Socio-Economic Review, 2019, Vol. 17, No.

3, 745–765
doi: 10.1093/ser/mwy005
Advance Access Publication Date: 19 January 2018
Article

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Article

Resilient privatization: the puzzling case of

for-profit welfare providers in Sweden
Stefan Svallfors* and Anna Tyllström
Institute for Futures Studies Södertörn University, Stockholm, Sweden

*Correspondence: [email protected]

Abstract
In this article, we analyse the striking resilience of for-profit care and service provi-
sion in what has often been seen as the archetypical social democratic welfare state:
Sweden. We focus on the strategic discursive activities of private companies and
their business organizations as they try to influence perceptions, organize actors
and facilitate communication to defend profit-making in the welfare sector in the
face of increasing conflict and opposition. We argue that taking such organized ac-
tion into account changes dominant perceptions about the characteristics of the
Swedish political economy, and carries important lessons for analyses of changes
in the organization of the welfare state in general.

Key words: employers, liberalization, political sociology, public sector, Scandinavia, welfare state

JEL classification: H1

1. Introduction
If a social scientific observer in the late 1980s had been presented with a line-up of rich
Western countries—say Germany, Sweden, the UK, France, the USA—and asked to guess
which of these countries that would later experience a rapid expansion of for-profit pro-
viders of health care, elderly care and education, few would probably have opted for
Sweden. Dominant perspectives on the development of welfare states would presumably
have pointed to the power resources of the organized labour movement (Korpi, 1980, 1983,
1989), the supportive feedback effects from a universal welfare state on important constitu-
encies dependent on the welfare state (Pierson, 1994, 1996), and the public support for the
existing welfare arrangements (Svallfors, 1991, 1995, 1996), as factors that made Sweden a
least-likely case of welfare state privatization.

C The Author(s) 2018. Published by Oxford University Press and the Society for the Advancement of Socio-Economics.
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746 S. Svallfors and A. Tyllström

And yet, three decades later, Sweden has in fact experienced an astonishingly fast growth
of for-profit providers of care and services. Although the financing of care and education is
still predominantly based on taxation, the actual delivery of such services has to an increas-

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ing extent come from for-profit providers. So far, no efforts to scale back the activities of
for-profit welfare enterprises have been successful. This in spite of the fact that public sup-
port for such providers remains low and that increasing political conflicts have been regis-
tered, not least as a result of failing school results, unanticipated consequences of
privatization of welfare services and public scandals involving private enterprises in the wel-
fare sector (Molander, 2017).
This privatization of the Swedish welfare state has received surprisingly little attention in
the international research community. In spite of the fact that Sweden has long been per-
ceived as the paradigmatic welfare state, recent developments, which seem to run counter to
this image, have been only cursorily covered (Andersson, 2016). The few existing studies of
the privatization of the Swedish welfare state tend to have a broader focus than the current
article since they analyse various aspects of marketization of the public sector, and they
mainly focus the early privatization process (e.g. Bergh and Erlingsson, 2009; Gingrich,
2011; Gustafsson, 2000: Ch. 4).
In this article, we specifically focus on the conflictual and contested for-profit welfare de-
livery and our aim is—in contrast to previous research on the issue—not primarily to ex-
plain why privatization took off, but why it has proved so resilient in the face of substantial
political conflict and opposition. With ‘resilient’ we simply mean that for-profit welfare com-
panies and their business associations have been able to stave off any attempts to impose
limitations on profit-taking or any other regulation of the standard operating practices of
capitalist firms. The question we raise in the article is exactly how this has been achieved:
what do lobbyists in the for-profit welfare sector actually do in order to pursue their
interests?
We argue that understanding why private welfare companies have managed to become
stable actors even when faced with an unfavourable public opinion and a considerable polit-
ical challenge can be explained only by extending existing theories of welfare state change
and continuity into an ‘augmented power resource approach’. Here the instrumental activi-
ties of private companies and their business associations are in the focus, and we also pro-
vide a more nuanced view of the feedback effects of a universal and encompassing welfare
state than is typically found in extant literature.
To substantiate our claims, we first follow the history of for-profit welfare provision in
Sweden, from the budding experiences in the early 1980s to the current situation where
more than 20% of care and education is delivered by private enterprises. We place particular
emphasis on developments in the last few years, when for-profit welfare has become a highly
contentious political issue.
We then develop our theoretical perspective on the issues at hand, focussing on the in-
strumental activities of private capital and the feedback effects of large welfare states. We go
on to illustrate the various activities by private companies and their organizations, based on
interviews with strategically selected actors in the private health care sector. Finally, we con-
clude by summarizing the main arguments and findings, and their implications both for un-
derstanding the Swedish case and for general perspectives on lobbying and the welfare state.
We base our empirical case on several sources. We consult existing literature and data on
changes in the delivery of welfare policies, public opinion and press coverage, and we
Resilient privatization 747

interview key organizational representatives of the private health care sector, in order to de-
cide what types of actions private firms and their organizations use in their lobbying efforts.

