In modern times, the five Nordic countries, Sweden, Denmark, Finland, Norway, and Iceland, have been held up as being quite successful, all of them being free, stable and prosperous. But how can their relative success be explained? Is there anything like a ‘Nordic model’ from which others nations may learn? Hannes H. Gissurarson writes about the ideas and herritage of Anders Chydenius, a pioneer of Swedish liberalism.
It is noteworthy that the Nordic countries were only united politically, under a king from the Danish royal family, for little more than a century, from 1397 to 1523. Then the Swedes rebelled and re-established their own kingdom, comprising most of present-day Sweden and Finland. While all the Nordic nations converted to Lutheranism in early sixteenth century, Sweden was for a while a major power in the Baltic region, but lost many of her possessions in a war against Russia, Poland and Denmark which ended in 1721. As a result of the defeat, the Swedish Diet, the Estates of the Realm, which could trace its roots all the way back to a 1435 meeting of the nobility, gained in influence. It consisted of four estates, the nobility, clergy, burghers and peasants. Soon two loosely defined parties emerged in the Diet, the ‘Hats’, hattar, mainly aristocrats, who sought to restore Sweden to her former glory, and the ‘Caps’, mössor, who wanted to pursue peace. In 1765, the clergy in Ostrobothnia (Österbotten in Swedish)—roughly Central Finland—elected from their ranks a Swedish-speaking Finn to the Diet. He was a young parish priest from the small town of Nedervetil, known as a supporter of the Caps, Anders Chydenius, who was to become a pioneer of Swedish liberalism, anticipating some of Adam Smith’s most profound insights. He provided “an almost classically clear and simple exposition of the fundamental tenets of economic liberalism,” economic historian Eli Heckscher stated, “which might readily have achieved main stream international fame if at that time it had been published in one of the world languages.”1
Chydenius’ Life and Works
Anders Chydenius was born on 26 February 1729 in the inland commune of Sotkamo in Central Ostrobothnia, not far from the border with Russia, the son of Hedvig Hornæus and her husband Jacob Chydenius, who was chaplain of the church there. When Anders was five years old, the family moved to the inland town Kuusamo in Northern Ostrobothnia where his father Jacob became a vicar and in 1746 the family moved westwards, to another town in Northern Ostrobothnia, Kokkola, close to the Gulf of Bothnia in the Baltic Sea. In 1745–1753 Anders studied philosophy and theology at Turku Academy in Finland (Åbo in Swedish) and at Uppsala University in Sweden. “Apart from the philosophical sciences, I was very interested in mathematics, especially geometry, astronomy, gnomonics, mechanics and some algebra,” Anders later recalled.2 Upon finishing university he became chaplain in Nedervetil (Alaveteli in Finnish), close to his father’s parish. Married, but childless, he was a diligent and resourceful farmer, and a conscientious shepherd of his flock. He was a practical man, active in the clearing of marshes, experimenting with new breeds of animals and plants, and adopting new methods of cultivation. He also tried to be useful in other ways, performing minor operations, preparing medicines and inoculating his parishioners against smallpox. Soon, he became interested in issues of trade and politics. At the time, the Kingdom of Sweden followed mercantilist policies and upheld the monopoly of a few chartered cities to engage in foreign trade. Thus, the farmers and burghers of Ostrobothnia were not able to sell their products, mainly tar and timber, directly to customers in other countries. Trade had to go through Stockholm, at the other side of the Gulf of Bothnia.
Chydenius became convinced that trade monopolies worked against the public good. If the Kingdom of Sweden was to prosper, free trade was necessary, indeed freedom in general. In 1763 he participated in an essay competition held by the Swedish Royal Academy of Sciences on the causes of emigration. His contribution proved however too radical for the jury, and he did not even get an honourable mention. In his essay, Chydenius detailed the abuses, regulations and taxes making it difficult to escape poverty in Sweden. “A fatherland without freedom and livelihood is a big word that signifies little.”3 The reputation which Chydenius had by now gained in Ostrobothnia ensured his election to the Estate of the Clergy in the Swedish Diet. In 1765, the Caps were for the first time in control of the Diet, and Chydenius emerged as an active and influential member of their party. In Stockholm, he wrote several political pamphlets, but the most important one was National Gain where he argued that “each individual will of his own accord gravitate towards the locality and the enterprise where he will most effectively increase the national profit, provided that the laws do not prevent him from doing so.”4 In the Diet, Chydenius successfully campaigned for the abolition of trade restrictions on the towns in Ostrobothnia. He was also instrumental in abolishing censorship in Sweden. In three memorials on freedom of the press he expressed his belief that in a free competition of ideas, truth would win. Man was a fallible being, and therefore nobody could be entrusted with deciding what to publish and what not to publish.5 His arguments were accepted and a Freedom of Information Act was passed by the Diet, the first of its kind in the world. But finally, Chydenius became too outspoken and independent for his party, the Caps. The currency had depreciated under the previous Hats regime, and the Caps wanted to restore it to its former value. After studying the issue, Chydenius became convinced that it would be more prudent to fix it at its present level.6 When he published a pamphlet about this in 1766, the majority in the Estate of the Clergy turned on him for having offended the Diet and had him expelled.
