The system we have seen since the major financial reforms of the 1970s and 1980s, often referred to as “neoliberal” reforms, has been a dominant force both theoretically and, above all, practically in the economic arena of capitalism. We generally oppose this concept and believe that we should instead look at the contradictions between state monopoly and private capital. However, the focus of this text is not to explain this concept and phenomenon in greater depth, but rather to interpret the developments we are seeing today. We can see that the actions of the bourgeoisie, not only in Sweden, indicate a general change in the economic policies that the ruling classes have been testing for decades.
The general crisis that imperialism is currently facing is forcing them to focus on new plans. Similar to the situation before the First and Second World Wars, an incredible expansion of military and weapons power is required to guarantee the security of their imperialist interests. But at the same time, these resources are difficult to find in the states’ own coffers today in order to adequately meet these military needs without limiting their profits.
Germany’s Chancellor Friedrich Merz from the CDU can be seen as a guiding force in this development of the European fiscal policy framework. Unlike the Moderates, they have actually shown where this funding will come from. The military and arms industry will receive its capital directly through loans from private financial capital. In other words, they have chosen to bow down to private capital and kick the can down the road.
The Swedish government has the same problem in this regard. They scratch their heads and make grand promises about investing in defense, forcing the government to dig for gold to satisfy its hunger for new killing machines. The problem is that they don’t know where to dig. And every day, the need for money grows as the management of infrastructure and healthcare, for example, is no longer viable.
In its 2025 spring budget, measures worth SEK 11.5 billion were presented to, according to the government, “support the economy and counteract the negative effects of economic uncertainty.” Three main points were presented, focusing on: 1) Strengthening defense, 2) Increasing security and tackling crime, and 3) Supporting households.
This is, of course, very vague, and they tend to be less adept at elaborating on where the money will go—but we suspect that some of it will find its way into their own pockets. SEK 11.5 billion is relatively little to prevent any major negative effects on the national economy (it is a fraction of Stockholm’s city budget) but enough to enrich individuals and companies with lucrative contracts.
Another focus with slightly greater emphasis is increased investment in infrastructure, with the largest investment in modern times, amounting to nearly SEK 200 billion by 2037. There will also be a change in strategy for the defense industry, with measures to strengthen the very foundation of the defense industry through changed rules and restrictions and increased investments that are likely to facilitate production. This is more directly related to NATO and the Swedish military requiring things such as a functioning rail network, if only to transport equipment. At the same time, the question remains as to how these government investments will be financed, which we can speculate will likely come from two sources.
– An increase in public debt through government loans from financial capital and an abandonment of “austerity policies”
And/or
– A reduction in other government spending, primarily in welfare, which can also be boiled down to two possibilities: cutting welfare directly by reducing the number of public employees, or abolishing previous reforms such as free dental care for young people, free healthcare, etc.
Under the Social Democrats, the Swedish government usually proposed tax increases as a means of enabling greater spending, but this can probably be ruled out as a source of revenue due to the various plans to reduce taxes, such as lower VAT and greater deductions on electricity tax. The reduction in VAT (only on food) is primarily an attempt to stimulate the economy and increase consumption, which in reality benefits the food giants (who have already been among the biggest winners in recent years) as it does not entail any major expenditure for them, since it is financed solely by lower tax revenues for the state.
During the summer of 2025, Ulf Kristersson stated the contents of the new defense budget as follows:
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This involves a loan-financed defense initiative from this year through 2030 until 2035, which could amount to a total of approximately SEK 300 billion, says Ulf Kristersson.
This is the largest investment since the Cold War and indicates a major change in public funding since at least the 1980s. With this loan, the costs will cover the development of defense equipment and capacity, with the ultimate goal of reaching a defense budget of close to 3.5% of GDP (in line with NATO requirements), with additional capital in the form of loans. This was explained in more detail at the press conference held on June 19.
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Today, the government, together with the Social Democrats, the Sweden Democrats, the Left Party, the Center Party, and the Green Party, presents an agreement to undertake a historic expansion of the Swedish defense forces in order to meet NATO’s new defense spending target, which is estimated to be 3.5 percent of GDP, and that the expansion will be carried out swiftly through temporary loan financing. This is a historic show of strength. If NATO were to agree on an additional target of 1.5 percent of GDP for broader defense and security-related investments, the parties agree that Sweden should also achieve this.
The agreement goes on to present specific points that clarify its long-term goals and measures, which every party in the Riksdag has been involved in drafting.
