FREE TRADERS AND PROTECTIONISTS

During the first half of the nineteenth century, free trade made its European breakthrough. For a limited period following the Napoleonic Wars, the mercantilist tarriff-and-rule system was fully restored. However, in the industrial society that was now emerging, with its vibrant activity, increased production, population growth, urbanization, and improved communications, there was no place for economic restrictions. A steadily growing quantity of goods was being permitted to flow more and more freely among peoples.

For a long time, Sweden did not share the economic growth of the Continent. It was a poor, backward agrarian country with a number of restrictive regulations governing trade and business. But a few reforms during the mid-nineteenth century resulted in full economic freedom, even in rural areas. A crucial factor in this development was that the United States and certain European states began to carry out a policy of retaliation toward Sweden's extensive tariff system. Another crucial factor was the intensive economic boom of the 1850s. Prices climbed very rapidly. It became necessary to suspend tariffs on both grains and animal feed. The reform was originally intended as a temporary measure. But circumstances made it permanent.

In theory, the doctrine of free trade was universal.

OWNERSHIP AND WELFARE ECONOMICS

Socialism derives its specific character and problems from its attitudes toward ownership.

The ideologies of the nineteenth century sometimes described ownership as the mainspring of progress, at other times as the root cause of the miseries of the class system. The former position was espoused by representatives of bourgeois liberalism, an ideology closely associated with the industrialization process. The latter was the view of socialist theorists, who generally believed that it would be necessary to interfere with the right of private ownership in order to create a happier society in the future. Karl Marx developed this view into a provocative theory of industrial development. He taught that mass poverty made it impossible for capital owners to find customers for all their products. As a result, violent crises would arise in the capitalist system. In the end the system would be hit by a major catastrophe, in which the economically exploited workers would seize power and transfer industrial companies to public ownership. Toward the end of the nineteenth century, practically all Social Democratic parties embraced this program.

In Sweden, the early Social Democrats put all their energy into political reforms unrelated to the ownership of capital. Together with the Liberals, they struggled for universal suffrage and parliamentary government.

In this work I have attempted to fulfill two purposes. The first was to write a basic textbook on Swedish politics during the past one hundred years. Rather than provide an exhaustive description, my account has focused on a handful of the most important controversies, beginning with the tariff dispute of the 1880s, that saw the birth of the modern party system. It examines the turn-of-the-century conflicts on suffrage reforms and the introduction of parliamentary government, then analyzes the crisis agreement of the interwar years – which laid the groundwork for the Swedish welfare state and its expansion of the public sector – and continues with studies of the postwar political battles on the economic planning issue and the compulsory supplementary pension system. The book closes with the present-day controversies on nuclear energy and government-run employee investment funds.

My second purpose was to present a theory of politics that has attracted increasing international interest – rational choice theory. Without denying the importance of other theories, it calls attention to the aims, calculations, and maneuvers of political actors; in game theory, it has found a concise format for summarizing its research findings. My own contribution has primarily been intended to show how rational choice theory can be applied empirically, because the disputes included in my book serve to illustrate various political strategies, games, and decision rules discussed by the theoreticians.

THE VOTER'S PARADOX

In more than seventy years, only one political party has succeeded in attracting a majority of the Swedish electorate during peacetime: In 1968 the Social Democrats received 50.1 percent of the vote. Two years later, their share of the total vote fell by nearly 5 percent. Whereas democratic theory has been based on the assumption that the majority makes decisions, political practice has meant government through coalitions or other agreements between various minorities. As a result, politics has largely become a tug-of-war among parties with differing views. Those who currently belong to the winning coalition must constantly weigh their positions on a variety of issues. How far can they pursue their own policy without destroying their cooperation? How valuable is their coalition as such? How should parliamentary successes, extracted at the cost of concessions on substantive issues, be weighed against the voters' reward for pursuing a consistent policy? The level of political drama was heightened in the 1970s by the Swedish constitutional reform, which introduced a unicameral system and strictly proportional representation. Under these circumstances, the Swedes have seen their politics increasingly turn into a game of bargaining among minorities. Politics has become a series of deals and compromises, surprising initiatives and sudden shifts in the structure of majorities, agonized indecision and sweaty press conferences.

