Free Societies

Sweden gained its prosperity from economic freedom, not socialism


Many on the left point to Sweden and other countries in that area of the world as examples of how socialism can bring prosperity if implemented correctly. In a new video from Atlas Network partner Free to Choose Network, Johan Norberg providesa brief, to-the-point explanation of why they are “dead wrong” — and why Sweden’s prosperity comes from free trade and deregulation rather than socialism.

“Sweden got rich first with free trade and an open economy before we had the big government,” Norberg explains. “In the 1950s, Sweden was already one of the world’s richest countries, and back then taxes were lower in Sweden than in the United States. Only then did we start expanding the government dramatically. And you know what happened then? We started losing, from having been the fourth-richest country in the world in 1970; 25 years later, we were only the 14th richest. And no new jobs had been created in the private sector. It all ended in a terrible crisis.”

Sweden only ended its downward slide after liberalizing its economy again, with new waves of deregulation and free trade with other countries — as well as lower taxes, school vouchers, and partial pension privatization.

“Sure, Sweden is great,” Norberg concludes. “I love it here. But be careful so that you imitate the stuff that brought us wealth, and not the stuff that almost brought us ruin.”

Norberg provided a far more detailed examination of Sweden’s prosperity in a commentary for the Cato Institute’s website. Titled “How Laissez-Faire Made Sweden Rich,” the article explains how Sweden came to have such a high degree of economic freedom, and how that led to its position as one of the wealthiest countries in the world.

“Liberalism had transformed Sweden completely,” Norberg wrote. “A society that used to be rigorously controlled—in which all occupations were thoroughly regulated and trade with other countries was practically forbidden—suddenly opened the floodgates of creativity that had been pent up for centuries. Creativity was now rewarded, not penalized. Open markets and a minimum of regulations meant that capital could flow to the best ideas and that companies were free to hire and fire. The old trades were mechanized, and Sweden could now export what it did best to Britain and other countries in exchange for imports that Sweden couldn’t produce as well.”

Norberg has worked with Free to Choose Network for years, explaining how sound economic principles bring countries from poverty to prosperity. India Awakes provides a vivid illustration of how economic freedom transformed India in the space of only a couple of decades, Free or Equal delves into why egalitarian policies impinge on both liberty and wealth creation, Economic Freedom in Action: Changing Lives tells the compelling stories of entrepreneurs who make a difference in people’s lives by solving their problems, and Power to the People examines how the world’s growing energy needs can only be met through bottom-up, decentralized approaches.