The Origins of the Swedish Welfare State: A
Class Analysis of the State and Welfare
Politics*
STEVE VALOCCHI, Trinity College
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This paper uses the Swedish welfare system as a case study to investigate the nature of policymaking in
capitalist societies and the relationship between economic and political power in the policy-making process.
Although previous explanations accurately point to the role of "open"state structures, agrarian politics, and the
rise of the Social Democratic party in the making of the Swedish welfare system, none of these explanations
grounds its analysis in the dynamics of capitalist state building in early twentieth-century Sweden. When this is
done, the more useful explanation focuses on the role of a fragmented capitalist class building alliances with
increasingly polarized agrarian interests in order to stave off economic and political threats from below. These
class politics took shape within a state that had historically relied on concessions to "the people" to maintain its
legitimacy.
Debates about the nature of policymaking in capitalist societies and the relationship between economic and political power in the policy-making process have polarized into two
theoretical camps. One position argues that the balance of class power determines the broad
contours of social policy while the opposing position claims that the formal and informal
features of states are more important in explaining the shape of social policy (cf. Quadagno
1988; Weir, Orloff, and Skocpol 1988). Not until recently has anyone attempted to examine
the interaction between class interests and state structures by focusing on specific policy reforms for a limited number of national cases (Gilbert and Howe 1991; Valocchi 1991). This
paper continues in this tradition: It examines the interaction of class power and state structure
in the origins and early development of the Swedish welfare system.
I proceed from several theoretical assumptions which require the historical analysis to
focus explicitly on the interaction between class interests and state structure. First classes
cannot act; however, class interests are embodied in organizations and institutions that can
act. In the case of Swedish welfare policy, these organizations and institutions are political
and statist in nature. Secondly, the structure and functioning of states are only partially the
result of internal organizational or bureaucratic characteristics. States are formal organizations deeply embedded in civil society; they owe their origins to and obtain their mandates
and resources from powerful groups in civil society. In the case of Swedish welfare policy,
these origins, mandates, and resources cannot be ignored in mapping the historical trajectory
of state action.
The Swedish welfare system is unique among Western nations. The hallmark of that
system is universalism and solidarity, that is, the public provision of income, goods, and services to all Swedish citizens without regard to previous contribution. The Swedish pension
system gives pension rights to all citizens regardless of previous employment; child allowances are available for all families, regardless of income level or family structure; and
health care is free or heavily subsidized and available to all citizens. Most of these benefits are
financed either by progressive taxation or employers' contributions (Einhorn and Logue
1989:170-193). In the area of unemployment, Sweden is unique in that it does not emphasize
* This article is a revised version of a paper presented at the August 1991 meeting of the American Sociological
Association. Correspondence to: Valocchi, Department of Sociology, Trinity College, Hartford, CT 06106.
SOCIAL PROBLEMS, Vol. 39, No. 2, May 1992
189
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VALOCCHI
The "Swedish Model" and Theories of the Welfare State
Baldwin (1989:7) argues that the universalist nature of the Swedish pension system resulted not from the party or interests of the working class or capitalist class but from the rising
rural middle classes during the early stages of industrialization. In the late nineteenth and
early twentieth centuries, urban elites and state bureaucrats attempted to respond to the rising
and uneven burden of the poor law with social insurance reforms that benefited only industrial workers and which were financed by employers. Farmers, however, used their political
power in the Swedish legislative system (Riksdag) to thwart all legislation: they did not want
to pay for a pension system from which they would not benefit. Only when a pension law
(passed in 1913) extended benefits to all citizens and mandated financing through the tax
system, did farmers give their approval. Though the amount of the pension was small, the
principle had been established.
This explanation shares some similarities with the more general perspective on the welfare state which depicts policymaking as a process of interest group pluralism. With the extension of the franchise and subsequent development of mass based political parties.
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insurance but prevention. It uses macroeconomic, public works, and worker retraining policies to achieve full employment and adequate wages (Gustafsson and Richardson 1984:166168).
There is disagreement among social scientists about why the Swedish welfare state took
its present form. Some see its origins in the political power of agrarian interests in the first
half of the twentieth century (Baldwin 1989, 1990); others attribute its unique features to the
political power of the industrial working class beginning in the 1930s (Esping-Andersen 1985;
Stephens 1979); still others locate the origins much further back in a "bureaucratically centered monarchical regime" which existed from the seventeenth to early twentieth century
and which created investigative and decision-making structures that were analytically thorough and politically consensual (Heclo 1974; Weir and Skocpol 1985:129).
