Capitalists Against Markets: The Making of Labor Markets and Welfare States in the United States and Sweden

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Summary: Praise for Capitalists Against Markets
Review: "Capitalists Against Markets highlights the important role played by employers in the creation of the American and Swedish welfare states. In a brilliant and original analysis, Swenson shows how employer strategies--solidarism in Sweden and segmentalism in the U.S.--were rooted in each country's economic development and gave rise to distinctive public programs. The book takes on both rational choice and social democratic arguments: employers acted rationally, Swenson shows, but their choices were historically constrained and far from being reflexively anti-labor or anti-government, right down to the 1990s. Adroitly blending theory, history, and politics, Swenson has created a masterpiece of comparative scholarship. "

Sanford M. Jacoby, Anderson Graduate School of Management, UCLA

"Capitalists against Markets is a magnificent follow-up on the author's much acclaimed Fair Shares. In this new book, Peter Swenson proposes a much needed correction to the mainstream - and myopic - focus on the role of labor movements in the making of welfare politics. He offers both rich history and strong analysis of how capitalists helped give shape and form to the welfare state and to labor market policies in Sweden and the United States, two countries that exemplify the welfare state extremes. It is both impressive and path-breaking scholarship and it will no doubt provoke controversy. It certainly should, as it forces us social scientists to take the politics of capitalists far more seriously than has been our want."

Gosta Esping-Andersen, Universidad Pompeu Fabra, Barcelona, Spain

"This is a book of great importance. Marshalling detailed historical evidence, Swenson persuasively challenges the view that employers were uniformly hostile to the creation of the welfare state by showing that this was untrue even in the United States. As an added bonus, it is quite a gripping read."

David Soskice, Research Professor of Political Science, Duke University

Rating:
Summary: businessmen for socialism
Review: In the early 20th century, the attitude of the capitalist class in Sweden was almost the exact opposite of conventional wisdom. Not only did business organizations welcome the growth of unions, they actually aided in the process. For the most part, they offered at best half-hearted opposition to the expansion of the welfare state and sometimes eagerly backed it.

The Swedish labor market of the early 20th century was perhaps the mirror opposite of what we associate with modern industrial economies. Rather than suffering a labor surplus (high unemployment) the Swedish labor market was suffering a chronic labor shortage, in part because of emigration, to the US and elsewhere. Eager to control the union demands, the lockout was a regular tactic used by Swedish employers associations. If the author is to be believed, they were quite successful at mounting lockouts within industries and sometimes across industries. Fearing the militant unions, the mainstream unions often tacitly approved of the employer tactics.

What runs through the employer strategy is an ingrained fear of competition from other capitalists who would lure employees away from existing employers, or alternately undercut the established companies with lower cost products. Unlike some American employers who attempted to ensure worker loyalty with "welfare capitalism", Swedish employers judiciously rejected the notion of non-wage benefits and were particularly strident in their attempts to curtail the introduction of such benefits by non-compliant employers. They also feared "chiselers" who undercut the sales of the mainstream businesses with lower prices as a result of lower labor costs. Viewed from this perspective, "solidarism" with the state and labor in the form of an array of social benefits financed through broad-based taxation was appealing. Thus the author takes issue with those who claim Sweden's generous welfare state is a result of labor agitation alone, rather he suggests capital was an active and willing promoter.

The author notes similar attitudes among some US business leaders although he doesn't really try to determine why the American capitalists were less inclined to support a similar level of state-financed social welfare. Curiously, the Swedish capitalists in his book seem indifferent to the level of taxation imposed upon them. The failure to address these two points weakens the author's thesis slightly. However, it is still an interesting proposition and one that has plausibility.