WOODS: You have an article alleging that Sweden actually succeeded economically not because of welfare state spending and government intervention, but both in spite of those things and prior to those things. So can we go back and look at the history of Sweden? When do we begin to see robust economic growth, and what was the role of the state at that time?
NORBERG: When you start to think of when Sweden was really a successful economy that the rest of the world looked at, you begin to notice Sweden in the 1950s, ’60s. In 1970, Sweden is one of the richest countries on the planet. I think the per-capita income is the fourth most prosperous on the planet, and that’s after a 100-year period of rapid economic growth – one of the fastest in the world. Probably only Japan beat us during those years. So you would have to say that this starts sometime in the 1870s, which is interesting, because at that time Sweden had gone through a liberalization and deregulation process. Between 1840 and 1870, we had a major political movement of classical liberalism, of a laissez-faire liberal attitude where they wanted to reduce government to open up to free trade, deregulating industry and so on.
And it’s sort of a funny anecdote: the minister of finance, who was one of the pioneers of these reforms, left in the mid-1860s after having really liberalized and opened Sweden up, and his opponents said, oh, now you’re leaving because you don’t want to see the failures that you brought upon us and the problems that Sweden will experience after these reforms. But what happened was that growth really took hold. If you want to look at one particular set of numbers, between 1860 and 1910, right before the First World War, real wages in Sweden increased by 25 percent per decade in manufacturing. That’s much faster than before and much faster than afterwards – which is interesting, because that’s 20 years before the Social Democrats ever got power in Sweden. So the real boom happened during this laissez-faire period