Bo Rothstein: Why No Economic Democracy in Sweden: A Counterfactual Approach

Datum: 17 februari 2021
Tid: 14:00-15:45

Bo Rothstein hold the August Röhss Chair in Political Science at University of Gothenburg, a position established by a donation to the university in 1901. He has also held positions at Oxford University, Blavatnik School of Government and Nuffield College and University of Uppsala and have been visiting fellow at Australian National University, Cornell University, Harvard University, Russell Sage Foundation, Stanford University and University of Washington Seattle. His research is concentrated on the issue quality of government. This relates to issues about corruption, clientelism, social justice, welfare policies and human well-being. 

Companies, that are owned and/or governed by their employees, either through a cooperative, stock option plan or an employee trust, has been studied empirically for almost four decades. The results show that such companies are on average performing better and have higher productivity than firms that are governed by outside capitalists/owners/investors and they pay somewhat higher wages. In addition, they have far less turnover of personnel and employees are more satisfied with their working conditions. In many cases, such companies are contributing to decreasing economic inequality because in addition to their salaries, employees also benefit from the capital in the company, usually in the form of substantially higher pensions. People working in such firms tend to be more pro-democratic and civic oriented. Given these many positive results, this paper poses a counterfactual question. Namely why have economic democracy in the form of employee owned and/or governed companies not been on the political agenda in Sweden? The reason to ask this counterfactual question is that there are many reasons for why we should have seen such companies mushrooming in Sweden given its strong labor movement and Social Democratic party. What needs to be explained is why the country has comparatively very few such companies? Three answers are presented: The organizational interests in organizational learning of the unions, the conflation of capitalism and markets by the political left and the political debacle of the wage-earner funds policy. 

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