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2. The rapid privatization of the Swedish welfare state
Health care in Sweden is financed by the regional county councils, while child care, elderly
care and education are administered by the municipalities. In 2015, Swedish county councils
and municipalities bought welfare services from private providers for a total of 13 billion
euro.1 In primary care, 42% of clinics are now privately owned, and in the Stockholm capi-
tal region, that figure is 65%. The lion’s share of private providers is for-profit: 97% of
county councils’ and 83% of municipalities’ expenditure on private welfare is spent on for-
profit corporations (SKL, 2016). Figure 1 summarizes the development of expenditures on
privately produced welfare in the three largest welfare areas: education, elderly care and
health care over the period 2003–2015. As shown, spending has increased considerably over
the last decade, and almost all of the increase comes from for-profit providers. Figure 2
shows that the increase in overall staffing in the welfare sector largely comes in the for-profit
part of the sector. Here, the number of employees increased by 65% between 2000 and
2015, as compared to a 20% increase in the sector as a whole.
Profit-seeking actors in the welfare sector are a fairly new phenomenon in Sweden.
Through a series of reforms from the 1940s to the 1960s, welfare policy delivery was cen-
tralized and nationalized in the building of the social democratic welfare state. As a result,
by the early 1980s, an absolute majority of welfare facilities in Sweden were both owned
and financed and run by the public sector. For example, in 1980 only 0.5% of Swedish pu-
pils went to a non-government school. The few exceptions were found among confessional
schools and parent co-operatives.
But in the 1980s things started to change. General opinion became more sceptical about
the expansion of the state and its bureaucracy (Svallfors, 1989, 58–60). An organized
thought movement started to emerge on the political right wing, manifested by the founding
of the neo-liberal Timbro think tank, which included a new publishing house. Inspired by
the Reagan and Thatcher administrations in the USA and UK, right-wing forces in Sweden
aimed at deregulating monopolized markets in various sectors, such as electricity, infrastruc-
ture, communications and media (Boréus, 1994; Tyllström, 2013, Ch. 4; Wedel, 2009,
Ch. 2). In this regard, Sweden followed an international trend of other European countries
(Bergh and Erlingsson, 2009).
Welfare services were no exception. Already in the 1980s, local politicians in Nacka, a
municipality with a conservative majority, started to experiment with a semi-private arrange-
ment, where the municipality issued vouchers for medical footcare to elderly citizens who
could then choose to spend them on private providers (Kastberg, 2005). Another important
early event was the establishment of the first chain of privately owned preschools, Pysslingen,
which stirred political debate and ultimately led to Lex Pysslingen, a law enforced by the so-
cial democratic government to stop all public funding of for-profit preschools.
When a coalition of four right-of-centre parties won the national election in 1991, the
new government initiated a series of reforms that were intended to create more choice for

1 127 billion SEK. Private providers corresponded to 12% of county councils’ and 15% of municipalities’
total welfare expenditure.
748 S. Svallfors and A. Tyllström

EDUCATION
40,000

35,000

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247%
30,000

25,000

20,000

15,000

10,000

5,000

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
For-profit actors Non-profit actors

40,000
ELDERLY CARE
35,000
+130%
30,000

25,000

20,000

15,000
For-profit actors
10,000
Non-profit actors
5,000

30,000
HEALTH CARE
25,000
+106%
20,000

15,000

10,000

5,000

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

For-profit actors Non-profit actors

Figure 1. Public expenditure on private health care providers in education, elderly care and health
care, according to type of actor.
Resilient privatization 749

100%

90%

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80%

70%

60%
Non-profit private employees
50%
For-profit private employees
40% Public sector employees

30%

20%

10%

0%
2000 2008 2009 2010 2011 2012 2013 2014 2015

Figure 2. Employees in the Swedish welfare sector 2000–2015 according to type of employer, percent-
age of total.

citizens, and to increase innovation and private entrepreneurship. Lex Pysslingen was abol-
ished, and a voucher system, similar to the footcare voucher, was introduced nationally in
the education system. In primary health care, a Family Doctor Reform (Husläkarreformen)
was introduced in 1993, stipulating that county councils had to apply the same remunera-
tion system to private and public health care providers. This was the starting point for pri-
vate primary care on a larger scale and was not significantly reversed by later governments
(Anell, 2011).
Early private actors often operated on contract with county councils or municipalities
according to a ‘procurer-producer’ model, but in later years the system has moved more to-
wards a ‘consumer’s choice model’ (Gingrich, 2011). Two especially important reforms
were the introduction of the Law of Public Procurement (LOU) in 2007, where the guide-
lines for public sector purchases were formalized, and the (somewhat paradoxically titled)
Law of Free Choice System (LOV) in 2009. The latter stipulated that all care facilities fulfill-
ing a series of criteria should be granted the right to public funding if the consumer/patient
chooses the services they provide. Municipalities can choose whether to introduce LOV or
not; so far, half of the municipalities have done so. County councils are obliged to introduce
free choice for primary care, but it is optional for specialized care. The adoption rate varies
strongly with geography and is most widespread in the urban regions of Stockholm,
Uppsala and Skåne (SKL, 2016, p. 44).
The LOV reform has favoured large corporate groups that benefit from economies of
scale. Whereas early private actors often were co-operatives of parents or staff starting their
own clinics and centres, in the 2000s national and international corporate groups began to
show interest in welfare service provision. As a result, there has been a consolidation of the
private care industry. Within education, the ten largest for-profit actors represent 20% of
primary education production, and a third of all secondary education (Skolverket, 2014).
750 S. Svallfors and A. Tyllström

Within health care, the ten largest firms represent 28% of the turnover among private pro-
viders (our own computations based on annual reports). Several of these companies are
owned by venture capitalists.

