Sweden does a hard pivot away from socialism?

snitzoid
1 hour ago
10 min read

In addition to unlocking the economic power of capitalism, Sweden limited immigration starting in 2015 (particularly from the Middle East). The result is a population that has less dependance on government support. The same isn't true of Germany and France.

IMP note, most immigrants to the US have historically assimilated well into our culture and produced net positive economic/social effects on our society...the same metrics don't exist for recent additions to the EU.

The World’s Most Surprising Capitalist Makeover Is Under Way in Sweden

The shake-up of cradle-to-grave care is lowering government spending, spurring innovation and stirring fears about those left behind

By Tom Fairless, WSJ

May 11, 2026 9:00 pm ET

STOCKHOLM, Sweden—This paragon of collectivism is pivoting toward rugged individualism.

For decades, Sweden was shorthand for the brand of high-tax, high-spend government that managed people’s lives from cradle to grave through state-run hospitals, schools and care homes.

No longer. With little fanfare, this Nordic country of 11 million has embraced capitalism.

Today, nearly half of primary healthcare clinics are privately owned, many by private-equity firms. One in three public high schools is privately run, up from 20% in 2011. School operators are listed on the stock exchange.

Sweden’s experience has lessons—good and bad—for other rich countries, including the U.S., where New York City Mayor Zohran Mamdani is looking to emulate parts of the state-centric model such as universal child care and city-run stores.

The capitalist makeover has allowed Sweden to do what few industrialized countries have managed in recent years: shrink the size of the state. That has enabled the government to sharply lower taxes and, economists say, sparked a surge in entrepreneurship and economic growth.

Its total public social spending bill—which includes healthcare, education and all welfare payments—has fallen to 24% of gross domestic product, similar to the U.S. and well below the over 30% for nations like France and Italy.

Sweden’s economy is expected to grow by around 2% a year through 2030, roughly the same pace as the U.S. and double the growth rates of France and Germany, according to an April forecast by the International Monetary Fund.

“Sweden is a real land of opportunity,” said Elisabeth Svantesson, the country’s finance minister. “I want people and capital to stay here and grow.”

While many European countries are raising taxes, Svantesson has cut them three years in a row. Sweden’s top income-tax rate has fallen close to 50% from nearly 90% in the 1980s.

Considering the overall tax burden, “it’s more attractive here…than the U.S.,” said Conni Jonsson, the billionaire founder of EQT, a Stockholm-based private-equity firm.

Critics say the paring back has gone too far. Inequality is soaring in this traditionally egalitarian country. Gang violence has surged in dozens of immigrant-heavy suburbs, creating areas where local criminal networks challenge state authority and hinder policing. A public debate is raging over for-profit schools, which critics say make money by skimping on playgrounds, libraries and staff.

“The American perspective of Sweden is so far off from reality,” said Andreas Cervenka, a Swedish author who recently returned home after living in California. “We are going from a society which is like, ‘One for all, all for one,’ to ‘Everybody is on their own.’”

Spurring entrepreneurs

Sweden didn’t always have a big public sector. The country climbed from being one of the poorest to the third-richest country in Europe over 100 years through 1970 without high levels of taxation.

But starting in the 1960s, the center-left Social Democratic Party—which dominated the country’s postwar politics—sharply raised taxes and spending, ultimately taking government spending as high as 70% of GDP by the 1990s.

The changes triggered a long period of weak growth, stagnant after-tax incomes and ballooning budget deficits and debt that culminated in a banking crisis in the early ’90s.

Under pressure from investors, the government instituted sweeping economic reforms over the next two decades. They included cuts to unemployment benefits and housing subsidies and the privatization of public services, as well as tax cuts and a reform of the pension system to make it more affordable. Strict limits were imposed on government debt. (Sweden’s debt to GDP is a meager 36%, compared with 129% for the U.S.) In the mid-2000s, the government eliminated wealth and inheritance taxes.

The result: Wealthy entrepreneurs who had fled Sweden’s high taxes have been returning, said Jacob Wallenberg, a member of the Swedish industrial dynasty that owns big stakes in Ericsson, Saab and other large companies.

When Wallenberg was growing up in the 1960s and ’70s, Swedes weren’t very wealthy, he said. The country, he noted, famously only had one Rolls-Royce car.

Today, international polling suggests Swedes are far more open to wealth than the French, Germans, Spanish or Italians, and more positive about the market economy than any European country except Poland. Sweden’s Rolls-Royce count is now over 800, and when the automaker decided to open its first showroom in Scandinavia in 2016, it chose Stockholm.

As the state retreated, the private sector expanded. A study published in April by the Stockholm School of Economics found that after Sweden removed inheritance and gift taxes in 2005, private firms with potential family successors grew faster, invested more and paid higher corporate taxes than firms without natural heirs.

