The Meidner Funds: A Swedish Perspective on Alternative Models of Ownership

by Mio Tastas Viktorsson

Last June, an important report commissioned by key leadership in the Labour party was published. The report, titled “Alternative Models of Ownership”, provides an overview of structural economic problems in the UK. It argues that these problems stem from private property ownership, and details policies to replace private ownership with democratic economic management. New Socialist published a piece dissecting it soon after its publication, highlighting and discussing the important areas covered within. There are, however, yet some important practical perspectives to consider in the debate on alternative ownership models, and so I’d like here to discuss the report in the context of an historical policy proposal in Sweden: the Meidner funds.

Sweden in the seventies

During the seventies, like most of the century, Sweden was dominated in politics by the Social Democratic Party (SAP), and in the labour market by the blue-collar trade union confederation Landsorganisationen (LO). By implementing industrial policy through both of these institutions, the labour movement was able to set up a system balancing high employment, high general wage growth, low inflation, and equal wages for equal work. Their method of doing this, however, featured wage constraint in the most productive firms, which enabled certain owners of those firms to make massive ‘excess’ profits. Meanwhile, the demand for real influence on the management of work and the workplace had reached a critical point, as workers were not content with just the newly implemented soft co-determination laws.

The union researcher Rudolf Meidner was tasked with resolving these matters, and came up with a proposal, now infamous. This proposal involved redirecting and reinvesting part of profits in the firm on behalf of the workers, via a network of union-managed branch funds. If implemented in their original form, the union funds would eventually control much of the Swedish economy. In the end, backlash from within the Social Democratic Party and the private sector made sure that didn’t happen.

Labour's Alternative Models of Ownership report

Reading Labour’s report, it’s good to keep Meidner’s fund proposal in mind. Much of the report deals with cooperatives, and it is particularly interested in the solution to cooperatives’ lack of access to finance, as this often leads to demutualisation or acquisition. Drawing from case studies and work by economist Jaroslav Vaněk, the main thrust is that cooperatives are most hardy when they rely on ‘shelter institutions’ willing to invest and provide financing without expecting control over the cooperative firm. The go-to candidate for such a shelter institution, according to the report, would be banking networks for this purpose based on Industrial Common Ownership Finance (ICOF).

Many good things can be said about the merits of the basic ICOF approach, but looking back at Meidner’s proposal reveals another possibility. Structured appropriately, the proposed network of funds is an excellent alternative candidate for taking on the function of Vaněk’s shelter institution, as they can use the resources and control made available through the funds’ capture of private-sector profits. This dual function implementation would facilitate the tying together of cooperative structures with other forms of worker’s control, and thus contribute to broader venues of economic planning and management. More importantly, since the funds are grounded in unionism and the labour movement, the cooperatives would become structurally tied to the world of labour.

The related idea that cooperatives shouldn’t be just “simply trading organisations” is explored by New Socialist in the dedicated dissection of Labour’s report. Cooperatives need integration into a ‘socialist system of values’ facilitated and institutionalised by social movements. What better way to do this than sheltering them within union-managed structures?

Using Meidner-style funds to help establish a socialist system of values is supported by Rudolf Meidner’s own writing on the fund proposal. Meidner never intended his proposal as “the final step” in “implementing socialism”, despite many portrayals as such by opponents and less savvy proponents. On the contrary, he thought of the funds as a first step. The resources and control made available by the funds would be partially used to develop the network of institutions and civil society (often tied to the SAP and LO), the social movements, and the world of labour. These resources would enable them to prepare the workers and become the tools necessary for the workers to transform the economy from the ground up. ‘Sheltering’ cooperative firms with the funds and integrating them into a socialist system of values is thus a natural extension of Meidner’s original argument as well as New Socialist’s analysis of the Alternative Models of Ownership report.

A first step

None of this is to say that the Meidner funds as historically put forward constitute a ready-made, fully developed proposal to be copied and pasted into twenty-first century policy with a shelter institution amendment. The UK economy is very different to that of Sweden in the seventies, in terms of globalisation as well as the structure of the labour market. Making the funds double as shelter institutions only increases the necessity of revisiting how the funds would be structured, such that they complement economic policy in a way that solves problems here and now.

Beyond the technical details, there are the strategic concerns. The high likelihood of resistance to economic-democratic reforms today is mirrored in the history of the Meidner funds. That is, their defeat through a tooth-and-nail struggle by established political powers and private interests. Development of policy starting with the Alternative Models of Ownership report, with or without Meidner funds, must continue in tandem and in subordination to the adjacent discussions on how to build the political power and base necessary for enactment of such policy.

News of the newly established 'Community Campaign Unit' serves as a worthy postscript to the Alternative Models of Ownership report, as evidence of a commitment to these things existing within today’s Labour Party. The same is true of continued sewer socialist experiments like those at Preston council, which are greatly celebrated by the report. What's more, the Alternative Models of Ownership conference just took place in London, and unlike the pro-fund rallies of the Swedish seventies it was attended by both leadership and members. From the report’s publication last June, through this conference and beyond, I hope the Meidner fund perspective can help the participants — and you — keep the discussion alive and, more importantly, lay the groundwork for a truly transformative movement.

Photo: Joe Bambridge

New Socialist is, and will always be, not for profit. Help us sustain and develop this project by subscribing on Patreon.