Sweden in the 1970s was the most advanced welfare society that had ever existed. The social reforms implemented during that decade were perhaps the most extensive ever seen. Over a period of ten years, the public sector’s share of GNP grew by 50 percent and a series of reforms vastly strengthened the position of wage earners in the labor market. Most of the reforms now associated with the Swedish welfare state — ranging from the health insurance system and parents’ allowances to daycare for all and free abortion — were initiated or implemented during a few years in the early and mid-1970s, an era symbolized by the radical social-democratic prime minister Olof Palme.

The reforms aimed at creating an inclusive and universalistic welfare society based on a deep-seated faith in a strong state, a planned economy, and active government economic policy — all seen as necessary corrective complements to free-market forces. There were significant tendencies towards a decommodification of the welfare sector. What made this extensive wave of reforms special — besides its comprehensive reach — was its openly statist focus. All central components of the welfare system were financed, owned, and run by the state. A uniform state pension system had been established for all wage earners. The pension funds, which were growing quickly, were controlled by the state. The million units of housing that were built were financed, for the most part, with the help of state-guaranteed loans; a large number of these came, in turn, from state pension funds. And a strong, increasingly social-democratic oriented bureaucracy was developed that could implement the reforms.

The public sector came to spearhead the transformation of society. Would it also become part of a process that would replace capitalism with a socialist system?