Businesses championed new technologies in a bout of risk-taking with few equivalents in a region dominated by older industries and ambivalent about tech.

Niklas Zennström, the billionaire founder of internet-telecommunications pioneer Skype, said the privatizations helped fuel innovation in sectors like telecoms, which have underpinned the country’s tech boom. Zennström himself started his career building fiber-optic networks for a private telecom operator in the 1990s.

“Sweden was very early with mobile phones, with a high penetration of 3G and competition in mobile networks,” Zennström said. “There was a sense of entrepreneurship.”

The country saw more than 500 initial public offerings over the 10 years through 2024, more than Germany, France, the Netherlands and Spain combined, according to a landmark 2024 report on Europe’s economy by former European Central Bank President Mario Draghi. It has now moved ahead of the U.S. in the number of billionaires per capita, thanks to a thriving tech startup scene and videogame industry that has produced hits like Minecraft and Candy Crush.

‘More for less’

At St. Göran’s hospital in downtown Stockholm, radiologist Karin Dembrower huddled over a computer screen, pointing to tiny light spots indicating cancer on a black-and-white image.

“We cannot see with our eyes that there is something going on here but somehow the AI is seeing” it, she said.

For nearly three years, Dembrower has pioneered the use of artificial intelligence at the hospital to spot breast cancer. The AI is so quick and accurate at detecting cases among the 80,000 women who get screened here a year that waiting lists at Dembrower’s radiology department have shrunk dramatically.

She and her colleagues have stopped working evening and weekend shifts. They have more time to run advanced diagnostics for women who’ve been diagnosed with cancer. St. Göran’s now regularly receives referrals from overcrowded hospitals with no AI.

Like all Swedish hospitals, St. Göran’s is publicly funded. But it is owned by a private hospital operator, Capio, and its chief executive trained at McKinsey and talks about KPIs and the Toyota model of lean management.

That mentality is one reason St. Göran’s rolls out productivity-enhancing tools like AI far faster than its state-run rivals.

“We do more for less,” says CEO Gustaf Storm. He estimates it costs 15%-20% more at public Swedish hospitals to treat conditions such as appendicitis than at his hospital.

Aida Hadžialić, a center-left politician who leads the Stockholm region government that is responsible for healthcare, is a fan. She says St. Göran’s is more efficient at producing good outcomes for patients, with lower reimbursements, than the public system.

Private competition has had broad benefits across the industry. At a time when aging populations are costing governments around the industrialized world more money every year, healthcare spending per capita in Sweden grew around 1% a year on average between 2014 and 2024 after adjusting for inflation—roughly half the pace in the U.K. and a third of the pace in the U.S., according to the Organization for Economic Cooperation and Development.

At St. Göran’s, staff brandishing iPad minis closely track patient data while digital systems monitor costs. Patients’ vitals are automatically uploaded into a central system. A traffic-light system helps staff prioritize cases.

The hospital has been testing an AI-based patient-observation system that alerts staff when elderly patients are at risk of falling out of bed, which leads to longer hospital stays.

The changes are even more pronounced in primary care: Nearly half of doctors’ offices are now private, and tech upstarts are disrupting the sector. Critics say it’s also disrupting care, with a concentration of private doctors in wealthier urban areas, where patients are often cheaper to serve, leaving state-run facilities with more complex, expensive cases in poorer or rural areas. That, in turn, has fueled worries about a brain drain.

When Ben Cooper, a Brit living in Stockholm, needed to check in with a doctor about his asthma recently, he didn’t leave home. Instead, he video-called the physician through an app on his cellphone.

The app, built by local company Kry, was launched in 2015 and now has more users in Sweden than Netflix. Virtual appointments are available 24/7, and doctors speak foreign languages, including Arabic.

“You open the app, put in your symptoms, they give you a choice of appointments. Never once have I experienced that the doctor has been late,” said Cooper, contrasting the service’s punctuality with frequent delays in the U.K.’s state-run National Health Service.

Private ownership creates efficiencies that allow Kry to save money and serve more patients, said Kalle Conneryd Lundgren, a physician who is Kry’s CEO.

Digital appointments tend to be shorter, saving time for both patient and doctor. The company recently started preparing medical notes and other health certificates using AI, which has reduced administrative time by 40% in the past year, he said.

Physicians can suggest other improvements to the app, which has resulted in changes such as a chat function performing certain checkups, said Bjorn Stridh, a physician who works at one of the company’s clinics inside an upmarket shopping mall. The waiting room resembles a premium spa, with wooden chairs and an espresso machine.

Kry’s list of registered patients is growing at 10% a year, Lundgren said. The company is also expanding fast in other European markets like France, where it has over a million visits a year.

