swedish capitalism in the interwar period

Sweden experienced a period of industrial expansion in the interwar years. Sweden’s wood, paper, metal, and machine industries bolstered its international position throughout the 1920s. The Electrolux Group was founded in 1910; its first product was a vacuum cleaner, but soon many other home appliances and electrical machines for use in professional kitchens and laundries were being produced. Electrolux is today the world’s second-largest manufacturer of household appliances. Founded in 1927, Volvo established itself as a manufacturer of safe, reliable, good-quality personal cars and trucks. Saab, which stands for Svenska Aeroplan Aktiebolaget, was founded in 1937, specializing in the production of weapons systems, airplanes, and electronics. In 1947, it expanded to producing cars. Husqvarna dates back to 1689; up until the 1870s, it mainly manufactured firearms. It later began producing motorcycles, mopeds, and bicycles, different kinds of tools, and sewing machines. Arms production continued with the popular Husqvarna submachine gun, among other weaponry.

Another important Swedish enterprise in the early 20th century was the Kreuger Group. In 1915, Ivar Kreuger consolidated ten match companies under the name United Swedish Match Factories, the flagship company within the group being a match company he had founded in 1910. The First World War complicated Swedish access to phosphorus and calcium carbonate, vital components in the production of matches. Nevertheless, Kreuger managed to secure better supplies than any other factory and acquired his main competitor, Jönköping-Vulcan Match, the two companies merging into Svenska Tändsticks AB. The Kreuger Group was formally established in 1917 and grew rapidly through the acquisition of leading match companies in Europe, the United States, and South America. Kreuger set up a holding company, International Match Corporation, which had its headquarters in New York.

Today, matches are considered an insignificant product, but at the time, they were a tremendously important commodity: everybody bought matches, every day. In the 1920s, Kreuger was one of the most prominent and powerful business executives in Europe. His company became a symbol of monopoly capital: the Kreuger Group accounted for two thirds of the world’s production of matches and controlled more than two hundred match factories in thirty-five countries. It had an official monopoly on the sale of matches in fifteen countries and dominated the market in another ten.

There are many colorful examples of the tricks and methods Kreuger used to maintain its monopoly position. In Peru, where Kreuger had an official monopoly on the sale of matches, the company hired “provocateurs” who would approach people, preferably foreigners, asking them for a light. If the victim used matches that did not come from a Kreuger company, or a lighter, it triggered a heavy fine, half of which went into the pocket of the provocateur.^[87]

In Belgium, Kreuger paid an agent, Sven Huldt, to persuade local match makers to be part of a joint company to resist Kreuger’s own company. As soon as the deal was in place, Huldt sold out to Kreuger. In countries such as Turkey, Yugoslavia, Guatemala, Ecuador, and Peru, Kreuger obtained his official monopoly by financing loans to the government. Kreuger also received France’s highest award after lending 75 million francs to the French state.^[88]

Throughout the 1920s, Kreuger established a broad network of financial and industrial enterprises, in parallel with the match companies. The Swedish companies he controlled were concentrated in the paper, machine, telecommunications, and mining industries. In 1930, the Kreuger Group accounted for 64 percent of activity on the Stockholm Stock Exchange.^[89]

Like today’s transnational corporations, Kreuger used a web of shell companies. In the 1920s, he had more than 400 companies registered in Liechtenstein and similar places where there were minimal regulations and no taxes. Not even the companies’ directors or accountants were fully informed of Kreuger’s many transactions, and even his personal assistant, Kristor Littorin, was kept in the dark. Kreuger was self-reliant and made all major decisions on his own. He was a great admirer of Napoleon Bonaparte; as Kreuger put it, he “did not hold war councils because one first-class brain is enough for an entire army.”^[90]

The world economic crisis that followed the New York stock market crash in 1929 caused huge problems for the Kreuger Group. Initially, however, Kreuger managed to keep everything going through a series of daring cons. President Herbert Hoover received him regularly at the White House to discuss the global economic situation and ask his advice. When Lee, Higginson & Co. of Boston, a huge investor in Kreuger’s business, suspected something fishy they sent a director, Donald Durant, to Stockholm to investigate the matter. Kreuger organized a large party, attended by prominent figures and diplomats, to impress Durant. It worked, and Durant went home confident that Kreuger’s financial situation was sound. It later turned out that many of the guests had been paid to attend the party. One of the directors of International Match, Percy Rockefeller, also suspected mismanagement, and asked for a personal meeting with Kreuger. During the interview, Kreuger appeared to receive telephone calls from English Prime Minister Stanley Baldwin, Stalin, and Henri Poincaré, one of the leading scientists of the time. Rockefeller was impressed and subsequently reassured his colleagues, “We are lucky to be associated with Ivar Kreuger.” Only later was it revealed that Kreuger had simply spoken into a silent phone. Kreuger became increasingly desperate, forging Italian bonds for $143 million and using them as collateral to take out a number of loans.^[91]

Eventually, it became impossible to hide that something was seriously wrong in the company. The price of Kreuger shares fell on the New York Stock Exchange from its highest listing of over $46 in March 1929 to $4.50 near the end of 1931. When the banks began to demand Kreuger repay its loans in the autumn of 1931, the company’s liquidity crisis became acute. Kreuger sought to raise capital by selling a large stake of shares in LM Ericsson, a major telephone company. The US company ITT was initially willing to pay $11 million for the shares but then withdrew. That was the end for Ivar Kreuger, who shot himself in his Paris apartment. An audit subsequently revealed that Kreuger was bankrupt; claims against the estate totaled over a billion dollars—an amount which at the time was more than Sweden’s total public debt.^[92] The so-called Kreuger Crash resulted in a wave of bankruptcies and suicides among Swedish CEOs and the resignation of the prime minister.^[93]

The Stockholm School of Economics

The capitalist world crisis of the 1930s got rid of smaller and less profitable companies, thereby leading to a greater concentration of capital. At the same time, banking and financial capital in Sweden strengthened its hold on the productive industrial sector. As the Kreuger Group fell apart, the financier Knut Wallenberg picked up the pieces, strengthening his position as the leading capitalist in Sweden.

On the political front, one consequence of the Kreuger Group’s collapse was that political parties associated with big capital were weakened. Several prominent Liberal politicians were personally involved in the Kreuger scandal. Liberal and business-friendly economic politics, which had been prevalent in the 1920s, had no solutions for the problems that had arisen in the wake of the world economic crisis. This paved the way for a social democratic economic policy that would attempt to regulate capitalism to avoid future crises.

The Swedish social democratic capitalist welfare state developed its own economic theory and practice based on ideas from the Stockholm School of Economics. Paradoxically, the aforementioned financier Knut Wallenberg was the main financial sponsor of the institution. Founded in 1909, its original purpose was to educate economists in order to be able to modernize Sweden’s economy and develop international trade. The connection between the capitalist Wallenberg and the development of social democratic economic policy can be traced to a common German inspiration.

The Swedish Social Democrats were, as previously mentioned, inspired by the German Social Democrats’ Gotha Program, which—besides being nationalistic and focused on reforms within the capitalist framework—also disputed Marx’s theory of labor being the source of value creation.

The American Marxist Louis Proyect has explained the connection between the German Social Democrats and the Stockholm School of Economics.^[94] At the time, the German Social Democrats supported Eugen Böhm von Bawerk’s theory of value; Bohm-Bawerk is considered the father of the Austrian School of Economics, which included economists such as Ludwig von Mises and Friedrich Hayek, the theoretical architects of neoliberalism. Someone else who was inspired by Böhm-Bawerk and shared his criticisms of Marx’s theory of value was Knut Wicksell (1851–1926), the first and founding professor of the Stockholm School of Economics. But if Wicksell was inspired by Bohm-Bawerk and if the Stockholm School of Economics later developed economic policies associated with John Maynard Keynes, how does one explain this strange mixture of neoliberal and social-liberal economic thinking? The answer lies in Wicksell’s economic theories.

Knut Wicksell was a very eclectic person. He was partly inspired by the classical ideas of David Ricardo and the Austrian School of Economics, both very liberal sources, but also by Keynes’s early writings, which recommended that the state should regulate capitalism. No wonder Wicksell has been called the “economist of economists.” Despite his liberal roots, he concluded that a capitalist economy left to its own devices would produce recurrent devastating crises and make the rich richer and the poor poorer. To counter this, state-regulated interest rates and monetary policy were necessary. Wicksell’s theoretical specialty was interest rates, prices, and monetary policy, and he was a strong advocate of using interest rates to maintain price stability. In addition, he advocated progressive taxation to promote a more equal distribution of wealth.

Wicksell was also influenced by the classical economist Thomas Malthus and his theories about overpopulation. He was deeply worried that technological development, productivity, and the volume of production would not be able to keep pace with population growth. He sought to determine the “optimal population size” and, as a result, was a strong advocate of birth control.

Wicksell was a controversial figure who was outspoken on many social issues. He was strongly opposed to alcohol and prostitution; he questioned social hierarchy, the institution of marriage, the Church, monarchy, and the military. His wife, Anna Bugge, was a prominent feminist. At a lecture in 1908, he poked fun at the idea of Jesus’s “virgin birth,” which led to his conviction for blasphemy and two months’ imprisonment. Wicksell saw himself as more than just an economist; he wanted to be a social reformer.^[95]

Notwithstanding all this, in 1916 Wicksell became a government advisor on finance and banking matters. He died in 1926, but his Stockholm School of Economics was to be further developed by esteemed economists such as Bertil Ohlin, Gunnar Myrdal, and Erik Lindahl. Dag Hammarskjöld, the later Social Democratic minister and Secretary-General of the United Nations, was also a pupil of Wicksell’s.96 (We will return to Hammarskjöld later.)

In 1937, Bertil Ohlin published an article entitled “Some Notes on the Stockholm Theory of Savings and Investment,” in the influential Economic Journal. The article was published in response to Keynes’s book The General Theory of Employment, Interest and Money, which had appeared the year prior. The purpose of the article was to draw international attention to the Stockholm School of Economics, which according to Ohlin had anticipated Keynes’s findings. Gunnar Myrdal, who was also a supporter of Keynes’s ideas, maintained that he and the School of Economics had first suggested adjusting national budgets to slow down or speed up a national economy.

Of greater importance to immediate political concerns, Wicksell and his pupils influenced Ernst Wigforss (1881–1977), who was the Social Democratic Finance Minister for most of the period from 1924 to 1949, as well as being a special advisor to the trade union movement. Wigforss was a knowledgeable economist in his own right and a Keynesian before Keynes, so to speak. Like Keynes, Wigforss believed that left unregulated, capitalism would run off track. There was an inherent imbalance in capitalism between the growing supply of goods and the limited purchasing power created by wages and profits from the same production. This contradiction would lead to crises of overproduction/underconsumption and then to unemployment. The state had to regulate capitalism, partly through interest rates and monetary and fiscal policies to stimulate employment, partly through state-initiated projects, such as new infrastructure and social housing, to promote employment and thereby increase purchasing power. During the economic slump of the 1930s, the Social Democratic government implemented Wicksell and Wigforss’s ideas about interest rates and monetary and price policy, to get the wheels of the economy spinning again.97 Wigforss is also regarded as the mastermind behind the high and progressive income tax in Sweden, used to finance social welfare measures and redistribute income in society.

