The (Im)practical Consequences of Practical Solutions

Since 1945, the practical solution to the Swedish Social Democratic Party’s ideological goals of ‘solidarity, equality and planning’ always tended to be yet another sweeping welfare state reform. Delivery was in keeping with the ideological rhetoric. However, increasingly the high taxes to support the reforms met with strong criticism from the party’s core blue-collar voters, disgruntled about marginal taxation and VAT. Yet, when in 1981 the party totally reformed its taxation policies by reducing marginal taxation, it infuriated key members and voters who felt that high-end earners benefitted unfairly. Moreover, the U-turn had knock-on practical effects on welfare state expansion. In 1982, Prime Minister Olof Palme stated that the welfare state could expand, ‘but not as a share of the total economy’. Suddenly, tax and welfare state ceilings had been put in place, with efficiency drives becoming increasingly necessary, leading to further U-turns when the party dropped most of its resistance to privatisations and to the marketisation of the welfare state. Yet the party’s rhetoric about the need for welfare state expansion and criticism of lower taxes remained intact. No longer does the delivery square with the rhetoric. Gradually, practical decisions have placed the party in an ideological dilemma.