The 1992-93 Swedish Crisis Debate

The very survival of Sweden’s famed welfare state was fiercely debated during its 1992–93 financial crisis, and as such, this experience is highly relevant for the debate over financial crises faced by the developed world, post-2007. This paper examines the role economists and other social scientists played in the Swedish public debate over that crisis. Ultimately, Sweden’s welfare state survived, but was fundamentally reformed. Contemporary policy analysts can gain insights into the process whereby expert, theoretical views of the economy clash with the world views of both laymen and other non-economist experts. This chapter, based on unpublished interviews performed during the spring and summer of 1993, examines the clash between different generations of economists (with different theoretical outlooks) and between economists and other social scientists. In particular, it focuses on the strong degree of consensus over Swedish economic analysis that dominated the public forums in Sweden. Besides simply understanding the Swedish case better, I attempt to add to the literature on policy formation and change and to add to a separate literature on the “rhetoric of economics.”

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