In the post–World War II Cold War, with its two rival political blocs around the United States and the Soviet Union, the Stockholm School of Economics enjoyed international appeal for promising a “third way” between a liberal capitalist economy and a socialist planned economy. The supposed accomplishment of this third way was to have achieved a high level of social equality and welfare without undermining the “efficiency” of the capitalist market economy. In order to succeed, however, such an economic strategy requires that some political and class-related preconditions be met.

The division of power

Despite almost half a century of continuous Social Democratic governments, capitalism has never been challenged in Sweden. The economy is firmly based on the accumulation of capital, a market economy, and private ownership of the means of production. Sweden is a capitalist state based on the rule of law, freedom of expression, and the right to organize. However, it is a special form of capitalist state. The Swedish state has been characterized by a division of power between the working class and the bourgeoisie via parliamentary mechanisms. This division of power does not mean that class struggle has ended. It is an expression of it.

The Swedish capitalist welfare state does not solely represent the interests of capital or the working class. The state is an organization that class society establishes in order to maintain social peace and uphold the optimal conditions for its mode of production. The prime minister of the welfare state is not the representative of narrow capitalist interests or of working-class interests but is simply the representative of the current mode of production. Power accrues to the government best suited to serve, preserve, and develop the existing mode of production, based on the informal social contract between capital and labor. This is how a capitalist welfare state comes to exercise hegemony. As Gramsci explained: “Obviously, the fact of hegemony presupposes that the interests and tendencies of those groups over whom hegemony is exercised have been taken into account and a certain equilibrium is established.”^[98]

There is nothing new, special, or controversial about the division of state power between classes. In a series of articles from 1848–50, collected under the title The Class Struggles in France, Marx described how the constitution of the bourgeois state grants political rights to the classes it exploits:

The comprehensive contradiction of this constitution, however, consists in the following: The classes whose social slavery the constitution is to perpetuate—proletariat, peasantry, petty bourgeoisie—it puts in possession of political power through universal suffrage (sic). And from the class whose old social power it sanctions, the bourgeoisie, it withdraws the political guarantees of this power. It forces the political rule of the bourgeoisie into democratic conditions, which at every moment help the hostile classes to victory and jeopardize the very foundations of bourgeois society. From the first group it demands that they should not go forward from political to social emancipation; from the others that they should not go back from social to political restoration.^[99]

Sweden’s constitution and parliamentary system serve the same purpose. They guarantee the economic predominance of capital while at the same time providing political rights to all citizens. With this power-sharing arrangement, class struggle is limited to dividing up the benefits from the accumulation of capital. Throughout the last century, this state form became increasingly important for the management of capitalism in the core. What’s more, this state form became the owner of infrastructure, institutions, and even means of production, and the capitalist welfare state developed a significant public sector employing many people (a fact that would help to secure its existence).

It is important to remember, however, that the emergence of this power-sharing arrangement and the subsequent construction of the welfare state were tied closely to the development of imperialism—a fact that is denied or dismissed by social democrats and many on the left, who tend to view class struggle from a strictly national perspective. Seen from such a perspective, reformism waged a very successful struggle.

Imperialism and the split in socialism

It was this combination of nationalism and reformism that Lenin fought against so fiercely in the Second International, in the years around the First World War. He rhetorically asked the question:

Is there any connection between imperialism and the monstrous and disgusting victory opportunism (in the form of social-chauvinism) has gained over the labour movement in Europe? This is the fundamental question of modern socialism.^[100]

Lenin’s answer was affirmative. Imperialism promoted extraordinary profits and national chauvinism, which laid the basis for what Lenin called a “labor aristocracy” and for the success of its political representatives, the Social Democrats. Lenin described the phenomenon in his pamphlet Imperialism, the Highest Stage of Capitalism:

As this pamphlet shows, capitalism has now singled out a handful (less than one-tenth of the inhabitants of the globe; less than one-fifth at a most “generous” and liberal calculation) of exceptionally rich and powerful states which plunder the whole world simply by “clipping coupons.” Capital exports yield an income of eight to ten thousand million francs per annum, at pre-war prices and according to pre-war bourgeois statistics. Now, of course, they yield much more.

Obviously, out of such enormous superprofits (since they are obtained over and above the profits which capitalists squeeze out of the workers of their “own” country) it is possible to bribe the labour leaders and the upper stratum of the labour aristocracy. And that is just what the capitalists of the “advanced” countries are doing: they are bribing them in a thousand different ways, direct and indirect, overt and covert.

This stratum of workers-turned-bourgeois, or the labour aristocracy, who are quite philistine in their mode of life, in the size of their earnings and in their entire outlook, is the principal prop of the Second International, and in our days, the principal social (not military) prop of the bourgeoisie. For they are the real agents of the bourgeoisie in the working-class movement, the labour lieutenants of the capitalist class, real vehicles of reformism and chauvinism. In the civil war between the proletariat and the bourgeoisie they inevitably, and in no small numbers, take the side of the bourgeoisie, the “Versaillais” against the “Communards.”

Unless the economic roots of this phenomenon are understood and its political and social significance is appreciated, not a step can be taken toward the solution of the practical problems of the communist movement and of the impending social revolution.^[101]

The concept of “Social Imperialism,” meaning social democratic politics at home and imperialism abroad, was widely used by Lenin.

The split in Sweden

The Social Democrats in Denmark and Sweden did not start out revolutionary and then become reformist. Under the tutelage of the German Social Democrats, these parties were born reformist. Nonetheless, they each had minority radical factions. As a result of Lenin’s ideological struggle in the Second International, there was in Sweden—as in the rest of Europe—a split between the vast majority of Social Democrats and the minority of Communists, who in Sweden organized as the Socialdemokratiska Vänsterparti (Social Democratic Left Party). In 1919 they joined the newly formed Third International (the Comintern), and in 1921 they changed their name to the Sveriges Kommunistiska Parti (Communist Party of Sweden).^[102]

This split created distrust between the two wings of the Swedish labor movement. The Social Democrats regarded the Communists as traitors to their nation because of their wholehearted defense of “socialism in one country”—the Soviet Union. The Communists, in turn, considered the Social Democrats to be class traitors because they cooperated with capital.

There is no doubt that the organizational split strengthened the position of the Social Democrats in parliament. First, it sent a signal that the Social Democrats were unequivocally committed to reforms within a capitalist framework. Second, the fear of radical forms of socialism helped convince the bourgeoisie to accept the existence of Social Democratic governments, as the lesser of two evils. Following their parting with the radical left, the Social Democrats would play a leading role in Swedish politics: with the exception of four years (1928–32), they would control the government from 1921 to 1976. Karen Anderson and Steven Snow have described the role of Sweden’s Social Democrats in government:

'The Social Democrats were historically linked to the unions, from which they derived much political support, but as a party often in government, it felt obliged to reduce the economic losses from labor conflicts. In the 1920s the SAP “repeatedly advocated general interests over and above the struggle of individual groups of workers for better working conditions.” Throughout this period, in fact, the SAP often stood with employers on the issue of wage rates. When the employers said that a wage reduction was unavoidable, the Social Democratic representatives in the unions often supported them. In 1920, for example, in response to a recession and in the face of unions’ appeals, the Social Democratic Minister of Finance declared “The demand for increased wages must cease.” The party was also willing to criticize outbreaks of violence in clashes between workers and police. In several labor disputes, even though the police apparently used excessive force, the SAP proved willing to denounce the tactics of striking workers. “Offenses against existing law must always be condemned,” the SAP Prime Minister argued.'^[103]

The world economic crisis in the 1930s provided the opening for the Social Democratic movement’s big breakthrough. Social Democrats put forth an economic policy that was able to pull capitalism out of its crisis, not only in Sweden but also throughout Northwestern Europe as well as the United States, where such policies took the form of President Roosevelt’s New Deal. Through social welfare programs, infrastructure construction projects, and social housing, jobs were created and this in turn increased purchasing power and got the wheels of capitalism turning again. The social democrats were managing capitalism better than the liberals and conservatives. At the same time, social democratic policies defused the threat of social unrest in response to the crisis.

Another reason for the parliamentary success of the Social Democratic Party was its transformation from a working-class party into a “people’s party.” The Social Democrats were able to form coalitions, not only with capital but also with farmers. In 1933, the Social Democratic government drafted an agreement with the Bondeforbundet (Farmers’ Federation—the predecessor of the Center Party). The Farmers’ Federation agreed to support the Social Democratic government’s labor market policy in exchange for subsidies for agricultural commodities. The opposition denounced the settlement as shameless horse- trading, but regardless, it signaled the start of a long-term collaboration.

As previously noted, social democratic economic policy is based on the idea of a “third way.” Not naked capitalism and the dictatorship of the bourgeoisie but also not communism and the dictatorship of the proletariat. Instead, a political system where the working class and capital must work together to avoid mutually destructive confrontations and must try to achieve a high employment rate and maximum productivity. To achieve these goals, conflict between labor and capital must be resolved peacefully in a fixed institutional framework.

Following a major strike in 1909, the Swedish labor market had been characterized by many unregulated conflicts and wildcat strikes. These reached a high point in 1930–32 (see table below). In 1931, the Communist Party (Vänstrepartiet Kommunisterne) led a general strike to protest against the deaths of five workers who had been shot by soldiers deployed to protect scabs at a strike at a paper mill in Ådalen.104 The general strike led to calls for a general election, which returned the Social Democrats to power. They immediately began negotiations with the trade unions and the Employers’ Association to establish lasting peace in the labor market.

After long and difficult negotiations, in 1938 the trade union movement and Employers’ Association entered the so- called Saltsjöbadsavtalet (the Saltsjöbaden Agreements, named after the seaside community where the accords were finalized). The main principle of this agreement was that all conflicts must be resolved by negotiations and mediation. The Swedish Trade Union Confederation (Landsorganisationen, LO) was to seek peaceful solutions and cut off all political and financial support to member unions that refused to accept a settlement proposed by the national union. The LO could also prohibit a strike if it included more than 3 percent of the members of a member union. Not all unions were enthusiastic about the Saltsjöbadsavtalet—as the Swedish Transport Workers’ Association’s put it, “For fear of death, one commits suicide.”^[105]

Sweden and Nazi Germany

From the mid-1930s, the world economic crisis began to abate and inter-imperialist rivalry once again took precedence as the principal contradiction in the development of the capitalist world system. Once again, Germany sought to translate its economic strength into increased global power. It was Germany's ambition to become the dominant power in continental Europe, subjugate the Soviet Union, and conquer territory in Asia and Africa from the old colonial powers. At the beginning of the Second World War, the United States hoped that Germany and the Soviet Union would destroy each other, leaving the global field open. After the Japanese attack on Pearl Harbor in December 1941, however, the US entered the war on the Allied side in a tactical alliance with the Soviet Union.

