Everyone knows that it's not what's being said about the political issues that matters. It's what can be said. Yes, politics is about 'credibility' and even more so about what is defined as 'credibility'. Ed Miliband doesn't look like a Prime Minister. He never will, unless the idea of what a Prime Minister is changes.
Ingvar Carlsson became the Prime Minister of Sweden under the worst possible circumstances. His predecessor, Olof Palme, was shot. On a cold night in February, 1986, at half past nine, walking home with his wife through the streets of Stockholm. We still don't know who did it. Or why. The theories are as many as there are Swedish crime novels.
Five years later, Ingvar Carlsson, the new leader of the Social Democrats, lost the election. It was 1991 and Sweden was in the middle of a severe financial crisis. During the 1980s, Swedish policy-makers had initiated the deregulation of many markets. Between 1983 and 1990 several deregulations of the financial sector were undertaken, all under social democratic governments. The liberalisation of loan restrictions contributed to a very rapid increase in lending. The country saw an extensive and risky credit expansion, largely concentrated in the real estate sector. In the early 1990s a fully developed banking and financial services bubble burst and between the summers of 1990 and 1993 Sweden suffered three years of negative growth. In these years, public debt doubled, unemployment tripled, and the budget deficit increased tenfold. At the time it was the largest of any OECD country - more than 10 per cent.
The centre-right government who took office in 1991 blamed the problems on the social democrats: 'this is the mess we inherited'. They told the story that, once upon a time, there was a centre-left government that over-spent. The tune echoed through the international press. This was 'the death of the Swedish model'. How does one win back power in a situation like that? The financial mess wasn't alone in shaking Sweden's sense of self. The country was torn apart by an infected debate about EU membership. A referendum was to be held shortly after the next election. Does any of this sounds familiar?
What makes the story interesting is that Ingvar Carlsson won back power for the Social Democrats in 1994. And he won on the slogan: 'Sweden is better than this' (1).
Credibility needs consistency
Ed Miliband's mantra at Labour conference in 2013 - 'We're Britain. We're better than this' - might or might not be inspired by Sweden in 1994. The situation Ed Miliband now faces is however similiar enough to make a comparison with Ingvar Carlsson interesting. This has already been pointed out in an excellent article by Jeremy Cliffe last year (Cliffe, 2013).
But the Social Democrats did more than win in 1994. They balanced the budget in four years and between 1994 and 2006 the Swedish economy created 400 000 new jobs, equal to 9 per cent of the labour force. By the end of this period Sweden had the second highest employment rate in the EU. Disposable income increased and inflation remained lower than the European average. And yes, Ingvar Carlsson brought the country into the EU. Paradoxically by not talking too much about it.
When the story about the Swedish financial crisis and its aftermath is told it is usually as a cautionary tale about the need for centre-left parties to propose even harsher cuts than their conservative opponents. Otherwise, the story goes, the left won't be viewed as fiscally credible. The Social Democrats in Sweden did propose the deepest cuts during and after the 1994 election. But the Swedish situation was special in macroeconomic terms. Budget consolidation in a small open economy at a time when the rest of Europe is doing...