Mark Blyth, “The transformation of the Swedish model: Economic ideas, distributional conflict, and institutional change”, World Politics 54 (2001), pp. 1-26

Summary: The transformation of the Swedish model of economic regulation should be understood from an ideational perspective. The institutions of the Swedish model were developed in the 30s and 40s on the basis of a guarantee of full employment for labour and a mutual guarantee of private ownership for business. Over time, however, the agreement began to break down, as labour experienced increasing returns to continuation with participation while business suffered diminishing returns once labour became institutionally powerful enough to challenge businesses’ right of ownership and, indeed, their very identity as capitalists.
Method: Case study.
Important Insight: Stresses the centrality and essentiality of ideational contestation for understanding institutional change. Institutional instability does not necessarily lead to institutional replacement – ideas are important b/c they provide agents with an instruction sheet to agents regarding how to go about replacing unstable institutions. While material resource mobilization is important, ideas must be considered alongside them.
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-key point: the transformation of the Swedish model of economic regulation should be understood from an ideational perspective. The institutions of the Swedish model were developed in the 30s and 40s on the basis of a guarantee of full employment for labour and a mutual guarantee of private ownership for business. Over time, however, the agreement began to break down, as labour experienced increasing returns to continuation with participation while business suffered diminishing returns once labour became institutionally powerful enough to challenge businesses’ right of ownership and, indeed, their very identity as capitalists.
-the result was a response by Swedish business of institutional withdrawal and ideological contestation designed to weaken labour by undermining its supporting institutions. The politics of ideas was key in this regard. During the 80s Swedish business marshalled ideas to contest and thus delegitimate existing institutions and the patterns of distribution they made possible, beginning the process of overturning the Swedish model long before capital mobility or domestic inflation was ever a problem. Economic ideas were a key mediating variable b/w structural change in the economic realm and institutional change in the political realm.
-stresses the centrality and essentiality of ideational contestation for understanding institutional change. Institutional instability does not necessarily lead to institutional replacement – ideas are important b/c they provide agents with an instruction sheet to agents regarding how to go about replacing unstable institutions. While material resource mobilization is important, ideas must be considered alongside them.
-while structural factors may explain why a particular institutional equilibrium becomes unstable, such a model does not explain why the new equilibrium takes the specific form that it does. Ideas are institutional blueprints, and thus their possession and promulgation becomes a crucial power resource and an integral component of institutional change.
-ideas are weapons in distributional struggles, since because existing economic institutions are the result of past economic ideas about how the economy works, the development and employment of economic ideas is a prerequisite of fundamental institutional change.
-these past ideas serve as cognitive locks. Once institutionally embedded, ideas can have effects independent of the agents who originally deployed them.