This year marks exactly 50 years since the LO Congress, amid fanfare and cheers, backed the demand that the unions take over ownership of companies. What happened? Historian Kjell Östberg takes us back to the years when the struggle for control over the Swedish business sector reached a critical juncture.

Imagine a Social Democratic party leader who openly called himself a democratic socialist and argued that the issue was not whether to have a planned economy but how it should be structured. And workers would finally gain control over their jobs. “We are moving toward a society where decision-making power over the means of production is increasingly transferred to society and the employees.” (Olof Palme)

And that thirteen union presidents presented long lists of industries they wanted to socialize: the paper industry and forests, the gasoline trade, insurance companies, banks, the transportation sector, shipping, and the building materials industry.

That the SSU demanded a socialist economy in which power would be transferred from private capital to elected bodies, labor unions, and cooperatives.

That the Social Democratic Women’s Association wanted to socialize real estate ownership and place all housing production under democratic control. That the Christian Social Democrats advocated for an ecological socialism that could break capitalism’s grip.

Democratic socialism in various forms was placed on the agenda during the 1970s, even within the traditional Social Democratic labor movement. Here is the S-Women’s campaign for socialized housing production.

That’s actually what it looked like in Sweden in the 1970s. For a few years, there were serious discussions—even within the Social Democratic Party—about how democracy could be expanded to include power in the workplace. The idea that power could be shifted from capital to labor was both possible and necessary.

Most important—and most concrete—was Rudolf Meidner’s proposal for worker funds.

Few Swedish books have influenced the public debate as much as the small, modest 128-page pamphlet he presented in the fall of 1975. It has a clear Marxist slant: “The history of industrialism is the history of the emergence of and conflicts between classes: at an early stage of industrialism, a small group appropriated and subsequently continually expanded its ownership of the means of production.”

The fundamental idea was that workers should share in the profits of large and medium-sized companies. Each year, a certain percentage would be transferred as shares to funds controlled by the labor unions. Meidner estimated that, through this system, workers would be able to control a majority of the shares in most companies after between 20 and 75 years.

Through this proposal, Meidner sought to achieve three goals: to give workers a share of corporate profits; to counter the growing concentration of power and ownership by creating a new group of owners; and, finally, to establish forms of worker influence based on ownership.

The proposal would prove to be explosive. In two key respects, it represented a clear break with the Social Democrats’ traditional reformism. It highlighted ownership as a central factor for influence, and power was to be exercised not through the state but through union-led bodies.

However, the proposal’s radical nature did not frighten the LO. On the contrary, it was adopted with great enthusiasm—and with certain refinements—at the 1976 congress. The session concluded with a spontaneous rendition of “The Internationale.” “With the workers’ funds, we’re taking over,” proclaimed Bert Lundin, president of Metall, across four columns on the front page of the LO newspaper.

In the LO newspaper, the Workers’ Funds were framed as a matter of power within companies.

How was it possible that the LO, which for decades had belonged to the right wing of social democracy, shaped by decades of class collaboration and the “Saltsjöbad spirit,” suddenly threw its support behind a proposal that, had it been implemented, would have meant that the unions today would control the vast majority of Swedish industry?

Indeed, this metamorphosis can only be understood against the backdrop of the profound social radicalization that characterized all sectors of Swedish society during the 1970s. What began with the youth and anti-Vietnam War movements and continued with a sweeping women’s movement culminated in wildcat strikes and a workers’ struggle that also radicalized the labor union movement. They pushed through laws on employment protection and workplace safety, but they didn’t stop there. It was time to dust off the demands for control over the workplace that had been gathering dust for half a century.

It is hardly surprising that employers flatly rejected any proposal that would curtail their unrestricted right to determine production conditions themselves—and, in the long run, lead to their confiscation.

But the Social Democratic leadership, too, was skeptical, to put it mildly. The criticism had several roots. One had to do with the public opinion problems associated with the proposal. The reactions from the business community and the bourgeois parties grew increasingly forceful.