Chydenius returned in 1766 to Ostrobothnia as somewhat of a celebrity. When the Caps eventually had to accept the depreciation of the currency, his analysis of Sweden’s monetary plight seemed to be fully vindicated. Chydenius was elected again to the Diet in 1769, but his election was invalidated because of a formality. In 1770 he became vicar of Kokkala, following in the footsteps of his father. Two years later, King Gustav III seized absolute power in a coup although he did not abolish the Diet. Chydenius had become disgusted with the corruption and bickering in the Diet and welcomed some liberal initiatives of the king. In 1778 he was elected for the third time to the Diet. No sooner had he arrived in Stockholm than he published a pamphlet pleading for reforms of existing statutes about servants and hired workers. At the time, they had very limited rights, their masters even being able to administer corporal punishments to them. “I speak only in favour of the one small but blessed word Freedom,” Chydenius wrote.7 While many were sympathetic to his suggestions, including King Gustav, they were also vigorously resisted and only implemented in mid-nineteenth century. Chydenius made more headway with another idea: introducing religious freedom in Sweden and welcoming people of other religions to the country, including Catholics and Jews. The Swedes should, he wrote, open their arms “to all those unfortunates who already are or may in future be deprived of a sanctuary in their native countries and therefore yearn to move elsewhere in search of some protection from violence and oppression.”8 Despite fierce opposition from many in his own Estate of the Clergy, Chydenius managed to convince the other three Estates of his proposal, and also King Gustav III who remarked: “I am fairly audacious as well, but I would never have dared to do what Chydenius did.”9 Sweden passed a Toleration Act in 1781.
The Diet sat until 1779 when Chydenius returned to the Kokkola vicarage and with his usual diligence resumed his pastoral duties. He was having misgivings about King Gustav III who had abandoned some of his liberal policies and who was also engaging in military adventures. In early 1792 Chydenius was elected for the third time to the Diet which now met in Gävle, only for a month. Soon afterwards the king was assassinated by disgruntled aristocrats. This was a time of conflict and great uncertainty in Swedish society. But even if Chydenius still had the courage of his convictions, he was no revolutionary. In a letter from the autumn of 1793 he commented on the French Revolution which had started four and a half years earlier, describing how he had “observed streams of blood flowing under the banner of enlightenment and freedom and under the sacred name of the enlightenment a frenzy of high-handedness rapidly spreading around the whole of Europe, which threatened rulers, subjects and citizens alike with the most terrible anarchy.”10 Later, Chydenius wrote an essay which remained unpublished during his lifetime about how the sparsely populated Lapland in the very north of Finland could be turned into an economic free zone where agriculture, industry and trade would be totally unregulated.11 He also devoted much time to writing his sermons and to farming his land, while directing an orchestra which gave concerts in the vicarage. Anders Chydenius passed away on 1 February 1803.
