In the mid-1800s, Sweden was one of the poorest and underdeveloped countries in Europe. Then, Finance Minister Johan August Gripenstedt, a proponent of de Tocqueville and Bastiat, launched far-reaching economic reforms that forged Sweden's transition to capitalism ..
.. By 1890, Sweden's economic growth was the fastest in the world, and remained so through 1950 ..
But Socialism was fashionable in post-War Europe and Sweden was not immune. The 1970s were a decade of radical government intervention in society and in markets, during which Sweden doubled its overall tax burden, socialized a slew of industries, re-regulated its markets, expanded its public systems, and shuttered its borders. In 1970, Sweden had the world's fourth-highest GDP per capita. By 1990, it had fallen 13 positions. In those 20 years, real wages in Sweden increased by only one percentage point.
By the late 1980s, though, Sweden had started de-regulating its markets once again .. These decisive economic liberalizations, and not socialism, are what laid the foundations for Sweden's success over the last 15 years .. as businesses have become more productive and people's incomes have risen, living standards improved ..
Challenges such as youth unemployment, inflexible housing markets, waiting lists for health services, and too-high taxes, still plague the country. So reforms that increase economic freedoms should and will continue —the results so far have been more than encouraging. That is the real lesson to be learned from "the Swedish model."