First Jonas Sjöstedt, European MP for the Left Party spoke in favour of Sweden leaving the Stability Pact and the need for budget deficits at certain moments. A week later he apologized. This panic from the Left Party raises several important questions. What is the position of socialists on budget deficits? What is, really, the position of the Left Party?

The "No" campaign has a clear lead with less than two weeks to go to the referendum on the euro in Sweden 14 September. Two-thirds of the members of the trade union federation, LO, are supporting a "No" vote, according to opinion polls. The support for the No campaign is high despite the profile of the official "No" leadership, as this article on the Left Party (former Communist Party), shows. The article is published in this week’s issue of Offensiv, the weekly paper of Rättvisepartiet Socialisterna (CWI Sweden). CWI online.

Left Party turns to the right in Euro campaign

The Left Party has demanded for years that Sweden should leave the so-called Stability Pact of the EU (Sweden is a member of the pact despite not having the euro). Two weeks ago, the MEP, Jonas Sjöstedt, repeated this position and added, "There have been moments when we, for good reasons, have been forced to accept 10 per cent deficits and we want to keep that freedom”. A week later, he made a public correction "I assumed that would be our position because we have written resolutions on it, but I went too far, and apologize for that".

In a recent article in the conservative daily, Svenska Dagbladet, three leaders of the Left Party: Ulla Hoffmann, Jonas Sjöstedt and Camilla Sköld-Jansson, did everything to calm capitalist opinion. "According to the Left Party what will take place if there is a ’No’ on 14 September? The simple answer is that nothing dramatic will change compared to today…Sweden’s economic policy will continue to be shaped in constructive cooperation between the government, the Left Party and the Green Party”.

"That means a policy where we clearly advocate a [state budget] surplus target of two per cent of the GDP”, they wrote. Another party spokesperson, Lars Ohly, interviewed on national TV, referred to the Left Party’s participation in "saving” the state finances in the mid 90s.

By referring to those huge cuts and austerity measures - slaughter of health care, reduced pensions etc (see separate box) - and its role as a guardian of today’s budget deficit limit, the Left Party leadership hope to calm the right wing media and parties. In addition, the Left Party in recent weeks has supported new big cuts on health care in Norrbotten, schools in Luleå etc.

The Left Party produced a report at the beginning of their "No" campaign which quoted extensively from the advice which the Ecofin, made up of the finance ministers of the EU, has given to its membership countries. The Ecofin "advice” for Germany in 2002 was for example very similar to the Agenda 2010 austerity plan presented by Chancellor Gerhard Schröder this Spring. In advice to another country, Austria was told to cut its pension costs.

The practice of the Left Party has nothing to do with its claimed programme, or even its proposals in the Riksdag (parliament). The demand for Sweden to leave the Stability Pact has clearly now been dropped.

”We have only eight per cent in the Riksdag”, said temporary party leader Ulla Hoffman, to underline that a "No" victory will lead to no real change.

But a lot of "No" voters actually want to show their discontent with cuts and growing inequalities in society. Their hope is that "everything will change”. The Left Party leadership now even says that Sweden should stay within the EU, contrary to the party’s official position, throwing more cold water on working class "No" voters.

The massive support for the council workers’ strike this spring - 80 per cent in opinion polls - shows the political mood below the surface in Sweden. If a "No" victory was to have any sustained effect, apart from the feeling of victory over the establishment, it has to be linked to an increased struggle against cuts and for improvements for the working class.

"In our view, Sweden should have the economic policy which is supported by voters in elections – whether it is right wing or left wing policies”, write the Left Party leaders. But when have the voters ever supported the version of neoliberal policies which have been conducted over the last decade? The betrayal of the former workers’ parties, the capitulation of the union leaders and the lack of any mass alternative has so far put enormous brakes on the class struggle. This has been reinforced by the collapse of Stalinism and capitalist globalisation. In the last few years, however, we have seen an increased radicalisation and willingness to struggle. But as soon as there are active protests or struggles, then the Left Party leadership is on the wrong side.