From December 1941 until May 1945, the contradiction between the Axis Powers (Germany, Japan, and Italy) and the Allies (the United States, England, and the Soviet Union) was the principal contradiction. It had a decisive impact on all other contradictions in the world—and thus also on developments in Sweden.

Although Sweden (like Denmark) remained neutral during World War I, Swedish capital (like Danish capital) profited handsomely from exports to Germany. Sweden's special relationship with Germany continued through the 1930s, and Swedish iron, steel, and machinery, especially ball bearings, were of particular importance to German industry, not least for the manufacture of military armaments. In the late 1930s, 75 percent of Sweden's iron exports went to Germany (see table on the next page.)107 In 1934, Hitler stated that without Swedish iron ore Germany would not be able to wage war. In turn, Sweden imported German coke and coal, which were an essential energy source. Germany's payments for Swedish iron during the war were made partly with gold stolen from Belgium, the Netherlands, and Jews in occupied Europe, all melted down to avoid detection.^[108]

TABLE 2. GERMAN IMPORTS OF SWEDISH IRON ORE, 1933–43109

Year Tons (Millions)

1933 2.3

1937 9.1

1942 9.0

1943 10.1

In December 1939, Social Democratic Prime Minister Per Albin Hansson formed a national unity government of all parties in the Riksdag, except the Communists. In 1940, the Social Democrats' new program declared that the party was now "One with the Swedish nation."

Denmark and Norway were occupied by Germany in April 1940. The Danish Social Democratic government under Vilhelm Buhl chose to cooperate with the occupying power, both politically and economically. The government announced that any resistance was illegal. Sabotage was terrorism. In August 1941, parliament unanimously approved a law making communist organizations illegal. Roughly 300 communists, including three members of parliament, were arrested by Danish police and sent to a prison camp in Denmark; 150 were later transferred to Stutthof concentration camp in Poland, where 22 died. Parliamentary elections were held in March 1943, with an all-time high participation of 89.5 percent—there was massive support for the policy of cooperation. In August 1943, however, the Social Democratic government broke off relations with Nazi Germany after public unrest and strikes in many major cities in Denmark. The fortunes of war had shifted and it was now time to change horses. Norway was the only Nordic country to make a clean break with Nazi Germany when it was occupied: the Norwegian army resisted the occupation and the government and King Håkon went into exile in England.

In his article on Sweden and Nazi Germany, Louis Proyect recounts how in July 1940 an agreement was concluded allowing German troops to transit through Sweden. Every month, approximately 30,000 Nazi soldiers traveled by Swedish rail to Norway and the eastern front, along with 1,500 freight wagons loaded with arms and other supplies. When Germany launched Operation Barbarossa against the Soviet Union in November 1940, Swedish trains transported 75,000 tons of German military equipment to the front and wounded soldiers from the front to hospitals in Norway. Sweden also sold and leased trucks to Germany for use within Sweden. The Swedish authorities established camps in Sweden for German troops transitting through and provided supplies of oil, food, etc., just as Swedish airspace was made available for German military aircraft on their way to the Soviet Union.^[110]

In 1940, when Torgny Segerstedt, editor of the Göteborgs Handels- och Sjöfartstidning, criticized these Swedish policies, the government confiscated three issues of the newspaper. When Segerstedt subsequently criticized the fact that the Swedish army commander Olof Thörnell had received the Grand Cross of the Order of the German Eagle along with a letter from Hitler and Ribbentrop, the newspaper was once again confiscated and Segerstedt was called before King Gustav V to receive a reprimand.^[111] In Sympathy for the Devil: Neutral Europe and Nazi Germany in World War II, Christian Leitz describes the Social Democratic Hansson government as follows:

In view of continued Swedish supplies to the Third Reich it is not surprising that relations between Sweden and the Allies "remained characterized for the rest of the war by suspicion and anger on the part of the Allies and nervousness over post-war trade prospects among the Swedes." Although, by 1944, Germany was evidently losing the war, Sweden continued to make a vital contribution to the German war effort. In September 1944 Churchill brought the attitude of the Swedes to a point when he accused them of "calculated selfishness, which has distinguished them in both wars against Germany." Why did the Swedish government not respond more readily to the growing Allied pressure? One important reason was that, even during the second half of the war, the Swedish government and an overwhelmingly pro-Allied Swedish public accepted trade with Germany as a national right under international law. ... Essentially, Hansson seems to have wanted to sit out the war without having to make any radical changes in the course of Sweden's policy of neutrality. In this undertaking Hansson was very willingly supported by his foreign minister, Gunther ... . Gunther's policies were quite pro-German even in the later stages of the war.^[112]

Despite increasing pressure from the Allies to stop trading with Germany, Sweden continued to export iron and ball bearings to the Nazis until January 1945.^[113]

The Swedish far right

Sweden's relationship with Germany was not just a matter of business dealings. Political developments in Germany also affected Sweden. The far right has generally played a greater role in Sweden than in Norway and Denmark, both before and after the Second World War. Apart from the inspiration from Germany, the Swedish far right had its own ideologues, such as the previously mentioned Rudolf Kjellén. The far right enjoyed support in academia, amongst the bourgeoisie, as well as in military and police circles.

Per Engdahl (1909–1994) was a particularly central figure on the organizational level. As a young man, in the late 1920s he joined the Sveriges Fascistiska Kamporganisation (Fascist Struggle Organization of Sweden). In the 1930s, Engdahl was a leading member of various fascist groups. In 1941, he joined the Riksförbundet Sverige-Germany (National Sweden-Germany Federation) and, at the same time, formed the Svensk Motstan (Swedish Opposition), later known as the Nysvenska Rörelsen (New Swedish Movement). In July 1941, he wrote an open letter to the Prime Minister, in which he suggested that Sweden become a vassal state of Germany, arguing that "Sweden cannot assert its interests politically or economically except in accord and cooperation with the dominant power on the European continent."^[114]

In 1941, Engdahl published the book Det kämpande Tyskland (The Struggling Germany), a tribute to Hitler with a preface by Sven Hedin, a pro-Nazi explorer and academic, highly decorated in both Germany and Sweden, and a member of the Swedish Academy.^[115] The book included articles by a variety of prominent figures: Fredrik Böök, professor of literary history at Lund University; Rütger Essén, professor of philosophy and a diplomat; Sigrid Gillner, a Social Democrat member of parliament who turned Nazi; the poet Irma Nordvang; the journalist Christer Jäderlund; Olympic sports shooter Axel Gyllenkrok; and Gustaf Jacobson, a professor of philosophy and history. Sympathy for Nazi Germany was widespread in Sweden in 1941.

Engdahl was undeterred by the German defeat. In the summer of 1945, demonstrations were organized by Engdahl's New Swedish Movement in Malmö, in the South of Sweden, against the "Allies' aggression and the emptiness of their ideology." During this period, Engdahl was also involved in helping Nazis to escape from Denmark, Norway, and Sweden to safety in West Germany, Spain, and Latin America.^[116] In 1951, Engdahl and the New Swedish Movement organized a congress in Malmö, which founded the Malmörörelsen (Malmo Movement), also known as the European Social Movement. The remnants of European Nazism and fascism in Sweden, Italy, Britain, Spain, France, Portugal, Belgium, and the Netherlands were all represented at this conference. It is noteworthy that the first postwar attempt to reorganize the international fascist movement chose Malmö as its base.^[117]

In his autobiography, Fribytare i folkhemmet (Pirates of the People's Home), published in 1979, Engdahl focused his attention on immigration.^[118] In 1983, inspired by this book, Sven Davidsson—a friend of Engdahl's from the New Swedish Movement—founded the Keep Sweden Swedish organization. This organization merged with the Framstegspartiets (Progressive Party) to form the Sverigepartiet (Sweden Party), Davidson being its vice president. The new party only existed for a short time, since in 1988 it became part of the Sverigedemokraterna (Swedish Democrats), in which Davidson remains a leading force, sitting on its board.^[119] As such, there is an unbroken line of individuals and organizations connecting the fascism of the 1930s and the Swedish Democrats. The Swedish Democrats are today the leading right-wing party in Sweden; they received 17.6 percent of the vote in the September 2018 parliamentary elections, coming in third after the Social Democrats (28.4 percent) and the Liberal Party (19 percent).

Engdahl was also friends with Ingvar Feodor Kamprad (1926–2018), the founder of IKEA. Kamprad's grandparents were related to the Field Marshal and later German President Paul von Hindenburg. His parents became big landowners in Småland, the southeastern part of Sweden. In 1942, Kamprad joined Engdahl's New Swedish Movement and the two men became close friends. The relationship continued after the war, and Engdahl was one of the few people from outside the family to attend Kamprad's wedding in 1950. Kamprad only left the New Swedish Movement in the 1950s—perhaps to avoid compromising his company IKEA. Kamprad's membership became public knowledge in 1994, when some of Engdahl's personal letters were published in connection with his death. Kamprad publicly regretted his membership in the New Swedish Movement; in an interview on Swedish television in August 2010, however, he insisted that "Per Engdahl was a great person; I will maintain that position as long as I live."^[120]

The far right in Sweden is therefore different from in Denmark, where the movement was marginalized after World War II and never really recovered. Today's populist right-wing Danish People's Party is rooted in a mix of ultra-liberalism and Islamophobia. In recent decades, however, it has adopted more social democratic positions on issues like eldercare while maintaining its strong opposition to immigration from the Global South. This does not make the Danish People's Party less unpleasant or dangerous than the Swedish Democrats. On the contrary: it has managed to become mainstream, an acceptable partner for both the Liberals and the Social Democrats in the Danish Parliament.

I will come back to the position of the Swedish populist right wing; for the moment, however, lets return to the development of the folkhemmet following the Second World War.

Sweden in the American World Order

Sweden's most important trading partner Germany lost the war. Huge areas of Europe and Japan lay in ruins, while the productive forces of the United States had grown and had been modernized during the war. The imperialist rivalry that had dominated world politics since the turn of the century was resolved. The United States succeeded the British Empire as the new global hegemon.

