The Swedish Model: What, why and whereto? Lars Niklasson, Associate Professor Political Science Linköping University, Sweden

 Collective bargaining since 1938  Welfare for work (”Arbetslinjen”) since the 1950s (?)  A welfare state since the 1970s (?)  A ”high tax equilibrium”: high taxes and high quality (?)  ”Good government” generates trust in government?  Reforms since the 1990s  A new ”supermodel” (The Economist, February 2013) What is the Swedish Model?

 The roots: from the Vikings to the present days   The effects: quality of life and competitive advantage?  (Better than the alternatives?)  The logic: self-supporting trust (”equilibrium”)  (Only in Sweden?)  Operations: central/local, fragmented/coordinated  Whereto? Europeanization, globalization Topics of the course

 After completion of the course, the student should…  …be able to show a fundamental knowledge of the origins and structure of the Swedish government and the Swedish social system  …have the capacity to deal with the many myths concerning Sweden and Swedish society The ambition of the course

 Introduction to StatebuildingLars Niklasson  Swedish history to 1600Sofia Gustafsson  Swedish history Henrik Ågren  Swedish history Björn Ivarsson Lilieblad  Good government from 1850Lars Niklasson  The early politics of the WSElin Wihlborg  Seminar on the literature  Seminar on individual papers 1: The roots of the Swedish Model

 Introduction to politicsLars Niklasson  Education and trainingLars Niklasson  Governance & privatizationBo Persson  Legitimacy & efficiencyLars Niklasson  Drivers of changeElin Wihlborg  Seminar on the literature  Seminar on individual papers 2: The Swedish Welfare System

 Active participation at the seminars  Questions on the literature will be provided  Submit and defend a short individual paper  1,000-1,500 words  A topic related to the course  A question and a short analysis  Only few extra sources (use the literature)  Collaboration is encouraged  High grades for clarity and creativity Course requirements

 A history compendium  Articles by Bo Rothstein et al  Quality of Government Institute, Gothenburg  Morel, Palier & Palme 2012: Towards a Social Investment Welfare State? Ideas, Policies and Challenges, Bristol: The Policy Press  Articles from Oxford Handbook on Swedish Politics (forthcoming)  Articles on higher education policy The literature

 States are different  Nordic, Anglo-Saxon, German, French, Asian etc.  Parliaments, governments, bureaucracies etc.  Comparison helps us understand and see causalitys  The historical process helps explain present variety  What was before states?  Why have they dominated from 1648?  How were patterns formed? 1. Introduction to Statebuilding

 Estates (the nobility) vs absolutist kings  Strong peasants or towns (Not West/East)  A military state vs separation  ”Corruption” until 1870s vs 1730s  The legal systems, university education  Gradual shift from conservatism to corporatism vs radical break and strong liberalism (by the farmers)  S: Protectionism, administrative corp., social corp. (statism)  D: Radical break , farmers and towns, little corporatism  More private providers in the Danish WS, less paternalism Sweden and Denmark: Different paths and outcomes

 What are ”western” and ”eastern” patterns?  How do Sweden and Denmark fit these patterns?  Sweden’s bureaucracy was more corrupt for a longer time than Denmark’s; How? Why?  What were the important steps in Sweden’s ”road to mass politics”? How did it differ from Denmark’s?  How did the popular movements differ?  Can we see differences in the welfare states? (1993)  (Why is Sweden more similar to Denmark now? A new path?) Knudsen & Rothstein 1993: State-building in Scandinavia

 Lecture 2: Swedish history to 1600  Lecture 3: Swedish history  Lecture 4: Swedish history  Based on the compendium  Excursion to western Östergötland Swedish history

 The puzzle: What causes what?  A. Economic development, industrialization  B. ”Good government” without corruption  C. Welfare policies  Rothstein et al: the quality of the government is the key  Corruption is a barrier to welfare and development  (Co-evolution with early industrialization?)  How can you go from corruption to non-corruption?  Corruption is a stable equilibrium  Now: one of the least corrupt countries in the world  Lessons applicable to Russia, Africa etc 5. The roots of good government

 The French ambassador 1771: Two serious problems, love for democracy and total corruption  A patrimonial, nepotistic state  A blurred line between public office and private interest  Heckscher: Marshy (försumpad) administration  Hiring not based on merit  Offices were sold to finance retirement  Hold several offices and hire others to do the job  Fees, housing and grain instead of salary  Bribery was a crime only for judges Sweden was a thirld world country

 How to stop taking bribes?  More control presumes a benevolent principal  How to control state leaders?  Democratic elections, accountability, presumes…  A social trap, a suboptimal equilibrium (”collective action theory of corruption”), explains persistence  ”Big bang” as a way out: impossible?  An endogenous way out? (Ostrom 1990) How can we explain the transformation?