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In 2011, an edited book was published by SNS, a business-academic think tank
(Hartman, 2011). The volume reviewed the effects of privatization on virtually all welfare
domains and concluded that it was hard to discern any clear positive effects of privatization.
If anything, the reforms towards privatization seemed to have had a slightly segregating ef-
fect: socio-economically privileged groups gravitated towards the private alternatives in care
and education. The members of SNS—business leaders with interest in the welfare produc-
tion market—were unhappy about the results, and SNS did not approve of the presentation
of the report. In the academic community, the affair raised questions about censorship, and
ended with the resignation of SNS’s research director and several other affiliated
researchers.
In fall 2011, the ‘Carema scandal’ exploded in the media. It started with an e-mail to the
local government offices containing information from the medically responsible GP at an el-
derly home run by Carema Care, a for-profit corporate group, stating that she could no lon-
ger guarantee the quality of care. When journalists discovered the e-mail, they started
scrutinizing the company. They reported on several cases of medical neglect and severe cost
reduction programmes. Carema was indirectly owned by overseas venture capitalists with
intricate tax planning schemes and generous bonus programmes for managers (see e.g.
Lucas and Tottmar, 2011). An award-winning documentary, ‘We Gave Them Our Dad’,
was produced by the Swedish Broadcasting Corporation and more than 4 000 media articles
were published in 2 months. The scandal had tangible consequences: several municipalities
and county councils cancelled their contracts with the company, which subsequently
changed its name. The chief of policy at the private care business association Almega
Vårdföretagarna even published a book espousing his perspective on the scandal (Tenelius
and Selling, 2016). Together with the conclusions of the SNS book, it sparked a wide-
ranging political debate about the ethics of profit in the health care sector.
Already in the 2010 election campaign, the fact that venture capitalist-owned corpora-
tions were making profits from tax-financed welfare had started to attract attention from
the Left Party. MPs produced a series of parliamentary motions questioning the fairness of
public expenditure going to corporate profits. The Carema scandal and the SNS conflict
brought the issue to the top of the agenda. In later years, criticism has been spurred by more
scandals within child care and educational sectors, where privately owned preschools and
schools have been accused to put profit before the quality of education.
Public opinion is clearly against profits in the welfare sector. In Figure 3, we can see the
development of public opinion. In 2015, 57% of respondents considered prohibition of divi-
dends for publicly financed welfare to be a ‘good’ or ‘very good’ idea. Only 19% were
against it. In another poll with a slightly different phrasing of the question, in November
2016, 80% preferred a limitation on dividends, and 27% wanted an outright ban (SVT,
2016).
There is a clear lack of political representation in the matter. Having championed many
of the privatization reforms during their 2006–2014 reign, all conservative parties are
openly positive to unregulated profits, even though a majority of their voters are negative,
resulting in a large discrepancy between party positions and their voters’ opinions. This dis-
crepancy is especially tangible in the case of the nativist Sweden Democrats, whose official
Resilient privatization 751

80

70

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60

50
Good
40
%

Neutral
30 Bad
20

10

0
2012 2013 2014 2015

Figure 3. Public opinion attitudes towards the statement ‘Profit dividends should not be allowed within
tax-financed healthcare, education or care’ 2012–2015. Source: Annika Bergström och Niklas Harring,
SOM-institutet, ‘Hållbarhetens horisont’ 2016, section 134.

policy was quite negative to unregulated profits until a very public turnaround in the
Parliament in 2015. Their voters, however, are approximately as critical as the average:
78% are pro-limitation, and 26% want a ban (SVT, 2016).
Media coverage has soared. Figure 4 summarizes the media coverage on ‘profits in the
welfare sector’2 over time: a total of 16 569 articles were published, with a clear upsurge in
2011. The debate culminated in the election of 2014, after which the Social Democrats came
to power, and the Left Party demanded as a condition in negotiation for political support
that there be a regulation on the profits made in the welfare sector. As a result, in early 2015
the government gave directives for a public commission with the task to develop a new
framework for regulating the financing of private actors in the public welfare system, the so-
called ‘Reepalu Commission’ (named after its chairperson, a social democratic politician).
As is customary, a team of experts and a reference group with representatives from orga-
nized interests were attached to the commission. The private welfare sector, headed by the
service providers’ business association Almega, was from the beginning very strongly op-
posed to the commission’s directives and process. They argued that a cap on profits would
severely damage the industry and the welfare sector as a whole. Over the course of the
18 months that the commission worked on its first report, an intricate political interplay
took place in the media, public opinion and the parliamentary committees. The main actors
have been Almega, the blue-collar trade union LO and its members, but also individual busi-
ness owners, academics and investment banks.
In November 2016, the commission’s report of 856 pages was released, suggesting a cap
of 7% for profits (cf. SOU, 2016, p. 78). In Sweden, anyone can answer to a political refer-
ral, and this became the most commented public commission ever: by the deadline, about
15 000 separate responses had been registered. In fall 2017, it became clear that the social
democratic minority government will go ahead and propose a law based on the commission,
despite of the fact that a majority of the parliament will be against the law proposal.

2 Search string: (välfärd OR välfärdsföretag OR välfärdssektorn OR välfärden) AND (vinst OR vinster

OR vinsttak OR vinstintresse*) AND privat*).
752 S. Svallfors and A. Tyllström

4500

4000

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3500

3000
Number of hits

2500

2000

1500

1000

500

0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Year

Figure 4. Number of hits in printed press on profits in the welfare sector on 1984–2016. Source:
Retriever.

To summarize, the Swedish welfare state has been rapidly privatized, although it is still
mainly financed by public means. The development has concerned several administrations
since the 1980s, and while there have been conflicts between political camps and public
opinion has remained largely negative, the main trend has been one of increasing private
production of welfare, and then mainly by for-profit actors. Moreover, the development to-
wards for-profit organization of welfare policies has been exceptionally rapid by interna-
tional standards (Palier, 2006).

3. Resilience, strategic action and institutional feedback

Even if dominant welfare state perspectives as we pointed out offer little guidance on why
privatization got such traction in Sweden, elements of their edifices are quite useful in build-
ing a theoretical perspective on why this privatization has proved so resilient. Both the
‘power resource approach’ (PRA) (Korpi, 1980, 1983, 1989; Korpi and Palme, 2003; Korpi,
2006) and its main contender labelled ‘new politics of the welfare state’ (NPS) (Pierson,
1994, 1996, 2001) have important pieces to offer for understanding the case of Swedish wel-
fare privatization. However, both these dominant welfare state approaches need to be
amended in order to be useful for the questions of this article. They were both primarily set
up to explain variation and changes in social spending and social rights and not for analy-
sing welfare service delivery.
From PRA we gain the insight that actors are intentional and not only reactive, but also
that strategic action in order to mobilize and organize is vital in order to successfully exert
power (Korpi, 1985). We also learn that the power resources of capital are formidable, since
they are more easily mobilized and put to action than labour’s control over labour power.
However, in their empirical applications of PRA to welfare state continuity and change,
Korpi and other PRA proponents mainly focus on labour to the neglect of capital. Capital is
implicitly seen as already organized and mobilized and not in need of any further such activi-
ties; it can depend on its structural power and threats of exit. While there are certainly
Resilient privatization 753

markets, such as financial markets, where such inactivity may be enough (Woll, 2016), the
market for welfare policy delivery is not such a market. It needs constant tending to, in order
to safeguard access to public financial resources, since it is politically highly risk-exposed.

