The Revolt Of The Capitalists

When the ruling Social Democrats proposed one tax too many, 100,000 Swedish businesspeople took to the streets in protest -- and that was just the beginning.

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By tradition at least, Swedes are not given to mass displays of emotion. The demonstrations were therefore momentous events in themselves. Regarded as the biggest in Swedish history, they brought out 100,000 people on October 4, 1983, all milling around the Riksdag, the Swedish parliament, shouting slogans with wild abandon.

About 115,000 took to the streets exactly a year later, this time at 15 different locations. But what was even more astonishing, on the face of it anyway, was the target of the protests and the makeup of the crowd. Swedish outrage is typically vented against the alleged immoralities of remote foreign powers (usually the United States), and the typical protester is either an idealistic student or a devout labor-union member. The October 4th demonstrations, however, were leveled at the Swedes' own Social Democrats, and the mob in the streets contained a high proportion of people who could only be described as business executives.

If Swedes rebelled against their own government, it was bound to be Swedes of the business community who would do it, and the Social Democratic Party that would bear the brunt of their rebellion. After almost half a century in power, the Social Democrats have built one of the most generous and comprehensive welfare states in the world. Social programs in Sweden, for example, take roughly 21% of the country's gross national product, as against 12% in the United States. Moreover, the welfare apparatus is founded on profound egalitarian sentiments. Swedish labor leaders, for example, think it is perfectly fair that top executives receive four times the pretax income that the lowest-paid workers do; American labor leaders and Democratic party leaders think that ratios of more than 11 to 1 are fair.

But Sweden is a welfare state, not a Communist or even a Socialist state. Well over 90% of the means of production is in private hands, and the concentration of ownership (in families like the Wallenbergs, for instance) is even greater than it is in the United States. Enterprise is also freely competitive in Sweden: Companies are left to prosper or to fail according to the dictates of the marketplace, and employment decisions remain in the hands of business managers, with the state making itself felt mostly in the form of extensive retraining and relocation programs for the unemployed. Swedes enjoy one of the highest standards of living in Europe, but welfare costs are paid for not out of the retained earnings of nationalized companies, as in truly Socialist countries, but out of the retained earnings of individuals -- that is, through taxation.

Americans should recognize the system: It is not unlike our own. The difference is in the proportions. About 70% of Sweden's GNP is taken up by the state, as against 33% (including defense) in the United States, the taxes are commensurate. To pay for these outlays, Swedes with incomes in the $20,000 range, modest enough by North American standards, are taxed at the 50% rate, and earnings above $20,000 rapidly approach the 80% bracket. In short, the Social Democratic way with capitalism in Sweden has been to domesticate its golden goose -- and make off with its eggs.

It was no surprise, therefore, that the October 4th demonstrations, although well seeded with students, professionals, and even a number of trade unionists, should have been led by businessmen. What was a surprise was the origin of the movement. Sweden is a thoroughly, some say suffocatingly, well-organized society, the business-managerial class no less so than the working class. Yet the October 4th protests were engineered by neither of the two businessmen's organizations; nor were they the work of the "Bourgeois Parties," as Swedes call the center-right parliamentary coalition that briefly held power from 1976 to 1982. Instead, the protests were orchestrated by an unknown, nonpolitical entrepreneur by the name of Gunnar Randholm.

A broad-shouldered man, smooth-shaven, with the disconcerting blue eyes of a Siamese cat, Gunnar Randholm comes from Nassjo, a city in Smaland, a southern province celebrated for its cottage industries. Like Connecticut Yankees, Smalanders are tinkerers, setting up machine-tool or electronic shops in their houses, often developing them into small family businesses. Randholm is of that breed, but with more imperial ambitions. Starting in 1945 with his father's company, which manufactured electrical junction boxes, he has put together a $100-million public conglomerate, Eldon AB, which makes a variety of export items, from electrical installation materials to high-quality leather furniture, from automobile ski racks to wagons for farming and forestry.

In a sense, Randholm owes his success at Eldon to precisely the sort of tax policies against which he has been mobilizing his countrymen. In the late 1970s, he put an ad in the paper offering to buy out companies that had products for export. (There was no OTC market in those days, the stock exchange in big business -- dominated "Sweden Inc." is a sleepy place.) "He received hundreds and hundreds of replies," says Peter Magnusson, a salesman for exports at Eldon. "It amazed him, and when he looked into the reason why so many people wanted out, he discovered that invariably it was the tax laws -- inheritance taxes that made it impossible to pass on a business to the next generation, or punishing restrictions on the mobility of capital." The Smaland spirit of enterprise, Randholm concluded, was being destroyed as surely as a birch forest could be destroyed by girdling its trees.

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