As with many social science explanations of historical phenomenon, there are elements
of truth in each of these accounts. I will argue, however, that the most useful explanation is
one that examines how past configurations of class interests and state structures during Sweden's early industrialization provided the context within which working-class welfare politics
were made and remade from the 1930s to the present day. Specifically, state structure and
agrarian politics made early Swedish welfare policy more interventionist and more universal
than other European states at similar stages of industrialization. However, Swedish state
structure was based on a particular configuration of class biases, and agrarian politics took
their shape from the unique form of capitalist state building that characterized Sweden from
1880-1920. Early welfare reforms, therefore, can only be understood with reference to these
class biases in a capitalist society.
In addition, the welfare state characteristics established in this early era were merely
tendencies until the Swedish Social Democratic party became a reformist party in the 1920s
and developed a politics to institutionalize and extend these tendencies. The consequence
was universal, tax supported public services, public works, and full employment policies.
By making these arguments, I do not pretend to add any new historical insight into the
origins of the Swedish reforms. I do provide fresh insight into the story by grounding it in a
theoretical and conceptual framework that acknowledges that these reforms took place in a
rapidly industrializing capitalist society replete with the attendant processes of proletarianization, working-class militancy, capitalist power, and the conflicts and compromises hammered
out among capitalist and pre-capitalist elites and masses.
Class and the Swedish Welfare State
1. Some pluralist accounts of policymaking do consider the class basis of social interests, particularly those accounts of politics in ethnically homogeneous nations (Lijphart 1977). Baldwin's account does this to some extent, particularly when his analysis of "risk communities" is rooted in economic interests rather than in political parties. However,
these accounts assume that all interests are equally "valenced" and thus all coalitions are possible. They also assume that
the rules, procedures, and traditions of the state, the organization in which these interests maneuver, are value neutral,
thus favoring no one interest or position over others.
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preexisting social cleavages organize into political interest groups. Although rules of representation and policy-making procedures may temporarily bias the policy-making process, the
proliferation of interest groups and the competition among parties to represent those groups
delivers "the greatest good for the greatest number." In Baldwin's analysis of the pension
system, gradual extensions of the franchise made farmers' interests the new objects of political
contention, and all the parties vied for their support. The process of reconciling agrarian
interests with other interests in favor of increased social supports for the economically vulnerable delivered a pension act that was universalist and tax supported.
Weir and Skocpol's (1985) state-centered account of the universalism and public works
features of the Swedish welfare system recognizes agrarian interests only in so far as these
interests created a policy legacy which influenced civil servants, state ministers, and outside
experts in the refashioning of Swedish social policy in the 1930s. More important than the
balance of power among social interests, Sweden possessed a "deeply rooted system of deliberative, consultative, and state-centered policy making" (Weir and Skocpol 1985:130) which allowed the new ideas of "maverick" economists and old ideas inherited from past policy to be
conjoined and integrated into coherent national reforms.
This state-centered account has its roots in the neo-Weberian tradition. With the breakdown of feudalism and the rise of dynastic regimes, which managed and profited from the
breakdown, geographically contiguous areas fell under the authority of central governing
units. Through their control of the military, courts, and tax systems these units gained a
monopoly over the means of administration and coercion. In Weir and Skocpol's account, the
Swedish state's ability to create deficit-financed public works derives from its expert civil service, its programmatic political parties, and its control of a central bank. These characteristics
of the Swedish state allowed the ideas of and coalitions forged by the Social Democratic party
easy access to political power.
In a third and final explanation for the rise of the "Swedish model" the Social Democratic
party, acting as the political representative of the industrial working class, takes center stage.
Equipped with socialist values of equality, solidarity, and efficiency, a commitment to parliamentary politics, and close ties to the trade union movement, the Social Democratic party
came to power in 1932 and proceeded to refashion social policy consistent with both its values
and winning elections (Stephens 1979:133-140). The outcome of these sometimes complementary, sometimes conflicting goals was universalism, progressive tax financing, and a preventive approach to unemployment (Esping-Andersen 1985).