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Therefore, in this article we try to amend PRA with a clear micro-oriented focus on pri-
vate companies and their organized action. Such a strong focus on private companies and
their individual or collective lobbying efforts is not found in welfare state research, but in a
completely different research field, where such activities are analysed in very different set-
tings from the Swedish welfare state (for summaries, see Smith, 2000; Selling, 2017). In this
line of research the main focus has been how private companies and their business associa-
tions act to avoid the introduction of detrimental regulations or create business opportuni-
ties in settings such as the decision-making machinery in Washington DC or the EU
institutions in Brussels. This research has to a minimal extent concerned welfare policies and
markets for welfare delivery; its findings have not at all been integrated in mainstream re-
search on the welfare state; and it has concerned very different institutional frameworks
from the one we target here.
We, therefore, see a need for an ‘augmented power resource approach’ (APRA), in which
the power resources of private business are treated as a variable and fully taken into account
(cf. Hacker and Pierson, 2010). Such a perspective needs to take the ‘structural’ aspect of
business power into consideration, but sees this as a variable rather than as a constant.
Furthermore, an APRA would need to also include the ‘instrumental’ activities of private
business. This refers to lobbying and other attempts to directly persuade policymakers to act
in ways consonant with business interests. Where structural power rests on the ability to
(threaten) ‘exit’ from countries or markets, instrumental power rests on ‘voice’ (Hirschman,
1970; Lindblom, 1977; Culpepper, 2015; Woll, 2016). Exerting instrumental power in-
cludes providing new policy ideas, persuading policymakers of the merits of ideas and pro-
posals, and defending existing beneficial practices and regulations. Hired lobbyists and
policy professionals are important providers of such knowledge, information and advice,
which includes knowledge about both political processes and substantive expertise
(Svallfors, 2017).
A recent stream of policy research has focussed precisely the role of ideational power in
policy processes (Campbell, 2002; Schmidt, 2008; Béland, 2010), that is, ‘the capacity of ac-
tors to influence other actors’ normative and cognitive beliefs through the use of ideational
elements’ (Carstensen and Schmidt, 2016, p. 321). These acts are expressed in discourse, or
‘the interactive process of conveying ideas’. Discourse refers not only to what is said and ar-
gued but also to the social context in which it is said (Schmidt, 2008, p. 304). In other
words: by saying certain things (and not others), in certain ways, and at certain times, actors
attempt to advance their positions in the policy process, and the positions of other actors.
Through carefully managing discourse, actors convey not only their arguments and interests
but also group identities (Van Leeuwen and Wodak, 1999) and coalitional status (Béland
and Cox, 2016). We argue that an APRA should include an analysis of language and dis-
course, to better show how policies come about. In our specific case, we argue that the resil-
ience of privatization of Swedish welfare cannot be understood without analysing both ideas
and discourse as power resources.
From NPS we use a focus on the importance of feedback effects from existing welfare ar-
rangements on the prospects for various forms of political action, and specifically consider-
ations about what kind of long-term feedback effects to expect from a large, comprehensive
754 S. Svallfors and A. Tyllström

and collectively organized welfare state such as the Swedish one. The standard version of
these feedback effects argues that encompassing welfare policies make the welfare state ex-
tremely stable, since most of the population is included in the same programmes and there-

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fore has an interest in defending these arrangements.
However, an APRA should include a clear understanding of the feedback effects of the
welfare state, not only on the mass public or on various political elites, but on the business
community and its organizations. And here size matters: a comprehensive welfare state is
also by necessity big and expensive—it is a pool of resources built over generations and rep-
resents tempting business opportunities for large-scale owners and investors. It is also an ac-
tual or potential market which is comparatively safe, in the sense that public demand and
general financial flows can be more or less taken for granted. But at the same time, it is a
market that is politically risk-exposed: a shift in political power may entail drastically wors-
ened conditions for private companies in the welfare sector. It is, therefore, imperative for
private capital in the welfare sector to keep constant vigilance against political threats.
A second feedback component of NPS that will be useful for analysing our case is ‘lock-
in’, that is, the tendency for existing public policy arrangements to become self-reproducing
once they are in place, since actors’ interests and expectations become rearranged in a fash-
ion that makes change harder to achieve (Pierson, 1996). As we will find in the empirical
analysis, such ‘lock-in’ effects are palpable in the case of for-profit welfare providers.
In the next section, we will take a closer look at what the vigilant activities entail from
the perspective of key actors in the private business community. We should emphasize, how-
ever, that our focus on these actors do not indicate that we find other actors (such as politi-
cal party elites) of little interest in trying to understand the resilience of for-profit activities.
But we argue that the lobbyists for the private welfare sector have attracted comparatively
little research interest and that it is highly motivated to analyse their considered actions and
discursive strategies if one wants to understand the resilience of the private welfare sector.

4. Policy action in the private welfare industry

In order to understand the resilience of the privatization of Swedish health care, we con-
ducted interviews with business association experts (BAE), public affairs officials or CEOs in
private health care companies (‘private company officials’ or ‘PCO’), and commissioned ex-
perts (CE). The seven interviews were conducted in 2016 by one of the authors and followed
a semi-structured format. The BAEs and PCOs were chosen because they were prominent in
the debate and represented large companies with high stakes in the debate surrounding the
policy process. Our questions mainly concerned the interviewees’ political activities around
the issue of profits in the health care sector, how they structured their overall political work,
what methods they used, which actors they approached, and what arguments they brought
forth and why. The CEs were chosen based on their centrality in the debate and the ongoing
state commission, and questions to them concerned specifically their interactions with
corporations.
The interviews were recorded, transcribed verbatim, and coded using a discourse analy-
sis, in which we identified different discursive acts and strategies apparent in the material
(Van Leeuwen and Wodak, 1999). Pertinent interview quotes were collected in an excerpt
document, from which we take the quotes used below. All translations from the Swedish in-
terviews were made by the authors.
Resilient privatization 755

Our analysis revealed no less than nine distinct types of strategies (presented below),
which can be grouped into three main types of active organizing efforts: influencing percep-
tions, organizing actors and facilitating communication. The first type of action consists of

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attempts to actively shape other actors’ perceptions and understandings. The second type
concerns the organization of relationships among actors in the field in order to build alli-
ances. The last type of action aims at affecting how communication with policymakers and
the wider public is set up. In the following, we discuss and illustrate each in turn.

