The politics of profits: Profit squeeze and macroeconomic management in Sweden, 1975–1985

Lilla Sparbanksfoajén Session 4: The Neoliberal Shift organized by Jonas Ljungberg and Erik Bengtsson


Erik Bengtsson


In the late 1970s, the Swedish economy faced a profit squeeze which threatened to hamper investments and, by extension, jobs creation. Economic policy makers reacted and attempted in various ways – incomes policy, devaluations, tax reforms – to bolster profits. This paper investigates “the politics of profits”: how politicians, including those from a professed labour party, act to cut real incomes of their electorate in order to pump up profits (thereby helping the economy in the medium and longer run). How did Swedish politicians act to convince Swedes, the electorate, that a pro-capital shift of incomes was needed? How were various policy measures motivated and how was the debate on profits related to the ongoing revision of macroeconomic paradigms which took place after the oil crisis of 1973? This explorative paper will give a new view of Swedish policy shifts in the 1970s, from the vantage points of profitability and the need for profits and investments. The study is based on two sources, covering the years 1975 to 1985: the macroeconomic analyses presented in the yearly budgets, produced by the Ministry of Finance and the National Institute of Economic Research (Konjunkturinstitutet); and the debate on labour costs and profits in the Dagens Nyheter daily newspaper. The study of the “politics of profits” contributes to our understanding of the macroeconomic shifts since the 1970s and to the political economy of the distribution of income.


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