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In its 2026 budget bill, the government proposes that the target for public sector net lending should be a balance target from 2027 onwards, in accordance with the proposal of the parliamentary Balance Target Committee (SOU 2024:76).
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The need for new defense spending, including support for Ukraine, will be temporarily financed through borrowing. This allows for a deviation from the target for public sector net lending in 2026–2034.
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The deviation for military and civil defense may entail an increase in debt of up to SEK 300 billion.
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Of this amount, a maximum of SEK 50 billion may be used for investments in physical infrastructure and the stockpiling of food, medicines, and fuel as part of civil defense.
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Support for Ukraine is not included in the SEK 300 billion ceiling.
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The debt anchor shall remain unchanged at 35 percent of GDP, in accordance with the proposal of the parliamentary committee (SOU 2024:76).
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Public sector net lending must be balanced by 2035. This requires the gradual introduction of financing measures.
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By the end of 2030 at the latest, a new assessment of the security policy situation must be carried out and a path for returning to balanced public sector finances by 2035 must be presented.
In short, this is a major shift from previous economic policies that have dominated since the era of “neoliberalism” – the advance of private capital (often allied with foreign interests) against the state monopoly and its functionaries, social democracy – which arrived in Sweden in the 1980s. If we examine history, and specifically state finances, we can see similarities and draw parallels to a type of Keynesianism. The difference is that it is to be financed with borrowed money instead of being collected through taxes. The state’s actions in economic matters always affect other players in the Swedish market, so let us also analyze the stock market and its development over the past year.
Shares with the most owners in Sweden this year:
Investor B (Wallenberg) -3,98%
Volvo B +2,20%
SAAB B +121,52%
SBB Norden +10,58%
Swedbank A +25,54%
SSAB B +21,93%
Nibe Industrier (Energy development) -17,37%
Novo Nordisk B (Danish insulin) -42,47%
Biggest (relevant) winners on the Swedish stock market this year:
Lundin Gold +146,47%
Axfood +27,74%
Nordea Bank +24,85%
SEB +19,12%
The government has invested in the big monopolies. The increased military budget has protected the arms industry, and to finance this, it has fallen into the same strategy as the rest of Europe, borrowing to fund these expansions, which in turn protects financial capital. This is partly due to the pressure exerted by yankee-imperialism on its weaker counterparts.
The majority of smaller private companies are still struggling and have not seen any major reforms to benefit them. At the same time, there has been no classic conservative policy with large tax cuts and increased migration. With the Sweden Democrats at the negotiating table, labour migration can no longer be justified in the same way, for example through the introduction of a minimum wage that makes it more difficult to import low-wage labour. This is also criticised by the Confederation of Swedish Enterprise.
However, this relatively short list gives us a better understanding of which groups are currently making the most profit in Sweden. We can divide them into three main groups, and then see the reasons why they have seen such a large increase.
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The arms industry (increasingly large contracts with the armed forces, and also abroad)
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Financial capital (New deregulation of loan financing.)
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Food capital (The general crisis, cartel formation, and new tax deductions on VAT)
However, we should primarily look at the link between the arms industry and financial capital, which is likely to become even more closely intertwined if our suspicions are correct. In this case, the government becomes an administrator, opening up and loosening previous rules in order to take on larger private loans. Since the 1990s, the budget has been limited by the fiscal policy framework. Among other things, these budgetary rules impose a “surplus target” which states that the state should, on average, have an annual budget with a surplus equivalent to ⅓% of GDP over a business cycle.
Throughout this period, we have seen an economic situation in which welfare and other government agencies have faced major cutbacks. In the situation that presented itself in the 1990s after the fall of the Soviet Union, there was a general psychosis among the bourgeoisie, which found expression in Fukuyama’s famous quote, “The End of History,” in which a utopian world order of constant peace and growing markets would reduce imperialist wars to a footnote in history. This was, of course, intended as propaganda—but like bad drug dealers, a large part of the bourgeoisie got high on their own product, i.e., fell victim to their own fabrications.
Sweden’s ruling class was no stranger to this psychosis, which is also reflected in how the Alliance’s policies were formed from 2006 onwards. One could go into every detail of what this government did during its nearly decade-long rule, but in relation to the military, it essentially abolished the entire preparedness and infrastructure that had been built up during the Cold War. This had disastrous consequences during the Covid pandemic, where thousands of people died unnecessarily in Sweden because emergency stockpiles had been destroyed and dismantled.