The Cambridge series in the Political Economy of Institutions and Decisions is built around attempts to answer two central questions: How do institutions evolve in response to individual incentives, strategies, and choices; and how do institutions affect the performance of political and economic systems? The scope of the series is comparative and historical rather than international or specifically American, and the focus is positive rather than normative.

Leif Lewin uses rational political models to analyze significant political events. His models explain the interactions of rational agents pursuing their goals in a political context constrained by the goal-seeking activities of other rational actors. His events are taken from the last century of Swedish political (especially parliamentary) history, but readers will easily find parallel episodes elsewhere. Lewin employs both formal reasoning and careful analysis of historical materials to analyze cases that range across the conflict between free traders and protectionists in the late nineteenth century, the introduction of universal male suffrage and electoral reform in the early twentieth century, cooperation between social democratic and bourgeois parties on the planned economy in the late 1940s, and the decision to utilize and develop nuclear power plants in the late 1970s.

Lewin's game-theoretic analysis focuses on the choices of political actors. Many of these readily found winning strategies.

MANEUVERING ROOM IN POLITICS

The concept of politics as rational action was defined in the introductory chapter of this study in two steps: first, as the ability of politicians to rank their preferences; and second, as the ability to act strategically – that is, to maneuver in such a way that as many of their preferences as possible can be realized at the present time, without thereby diminishing their long-term prospects.

On the basis of this definition, we have been able to follow our politicians as they have used strategic action to further their own positions on a number of major controversial issues in Sweden during the past century. The exclusive pursuit of their first preference has rarely been the best way for these actors to promote their interests. But by modifying their preferences in various ways, linking them with other issues, referring them to other decision-making bodies, maintaining silence about them, or – on the few occasions when this is considered suitable in spite of everything – by uncompromisingly arguing their case in order to force their opponent into retreat, the winners of these games have managed to increase their influence on impending decisions.

What should be our attitude toward such strategic action in politics? Is it an acceptable means of achieving political goals? Or is it a morally dubious undertaking that only reinforces our “contempt for politicians,” to use a phrase that is fashionable in Sweden today?

PLANNING FOR THE POSTWAR PERIOD

The outbreak of World War II brought a pause in the debate on economic planning. The ideological dispute on the role of the state in the business sector gave way to a truce as wartime regulation was imposed on the economy. Under the leadership of Per Albin Hansson, a grand coalition government was formed. It included representatives of the Social Democrats, Conservatives, Liberals, and Agrarians. The detailed regulation of the country's economic life that now took effect was supported by all social classes. Employees refrained from demanding extra pay to compensate for high wartime prices. Consumers felt called upon to accept a rationing system, manufacturers went along with price freezes and government direction, and special-interest organizations relinquished their independence and participated in the wartime economy as administrative bodies. To express this consensus, different groups chose stylistic approaches that best suited their varying traditional world views. In the conservative camp, it seemed natural to appeal for national unity in the face of danger and to call on special interests to subordinate themselves to the best interests of the country. In the Social Democratic camp, leaders preferred to describe the necessary economic regulation in terms that might conjure up the image of an economy dedicated to meeting social needs, which had always been the ideal of socialism.

FOUR CONCEPTS OF MONARCHY

Ever since the 1880s, the monarchy had shown newly awakened political ambitions. During the tariff dispute, Oscar II had taken the opportunity to demonstrate his power by using his constitutional prerogative to dissolve the Second Chamber, which had long been regarded as a dead letter. Sweden's system of government, the king reasoned, was “constitutional but not parliamentary in the modern sense of this word.” Consequently, the “verdict of the ballot box” alone should not determine the shape of the government. During the suffrage dispute, the king had once again used his prerogative, this time negatively by citing the right of the monarchy in principle to refuse to dissolve the Second Chamber when there were good reasons for adopting such a position. The new king, Gustaf V, who assumed the throne in 1907, shared his father's constitutional views in all essential respects.