Influencing perceptions
This theme consists of three types of specific actions: (1) creating facts on the ground,
(2) producing quality standards and (3) enacting transparency.
When it comes to influencing perceptions, perhaps the most fundamental action of pri-
vate welfare companies is that they create facts on the ground. The very first attempts to cre-
ate privately delivered welfare—the footcare vouchers in Nacka—were ingenious in this
regard. While it would have been almost impossible to argue against this on principle
grounds, it set an example for later privatizations: why should consumer choice in the sector
be restricted to footcare and not include, for example, choosing whom to entrust with the
care or education of one’s children?
Facts on the ground are even more important once large-scale private welfare delivery is
in place. The problem for policymakers intent on rolling back privatization is that any at-
tempts to do so risk creating disruption of essential services and hence dissatisfaction among
citizens/voters. This is clearly recognized by BAEs and PCOs:

This company where I work now, and others, may say, “If you change the compensation system
in this way, then we cannot work with this, because we cannot handle it” and that is a type of . . .
I wouldn’t call it lobbying really, but it is a kind of information. (PCO1)

Or they may make clear to policy makers that they will have a huge problem on their hands
if they attempt to limit profitability in the sector: ‘If you make this change that will in the
worst case make a lot of companies go bankrupt, and then you have a giant problem to
make your elderly care work’ (BAE1).
But companies are also involved in continuously creating new facts on the ground
through expanding their market presence. The targets are strategically chosen:

We have selected about 40 municipalities where we want to be present over time, /. . ./ based on a
few parameters: one, that it is a municipality that will face a big demographic challenge. Where
you can see that in this municipality there will be such an increase in the number of elderly people,
we look at their current plans and see “oh my god, they have no new facilities on the way”, and
we can see that this is not going to work. /. . ./ The second dimension is: “Is this a municipality that
is open to private care?”, that is, have they worked with private providers in the past? /. . ./ And
then we try to make contact with them to ask: “Are you interested in a conversation?” (PCO4)

By strategically using their current position and possibilities for exit as a bargaining threat,
and by extending market presence, private welfare companies and their organizations try to
beat off threats against their market.
The private welfare industry does additional things to influence perceptions at the inter-
face between private welfare companies and policymakers and the wider public. One of
756 S. Svallfors and A. Tyllström

them is producing quality standards. This is important for several reasons: it is an attempt to
increase trust in and legitimacy for for-profit providers, but it is also important for creating
a ‘level playing field’ for welfare providers and provide long-term planning horizons. They

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feel confident that they can hold their own compared to the public sector once standards for
comparisons have been set, but they worry that comparisons may be biased:

We like to be clear with how things work at our end, but we would like the county council to be
as clear – not least because we have this voucher system that is relevant. /. . ./ They can make a
loss, to put it bluntly, because that is hidden in the whole county council hole . . . . in that black
hole there. (PCO3).

Hence, in order to increase trust and enact fair comparisons, the welfare industry works sys-
tematically with things such as ‘ethical platforms’, ‘quality measures’, ‘codes of conduct’ and
other attempts to systematically produce rules and standards for the industry as a whole. It
is far better to self-regulate than to have standards externally imposed:

There are a number of commissions everywhere that have been given a mandate and it’s incredi-
bly important that they don’t misunderstand how the industry works. So, we work quite a lot
with participating in Reepalu’s commission, taking part in procurement, quality, standards, and
so on. (BAE2)

The production of standards also serves to shift focus from profits to quality. BAEs empha-
sized how advanced and forthcoming they were in developing their own quality measures,
and how they had established quality measurement practices as a requirement for business
association membership. They argued that the lack of discussion about quality been detri-
mental to the whole debate about privately produced welfare:

We need good quality measurements, good quality comparisons so that you can see every . . .
You should be able to see what the users think in every single elderly care home, publicly as well
as privately owned. So that you can compare. These are questions we have been championing for
a long time, and then you can say that if we had had those things in place in Sweden, quality
comparison systems, then this debate wouldn’t have turned out this way. Then, the politicians
would have felt more confident saying “well, the quality is good in the privately owned care and
healthcare, we can see that in our measurements” (BAE1)

The emphasis on quality was also clear when instructing member firms in their communica-
tion with politicians and media: BAE1 reports telling his members ‘remember to say that we
want national quality indices!’ Tellingly, this attempt to shift focus from profits to quality
was prominent in the additional directives that were added to the Reepalu commission in
late 2015, after lobbying efforts by the business organizations.
Producing standards is closely connected to the wider issue of how to enact transparency:
to decide what to show, for whom, at which time. This serves to increase legitimacy by pro-
viding partial transparency: What is it that they feel insecure about? /. . ./ What is it that is
not transparent enough? (PCO1)

Of course there is an extra responsibility for companies that are fully or partly financed from tax
money. Of course that requires oversight. Of course that requires transparency. Of course it re-
quires certain rules that you have to bow down to (PCO2).
Resilient privatization 757

But transparency in this general sense is not enough. It is also important to provide policy-
makers with examples of well-functioning private firms in action:

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This politician should be able to bring with them: ‘I was at this home for the elderly and I saw
this and that and how it worked’ – politicians have a need to somehow relate to reality. (BAE1)

And a commissioned expert concurs:

[This company] asked us if we wanted to come. Then we’ve had, it was almost the first thing we
got from [the business association representative]; ‘Do you want to visit specific companies? Let
me know and I’ll arrange for you to see them.’ So, we had a standing invitation in that sense, to
meet specific companies (CE2).