Western Europe was rebuilt on American terms, via the Marshall Plan. The idea was to develop Europe as a united market for US investments, commodities, and culture. Monopoly capital became increasingly multinational. A large number of international agreements were concluded and various economic, political, and military international institutions were established to administer a more global capitalism under the leadership of the United States. At first, the United Nations with its Security Council consisted of the victorious Allied nations (China excluded); its sub-organizations dealt with everything from development and culture to health and the labor market. International financial and banking systems were reorganized under the Bretton Woods agreement, which enshrined the dominant position of the United States in the world, symbolized by the US dollar serving as the global currency. The US established an extensive network of approximately 800 military naval and air bases in 177 countries, allowing it to quickly intervene anywhere in the world. At the end of the war, the US demonstrated the effects of its new weapon, the atomic bomb, on Hiroshima and Nagasaki. As such, throughout the 1950s, the United States was the undisputed leader of an increasingly globalized capitalism, with Canada, Western Europe, Australia, and Japan being junior partners obliged to submit to US interests.

The United States wanted "free trade" and put pressure on the old European colonial powers to decolonize in order to open up Asia and Africa for US capital and exports, while Latin America was to remain America's very own private backyard. India was the first major colony to become independent in 1947, because the USA wanted it to. This was not out of any sympathy for colonized people. The USA was no friend of decolonization at any price. Decolonization was only welcome when the newly independent countries were to be ruled by regimes that guaranteed US access to their raw materials, cheap labor, and markets. The American position on decolonization was characterized by two things: (1) Demanding decolonization in the context of the contradiction between the USA and the old colonial powers; (2) Making sure that the governments of the newly independent countries fit in with the USA's economic, strategic, and political plans in the context of the contradiction between the USA and the socialist bloc.

The British led a barbaric colonial war against Malaya and benefited from full US support because the Malayan liberation movement was led by communists. The same was true of the French fighting against anti-colonial movements in Indochina. On the other hand, the Netherlands were forced by the United States to grant Indonesia independence because Sukarno's vision for the country had become acceptable to US interests. The United States also made it clear to the French that the countries of Indochina should become independent once the communists were defeated. The USA got militarily involved in the Indochina conflict when the French seemed incapable of defeating the communists after the battle of Dien Bien Phu in 1954.

The principal contradiction in the first two decades following the war was the contradiction between the United States and the socialist bloc. It was not only America's position in the world system that was strengthened by the war, but the Soviet Union's too. Something must have gone right in the 1920s and 30s, despite the power struggle between Stalin and Trotsky, since the Soviet Union was able to defeat the German war machine and rebuild the country after the war. In addition, communists seized state power in parts of Eastern Europe. Communist parties were also popular in many Western European countries, due to the role they had played in the struggle against the Nazi occupation. In China, the Communist Party proclaimed the People's Republic in 1949. One third of the world system was part of a socialist bloc detached from the reach of western capital. To counter this threat to US hegemony, NATO was established and "cold" and "hot" wars were launched to keep the socialist bloc in check. All these contradictions were critically important to Sweden's postwar development.

Sweden benefited from having an intact production apparatus and access to a large export market in Europe. Companies such as Volvo, Saab, Electrolux, Husqvarna, and LM Ericsson were expanding rapidly. Sweden quickly adapted to the new world order, taking part in the US Marshall Plan for the reconstruction of Europe and becoming a member of the OECD. At least officially, however, it maintained its military neutrality and, unlike Denmark and Norway, did not join NATO. Covertly, however, Sweden supplied NATO with military intelligence on Soviet movements in the Baltic region.

In the postwar period the Social Democrats were firmly in power in Sweden, with majority governments and enjoying good relations with the trade unions and capital alike. Supplementing the Saltsjöbaden Agreement between the trade unions and Employers' Association, the Social Democrats introduced the Harpsund Democracy, named after a manor house that serves as the prime minister's recreational residence. In the 1950s and 60s, the manor became the venue for numerous informal meetings between the government, the Employers' Association, and trade unions, where political guidelines were laid down to ensure a peaceful labor market.

Social Democratic governments under Prime Minister Tage Erlander in the 1950s and Olof Palme in the 1960s and 1970s took Per Albin Hansson's idea of the folkhem and developed it further into the capitalist welfare state, which was to include practically the entire population.

Swedish neocolonialism

The US demand for free trade after the Second World War forced Europe's colonial powers to decolonize, thus opening Asia and Africa up to US capital and exports. The old form of colonialism had lost its legitimacy and utility. Direct administrative and military rule over the colonies increasingly came to represent a financial burden for the European powers. Imperialism changed character, switching from the directly violent exploitation of colonialism to the more market-driven exploitation of neocolonialism in the form of unequal exchange. The Third World exported mainly raw materials and agricultural products produced by low-wage labor and imported industrial goods produced by relatively high-wage labor in the US and Europe.

In the colonial period, Sweden had been forced to operate in the wake of the great colonial powers, especially Germany; neocolonialism, however, provided new opportunities to acquire direct economic and political influence in Asia and Africa. One example of this was LAMCO, the Liberian American-Swedish Minerals Company.

In 1955, LAMCO discovered one of the world's largest and cleanest deposits of iron ore in Mount Nimba in Liberia, in West Africa. The ore was easily accessible, just below ground level; no underground mineshaft or tunnels were necessary, all that was required was to scrape the surface and start digging. LAMCO consisted of Marcus Wallenberg's Stockholm Enskilda Bank, Skånska Cement, Sentab, Atlas Copco, Nordström Linbanor, and Grängesberg. The Swedish investors owned 75 percent of LAMCO, the American Bethlehem Steel Corporation the remaining 25 percent.^[121] The Grängesberg firm, which had experience dealing with iron ore in the northern part of Sweden, also received a contract with LAMCO concerning maritime transport and sale of the ore.

Exports began in 1963 after LAMCO built a 270km railway from the mine to the coastal town of Buchanan, where LAMCO established a new port, drawing on experience with the ports of Narvik, Svartön, and Oxelösund in Sweden. A total of $250 million was invested in the project, and in the investment phase 11,600 people were employed in the construction work. The mine made Liberia the world's largest iron ore supplier in the 1970s.

According to contemporary media accounts, a "little folkhem" was established in Liberia in connection with the mining site, complete with safe roads, modern homes, schools, hospitals, supermarkets, recreation facilities, and even a police station and courthouse. Locals worked at the mine, but the managers, skilled workers, and technicians were recruited in Sweden, attracted by the high wages and low taxes.^[122]

During the production phase, around 15,000 people worked at LAMCO in Liberia. In Sweden, it was presented as a successful example of a "development project" in a poor African country. The progressive image cracked in 1966, however, when Swedish television aired the documentary Svart vecka i Nimba ("Black Week in Nimba"). The film tells the story of a strike at LAMCO and the Swedes are portrayed as racist neocolonialists.^[123] The following year another strike broke out. The Liberian government deployed the army to protect LAMCO's property and the Swedish management. President Tubman declared the strike illegal and workers identified as strike leaders were arrested and later fired.

Siahyonkron Nyanseor, one of the workers, recounted his experience at LAMCO:

I was taught mechanical technology, welding, electricity, Iron Ore Handling Plant Operations, and many other technical skills. After the nine-month intensive training, we graduated, and were assigned to LAMCO. Our group was part of the "Liberianization scheme." We were supposed to replace the European/American expatriate employees. However, when the all Liberians crew took over the operations of the Control Room, amenities such as the drinking water cooler, icebox (refrigerator), toilet facility (portable toilet), etc. were removed from the station. We had to call for relieve, to get a drink of water and use the toilet.

When I left LAMCO in December 1968 to come to the United States, I was earning 40 cents per hour, whereas the expatriates that we replaced were making somewhere in the neighborhood of $2,500.00 to $3,000.00 US dollars per month. In addition, their benefits package included one-month paid vacation; free housing in the company's residential area, healthcare benefits, the use of the company supermarket, private school for their children, mess hall, recreational privileges, etc. The benefits provided for Liberian workers were substandard, at best, inferior.^[124]

Throughout the 1960s and early 1970s, LAMCO was making big money, as the high-quality Liberian ore was much in demand on the world market. In the mid-1970s, however, the oil crisis hit the world economy and, as a result, a period of protracted stagnation set in. The steel industry was particularly hard hit and LAMCO had to reduce production as company profits decreased. When there is less food on people's plates they start fighting over the crumbs. LAMCO and the Liberian government were increasingly at odds over the operation of the mine and how to split the profits. At the same time, Liberia was increasingly politically unstable, and in April 1980 President Tubman was assassinated in a bloody military coup. LAMCO finally abandoned its operations in Liberia in 1983.

LAMCO's activities still had consequences for Liberia, however, as former LAMCO employee Nyanseor explained:

Whatever arrangement or agreement LAMCO and the Liberian government had unfortunately did not include the protection of the Atlantic Ocean and the environment, nor even the safety and health of the people. LAMCO was given "carte blanche" to dump the waste from the iron ore into the ocean.

Over the years, several individuals who once worked in the LAMCO environment contracted lungs-related illnesses and eventually died. I suspect some of these deaths could be attributed to the poor environmental conditions they worked in.^[125]

Patrice Lumumba and Dag Hammarskjöld

Colonialism and neocolonialism in Africa led to resistance and demands for political freedom and economic development to benefit the people. This struggle interacted with the principal contradiction at the time, between the USA and the Soviet Union. One Swede in particular came to play a significant role in the decolonization of Africa—Dag Hammarskjöld (1905–61).

The Hammarskjöld family were aristocrats; Dag’s father, Hjalmar Hammarskjöld, was prime minister from 1914–17 for the Conservative Party. As mentioned previously, Dag Hammarskjöld studied under Knut Wicksell and received a degree at the Stockholm School of Economics. He quickly rose through the ranks of the civil service and from 1951–53 was Minister of Foreign Trade in Tage Erlander’s Social Democratic government. Then his career made a leap: in 1952, the United Nations was due to have a new Secretary-General after the departure of Trygve Lie. After lengthy and difficult negotiations between the United States and the Soviet Union, Hammarskjöld was chosen as a compromise candidate. Thus, in 1953, at only 47 years of age, Hammarskjöld was elected Secretary-General of the UN. In 1960, he became deeply involved in the crisis around the decolonization of the Congo.

The Swedish Air Force also contributed nine Saab 29B “barrel” jet fighters and two reconnaissance aircraft to the UN force deployed in the Congo in 1960–64 to resolve the crisis.^[126]

The Congo had become the personal property of Belgian King Leopold II at the Berlin Conference in 1884, with Sweden’s support. Ever since it was colonized, it had been exploited and tortured. The Belgians enslaved workers to plunder the country, extracting rubber, ivory, timber, and minerals. The Belgians developed a brutal system of local militias and mercenaries to protect the interests of their mining, banking, and trading companies.^[127] Very little of Congo’s wealth benefited the people. As Mauricio Brum has written:

Ironically, Leopold II had an incomparably bigger power in Africa than in his own country; while in Belgium he was a symbolic figure in a parliamentary monarchy system, in Congo he had absolute powers, just like in the old days.