 Supply of a solution, Comitment, Monitoring  A cooperation game (as overfishing etc)  A high payoff from cooperation  ”Another world is possible”  New ideas: Liberalism  Exogenous factors? Ostrom’s solution

 Appeals Court cases on malfeasance peaked twice, i.e. there was increased attention to the problem  A new High Court in 1789, by the absolutist king but with a long-term positive impact  A need to save money after the wars , 1814  A new political situation after the collapse of the government A new constitution and a new king  A threat to national survival, becoming a small state  Corruption was mainly in the rural administration Data shows the transformation

 The separation of public and private money: punishment for taking private ”loans” 1823  Several initiatives to outlaw promotion based on fees (pension system introduced in the 1870s)  A new tax system and the introduction of salaries  A Weberian perspective: an impartial bureaucracy was needed to strengten the legitimacy of the public sector (not divinity, heritage, tradition etc)  The bureaucracy as a machine (hierarchy) to handle routine cases in governments (and companies) Debates in the Parliament (the Diet with four estates)

 Enlightenment liberalism: meritocracy, impartiality, professionalism, accountability  Britain, France, Prussia, Bavaria (Schiller/Beethoven…)  Stronger from 1830 due to a liberal press and more liberals in the Parliament/Diet (industrialists)  Demand for a more representative parliament and a government that respected the constitution Where did the ideas come from?

 From feudal loyalty (back) to Roman legal traditions  Need for education and good universities  More rational government: Railway Board 1862, Telegraph Board 1865, Road and Waterway Commission 1841  Feudal guilds abolished 1864: free trade and commerce  Industrialization started around 1870 Bureaucracy and the economy

 What are the key elements in a theory inspired by Ostrom to explain the abolishment of corruption?  What are the key evidence that Sweden confirms to Ostrom’s explanation?  What external (exogenous) factors can have helped in the transformation of Sweden? Teorell & Rothstein 2012: Getting to Sweden: Malfeasance and bureaucratic reforms

 What are the key elements of a bureaucracy according to Max Weber?  How did the Swedish civil service differ from the Weberian model?  What are the benefits of a bureaucratic government?  Is the bureaucratic model still appropriate for governments? How can it be improved? Rothstein 1998: State Building and Capitalism: The Rise of the Swedish Bureaucracy

 Popular protest and organized civil society  Free trade vs. protectionism  Democracy for men and women  Saltsjöbaden 1938: corporatism  The dominance of the labor movement  ATP as a key event and major conflict  ”The solidaristic pay policy” and the booming 1960s  1968 and the 1970s: triumph or hubris? 6. The politics of the early welfare state

 Benefits for all (universal vs. selective)  Compare: Bismarckian systems, company-based welfare  Everyone pays  Creates loyalty, if it works well  The cynical interpretation: a way to buy votes  Does it create social capital or is SC a prerequisite?  Only possible in homogenous societies?  A gradual development, small steps, pragmatism What is a universal welfare state?

 What are universal welfare states?  What are its electoral and political effects?  What are the alternative explanations for a relation between big governments and social capital?  What evidence points to the welfare state as an outcome of social capital?  What evidence points to the welfare state as a producer of social capital? Rothstein 2008b: Is the universal welfare state a cause or an effect of social capital?

