Why capitalism cannot manage building or maintaining Sweden
Sweden has long experienced a major change in the construction of infrastructure and housing. In the early 1960s, a major process began to build the welfare state in a social democratic spirit, which was not only reflected in broad social reforms within the superstructure, but also in the economic basis of how construction processes such as the Million Programme were implemented. Between 1965 and 1975, one million homes were built, mainly cheaper apartment complexes, but also a large number of detached houses, which are now known as suburbs. These are now a critical part of Swedish infrastructure, and it is estimated that up to 2 million people live in them, i.e. one in five inhabitants of Sweden, or 20% of the population.
Construction under the Folkhem (“the people’s home”) period
Despite today’s severe housing shortage, no government has managed to tackle it in any way that can even be compared to the major campaign of the 1960s. One of the largest construction companies involved in the construction of the Million Programme was BPA AB, Byggproduktion Aktiebolag, which was formed in 1922 by joint trade unions in the construction industry to conduct its own operations, inspired by the guild socialists in Great Britain. In 1967, 18 companies merged to form BPA, 12 of which were guilds that now became a nationwide construction company. BPA represented almost all professional groups, with departments covering everything from concrete, carpentry, painting, flooring, electronics, plumbing, and many more. This is a major factor that sets BPA apart, as it meant that projects could be run entirely on its own without hiring other companies.
This caused production to skyrocket. Knut Johansson (1911-1997) was chairman of the Byggnads union from 1952 to 1974, and described BPA in his book Från Storstrejk till Storföretag (From General Strike to Large Companies) as follows:
“In 1950, the construction time for concrete and wood workers, bricklayers, and crane operators was 1,500 hours for an 80 m² residential apartment. In 1965, the time required for the same production using the BPA system was only 400 hours.”
This represented a production increase of nearly 73% in just 15 years. But how was this possible in practical terms? As early as the 1960s, BPA was quick to establish its own workshops to refine the process of producing prefabricated elements, and patented new pipe laying systems that drastically reduced prices.
In addition to this, they always maintained close contact with the union and ensured that almost all work was carried out according to the agreement, meaning that workers were paid based on how much they produced as a team, rather than just by the hour. This motivated an even higher level of production throughout the entire work team, which became a win-win situation for both the company and the construction workers, who were able to actively influence their own wages.
It is important to bear in mind that piecework wages, as Marx explained, “have … a tendency, while raising certain individual wages, to lower the average wage itself.” Marx analyzed that piecework wages were the form of wages that best suited the capitalist mode of production, especially since it increases the intensity of labor and gives the worker a sense of individualism.
With all this in mind, it was relatively easy for BPA to take on and win the major contracts throughout the period now known as the “record years.” In addition to these factors, there were also strong ties to the Social Democratic political elite, and many of the leaders of both BPA and Byggnads, including Knut Johansson himself, were also members of the Riksdag, county councils, and municipalities, and were themselves involved in placing orders on behalf of the state. On paper, Knut was also the leader of both Byggnads and the employers in BPA. Is there any other time when one person could “represent” the state, workers, and employers at the same time? Despite everything, this unusual combination led to the company becoming one of the largest construction companies in Sweden.
It can be said that this led to the beginning of a monopoly within the industry, which could have grown incredibly strong. In DN 1970, it was stated that:
“Amid growing irritation, private builders have noted how the cooperative Riksbyggen-BPA has taken over an increasingly large share of the construction market.”
However, the story would come to an end with the stock market listing in the 1980s, which quickly led to major losses, with BPA’s model no longer working when the new era of “neoliberal” economic reforms began in Sweden. When the financial crisis of the 1990s also took hold, it became difficult for BPA to continue its operations, and despite billions in direct support from LO, the company was sold to PEAB, which later put the final nail in the coffin by splitting up the business, which today exists as Bravida, with a sole focus on installation work such as electrical and plumbing.
The decay of construction today
Today’s infrastructure clearly has major shortcomings, which are reflected in the large projects that all too often come to a standstill, shattering planned budgets, and politically reflecting the incompetence of both project managers who fail to follow plans or control construction, and municipal officials who repeatedly continue to pump money into these nightmarish projects in an attempt to save them. All this takes place within the framework of the anarchy of capitalist production — the spontaneity and lack of planning for the national economy as a whole, which characterizes commodity production under private ownership, where production is carried out in isolated private companies that compete with each other, without any plan or planning for society as a whole and its production, and without any calculation of society’s needs. Let’s look at a few examples.