In a short period of time, the king focused his economic interests in the export of latex, an abundant product in the region’s forests, using troops of mercenaries to force the local population to cater to his interests. The extraction of ivory and mining also helped to fill Leopold’s coffers. Imposing productivity quotas so high that they were rarely reached, the Congo Free State little by little acquired such infamy that it eventually was denounced by other colonial powers: the mutilation of the local population as a form of punishment for not fulfilling the quotas—and living conditions so precarious that they provoked a mortality rate comparable to a genocide. ...

[I]t is estimated that up to 15 million people died during Leopold II’s rule, either due to the repression or the terrible living conditions imposed on the local population, with widespread disease and malnourishment.^[128]

The process of decolonization in some African countries was driven by radical liberation movements, which took advantage of the “window for change” opened by the inter-state rivalry between the US and the Soviet Union. In the Congo, Patrice Lumumba (1925–1961) became a leading figure in the liberation movement in the late 1950s. Lumumba’s parents were poor peasants, but he succeeded in getting an education as a clerk at the post office. In 1958, he was one of the founding members of the Mouvement National Congolais (MNC), which managed to unite the various ethnic groups in the country to demand independence from Belgium. Lumumba was inspired by Kwame Nkrumah, Ghana’s first president after independence in 1957 and a prominent anti-colonial politician and theorist. He met Nkrumah at the Pan-African Conference in Ghana in 1958 and they became close friends, both political and personal.

In June 1960, Lumumba was elected as the first prime minister of the Democratic Republic of Congo, after his socialist-oriented party won a large majority in the elections with a mandate to form a post-independence government. On Independence Day, June 30, 1960, Belgian King Baudouin gave a speech in which he praised Belgian colonialism and the work of “the genius”—his predecessor, King Leopold II—for having “helped” the people of the Congo. King Baudouin ended his speech with these words:

Don’t compromise the future with hasty reforms, and don’t replace the structures that Belgium hands over to you until you are sure you can do better. Don’t be afraid to come to us. We will remain by your side, give you advice.^[129]

In his reply, Lumumba reminded the audience that Congo’s independence was not some gift from Belgium:

... For this independence of the Congo, although being proclaimed today by agreement with Belgium, an amicable country, with which we are on equal terms, no Congolese worthy of the name will ever be able to forget that it was by fighting that it has been won, a day-to-day fight, an ardent and idealistic fight, a fight in which we were spared neither privation nor suffering, and for which we gave our strength and our blood. We are proud of this struggle, of tears, of fire, and of blood, to the depths of our being, for it was a noble and just struggle, and indispensable to put an end to the humiliating slavery which was imposed upon us by force.^[130]

Lumumba was determined to detach the Congo from Belgian neocolonialism, but he survived only seven months as president. A few weeks after independence, the copper-rich Katanga province, led by Moise Tshombe, declared its independence from Congo. Tshombe acted in coordination with Belgium, which sent 6,000 elite soldiers to support the secession. The aim was to ensure that Belgian mining companies could continue operating as they had under colonialism. The threat to the Congo’s integrity caused Lumumba to ask the UN to send a peacekeeping force to the country, and this triggered a Belgian-backed military coup. Lumumba was arrested on December 1, 1961, with US and Belgian assistance; United Nations troops that were present on the scene did not intervene.131 Lumumba was imprisoned in Camp Hardy military barracks, 150km from the capital city, Leopoldville; there, a conflict broke out between the soldiers, some of whom wanted Lumumba to be released and reinstated as president. On January 17, with the help of Belgian forces and coup backers, former Belgian Minister of African Affairs Harold d’Aspremont Lynden handed Lumumba and his closest advisors Maurice Mpolo and Joseph Okito over to Tshombe in Lubumbashi, the capital of Katanga province.132 Hammarskjöld’s response, as Secretary-General of the United Nations, was simply to appeal to the coup makers to grant Lumumba “due process” (sic). A few hours after arriving in Katanga on January 17, Lumumba and his associates were brutally beaten and tortured by Katangan and Belgian officers.133 Later that evening, Lumumba and his advisors were transported outside the city and executed in the presence of Tshombe and some of his companions. Lumumba’s execution was carried out by a death squad under the command of a Belgian officer, Julien Gat. A Belgian police commissioner, Frans Verscheure, was in charge of the killings.134 Lumumba and his comrades were quickly buried, but the next day Verscheure and another Belgian police commissioner, Gerard Soete, along with his brother and some soldiers, returned to the graves to move the bodies, as they feared the executions had been observed.135 On January 21, the same team once again dug up the bodies, cut them into small pieces, and dissolved them in sulfuric acid in an attempt to erase any trace of the atrocity.^[136]

The assassination of Lumumba was not some spontaneous act carried out by a small group of criminals in the pay of the mining companies. In 2000, the Belgian sociologist and writer Ludo De Witte discovered a memo from the Belgian government ordering the execution of Lumumba, as well as documents specifying the details of how it was done. In 2001, a Belgian government report described both Belgian and American plans to kill Lumumba, including a CIA plan to poison Lumumba, ordered by President Eisenhower.^[137] A plot that was later confirmed by “declassified” CIA documents.^[138] In 2013, the State Department itself confirmed that Eisenhower had authorized the liquidation of Lumumba.^[139]

While rumors swirled, the Belgian puppet-regime of Katanga separatists waited a month before officially announcing Lumumba’s death. It was February 13 when Katangan Radio first announced that “Lumumba has been killed by agitated villagers, three days after he fled from prison.”^[140]

As president, Lumumba had hoped for UN support to safeguard the decolonization process and the integrity of the Congo, but there was no help to be found from Hammarskjöld’s UN. As Helen M. Hintjens and Serena Cruz have explained:

King Leopold’s conquests were based on violence on such a massive scale that the death rate was quite unprecedented. History matters, since the conflict that arose at independence between Patrice Lumumba and the Belgian authorities, a conflict that was transposed to one between Lumumba and Hammarksjöld, was a conflict about the meaning of history. Dag Hammarskjöld may not have appreciated the depths of Belgian self-deception over the bloody history of the Congo. East-West obsessions during the Cold War added another layer to the disputes over the legacy of the colonial past.^[141]

Lumumba and Hammarskjöld were men of different personal backgrounds, ideologies, and objectives. Ludo de Witte has made the following assessment of these differences:

Lumumba intended to jettison the deadweight of colonial heritage and combat any neo-colonial designs on the country, the aims of the United Nations Secretary General were with a liberal kind of peace, and with maintaining public order.^[142]

Hammarskjöld’s hostility towards Lumumba was no secret, as Lumumba challenged his interpretation of the UN mandate in the Congo. Lumumba wanted the UN to defend the elected government and the decolonization process and regarded the secession of the Katanga province as an act of blatant sabotage.^[143] The Katanga separatist movement represented the interests of Belgian capital, white settlers, and their Congolese partners, and sought to ensure that the Congo’s wealth remained in their hands. Hammarskjöld interpreted the situation differently; in his view, separatist movements were inevitable, given the ethnic diversity of the country. According to de Witte, Hammarskjöld went so far as to describe Tshombe’s goal, an independent Katanga state, as “legitimate.”^[144]

In the confrontation between American and Soviet interests at the UN, Hammarskjöld sided with the US. Hammarskjöld wanted to appear above politics, to be seen to be supporting peace and the rule of law. The UN should limit itself to what is now known as “humanitarian intervention”; defending an elected government and the integrity of the new state, not to mention changes in the colonial economy which went against imperialist interests, were not part of his job.

Unlike Lumumba, Hammarskjöld expected the Belgians to act reasonably towards a United Nations with a Swedish Secretary-General at its head. According to Hammarskjöld, “law and order” was the top priority for the UN—the kind of “law and order” that facilitates “business as usual,” not the “law and order” that might secure the safety of an elected president.

Lumumba was taken prisoner on December 1, 1961, in the village of Lodi on the left bank of the Sankuru River. He was denied UN protection by the Ghanaian contingent of UN soldiers stationed nearby who were aware of the situation.^[145] The task of the UN troops was to protect the white settlers, not the elected prime minister, based on a position that the UN could not interfere in the Congo’s internal affairs.^[146]

Hammarskjöld and his right-hand man, the American Ralph Bunche, had apparently concluded that Lumumba posed a greater threat to peace and law and order than the separatists in Katanga did. When the killings of Lumumba and his advisors came to the attention of the UN Security Council, it asked Hammarskjöld to investigate what had happened. He initially refused, and the Security Council had to repeatedly insist that an investigation be conducted; when one finally was, it went nowhere. Nothing was clarified and no one was punished for the execution of Lumumba.^[147]

It would seem that Hammarskjöld did not recognize the contradiction between the “human face” of capitalism at home in Sweden and the brutality of imperialism in the Congo. The profit rates of Belgian investments in the Congo were two to three times higher than investments in Europe. Belgium’s largest company, the Société Générale de Belgique financial group, received 40 percent of its profits from its investments in the Congo.^[148] That is something Belgians did not want to have to give up.

Dag Hammarskjöld, the Swedish Social Democrat, chose to side with Belgian and American neocolonialism against the democratically elected socialist prime minister of the independent state of the Congo.

After the Belgians and Americans got rid of Lumumba, their interests began to come into conflict with one another. While the Belgians and their mercenaries were safeguarding the old colonial interests, the multinational companies linked to the United States were increasingly unhappy with how Belgium was trying to keep the whole cake for itself.^[149]

When Hammarskjöld finally realized that it was Belgian interests that constituted the primary threat to Congo’s peace and “free enterprise,” he decided to intervene in Katanga, but it was too late. On his way to negotiations on September 18, 1961, his aircraft crashed; Hammarskjöld and the other fourteen persons on board were never found and the circumstances surrounding the crash were never resolved. Historian David Gibbs believes that Hammarskjold’s death was not just some random accident but that there is “evidence that Belgian mining interests were responsible,” although “the dirty work” would have been carried out by local accomplices. Gibbs explains that, “Much of the Belgians’ animus was directed against Hammarskjöld personally,” even though he actually started out as being attentive to Belgian interests.^[150] What may have sealed his fate, according to Gibbs, was that he had begun to cater to Swedish and American interests at the expense of the Belgians in Katanga:

The facts are as follows. The Hammarskjold family was associated with the Liberian-American Swedish Minerals Company, known by the acronym LAMCO. This syndicate of six separate Swedish mining companies was closely connected with Boliden, another Swedish enterprise with interests in copper mining, and with the International African American Corporation. Several persons from the syndicate were involved in the UN force in the Congo, notably Sture Linner, the first head of civilian operations, who was, at the time of his hiring, a “managing director” of LAMCO. Two other Swedes employed by the UN mission as consultants also had connections with LAMCO: Sven Schwartz had been a director at a constituent company as well as chairman of the board at Boliden, and Borje Hjortzberg-Nordlund was listed as an “alternate director” at LAMCO. Both assisted the UN in evaluating the prospects for economic development, especially in the mining sector, and their interest in the Congo probably alarmed the Belgians, especially those affiliated with the Union miniere, which regarded the Swedes as interlopers in what had historically been a special “preserve” for Belgian capital. Such suspicions were increased when it was discovered that Bo Hammarskjold, the brother of the Secretary-General, was on the board of directors of Grangesberg Oxelosund, the largest of LAMCO’s constituent companies ... . The death of Hammarskjöld took place in the context of intense competition among Western mining companies for access to Katanga, and had very little to do with the rivalry between East and West.^[151]