Above all, however, there were important ideological objections. The “functional socialism” that the Social Democrats had long advocated was based on the idea of gradually advancing their positions through legislation. The push for a comprehensive reform of labor law—with the Co-determination Act as the jewel in the crown—was seen as completing the third stage in the democratization of society, this time in the economic sphere. But when it came to ownership, they hesitated.

A joint working group was appointed to tone down the proposal. The party’s contribution was a fourth objective: that the funds should contribute to capital formation and investment. But this was not what the members were passionate about.

In the resolution adopted ahead of the 1978 party convention, 65,000 participants supported a proposal that gave wage earners real economic power.

When the Social Democrats returned to government in 1982, the proposal was severely scaled back: ownership was capped at 10 percent, the funds’ boards were appointed by the government, and funding was provided for only seven years. When the Riksdag adopted the proposal in 1983, Feldt summed up the mood: “Employee funds are a damn mess, but now we’ve managed to push them this far.”

The result was a far cry from Meidner’s original idea. As Meidner’s biographer Lars Ekdahl summarizes:

“In other words, the employee-owned funds that were introduced bear little resemblance to Meidner’s proposal, which was eight years old at the time. Gone was the profit-sharing that, through targeted mandatory employee stock offerings, was intended to increase the union-controlled funds’ ownership stakes in companies on an annual basis; gone was, almost entirely, the power exercised by the unions over industry, at both the local and sectoral levels; gone was the return on the funds that was intended to strengthen democracy and foster knowledge-building within the labor movement; gone was the effort to decisively break the far-reaching concentration of power and wealth; gone, of course, was the goal of making the funds a democratizing force in class society; gone was the attempt to fundamentally transform capitalist class society; gone were the funds as part of a democratic socialist strategy.”

Despite the watering down of the proposal, the employers rejected all compromises. Instead, the issue of the funds became the starting point for extensive mobilizations of pro-market forces, culminating in the October 4 demonstrations of 1983—the largest bourgeois mass protest since the Farmers’ March of 1914.

But it was not only the employers and the Social Democratic leadership who were skeptical of the workers’ funds. The broad movement that existed to the left of the Social Democrats in the mid-1970s, including the Left Party Communists (VPK), also largely rejected the proposal. “Meidner’s funds are meant to turn workers into capitalists,” wrote this newspaper, *Internationale*. Others felt the proposal was too technical and complicated to implement, and that it would take far too long. Not least, there was a deep distrust of the union leaders who were to replace the former owners. They had been trained for decades in class collaboration, and there was a high risk that power would remain with them and never reach the workers on the factory floor.

There is a great deal of truth to these arguments. Nevertheless, it was a major mistake on the part of the radical left to stand outside the broad movement for economic and workplace democracy. It is difficult to imagine that the proposal for worker-owned funds could have been implemented through simple parliamentary decisions. But when hundreds of thousands of union activists pressured their leaders to adopt plans to shift power from capitalists to workers’ organizations—and received massive support from Social Democratic rank-and-file members—a historic opportunity opened up for the labor movement in the broadest sense to discuss the forms this struggle would take. Had they succeeded in mobilizing the strength required to achieve success, there is every reason to believe that power would ultimately have ended up where it belonged: with the workers.

The watered-down funds implemented in 1983 did nothing to give workers influence over their work.

The watered-down funds introduced by the Social Democratic government in 1983 bore little resemblance to the proposal made seven years earlier—and were immediately abolished by Carl Bildt’s right-wing government in 1991.

When the Bildt government took office in 1991, one of its very first decisions was to dissolve the funds. The 25 billion that had been set aside was quickly squandered as seed capital for various venture capital ventures and the establishment of research foundations, primarily to support business development.

The LO leadership quickly abandoned any ambition to take control of the companies. Instead, together with the employers, they signed a “Development Agreement.” This marked a retreat from everything the LO had fought for over more than a decade. There was no mention of democracy within companies or even employee participation. In the same spirit as previous agreements on corporate democracy, the aim was to make production more efficient.