Kiruna Badhus (Kiruna Public Bathhouse)
Planning began in 2018 with estimates of SEK 360 million, of which SEK 200 million came directly from LKAB. However, in 2020, Kiruna Municipality determined that the cost would be around SEK 550 million to include a “relaxation area.” During construction, it became apparent that there were significant differences between the time invoiced by the construction companies and the actual time recorded, and that a large proportion of the reported personnel were never on site, even though the municipality paid for this. The municipality’s response was not to demand repayment from PEAB, but instead to suspend the audit and initiate a “collaboration” to find out why these problems had arisen. In the end, the bill reached a whopping 1.37 billion (!), far exceeding initial estimates, which, in the spirit of free market capitalism, will be paid by taxpayers, who have no choice whatsoever as to whether or not to pay for the incompetence of the municipality and the construction company.
Förbifart Stockholm (Stockholm Bypass)
In 2013, the project to build the new tunnels was estimated to cost SEK 31 billion and take 10 years to complete, i.e. until 2023. During the course of the project, contracts have been terminated due to both poor working conditions and slow progress. In connection with this, the project’s completion date has been postponed to 2030, and additional costs have been added, which in 2021 were said to be SEK 41 billion, later increasing to SEK 51 billion in 2024, not including a possible ruling from the Land and Environment Court to infiltrate water to maintain the groundwater level.
If we divide the cost of this project by the number of kilometers, it comes to approximately SEK 2.45 billion per kilometer. If we compare this with a country like China, which also built its largest tunnel network, Zhongnanshan, which, like the bypass, consists of 18 km of tunnels, the total cost was SEK 4.5 billion, with a cost of SEK 236 million per km. This does not take into account the fact that the Zhongnanshan tunnel runs nearly 1,640 meters below the surface, while the deepest point of the bypass is only 70 meters.
Even if we take an example such as the Laerdal Tunnel in Norway, built in 2000, the cost per kilometer is approximately 70 times more expensive for the Stockholm Bypass. All in all, this project can easily be described as a complete failure, both financially and in terms of construction.
Dyra Nya Karolinska Sjukhuset (New Expensive Karolinska Hospital)
The New Karolinska Hospital is probably one of the biggest failures of our time in terms of large construction projects. In 2010, the project to “modernize” large parts of the Karolinska University Hospital in Stockholm was launched. Skanska was awarded the contract to construct the new buildings, and a consulting firm, Boston Consulting Group (BCG), was also brought in. BCG is known for, among other things, assisting and financing Israel’s genocide in Gaza, and is now involved in the upcoming “reconstruction” of Gaza. Their contribution and proposals form the entire framework for the financial sector presented by their Israeli counterparts, who, in communication with Trump, refer to a future Gaza as the “Trump Riviera” and an “Elon Musk Smart Manufacturing Zone.” Incidentally, BCG consultants proposed providing “financial compensation” to relocate up to 500,000 Palestinians from the area. BCG from the US, which in turn led to consulting costs averaging SEK 700,000 per month for each consultant. In 2017, legal proceedings were initiated with allegations of bias after it emerged that the production director for the construction, Andreas Uggla, had previously been employed by BCG, and several of the invoices that lacked the correct specifications listed him as a reference.
At the time, Irené Svenovious was the finance councilor for Stockholm County and voted down a proposal to conduct an external audit of the project and its finances. However, a future audit revealed that the procurement manager for Karolinska was her own husband, Jan Svenovious.
The contract for this “upgrade” was initially set at SEK 14.5 billion, but has now been finalized at SEK 67 billion until 2040. During the course of the project, there have been around 170 changes to the construction plan, and relatively minor work has somehow incurred incredibly high costs; for example, it cost SEK 1.2 million just to replace a door.
As a result, the New Karolinska Hospital is considered the most expensive hospital in the world and is the most expensive construction project in Swedish history. Compared to other hospitals in Europe with the same number of beds, the New Karolinska Hospital was approximately 10 times more expensive to build.
Öresundståget (The Öresund Train), an effective transfer of the people’s money to the big companies’ pockets.