Lumumba’s death was the result of his efforts to free Congo from Belgian imperialism. When Hammarskjöld finally turned against Belgium’s conduct in the Congo, he became almost as unpopular as Lumumba among the Belgian imperialists and settlers. The UN system’s lack of interest or ability to confront the logic of imperialism left the Congo with the same economic structures sustained by brutal violence as had existed under colonialism. Belgium’s “rubber terror” turned into “coltan terror.” King Leopold’s ghost continues to haunt the Congo.^[152]

In Sweden, Hammarskjöld received a posthumous Nobel Peace Prize, and John F. Kennedy called him “the greatest statesman of our century.” Lumumba did not even get a grave. Neocolonialism presented itself to the Third World under the veil of development aid and liberal democracy, but exploitation and oppression continued. In a 1964 speech to the UN, Che Guevara denounced the imperialist exploitation of the Congo:

I would like to refer specifically to the painful case of the Congo, unique in the history of the modern world, which shows how, with absolute impunity, with the most insolent cynicism, the rights of peoples can be flouted. The direct reason for all this is the enormous wealth of the Congo, which the imperialist countries want to keep under their control.^[153]

Today, diamonds as well as minerals that are critical for the production of smartphones are extracted under the same conditions as in colonial Congo. Child labor and brutal militias still secure high profits. Congo is also a source of the minerals required for the batteries that store energy produced by windmills and solar panels, and which will be in high demand for electric cars. It is estimated that lithium-ion batteries for electric vehicles alone will require up to 43 percent of the cobalt and 50 percent of the lithium produced globally. “Green” capitalism will be no better than fossil-fuel capitalism.^[154]

Olof Palme

While these dramatic events were taking place in Africa, the capitalist welfare states in Northwestern Europe, Canada, the United States, Australia, and New Zealand continued to flourish. In Sweden, the Social Democrat Olof Palme’s first government (1969–76) represented the pinnacle of the capitalist welfare state, testing the limits of the compromise between capital and the working class.

Olof Palme (1927–86) was from a bourgeois family; his father was a wealthy CEO and his mother an aristocrat who owned large landed estates. Olof, however, was not the first to break out of the family mold—his aunt Anna Palme had married Dr. Upendra Dutt, an Indian surgeon, and their son Rajani Palme Dutt (1886–1974) became the chief intellectual, and for a short period also chairman, of the Communist Party of Great Britain. While Palme Dutt was loyal to the Soviet Union and the Communist Party all his life, Olof Palme was strongly opposed to the Soviet Union. Many years after the fact, he would describe how the 1948 Communist seizure of power in Czechoslovakia, when he was just 21 years old, had had a decisive impact on his political views:

For many of my generation, the 1948 Prague coup was a crucial political experience. There were no mitigating circumstances to excuse the outrage. Czechoslovakia was a developed industrial nation with functioning democratic institutions. Yet Czech democracy was crushed overnight by military force, resulting in relentless persecution of dissent.^[155]

Palme’s hostility toward the Soviet Union had practical consequences. When he was in the United States studying economics and political science, the CIA attempted to recruit him. He was apparently not hostile to the idea, and after a student conference in Prague in 1949 he passed on information to the US Embassy in Stockholm about three Swedes who had been in attendance, members of the communist association Clarté: Gunnar Claesson, Gunnar Svantesson, and Hans Göran Franck, who would later be president of Amnesty International in Sweden.^[156]

From the Second World War to the early 1960s, one pretty much had to be pro-Moscow if one was a communist. While there was the Trotskyist alternative, this remained confined to small groups without much influence. The need to defend socialism in one country and the Cold War made other positions difficult. The divisions within the Communist Parties that resulted from the Soviet interventions in Prague (1948) and Hungary (1956) led to the formation of new socialist parliamentary parties in Europe. It was not until the 1960s, however, that new revolutionary left oppositions emerged as a result of criticisms of the Communist Party of the Soviet Union.

Palme became a Social Democrat, and after graduating he began working in the state administration. In 1953, at only 26 years of age, he became the secretary of Prime Minister Tage Erlander. Like his mentor, Palme was an academic (indeed, the only Social Democratic prime minister to come from the working class was Per Albin Hansson in the 1930s). While it generally took years to rise through the Social Democratic party apparatus, Palme’s career was on a fast track. He was described by the press as the gray eminence behind Erlander; as an example of the prime minister’s great confidence in him, when Erlander came down with a severe cold during a state visit to the Soviet Union in April 1956, the 29-year-old Palme was sent to negotiate in his place with Khrushchev.^[157]

In 1958, Palme was elected to the Riksdag, the Swedish parliament. He was minister without portfolio from 1963–65, Minister of Traffic and Transportation from 1965–67, Minister of Education from 1967–69, and in 1969 he became Prime Minister and Chairman of the Social Democratic party. Palme represented a political administrative class that had developed alongside the institutionalization of the division of power between capital and the working class. This layer does not cater to narrow class interests but seeks to fine-tune cooperation between capital and the trade union movement. The administrative class serves the interests of this particular form of the capitalist mode of production, working to ensure “the system” works smoothly. Members of the administrative class float in and out of top positions in national and international politics, state administration, financial foundations, large corporations, and academia.

There was another side to Olof Palme, however. He was a person who knew his own mind; just as he was critical towards the Soviets, he was also critical towards certain aspects of the USA. During his studies in the United States in the late 1940s, he had seen and was upset by the racism against Black people, and in the 1960s, like many other young people, he became outraged by the horrors of the Vietnam War. Palme led the Swedish government’s criticism of US aggression in Vietnam. As early as 1965, he spoke out against the US war in Vietnam at a public meeting in the Swedish town of Gävle. In 1968, as the US war effort intensified, Palme attended a demonstration alongside the North Vietnamese ambassador to Moscow, who was visiting Stockholm at the time. Palme was a speaker at a subsequent protest meeting at Sergels Torg, in Central Stockholm: “... if you want to speak of democracy in Vietnam, it is obvious that it is represented to a much greater extent by the NLF than by the United States and its allied junta.”^[158]

In January 1969, Sweden became the first Western country to recognize North Vietnam. In his 1972 Christmas address, Palme compared the B-52 bombings of Hanoi to the atrocities of fascism:

Guernica, Oradour, Babi Yar, Katyn, Lidice, Sharpeville, Treblinka. There, violence triumphed, and yet history’s judgment has not spared those responsible. Now we add a new name to the list: Hanoi, Christmas 1972.^[159]

The US government was naturally upset about the prime minister’s statements. Nixon called Palme “a Swedish arsehole” and brought the US ambassador home for consultations. The situation was not so bad as to interfere with the covert military cooperation between Sweden and the US, however, which continued unperturbed. Officially, Sweden was neutral; however, as early as 1952 it had begun working with NATO. Sweden provided intelligence on Soviet activities in the Baltic and received US weapons technology in return. In 1960, the United States provided Sweden with a secret security guarantee: in the event of a Soviet attack, the United States would intervene on Sweden’s side.^[160] As part of this collaboration, US experts assisted the Swedish arms manufacturer Saab to develop the Viggen jet fighter, to improve the accuracy of Swedish Polaris missiles, and to partially subsidize anti-submarine weapons for the Swedish Navy.^[161]

There is no doubt that Vietnam appreciated the Swedish government’s support, which was unique in the West. As a loyal member of NATO, the Danish Social Democratic government supported the US in Vietnam. Yet despite Palme’s harsh anti-American rhetoric, Sweden remained in a secret strategic alliance with NATO. Palme’s criticism of the United States was not grounded in a historical, economic, or political analysis of the root causes of US imperialism and the Vietnam War. The war was opposed as a political stupidity that could be corrected.

Nonetheless, Palme’s criticisms of the United States had consequences within the Swedish state apparatus. Elements within the SÄPO intelligence service distrusted Palme, and vice versa. Members of SÄPO suspected that Palme was a spy for the Soviet Union. The Social Democrats therefore felt compelled to create their own intelligence service, “IB” (Information Bureau). Ironically, IB primarily spied on the left, which in those years was demonstrating against US imperialism.

A capitalist path to socialism?

In the late 19th and early 20th century, the Swedish labor movement prioritized the struggle for the right to vote and parliamentary democracy. Once this framework was in place, they would be able to conquer government power. The next phase was social democracy: the development of the welfare state with social security and material welfare for all citizens. In the early 1980s, Sweden was in fact the country with the lowest level of income inequality in the capitalist world. The Swedish welfare state became known internationally as a middle ground between capitalism and socialism, the “Swedish model.” The third phase was to be the democratization of economic power—a democratization of ownership of the means of production. This occurred during Palme’s tenure as prime minister.

Economic development in Sweden in the 1950s and 1960s laid the basis for rising wages and the expansion of the welfare state. There was a widespread notion that Keynesian-inspired economic policies could regulate capitalism, avoiding future crises. At the same time, however, capital continued to be concentrated in fewer and fewer hands. To counter this tendency, the trade union movement began to foster the idea of “economic democracy” in the late 1960s. At first, there was confusion and disagreement about what exactly was meant by “economic democracy” and how it should be implemented. Was it just about having a say in important decisions in the company? Was it profit-sharing—a kind of collective capitalism which retained a market economy? Or was it something more radical—collective ownership of the means of production?