The "triumph of social democracy" explanation in Sweden is part of a more general emphasis on the importance of social democratic parties in the creation of the welfare state in
capitalist democracies. More than the previous explanations, the social democratic explanation sees the politics of the welfare state as a class-based affair.1 Put simply, industrialization
in the West resulted in capitalist power, working class vulnerability in the face of that power,
and the emergence of a middle stratum of white collar administrators, managers, and technicians (Stephens 1979:15-55). With working class pressures for representative government,
capitalist industrialization also resulted in political parties organized around these economic
interests. Working-class parties that shed their oppositional stances, engaged in the politics of
winning elections, and entered coalitions with white collar wage earners built welfare systems that emphasized universality and solidarity.
The historical explanations of the Swedish welfare model share the weaknesses of the
191
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VALOCCHI
Pre-Social Democratic Welfare Reform
National responsibility for sickness, old age, and unemployment predated the dominance
of Social Democratic governments. 2 The Pension Act of 1913 provided flat rate pension benefits to all citizens at age 67 (Heclo 1974:191; Rosenthal 1967). In 1914, the Swedish government supplemented local poor relief with national funds and, more importantly, established
the National Unemployment Commission which undertook public works projects to combat
unemployment (Clark 1941:22). In addition, the state contributed money to a variety of voluntary and wage earners' clubs for sickness and industrial accidents (Wilson 1979). In sum, a
new national system was established only for old age and, although the state provided substantial supplements, provision for accident, sickness, and unemployment in Sweden remained the responsibility of local governments and voluntary programs (Hovde 1943:632).
As I will argue below, these early reforms emerged from an interaction between politically-mediated class interests and class-mediated state structures. As stressed by the state-centered perspective, a credentialized civil service participating in a decision-making process that
relied on investigation, analysis, and close ties between state ministers and the Riksdag created a context in which national solutions to the social problems of Swedish industrialization
could develop, percolate, and be implemented with a high degree of consensus. But that is all
that this administrative structure created—a context. What is missing are the interests that
created this administrative structure in the first place, the class biases embedded in this structure, and the interests that filled this structure with the content of national solutions. Here
Baldwin's theory of social interests provides a necessary, if incomplete, answer.
As stressed by Baldwin's analysis of the Pensions Act of 1913, farmers' interests did exert
countervailing power against attempts by "government bureaucrats and urban elites" to institute a contributory, employer-financed, old age insurance for industrial workers (Baldwin
1989:8). While acknowledging the importance of farmers' interests in the making of the
Swedish welfare state, Baldwin does not situate these interests, nor other interests in the policy-making process, within a broader class analysis. Baldwin's analysis is unable to explain
2. The Social Democratic party held office, either alone or in a coalition government, from 19321977 and from
19821991.
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general theoretical traditions of which they are a part. Neither the interest group pluralism
explanation nor the Weberian explanation sees class structure and processes as setting limits
on democratic politics. Interest group pluralism does not recognize that the class biases of
social interests routinely give some interests more power than others in the policy-making
process; state-centered theory doesn't recognize that class biases may be built into the ways in
which states monopolize the means of administration and coercion.
The social democratic perspective does recognize the importance of class power in the
politics of the welfare state. It concentrates, however, only on the ways in which working
class strength and labor party strategy shape welfare policy and ignores the ways in which
other class interests, particularly capitalist interests, make their way into the political arena
(Olsen 1991:110). It also ignores the state as a class structure. It does not consider that state
organizations may vary in their receptivity to working-class parties, and that this receptivity
may be the product of past balances of class forces presently institutionalized within the state.
A more useful class analysis of welfare policy would examine not only the class politics of
the Social Democratic party but also the politics of other interests in the policy-making process. It would also examine the state's class origins to determine if the state's structure and
functioning reveal a certain configuration of class bias as well as how that bias might affect
the policy-making process (Valocchi 1990). The following account attempts this kind of class
analysis for the early Swedish welfare reforms.
Class and the Swedish Welfare State
193
why agrarian interests continued to exercise both economic and political power within Swedish society in the early twentieth century, and how the class nature of other interests in the
policy-making process affected the shape of the early reforms.
Class Interests and State Structures
3. It is important to keep in mind that this "strong" state depended on a particular configuration of class biases, a
configuration that was becoming increasingly problematic in the late nineteenth century. Its independent power, therefore, derived from its pivotal function in a rapidly industrializing capitalist society.