The big train robbery
Over the past 25 years, rail travel has almost doubled, and regional traffic has almost tripled. This has led to more, longer, and heavier trains running more frequently, putting greater strain on tracks, switches, and overhead lines. There is not a single person in the country who travels daily by rail who is unaware of how the train infrastructure is falling apart. Delays, stoppages, and, above all, track faults are commonplace. It has become so bad that companies prefer to lie and claim that there is a “staff shortage” when the tracks are not working and “track faults” when there is a staff shortage.
The railways are in themselves a very clear example of the offensive launched by private monopoly capital since the 1980s against the state-monopoly faction within the big bourgeoisie. Until the early 1980s, SJ (Statens Järnvägar) was a state monopoly. SJ was responsible for everything related to the railways: infrastructure (tracks, stations, signals), traffic (passenger and freight trains), maintenance, and service.
However, from the 1980s onwards, control began to shift from the state monopoly faction to the private monopoly capital faction. During the 1980s and 1990s, privatization, division, and corporatization began. The major turning point came in 1988, when the Swedish Parliament decided to divide SJ into two parts. Banverket was given responsibility for infrastructure (tracks, signals, stations, etc.), and SJ continued as a transport operator, i.e., responsible for the trains.
Regionalisation began in the 1990s. County transport companies were given responsibility for regional passenger transport. They were able to start procuring transport services from different operators, not just SJ. Private companies were granted permission to operate transport services on certain routes through procurement. In the 2000s, SJ became a public limited company and more players entered the market. The Social Democratic government led by Göran Persson decided to convert Statens Järnvägar into six state-owned companies. These consisted of SJ AB, Green Cargo AB, which handled freight transport, Jernhusen AB, which managed real estate, stations, and workshops, Euromaint AB, which handled maintenance, Swemaint AB, which handled the maintenance of freight cars, and Statens Järnvägar (the authority), which remained as a residual organization for pension liabilities and other matters. Operations that were previously government agencies became public limited companies that were expected to turn a profit.
During the 2010s, full deregulation and open competition were on the agenda. After several stages of liberalization, the Swedish railway market was completely opened up to competition, including from abroad. From 2010, all companies were given the right to operate commercial passenger transport on the state-owned railway network without competitive tendering. Sweden was the first country in the EU to fully liberalize passenger rail transport. New players entered the market, such as MTR Express (now MTRX, owned by Hong Kong-based MTR), Snälltåget, Transdev, and the German company Flixtrain. The Swedish rail infrastructure was completely fragmented among countless companies. Today, there are different owners of train stations, parts of the tracks, trains, train operations, maintenance, workshops, manufacturers, etc. This increases the cost to society, as the train infrastructure is designed to accumulate profits for capitalists everywhere who all want to parasitize on their share of the pie.
Today, Trafikverket, which owns the railways and infrastructure, does not carry out any maintenance itself. Track maintenance was separated from SJ as early as 1988. Responsibility for the tracks was transferred to the newly formed Banverket, which later merged with Vägverket to become Trafikverket. It pays private companies to carry out maintenance. In accordance with the Public Procurement Act, the “most economically advantageous” bid is selected. In other words, contracts are awarded based on who offers the lowest price on the market – not who offers the best service. This leads to everyone doing as little as possible and no one taking responsibility for the whole. Due to privatization, maintenance has become increasingly neglected. Since railway maintenance began to be privatized in earnest in 1998, the number of track technicians has fallen from just over 7,000 to around 3,800, almost halving the workforce, which naturally affects the ability to maintain the standard of the railways. Many of these former specialists have been replaced by lower-paid workers. This has led to a loss of expertise and increasingly neglected maintenance.
The companies are responsible for maintenance during the contract period, which is often around five years at a time. Since different companies are responsible for different areas and systems, it is difficult to coordinate maintenance and planning. As the contracts often only last for a few years, contractors have less incentive to invest in long-term expertise and equipment. They make their profits by running budget deficits on the sum from the public sector, which is in direct contrast to the need for major long-term investments. This has led to a situation where no one is willing to carry out the necessary maintenance projects that society needs to maintain its infrastructure. Corporatization also makes it difficult to coordinate between different parts of the rail transport system. For example, it may be unclear who is responsible for resolving train faults, especially when the trains and tracks are owned and maintained by different operators. Even when a new company wins a tender, staff change employers and local knowledge is lost, which has led to poorer fault management and delays.
