Why no economic (representative) democracy in Sweden?
From time to time, I am reading about economic democracy. It mainly has to do with my work with cryptocurrencies and decentralization. Since decentralization via crypto enables new ideas and practices regarding democracy, welfare, and entrepreneurship, for example, by becoming a member or citizen of a crypto-community, you can be involved in decision-making procedures as projects and businesses are made in the community.
Recently, I was listening to a video about economic democracy featuring Professor Bo Rothstein, one of Sweden's most active and famous public intellectuals. Rothstein focuses on the case of why economic democracy, regarding cooperatives and companies under the direct influence of employees, never developed at a larger and more advanced degree in Sweden despite all the left-wing, socialist, and social-democratic ideas in the history of modern Sweden. The presentation was done under the supervision of the Institute for Future Studies in Sweden.
Economic democracy is a concept that involves extending democratic principles and decision-making processes to economic institutions and organizations. According to Rothstein’s research, in Sweden, the concept of economic democracy has a long history, with its roots in the labor movement and the social democratic tradition.
The emergence of economic democracy in Sweden can be traced back to the early 20th century when the labor movement demanded greater influence and control over economic institutions—a period of the growth of the cooperative movement, which aimed to provide workers with increased control over production and distribution processes. Cooperative organizations, such as housing cooperatives and consumer cooperatives, played a significant role in advancing the concept of economic democracy in Sweden.
Rothstein says that the Swedish Social Democratic Party (SAP) has been a major proponent of economic democracy in Sweden. Since its inception in the late 19th century, the SAP has pursued policies that promote workers' rights, social welfare, and economic equality.
One of the key milestones in the development of economic democracy in Sweden was the establishment of the Rehn-Meidner model in the 1950s and 1960s. This model aimed to promote economic growth, full employment, and income equality through centralized wage bargaining, active labor market policies, and a solidaristic wage policy.
Furthermore, the role of labor unions is highlighted as a significant factor in Sweden's historical development and promotion of economic democracy. According to Rothstein, labor unions have been crucial in securing workers' rights, fair wages, and reasonable working conditions and fostering a more inclusive and equitable society.
For example, Rothstein argues that “the strong and influential role” of the SAP-affiliated Swedish Trade Union Confederation (LO) in shaping the country's economic and social policies explicitly. LO has played a significant role in establishing the "Swedish Model," a system of collective bargaining, wage solidarity, and active labor market policies that helped to create a more egalitarian society.
Also, Rothstein points out that labor unions in Sweden have been involved in expanding workers' participation in company decision-making through the "Co-determination Law" passed in the 1970s. This law allows workers to have representation on corporate boards, giving them a voice in the management of companies and other economic institutions.
In the 1970s, the Swedish Trade Union Confederation (LO) proposed the establishment of wage-earner funds as a means to increase workers' influence over economic decision-making and redistribute wealth. The idea was to use a portion of corporate profits to create funds controlled by workers, enabling them to invest in and own shares of companies.
Implementing wage-earner funds in the 1980s marked a significant step towards economic democracy in Sweden. However, it faced considerable opposition from business interests and market-liberal and conservative political forces.
The 1990s witnessed a retreat of economic democracy in Sweden. The country experienced a severe economic crisis, leading to the deregulation of financial markets, privatization of state-owned enterprises, and weakening of the labor movement. However, the concept of economic democracy has experienced a resurgence in recent years, with renewed interest in cooperatives, employee ownership, and worker representation on corporate boards.
Today, economic democracy in Sweden manifests in various forms, including cooperatives, employee-owned enterprises, and worker representation on corporate boards. At the same time, Rothstein argues that the role of labor unions in Sweden has faced challenges in recent years, including declining membership and the rise of the gig economy.
In response to these challenges, he suggests that labor unions must adapt and find innovative ways to represent and protect workers in the changing labor market. There is a growing interest in alternative economic models that promote sustainability, social welfare, and equitable distribution of wealth. This development has also led to new forms of economic democracy, such as platform cooperatives and social enterprises.
The future of economic democracy in Sweden will, according to Rothstein, depend on adapting to new challenges, such as the rise of the gig economy, automation, and globalization. This will require innovative approaches to worker representation, ownership, and decision-making in various economic institutions.
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