By comparison, the Alliance’s policies were in a typical “neoliberal” spirit, which included undermining the power of trade unions, especially in the deregulation of foreign companies in the construction industry, which opened the door to a wave of low-paid labor from Eastern Europe that still plays a dominant role. There were many different changes that took place in the labor market, but in general, it can be seen that the increased immigration from this period provided opportunities to form a new category within the working class, of immigrants who received increasingly lower wages and poorer conditions, which later came to influence general wage development through wage dumping.
On the issue of immigration in particular, the right wing has made a complete U-turn. From “promising” never to cooperate with the Sweden Democrats, they have now allowed them to draw up immigration policy. When we examine this more closely, we can also see that parts of the Confederation of Swedish Enterprise have been critical of this shift in relation to immigration. There is a contradiction here. Among others, Visita (the restaurant industry association) has sharply criticized the decision to introduce a minimum wage for workers from other countries, where the requirement was recently raised on October 6 to 90% of the Swedish median wage, i.e., SEK 33,900.
“Firstly, Visita is not ”a special interest group mourning the days when it was possible to bring in dishwashers and cleaners from faraway countries and pay them very low wages” […] Many of these have in common that the supply of skilled labor is one of the main challenges. Our criticism of the design of the new rules for labor immigration is shared by a unanimous business community and also by our union counterparts in the Hotel and Restaurant Workers’ Union.
[…] The Swedish model, in which trade unions and employers jointly negotiate labor market conditions, has served Sweden well, and the government’s proposal fundamentally threatens that model.
Thirdly, preventing labor migration on the grounds that jobs should be done by those who are unemployed in Sweden has no basis in reality. No serious employer would choose to hire someone from the other side of the globe, with all the bureaucracy and practical challenges that entails, if they could find the labor they need in Sweden or the EU.
Finally, we naturally share the view that fraud and abuse not only undermine the system as such, but also harm the individuals who are exploited and reputable companies. However, fraud is best combated through increased controls and stricter penalties – not by preventing people from coming to Sweden, working, and contributing to society.”
This has led to anger among Swedish business leaders, who are denouncing the new laws as “anti-business” and “undermining” the Swedish model, in which the social partners themselves set wages, rather than politicians. However, the original plan was to achieve a wage requirement of 100%, which was instead reduced after pressure from the business community. Since the wage floor was implemented, they estimate that labor immigration has decreased by 30%.
In 2009, major changes also took place in the Armed Forces, not least with the abolition of compulsory military service. Instead, the traditional, “popular” military would now become a thing of the past, to be replaced by a professionalized force, precisely in order to increase its capacity for “international operations,” which became increasingly common during this period, including deployments in Afghanistan and Mali.
In addition to all this, significant cuts were also made to military operations. Throughout the period from 2001 to 2013, the appropriation for the Armed Forces was SEK 40 billion per year. The Armed Forces themselves stated that from 2000 to 2007, this appropriation had been reduced by SEK 9 billion, which corresponds to nearly 20% of the original budget at the turn of the millennium.
This major reorganization of the defense forces could hardly have come at a worse time. As Marxists, we know that as long as imperialism rages, these wars will never end. The imperialists’ constant need to grow and dominate new markets will always lead to conflict. But this is where we are now, and we see how quickly the bourgeoisie can change its priorities when the general crisis in the world becomes increasingly urgent in the eyes of the bourgeoisie.
The “opposition’s” economic policy, a state capitalist bullshit sandwich.
At the same time, the opposition also has several proposals that are similar in nature to the current government’s actions. The Social Democrats’ program, and its economic content in particular, was classified by the media as “very left-wing,” and its content can easily be seen as a victory for the internal group that unironically calls itself “The Reformists,” which has long advocated for a growing state with greater public spending. The Reformists are much more open about their proposals and approach, and their program on economic policy states, among other things, that:
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”“That economic policy is guided by the overall goals of full employment, a more equitable Sweden, green transition, and a stable inflation rate.
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That the agreement on the new fiscal policy framework for 2027-2034 be renegotiated early in the next term of office.
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That the fiscal policy framework is based on a separation between an investment budget, where loan financing is permitted, and an operating budget, where a balance target over the economic cycle is the guiding principle.
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That the debt anchor be adjusted to take into account the major global changes in the 2020s.