At the same time, transparency always remains partial. The inner workings of private welfare
firms are bound by company law to remain business secrets, and are also very hard to under-
stand for lay people due to their technical nature. For example, one commissioned expert states
about the different profit calculation models that are at issue in the debate that ‘We are proba-
bly talking about less than 15 persons in the whole of Sweden who can understand these issues
(CE1).’ Here, private welfare companies have an enormous advantage compared to their oppo-
nents, in that they employ professionals who understand issues concerning accounting practices,
different concepts of profit and tax schemes, and what they imply for their companies.

Organizing actors
In the second action type, organizing actors, three sub-strategies are found in our material:
(4) mobilizing one’s own, (5) persuading the indifferent and (6) seeking out friends.
The first task is to mobilize one’s own, which is a much harder task than might be
thought. It could easily be imagined that the sector has such a strong common interest in
safeguarding conditions for market presence and profitability that little effort would be
needed to keep a unified front. This is, however, not the case. The private welfare industry
harbours quite substantial heterogeneity among firms: many are quite small, others very
large; firms with large outside owners have higher demands for profitability than self-owned
companies. Furthermore, they are all competitors: if one firm fails, others will perhaps be
able to increase their share of the market. So, it is a constant struggle for the BAEs to keep
their own unified when the industry is under threat:

When the Carema battle began and they read about it in the newspapers, other firms thought
that this would affect only a single company: “We who are so good, this will not affect us.” /. . ./
When this whole debate about profits got going I think it was exactly so that these small compa-
nies, and those companies that were not owned by venture capitalists /. . ./ they thought that
‘well, what if we got rid of these big companies, maybe that is great’ (BAE1).

Intra-industry interests clash most clearly regarding the importance of profits in welfare,
where individual private welfare companies are less persuaded by the importance to pursue
this topic in the debate:

We have not really entered it. We think it is a pseudo-issue. /. . ./ We do not demand the right to
make profits, we demand the right to make good healthcare. /. . ./ Who has an interest in us stand-
ing on the barricades and shouting for the right to make profits? (PCO2)
758 S. Svallfors and A. Tyllström

Positions such as these are known to the BAEs and elicit sour remarks:

[This company] has a view that they stand above [the business association], and [their representa-

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tive] has felt that ‘I have a sort of direct link in, I can solve this myself. I can solve this, there are
no problems’ /. . ./ If you sit on the board of [the business association] and make decisions about
strategy and have been willing to increase membership fees last year in order to put more empha-
sis on opinion-forming, then it is a little strange to say in the next moment that ‘I do not think
this is important’. (BAE2)

So, the business association must strive incessantly to get all member companies to perceive this
as a collective struggle, in a way not at all dissimilar to the ones unions have to wage in order
to keep members in line. Although the business association ultimately works at a mission task
provided by their member companies, it often looks more like the agent driving the principal.
But it is not only important to mobilize one’s own; it is also important to persuade the
indifferent: to get parties and organizations on board who have little concern about these
specific issues but may hold pivotal power. In this regard, the most important single thing
has been the successful attempts of the private welfare industry to persuade the nativist ex-
clusionary Sweden Democrats to make a complete turnaround on the issue, from critics of
for-profit welfare to supporters. Because of this, there is now a clear parliamentary majority
against regulating profits in the sector. In August 2014, the Sweden Democrats’ party leader
Jimmy Åkesson had clearly stated that his party wanted to restrict profits in the welfare
sector,3 but only 2 years later the rhetoric was largely the same as put forth by the organized
business interests. He and economic spokesman Oscar Sjöstedt then published an opinion
piece in a business daily arguing that profits were ‘preconditions and incentives to improve
quality and accessibility’ in the welfare sector, while a cap was to equate with ‘abuse’ of the
market model. If the state focused on regulating quality standards instead of profits, a natu-
ral cap to how much profits firms could make would emerge, they argued.4
Here, the groundwork of BAEs was decisive:

I have had two meetings with the Sweden Democrats /. . ./ . Both to learn how they see these issues
and explain how we think one should solve this. /. . ./ The first meeting we had just because we
saw that . . . well, the Sweden Democrats were pivotal in our issues, so we needed to know what
they thought, and they themselves thought “we know nothing about these issues.” (BAE1)

But attempts to persuade the indifferent are not, of course, limited to the Sweden
Democrats: they extend to any party or organization that has an influence on important de-
cisions, but no firm standpoints when it comes to the issue of privatized welfare. When such
attempts are successful they are most likely grounded in the strategic interests of the indiffer-
ent part—in the case of the Sweden Democrats, their interest in future collaboration with
the liberal-conservative parties in parliament.
Closely related to persuading the indifferent is trying to seek out friends among the oppo-
nents. This is helped by the fact that both the Social Democratic Party and unions have been
divided on the issues. There are several leading Social Democrats who are quite supportive of

3 ‘Jimmie Åkesson frågas ut inför valet’, SR 140828, accessed at http://sverigesradio.se/sida/avsnitt/

423608?programid¼4657 on January 22, 2018.
4 Jimmie Åkesson and Oscar Sjöstedt, Vinsttaket är ett övergrepp, Dagens Industri, 160909, accessed
at https://www.di.se/artiklar/2016/9/9/debatt-vinsttaket-ar-ett-overgrepp/ on January 22, 2018.
Resilient privatization 759

for-profit activities in the welfare sector, in spite of the fact that both grass-roots members and
public opinion are strongly negative.5 Furthermore, the unions were for a time quite divided:
the large public sector union Kommunal was in the 1990s and early 2000s quite favourable to

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privatization (because they imagined competing employers in care and education would entail
better working conditions and wage prospects) (Waldemarson, 2010, p. 379–381). This rift
among the opponents is clearly recognized and strategically used by BAEs:

It is vitally important to meet social democrats in important municipalities so we understand:

How do they think? Are they pragmatic or are they ideologically far to the left and can they then
pose problems? (BAE1)

In this search for friends among the opponents they perceive that they score victories:

We follow the debate every day closely and we note that no leading social democrat enters the
debate on profits any longer. No Green Party activist, that was a long time ago we saw anything
of that sort. (BAE1)

Even when no clear victories can be registered, it is still very important to keep up contacts
‘behind enemy lines’ so as to be able to activate such neutral or friendly actors in the oppos-
ing camp.

