Hostname: page-component-586b7cd67f-t7fkt Total loading time: 0 Render date: 2024-11-24T03:02:57.781Z Has data issue: false hasContentIssue false
  • English
  • Français

Unlocking the Social Trap: Inequality, Trust and the Scandinavian Welfare State

Published online by Cambridge University Press:  25 January 2016

Svenja Gärtner  and
Svante Prado
Get access Rights & Permissions [Opens in a new window]

Abstract

Recent research suggests that economic inequality thwarts attempts to establish a welfare state. The corollary of this view is that today's welfare states had witnessed an equality revolution already before the rise of social policies aiming at redistribution. The paper brings this insight to bear on the creation of the welfare state in Sweden, for many the very model of a universal welfare state, and enquires into whether equality really predated the formation of universal welfare policies in the 1950s. We present evidence on inequality based on labor market outcomes and corroborate the view that there has been a sharp reduction in inequality during the 1930s and 1940s. Hence Sweden underwent a true equality revolution prior to the establishment of the welfare state. A leveling of incomes is a necessary precondition for the rise of the universal welfare state, we suggest, because of trust, which correlates negatively with inequality. High trust levels solve the problems associated with collective goods and boosts support for universal solutions of income security. The paper provides a narrative in which the formation of institutions, the removal of large income differentials, and the creation of higher trust levels interacted in the 1930s and 1940s to form the foundation for the welfare state in the 1950s. It adopts a dynamic view of trust by departing from the assumption that trust arises endogenously as a concomitant to changes in the underlying fundamentals like income inequality and redesigned institutional frameworks.

Type
Articles
Information
Social Science History , Volume 40 , Issue 1 , Spring 2016 , pp. 33 - 62
Copyright
Copyright © Social Science History Association, 2016 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, D., and Robinson, J. A. (2012) Why Nations Fail: The Origins of Power, Prosperity and Poverty. New York: Crown Business.Google Scholar
Acemoglu, D. (2015) “The rise and fall of general laws of capitalism.” Journal of Economic Perspective 29 (1): 3–28.Google Scholar
Alesina, A., and Rodrick, D. (1994) “Distributive politics and economic growth.” Quarterly Journal of Economics 109 (2): 465–90.CrossRefGoogle Scholar
Alvaredo, F., Atkinson, A. B., Piketty, T., and Saez, E. (2015) “The world top incomes database,” topincomes.g-mond.parisschoolofeconomics.eu/ (accessed May 2013).Google Scholar
Åmark, K. (2005) Hundra år av välfärdspolitik: välfärdsstatens framväxt i Norge och Sverige. Umeå: Boréa.Google Scholar
Åmark, K. (2006) “Women's labor force participation in the Nordic countries during the twentieth century,” in Christiansen, N. F. (ed.) The Nordic Model of Welfare: A Historical Reappraisal. Copenhagen: Museum Tusculanum Press: 299–333.Google Scholar
Atkinson, A. B., Piketty, T., and Saez, E. (2010) “Top incomes in the long run of history,” in Atkinson, A. B. and Piketty, T. (eds.) Top Incomes: A Global Perspective. Oxford: Oxford University Press: 664–759.Google Scholar
Autor, D. H. (2014) “Skills, education, and the rise of earnings inequality among the other 99 percent.” Science 344 (6186): 843–50.Google Scholar
Baldwin, P. (1990) The Politics of Social Solidarity: Class Bases of the European Welfare State 1875–1975. Cambridge: Cambridge University Press.Google Scholar
Barth, E., and Moene, K. O. (2009) “The equality multiplier.” NBER Working Paper 15076.Google Scholar
Barth, E., Moene, K. O., and Willumsen, F. (2014) “The Scandinavian model: An interpretation.” Journal of Public Economics 117: 60–72.Google Scholar