The domestic economic situation
One of the pressing issues in Sweden is housing construction. Despite a general increase in construction between 2013 and 2019, there is still an acute shortage of housing. According to the Swedish Union of Tenants, there is a shortage of nearly 100,000 homes today. Despite this, there are currently nearly 20,000 vacant homes, and according to reports from Sveriges Allmännytta, the main reason for this is that rents are too high.
This is mainly the case with newly built apartments, where prices are completely out of line with normal incomes. If we take the newly built area “Galaxen” in Växjö, the price for a three-room apartment of 73 square meters ended up at nearly SEK 11,000, which is close to 40% of the salary of a worker earning SEK 30,000. The result of this is that nearly half of all apartments in the area are still vacant. In this case, it is a municipally owned landlord who justifies the high prices by saying that the cost of construction has risen sharply, which is not entirely wrong when we later examine price trends.
Housing prices in Stockholm since 1875 (with adjustment for inflation).
The question remains as to why construction has become so expensive, despite the fact that productive forces in the form of new tools and machines have been developed in the construction industry, enabling greater production than ever before, while the manufacturing industry has also seen the development of new technology that has increased the production of building materials.
A relatively new factor that has increased production while reducing costs is the increased availability of tools and machinery for hire, including through Hyreslandslaget. This allows companies to hire everything from saws, excavators, drills, industrial vacuum cleaners, site huts, lifts, and even cranes. For smaller companies that may need these machines on an occasional basis, this can drastically reduce costs. For example, instead of buying a small excavator for around $7,000-$10,000, you can now rent one for around $100-$500 per day.
Rental concrete cutting machine. Retail price – around 20 000 kronor or daily rental for around 500 kronor.
In the long run, however, this can lead to significant costs, particularly when companies run long-term projects where profit margins are increasingly small and the leasing company also needs to see its share of the profits increase. At present, HLL has a monopoly-like role in this business, and there is no other company in this sphere that can even come close to the position that HLL has managed to build up since its founding in 2011. In the future, this will likely lead to an ever-decreasing profit margin for construction capitalists, who are becoming increasingly dependent on leasing to carry out their projects.
Price development of building materials?
Another factor that has affected the construction industry is the process of outsourcing the production of building materials to other countries where operations are significantly cheaper. Among others, Swedish-owned Kährs had moved its production of wooden flooring to a factory in Russia, which it later closed down after the war began.
Even Knauf, the world leader in the production of gypsum materials, has gradually moved its production to poorer countries and now has over 300 factories, several of which are located in Serbia, Turkey, Slovenia, the UAE, Croatia, Greece, and Albania. By moving production, costs become much cheaper for these companies, while at the same time there are not the same bureaucratic processes and regulations as in many imperialist countries. In addition, wages are also significantly lower for workers. For example, the median wage for a factory worker in Russia is only SEK 9,000 per month, which is roughly the same for workers in Greece and Albania, while industrial wages in Sweden are around SEK 31,000 per month.
In addition to this, cheaper alternatives have also been developed for the raw materials used in construction, including greater opportunities for recycling by-products (such as fly ash from coal extraction into bricks), imitation wood products (such as laminate flooring), and low-cost production of standardized concrete elements (such as lightweight concrete, produced with sand, lime, cement, and aluminum powder). Sweden has been a leading developer in this particular field. Both laminate flooring and lightweight concrete are Swedish inventions.
Wood flooring compared to laminate flooring.
Despite these factors, the construction industry experienced a major crisis after the imperialist war began in Ukraine, which led to a severe shortage of raw materials, which in turn led to sharply increased prices between 2021 and 2022. Here are some examples of the increased costs:
Despite increased production levels over the past 10 years in wood production, which reached record levels in the early 2020s, this increased supply has not led to lower unit costs. On the contrary, the price of wood products has increased by over 60%.
While this price trend strangled the entire construction industry, there was one group that saw record profits: building materials retailers such as Bauhaus, Byggmax, and Beijer. When we examine the market at this time, we see that Byggmax saw an increase of nearly +89% in its share value at the end of 2021, when the situation was at its worst.
