The SWEDISH Economic Model
For years, Sweden has combined prosperity with an extensive social welfare system. But today the Swedish model seems destined for change. At home, the economy is in trouble. Taxes are high, inflation is rampant, the work ethic lax. Abroad, the demise of communism in Eastern Europe has challenged the concept of a cradle-to-grave social safety net. A long debate is just beginning. THE ``Swedish model'' - an advanced market economy combined with a far-reaching social welfare system - is being questioned here as never before.
With signs of a deteriorating work ethic, decreasing voter participation, and an ever rising cost of living, Sweden is searching for a new plan.
This search has been given further impetus by the collapse of communism in Eastern Europe and the end of the cold war. With possible new security arrangements in Europe and with the approach of a truly common European market in 1992, Swedes say their country must change to keep up with the times.
``There is a confidence crisis among Swedes as to the Swedish model,'' says economist Lillemor Thalin at Svenska Handelsbanken, a leading Swedish bank.
The crisis is two-fold. It is economic, because of high inflation, rising labor costs, and low productivity. But it is also involves a loss of confidence in Swedish society and how it functions.
``The Swedish model is being eroded slowly but surely,'' says Carl Bildt, chairman of the conservative opposition Moderate Party.
For more than 50 years, with the exception of a six-year interruption in the 1970s, one party - the Social Democratic Party - has run Sweden. Under social democracy, adherence to parliamentary rule and belief in the free-market economy are combined with a strong state that takes care of its citizens in need.
Social Democrats outside the government acknowledge that Sweden faces a crisis.