Bénabou, R. (2000) “Unequal societies: Income distribution and the social contract.” American Economic Review 90 (1): 96–129.Google Scholar
Bengtsson, E. (2014) “Labour's share in twentieth-century Sweden: A reinterpretation.” Scandinavian Economic History Review 62 (3): 290–314.Google Scholar
Bengtsson, T., Campbell, C., and Lee, J. Z. (2004) Life under Pressure: Mortality and Living Standards in Europe and Asia, 1700–1900. Cambridge, MA: MIT Press.Google Scholar
Bentzel, R. (1952) Inkomstfördelningen i Sverige. Uppsala: Almqvist and Wicksell.Google Scholar
Bergh, A. (2009) Den kapitalistiska välfärdsstaten. Stockholm: Norstedts akademiska förlag.Google Scholar
Bergh, A. (2004) “The Universal Welfare State: Theory and the Case of Sweden.” Political Studies 52 (4): 745–66.Google Scholar
Bergh, A., and Bjørnskov, C. (2011) “Historical trust levels predict the current size of the welfare state.” Kyklos 64 (1): 1–19.Google Scholar
Beugelsdijk, S., and van Schaik, T. (2005) “Social capital and growth in European regions: An empirical test.” European Journal of Political Economy 21 (2): 301–24.Google Scholar
Björklund, A., and Jäntti, M. (2011) Inkomstfördelningen i Sverige. Stockholm: SNS.Google Scholar
Björklund, A., and Palme, M. (2000) “The evolution of income inequality during the rise of the Swedish welfare state 1951 to 1973.” Nordic Journal of Political Economy 26: 115–28.Google Scholar
Bjørnskov, C. (2006) “The multiple facets of social capital.” European Journal of Political Economy 22: 22–40.Google Scholar
Bjørnskov, C., and Svendsen, G. T. (2012) “Does social trust determine the size of the welfare state? Evidence using historical identification.” Public Choice 157 (1–2): 269–86.Google Scholar
Bowley, A. L. (1895) “Changes in average wages (nominal and real) in the United Kingdom between 1860 and 1891.” Journal of the Royal Statistical Society 58 (2): 223–85.Google Scholar
Colistete, R. (2001) Labour Relations and Industrial Performance in Brazil: Greater São Paulo, 1945–1960. Houndmills, UK: Palgrave.Google Scholar
Colistete, R. (2007) “Productivity, wages, and labor politics in Brazil, 1945–1962.” Journal of Economic History 67 (1): 93–127.Google Scholar
Cusack, T. R. (1997) “On the road to Weimar? The political economy of popular satisfaction with government and regime performance.” Germany Discussion Papers, FSI 97–303. Berlin: Wissenschaftszentrum fur Sozialforschung.Google Scholar
Dahlberg, H. (1983) I Sverige under 2:a världskriget. Bonnier: Stockholm.Google Scholar
Delhey, J., and Newton, K. (2005) “Predicting cross-national levels of social trust: Global pattern or nordic exceptionalism.” European Sociological Review 21 (4): 311–27.Google Scholar
Donado, A., and Wälde, K. (2012) “How trade unions increase welfare.” Economic Journal 122 (563): 990–1009.Google Scholar
Edvinsson, R. (2005) Growth, Accumulation, Crisis: With New Macroeconomic Data for Sweden 1800–2000. Stockholm: Stockholm Studies in Economic History 41.Google Scholar
Enflo, K., and Rosés, J. R. (2015) “Coping with regional inequality in Sweden: Structural change, migrations, and policy, 1860–2010.” Economic History Review 68 (1): 191–217.Google Scholar
Enflo, K., Lundh, C., and Prado, S. (2014) “The role of migration in regional wage convergence: Evidence from Sweden 1860–1940.” Explorations in Economic History 52: 93–110.Google Scholar
Esping-Andersen, G. (1990) The Three Worlds of Welfare Capitalism. Cambridge: Polity.Google Scholar
Esping-Andersen, G., and Myles, J. (2009) “Economic inequality and the welfare state,” in Salverda, W., Nolan, B., and Smeeding, T. M. (eds.) The Oxford Handbook of Inequality. Oxford: Oxford University Press: 639–64.Google Scholar
Espuelas, S. (2015) “The inequality trap: A comparative analysis of social spending between 1880 and 1933.” Economic History Review 68 (2): 683–706.Google Scholar