One of the reasons for this agenda was that the trade union movement had been politically radicalized as part of the ’68 rebellion. Many new shop stewards were to the left of the old Social Democrats. At the 1971 congress of the Swedish Trade Union Confederation (Lands Organization, or LO), a majority of delegates demanded the abolition of the employer’s right to direct and distribute work and the introduction of economic democracy. The Social Democratic leadership of the LO wanted to increase employees’ say regarding their working conditions and company operations in general, however they were against any change in the ownership of capital itself. Nonetheless, the Metal Workers’ Union managed to get majority support for a proposal that the LO should study the possibility of acquiring co-ownership of companies under the auspices of the trade union movement, through collective investment funds. This resulted in a study group being established, headed by LO economist Rudolf Meidner (1914–2005). Together with Gösta Rehn (1913–1996), Meidner had been the LO’s economic strategist since the late 1940s. Meidner was convinced that economic democratization had to strike at the heart of capitalism: private ownership of the means of production.^[162]

Together with Anna Hedborg (b. 1944), Meidner put together a proposal according to which every year companies with more than one hundred employees should transfer part of their profits to collective funds, in the form of new shares. These funds should belong to the trade union movement and be managed by the employees, making them active partners in the companies.^[163]

Over a period of 20 to 30 years, the funds would acquire a larger and larger share of the companies, until eventually they would own a majority of all shares in major Swedish corporations. It was the first time that the Swedish labor movement had made a concrete proposal challenging private ownership of the means of production. As Meidner put it:

We want to deprive the owners of capital of their power, which they are exercising precisely by virtue of their ownership. All experience shows that influence and control are not enough. Ownership plays a crucial role. I would like to refer to Marx and Wigforss: We cannot fundamentally change society without also changing the relations of ownership.^[164]

The proposal did not suggest a traditional nationalization of capital, which would give the state ownership of the means of production, let alone a planned economy where economic priorities would be decided politically by the state. Meidner’s idea was to do away with private ownership of the means of production without concentrating economic power in state institutions. It was the trade unions and their members’ position that needed to be strengthened in relation to capital.^[165] As such, it was not a break with the logic of capitalism. Sweden was to continue as a market economy, both domestically and internationally. Sweden would remain part of the capitalist world market, just as before. It would be a more democratic capitalism with the trade unions at the helm, a kind of “people’s capitalism.”

It turned out that regular trade union members supported the plan to an extent that surprised even Meidner and Hedborg; with this momentum, LO chairperson Gunnar Nilsson was convinced to support the plan. At the June 1976 LO Congress, the Meidner-Hedborg plan was approved by a large majority of delegates, who closed the debate by singing the Internationale. But it soon became clear that the Social Democratic Party, which had spent the past century pursuing peaceful class cooperation, could not endorse a proposal that called into question the private ownership of the means of production. As the Social Democrats saw things, it was the role of the trade union movement to take care of the interests of the working class, while the Social Democrats, as a people’s party and as a government, was to manage the division of power between labor and capital.

When Olof Palme first received Meidner’s proposal, he initially thought it was only a discussion paper. When he learnt it was the official policy of the national trade union, his first comment was, “They went beyond my wildest imagination.” To the Social Democratic leadership, Palme made it clear that “This is a hell, but it’s a hell we have to go through.”^[166]

Due to the longstanding close relations with the trade unions, the Social Democrats could not simply reject an important proposal passed by a large majority at the LO congress. Still, the Social Democrats avoided taking a public stand on the proposal in the 1976 parliamentary elections, in which the liberal political parties described the LO proposal as introducing “Soviet-style socialism” into Sweden.

When Olof Palme became prime minister in 1969, it seemed that economic growth and the expansion of the Swedish welfare state would continue as in previous decades. With the international oil crisis and subsequent stagflation in the early 1970s, however, it suddenly became difficult to implement new welfare reforms. Keynesian economic policies had stopped working. High-income working-class families with a house, car, lots of credit, and high consumption levels failed to support the Social Democrats. Palme lost the 1976 election and, after 44 years in power, the Social Democrats found themselves in opposition for the first time since 1931.

Palme had to find political ground between the left wing of the trade union movement and a section of the working class increasingly attracted to economic liberalism—ground from which to regain power. To achieve this, the Social Democrats and the LO leadership created a working group in 1977, tasked with drafting a bill on establishing Employee Funds.

Time was on Palme’s side. The energy from the ’68 rebellion was dissipating and neoliberalism was at the door. In 1978, the joint working group presented a modified compromise proposal, which limited Meidner’s original plan to companies of more than 500 employees. Furthermore, the funding should come not just from profits but also from the wage-earners’ salaries. The question of the ownership of the means of production had disappeared completely, as the working group’s introduction made clear: “The proposal is not going to fundamentally change the economic and political environment in which businesses operate.”^[167]

In the revised joint proposal, the purpose of the Employee Funds was no longer to transform society’s economic power relations but to finance the investments needed for industrial restructuring in the context of neoliberal globalization. In addition, the state would pay compensation for the profits paid into the funds, to indemnify the private shareholders from any loss. According to Meidner, the new proposal had nothing in common with the original except its name.168 Despite the compromise, the Social Democratic leadership refused to support the new joint proposal prior to the 1979 general election, so as not to scare away voters. It made no difference: the Social Democrats lost and the Liberals formed the new government.

In 1981, a new revised proposal was issued by the Social Democrats and the LO, largely the work of future Social Democratic Finance Minister Kjell-Olof Feldt and influenced by the new neoliberal trends. The proposal got rid of any mandatory profit-based transfer of shares to the funds. The core mechanism for changing property relations was completely gone. The purpose of the funds, whose capital now consisted of joint contributions from capital and employees, was to buy shares on the stock exchange, just like any other investor.

In the campaign leading up to the 1982 elections, the Social Democrats tried to downplay the significance of the proposal for economic democracy. They presented it as an initiative to deal with the economic crisis in Sweden by encouraging new investments. This time the Social Democrats won the election. The new Palme government drafted a bill for Employee Funds, with five funds to be established, financed primarily by contributions from the joint capital and labor payments to future pensions. The size of the funds’ total assets was limited and the funds were to own a maximum of 8 percent of each company’s shares. As he presented the bill to parliament, the Finance Minister concluded:

The Employee Funds are not an instrument intended to do away with capitalism ... . The Employee Funds are one of many corporate tools that the democratic labor movement employs to make life better for people in our country ... . The funds are a way to strengthen the common interest concerning work, production, and savings, which has existed in our country for a long time. Thus, the introduction of the Employee Funds is a reform in the traditional spirit of social democratic reform.^[169]

The bill now looked like some proposal from the Liberal Party or the Employers’ Association. But, despite all the compromises and changes to the LO’s Meidner proposal, it seemed that the opposition could not forget the content and spirit of the original. There was still strong opposition to the Social Democrats’ proposal. At the opening of parliament on October 4, 1983, approximately 75,000 people demonstrated in front of the Riksdag against the proposal. A petition against the bill received more than a half-million signatures. Opinion polls showed that 63 percent of voters were against and only 17 percent for the funds.^[170] The rhetoric was over the top; the question was presented as a choice between the funds and freedom. Nonetheless, on December 20, 1983, the bill was passed by the Riksdag with the votes of the Social Democrats and the former Communist Party, the Vänsterpartiet Kommunisternes. As for the opposition, they swore to abolish the funds as soon as they were back in power. In protest, several large companies—including Ingvar Kamprad’s IKEA, the Rausing family’s Tetra Pak, and the Persson family’s H&M—relocated their assets and headquarters out of Sweden to tax havens in Switzerland and England. There was no love lost at the time between the Swedish bourgeoisie and the Social Democrats.

In February 1986, in central Stockholm, Olof Palme was murdered, shot at close range on his way home from the cinema with his wife. As it was a spontaneous and personal outing, he did not have a bodyguard with him at the time. Despite a massive investigation, it has never been clarified whether the murder was committed by a random petty criminal or as part of a politically motivated conspiracy. The latter possibility cannot be ruled out. The Employee Funds issue had polarized the political climate in Sweden and Palme’s interventionist foreign policy had earned him many enemies, both abroad and in Sweden.

The Palme government marks the high-point of the Social Democratic era in Sweden. Individuals, however, do not create the story. It was not Palme’s death that changed the Swedish folkhem. For some time, neoliberalism had been eating away at its foundations, and it now entered the scene to restructure Swedish society.

When the Liberal Party (Moderaterne) formed the government in 1991 with Carl Bildt as prime minister, one of its first acts was to dismantle the Employee Funds and distribute their assets. Ten billion kroner were spent on various scientific research projects and the rest went into ordinary labor market pensions funds. As for the Social Democrats, SAP chairperson Ingvar Carlson promised that they would never again introduce wage-earner funds. (Parallel to the Swedish efforts to introduce “economic democracy,” the Danish Social Democrats had attempted something similar. Their proposal never reached parliament, however, as Social Democratic Prime Minister Anker Jørgensen threw in the towel and handed power over to a conservative government in 1982.)

The Employee Funds fiasco marks a boundary limit for the social democratic project in Sweden. In the end, the Social Democrats simply wanted to democratize capitalism, not abolish it. Imperceptibly, up through the 20th century, the Social Democrats had shifted from being a party which had some kind of socialist agenda to being a pro-capitalist party. At the beginning of the century, the Social Democrats defined socialism as their goal. It was how to reach and implement socialism that separated them from the more radical left. The Social Democratic strategy was to make a temporary compromise with capital on the path to socialism. At some point after World War II, however, socialism disappeared from the plan and the Social Democrats discovered a newfound appreciation for capitalism—maybe given what they could see of how “real existing socialism” was working or maybe out of a fascination with US consumer society and culture. For the Social Democrats, the growth of the Swedish welfare state was proof that a healthy capitalism could exist. When the health of capitalism is threatened by crises, it just needs some social democratic Keynesian medicine and care to set things right and reign in the worst excesses.

As for capital, the Employee Funds were beyond the pale, in terms of what was or was not an acceptable level of power-sharing with the Social Democrats. Although the final proposal did not challenge the private ownership of the means of production or the right of capital to direct and distribute work, the original ideas in the LO’s proposal had provoked the bourgeoisie. Before parliament voted on the bill, the Employers’ Association purchased full-page ads in the leading newspapers, describing the funds as the first step towards a totalitarian socialist society opposed to capitalist freedom and democracy. A slew of books were published on the relationship between capitalism and freedom. The tenor of the debate leading up to the vote had been harsh and this created cracks in the folkhem. Capital had drawn a line in the sand.

These conflicts in Swedish society had their origin in transformations in global capitalism in the second half of the 1970s, which made capital move from the defensive to the offensive, as we shall see.

Capitalism under pressure

By the early 1970s, a number of Swedish companies could be found among the world’s 500 largest multinational corporations: Volvo, Saab Scania, LM Ericsson, Electrolux, Stora Kopparbergs Bergslags, Svenska SKF, Trelleborg Cellulosa, Nobel Industries, KF Industri, Procordia, Mo & Domsjö, Sandvik, and Esselte. The years between the Second World War and the mid-1970s had not only been the golden age of Social Democracy but also of Swedish industry—perhaps because of the partnership between the two. Even the Employee Funds, which capital had fought against tooth and nail, proved a useful tool when the economic crisis hampered growth. The funds provided venture capital for modernizing and restructuring Swedish industry to better face the challenge of increased competition as globalization evolved.