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In Sweden, industrialization was engineered by a relatively small number of capitalists
involved in the iron mining, timber, and shipbuilding industries (Samuelsson 1968). Capitalists derived their wealth primarily through export and not through opportunities provided by
the state through imperialism and war. This nascent capitalist class, however, relied on the
Swedish state for infrastructure, protectionist tariff policies, and generous lending and direct
investment in large projects (Esping-Andersen 1985). Many of the investors were "high ranking public officials," officials who were tied through heredity or current status to large commercial landowners in the south of Sweden (Tilton 1974:564). This indirect yet powerful
alliance between the state and capitalists had important political consequences. Capitalists
did not use their increased political power to advance the cause of franchise reform or parliamentary government nor did they use it to dismantle administrative structures that catered to
the nobility and the countryside. Instead, they used their power to support the economic
interests of both large industrial employers and large estate owners, which included tariffs
and defense spending (Tilton 1974; Verney 1972).
This alliance, however, was not only beneficial for the rising capitalist class. It was also a
conscious strategy used by the monarch to gain power over the Swedish aristocracy and to
stave off demands for greater constitutional and political freedoms by urban liberals and independent farmers (Alestalo and Kuhnle 1987:10). In the late seventeenth century, the monarch, in a successful struggle for power with the aristocracy, dramatically reduced land
holdings and distributed these among small-scale farmers and the Swedish state (Roberts
1967:212). This greatly reduced the economic resources of the aristocracy and increased the
importance of independent farmers for both commercial agriculture and the political stability
of the monarchy.
The heightened importance of agrarian interests, as well as the volatile mix of rural and
urban interests that underscored this development, convinced the monarch and his state ministers to pursue a number of administrative reforms that emphasized a close association between state ministers, party leaders, and local administrators (Koblik 1975:37). Foremost
among these reforms was a committee and commission structure that jointly involved all
parties in identifying problems, drafting consensus-based solutions, and implementing these
solutions throughout the countryside (Castles 1978). This structure's investigatory powers, its
openness to outside expertise, and its ability to take into account previous policy proposals
served as a stabilizing agent in the increasingly conflictive world of party politics, where the
Riksdag held no policy-making power until 1919.3 Those who "set the structure in motion,"
the leading civil servants, state ministers, and party leaders, were drawn from a newly consolidated upper class of bureaucratic nobles, merchants, and industrialists; they determined
whose interests would be included and what bureaucratic policy initiatives would address
those interests (Alestalo and Kuhnle 1987:25; Berntson 1979; Therborn 1978).
This structure's tempering effects as well as its class biases are evident in the gradual
nature of Sweden's parliamentary reforms—reforms that were important in the development
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VALOCCHI
The Politics of the Early Reforms
Many of the early Swedish reforms were simply extensions of previous programs. They
were extended because the close links between local administrators, politicians, and the national bureaucracy enabled civil servants to detect local problems and respond on a national,
albeit ad hoc, basis (Hammerstrom 1979:184). The state's attention was drawn to these
problems by a small group of urban Liberals in the second chamber of the Riksdag who demanded national responsibility for old age, unemployment, and sickness and who commanded the support of a number of popular movements for religious freedom, free trade, and
temperance in the countryside (Lundkvist 1975).
While Conservatives in the first chamber easily defeated proposals for national welfare
reform, the fragile alliance forged between bureaucratic nobles, capitalists, and small-scale
farmers around the defense of the monarchy was in jeopardy without concessions of some
sort. These concessions, however, were not financed by an increase in the taxes of commercial and industrial elites but through the diversion of revenue from the tobacco monopoly
from defense to social expenditures (Verney 1972:45).
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of the early welfare system. Although the constitutional reforms of 1866 gave farmers a privileged position in the second chamber of the Riksdag, the aristocracy continued to play a leading part in Swedish politics (Oakley 1966). Entrance to the first chamber was still determined
by provincial assemblies that cast votes based on wealth. Large landowners, rich merchants,
and fledgling capitalists predominated (Rustow 1955). While farmers were more systematically included in the policy approval process and in the committee and commission structures
of the Swedish state, their importance was clearly secondary.