Natural Rights and Harmony of Interests
Chydenius’ case for liberty rested on two pillars, natural rights and harmony of interests. Economic freedom “guarantees a Swede the enjoyment of his most precious and greatest natural right, granted to him as a human being by the Almighty, namely, to earn his living by the sweat of his brow in the best way he can.”12 In economic affairs Chydenius’ premise was similar to that of John Locke with whose works he was familiar: God had given the resources of nature to man for his use and enjoyment. He should be fruitful, multiply, fill the earth and subdue it. “Should the great Master, who adorns the vale with flowers and clothes the very mountain peak in grass and moss, expose such a great flaw in human beings, His masterpiece, as that they should be unable to populate the globe with as many inhabitants as it can feed?” But each man should be a producer and not a parasite on his fellow human beings: “The more opportunities that the laws provide for some to live on the toil of others and the more obstacles that are placed in the way of others’ ability to support themselves by their labour, the more will industriousness be stifled.”13 Chydenius took self-interest for granted:
Each individual pursues his own advantage. That inclination is so natural and necessary that every society in the world is based on it: otherwise laws, penalties and rewards would not even exist and the whole human race would perish completely within a short space of time. That work is always best rewarded that is of the greatest value and that most sought after that is best rewarded.14
He pointed out however that the “injurious” self-interest “which always tries to conceal itself behind one regulation or another” could “most effectively be controlled by mutual competition.”15
This “mutual competition” was the reason why the pursuit of self-interest need not result in destructive chaos, according to Chydenius. People adjust to one another; if left free, then they move on their own from a less to a more valuable use of their labour. In such a way, private and national profit merge into a single interest, as he put it. There could be a harmony of interests, or what modern economists would call spontaneous coordination. Like Adam Smith later, Chydenius realised that it was the division of labour which brought about prosperity: “If ten men in one trade produce commodities to a value of 100 daler a day but in another to no more than 80, it is clear that the work of the ten men in the latter causes the nation a loss of 20 daler every day.”16 The gravitation of labour to its most valuable use was similar to the downward movement of water, an analogy which Chydenius frequently used. Superflous regulations were like “dams that concentrate the people in certain places, removing them from one place and moving them to another, without it being possible to say in which place they will be most useful and increase or reduce the national profit.” Thus, Chydenius’ conception of the economy was dynamic rather than static, expressed in terms of a stream rather than a pond:
When the stream is allowed to run evenly, every drop of water is in motion. When there are no obstacles in the way, every worker competes for his livelihood and thereby increases the profit to the nation. By means of regulations, people are concentrated in certain groups, the opportunities to move into industry are reduced and a small number of people within each group rise above the majority, whose well-being is presented as evidence of the prosperity of the whole kingdom.17
Chydenius was much more concerned about inequality as a result of privileges created and protected by government than about inequality flowing from different individual achievements or performances. “The community at large may have no right to the property of private individuals when it has been legally acquired, but on the other hand it also contributes to the ruin of the country if it does not promptly open those dams that have gathered wealth together in a few places and impoverished the rest.”18
Implicit in Chydenius’ case for liberty was a persuasive critique of interventionism. Government regulations and other attempts to steer the economy away from what would be its natural course were harmful, he held, for four main reasons. The politicans making them had no fixed principles to follow; they were not in a position to know which branch of industry would produce the greatest national profit, or how many should be employed there; they might have a special interest in moving people into some particular branch of industry; and some unexpected events might undermine the whole system and turn useful regulations into harmful ones. It is noteworthy that Chydenius, by emphasising ignorance and time, anticipated the approach of the Austrian School of Economics, especially Carl Menger and Friedrich A. von Hayek, who viewed the economy as a process rather than as a given state of affairs. Chydenius also was a precursor of James Buchanan’s Public Choice School when he stressed that politicians and public servants might be motivated by self-interest like the rest of society. Again, an early statement of a point often made by Ludwig von Mises, that interventionism may become a vicious circle wherein one regulation requires another, is found in Chydenius: “One constraint always makes another inescapable.”19
Chydenius’ Intellectual Heirs
Anders Chydenius was not a systematic thinker who would devote his whole life to writing a big treatise of economics like Adam Smith did with his Wealth of Nations, published eleven years after Chydenius’ National Gain. Certainly, many of their ideas were already circulating in 18th century society. But it is remarkable how insightful this Lutheran pastor in a sparsely populated periphery of Europe was, and how clearly and forcefully he expressed his views. Chydenius was also a brave and successful champion of freedom in the Kingdom of Sweden, being instrumental during his first term in the Diet in lifting trade restrictions in the Gulf of Bothnia and in abolishing censorship and during his second term in introducing religious freedom. He representated the same sturdy Swedish individualism as Lawspeaker Torgny in his famous message to the Swedish king in 1018: respect our ancient rights and keep the peace. Chydenius laid the foundations of a robust liberal tradition in Sweden although only a few names can be mentioned here. Perhaps the army officer Count Georg Adlersparre (1760–1835) was not as original as Chydenius, but he was even more influential. He translated parts of Adam Smith’s Wealth of Nations for a magazine he published and was the first Swede to call himself ‘liberal’. After King Gustav IV Adolf in 1809 had lost Finland to the Russians, Adlersparre led a successful revolt against him. The ousted king’s childless old uncle was put on the throne, and restrictions on the freedom of the press—that the two previous monarchs had reintroduced, after Chydenius’ reform in 1766—were abolished again. A constitution was adopted which in a perhaps typical Swedish way was the result of a compromise between liberals and conservatives. Freedom of the press, of religion, and of assembly, as well as the protection of property rights were guaranteed, while the nobility retained some of its privileges.
