“Shock therapy to end the welfare state.” New book by Swedish right-wing author finds high praise amongst capitalists.

“The time has come for Europeans to ask themselves the unthinkable: can their vaunted social model endure?” wrote the Financial Times’ chief economist, Martin Wolf, on 1 March. “In a forceful new polemic, Johnny Munkhammar of Timbro, a free-market Swedish think-tank, convinces us that trouble abounds even in Sweden’s social democratic paradise.”

After such a splendid PR write-up, reading “European Dawn” by Munkhammar (the book is in English) is a complete disappointment. It is 175 pages full of George W. Bush-type language such as: “The European social model simply has extremely anti-social effects. When we leave it behind, there will be a new dawn of prosperity and welfare for the old continent…History does not forget its heroes.” ! In reality, Munkhammar is a parrot of the capitalist class, arguing for a redistribution of value in their favour.

Health care

The campaign for further privatisations is based on the crises of the public sector services. “Health care is falling apart, people wait months to have treatment. More youngsters are leaving school without basic skills”. Munkhammar then gives his explanation: “This is a direct consequence of the model obstructing and prohibiting the forces of development. Free start-ups, free competition, free pricing, free funding. We chose a command economy for welfare instead of a free one. That way you get a Trabant, not a BMW”. This is the propaganda level of this supposedly sophisticated ‘modern’ analysis.

The main reason for waiting lists in the Swedish public sector, however, is the massive cuts made in the 1990s. In five years from 1993-97, 80,000 jobs were axed from health care. Its share of GDP fell from 8% to 7.4%. 93,000 hospital beds disappeared with only 27,000 remaining. This was a conscious policy from the Social Democratic government, supported by all other parliamentary parties, from the right wing ‘Moderates’ to the ‘Left Party’. Health care has never recovered. Instead, the austerity programmes have become a standard feature, including clinic and hospital closures. This, at the same time as the population is getting older and new methods allow the treatment and cure of more diseases.

The neo-liberal programme

Munkhammar’s trump card for his neo-liberal programme is globalisation, which will force through lower wages, abolish job security, improve “business conditions” etc. This is because capital can easily move wherever it wants and according to Munkhammar this is good. If jobs disappear, it is because “we” have deserved it.

“European Dawn” commends certain ‘reforms’:- ‘Agenda 2010’ in Germany for reducing public spending, Blair in Britain for introducing charges for higher education and the French government for cutting pensions and increasing working hours. The most “successful reforms” are supposed to haven taken place in Eastern and Central Europe. That poverty increased tenfold in Eastern Europe in the 1990s is the other side of the coin, which Munkhammar of course knows, but does not speak of. Of Swedish ‘reforms’, the crown in the jewel is the cut in pensions for workers by around 40%, and by even more for part-time workers.

The programme of Munkhammar includes:

  • Private charges to reduce “over-utilisation”, particularly tuition fees in higher education.
  • Abolition of child allowances; replace them with tax reductions “on a much lower level”.

“European Dawn” looks forward to venture capital being put into health care and a ‘Welfare Stock Exchange’ with 10% annual profits. Neither consumers nor politicians should “bother their minds” about what organisation runs a welfare service.

Munkhammar also delivers a menacing perspective. If drastic measures are not made now, “Great and dramatic changes – ‘shock therapy’ - may follow. The spending cuts of previous crises would seem like gentle breezes compared to the great and rapid changes, that would then occur.”

Labour market targeted

The strategy now in fashion amongst the right wing is to pit workers and trade unions against the unemployed. The unemployed are pictured as some kind of parasites. “Many simply chose not to work,” because of supposedly high unemployment benefits. Those in jobs are at the same time pictured as over-protected. In the language of a commercial jingle, Munkhammar blithely says: “Job protection seriously endangers job creation!”.

His programme on these issues is crystal clear:

  • Stop “handouts” to non-workers. He says early retirement in Sweden costs €7 billion a year and sick pay €4.5bn. Actual “handouts” of €20 billion in dividends to shareholders are however not mentioned.
  • “Basic supply of social security arrangements, on appreciably lower levels than 70 - 90% compensation which the public sector is paying out today”. This should be “scaled down with the passing of time and will have an ultimate expiry day”.
  • It should be easier to sack workers. Or to be sacked, if you look from another angle than Munkhammar.
  • "Abolish retiring age altogether under the public system". Instead, there should be an individual pension age based on how many years the worker can continue working. Again, not a word about fat cats like SEB (bank) director Lars Thunell, who retired before 60 years and gets over 10 million euro in pension if he lives another 20 years.

Welfare State

The Swedish Welfare State was a result of on one hand the political strength of the labour movement (social democracy was totally dominating) and on the other the enormous profits of Swedish big business in the 1950s and 60s. The capitalists needed functioning health care and education – and later childcare – to fill its need of labour. They also wanted peace on the labour market, which meant that the labour movement could achieve even reforms not needed for production, such as higher pensions.

The welfare reforms in Western Europe were also a result of a fear of the spread of the Russian revolution. Despite that Stalinism smashed worker’s rule and established a dictatorship, the planned economy in its first phase delivered substantial economic progress. This gave the labour movement in the West stronger bargaining power.

The public sector is not in itself limiting economic growth. In other recent articles in Financial Times, the Swedish economy – with a reduced but still comparably big public sector – is praised for its economic and productivity growth, compared to the rest of the EU. Munkhammar cites Japan as a country with low taxes and high growth, but seems to have missed the stagnation and crises of Japanese economy for the last 15 years.

The Welfare State in Sweden and Western Europe is not a socialist model, even if it contained and still contain many parts that a worth for the working class to defend. The public service sector in a capitalist society cannot in itself abolish inequality and injustice, only for a time partly equalise. The public sector can develop either as today – to copy private businesses – or to a system of increased power for workers and users. As socialists we defend public service, at the same time demanding that hierarchies, privileges and injustices should be abolished. This counters the argument that socialists and workers today are ”conservatives”, simply afraid of change. We want a far more profound change, and a change in the opposite direction of those neo-liberals accusing us of conservatism.

Munkhammar is dreaming of mass privatisation, “an enormous sector will open up to enterprise and entrepreneurship” across the EU. He argues for improved business conditions and a ”flat tax” with rich and poor paying the same proportion taxes. But this gives no automatic economic growth. To lower wages and taxes is part of the race to the bottom, not an attempt to develop society as a whole, neither in Sweden nor globally.

Class struggle decides

How value in society is distrubuted is a result of class struggle. We socialists can win every debate against types such as Munkhammar, but as long as his capitalist class have political parties and forces in society that are better prepared and politically armed than the workers’ forces, policies will continue is his direction, even if workers will fight back.

Today we need new fighting workers’ parties, able to establish a democratic and socialist alternative, to fight back the looting party of the neo-liberals. It is socialism that stands for a fresh and really new alternative, it is capitalism that has been tested and failed on a world scale.

A shortened version of article in Offensiv (weekly paper of Rättvisepartiet Socialisterna, CWI Sweden).

Committee for a workers' International publications

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