Other secondary players in the process of parliamentary reform emerged as by-products
of a capitalist industrialization that was producing a commercial culture in the cities and a
working-class culture in the towns and countryside. Both the Liberal party, representing
small-scale merchants and urban professionals, and the Social Democratic party, representing
industrial workers, had to contend with the rural interests of farmers if they were to build
political constituencies able to win elections (Rustow 1955). The 1866 reform gave those with
a great deal of urban property the vote, thus allowing urban liberals' concerns about poor
relief and unemployment to receive a hearing in the Riksdag during the latter half of the
nineteenth century (Rustow 1955:23-25). The 1909 reforms with their franchise extensions to
the better off members of the working class gave additional impetus to demands for changes
in the poor laws. The Social Democratic party organized these working-class interests, but
chose to concentrate on an alliance with the Liberals in support of universal suffrage and
representative government (Hentila 1978).
What is left out of this fairly standard account of Swedish parliamentary reform, however, is the changing nature of agrarian political interests in the face of capitalist industrialization. Political debates over defense policies, tariffs, suffrage reform, and labor-capital relations
throughout the late nineteenth and early twentieth centuries saw large-scale farmers ally
their interests with the Conservative party. Indicative of this development was the split in
the Ruralist party in 1887 over the issue of protectionism (Verney 1959). The Liberal party
attempted to win farmers' votes away from the Conservatives by moving closer to the position
of the right on tariffs and defense spending. Similarly, small-scale farm owners and peasant
proprietors concerned with religious freedom, temperance, and workers' rights joined the
ranks of the Social Democratic party (Schiller 1975). On the issue of welfare reform, as with
these other political issues, the interests of farmers were not unified and, as we will see, can be
best understood vis-a-vis their economic and political alliances with either capitalist or working class interests.
Class and the Swedish Welfare State
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It was only in the case of pensions that the early welfare reforms did not utilize existing
voluntary or local programs; in this one instance, Sweden moved toward a national insurance
model establishing a system of flat-rate contributions for old age and invalidity benefits for the
entire citizenry. This anomaly rested on a three-step political process involving a temporary
coalition of small-scale farmers and urban liberals in the Riksdag, class conflict and socialist
agitation, and state concessions in the face of that agitation.
The first proposals for national old age reform came in 1882 from urban liberals and
government councilors who echoed the concerns of local capitalists over the increasing and
uneven tax burden of the local poor law (Hammarstrom 1979; Olsson 1990:46). Unlike the
other proposals discussed at that time, the initial opposition from farmers in the second chamber over financing was overcome by eliminating the tax on small-scale employers (Heclo
1974:185-188). Given the fact that the largest group of employers at the time was farmers, it is
not surprising that the Agrarian party could not give their assent to a proposal that they
would finance but from which they would derive no benefits (Baldwin 1990:87-90). As noted
above, however, pension reform, along with other reforms, met resistance in the first chamber which was dominated by large-scale farmers and capitalists averse to taxation and dependent on the state for tariffs and financing. Not wanting to alienate his rural constituency, the
monarch relegated the discussion of pensions to a parliamentary commission where it was
revived not by Liberal reformers or Social Democrats but by Conservatives in the first chamber concerned with the increased militancy and socialist leanings of the working class.
In 1879, Sweden experienced its first major strike by organized labor. This was followed
by virtually three decades of strikes, union building, and socialist activity culminating in a
general strike (Scott 1977). These developments led many Conservatives and government
ministers in the 1890s to look to the welfare reforms recently sponsored by German Chancellor Bismarck as examples of national legislation that could effectively deliver economic efficiency and labor peace (Olsson 1990:113; Schiller 1975).
The commission set up by the Conservatives in 1891, once again foundered on the issue
of coverage and financing. Like the Bismarckian pension reform, the plan proposed by the
commission benefited only the industrial working class and was to be financed by employers.
The committee structure of the Swedish state, however, kept old age reform under discussion
and, with the arrival of the first Liberal party government in Sweden in 1905, the stage was
set for another attempt at a pension bill. The Liberals did not undertake an additional investigation and used the recommendations from the commission of the Conservatives (Heclo
1974:192). The increased influence of the Liberal and Social Democratic parties in the second
chamber of the Riksdag due to the franchise extensions of 1907-1909 forced Conservatives not
to oppose the bill (Baldwin 1990:89). The final bill expanded the coverage to all Swedish citizens, removed employers' contributions, and added state financing.
The beginnings of universalism in the field of old age in Sweden did not originate in the
party ideology or political influence of the Social Democrats: they played only a supporting
role in the passage of the Pension Act of 1913 (Tingsten 1973). The appeal of a nationally
organized program stemmed originally from concerns of local capitalists about increasing
taxes and then later from the concerns of those capitalists most dependent on the state to
control labor unrest and popular insurgencies at the turn of the century. These concerns,
expressed politically by state ministers and the Conservative party, could not be realized due
to the entrenched influence of agrarian interests. Farmers, particularly large-scale farmers,
were more worried about costs and coverage than about labor unrest.