Winners and losers

Sweden’s transformation has many winners, mainly middle-class families who own their homes and have benefited from rising incomes and surging house prices, said Elinor Odeberg of Arena Idé, a progressive think tank in Stockholm.

The transformation also has losers: renters outside big cities, where there are fewer new jobs and shrinking public services, and urban, low-income migrant communities that have historically been more dependent on the state.

The share of Swedes aged 20 to 27 living at home with their parents—traditionally among the lowest in Europe—rose to 26% in 2023 from 15% in 1995 as housing costs increased, said Ola Palmgren, president of the national tenants’ association.

With less income redistribution, local governments in Malmö and elsewhere are being squeezed as central government funding has fallen, making it harder to deliver public services like education, said Malmö Mayor Katrin Stjernfeldt Jammeh.

Public infrastructure investments, meanwhile, have been low over the past two decades, leading to delays and patchy service in the train network, with poorer Swedes feeling the bigger pinch.

“They took away resources from sectors that were supposed to protect the society,” said Jonsson, the private-equity entrepreneur. “But of course for the dynamism in the economy it has been good.”

Stefan Fölster, an economist and former Finance Ministry official, argues that the vast majority of Swedes have benefited from the reforms. Households’ inflation-adjusted incomes have doubled on average since the 1990s, after stagnating during the 1970s and ’80s under high taxation, Fölster noted.

Even so, the government is responding to concerns. In November, parliament voted to replace a longstanding requirement to maintain a state surplus with a new balanced-budget rule, allowing the state to loosen its purse strings. The government is also pushing through reforms aimed at tightening rules to run a school for profit so that only long-term, high-quality operators remain.

“It was right to move in the privatization direction,” said Lars Calmfors, a prominent economist and longtime adviser to the Finance Ministry who helped shape the country’s economic reforms. “But we probably overdid it.”

School grind

Perhaps nothing highlights the promise and peril of privatization more than education, where Sweden’s embrace of the market goes even further than the U.S.

The country has increasingly allowed public schools to be run by either nonprofits or for-profit companies. Roughly one in 10 teenagers now attends a secondary school operated by AcadeMedia, which is listed on the Stockholm stock exchange.

These schools receive public funds based on enrollment, but what they do with that money is largely up to them. They must follow the national curriculum, and their students take the same national exams as public-school students.

In the southern city of Malmö, Bryggeriets high school is operated as a nonprofit after an initiative by the local skateboarding association. Every student gets a MacBook Air—an upgrade from the midrange laptops given to most Swedish high-schoolers—and lunch is free at a cafeteria perched above a cavernous indoor skate park. There are two teachers per class, compared with the standard one teacher per 25-30 students.

Principal Marie Svensson, who changes lightbulbs herself, said she saves money on maintenance and administration to invest in more teachers, art exhibitions and equipment like film cameras. The school rents cheap space inside a former brewery for its 191 students.

“It’s kind of free here, you get to explore,” says John Wiforsen, a student who travels two hours each way to get to the school from central Sweden. Some Danish students cross over the bridge from Copenhagen every day.

Private direction allows for nimble decision-making. When funding for public schools was cut recently, Bryggeriets stabilized its finances by quickly taking in more students and dividing two classes into three. That same decision would have taken up to a year in the state system, said Svensson, who previously worked in public schools.

While nonprofit schools like Bryggeriets can work, Malmö Mayor Stjernfeldt Jammeh and others worry for-profit schools have incentives to cut corners because they are set up to make a profit. “These operators earn money by dividing pupils into different groups,” she said.

Privately run schools are far better at recruiting the best students and wealthiest families. That leaves poorer kids with more dysfunctional public schools, which have higher costs because they are dealing with students with greater needs and a growing percentage of children of immigrants whose first language might not be Swedish.

Bryggeriets is less than a mile from one of Sweden’s most notorious housing projects, Rosengård, where soccer star Zlatan Ibrahimović grew up. Principal Svensson said few children from Rosengård attend the school because their parents tend to prefer a more conservative approach.

Sweden has recently fallen down international education rankings, a shift that proponents of free schools attribute to high levels of immigration. Private-school critics argue that when you cluster the high-performing students in one school and the struggling ones in another, the overall national average suffers.

Underscoring the country’s new psyche, school choice is now deeply entrenched in Sweden, with broad backing among parents and within both the current center-right government and center-left opposition Social Democratic Party.

But ahead of September’s general election, fractures over for-profit schools—and societal shifts—are surfacing, and are expected to play a large role in campaigns. The Social Democrats are promising a ban on school profits. The party is also calling for higher investments in public services and social welfare and criticizing past tax cuts for the wealthy.

“The system works well for some people,” said Åsa Plesner, a former school administrator. “It’s really a break from Swedish universalism.”