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The Legacy of Myrdal: Is the Swedish Welfare State Dead?

In: Gunnar Myrdal

Author

Listed:
  • Claes Berg

    (Retired from Sveriges Riksbank)

Abstract

The Swedish model, originally insulated from international financial influences, became obsolete with the rise of global financial markets in the 1970s–80s. Financial deregulation in the 1980s led to rapid credit expansion, asset price inflation, and increased indebtedness, culminating in a severe banking crisis by the early 1990s. The government’s response included abandoning the fixed exchange rate and introducing economic reforms. Confidence in the financial system was restored by comprehensive and transparent action. Despite the crisis, the welfare state persisted, although modified. The 1990s saw privatization and deregulation in various sectors. Sweden became the home of several of Europe’s largest tech companies. New challenges like wealth inequality and immigrant integration emerged. Following Russia’s invasion of Ukraine in 2022, the dilemma for Swedish security policy from the coldest period of the Cold War returned. Sweden became a member of NATO in March 2024, which completed the Western-friendly line of Dag Hammarskjöld. The dream of a Myrdalian bridge between East and West now seemed dead, even though Myrdal’s contributions during the Cold War still are worth recognizing.

Suggested Citation

  • Claes Berg, 2025. "The Legacy of Myrdal: Is the Swedish Welfare State Dead?," Springer Studies in the History of Economic Thought, in: Gunnar Myrdal, chapter 0, pages 253-263, Springer.
    • Handle: RePEc:spr:spshcp:978-3-031-75075-5_15
    DOI: 10.1007/978-3-031-75075-5_15
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