Eurenius, A.-M., and Bohlin, J. (2010) “Why they moved: Emigration from the Swedish countryside to the United States, 1881–1910.” Explorations in Economic History 47 (4): 533–51.Google Scholar
Feinstein, C. H. (1990) “New estimates of average earnings in the United Kingdom, 1880–1913.” Economic History Review 43 (4): 595–632.Google Scholar
Flora, P. (1988) Growth to Limits: The Western European Welfare States since World War II. Vol. 5, Unity and Diversity: A Comparison. Berlin: de Gruyter.Google Scholar
Flora, P., and Heidenheimer, A. (1981) The Development of Welfare States in Europe and America. Brunswick, NJ: Transaction.Google Scholar
Flora, P., et al. (1983) State, Economy and Society in Western Europe 1815–1975. Vol. 1, The Growth of Mass Democracies and Welfare States. London: Macmillan Press.Google Scholar
Fogel, R. W. (2000) The Fourth Great Awakening and the Future of Egalitarism. Chicago: University of Chicago Press.Google Scholar
Frankema, E. (2009) Has Latin America Always Been Unequal? A Comparative Study of Asset and Income Inequality in the Long Twentieth Century. Leiden, The Netherlands: Brill.Google Scholar
Frisk Jensen, M. (2013) Korruption og embedsetik. Odense: Syddansk Universitetsforlag.Google Scholar
Gadd, C.-J. (2011) “The agricultural revolution in Sweden 1700–1870,” in Myrdal, J. and Morell, M. (eds.) The Agrarian History of Sweden. Lund: Nordic Academic Press: 118–64.Google Scholar
Glete, J. (1987) Ägande och industriell omvandling: ägargrupper, skogsindustri, verkstadsindustri 1850–1950. Stockholm: SNS.Google Scholar
Glete, J. (1994) Nätverk i näringslivet: ägande och industriell omvandling i det mogna industrisamhället 1920–1990. Stockholm: SNS.Google Scholar
Goldin, C. (1999) “Egalitarianism and the returns to education during the great transformation of American education.” Journal of Political Economy 107 (S6): 65–94.Google Scholar
Goodin, R. E., Headey, B., Muffels, R., and Dirven, H.-J. (1999) The Real Worlds of Welfare Capitalism. Cambridge: Cambridge University Press.Google Scholar
Gustafsson, B. A., and Johansson, M. (2003) “Steps towards equality: How and why income inequality in urban Sweden changed during the period 1925–1958.” European Review of Economic History 7 (2): 191–211.Google Scholar
Hadenius, S. (1995) Svensk politik under 1900-talet: konflikt och samförstånd. Stockholm: Tiden.Google Scholar
Haggard, S., and Kaufman, R. R. (2008) Development, Democracy, and Welfare States: Latin America, East Asia, and Eastern Europe. Princeton, NJ: Princeton University Press.Google Scholar
Hamark, J. (2014) Ports, Dock Workers and Labour Market Conflicts. Gothenburg: University of Gothenburg.Google Scholar
Heckscher, E. F. (1954) An Economic History of Sweden. Cambridge, MA: Harvard University Press.Google Scholar
Husted, T. A., and Kenny, L. W. (1997) “The effect of the expansion of the voting franchise on the size of government.” Journal of Political Economy 105 (1): 54–82.Google Scholar
Isacson, M. (1987) Verkstadsarbete under 1900-talet: Hedemora Verkstäder före 1950. Lund: Arkiv.Google Scholar
Jäntti, M., Riihelä, M., Sullström, R., and Tuomala, M. (2010) “Trends in top income shares in Finland,” in Atkinson, A. B. and Piketty (eds.) Top Incomes: A Global Perspective. Oxford: Oxford University Press.Google Scholar
Jensen, C., and Svendsen, G. T. (2011) “Giving money to strangers: European welfare states and social trust.” International Journal of Social Welfare 20 (1): 3–9.Google Scholar
Jordahl, H. (2007) “Inequality and trust.” IFN Working Paper No. 715.Google Scholar
Jordahl, H. (2009) “Economic inequality,” in Svendsen, G. Tingaard and Haase Svendsen, G. Lind (eds.) Handbook of Social Capital: The Troika of Sociology, Political Science and Economics. Cheltenham, UK: Edwar Elgar: 323–37.Google Scholar
