Another source:
http://www.fcpp.org/publication.php/1511
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During the phase when Sweden went from agriculture and poverty to industry and wealth, the economy was very open and flexible. Free traders won in the late 19th Century the battle for free trade, which was very important for exports and industry. Entrepreneurs started up small businesses easily in a dynamic environment with low taxes and strong property protection. In fact, the tax pressure rose only from 10 to 20 per cent of GDP between 1890 and 1950.
During the socialist phase, however, the size of the state exploded. The tax pressure increased to 50 per cent of GDP during the three decades up to 1980. Many companies were socialised by the state. The state interference in markets grew and the ultimate aim was a more centrally planned economy.
The socialist period created problems. Growth decreased and Sweden started its decline in the OECD list of countries in GDP per capita. Inflation soared and so did budget deficits, at times at around ten per cent of GDP. Unemployment reached high levels. Problems with matching supply and demand in markets with state intervention and in the welfare monopolies were mounting. Only one of the 50 biggest companies today has been started before 1970, which indicates which period was successful and which one that was not.
This was followed by a rather intense period of market-oriented reforms from the late 1980s to the mid 1990s. Inflation was reduced and the Central Bank made independent. The EU membership opened up markets and normalised several of the more radically socialist features of the Swedish society. Marginal tax rates were cut, making education and work more profitable. Many markets, such as telecom, taxi, finance and gas - were de-regulated. That led to a telecom success, with Ericsson as the flagship, and vastly lower prices for phone calls. A pensions reform substantially reduced the level of state pensions and allowed citizens to invest part of the state pension in the private market.
Where does that put Sweden today? A neo-liberal country that became socialist and then embarked on market-oriented reforms in several areas. Today, Sweden contains both socialism and free markets. But the same truth as before applies: where there has been free-market reform, there is success, and where there is socialism, there are problems.
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