Does the Swedish model prove Thomas Piketty wrong?

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28 August 2014

BOOK RELEASE: Sweden and the Revival of the Capitalist Welfare State

The popular French economist Thomas Piketty emphasizes capitalism's seemingly inevitable tendency to create an unequal wealth distribution – and advocates a global progressive tax on capital.

In his new book, Sweden and the Revival of the Capitalist Welfare State, Andreas Bergh, Associate Professor of Economics at Lund University in Sweden, outlines how rather than taxing capital drastically, the Swedish strategy has been to provide generous conditions for capitalists and the private sector. This in turn has enabled fairly high taxes on labour income - necessary to finance the welfare state.

The Swedish model levels the playing field by providing universal access to things like high-quality education and public health care. It offers relatively equal opportunity, while creating an open environment for the private sector and business”, says Bergh. “The focus is on redistributing income, generated by a highly functioning capitalism.”

Between 1870 and 1970, Sweden went from being one of Europe’s poorest countries to being the fourth richest country in the world. Following a financial crisis in the 1990s, Sweden went on to grow faster than most EU countries as well as the US.

Bergh walks us through this remarkable success story, showing how a redistributive welfare state combined with thriving capitalist institutions can provide a more efficient and comprehensive solution than a global wealth tax.

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