Facilitating communication
The last activity type, facilitating communication, is conducted in three ways: (7) represent-
ing public sentiments, (8) opening and closing channels and (9) customizing messages to
policymakers.
First, it is important to represent public sentiments. This is important not least because
public opinion has been unfavourable towards the opportunities to make profits in the wel-
fare sector, something which the private welfare sector is now quite aware of:

You could see that there was. . .not a majority but there was a very large group of people who
were very sceptical about precisely if you should make a profit and give out dividends. I thought
that this was very worrying when I came in here, but when I raised this with our board they said,
‘Oh this, it has always looked like this, that is nothing to worry about’ (BAE1).

In this situation, much emphasis has been put on turning public opinion, or at least present-
ing it in a different light. Such attempts play on the fact that although public opinion con-
cerning profits is quite unfavourable, freedom of choice is quite popular:

If you ask, ‘Is it reasonable that companies can make a profit in the care sector?’ then that figure
is 40% and very few make the connection that if companies can’t make profits, then they can’t
survive. If they don’t survive then there is no possibility to have freedom of choice (BAE2).

5 Some examples are Lars Stjernkvist, chair of the municipality board of one of the larger cities in
Sweden, Norrköping: http://www.svt.se/opinion/det-ar-fel-att-forbjuda-valfardsforetag-som-fungerar-
bra on January 22, 2018; the leading Stockholm politician Karin Wanngård: http://www.di.se/nyheter/
s-revolt-mot-reepalus-vinsttak/ on January 22, 2018; and the newspaper editor Widar Andersson:
http://www.dagenssamhalle.se/kronika/vagar-reepalu-ta-miljardaerens-parti-14181 on January 22,
2018.
760 S. Svallfors and A. Tyllström

The main and final target for these attempts is not really the public, but rather
policymakers:

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We can make the public really feel it is actually not such a great idea to walk in and limit the op-
portunities for these companies since they actually contribute. Then we want the politicians to
feel that maybe I do not have the support to install these regulations, or maybe I should stand up
for freedom of choice. Many politicians from the Alliance pushed hard on these issues a decade
ago, but now they don’t really stand up and they need to feel that they have some wind in their
backs and that the public actually likes the alternatives too (BAE1).

Closely related to opinion building/representation is to open and close channels of commu-

nication with other actors. The business association continually organizes meeting grounds
for exchange and debate. Not only supporters but opponents are engaged and challenged in
public seminars:

When we organize seminars about some political issue, we really want both someone who is for
and someone who is against. That is important to get an animated debate (BAE1).

The important thing is not to ‘win’ every single argument and debate, but to keep certain
perspectives and issues alive. At the same time, other channels for communication are seen
as detrimental for the industry’s interest and as something to avoid or close down. For
example, one PCO states, ‘I don’t want my owners to talk about health care’ (PCO4) since
the owners know little about health care activities and facilities, and bringing them into the
debate would risk leading to a focus on profits and tax schemes that would be unfortunate
for the cause. But most of all it was the Reepalu Commission that was the object of the
industry’s ire:

What is troublesome is that this commission still sits. Because we think that the debate has
changed /. . ./
Interviewer: So you want to close down this commission?
Yes! [laughs] Or that it gets new directives – that would be great. (BAE1)

I would like to put the lights out for this commission, absolutely. (BAE2)

By opening and closing channels, BAEs try to make sure that the debate is pursued on terms
which are beneficial for their cause, and by suitable actors. Theirs is not an academic interest
in debate for argument’s sake but debate to further and consolidate interests.
The last, but not least, way in which professionals in the private welfare sector act to fur-
ther their companies’ interests is by customizing messages for policymakers. This has several
aspects. One is the importance of good timing—to approach politicians and other policy-
makers at a time when issues are at the table, not too early and not too late. Here, political
experience is the basis for sound advice:

Now is not a good time to seek out politicians to talk about this – why should you do that? They
are not into that now, the yearly cycle in politics is a given a long time beforehand. They do not
get into budget work and think about what they will put their money on until . . . or if they
should procure something, they don’t do that until next fall! (PCO1)
Resilient privatization 761

In this regard, it is of fundamental importance to have first-hand political experience: you

have to know the nooks and crannies of political decision-making and how political logic
differs from business logic:

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There are many of us in this company who know politics./. . ./Everybody does not have to have
[political experience], but we who reason and make decisions about how to make contact with
politicians, that is, when we do it, how we do it, and how we pursue that dialogue./. . ./Political
logic and business logic, they are two completely different worlds and often they do not meet.
(PCO3)

So, in accessing policymakers, it is key not only to have the right timing, but to frame argu-
ments in a way that will land well in political quarters, and here previous experience is
invaluable:

It has to do with both tonality and about understanding the rationality of politics. If you want to
achieve change you have to understand a bit about ‘what’s in it for me?’ Because if I come and
you’re the politician, and I just state that ‘I think you are doing the wrong thing. Do this instead!’
then it is very rarely possible to have a dialogue, but [instead it’s better] if you come to the politi-
cian and say, ‘I can see that you have a problem; this could be a way to solve it’ (PCO3).