Baldwin (1989, 1990) is correct in emphasizing the importance of agrarian interests in the
universalism of pension reform. Several features of the process, however, are neglected or
undertheorized in his account. First, although the reform did apply to all citizens, it remained
essentially a contributory program until the dominance of Social Democratic politics in the
late 1930s (Olsson 1990:311, note!8). Severing the link between contributions and benefits by
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VALOCCHI
Whither the Social Democrats?
The decade of the 1920s was a crucial period for the Social Democratic party. Their growing electoral strength in the interwar period did not automatically translate into public policy.
Unpopular policy programs and rules of proportional representation in the Riksdag prevented
the party from exploiting its basis of support (Koblik 1975:254). Beginning in the mid-1920s,
however, the Social Democratic leadership took advantage of its experiences in the investigatory commissions of the past several decades to develop and adjust party programs (Steinmo
1988:415). This rethinking of "socialist" practice bore political fruit in the 1930s, when they
won forty-one percent of the vote and formed a coalition government with the Agrarian
party.
Three outcomes of this process are important for understanding the role of the Social
Democratic party in the refashioning of the Swedish welfare state. First, stemming partly
from the politics of the 1913 pension law, the Social Democrats recognized the affinity of
interests between proletarianized small-scale farmers and industrial workers and developed
policy in accordance with this affinity. Party programs in the 1920s came to terms with certain economic and political realities: Sweden was not a highly polarized capitalist society;
agricultural elites and small-scale farmers had easy access to a Riksdag based on proportional
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financing social policy through the tax system was an essential component of the 1938 Social
Democratic program. The Social Democrats built on the principle of universalism to include
solidarity among people of very different ages, economic status, health, and family circumstance (Furniss and Tilton 1977:138-144).
Secondly, the decision-making process of the Pension Act of 1913 is undertheorized by
Baldwin. Although he locates the unique position of farmers in Swedish social structure, he
does not examine the emerging polarization within those interests nor does he examine the
class coalitions made possible by that polarization. It was primarily small-scale farmers and
peasant proprietors who gave their assent to pensions early on, thus putting pressure on both
capitalists and large estate owners in the first chamber. It was primarily large-scale farmers
who allied with capitalists in their opposition to employer financing of pensions, and it was
the growing working class pressure in the second chamber and elsewhere that encouraged the
compromise.
In addition, Baldwin gives too much explanatory power to agrarian interests. After all,
they exerted only countervailing power in the development of the old age pensions. Other
interests situated in both the state bureaucracy and party politics took the early initiatives to
which the agrarians were forced to respond. These interests were rooted in both the nature of
capitalist industrialization and capitalist state building in Sweden. As noted above, capitalist
interests registered in both the Conservative party and the state bureaucracy played an important role in both these processes.
This analysis also points to inadequacies in a state-centered explanation of the early
Swedish welfare reforms. The influences on the development of state-provided universal pensions as well as supplementary welfare assistance given by the state to already organized
local, voluntary, and private programs can be understood in state-centered terms only if we
see the administrative relationship between civil servants and the monarch, and the political
relationship between the Riksdag and state ministers as the outcome of class-based processes.
The power struggle between the monarchy and the aristocracy gave the Swedish state autonomous administrative power, the alliance between the monarchy and independent farmers
gave agrarian interests disproportionate access to policymaking, and the alliance between
state administrators and industrial capitalists impeded the growth of a centralized system of
welfare provision.
Class and the Swedish Welfare State
Summary and Conclusions
While most social science accounts of the Swedish welfare state's origins have stressed the
unique features of Sweden's state structure or agrarian politics, this account situates both explanations within the theoretical debates on the welfare state and, more specifically, within a
class analysis of the state and welfare politics. Many early welfare reforms were initiated by
state bureaucrats or kept alive in investigative and decision-making structures that stressed
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representation; and farmers' worsening economic situation and their solidarity in the face of
the farm crisis made their interests unavoidable objects of political contention (Soderpalm
1975:265). In response to these factors, Social Democratic programs throughout the 1920s
eliminated the demand for nationalization of land and replaced it with policies that protected
small farms and encouraged cooperative farms (Stephens 1979:132).
