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Yet the government has severely curtailed the discretion of Sweden's capitalists in using their wealth and managing their businesses. Observes Stockholm University Jurist Gustaf Lindencrona: "As long as you use your money to raise productivity, the government won't do anything against it. But if people want to consume their money, the government will keep them from doing it." The aim has been to foster what the Social Democrats call "social" rather than "antisocial" uses of ownership. This will be furthered by legislation that takes effect next year, encouraging all management decisions to be subject to collective bargaining with labor unions: not only what wages to pay but how to budget investments, allocate profits—in short, everything.
Special Conditions. Sweden's hybrid economy rode out the recent worldwide recession rather well. The Swedish gross national product grew (albeit modestly), and unemployment was minimal (49,000, or 1.2% of the labor force, as of last May). The success of Stockholm's antirecession measures (like subsidizing production for stockpiles in order to keep employment high) was praised as an example of adroit fine tuning by the Organization for Economic Co-operation and Development. Yet the price Sweden paid for combatting unemployment this way was a sharp decline in productivity and a high rate of inflation (currently about 11%); together they have made Swedish goods less competitive in world markets.
Moreover, it is questionable whether Sweden's techniques can be exported. Reports TIME Bonn Correspondent Gisela Bolte: "For the Swedish system to work requires Swedish conditions. It is a small country on the periphery of Europe (it has not been involved in a war for 160 years) with a homogeneous population. Not only do Swedes trust one another, they also trust their government. Labor and business cooperate so smoothly that strikes are virtually unknown, and the unions have not resisted structural changes in the economy. Key decisions are made in personal contacts among a small number of government, labor and business leaders.
"One illustration of the country's uniqueness is the anecdote about a Swedish economist bragging to an Indian of the splendid performance of Sweden's economy. 'How many countrymen do you have?' inquired the Indian. When the Swede replied, the Indian retorted wryly, 'Well, that is what in my country we call a laboratory."
But is the cost of the social welfare experiment in Sweden's laboratory getting out of hand? Many Swedes think so. To pay for social security, employers must now ante up as much as $38.70 to the state for every $100 in salary they disburse. This is in addition to what businesses must spend for vacations, holidays and sick leaves. The individual Swede also pays for his privileges, in the form of some of the world's highest income taxes; that industrial worker who earns $11,250, for instance, must give the taxman $4,125. Levies on the half-million self-employed Swedes—professionals, farmers, intellectuals and small businessmen—are even more onerous. The maximum tax rate is supposed to be 85%, but in one recent, celebrated case involving Astrid Lindgren, a writer of children's books, the taxman threatened to take 102% of her royalty earnings.