 What is the Power Resource Theory?  What are the problems with PRT?  What is ”bringing the state back in”?  What are the key ideas in the Quality of Government (QoG) theory?  What does the empirical evidence show? Are there any problems with the evidence? Rothstein, Samanni & Teorell 2012: Explaining the welfare state: Power resources vs the quality of government

 Introduction to politicsLars Niklasson  Education and trainingLars Niklasson  Governance & privatizationBo Persson  Legitimacy & efficiencyLars Niklasson  Drivers of changeElin Wihlborg  Seminar on the literature  Seminar on individual papers The Swedish Model, part 2

 : Challenges and decentralization  1995: Membership of the European Union  Late 90s: Cutbacks to save the welfare state  Too generous to work?  2006: Back to ”work for welfare” (Arbetslinjen)  = Reforms to save the welfare state?  Influence from 1997: The European Social Model  Whereto? A Social Investment State? 7. Introduction to the politics of the welfare state

 1. Social investments in skills and modern needs/risks (work/family life, change of careers etc.)  = an Economist’s perspective on welfare: utility rather than social rights, ”productive social policy”  = Collective responsibility  Alva and Gunnar Myrdal: families and women  (Wanted selective policies)  2. Keynes: the macro economy, more traditional/male  3. Neoliberals: rigidities, market distortions, gov’t failure  Three paradigms (table 1.1) SIWS as a hybrid A new type of welfare state? (Morel, Palier & Palme, intro)

 Critique:  Less support for passive unemployment with the focus on ”activation”  Less support to stay outside the labor market  Bad implementation of policies against exclusion in the Lisbon strategy  An instrumental view on women and children (as labor force)  Divergent views (Nordic vs Anglo-Liberal):  Esping-Andersen on positive effects of social rights, aim for equality, combination of investment and protection  Giddens on moral hazard and duties, beneficial inequalities, support as springboard, from passive to active measures A new type of welfare state, continued

 1. Keynesianism after WWII (the Depression)  From charity to right, taming capitalism, class compromise, embedded liberalism (Bretton Woods)  2. Neoliberalism after the 70s (Stagflation)  Monetarism (balanced budgets, low inflation, stable currency), flexibility, gov’t as problem, selective policies  OECD Jobs Study 1994: high unemployment in Europe, EMU to limit politics, social pacts/not cutbacks  3. Social investment since 90s (the Third Way)  OECD 1996, EU 1997, Esping-Andersen et al A balance. The welfare state can be positive for competitiveness. Structural (not cyclical) unemployment needs capacitating services Waves of transformation (Hemerijk 2012)

 Beyond neoliberalism: critics on the left and right  Investment (not spending) = future profits  Responsibility mix: market, family, community, state  Universal coverage  Fostering prevention, rights and duties  Governance through networks: communities (?)  (Sweden: Learning accounts, citizen choice?)  Neoliberalism failed: high spending & problems in Europe, experiments in Asia, revised ideas 1997 (World Bank) Social investment (Jenson 2012)

 Demographic transition: problem and opportunity  Ageing population effect in  National variety, National Transfer Accounts  Transfers over the life cycle: independence, retirement  Life expectancy, fertility rates: dependency rates  Work longer, have more babies: welfare support  Pensions: savings or pay-as-you-go  Parental leave  Consequences for jobs: more services, less goods Ageing populations (Lindh 2012)

 More barriers to European social policy due to aftershocks of the crisis, especially public finance  Direct effects: unemployment, austerity  EU divergence  Globalisation winners and losers  Demography  Migration  The state remains big but changes its role (NPM)  An opportunity for a European Social Model? Post-crisis policy (Diamond & Liddle 2012)

 Social policies to support climate policy  Market-based climate policies: emissions trading  Income equality leads to better climate (?)  Public ethos, economic instruments regressive  Sectoral impact: less agriculture, energy-intensive industries, more transport  Need for industrial policy, employment policy, dialogue, public investments (-- a role for markets, banks?)  The new economics of sustainable development (Stern)  Long-term investments in public goods: education etc. Climate policy (Sommestad 2012)

 The Lisbon Strategy (2000): wide and with a goal:  ”The most competitive region in the world”  ”Europe 2020” (2010): narrower, with priorities  Smart, sustainable, inclusive growth (+targets)  Continuity with the focused Lisbon Strategy  Still weak implementation (OMC), change of majority, SGP  European Employment Strategy: quality jobs? Flexicurity? Less competitiveness with less cohesion?  No understanding of the learning economy (or EMU)  A transnational welfare state needed = European identity From Lisbon to Europe 2020 (Lundvall & Lorenz 2012)

 A paradigm in search of a new economic model  Modernising ideas  Capacitating policies: education, family, employment  Weak implementation:  Increase in expenditure, not investments  Protection and promotion: the Nordics (NL, UK)  Activation = third way = ”too close to neoliberalism”  The analysis: disincentives, lack of flexibility  The solution: working poor. (Conservation?) Skills are needed. A new economic model (Morel, Palier & Palme, conclusion)

 With high skill jobs, more difficult to employ migrants  New national accounts? Investments vs consumption  Political triggers: competition for the female vote  Against neoliberalism (– a new coalition of socialists and conservatives? mercantilism, competitiveness)  Germany not a viable alternative (?)  Gradual change may lead to paradigmatic change A new economic model, contd.