Secondly, also in response to the fight over the pension and franchise systems, the Social
Democrats recognized the necessity of collaboration with a segment of capital to finance welfare reforms. Thus, their agricultural program of the 1920s while benefitting small-scale farmers, did not propose to "socialize the great estates" (Hentila 1978:334).
Social Democratic rule in this context required coalition and compromise. The extension
of the welfare state in the 1940s and 1950s reflected this reality. Social policy focused on
expanded educational opportunities, pension benefits, and health care to urban and rural citizens; all programs emphasized the common factors in the class situation of small-scale farmers
and workers (Stephens 1979:134). It was a compromise, however, not only with farmers but
also with a sector of capital. As part of a collective bargaining agreement between the major
business and labor organizations in 1938, the Social Democrats "sweetened the deal" for capital with a series of corporate tax reforms "designed to lessen the tax burden on Sweden's
biggest and most profitable corporations" (Steinmo 1988:420).
The third outcome of this process was a shift in the party's policy toward unemployment.
Ever since 1908, the party had supported expanded relief payments and unemployment insurance as its main labor market strategy; all attempts to pass such policies were easily defeated
by Conservatives and farmers (Rothstein 1990). Emerging from these defeats, as well as from
Social Democratic experiences on the unemployment commissions of the 1920s, was a new
focus on countercyclical public expenditures and public works—using social expenditures
and public works to alleviate unemployment and restore sluggish productive capacity. The
policy emerged out of a realization that the combined opposition of capital and farmers made
an unemployment insurance program unlikely. The compromise symbolized the political
constraints within which the Social Democrats operated as well as the policy ingenuity of
party leaders as they maneuvered within those constraints (Rothstein 1985).
While the principle of universalism predated social democratic dominance, it was extended by the Social Democrats. More importantly, however, the use of public employment
and other macroeconomic policies and its integration with traditional welfare policy was the
achievement of the Social Democrats in the post-World War II period. It made possible a
consumption-led full employment economy that generated the resources to fund the welfare
state.
The Social Democratic party's political dominance throughout much of the postwar period in no way implies that the capitalist constraints on the state of an earlier era were no
longer operative. The Swedish Social Democrats attained power precisely because they accepted those constraints and refashioned their ideology, program, and electoral strategy to get
"the best deal" for the Swedish working class.
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VALOCCHI
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analysis, consultation, and consensus. However, state bureaucrats had close ties with industrial and commercial capitalists, and state structures had their origins in class alliances between the monarchy and the capitalist class. The early welfare reforms reflected these biases:
the motivation for pension reform lay in concerns by Conservatives and state bureaucrats
with labor unrest; extensions of state subsidies to local and voluntary welfare programs
emerged out of an implicit alliance between the state and Conservative party to "do something" without establishing national programs. Contrary to the state-centered perspective, the
interests and authority of state actors derive from their relationships to a class-based civil
society.
Agrarian interests did put the brakes on or refashioned a variety of reform proposals.
Their importance, however, lay primarily in their countervailing pressure, not in their proactive position. These interests, moreover, derived their political power out of a struggle between the monarchy and the aristocracy in the eighteenth century and in subsequent class
alliances between the monarchy and the nascent capitalist class to preserve state promotion of
capitalist activity in the late nineteenth and early twentieth centuries. With the shift in Social
Democratic ideology and the crisis in agriculture in the 1920s, these interests allied themselves
more often with labor than with capital. Agrarian politics, therefore, are better viewed with
reference to the emerging class politics of a capitalist society than with the interest group
politics of a pluralist democracy.
This analysis also situates the social democratic explanation of the Swedish welfare system in historical perspective. Some of the principles that would become associated with the
social democratic welfare state were anticipated decades before the dominance of the Swedish
Social Democratic party. However, the principle of universalism in old age provision, a concession to the Agrarians, was extended by the Social Democrats to invalidity, health, and
family policies in the post-World War II period. The system of public works, which was organized at the local level at below market wages, was reorganized by the Social Democrats in
the 1930s as a national system at union wages. The party did not bring radical transformations in policy; it simply refashioned existing programs in accord with both ideology and
political expediency. As the foregoing analysis as well as recent events in Sweden suggest (cf.
Kelman 1991:10), however, this refashioning is unlikely to deliver anything resembling a socialist society.
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