Bitterly disappointed when his candidate to succeed the old king suddenly died, Adlersparre retired from politics. One of Napoleon’s generals, Jean-Baptiste Bernadotte, calling himself Carl Johan in Swedish, was elected king. He allied himself with Russia and Great Britain against Napoleon and in 1814 as compensation for Finland received Norway from Napoleon’s defeated ally Denmark. To placate the unruly Norwegians, he had however to accept a much more liberal constitution there than in Sweden. Carl Johan turned out to be quite authoritarian, forcing the liberals into opposition. One of them was the distinguished legal scholar Johan Gabriel Richert (1784–1864). As a young man, he had read the Icelandic sagas, finding their account of arbitration by consent rather than commands fascinating.20 He proposed several legal reforms in order to liberalise Swedish society, but his proposals were only slowly adopted. Another liberal in opposition to the authoritarian king was the nobleman Lars Johan Hierta (1801–1872). At once a successful entrepreneur and a political activist, in 1830 he founded Aftonbladet which became a bastion of liberalism and the growing middle class, fighting against class privileges and economic controls. Hierta had a copy of a famous painting of the American revolutionaries of 1776 on the wall in his office, and like Chydenius he strongly believed that no group should be allowed to take money out of others’ pockets. His liberalism was eclectic, bringing together utilitarian arguments and ideas of natural rights. “Some would argue that this is characteristic of the Swedish mentality”, Johan Norberg remarks.21 Hierta and other liberals were convinced that the only way to bring Sweden out of poverty was to liberalise the economy and to create new opportunities both for the peasants remaining in the countryside and for the poor masses flocking to the cities.
It was quite a sensation, as well as a sign of the times, when Sweden’s most distinguished intellectual, the poet, historian and composer Erik Gustav Geijer (1783–1847), in 1838 openly declared his wholehearted support for economic liberalism. Because of his patriotic verses and writings on the history of Sweden, until then he had been regarded as more of a conservative. Inspired like Richert by the Icelandic sagas, in his poems Geijer portrayed the independent Swedish farmer, working in the sweat of his brow, holding his own against the wealthy and the learned:
Må ho, som vill, gå kring världens rund:
vare herre och dräng den det kan!
Men jag står helst på min egen grund
och är helst min egen man.
(May he who so likes, go all over the world, be master or servant. But I would rather stand on my own ground and be my own man.)
Geijer wrote that the real measure of a system was not found by asking the powerful and the wealthy. What mattered was how the humble and the weak fared.22
After King Carl Johan’s death in 1844, the Swedish government became more open to liberal ideas. An ardent disciple of French writer Frédéric Bastiat, Johan August Gripenstedt (1813–1874) was in 1848 appointed minister without portfolio, and in 1856 finance minister. In the following decade, he used his considerable political skills to implement comprehensive liberal reforms, especially after he was in 1858 joined in the government by another committed liberal, Baron Louis De Geer (1818–1896). The Diet of the four Estates was replaced by a bicameral Parliament; the guilds were abolished; entry into business was facilitated; regulations on the important timber and iron industries were lifted; tariffs were lowered; a law was passed on joint-stock companies; banks were established and interest rates deregulated; public education was improved; freedom of the press and of religion were expanded; women won rights to own and inherit property, receive education, and make a career. Together, Gripenstedt and De Geer also resolutely pursued a foreign policy of non-intervention, in the spirit of Lawspeaker Torgny and Anders Chydenius. They for example stopped plans by the king to intervene in a war between Denmark and the German Federation over Schleswig and Holstein. In 1865, Sweden joined the free-trade treaty between France and the UK. Two years later, when the new bicameral Parliament convened for the first time, Lars Johan Hierta, as its oldest member, gave the welcoming speech, celebrating recent liberal reforms and warning his fellow parliamentarians not to devise new ways of taking money from the people.