As the Social Democrats reached the peak of their power in Sweden, an opposition emerged to their left that wanted even more. There were a number of wildcat strikes at the iron mines in northern Sweden in 1969 and 1970, and Meidner’s proposal to expropriate the capitalists via trade union–controlled funds was adopted by the LO. Furthermore, the spirit of ’68 radicalized a section of youth, who not only wanted to abolish capitalism and imperialism but were also highly critical of the Social Democrats and the old Communist Parties—it was the emergence of a New Left. All this was not just a Swedish phenomenon; the same trends could be found elsewhere in Europe, especially in Italy, France, and Germany. In the US, resistance to the Vietnam War set the political agenda in the late 1960s and early 1970s. At the same time, the Black Liberation Movement was rapidly escalating to new levels of struggle; this took form in a number of new organizations, the most famous of which probably being the Black Panther Party.

Economically, these confrontations were expressed in the dollar crises of 1967–8 and 1971, which forced the US to abandon the gold standard. Capital was not only under pressure in Europe and North America, however—forces in the Third World were also demanding change.

In contrast to the relatively peaceful coexistence between the working class and capital in the core countries after the Second World War, strong nationalist and anti-imperialist movements emerged in the Third World. In total, there were about 40 revolutionary attempts to seize state power in the Third World between 1945 and 1975.

The contradiction between neocolonialism and the Third World also took global economic and institutional forms. In the 1970s, a group of 77 Third World countries organized themselves into the G77, demanding that new global institutions be established to govern the world economy, instead of the US-dominated Bretton Woods institutions.

The raw material–producing countries in the Third World tried to counteract the unequal terms of trade with the rich countries by establishing oil, bauxite (aluminum), copper, and sugar cartels. The most successful example of this strategy was OPEC, the Organization of the Petroleum Exporting Countries. OPEC also proved itself to be a political force. In October 1973, during the Yom Kippur War, the Arab OPEC countries imposed an oil embargo on the US and Western Europe and then quadrupled the price of oil, which resulted in the oil crisis of 1973–74. For the first time since the Second World War, the West experienced an economic crisis with high inflation simultaneous with stagnation in production and consumption—stagflation.

As a result of this combined pressure, capital went on the offensive; its opportunities for expansion were far from exhausted. There were still hundreds of millions of people in the Third World and in the socialist bloc who could be incorporated as cheap labor in a globalized capitalism, if production could only be outsourced. To implement such a strategy required a showdown with the social democratic state and trade unions in Europe and North America.

From the perspective of capital, the social state had gradually changed from being part of the solution to being the problem. The social state’s welfare programs demanded an increasing share of profits, but even worse, the social state’s regulation of financial activities and trade was a hindrance to the transnational activities of capital.

If transnational capital was to be able to invest and trade globally and to outsource production to countries where wages and working conditions were optimal for accumulation, it had to break free from the grip of the social democratic state and its accomplices—the domestic trade unions. This was the rationale behind capital’s counter-offensive against the social state under the banner of neoliberalism. This was a prerequisite for enrolling millions of new proletarians in the Global South into the capitalist world system. Capital had to clear away the obstacles at home before it could proceed with its global expansion.

The neoliberal breakthrough

One of the most important factors behind the neoliberal breakthrough was the development of technologies and management tools (meaning: productive forces) required for the globalization of production, to make it possible for capital to free itself from the nation-state’s embrace.

Specifically, it was the development of communications and transport technology that made global neoliberalism possible. The introduction of the standard-size container for land and sea transport is one example. Instead of taking days or weeks to unload and load a ship, it now took only hours. The container reduced the costs of long-distance transport by 97 percent, to 3 percent of what they had been. Cheap container transport was a necessary precondition for the outsourcing of industrial production to the Global South, as the bulk of consumers were still in the Global North.

Another important development of the productive forces was computer technology. The computer was the prerequisite for the mobile phone and for the Internet, and thus for e-mail, all of which have revolutionized information flows globally. This was necessary for the management and control of global production and trade networks. At the same time, the new forms of transport and the development of information and communications technology laid the basis for subdividing production and coordinating it via networks and chains between factories, countries, and continents, in whatever way was most profitable for capital. The development of the productive forces made capital more independent from any one specific place, while labor was bound much more tightly to its geographical location.

Neoliberalism was not just a technical development, it was also about politics. The neoliberal breakthrough occurred when liberal think tanks and lobyists from multinational corporations connected with conservative political forces. In England, Margaret Thatcher ran against the Labour Party in the 1979 election with the slogan: “There is no alternative.” She immediately set about cutting away at the services provided by the welfare state, privatizing public companies and seeking in every way to curtail the influence of the trade union movement. When Ronald Reagan won the US presidential election in 1981, it signaled the global breakthrough of neoliberalism. Neoliberalism combined a market-oriented critique of state regulation of capitalism with an emphasis on individualism rather than community. As Thatcher explained:

There is no such thing as society. There is living tapestry of men and women and people and the beauty of that tapestry and the quality of our lives will depend upon how much each of us is prepared to take responsibility for ourselves and each of us prepared to turn round and help by our own efforts those who are unfortunate.^[171]

The social democratic state was criticized for being patronizing and bureaucratic and for depriving people of responsibility and initiative. Again in the words of Margaret Thatcher:

We should not expect the state to appear in the guise of an extravagant good fairy at every christening, a loquacious companion at every stage of life’s journey, and the unknown mourner at every funeral.^[172]

Thatcher wanted to replace what she called the “Nanny State” and its cradle-to-grave “coddling” with the much more bracing risks and rewards of the “competition state.”

Neoliberal criticism of the social state became so pervasive that it spread to various social democratic parties. From the 1990s up to 2014, successive Danish Social Democratic governments adopted neoliberal policies, “modernizing” the workflows of the public sector according to the principles of New Public Management and Public Choice. Citizens became customers. They sold off public assets from social housing, railway and bus companies, telecommunications companies, electricity, heating—everything from the water supply to the sewers. On the international front, the main priority of the “competition state” is to secure the best possible conditions for capital, in competition with other states in the world system. From trying to regulate and control multinational corporations in the 1960s, the role of the state today is to serve capital as best as possible, in order to attract investments and thus jobs.

Free from the grip of the social state, from its control of the flow of capital and trade, and from the power of the trade unions, capital could initiate a new transformation of the global economy. The result was the relocation of hundreds of millions of industrial jobs from the Global North to the low-wage countries of the Global South, in search of higher profits.

To govern this new wave of globalization, neoliberalism established an informal political leadership consisting of the US, the EU, and Japan, with the United States as the “lead dog,” and with biannual “G-meetings” to coordinate their policies. Europe developed from a common market towards a political union, and the former socialist bloc in Eastern Europe was absorbed by the EU. A common currency, the euro, was introduced in 1999, used by 19 countries with a population of more than 300 million. The North American Free Trade Agreement (NAFTA) was signed in 1991 and the World Trade Organization was established in 1995. These institutions and agreements, and others like them, formed the political institutional framework of the new globalized capitalism. In addition, there were a number of more informal gatherings and “clubs,” such as the Davos and Bilderberg meetings between leading capitalists and politicians.

Neoliberalism in Sweden

With the neoliberal breakthrough, the contradiction between transnational monopoly capital and the social state intensified and became a driving force in the development of global capitalism. Gradually the social state aspect weakened and transnational capital became the dominant aspect. This also meant that the balance of power between labor and capital shifted in favor of the latter.

This trend spread quickly to Sweden. The Social Democrats’ long-standing “monopoly” of government was broken. Parliamentary power fluctuated between the Social Democrats and Liberals, with the latter forming governments following the 1976, 1979, 1991, 2006, and 2010 elections.

Marcus Wallenberg, Sweden’s top financier, switched horses in the mid-1970s, from the Stockholm School of Economics to neoliberalism. Wallenberg, whose family directly or indirectly controlled a third of the Swedish gross domestic product, was a major influence on the Swedish Employers’ Association (Svenska Arbetsgivareföreningen, or SAF). In 1978, Wallenberg’s favorite, Curt Nicolin, became head of the SAF. His aim was to tame the Swedish trade unions and force the Social Democrats to support or pursue a neoliberal economic policy. In accord with the neoliberal doctrine, Nicolin criticized the high taxes, high wages, and swollen public sector, all of which caused Sweden to lag behind in the global race to attract capital.^[173]

Initially, the Social Democrats responded to this pressure with talk of “the middle road,” an adaptation of the social democratic welfare state to neoliberal criticism: there were to be no new demands for wage increases and restrictions on the movement of capital had to be relaxed, but the core—the social spending—was to be maintained.

In 1987, Britain deregulated the trade in currency, shares, and bonds. The London Stock Exchange is the center of global financial trade, so other European states quickly followed suit– Sweden in 1989. Whereas Keynesianism had been a bulwark shielding the Swedish national economy, neoliberalism now established a conveyor belt bringing global market forces into the country. Neoliberalism thus also marks a shift from the dominance of industrial capital to financial capital. In the article “The End of the Middle Road: What Happened to the Swedish Model?” Kenneth Hermele and David Vail describe the development of Swedish capitalism in the early 1990s:

... the growing profits bred speculation and inflated the prices of real estate, art, stamps, and the like. In order to find an outlet for all this speculative capital, the Social Democratic government thought it necessary to eliminate the little control over international capital flows that it had previously exerted. Within a year or two, Swedish capital had spilled over into Europe and helped push real estate prices in London and Brussels to record highs ... . The outflow of capital amounted to as much as 7 percent of Sweden’s GNP, or 60 percent of its domestic investment in 1989 and 1990. Approximately 35 percent of those investments were for speculative purposes (real estate and portfolio investments) and centered on London and Brussels. Swedish capital in fact became one of the most active investors in the EC at the end of the 1980s ... . As we know now, the bubble burst sooner rather than later, and the losses turned out to be enormous. In Sweden, the banking system lost an estimated 90 billion SEK (18 billion US dollars) on the collapse of the real estate market. Here, private and public commercial banks and the normally-conservative savings and loan institutions had all participated in the scramble. Their enormous losses are now covered by the Swedish state, i.e., by the taxpayers. Thus, wage earners have paid twice for the policy of the Third Road: first, when their wages were sacrificed in favor of profits, and then again when the banks’ losses are covered by the state.^[174]

The deregulation of the foreign exchange market led to massive speculation on small day-to-day fluctuations between currencies. There are huge profits to be made on even small changes in exchange rates, if you trade large amounts. A political crisis in the EU in 1992 led to massive speculation against first the Italian lira, then the British pound, and then the Swedish krona. In September 1992, the Swedish National Bank had to purchase billions of Swedish kroner on the foreign exchange market to prop up the currency, before giving up in November 1992 and leaving its value be decided by the market.

The Social Democrats were forced to adapt to the neoliberal regime. As in Denmark, this meant getting rid of public monopolies, such as those on television, radio, postal services, telephone, railways, schools, and employment services. Whatever could not be sold learned to mimic the private sector. After a half a century of Social Democratic rule, the ideological and mental transformation of Swedish society was profound. Neoliberalism changed the international division of labor, too, of course, which also had a profound impact on the Swedish labor market. Let us now return to the global perspective to review these changes.