This obvious plundering of the Swedish construction market initially hit construction companies hard, but they have now managed to push up their prices for construction work in line with the increased costs of building materials, and the government’s new ROT tax deduction has made it much easier for private individuals to finance projects. However, the ROT deduction is only intended for people who own their homes, which is reflected in the fact that it is mainly older men with high incomes who take advantage of this to renovate their houses.
When we take all this into account, the fact remains that an ordinary worker living in a rental property has received no compensation whatsoever, and it is we who are paying the cost in the form of record increases in rents. In general, rent increases have been around +5% in 2025, while wage increases have been around +3.4% according to the industry benchmark, which in relation to inflation gives a final result of only +1.1%. Since the 1990s, rents have increased twice as much as the rest of the consumer price index(!).
The Swedish construction market must truly be a miracle. Despite increased capacity to produce more and cheaper, prices continue to skyrocket for ordinary people, which is an essential part of market development under capitalism. When we examine statistics, we can also see a number of points that indicate an industry heading toward increasingly deteriorating production.
In relation to industry, the construction sector has seen a sharp decline in production.
However, despite an increase in investment and greater construction activity during the previous period 2015-2023, the added value still shows no significant development.
These graphs only show the situation up to 2015, but by 2020, another dark year had arrived, with construction activity falling by 10%, leading to a major crisis for the entire construction industry, with thousands of workers losing their jobs, which is still affecting the industry. At first, it was mainly smaller companies that experienced major problems, but now the situation has also reached the larger construction companies, which are also continuing to lay off workers.
Despite praise and analyses from several conservative economic media outlets that the construction industry will experience a historic upswing in 2025, there is still no evidence that this will be the case. Instead, in February, nearly 1,300 workers were given notice of redundancy.
Construction sites today have undergone relatively significant changes since the record years. One factor that stands out in particular is a new relationship with an ever-growing administration of managers and other office professionals who are taking up positions on construction sites. In many cases, these are people who have no experience of construction work themselves. Instead, it is often people who have completed a purely theoretical education as civil engineers who are given responsibility for managing and allocating work on the construction site. However, this is not always the case.
In addition to this, the entire communication chain has become increasingly bureaucratic, with decisions often taking longer to reach a site manager, who now has overall responsibility for the construction process. When it comes to very large projects, it can be relatively difficult to get a response when problems arise on site, as no one from “site management” wants to take responsibility for any risks.
Now that you have such a bureaucratic administration at construction sites, it hardly becomes any easier when an increasing proportion of the construction workforce arrives as migrant workers, mainly from Eastern Europe, who in turn have no professional experience in the construction industry. This leads to several problems in practice, not least of which is difficult communication when you are forced to contact the other person’s manager just to communicate with them, or when a lack of professional knowledge leads to poor quality and faulty construction, which also reduces production rates, increases costs, and delays the completion of the construction project.
The current construction standard.
An example of on-site leadership at a construction site.
Despite all these factors that are damaging construction in Sweden, these management methods continue to be implemented and developed. We can only speculate as to why this is happening, but it is probably an attempt to “modernize” the construction industry, which economists often see as a “traditional, conservative” industry that is difficult to change.
One of the main “problems” for capitalists in the construction industry is the fact that it is difficult to control production, and not least the workers and our pace of work. By having a larger bureaucracy and taking away the influence of workers, they want to try to gain a greater overview and continue to be able to control their exact work tasks and production levels to the extent that it is possible to calculate and systematize them.
On top of this, there is a desire to move towards increasingly “specialized” professional skills, where the division of labor is broken down to the smallest possible level in an attempt to “streamline” construction, whereby a construction worker, who should basically be able to do everything, becomes an easily replaceable commodity on the labor market, similar to a worker in a restaurant. An example of this is the development of large construction companies.
A carpenter, in the traditional sense, should be able to perform a number of different jobs. Some examples are:
- Formwork: Building forms for concrete casting.
- Frame construction: Erecting frames for walls, ceilings, and floors.
- Assembly: Installing windows, doors, moldings, and prefabricated elements.
- Interior finishing: Installing wall coverings such as drywall or paneling, as well as building and installing kitchens, closets, and other woodwork.
- Renovation: Working on remodeling and renovation projects that may require more advanced craftsmanship.