 1. What are the differences between Giddens and Esping- Andersen on Social Investment policies?  2. What are the three waves reactions against?  3. What are the differences between investments and savings?  10. In what sense is demography an opportunity?  11. Is the crisis an opportunity for a European Social Model?  12. What is the link between social and climate policies?  13. What is missing in Europe 2020?  14. What kind of coalition(-s) would support a European Social Model based on the idea of social investments? Morel, Palier & Palme 2012: Towards a social investment welfare state? Ideas, policies and challenges

 Two parts:  Primary, secondary, tertiary education  Skills development and training for adults  Structures, actors, processes, achievements  Challenges  European comparisons (Morel, Palier & Palme 2012) 8. Case study: Education and training

 Pre-school, primary school 1-9, secondary  National curricula, framework legislation and control  Local and private implementation  A strong focus on results since 2006: more uniform  A debate on segregation, vocational programs Education policy

 Xx universities (PhD-granting)  Yy colleges (limited PhD-granting)  Several private, two independent  Also some vocational tertiary education (YH)  Student loans to study in Sweden and abroad  Quasi-market since 1993:  Formula funding, deregulation, quality control  Fees for non-EES students (except exchange)  What drives innovation in higher education?  Competition and/or top-down inititives? Higher education

 Active labor market policy, ALMP = training programs  A national policy: people need to move to the jobs  Formerly regional and corporatist, now centralized  Performance targets lead to creaming  Exclusion: difficult to help clients with many needs  Local collaboration or competition?  Training programs by local and regional gov’ts too  ”One door in”, joined-up government bottom-up:  Infotek = guidance, Lärcentrum = co-location Labor market policy: training

 The policies overlap in adult education  Are the systems integrated?  Do they promote equality (of opportunity/outcomes)?  Do they support individual development?  Do they support economic growth?  Next lecture on governance and privatization Consistent? Efficient?

 More integrated public services?  More adaptable services?  Not good at solving complex problems, or these problems are now more visible?  Fighting exclusion  Support for economic growth (better skills development? A strong business climate?)  Accountability? Good for the citizens?

 Compensatory policies: unemployment, old age  Investment policies: ALMP, family, education  Spending convergence over time  Spending in cash or in kind (services)  Expansion of old age insurance and family benefits  ALMP: more activation, less spending  Four clusters (low/high) Figure  Increased spending but less on education  Convergence on Scandinavia or the UK? OECD comparisons (Nikolai 2012)

 The European Employment Strategy, EES 1997  After EMU, to develop skills, part of the Lisbon Strategy  Synergies of economic, labor market and social policies  Targets the continental and Mediterranean countries  Soft policy, OMC: increased employment due to EES?  Policy frame: problem, goal, benchmarks, instruments  Contradicts the economic policy frame (EMU)  Flexi+curity, employability, a role for social partners  EES has become a reference point, but little change Employment policies (de la Porte & Jacobsson 2012)

 The Nordic countries: big fit  Less quality in activation, structural issues not reformed  The English-speaking countries: fit  UK: Domestically driven reforms, Ireland: ESF  The Continental countries: misfit  More activation, ”Modèle danois”, Hartz reforms  The Mediterranean countries: misfit  More flexibility, less security (opposite of social investment)  The East European countries: low spending  Activation and flexibility, weak social partners Employment policies, contd

 Female employment, gender equality, child care  Pioneers: France, Norway, Sweden  Path-shifters: Germany, Netherlands, UK  Slow-movers: Austria, Italy, Spain  Political forces: new ideas? Barriers?  Electoral strategies (Sweden and Norway)  The representation of women in politics  General conservatism in the slow-moving countries Work-family policies (Morgan 2012)