Gripenstedt sometimes quoted the famous words of poet Esaias Tegnér that Sweden could within her own borders ‘regain Finland’, meaning that she could grow inwards instead of outwards, thus compensating for territory losses. She could engage in trade rather than warfare. When Gripenstedt stated that Sweden, one of the poorest European countries at the time, could become one of the richest through free trade and modernisation, his opponents tried to ridicule him and his ‘flower paintings’.23 But Gripenstedt was proved right. Liberalism transformed Sweden. In 1860–1910, real earnings of male industrial workers increased by 25% per decade, while life expectancy increased by 12 years. It is interesting that in the fifty years from 1860 to 1910, real earnings increased by 170%, whereas in the next fifty years, from 1910 to 1960, they increased by 110%.24 The living standards of ordinary people improved not only as a result of higher earnings, but also because they got running water, sewerage and electric lights installed in their homes, and access to other material goods. During this period, government remained small: at the turn of the century, central public expenditure was only about 6% of GDP. New companies were established to produce goods out of the ‘green gold’, as timber was called, and out of iron and other resources. Entrepreneurs and capitalists flourished. Lars Magnus Ericsson devised an automatic telephone exchange and founded L. M. Ericsson. Alfred Nobel invented dynamite and established Nitroglycerin AB. Swen Wingquist designed the self-regulating ball bearing and created SKF. Gustaf Dalén invented a flashing apparatus for lighthouses and set up AGA. Axel Wenner-Gren built up Electrolux by introducing vacuum cleaners and refrigerators into Swedish homes. André Oscar Wallenberg founded Stockholms Enskilda Bank and Albert Bonnier started a publishing company. In Swedish intellectual life, liberals were prominent, for example the pioneer of academic economics, Count Gustaf Knut Hamilton (1831–1913), who contrasted spontaneous associations possible in the market to enforced associations envisaged by socialists.
The new Swedish Parliament did not altogether heed Hierta’s advice to seek only the common good instead of serving special interests. In the 1880s tariffs on grain were raised, and protectionists took power, although they were unable to reverse most of the liberal reforms. In 1889, the Social Democratic Party was founded with the explicit goal of gaining power and using it for the benefit of only a segment, albeit a large one, of the population, urban workers. The Social Democrats were however against ‘hunger tariffs’, realizing that they reduced the living standards of the poor. Slowly, economic liberalism ceased to be a new and attractive idea and seemed to become merely a defence of the status quo. Great Britain had long been the model for many Swedes, but now Otto von Bismarck’s new state south of the Baltic Sea, the vigorous German Empire, was viewed with admiration, not least Bismarck’s introduction of government-funded welfare benefits and of tariffs to protect domestic industry. But both the German and the Russian empires collapsed in the First World War, and Chydenius’ homeland, Finland, gained her independence. Since 1809, Finland had been a Grand Duchy within the Russian Empire, with some autonomy. But the liberal tradition in Finland was not strong. Finns certainly claimed Chydenius as their countryman, but it complicated the development of liberal ideas and movements in Finland in the 19th century that the population was divided between a large Finnish-speaking majority and a small Swedish-speaking minority which had formerly constituted most of the ruling elite of the country. Nationalism, both Finnish and Swedish, played a much more important role in Finland than liberalism, even if the Young Finns, prominent at the end of the 19th century, were at once nationalists and liberals. Nonetheless, the Finnish republic established in 1917 was built on the liberal principles of constitutional democracy and protection of human rights. Its constitution was written by the distinguished legal scholar Kaarlo Juho Ståhlberg who served as President of Finland in 1919–1925. But the Soviet Union, established after the Bolshevik Revolution, cast a long shadow over Finland until its dissolution in 1991.
