On Scandinavian Capitalism

Eric sent me this: "Re. your post yesterday on the Scandinavian welfare state: a clue to the mystery of the persistence of the welfare state in the Nordic countries is the surprising fact that marginal income tax rates on the bourgeoisie are much higher in the US than in, say, Sweden. Indeed, the Swedish welfare state is financed on the back of its working class, largely through various excise taxes that make no exceptions for wage goods like food and clothing. As the rate of profit came under pressure throughout the world capitalist system in the 1970s, we began to see progressive taxes (corporate taxes, personal income tax) rolled back in the advanced capitalist countries. The US welfare state, financed mainly through progressive taxation (as you know, there is no national consumption tax in the US), contracted sharply. The Swedish welfare state, which relies on highly regressive value added taxes, managed to survive precisely by increasing the VAT to compensate for diminished personal income and corporate tax rates. The notion that the surplus value appropriated by the bourgeoisie through exploitation of productive laborers is redistributed by the bourgeois state to the exploited classes such that the latter ultimately gain is total nonsense, in the Nordic countries or in any other social formations dominated by the capitalist mode of production. See Sven Steinmo's book "Taxation and Democracy" for a detailed comparative history of the US, British and Swedish tax systems."