The same period had also witnessed the emergence of a more and more ideologically conscious Left, with its roots in the political forces that members of Parliament had unwillingly helped unleash during the tariff dispute. Leftists advocated parliamentary government, as opposed to the division of powers specified in the Constitution. The controversy concerned the role of the king in the formation of a government.

I. Introduction

The energy picture in the ASEAN region is quite diverse, viewed from either the demand or the supply side. This diversity reflects differences in stage of economic development, energy resources endowment, and other factors — including energy policies. Per capita primary energy consumption in the ASEAN region in 1984 ranged from 29.3 barrels of oil equivalent (boe) in Singapore to 1.4 boe in Indonesia. Similarly, the share of non-commercial energy (fuelwood, agricultural waste, etc.) in total primary energy consumption in 1984 varied from an estimated 38.7 per cent in Indonesia and 26.4 per cent in Thailand to only 9.6 per cent in Malaysia and almost nil in Singapore.

The six ASEAN countries, however, share a common feature in that they assign great importance to the petroleum industry in their economies. Indonesia, Malaysia, and Brunei are important regional producers and net exporters of oil and gas. The Philippines, Singapore, and Thailand are net importers of energy in general, and oil in particular. None the less, all three countries also have a sizeable petroleum refining capacity. Singapore, in fact, is the third largest refinery centre and third largest oil trading centre in the world. Thailand has greatly stepped up its efforts over the past few years to reduce dependence on energy imports by promoting the production of natural gas and oil, in addition to coal (lignite). In 1985, production of natural gas and condensate by the Union Oil Co. in the Gulf of Thailand has reached the rate of 327 million cubic feet per day (mmcfd) and 14,136 barrels per day (bpd), respectively. Production of crude oil in the North by Shell has amounted to 20,688 bpd. The Philippines is also producing some oil from ten producing wells.

China, being an important regional producer and a net oil exporter, has developed over the years various relations with ASEAN countries in the field of energy generally and petroleum in particular.

Every society must face the fundamental question of the appropriate extent of family responsibility for older people: for their emotional and financial support, living arrangements, and care when ill. This question needs to be examined in the context of sweeping changes in the economy and society that are everywhere leading to a redefinition of family life, and changes in family structure and functions. How does the increasing specialization and mobility of modern life affect the scope of family control? How do these family changes in turn affect the aged? “Ironically, modernization brings not only the greater longevity of old people but also changes in family size and composition that make family care more problematic” (Giele 1982, p. 43). Decreasing family size means fewer potential family caretakers for the elderly person, and the increasing tendency for married women to be in the paid work-force also works against their availability to care for the aged.

The impact of development on the position of the elderly has been the subject of considerable research and speculation (Treas and Logue 1986). A prominent view is that a general decline in the status of old people is associated with modernization (Cowgill and Holmes 1972), whereas others note the better income and care that well-paid workers can afford to give their parents or other aged relatives in modern society (Inkeles and Smith 1974). Cowgill (1974) singled out several factors associated with development — modern health technology, economic technology, urbanization, and increased education — and concluded that each tended to reduce the status of the elderly by depriving them of meaningful roles through early retirement, trapping them in more traditional and less rewarding jobs, separating them from their families, and lowering their social status relative to the young. At the same time, he recognized that several benefits accrued to the elderly from development, and observed that in the more economically developed countries, there was increasing attention to their needs and interests.

I. Introduction

Export processing zones (EPZs) began to make their appearance in Southeast Asia in the early 1970s, when several countries in the region shifted their industrialization and trade strategies in favour of manufactured exports. Several member countries of the Association of Southeast Asian Nations (ASEAN) have established EPZs. Singapore may be considered as one big EPZ, in the sense that industries in this city-state enjoy certain privileges which are quite similar to those offered to EPZs elsewhere in the region. Brunei has no EPZs. The other four ASEAN countries, namely Malaysia, Indonesia, the Philippines, and Thailand, have a number of EPZs. It will indeed be an interesting exercise to systematically study their experience from which some valuable lessons may be learned.