Swedish Liberalism in the Twentieth Century
In Sweden, during and after the First World War the old differences between conservatives and liberals were gradually replaced by differences between on the one hand conservative-liberals in a broad sense, split into many political parties, and on the other hand socialists, organised in one large party, the Social Democrats, with a small communist party to their left. Two renowned economists became outspoken critics of advancing socialism, Gustav Cassel (1866–1845) and Eli Heckscher (1879–1952). As young men, both had been rather sceptical about economic freedom, but by their studies and reflections they had become convinced that socialism would not have the beneficial consequences intended or at least advertised. Cassel, a mathematician by training, was Economics Professor at Stockholm University. He was a world famous monetary economist who developed the idea of purchasing power parity and was internationally influential in the 1920s. He was also an excellent writer who contributed a stream, almost a torrent, of articles, in lucid, powerful prose, to Swedish newspapers in the 1920s and 1930s on the virtues of competition and the free market.25 Heckscher was Economics Professor at the Stockholm School of Economics. As a scholar, he contributed to the theory of international trade and wrote a comprehensive history of mercantilism as well as a monumental economic history of Sweden.26 He mainly argued for economic freedom on consequentialist grounds. He held that income distribution ought to be as equal as it could be without harming the process of wealth creation,27 in a clear anticipation of John Rawls’ theory of justice.28 Heckscher was like Cassel adamantly opposed to protectionism: “Either an economic sector is profitable, and then it does not need tariff protection; or it is not profitable, and then it does not deserve tariff protection.”29 But to their chagrin, Cassel and Heckscher saw the Social Democrats assume power in 1932, although neither of them probably imagined that they would keep it continuously for 44 years.
Immediately after the war, the Social Democrats adopted a radical programme calling for comprehensive economic planning. Swedish businessmen looked with apprehension on this development and welcomed the translation of Friedrich A. Hayek’s 1944 book, Road to Serfdom, where he argued that national socialism and communism were of the same ilk and that despite the undoubtedly good intentions of many social democrats, the extensive economic planning they craved would, if consistently carried out, lead to despotism. In Sweden, as in many other countries, a lively debate took place about Hayek’s dire warnings. One of Sweden’s best-known social democrats, Herbert Tingsten (1896–1973), Professor of Politics at Stockholm University, even changed his mind after reading Hayek’s book. In June 1945 Tingsten said in a famous radio debate: “The problem is whether one can, in a state which directs, leads, plans, and owns most things, preserve freedom in some designated sectors which are then highly taxed. Will such small oases not soon be destroyed by the desert storm which central planning really is?”30 Soon afterwards, Tingsten left his professorship and became editor of one of Sweden’s largest newspapers where he used his eloquence and wide learning to promote liberal principles, but displayed more interest in politics than economics. When Hayek founded an international academy of liberal thinkers, the Mont Pelerin Society, in 1947, Heckscher and Tingsten became members. However, Tingsten only attended the first meeting of the society. He did not share the fierce opposition of some members, Ludwig von Mises in particular, to redistribution. ‘If this is liberalism, then I am still a socialist,’ he exclaimed at the meeting.31
The lively debate in Sweden on central planning at the end of the war was an intellectual victory for the anti-socialists. In order to keep power, the Social Democrats retreated somewhat from their most radical positions. The next two decades saw a new consensus forming whereby the state refrained from nationalisation and comprehensive economic planning, but instead levied high taxes on the more well-off, while mostly avoiding to impair the competitiveness of the export industries. This was the time of ‘Harpsund Democracy’, named after a country manor that a rich industrialist left the Swedish state in 1952 as the prime minister’s summer house. Regular consultations were held there between leaders of the Social Democrats, the business community, and the trade unions. It sometimes felt, critics said, like Sweden was not ruled by her people, but by an unholy alliance of Big Government, Big Business, and Big Labour. The Social Democrats cautiously started extending welfare benefits to the middle class both to enlarge their own electoral basis and to strengthen support for the welfare state, just like Bismarck had introduced welfare benefits in Germany to try and capture the working-class vote. In the 1960s and 1970s, the welfare state seemed to have become firmly entrenched in Sweden, the old liberals quietly falling silent and leaving the scene without younger thinkers or activists replacing them. A rare exception was economist Sven Rydenfelt (1911–2005). Steeped in Chydenius’ liberal tradition, Rydenfelt in his books applied classical price theory to economic problems, noting for example that rent control reduced supply of housing relative to demand and that the welfare state was like a knight in armour: the heavier the protection, the less the mobility. He stressed the role of entrepreneurs in a dynamic economy and even wrote books about some of them, the Åkermans of Eslöv and Ruben Rausing of Tetra Pak. He also argued against monopoly in education and broadcasting. Long before the Soviet Union collapsed, Sven Rydenfelt predicted that it would.32 He also expressed doubts about the European Union, observing that customs unions are not necessary to lower tariffs and stimulate free trade; countries benefit from unilaterally lowering or abolishing tariffs.33
Polemical and uncompromising, Sven Rydenfelt certainly was not a prophet in his own country, often being dismissed as a mere reactionary. But this and much else was to change. Slowly but surely, the Swedish Social Democrats had been raising taxes and increasing welfare benefits, intensifying the corporatism inherent in ‘Harpsund Democracy’, except that the business community was no longer welcome. By 1970, in the social democratic party ideologues had replaced pragmatists, and the emphasis had shifted from lifting up the poor to bringing down the rich. Ambitious plans were designed to transfer private enterprises gradually into the hands of trade unions by means of special wage earner funds. Swedish society was to become as socialised and equalised as possible, capitalism without capitalists. But as sometimes happens, the time of a movement’s greatest triumph is also the time when it may have over-extended itself. The ‘Swedish model’ which left-wing intellectuals around the world touted in the 1960s and 1970s was not to last. Indeed, a distinction can be made between three Swedish models. The Chydenius model, as it could be called, was developed in the mid-19th century, when liberal principles of free trade and unfettered competition were generally accepted and implemented in Sweden. The years between 1970 and 1990 were the heyday of the social democratic welfare model, although it had of course started its development much earlier and was to last for a few more years. The third model emerged in the 1990s after the failure of the social democratic model: this was the liberal welfare model, based on a new consensus in Sweden of reducing taxes and encouraging entrepreneurship, while securing the access of all citizens to welfare services irrespective of their means.