Hence, customizing messages for policymakers in an optimal way requires considerable po-
litical know-how, skills that can only be acquired by first-hand experience and which is the
reason why so many companies and organizations hire people with such experience
(cf. Svallfors, 2016a).
To sum up, safeguarding the market for private welfare companies is a relentless pursuit,
which has to be conducted using a broad array of strategic discursive actions and applying a
broad set of political skills. It is exactly these strategic actions that have been curiously miss-
ing from existing approaches to welfare change and continuity, arguments to which we will
return in the concluding section.

5. Conclusion
In this article, we have charted the development of for-profit welfare delivery in Sweden,
from the first fledgling attempts in the early 1980s until today when an extensive part of wel-
fare policies are delivered by for-profit companies. We have noted that in order to under-
stand why this industrial-welfare complex has been so resilient against political backlash we
need to take seriously action by private companies and their organizations, as they try to
guarantee continuous access to the vast resource pool that is the welfare state. We, therefore,
also need to appreciate that a large and centralized welfare state not only includes the bulk
of the population in comprehensive welfare programmes, but also constitutes a large market
and tempting business opportunities. In order to understand the resilience of the for-profit
welfare sector, we have, therefore, proposed an ‘augmented power resource approach’
(APRA), in which the discursive actions of private companies and their business associations
are taken fully into account, and in which feedback effects from the welfare state are inter-
preted in a more nuanced way than in the standard accounts.
In short, we argue that we need to analyse not only how capital tries to influence other
parties’ actions directly, but also their attempts to shape how they think. Consequently, the
762 S. Svallfors and A. Tyllström

bulk of the empirical analysis in the article concerns the discursive strategic action in the pri-
vate welfare sector, and we discern a number of ways in which private health care compa-
nies and their organizations act to influence perceptions, organize actors and facilitate

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communication: they create facts on the ground, produce quality standards, enact transpar-
ency, mobilize, persuade, seek out friends, represent public sentiments, open and close chan-
nels and customize messages to policymakers.
What we have, therefore, shown in this article is the broad array of activities that private
welfare companies and their associations pursue, activities that have so far been quite suc-
cessful in staving off challenges to the for-profit sector in welfare policy delivery. We suggest
that such activities should be attended to if one wants to understand how resilient privatiza-
tion has proved to be in what was previously thought of as extremely hostile territory for
such ventures. They contribute to the ‘lock-in’ of a large sector of for-profit facilities
financed by the public purse. Whereas ‘lock-in’ used to underpin a collectively financed and
publicly organized welfare state, in the new privatized environment it works to make a roll-
back of for-profit facilities very hard to achieve. Practical ‘facts on the ground’ now make
risk-aversive politicians hesitant about risking a head-on collision with the for-profit compa-
nies and their associations.
The fairly limited empirical analysis (in terms of a specific field and number of interviews)
in this article should of course be complemented by studies of other policy domains, in par-
ticular, those related to other welfare state areas (such as education). Only in this way will it
be possible to decide how much of the evidence we have provided that is restricted to the
health care sector and how much that can be extrapolated to other policy domains.
Nevertheless, the results in this article seem to contribute substantially to research on the
determinants of the welfare state, and the place of lobbying and other political activities by
the business community in understanding welfare continuity and change. They also contrib-
ute to the understanding of the broader political economy of present-day Sweden.
The strong organization of capital owners in Sweden has sometimes been noted (Fulcher,
1991; Svallfors, 2016b), but has rarely been seriously taken into account in comparative
welfare state research. To the extent it has, analyses have tended to see Swedish employers,
along with employers in other ‘coordinated market economies’ as basically supportive of the
welfare state. Since Swedish employers have adjusted to a particular institutional environ-
ment, the argument goes, they have vested interests in keeping its main components, includ-
ing a comprehensive welfare state, in place (Pierson, 2000, p. 793–797; Estevez-Abe et al.,
2001; Swenson, 2002). In contrast, our APRA emphasizes the conflictual element of
Swedish business politics as they try to expand and defend markets in new domains, some-
times in the presence of opposition (Kinderman, 2017; Svallfors, 2016b).
In this endeavour, the Swedish business community has been helped by the fact that it is
highly organized: ownership and control are highly concentrated in large institutional inves-
tors (Nachemson-Ekwall, 2016), and interest organizations are strong both historically and
currently (Rothstein, 1992; Öberg, 2015). As was shown in our historical exposé, the large
scale and highly organized character of the Swedish business community is something that
to an increasing degree characterises the for-profit welfare sector. Furthermore, employers
and their organizations have successfully mastered the transformation of Swedish politics
from a highly concerted corporatist structure to a more diffuse lobbying scene (Öberg,
2015; Svallfors, 2016b). The strategic actions that we have charted in our empirical analysis
are evidence of how this new de-centred mode of political action works.
Resilient privatization 763

Our article has therefore also contributed to a more detailed understanding of recent
broader political-economic changes in Sweden. We have added to a minor literature on
Sweden, one focused on the strength of Swedish business and its organizations (Fulcher,

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1991; Boréus, 1994; Kinderman, 2017; Svallfors, 2016b). This strength is no longer chan-
nelled only through corporatist institutions and pursued through top-level bargaining with
unions and the state, but primarily in a post-corporatist, de-centred, networked, personal-
ized, under-the-radar mode of doing politics and advocacy.
What we offer as a contribution to understanding the resilience of the privatization of
the Swedish welfare state is therefore a new perspective for a new political landscape, in
which mass parties, corporatist arrangements and peak-level negotiations play less of a role,
but where the importance of strategic organized action has if anything increased. At the
point of writing, the forthcoming proposal on limits on profit-taking is heading for defeat in
the Swedish parliament, mainly as a result of the skilled, highly organized and concerted ac-
tions of the Swedish business community.

Funding
The research has been supported by the Swedish Research Council (grant no 421-2014-962).

Acknowledgement
Both authors contributed equally to the research, names are in alphabetical order. We thank Corrie
Hammar for excellent research assistance, and Daniel Kinderman, Johannes Lindvall, Jonas
Pontusson, Niels Selling, Michael Shalev, Sven Steinmo, and Janine Wedel for helpful comments.

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