The 1992-93 Swedish Crisis Debate: How Economic Consensus Overturns Tradition

In a more extensive study, presented at the RATIO Conference on Knowledge and Policy Change in August of 2011, I examined the role economists played in the Swedish public debate over its financial and economic crisis of 1992 and 1993 (Jakee 2011). I argued that this Swedish experience is highly relevant for the financial crises faced by the United States and Europe, post-2007. The very survival of Sweden’s famed welfare state was fiercely debated during the 1992–93 crisis, just as the redistributive polices of Western Europe and the United States are being debated in the wake of their own crises. Ultimately, Sweden’s welfare state survived, but was fundamentally reformed nearly twenty years ago. As a result, the Swedish economic conditions of the early 1990s and the subsequent policy adjustments hold insights for current policymakers facing a very similar set of problems and economic constraints. For example, many of the same underlying conditions that gave rise to the austerity measures adopted in Greece, Ireland, and Italy between 2010 and 2012, have much in common with the 1990’s Swedish experience. The same is true of the monumental reforms contemplated (and largely ignored) with regard to Social Security or Medicare in the United States.