EPZs refer to designated industrial estates specializing in the production of manufactures meant mainly for exports, and constitute enclaves within the economy enjoying favoured treatment with respect to imports of intermediate goods, corporate taxation, provision of infrastructure, and waivers from certain regulations.

While a wide definition of EPZ, as adopted by the World Export Processing Zones Association would include the Singapore and Hong Kong city-states, a narrow definition would restrict the use of the term EPZ to a distinct physical area which is cordoned off. In Malaysia, these zones are referred to as free trade zones (FTZs), as the term emphasizes the enclave nature of the operation, that is free from the trade and customs regime of the country. None the less, we shall use the term “export processing zones”, as the main activity of the zones is processing for exports rather than trading as such.

The enclave nature of the operation makes the EPZs particularly attractive to transnational corporations (TNCs), although the investments in the zones are not entirely foreign. TNCs are closely associated with EPZs, as the latter make it possible for TNCs to spread out their production facilities on a world-wide basis.

PATTERNS OF WORK AND RETIREMENT

It was noted earlier that most of the aged who work in ASEAN countries except Singapore are in agriculture, and that the decline in labour force participation rates as age increases is only very gradual. As shown in Tables 5.1 to 5.3, the rates are universally higher in rural than in urban areas. This probably reflects, not so much the need for the aged to work, but rather the integrated household economy in the rural areas, in which the elderly play a variety of roles. These include continued participation in the management of and actual physical work in the farm holding, in return for their support from the proceeds of the household's economic activities, support which normally continues after they have become too old to perform any economically productive activities.

Table 5.4, showing the reasons for stopping work among those who have stopped, supports this general thesis. Aside from the reason “reached retirement age”, which was particularly important for males in Singapore and the Philippines and probably reflects mainly formal sector government and private employment, the main reason given for stopping work was “ill health”. This would certainly not be the case in Western societies, where standard retirement ages apply and pension systems then take effect, and where the proportion of the workforce who are employees is much higher. But in ASEAN countries, some level of involvement in the work-force is normal until increased ill health related to ageing makes this no longer possible. This continued involvement in the work-force helps provide the justification for the aged to maintain their status as head of household.

Table 5.5 (for Thailand and the Philippines) confirms the tendency for old people in these societies to continue to work as long as they are physically capable of it. Even among the group aged 75+, around half of all respondents wanted to work.

SOURCES OF FINANCIAL SUPPORT

In Western countries, social security is the most prevalent source of income for aged individuals.

The proportion of old people is still very small in ASEAN countries, when compared with Western countries. In 1980, the proportion of the population aged over 60 was 7.2 per cent in Singapore, 5.7 per cent in Malaysia, and around 5 per cent in Thailand, the Philippines, and Indonesia. In Western countries, by contrast, this proportion ranges between about 12 and 30 per cent. The question might then be raised as to why it is necessary at this time to consider ageing a phenomenon deserving of serious attention in the ASEAN region. The answer is not that an ageing crisis is just around the corner; it is not. By the turn of the century, the proportion of aged in ASEAN countries will still be below 8 per cent, except in Singapore. But in all cases, the proportion will be rising. In other words, the number of old people will be increasing faster than those at all other ages. This trend will continue at an accelerating pace in the early twenty-first century. Therefore, what is faced is not an immediate crisis of ageing, but rather a steady trend which will lead to many changes in the way societies work, and raise many questions about appropriate approaches to problems raised by the steadily increasing share of old people in the population. The time to begin examining these issues is now, not later when the issues have assumed major importance and some of the options may have been foreclosed.

Population ageing over the next decade or two will be of a different order of magnitude in Singapore compared to the other ASEAN countries. Cowgill and Holmes (1970) have proposed that populations should be considered as “aged”, “mature”. “youthful”, and “young” on the basis of the proportion of total population aged 65 and over:

Translated into proportions aged 60+ (the measure used in the present study) the definitions would be roughly as follows: