Sweden’s declining ordoliberalism (b)

The most important advantage in the current world economic crisis is the balanced budget, and this has been something I have returned to again and again on this blog. The Swedish saying “den som är satt i skuld är icke fri” (Swedish Wikipedia) was coined by Göran Persson, Sweden’s prime minister from 1996 to 2006. It loosely translates as “whoever is debt-burdened is not free”. This is the crucial element in ordoliberalism that makes it imperative that Sweden remains independent of the euro (€). Its US-like housing policies combined with the sub-prime mortgage crisis and its attempt to force all member states into the euro (€).

A key factor behind Sweden’s ordoliberalism is its pattern of housing tenures. The choice is not between home ownership and private profit renting. it includes tenant-owner housing (bostadsrätt), mostly in blocks of flats and semi-detached housing. So there is no attempt to maximise owner occupation as EU policies regarding subsidies are designed to do. This has become vastly more important since the subprime mortgage crisis of 2008/9. See https://ordoliberalism.wordpress.com/2014/05/24/from-home-owership-to-ordoliberalism/.

Tenure systems are difficult to change. The Moderates have not even attempted to do so in their 8 years in office, only made minor reforms at the edges. But in today’s Dagens Nyheter there is  whole page under Dagens Nyheter Debate on Bostadspolitik (page 6) co-authored by no fewer than nine people, complaining about how there are far too many objections filed against new construction, which we could do without so that we could “build away” (bygga bort) the housing crisis.

The reason for this is that housing tenures are difficult to change in any fundamental way. Bo Bengtsson calls this Path Dependence. See Bo Bengtsson and Hannu Ruonavaara Path Dependence in Housing (Introduction to the Special Issue of Housing, Theory and Society, 27, 3 2010). See also my Online Paper: http://www2.ibf.uu.se/PERSON/jim/on_line/ordoliberalism.pdf and the book by Bo Bengtsson (ed. 2010) Varför Så Olika?: Nordisk Bostadspolitik i Jämförande Historiskt Ljus, Égalité , Malmö (2006), which shows how varied the small group of Nordic countries are in their housing policies and the resulting tenure outcomes.

In other respects the Moderates have been more successful in countering Social Democratic policies by shifting subsidies to the cities of Stockholm, Uppsala, Gothenburg and Malmö. This has been at the expense of the rural areas, as, naturally enough, companies in small towns are encouraged to move their operations to the larger urban centres. The multi-national steel company Sandvik has recently moved its offices to Stockholm to make it more easy to reach by foreign company executives. There used to be a subsidy to balance this urban-rural divide, but this has been lost by the Social Democrats who take a more “business” approach to the divide.

The big loser in this is the rural party, the Centre Party which has gradually moved right toward the neoliberal ideology around the time of the rise in neoliberal revanchism in the 1970s. The ins and outs of this shift can be read on the Wikipedia page for the party. It is now in danger of losing its Riksdag presence by getting less than the 4 percent of votes.

But the long-term prospects of an ever more city-oriented approach is to force a larger proportion of low-income tenants into home owership just to be able to get housing at all.

So Social Democratic policies become ever more like Moderate policies. The result of this is interesting, because the two main opposition parties have lost votes, the Moderates to the right and the Social Democrats to the left, to the Greens, Feminist Initiative (F!) and Left. It remains to be seen what happens in the September elections. Each of the 3 party allies in each alliance bloc are campaigning separately for their own policies. But it is quite possible that the 9th party, Sweden Democrats, who are not in either of the two alliance blocs may hold the balance of power in the Riksdag.

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