STOCKHOLM — The citizens of this attractive, progressive Scandinavian nation prided themselves for years on their "Swedish model," the exemplar of what they considered to be the world's finest social democracy.
The Swedish model, it was thought, had appeal not just for the rest of Western Europe but for the states of Eastern Europe as well, once they broke out of their Communist shell, and beyond that for Third World nations.
Sweden's model combined democratic values with a strong, industrialized economy featuring high living standards and low unemployment. It was a vibrant welfare state intent on narrowing class differences between rich and poor.
Through most of the postwar period, well into the 1980s, Sweden did seem a veritable paradise where the old, infirm, disadvantaged, and infants were looked after--while the young and healthy worked hard, enjoying good jobs, summer vacation cabins, and a boat to sail on the country's lustrous waterways.
But now the Swedish model is under fire from right, left and center, and Sweden has become a troubled paradise.
"No one believes in the Swedish model anymore," says Carl Bildt, the cerebral, assured leader of the Moderate (Conservative) Party. "It has become discredited."
Concerned Swedish economists are questioning whether the welfare benefits are still worth what they say is the cost: the overwhelming taxes, economic slowdown, high inflation, falling productivity, lowering worker morale, and rising unemployment that seems now to characterize this nation of 8.6 million people.
Swedish spending power, once the top in Europe, has steadily declined, with the krona slumping as much as a third compared to the German mark. The gross national product, which came to a standstill in 1990, will drop this year. The value of manufactured products is down about 10% from 10 years ago.
As a measure of discontent, Sweden's ruling Social Democratic Party, which has governed for all but four of the past 60 years and which invented the Swedish model, is in deep trouble: Opinion polls show only 30% support today compared to the 43.2% showing that was good enough to win the party the 1988 election.
Most observers say the Social Democrats under the tall, bespectacled Prime Minister Ingvar Carlsson will lose the next national election, scheduled for Sept. 15.
A Swedish Foreign Ministry official, with long experience abroad, observed: "The country is going through an identity crisis. So is the Social Democratic Party. People don't know what it stands for any longer."
Another official says: "Sweden is in transition. The old values are under attack. We are changing the system, changing the model. We realize the public sector has to be cut back and made to work better. A lot of sacred cows are going to be slaughtered."
Once proud of their independence from the European Community, Swedish leaders have reversed themselves--Carlsson formally announced last Friday that his country will seek admission to the EC.
Conservative leader Bildt, widely tipped to become prime minister after the September election, says: "Sweden is moving away from its own model and becoming more like the rest of Europe. There is no alternative to joining Europe."
As economist Daniel Viklund points out: "Corporate executives and industrialists believe that full Swedish membership in the EC would be the safest way of avoiding trade barriers in this, their most important export market."
As for Sweden's treasured neutrality, one official said: "Swedish neutrality was meant to be a buffer between the superpowers in the Cold War. Now that there's no Cold War, nobody knows what neutrality is supposed to mean. We are trying to redefine neutrality."
In addition to neutrality and the welfare state, what distinguished the Swedish model was an unwritten compact between employers and unions to set wage standards and avoid strikes. But this tacit agreement began to go awry when the trade union chiefs, if they could not get what they wanted from corporate negotiators, went directly to the Socialist government, which granted them pay raises. The result, according to economists, has been a fall in Swedish productivity.
The Swedish model was further discredited in the past two years when emerging Eastern European nations, shucking off communism, scorned democratic socialism and opted instead for free enterprise.
Looking back, ex-finance minister and Social Democrat Kjell-Olaf Feldt maintains in a new memoir that the Swedish model of social democracy is basically dead. He blames the unions for forcing the government into unwise policies, which boosted inflation to 10.5% last year (it's currently running at 10.7%) and adversely affected competitive, cost-conscious industry.
Such is the stultifying uniformity of wages in Sweden, this official and others contend, that those young Swedes seeking a university degree can never make up in salary the time lost in attending school.