The Stalinist remnants of the Left Party are evident in both the public "apology” of Sjöstedt and in the party’s aim to keep the "No" alliance with other parties at all costs. They are willing to let the most openly right-wing "No" representatives set the tone of the campaign.

In the liberal daily, Dagens Nyheter, the Left Party’s previous position of leaving the Stability Pact is called "unrealistic”. This has now been accepted by the party itself. The party has for many years agreed to the state budget limit which makes any proposal to increase resources in schools or health care impossible.

But a judgement on if proposals are implemented cannot be based on whether they are approved by the capitalist class in Sweden. All improvements made by the labour movement in Sweden and other countries have met resistance from the market, like increased pensions or shorter working hours. Whether they can be implemented is a question of struggle, where the strength and willingness to fight of the working class is decisive. Revolutionary struggle has been followed by the greatest reforms, like in Sweden after 1917 and in France following the general strike in 1968.

The profile of the Left Party up to the referendum is not helping the "No" campaign. The only possibility for Yes to regain the upper hand is that No leaders move further to the right and declare their willingness to conduct almost the same policies as the "Yes" campaign, in line with demands from the EU and the EMU. The socialist "No" campaign of Rättvisepartiet Socialisterna (CWI Sweden) is in sharp contrast to the Left Party leadership and puts forward a class position and socialist alternative.

Do socialists want deficits?

The statement of Jonas Sjöstedt is in itself not particularly left wing or socialist. ”There have been moments when we for good reasons have been forced to accept 10 per cent budget deficits and we want to keep that freedom”.

He is referring to the state budget deficits in Sweden at the beginning of the 90s. They went up to 13 per cent of the GDP and unemployment increased rapidly. But “the good reasons” did apparently not last for very long. The austerity policies of 1994-95, which were supported by the Left Party, put the costs onto workers, while the big companies got tax reductions and the bank owners received billions of SEK (Swedish Krona) in state aid.

It is of course better to decide on a deficit budget than to make cuts. But it is no solution, the deficit is just postponed for later. A period of deficits has than to be used by unions and workers’ organisations to prepare for struggle.

How can deficits be avoided? They have not been caused by growing costs alone, but as much by reduced incomes. The tax reform introduced in Sweden in 1990 reduced state income by more than 50 billion SEK per annum. The same is the case in Germany today, where reduced taxes on companies are on about the same level as the proposed health service cuts.

To avoid deficits is a question of struggle, not a fiscal technicality. Socialists fight for the rich and big business to pay for the crisis. A fighting labour movement can increase wages. There is enough wealth today to pay for more resources for the public sector and increased living standards for workers. A socialist programme, with nationalisation of the big companies and financial institutions under workers’ control, would lay the basis for a democratic planning of the economy, which would enormously increase the resources in society. With capitalism abolished, deficits in the public sector and their effects on working class families will disappear.

Fact box:

On deficits

The Stability and Growth Pact of the EMU means threats of fines if the deficits are over three per cent of the GDP

Current deficits, Summer 2003

  • France – 4%
  • Germany – over 3%
  • USA – 6%
  • Japan – 9%

Changes behind the Swedish budget deficit in the beginning of the 1990s

  • 62.2 billion SEK costs for bank crisis
  • 50 billion SEK in reduced incomes because of ”tax reform”
  • 100 billion SEK a year for increased unemployment

Who paid for the “convergence” of the Swedish state budget deficit?

  • Health care: 100 000 jobs disappeared as a result of cuts
  • Workers taxes: increased by 23 billion SEK
  • Housing: Subsidies cut by 30-40 billion SEK a year
  • Schools: Every tenth teacher per pupil was cut
  • Pensioners: pensions were cut 6-9 per cent in 1991-95.
  • The sick, unemployed, refugees, children and school students had their grants severely reduced. The councils lost many state grants.

In total, the social democratic government cut 134 billion SEK from the budget, of which the first 114 with the support of the Left Party.

Committee for a workers' International publications

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p248 01

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