FRIEDRICH-EBERT-STIFTUNG EMPLOYEE FINANCIAL PARTICIPATION 5 SWEDEN: FAILURE OF SALARY FUNDS Between 1973 and 1975 a committee of experts of the largest Swedish trade union confederation of manual workers, Landsorganisationen i Sverige(LO), a commission led by the economist Rudolf Meidner, the architect of the"Swedish model", proposed the most radical concrete form of financial participation: the establishment of employee funds to be financed from about 20 percent of the company's profit, as dividends granted to employees following share transfers. The proposal was radical because its application would have reopened the discussion over the issue of capital ownership in Sweden, an issue left unquestioned by labour­capital negotiations upon which the Swedish model has rested since the 1930s(Blyth 2002). Thus, employees' funds were to be set up at the sector level in such a way that the benefits of all the companies listed on the stock exchange were distributed equally between the very profitable and the least profitable companies. The funds were to be managed by certain union-dominated boards. Thus, the more profitable companies were, the sooner employee funds would become majority shareholders. The Meidner Commission estimated that in a few decades, employee funds would become the majority shareholders in listed companies(Furaker 2016). The plan had four explicit objectives: strengthening the principle of solidarity in wage policy by dividing profits between owners and employees, preventing the concentration of private capital, giving more control over the workplace to employees(economic democracy) and increasing the supply of capital for productive investment(Furaker 2016). At the same time, however, the Meidner plan was not just a form of cash redistribution to employees' accounts. Thus, of the money from dividends distributed to employees' funds, one part was to be reinvested in companies to increase the percentage share held by employees, part went to employees as cash and part was invested in professional training and research capacities of employees to prepare them to take control of companies when their funds become the majority (Pontusson and Kurvila 1992). Unfortunately for employees, this version of the Meidner Plan failed, when the Social Democrats, who returned to power in the '80s, adopted a more diluted version. The notion itself of EFP via wage funds was eventually emasculated by the economic right and the financial crisis of 1992. At the beginning, things looked promising. The Meidner Plan was adopted by the powerful Social Democratic union confederation Landsorganisationen i Sverige in 1976 with the support of the Social Democrats(SAP). But a series of problems ensued. First there was the electoral misfortune: after almost 50 years of uninterrupted dominion over Swedish politics, the Social Democrats lost the 1976 elections, with failure being attributed to the radicalisation of the Swedish Social Democracy(Blyth 2001). The Meidner Plan was then promoted at a time of intellectual transition in Swedish-applied economics from Keynesianism to a series of aggregate theories under the popular notion of "neoliberalism". This transition also affected the Social Democrats who, upon their return to power in 1983, reappeared ideologically transformed, now calling for a diluted form of employee funds: financed for seven years with a small component of profit-sharing and minimal union control, with government members having the majority leadership(Pontusson and Kurvila 1992). The transfer of 20 percent of the profits of large companies was maintained and every year 3 per cent of managed capital went to pension funds, but a limit of 7 per cent of the capital market was placed on their acquisitions, and of 40 per cent of the shares of a company and after 1990 no profit being transferred. Funds have come to control 2.6 percent of the total amount listed on the stock exchange, thereby obtaining benefits from invested capital that are above the market average, in a democracy facilitating legitimisation the concept of collective investment funds as an instrument of economic policy(Whyman 2006). But in 1992 the right wing returned to power and subsequently privatised these funds in order to destroy the economic basis for a discussion of"socialism" in Sweden, just in time for the financial crash in the same year, which was triggered by a housing bubble further inflated by the financial deregulation policies of the same right-wing government(Blyth 2002). Nevertheless, the most important factor was the resistance of employers and the division of the unions. Predictably, employers' unions mobilised effectively, including through"marches of entrepreneurs," a rare phenomenon in history but encouraged in Sweden by LO's mistake of cultivating a certain ambiguity when it came to including small businesses in the range of enterprises that would be forced to share profits with employees. Somewhat less predictably, even in the conditions of a somewhat radical Social Democracy like Sweden in the 70s, the unions did not make a common front. Above and beyond the usual fluctuations in opinion, the trade unions of professionals(Saco) and white-collar workers(TCO) did not support the Meidner Plan, prefering to have shared profit transferred to individual employee accounts, a position that resonated with a majority of Swedish public opinion at the time(Furaker 2016). In short, the most radical version of EFP was unable to become a reality even in one of the best possible worlds of the democratic economic left. 1 0