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That Sweden’s public infrastructure borrowing is increased
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That a state investment bank be established to mobilize cheap, long-term capital for large-scale public and private investments, for example in the following areas:
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New construction and renovation of housing, including energy efficiency measures
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Climate-neutral electricity production and energy storage that meets future needs
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Expansion of local and regional electricity grids
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Expansion and upgrading of water and sewage systems
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Production and distribution of green hydrogen and fossil-free fuels
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Establishment and development of new, green industries such as battery factories, fossil-free steel production, and fossil-free artificial fertilizers
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Infrastructure for carbon capture and storage (CCS and bio-CCS)
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Infrastructure for electric vehicles
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Loans to households for investments in, for example, electric cars, energy efficiency improvements, and energy storage
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That the Riksbank establish an independent electronic payment system based on the e-krona. The independent electronic payment system should enable private individuals to receive salaries, pay bills, and save money. In this way, private individuals can manage their finances without contact with other banks, and a socially important function is assigned to the Riksbank instead of the private banking system.
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Commercial banks should be treated like other companies and bear their own business risks. Under market conditions, this means that banks are forced to hold significantly more capital on their balance sheets than they do today in order to be entrusted with deposits from the public.
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Guarantees for banks’ activities should be phased out in a controlled manner.
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That the Competition Authority and the Financial Supervisory Authority receive increased funding and stronger tools to review and address potential abuse of dominant positions in the financial sector in order to protect consumer interests.
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That a financial market council comprising internationally leading researchers, free from special interests, be established under the government to support efforts to re-regulate the financial sector with the public interest in mind.
However, Markus Kallifatides, leader of the Reformists, describes the Social Democrats’ long-term goals very concretely in an article in Dagens Arena, entitled:
“What’s new about the Social Democrats is that we tell it like it is.”
It’s about a stronger state, greater state and public intervention. More about social control and less about the market. It also includes an aggressive economic policy—a growth pact where the state and the business community join forces, says Markus Kallifatides.
Despite an excellent ability to twist his words in a social democratic spirit to make this seem like something “socialist” at all, it is enough to replace a few synonyms to actually bring out the real meaning of this quote. A blood pact where the state and capital are in the same boat.
In summary, the economic policy of the “opposition” is essentially the same as that of the current government, namely to borrow private loans from financial capital for the state in order to finance infrastructure and military expansion.
This is not unexpected, especially when we see how the previous Social Democratic government acted in favor of foreign capital. Amazon began planning to establish itself early on, and with experience in quickly establishing and seeking a monopoly position in countries where it operates, it began to seek contact not only with representatives of the business community, but also with several members of the political elite. Among other things, former Minister of Enterprise Mikael Damberg (S) was to comment on Amazon’s establishment, but Amazon was first allowed to “correct” the statement as a way of advertising the company.
While the energy crisis affected workers in Sweden, the Social Democratic government introduced an “electricity discount” for Facebook and Amazon, among others, with a 97% reduction in energy tax. In comparison, they paid 0.6 öre per kWh, while a household pays 36 öre, in tax alone. Numerous jobs were promised, including 30,000 jobs in Luleå, which in reality amounted to a total of 56 new jobs.
At the same time, several other industries in the country had to cut back on production, which led to large companies such as Pågen and Holmen Pappersbruk expressing great frustration with the situation. When electricity prices skyrocketed, the situation became more difficult not only for private individuals, but also for several of the large industries, which experienced higher costs. However, in their case, there was no support package or measures to ease the costs, which only came much later in November/December 2022 after the new government took office. This is an example of how the then Social Democratic government actively chose to appeal to the large foreign tech companies while ignoring the relatively smaller domestic capitalists. However, this was abolished on July 1, 2023, by the current conservative government.
However, after a couple of years of operation, Amazon does not appear to have been successful in its goal of monopolizing the Swedish e-commerce market. Compared to other countries, profits have been relatively small, and recently profit margins have been lower than expected and, in some cases, operating costs have increased significantly. In 2023, the company reported a profit of only 6 million, with a turnover of 2.3 billion.
What does this change mean for the working class in Sweden?
With these changes in mind, we can begin to analyze possible scenarios for the future development of the Swedish economy. In the current political situation (autumn/winter 2025), we can see that there have been major economic deregulations regarding the state’s relationship to loan financing, and with an election coming up next year, we can begin to speculate on what the possible outcomes might be depending on which government comes to power.
In almost all election polls conducted by various conservative media outlets, the “opposition” has taken a lead of between 5-10%, assuming that the S, MP, C, and V parties would succeed in forming a coalition government. However, we will return to the consequences of this for the working class and its impact on next year’s election in a later article.
What other outcomes are possible? Could the SD form a majority with a government similar to the current one, but with Åkesson as prime minister with increasing influence? If an opposition took power, how would it differ if it included either the C or the V? In all scenarios, the common denominator would not be too different.