 Ambiguous concept. Four (six) types (table 7.1):  Investment in human capital? (or incentives to work?)  Pro-market orientation? (or temporary jobs?)  Spending profiles in six countries (figure 7.1)  General decline , except the UK  Reduction of ”job creation”, increase of ”employment assistance”, decline of ”training”  Spending levels: Nordic, Continental, UK  From education (60s), via occupation (70s) to re-entry (90s). Laggards become leaders: Denmark, UK. Active labor market policy (Bonoli 2012)

 Investment policies are related to knowledge-inten- sive services and discretionary learning employment  Problems: overeducation? Inhibiting business investment? Relevant adjustment of content?  But: markets aren’t perfect, education is undersupplied (?), a need to recruit internationally  Data: (1) , (2) cross-sectional correlations  USA at top and bottom  Investments lead to employment and quality jobs More and better jobs? (Nelson & Stephens 2012)

 A need for organizational learning and networking  Discretionary learning = more autonomy than in ”lean production” (But: standardized processes!)  North vs south  High skill jobs less exposed to foreign competition  Flexicurity makes it easy for firms to upgrade and makes individuals less risk-averse  Vocational training and informal learning  Equality, openness and trust  Learning by doing and by interaction with customers etc.  Social investments on an international scale for migrants? The globalizing learning economy (Lundvall & Lorenz 2012)

 4. What spending patterns can we see over time?  5. Which groups of countries have increased the policies of activation?  6. What are the political drivers and barriers for and against equal rights for women?  7. How did the laggards become leaders in ALMP?  8. How can social investments lead to better jobs?  9. What are the pros and cons of flexicurity? Morel, Palier & Palme 2012: Towards a social investment welfare state?

 1. What is the difference between ”market by design” and ”market by interaction”?  2. In what sense did the regulation of the universities converge on a common model?  3. In what sense did Sweden and the UK move in opposite directions? Niklasson 1996: ”Quasi-markets in higher education – A comparative analysis”

 The operations ”behind the scenes”  National, regional and local programs  Collaboration in networks  Private providers  Agencies for control and evaluation 9. Multi-level governance, networking and privatization

 Marks & Hooghe (1995): MLG 1 and 2  Traditional relationship (MLG 1):  Framework laws and control by the national gov’t  Funding and operations by regional and local governments  Separated roles (schools, health care)  New relation (MLG 2)  Actors at different levels overlap  Shared clients (”exclusion”)  Similar instruments (training, subsidies for firms) Multi-level governance

 MLG 2 = collaboration = networking in projects  Often informal, social skills are needed  Different from Weberian bureaucracy (hierarchy)  Leadership through vision and persuasion  Common goals, common strategies  Territorial integration means greater variety, less control from the center (performance targets?)  Functional integration means specialization (silos), works best when problems are NOT shared Networking

 ”Phase 3”: the furthest away from regular jobs  Unemployed, on sick-leave or on general welfare  Agencies and local gov’ts collaborate in projects  Often co-funded by the EU (ESF, ERDF)  Returning clients count as new clients in the statistics  = targets are met, problems remain unsolved  Gaming, creaming etc.  Local initiatives to collaborate on a holistic view An example: Fas 3

 Public funding, private provision:  Client choice: schools, health care  Procurement: garbage collection for a local gov’t  Private funding, public provision: Fees  Pro: competition, greater variety (?), empowerment  Con: segregation, bancruptcy, difficult for planners  Quality/costs? Innovativeness? Legal rights?  Cities vs rural areas Privatization

 Many agencies for control and evaluation  More performance targets by the central gov’t  The center regains control? More central control

 Niklasson: Challenges and reforms  Consolidation 1970 to provide welfare services  Decentralization after 1976 for local adjustments  Regionalization and collaboration 90s (EU?) weak center  Now centralization? Cutbacks top-down = fairness?  Montin: Overview of local and regional governments  Feltenius: Multi-level governance  (Lidström: International comparisons) Oxford handbook on Swedish Politics (2014): Regional and local gov’ts

 Niklasson: What are the main waves of reform? Why did they take this shape?  Montin: How much autonomy do local governments in Sweden have? Is Sweden a federal country? Why/why not?  Feltenius: How has multi-level governance changed over time?  Lidström: What are the unique characteristics of local government in the Nordic/Scandinavian countries? Oxford handbook on Swedish Politics (2014): Regional and local gov’ts

