Stockholm is built on fourteen islands where the fresh-water lake Mälaren flows into the Baltic Sea. The site could hardly be more attractive, and indeed the city is sometimes called the ‘Venice of the North’. Much of its old quarter is intact, although in the 1950s many quaint houses there were demolished and replaced by ugly, brutal high-rise buildings, especially in the Klara neighbourhood. The city survived this just like Sweden as a country survived forty-four years of social democracy. Stockholm became the capital of Sweden when she seceded from Denmark in 1523. The city is a relatively sunny place, although it can get quite cold there, as French philosopher René Descartes discovered after he had in 1649 rashly accepted an invitation by Queen Christina to be her private tutor at the Court: a year later he died of pneumonia. Indeed, another French philosopher, Madame de Staël, who was married to a Swedish diplomat, exclaimed in 1812 that there were only two seasons in Sweden, green winter and white winter. But this is an unfair French witticism. The Stockholm summers are warm and pleasant as I could attest in June 2022 when I was speaking at a conference of the European Resource Bank, where representatives of several free-market think tanks in Europe gathered. I was promoting my recent book, Twenty-Four Conservative-Liberal Thinkers.
Stockholm in 1981
One of my most memorable visits to Stockholm was in 1981 when I attended a regional meeting of the Mont Pelerin Society. The Anglo-Austrian philosopher Friedrich A. von Hayek had founded the Society in 1947, three years after he published his Road to Serfdom where he argued that Hitler’s national socialism and Stalin’s communism were two of a kind; that central economic planning might lead to a one-party police state; and that we should return to the classical liberalism of the eighteenth and nineteenth centuries, modified and revised in the light of experience. Hayek introduced me in 1980 to the Mont Pelerin Society. Its Stockholm meeting in 1981 was a stimulating occasion. American economist Gordon Tullock argued that if we wanted to influence policy we should stay out of politics. His point was that outcomes were determined not by politicians but by circumstances or better still by prevalent interpretations of circumstances, and they in turn were determined by the ideas dominant at the time. The task was therefore to change those ideas, by sound academic research and its subsequent effective and accessible presentation by think tanks. Some distinguished Swedish business leaders and intellectuals, including Curt Nicolin and Sven Rydenfelt, gave instructive talks at the conference on the struggle against socialism in their country. Hayek attended and was in good form.
A visit to Stockholm in December 1986 was also memorable. The Nobel Prize in Economics had just been awarded to one of my intellectual mentors, James M. Buchanan, and we the Nordic members of the Mont Pelerin Society decided to celebrate this at a dinner party. It was a joyous event. My Swedish friends Dr. Carl Johan Westholm and Sture Eskilsson were in charge. Normally somewhat taciturn, Buchanan now was cheerful and talkative. He expressed the hope that now economists might take more note of his idea that the behaviour of competing politicians had to be analysed with the same tools as the behaviour of competing businessmen. People did not change their nature by moving from the marketplace into the political arena. If self-interested behaviour was the assumption in the analysis of the marketplace, it should also be the assumption in the analysis of the political arena.
As in 1981, I stayed at the Grand Hotel, and I still remember how animated and clamorous the winner of the 1986 Nobel Prize in Literature, Wole Soyinka, and his entourage were at the hotel bar every evening. They loudly demonstrated how happy they were with the honour bestowed on the Nigerian writer. The Grand Hotel is old-fashioned but well-preserved, built and designed in the same style as d’Angleterre in Copenhagen, Copacabana Palace in Rio de Janeiro and Majestic in Cannes. They all seem to come straight out of novels by William Somerset Maugham or Scott Fitzgerald. One of the special attractions of Grand Hotel is the Swedish Smörgåsbord in the Veranda Restaurant, a buffet of open sandwiches and other delicacies such as herring, goose liver paté, gravlax (cured salmon), oysters and lobster. (Smörgåsbord literally means a table of butter and geese.) Later, a well-equipped and comfortable spa was added to the hotel, which I much enjoyed on subsequent visits.
A Randian Experiment
Sweden is a particularly interesting country for conservatives and classical liberals alike because she is often held up, for example by American economist Jeffrey Sachs, as a successful example of social democracy and as a conclusive refutation of Hayek’s ‘Road to Serfdom thesis’. But as Swedish scholars Johan Norberg, Nima Sanandaji and Nils Karlson have made clear, Nordic success was despite and not because of social democracy. It was based on the long Nordic traditions of the rule of law, including the protection of property rights, free trade, social cohesion, and hard work. In the nineteenth century liberal governments, influenced by Adam Smith and Frédéric Bastiat, had laid the foundations for Swedish prosperity in modern times. It is true that the Social Democrats were in power for a long time. It is also true that in the late 1970s and in the early 1980s their party was ruled not by pragmatists as before, but by ideologues who sought to transform Sweden into a socialist country. But they met fierce resistance from many quarters, as people realised that a further growth of the state was undesirable and counter-productive. No new jobs were created in the private sector, and entrepreneurs were leaving the country: It was almost an experiment as described in Ayn Rand’s Atlas Shrugged, where the productive individuals decided to retreat, either to other countries or to non-taxed pursuits, with the economy becoming stagnant.
Dinner with Göran Persson
The 1990s saw a sea change in Sweden, not only in the non-socialist parties under Hayek’s influence, but also in the Social Democratic Party which abandoned many of its radical ideas. A new consensus, or if you will, a new Swedish model, was formed, accepting generous welfare benefits, but allowing choice in education and health care and encouraging entrepreneurship. A forceful Social Democratic pragmatist, Göran Persson, was Finance Minister in 1994–1996 and Prime Minister in 1996–2006, stabilising and liberalising the Swedish economy. A famous exchange once took place between him and a journalist who had asked him what he thought of socialism. ‘I am a Social Democrat,’ he replied. ‘Not a socialist?’ the journalist asked. ‘No, if you call yourself a socialist, they confuse you with a lot of crazies,’ Persson retorted. He became a good friend of David Oddsson, Iceland’s Prime Minister in 1991–2004, another forceful, pragmatic politician. When Persson was giving a lecture in Reykjavik on 27 November 2012, in the evening he had dinner with David who was kind enough to ask me to join them. Over gravlax and Icelandic lamb, we had a lively discussion on current affairs and the circumstances of the Nordic countries. Persson did not look like a typical Swede. He was of medium height and rather stout, with a receding hairline. He was affable, but resolute and very down-to-earth.
Persson was intrigued by the little-known fact which I pointed out to him that Iceland was in the fourteenth century for a while unified with Sweden, and not with Norway and Denmark. Having formed a Commonwealth without a king in 930, the Icelanders had reluctantly agreed in 1262 to become subjects of the Norwegian king. In 1319, Magnus Eriksson, called Magnus Smek, became king of Norway and Sweden and thus also of Iceland. But Magnus was unpopular in Norway and in 1343 it was decided that his young son Haakon would become king of Norway, with Magnus as a temporary regent, while he continued to rule Sweden. Magnus retained sovereignty over Iceland and was therefore nominal king of Sweden and Iceland until his death in 1374, although he lost power in Sweden in 1364. So, at least from 1343 to 1364 and even nominally until 1374, Iceland was in a personal union with the Swedish king. Subsequently, Iceland was ruled by the son of Magnus Smek, Haakon VI of Norway, until his death in 1380. The wife of Haakon VI was Margaret of Denmark, and their son Olav inherited the Danish throne in 1375 and the Norwegian throne in 1380. From then on, Norway and Iceland were ruled from Denmark. Thus began the long history of Iceland under the Danish throne which only ended with the proclamation of the Icelandic Republic in 1944.