- Timber framing: Build walls, floors, and other parts on site when buildings are not made from prefabricated parts.
- Quality control: Ensure that the work meets requirements, measure and check that everything is the right size and quality.
But if we look at, for example, the company JM, they use a working method where certain carpenters are trained to *only install kitchens, instead of being able to perform a broader role in their work. This can, of course, lead to an increased production rate for these carpenters, but at the same time as production increases, they lose their professional skills in other areas, making them replaceable. Basically, this is the easiest way for capitalists to push down workers’ wages, and with a large pool of migrant workers, this factor becomes an increasing risk for construction workers. It is precisely the large companies that are leading this development, continuing to implement and experiment with various methods to control and specialise the construction process down to the smallest detail, e.g. recently by introducing a “knife ban” at Bravida, which has led to strong reactions from electricians.
Summary
What we see is how capitalism’s fundamental contradiction, between the increasingly social character of production and private appropriation, increasingly hinders production and inhibits social development. This is demonstrated by the fact that:
1) Despite advances in technology and industry, which have led to even greater production capacity, production time is increasing.
2) Despite the fact that production is generating more products, prices are rising.
3) Despite the fact that the division of labor is increasing, which should create greater capacity for production, this is instead turning into a situation where a few are parasitizing on the work of society.
The enormous resources available within the capitalist economy are squandered due to the anarchy of capitalist production and competition. The production and sale of goods is driven by profit-seeking actors, without any social planning and in constant competition, who try to grab as large a share of the pie as possible. Instead of increased efficiency and production, capitalist production is hampered by such exploiters and parasites at all levels. This, in turn, leads to more inefficiency and dysfunction. The negative effects of this anarchy in production fall not only on the working class, who have to travel on poor public transport and live in dilapidated homes, but also on the bourgeoisie. The consequences of not being able to complete construction projects and maintain critical infrastructure entail enormous external costs for society as a whole. Not only does it become more difficult for the working class to live, it also becomes more difficult for capital to grow.
Marxism teaches us that when the relations of production, which are the relations between those who own and control production and those who work, no longer correspond to the development and character of the productive forces, it is a historical law that a new mode of production will replace the old one. Capitalist ownership of the means of production, in contrast to the increasingly social character of production, has hampered production. Not only do we know this, but everyone can see it when capitalism cannot even solve its most basic problems.
The bourgeoisie faces new times with new problems. At a time when higher demands are being placed on Sweden’s industrial capacity, maintenance, and infrastructure, those in power are trying to find solutions. But the bourgeoisie is by nature a divided class. They can only agree on exploiting the working class, but among themselves they are competitors. The most obvious division within the big bourgeoisie in Sweden is between private monopoly capital, mostly linked to finance capital and speculation, whose capital is spread across the globe and profits from selling everything, and state monopoly capital, linked to domestic industrial capital and the state apparatus. State-monopoly capitalism often develops in times of crisis and war preparations, when greater cooperation is required among the ruling classes. But even in times without crisis and war preparations, industry needs functioning infrastructure, etc., in order to stay alive.
Now, with NATO bases being established on Swedish soil, war preparations demanding more and more resources, and ever-increasing demands being placed on industrial production, it is becoming increasingly important for the big bourgeoisie that construction projects can be carried out and completed and that a functioning infrastructure is in place. But solving these problems is not easy for the bourgeoisie.
It is likely that some politicians, serving SAP honorary member Wallenberg, look back to the corporative model of the welfare state, where state-monopolistic capitalism was stronger and where the private-monopolistic faction was kept under the thumb of the state-monopolistic faction. For this to be possible today, it would probably have required a purge within the bourgeois state of all market liberals who consider privatization and competition to be the highest virtues. This could mean a return to a corporative model where state control is stronger. This would obviously serve the strongest part of the imperialist big bourgeoisie. However, this would have meant that the state-monopolistic faction of the big bourgeoisie would strike against private monopoly capital, which would no longer be allowed to squeeze out everything and everyone. This would not mean an improvement for the working people; on the contrary, it would mean the streamlining of an increasingly capable bourgeois state in the service of the strongest part of finance capital. Both Mussolini’s Italy and Hitler’s Germany managed to build roads using a corporative model, but this did not make these states good for the people…