The reason why the second Swedish model was abandoned was simple. It was not sustainable. The economy stagnated, many entrepreneurs left the country, the only new jobs created were in the public sector, and the traditional Swedish virtues of hard work, self-reliance and thriftiness were visibly eroded. More and more people came to see that the success of Sweden and the other Nordic countries was not because of social democracy, but despite it. The three main factors explaining their relative success in modern times were the rule of law, free trade and social cohesion.34 These three factors all rely on the conservative-liberal tradition of Anders Chydenius and his disciples, tracing its roots all the way back to the old Nordic notion of folk law—a tradition which has now been rediscovered and revived in Sweden and the other Nordic countries.
Hannes H. Gissurarson is Professor of Politics at the University of Iceland. The author of more than 15 books in Icelandic and English, he has served on the boards of the Mont Pelerin Society and the Central Bank of Iceland and been a Visiting Scholar at several universities, including Stanford and UCLA. He is also Research Director at RNH, the Icelandic Research Centre for Innovation and Economic Growth.
1 Eli F. Heckscher, Ekonomisk-historiska studier (Stockholm: A. Bonnier, 1936), p. 121.
2 Anders Chydenius, Självbiografi (manuscript, 1780). Autobiography submitted to the Society of Arts and Sciences in Gothenburg, tr. Peter C. Hogg. Repr. Anticipating the Wealth of Nations: The Selected Works of Anders Chydenius, 1729-1803, eds. Marin Jonasson & Pertti Hyttinen, introd. Lars Magnusson (London: Routledge, 2012), pp. 331–350. Gnomonics is the art of constructing and using sundials.
3 Anders Chydenius, Swar På den af Kgl. Wetenskaps Academien förestälta Frågan: Hwad kan wara orsaken, at sådan myckenhet Swenskt folk årligen flytter utur Landet? och genom hwad Författningar det kan bäst förekommas? (Peter Hesselberg, Stockholm, 1765), §18. Repr. Answer to the Question Prescribed by the Royal Academy of Sciences: What May Be the Cause of So Many People Annually Emigrating from This Country? And by What Measures May It Best Be Prevented? Anticipating The Wealth of Nations (2012), pp. 63–120. In the original, these words are in italics. Chydenius used the same words in other works.
4 Anders Chydenius, Den Nationnale Winsten (Stockholm: 1765), §5. Repr. The National Gain, Anticipating The Wealth of Nations (2012), pp. 142–165.
5 Memorial om tryckfriheten, 1765. Manuscript in the National Archives of Sweden. Repr. Memorial on the Freedom of Printing, Anticipating The Wealth of Nations (2012), pp. 219–225; Riksens höglofl. ständers stora deputations tredje utskotts betänkande, angående skrif- och tryckfriheten; gifwit wid riksdagen i Stockholm then 18 december 1765. Repr. Report of the Third Committee of the Grand Joint Committee of the Honourable Estates of the Realm on the Freedom of Writing and Printing, submitted at the Diet in Stockholm on 18 December 1765, Ibid., pp. 228–234; Riksens höglofl. ständers stora deputations tredje utskotts ytterligare betänkande rörande tryckfriheten; gifwit wid riksdagen i Stockholm d:n 21. aprilis 1766. Repr. Additional Report of the Third Committee of the Grand Joint Committee of the Honourable Estates of the Realm on the Freedom of Printing, Submitted at the Diet in Stockholm on 21 April 1766, Ibid., pp. 237–248.