Kraus, F. (1981) “The historical development of income inequality in Western Europe and the United States,” in Flora, P. and Heidenheimer, A. J. (eds.) The Development of Welfare States in Europe and America. Brunswick, NJ: Transaction.Google Scholar
Kumlin, S., and Rothstein, B. (2005) “Making and breaking social capital: The impact of welfare-state institutions.” Comparative Political Studies 38 (4): 339–65.Google Scholar
Lee, C. (2013) “Welfare states and social trust.” Comparative Political Studies 46 (5): 603–30.Google Scholar
Leigh, A. (2006) “Trust, inequality and ethnic heterogeneity.” The Economic Record 82 (258): 268–80.Google Scholar
Lindert, P. (2004) Growing Public: Social Spending and Economic Growth since the Eighteenth Century. Vol. 1. Cambridge: Cambridge University Press.Google Scholar
Lindert, P. H. (2014) “Making the most of Capital in the 21st century.” NBER Working Paper 20232.Google Scholar
Ljungberg, J., and Nilsson, A. (2009) “Human capital and economic growth: Sweden 1870–2000.” Cliometrica 3 (1): 71–95.Google Scholar
Lundberg, U., and Åmark, K. (2001) “Social rights and social security: The Swedish welfare state, 1900–2000.” Scandinavian Journal of History 26 (3): 157–76.Google Scholar
Lundh, C. (2002) Spelets regler: institutioner och lönebildning på den svenska arbetsmarknaden 1850–2000. Stockholm: SNS.Google Scholar
Lundh, C., and Prado, S. (2015) “Markets and politics: The Swedish urban-rural wage gap, 1865–1985.” European Review of Economic History 19 (1): 67–87.Google Scholar
Mehran, F. (1976) “Linear measures of income inequality.” Econometrica 44 (4): 805–9.Google Scholar
Meltzer, A. H., and Richard, S. F. (1981) “A rational theory of the size of government.” Journal of Political Economy 89 (5): 914–27.Google Scholar
Milanovic, B. (2011) The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality. New York: Basic Books.Google Scholar
Milanovic, B., Lindert, P. H., and Williamson, J. G. (2011) “Pre-industrial inequality.” Economic Journal 121 (551): 225–72.Google Scholar
Moffitt, R., Ribar, D., and Wilhelm, M. (1998) “The decline of welfare benefits in the U.S.: The role of wage inequality.” Journal of Public Economics 68 (3): 421–52.Google Scholar
Morell, M. (2001) Jordbruket i industrisamhället. Stockholm: Natur och kultur.Google Scholar
Morrisson, C. (2000) “Historical perspectives on income distribution: The case of Europe,” in Atkinson, A. B. and Bourguignon, F. (eds.) Handbook of Income Distribution. Amsterdam: Elsevier.Google Scholar
Naef, M., and Schupp, J. (2009) “Measuring trust: Experiments and surveys in contrast and combination.” SOEP Working Paper 167, DIW Berlin.Google Scholar
Nannestad, P. (2008) “What have we learned about generalized trust, if anything?” Annual Review of Political Science 11: 413–36.Google Scholar
North, D. C. (1990) Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.Google Scholar
Nyman, O. (1944) Krisuppgörelsen mellan socialdemokraterna och bondeförbundet 1933. Stockholm: Almqvist and Wicksell.Google Scholar
OECD (2008) Growing unequal? Income distribution and poverty in OECD countries. Paris: OECD.Google Scholar
Ohlsson, H., Roine, J., and Waldenström, D. (2008) “Long run changes in the concentration of wealth: An overview of recent findings,” in Davies, J. B. (ed.) Personal Wealth from a Global Perspective. Oxford: Oxford University Press: 42–63.Google Scholar
Olsson, S. E. (1990) Social Policy and Welfare State in Sweden. Lund: Arkiv förlag.Google Scholar
Persson, J. (1997) “Convergence across Swedish counties, 1911–1993.” European Economic Review 41 (9): 1835–52.Google Scholar
Persson, T., and Tabellini, G. (1994) “Is inequality harmful for growth?” American Economic Review 84 (3): 600–21.Google Scholar
Piketty, T. (2014) Capital in the Twenty-First Century. Cambridge, MA: Harvard University Press.Google Scholar
Piketty, T., and Saez, E. (2003) “Income inequality in the United States, 1913–1998.” Quarterly Journal of Economics 118 (1): 1–39.Google Scholar
