Sweden has long presented a puzzle to foreign observers. The Left tends to extoll the perceived virtues of social solidarity, collectivist values, and the “cradle-to-grave” welfare state. The Right, on the other hand, while largely agreeing with the basic welfare narrative, tends to paint it in darker colours, conjuring up a more dystopian vision of high taxes and overbearing regulations. In this view, Sweden is a nanny state that discourages initiative, innovation and entrepreneurship in favour of excessive social security that inevitably results in stagnation and sclerosis.

And yet conservatives — particularly in Britain’s currently-flailing governing party — have a lot to learn from Sweden. The foreign obsession with the nation’s vaguely socialistic welfare system is myopic — and is happily beginning to wane. Increasingly, Sweden is receiving attention for its remarkable economy. There is enthusiastic talk of the Nordic tiger economies at Davos, while pro-business publications such as The Economist and The Financial Times praise the Nordic model of capitalism. The former praised Sweden’s economy for being “as strong as Pippi Longstocking”; indeed, the nation close to tops international rankings when it comes to economic clout and innovation, as well as quality of life.

Behind this success lies a moral logic that defies the stereotype that Sweden is based on collectivist values such as equality and solidarity. Upon closer inspection, it appears that the lynchpin of the Swedish social contract is an alliance between the state and the individual — one I have named “statist individualism”. In our high-trust society, the state is viewed more as friend than foe. This contrasts sharply with the Anglo-Saxon suspicion of the state, which is combined with a stress on “family values” and the supposed virtues of civil society. In Sweden, the state is welcomed as a liberator of individuals from traditional, unequal, hierarchical and patriarchal organisation — including the family, ethnic and religious communities, and charities.

If we look at the historical emergence of modern Sweden, it becomes clear that far from engaging in classical socialist policies, such as nationalising banks or private enterprise, Swedish Social Democrats made their peace with capitalists and businessmen in the late Thirties, having learned some hard lessons at the polls in 1928. Instead of radically re-organising the economy, they turned to a far more popular political agenda, namely social and family policy.

The common denominator for this political struggle was the goal of eliminating the need for charity and philanthropy. It was commonly seen as demeaning to receive alms, cap-in-hand, even if it created a warm, fuzzy feeling in the bellies of the givers. The central aim of the social movement of the 19th and 20th centuries was to replace charity with rights. The essence of the new social contract was clear and simple: citizens have both the right and duty to work, and to pay taxes, which finance social rights and common infrastructure. The fundamental logic was one of reciprocity over charity, autonomy over dependence, voluntary relations over inscribed familial duties. In practice, this entailed the gradual introduction of social and family policies, reforms of the tax system, and institutions that served to free individuals — the working class, women, children — from unequal power-relationships.

This social contract depends on what I like to call “the Swedish theory of love”. Authentic human relationships are possible only between autonomous and equal individuals who enter voluntarily into close relations. This is, of course, shocking news to those many non-Swedes who believe that interdependency is the very stuff of love. But in Sweden this ethos informs society as a whole. Despite the traditional image of Sweden as a collectivist social democracy, comparative data from the World Values Survey suggests that Sweden is possibly the most individualistic society in the world.

In 1971, for instance, the nation introduced individual taxation. In perhaps the most radical reform in modern Sweden, the individual — not the family — was symbolically and fiscally recognised as the fundamental unit of society. Even 50 years later, individual taxation is rare globally. In the United States, for example, the family is the fundamental economic unit; the first question on the tax return is: “Are you head of household”? If one checks “yes”, the follow-up question is: how many dependents do you have? The figure then translates into deductions and tax advantages.

In Sweden, these questions would be unthinkable. Indeed, the very purpose of the 1971 reform was to promote female labour participation, which was effectively discouraged before (if a woman began earning money her additional income would be heavily taxed). The tax reform was then followed up by the introduction of universal daycare to make it possible for both parents to work while also having children.

There were several other key reforms during this period. Student loans were offered to all, regardless of income or family wealth. Corporal punishment of children was outlawed; indeed, there was a much stronger emphasis on children’s rights than parental rights. The legal and financial obligation to care for the elderly was transferred from the family to the state.

It seems mysterious that a nominally socialist country could sport such a powerful brand of capitalism. But note the harmony between the Swedish model and the fundamental principle of the market — that the basic unit of society is the individual, and a central purpose of policy should be to invest in human capital and maximise individual autonomy. That is the key to the vitality of the Swedish economy.

This emphasis on individualism and free enterprise is also what makes the Swedish model so attractive not only to Social Democrats devoted to equal opportunity but also to Swedish Conservatives and market liberals — who favour the investments in human capital and opportunities for social mobility that are so central to an efficient market society. For liberals of this bent, the large role afforded to the state is rendered reasonably palatable, as the rhetorical focus shifts from the social welfare state to what I like to call the “individual investment society”.

But what works for the Swedish centre-Right might not sit well with the British Conservatives. Some may agree that the goal of combining social security with free enterprise is laudable in the abstract. Yet when it comes to embracing Swedish-style statist individualism, a number of considerable obstacles would seem to loom. Not only might one expect resistance from social conservatives for whom family values and communitarian Big Society ideals are dear, but both Truss and Sunak also seem more interested in invoking Thatcher and and on lowering taxes and limiting state power.

The radical individualism of Sweden also causes problems for the Anglo-Saxon Left, not least the “progressive” Left that has largely abandoned economic policy and civic universalism in favour of multiculturalism and the politics of identity. The focus is on culture war tactics, meaning the majoritarian politics aimed at actually taking control of the state are abandoned. Instead, the Left devolves into a cacophonic coalition of often conflicting group claims.

Ultimately, the modern, Anglo-Saxon Left and Right both adhere to communitarian rather than individualist values and ideals. On the Right we find a romantic view of the traditional family, of charities and churches; on the Left we encounter a celebration of “community” and identity-based groups that, it is argued, warrant special regard and recognition, and repayment for past sins, from slavery to discrimination.

Just as the Swedish experience suggests individualism does not lead to narcissism, alienation and anomie, it also shows that the only possible common denominator for an inclusive, just and sustainable social contract is the individual citizen. In the realm of voluntary society, we may well freely choose to associate with those who are like us in various ways — on the grounds of faith, ethnicity, sports or stamp collection. But the state would do well to stay focused on the individual citizen when it comes to the logic of rights and duties. Sweden’s individualistic, civic universalism was built on an optimism that set aside grievances relating to past victimhood. Unlike today’s British conservatives or identity-driven activists, it looked ahead.

Lars Trägårdh is, with Henrik Berggren, the author of The Swedish Theory of Love, available on 30 August. 

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