6 Anders Chydenius, Rikets Hjelp, Genom en Naturlig Finance-System (Stockholm: 1766). Repr. A Remedy for the Country by Means of a Natural System of Finance, Anticipating The Wealth of Nations (2012), pp. 170–212.
7 Anders Chydenius, Tankar Om Husbönders och Tienstehions Naturliga Rätt (Stockholm: 1778), §12. Repr. Thoughts Concerning the Natural Rights of Masters and Servants, Anticipating The Wealth of Nations (2012), pp. 281–312.
8 Anders Chydenius, Memorial, Angående Religions-Frihet (Stockholm: 1779). Repr. Memorial Regarding Freedom of Religion, Anticipating The Wealth of Nations (2012), pp. 317–322.
9 Chydenius, Autobiography.
10 Brev till Nils von Rosenstein 21 August 1793. Georg Schauman, Biografiska undersökningar om Anders Chydenius (Helsingfors: 1908), pp. 412–413. In English: Letter to Nils von Rosenstein 21 August 1798, tr. Peter C. Hogg. http://chydenius.kootutteokset.fi/kirjoitukset/brev-till-von-rosenstein-1793/?lang=en
11 Förslag till Lappmarkernas upphjälpande. Schauman, Biografiska undersökningar, pp. 623–627. In English: Proposal for the Improvement of Lapland, tr. Peter C. Hogg, http://chydenius.kootutteokset.fi/kirjoitukset/brev-till-von-rosenstein-1793/?lang=en
12 Chydenius, The National Gain, §31.
13 Ibid., §4.
14 Ibid., §5.
15 Ibid., §31.
16 Ibid., §8.
17 Ibid., §15.
18 Anders Chydenius, Källan til rikets van-magt (Stockholm: Lars Salvius, 1765). Repr. The Source of Our Country’s Weakness, Anticipating The Wealth of Nations (2012), pp. 124–138.
19 Anders Chydenius, Thoughts Concerning the Natural Right of Masters and Servants, §1.
20 Johan Norberg, Den svenska liberalismens historia (Stockholm: Timbro, 1998), p. 81.
21 Johan Norberg, How Laissez-Faire Made Sweden Rich, https://www.libertarianism.org/publications/essays/how-laissez-faire-made-sweden-rich
22 Erik Gustaf Geijer, Freedom in Sweden (Stockholm: Timbro, 2017), p. 238.
23 Norberg, Den svenska liberalismens historia, p. 147.
24 Norberg, How Laissez-Faire Made Sweden Rich.
25 Gustav Cassel, Socialism eller Framåtskridande (Stockholm: Norstedt & Söner, 1928). Parts of this collection of articles were translated into both Danish and Icelandic. In Iceland, Cassel had quite an impact on leading members of the Independence Party, Iceland’s conservative-liberal party.
26 Eli F. Heckscher, Mercantilism, I–II (London: Allen & Unwin, 1935); An Economic History of Sweden (Cambridge MA: Harvard University Press, 1954).
27 Norberg, Den svenska liberalismens historia, p. 229.
28 John Rawls, A Theory of Justice (Cambridge MA: Belknap Press of Harvard University Press, 1971).
29 Johan Norberg, Den svenska liberalismens historia, p. 232.
30 Ibid., p. 267.
31 Herbert Tingsten, Mitt liv, Vol. III (Stockholm: Norstedt & Söner, 1963), p. 334.
32 His critique of socialist agricultural policies was published in an English translation. Sven Rydenfelt, A Pattern for Failure: Socialist Economies in Crisis (New York: Harcourt Brace Jovanovich, 1984).
33 There are three chapters on Eli Heckscher and two chapters on Sven Rydenfelt in Mats Lundahl, Seven Figures in the History of Swedish Economic Thought (Basingstoke: Palgrave Macmillan, 2014).
34 Nima Sanandaji, Scandinavian Unexceptionalism (London: Institute of Economic Affairs, 2015); Hannes H. Gissurarson, The Nordic Models (Brussels: New Direction, 2016).