 Economists ask for efficiency – what is it?  Productivity: do things efficently  Effectiveness: do the right things  More central control? More power to clients? Competition? Incentives?  (Individual services vs solving complex problems)  Sociologists ask for legitimacy  Organize services to maximize trust?  Public ethos to avoid corruption 10. Legitimacy and efficiency

 Complex problems are adressed in many pieces  Exclusion, economic growth etc.  Collaboration is a pragmatic solution  Reorganization, mergers (Norway)  Vouchers, learning accounts etc. (supported by Parliament but never implemented)  Efficiency-losses by decentralization – or efficiency gains?  Difficult to evaluate, redirect or terminate programs Efficiency-losses due to organization

 Voters elect the parliament, which selects the government, which controls agency heads, who control staff, who run programs to influence citizens  Who controls whom? Only in one direction?  Principals can’t control agents  Information asymmetries, lack of effort  Cooperation in a situation of Prisoners’ Dilemma  The long-term win-win solution Efficiency-losses in the chain of command

 Swedish higher education 1993: a new kind of game?  The Minister of Education vs the Rector (vice chancellor): trust or attempt to control/shirking?  Minister-Rector-Dean-Dept chair-Teacher-Student  Late 80s: a need for transparency and long-term perspectives (lobbying, detailed regulation)  Framework legislation, funding formula (input and output), quality control, decentralization, competition Game-like regulation: An attempt to promote cooperation

 The policies were introduced at a time of expansion, i.e. everyone was a winner overall  A later minister reclaimed surpluses, eroded trust  Funding eroded with more detailed regulation, more performance targets, more quality control  More central control, less innovation at the bottom?  Or: teachers and students live by traditional norms? Did it work?

 Legitimacy of input vs output  Adjustment to particular situations by professionals  ”The black hole of democracy”: too many details  Five models: theoretical legitimacy? Practice? Motive for choice?  Legal-bureaucratic: impartial = predictable but rigid  Professional: evidence-based, very engaged in each client  Corporatist: decisions by affected groups  Pseudo-market: competition = balance of power  Lottery: can be better than the alternatives  (Local politicians: hostages?)  What are the effects of collaboration and privatization? Legitimacy as a guiding principle

 How can the ”game” played by the Minister of Education and each Rector/Vice-Chancellor help us understand the regulation of the universities (and other agencies)?  What are the limitations of the model? Niklasson 1996: ”Game-like regulation of the universities – will the new regulatory frame- work for higher education in Sweden work?”

 What are the pros and cons of each model, in terms of making the public trust the public sector?  What type of empirical evidence is provided in the article? Rothstein 2008a: ”Political legitimacy and the welfare state: Five basic models”

 How can we understand the ongoing politics?  ”The three new institutionalisms”  Rationality, legitimacy and paths  Actors  Politicians, bureaucrats, epistemic communities  Situations  Many interrelated games  Ideas 11. The drivers of change: Welfare policies in new institutional framing

 What is an ”institution” in Rational Choice Institutionallism?  What is it in Historical Institutionalism?  What is it in Sociological Institutionalism?  To what extent are the three models compatible? Contradictory? Hall & Taylor 1996: ”Political science and the three new institutionalisms”

 In what way did civil servants influence the outcomes of the bargaining during the crisis of ? Dahlström 2009: ”The bureaucratic politics of welfare state crisis: Sweden in the 1990s”

 Why are Active Labour Market Policy and ”the Social investment welfare state” popular in the EU?  Is it the best set of ideas?  How strong are competing ideas?  Is it a useful set of ideas for the EU?  Is it evidence of a new path? Or continuity?  How important are ”the rules of the game”? (Morel, Palier & Palme 2012)

 How can we explain the shifts from centralization to decentralization and back?  How much can be explained by ”necessity”?  Is Sweden following trends? Give some examples  Who are the conflicting actors in the article?  What other conflicts may there be, which can explain the outcomes? (Niklasson 2014)

 What?  A high-tax equilibrium with a capacity to reform itself  Why?  A workable model, based on traditions  Whereto?  A northern European model? Conclusions about the Swedish Model?