3. Sweden in the inter-war period: Economy and society
3.7 The state as company owner and employer
In Sweden, like in many other countries, industrialization was associated with increased state involvement in communications and transports, such as telegraphs, railroads and canals. These projects were considered to be of strategic importance for the country’s economic development and demanded huge amounts of capital.46 The state interventions were not limited to financing
42 Eriksson 2004.
43 Eriksson 2004, pp 116-117.
44 Eriksson 2004, pp 118-119; Wegerman 2004, p 122.
45 Stanfors 2007, pp 82-83; Frangeur 1998, pp 67-71.
46 Magnusson 1996, p 384.
infrastructure but were also extended to operating the services, and public agencies, so-called affärsverk, were created for that purpose.
Basically, there were three types of employment contracts in the state infrastructure enterprises: ‘ordinary’, ‘extra-ordinary’ and ‘extra’. Wages and other conditions of the ordinary employed were determined directly by Parliament without negotiations.47 The ordinary employees were expected to be loyal, obedient and objective and in return they could expect lifelong employment. Higher civil servants could only be dismissed after a court decision. Civil servants of lower rank and workers had somewhat weaker employment protection, but could only be fired if they were guilty of more serious official misconduct. The extra-ordinary status may be seen as a form of apprentice contract, which was intended to lead to ordinary employment. The extra employees were hired on a temporary basis, depending on the demand for labour. The conditions of the extra-ordinary and extra employed were not determined by Parliament, but by the managements of infrastructure agencies.48 In contrast to the ordinary, the conditions of the non-ordinary could be governed by collective agreements or personal contracts.
The state involvement in providing infrastructure services continued in the twentieth century, when the state also became an owner of limited companies producing goods or inputs.49
The first example of this development was in 1907 when the state acquired 50 percent of the shares of a mining company in the far north – LKAB (Luossavaara-Kirunavaara AB).50 Several factors contributed to this acquisition, for example the threat of foreign intrusion and the wish to stimulate an underdeveloped region.51 As the owner of the railroad that made it possible to exploit the iron ore commercially, the state had already interfered in the company’s business. The state ownership of the mines in Kiruna was not associated with an equivalent share of influence, rather the contrary. In the agreement that was made between the state and the former owner the shares were divided into ‘stem shares’ (stamaktier) and ‘preference shares’
47 The employment conditions of personnel in the infrastructure enterprises were annually regulated in the state budget. Parliament also debated and made decisions on the conditions of individual employees, for example regarding pensions. Kvarnström et al 1996, pp 14-15.
48 Kvarnström et al 1996, pp 16-17.
49 Waara, 1980.
50 Eriksson 1998a, p 36.
51 Waara 1980, p 136.
(preferensaktier).52 The preference shares, which were held by the state, had only one tenth of the votes at the annual meeting and the state could only appoint one board member. However, it had the right to buy out the holders of the stem shares, which was done in 1957.53
The second state-owned limited company in Sweden was the Tobacco Monopoly, founded in 1915. Here, the state nationalized a whole industry, consisting of about 100 factories and employing more than 4,000 workers. The motives for the creation of the Tobacco Monopoly and some characteristics of the company will be described below.
Two years after the nationalization of the tobacco industry a third state-owned enterprise was founded – Wine & Spirits (Aktiebolaget Vin- och Spritcentralen).54 This company was a consequence of the abolition of the marketing and sale of alcoholic beverages in private shops. When retailing was nationalized the politicians wanted to prevent wholesale traders and manufacturers from forming a trust, and they therefore decided to nationalize all parts of the commodity chain. Wine & Spirits’ shares were divided into stem and preference shares and,55 like the Tobacco Monopoly, Wine & Spirits carried through a downsizing process in the inter-war period. The number of workers decreased by more than 50 percent, from 1,352 to 659, between 1920 and 1932.56 However, there is at least one principal difference between Wine &
Spirits and the tobacco monopoly with regard to being employers. Whereas the Tobacco Monopoly was a monopsony, Wine & Spirits was not the sole employer of brewery workers in the country. The production of beer and non-alcoholic beverages was still in private hands.
The three early state-owned limited companies described above were created by bourgeoisie governments. When the Social Democrats for the first time formed a minority government in 1920 there were expectations of increased state involvement in the economy. A general radicalization of the political debate had taken place after World War I and the Russian revolution and the issue of industrial democracy was high on the agenda.57 The Social Democratic Party had adopted a radical programme with the ultimate goal of socializing important parts of natural resources, banks, infrastructure and
52 Eriksson 1998a, p 36.
53 Waara 1980, p 136.
54 Marcus & Lyberg 1942.
55 Marcus & Lyberg 1942, pp 93-94, 208.
56 Marcus & Lyberg 1942, p 226.
57 Lundh 1987.
manufacturing industries. One of the first measures taken by the new government was to appoint a committee to investigate how socialization could be accomplished.58 The directives given to the committee were not as radical as the party programme and did not lead to any concrete proposals. Still, the committee came to play an important role in the political debate during the 1920s and the early 1930s.
State entrepreneurship continued to expand in these decades as a result of technological advances in the communication and transport areas and economic crises. The crisis of 1920-1922 led to state intervention in the bank sector and, with the motive of forestalling local unemployment, the state became part-owner of a sawmill in northern Sweden in 1926.59 State-owned companies in the wood industry had been discussed since the first decade of the twentieth century in the light of the existing state ownership and management of forest resources.
Several factories for wood goods were nationalized in the 1930s and were concentrated in a holding company in 1942.60