I. Kärrylä: Democracy and the Economy in Finland and Sweden since 1960

Democracy and the Economy in Finland and Sweden since 1960. A Nordic Perspective on Neoliberalism

Kärrylä, Ilkka
Palgrave Studies in Political History
Anzahl Seiten
XV, 364 S., 4 SW-Abb.
€ 117,69
Rezensiert für H-Soz-Kult von
Micha Fiedlschuster, Department of Politics, York University, Toronto

Hardly anyone today thinks about democratizing the economy: democracy and economy are considered by most thinkers as separate spheres. Individuals exert power over companies as shareholders, protesters or influencers, but not as workers. Frankly, with surveillance technology and flexible work contracts, many workers around the world have to fight for their most basic rights to be respected. As this book shows, however, there were times and places where economic democracy seemed a real possibility. Based on that observation, the author asks: why has the idea of democracy in the economy so little value today?

Focusing on Finland and Sweden, Kärrylä shows that the terms around economic democracy have almost disappeared since the early 1990s, despite vital public discourses from the 1960s onward. He argues that existing ideas of economic democracy were pushed back by neoliberal beliefs, in particular about democracy and the economy being separate spheres. Throughout the book, we learn that the neoliberalization of the two Nordic countries is not simply a story of how a global discourse and global elites have undermined the local traditions of a strong welfare state and ideas of economic democracy. As Kärrylä demonstrates, the devaluation of those ideas had many country-specific reasons and is partly the outcome of dilemmas that political actors faced at specific moments in the history of the two countries. Sweden and Finland are analyzed throughout the book in the same chapters. While this certainly makes sense for the argument and overall design of the book because both countries share many similarities, readers who are interested in the history of only one country may find the design obstructive. Adding some tables that list the key historical moments for each country would have alleviated that caveat.

The book, which is based on Kärrylä’s dissertation, is divided into eight chapters. The concise introduction sets out the topic, aim, argument and scope of the book. Kärrylä asks about the history of concepts such as economic, industrial, and enterprise democracy: “[W]hat kind of beliefs, attitudes and concrete practices they have been associated with, how they have been legitimized and criticized, and how their role has changed in political thought and rhetoric” (p. 2). The author’s approach is to “look at historical agents’ contested ways of conceiving and conceptualizing democracy and the economic order” (p. 9), further explained by short references to Reinhart Koselleck, Quentin Skinner and Mark Bevir. The latter is his main reference, having inspired him to “explain conceptual and ideational change with ‘dilemmas’ that historical actors have faced and that have prompted them to modify their beliefs and concepts” (pp. 10–11).

Chapter two explores economic democracy as a contested concept with a focus on discourses on active industrial policy and economic planning. Based on secondary literature, Kärrylä refers back to debates in the early 20th century before starting his own empirical analysis from the 1960s onward. He concludes that in the visions of a democratic society of both Finnish and Swedish conservatives “the most important subject was the individual, while the role of the state and interest groups were to be restricted as much as possible” (p. 59). Although conservatives at that time accepted the left economic discourse to a certain extent, they already proposed their opposite ideas early on before they eventually became implemented decades later.

Chapter three and four focus on the 1960s and 1970s, which could be called the ‘golden age’ of ideas and debates about democratizing the economy. By analyzing the day-to-day political debates (newspaper articles, party programs, pamphlets and archival material), the author comments on thoughts about enterprise democracy and collective ownership. Chapter three details the debate about how much power employees should have over a company. Despite advances towards more substantial powers for employees, employer organizations and conservatives managed to contain increased worker’s influence to forms of cooperation and consultation, thereby curbing real power sharing between employees and employers. Kärrylä argues that the legislative innovations of the 1970s were not – as Social Democrats in both countries thought at that time – moves towards enterprise democracy, but in fact “first steps toward the hegemony of employer thought” (p. 106). The idea of enterprise economy was subordinated to the cultural norm of national economic interest, which pushed forward ideas of economic efficiency and growth.

In chapter four, the author shifts to discourses around wage earner funds and collective ownership. Wage earner funds were controversial topics in both countries: Sweden established them successfully in 1982, albeit, as Kärrylä shows, only in a very limited form that did not contribute to the democratization of the economy. Similarly, Finland’s policy solution in this respect advanced democracy only in theory, but not in practice.

Chapter five situates Sweden and Finland in the global context of postwar capitalism and its crises. Kärrylä comments on the well-known developments, asking “how economic beliefs changed in Finland and Sweden in the late 1970s and early 1980s” (p. 163) and how this affected the meaning of economic democracy. Social Democrats adopted ‘Third Way’ reforms as they faced the dilemma to reform their general economic policy “within the bounds of internationalizing capitalism” (p. 193). Since they believed that elections could not be won with more socialist-type policies, “they chose a strategy that in fact strengthened global capitalism by loosening political steering of capital, even if it was not their main intention” (p. 193). Kärrylä concludes that the possible meanings of economic democracy narrowed considerably at that time. Enterprise democracy increasingly lost its potential radical edge and became confined to ideas of codetermination and cooperation, while the business sector and the centre-right, no longer feeling the need to appropriate and redefine left-wing concepts, pushed forward negative connotations of economic democracy.

Chapter six covers the 1980s, which were characterized by further decline in the salience of economic democracy. Particularly telling is the de-regulation of the financial markets, which was pursued in both countries without much debate by political leadership on its ideological and political consequences. In general, it seems that debates about economic reforms in that period took place less and less with reference to democratic ideas.

Chapter seven analyses the developments in the 1990s and the economic crisis Finland and Sweden experienced due to the free flow of capital after having deregulated their financial markets. However, this did not strengthen demands for regulation and (re-)democratization of the economy, but further narrowed down policy alternatives. European integration also fell into that time period. Though Kärrylä shows that both countries pursued European integration, he rarely goes into details about the controversies around EU membership, which is a missed opportunity – constitutional and supranational restrictions to economic policy were transnational phenomena, and European integration their driving force in Europe. It would have been interesting to know how it was debated in Sweden and Finland in more detail.

The conclusion starts with a summary of the book’s argumentation and history of concepts. In an outlook, the author asks whether the economy can be “re-politicized” in the future (p. 318). He finds the debates around climate change and economic inequality most fruitful for this task. Proposals for a stronger regulation of global capitalism have been made after the global financial crisis, which entail the possibility to re-consider the relationship between democracy and the economy. The task of tackling climate change and the global cooperation it requires bears the potential to “produce new forms of economic governance” (p. 320). However, current climate policies seem to play into the hands of global capitalism by preferring market solutions, techno-fixes and expert rule instead of significant re-distribution of power and resources.

Kärrylä provides a meticulous analysis of the changing meaning and significance of concepts of economic democracy in the history of Sweden and Finland. His well-written book is of interest not only to historians of Sweden and Finland, but more broadly to social scientists with an interest in the meaning of democracy and the adverse effects the discourse of neoliberalism has on it. Last but not least, the book is valuable for all those who want to learn from the dilemmas of the past for the prospect of democratization in the future.