The Democratic Socialists Need a New Model

By Noah Rothman

Wednesday, May 13, 2026

 

The capitalist enterprise is alive and well, even in that “paragon of collectivism,” as the Wall Street Journal put it: Sweden.

 

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

 

In addition, Sweden’s market-oriented reforms have transformed it into an investment hub. “Sweden’s economy is expected to grow by around 2% a year through 2030,” the report added — a level of growth that would keep pace with the United States and eclipse its industrialized European neighbors, like France and Germany.

 

Even more impressive is what Sweden is doing with its newfound wealth: shrinking the size of the state. Stockholm has lowered its overall tax burden, reduced its health care and welfare expenditures, and created incentives for private-sector actors and charities to take on what were once government mandates.

 

Fairless’s report might come as a shock to American progressives, many of whom still hold up the Scandinavian social compact as the model of what state-dominated capitalism should look like. The Scandinavian states, Bernie Sanders said earlier in the decade, observe “strong democratic socialist principles,” and they have some of the “best” and most accessible public services in the world as a result. Alexandria Ocasio-Cortez, too, advocated importing the Swedish model — at least, their confiscatory tax rates on their highest earners. The 2018 PBS documentary “Sweden: Lessons for America?” found a striking number of Americans who believed both that the Swedish model was socialist and that it was superior to America’s.

 

This misconception about the relative level of socialism that prevails in Scandinavia has long vexed economists. Indeed, it has frustrated plenty of Scandinavians, too. When Senator Elizabeth Warren ran for president on a platform that she claimed would emulate the Nordic experience, onetime Swedish Prime Minister Carl Bildt said her “protectionist impulses are not reassuring from a European perspective.”

 

What America’s democratic socialists are praising is a bygone era in Swedish politics that the Swedes themselves remember as the bad old days. When the Social Democratic Party was in power in the middle of the 20th century, it sharply increased public spending and taxation rates. “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,” Fairless observed.

 

Today, however, the wealthy are flocking back to Sweden, and they’re taking their capital with them. Swedish per capita GDP is the envy of the European Union, and the country has become a hub of tech and telecom innovation. Its public services have not suffered as a result of increased privatization. Indeed, reduced public-sector costs for services like health care create “efficiencies” that allow providers to “serve more patients.” Students are flocking to privately operated schools, and “school choice is now deeply entrenched in Sweden.” Even the Social Democrats, now relegated to the opposition, support it.

 

With even the Scandinavians running away from their unearned reputation as diehard collectivists, it’s not clear where America’s democratic socialists will turn to for guidance. At least they still have Cuba.