Prado, S. (2010) “Nominal and real wages of manufacturing workers, 1860–2007,” in Edvinsson, R., Jacobsson, T., and Waldenström, D. (eds.) Exchange Rates, Prices, and Wages, 1277–2008. Vol. 1. Stockholm: Ekerlidsförlag: 479–527.Google Scholar
Putnam, R. D. (2000) Bowling Alone: The Collapse and Revival of American Community. New York: Simon and Schuster.Google Scholar
Reeskens, T., and Hooghe, M. (2008) “Cross-cultural measurement equivalence of generalized trust: Evidence from the European social survey (2002 and 2004).” Social Indicators Research 85 (3): 515–32.Google Scholar
Roine, J., and Waldenström, D. (2008) “The evolution of top incomes in an egalitarian society: Sweden, 1903–2004.” Journal of Public Economics 92 (1–2): 366–87.Google Scholar
Roine, J. (2010) “Top incomes in Sweden over the twentieth century,” in Atkinson, A. B. and Piketty, T. (eds.) Top Incomes: A Global Perspective. Oxford: Oxford University Press: 299–370.Google Scholar
Ross, A. M., and Hartman, P. T. (1960) Changing Patterns of Industrial Conflicts. New York: Wiley.Google Scholar
Rothstein, B. (2005) Social Traps and the Problem of Trust. Cambridge: Cambridge University Press.Google Scholar
Rothstein, B. (2009) “The universal welfare state,” in G. T. Svendsen and G. L. Haase Svendsen (eds.) Handbook of Social Capital: The Troika of Sociology, Political Science and Economics. Cheltenham, UK: Edwar Elgar: 197–211.Google Scholar
Rothstein, B. (2011) The Quality of Government: Corruption, Social Trust, and Inequality in International Perspective. Chicago: University of Chicago Press.Google Scholar
Rothstein, B., and Uslaner, E. M. (2005) “All for all: Equality, corruption, and social trust.” World Politics 58 (1): 41–72.Google Scholar
Roxborough, I. (1994) “The urban working class and labour movement in Latin America since 1930,” in Bethell, L. (ed.) The Cambridge History of Latin America. Vol. 6. Cambridge: Cambridge University Press: 307–78.Google Scholar
Shorter, E., and Tilly, C. (1974) Strikes in France 1830–1968. Cambridge: Cambridge University Press.Google Scholar
Socialstyrelsen Sociala meddelanden.Google Scholar
Socialstyrelsen SOS Löner.Google Scholar
Socialstyrelsen SOS Lönestatistisk årsbok.Google Scholar
Söderberg, J. (1987) “Trends in inequality in Sweden, 1777–1914.” Historical Social Research 21 (1): 58–78.Google Scholar
Söderberg, J. (1991) “Wage differentials in Sweden, 1725–1950,” in Brenner, Y. S., Kaelble, H., and Thomas, M. (eds.) Income Distribution in Historical Perspective. Cambridge: Cambridge University Press: 76–95.Google Scholar
Spånt, R. (1975) Den svenska inkomstfördelningens utveckling. Uppsala: Uppsala universitet.Google Scholar
Spånt, R. (1981) “The distribution of income in Sweden, 1920–1976,” in Klevmarken, N. A. and Lybeck, J. A. (eds.) The Statics and Dynamics of Income. Clevedon: Tieto: 37–54.Google Scholar
Statistiska centralbyrån SOS Löner.Google Scholar
Stevenson, P. (1974) “Monopoly capital and inequalities in Swedish society.” Critical Sociology 41 (5): 41–58.Google Scholar
Svensson, L. (1996) “Politics or market forces? The determinants of the relative wage movements of female industrial workers in Sweden, 1960–1990.” Scandinavian Economic History Review 44 (2): 161–82.Google Scholar
Swenson, P. A. (2002) Capitalists against Markets: The Making of Labor Markets and Welfare States in the United States and Sweden. Oxford: Oxford University Press.Google Scholar
Tolipan, R., and Tinelli, A. (1975) A controvérsiasobredistribuicao de renda e desenvolvimento. Rio de Janeiro: Zahar.Google Scholar
Uslaner, E. M. (2002) The Moral Foundations of Trust. Cambridge: Cambridge University Press.Google Scholar
Zaheer, A., McEvily, W., and Perrone, V. (1998) “Does trust matter? Exploring the effects of inter-organizational and interpersonal trust on performance.” Organization Science 9 (2): 141–59.Google Scholar