Nobel Prize Economics Professors Hijack The Swedish Public Policy Debate

Swedish economics professors, many of them members of the Nobel Prize Committee on Economics within the Swedish Academy of Science, have advised successive governments that the welfare state seriously decreases economic efficiency and growth. Since the 1970s, they have portrayed ''Swedosclerosis'' as a particularly virulent form of Eurosclerosis. But according to Professor Walter Korpi, writing in the latest issue of the Economic Journal, while these economists have been highly politically influential, their policy advice has been neither objective nor sufficiently based in empirical facts.

The basic empirical argument used to support the Swedosclerosis diagnosis has been that since 1970, Sweden''s GDP growth rate has been lower than the average of all the OECD countries. But within the OECD, GDP growth rates have tended to be lower among the more affluent European countries (Denmark, France, Germany, Sweden, Switzerland, the Netherlands and the UK), as well as the US, Canada, and Australia, than among the less wealthy countries (Turkey, Greece, Italy, Spain, Portugal and Ireland).

This phenomenon is often referred to as ''catch-up''. It suggests that not only Sweden but all the most affluent OECD countries have tended to have growth rates below the OECD average, an average that is raised by the higher growth rates of the less affluent countries. According to Korpi, the Swedosclerosis spokesmen have missed the fact that in drawing conclusions about the growth effects of the welfare state, Sweden''s growth rate must be compared not with the whole OECD but with the average growth rate of the other affluent members. Such a comparison shows that up to 1990, on the whole, Sweden''s growth rate was similar to that of the other affluent OECD countries. For example, Sweden''s growth rate has been considerably higher than Switzerland''s, a country generally recognised to have a welfare state much smaller than Sweden's.

Korpi also suggests that the Swedish university professors have engaged in careless analysis, and their errors have systematically favoured the Swedosclerosis interpretation. Furthermore, they have neglected easily available data and scholarly publications that are out of line with the Swedosclerosis diagnosis.

Korpi notes that the non-Swedish participant In the Economic Journal controversy, Professor Steven Dowrick of the National University in Canberra, supports Korpi''s interpretations. Dowrick concludes that ''at least up until 1990 there is nothing in the Swedish growth performance which suggests substantial underperformance.'' The plummeting of Sweden''s growth rate after 1990 may reflect policy mistakes in the late 1980s as well as the change of economic policy goal from full employment to low inflation. Dowrick argues that there is a stiff challenge for the proponents of the Swedosclerosis diagnosis: ''It is incumbent on them to explain why Swedish GDP performance was consistently reasonable over forty years and only shows a marked decline after 1990.''

Korpi argues that the controversy points to old but usually neglected problems of scientific objectivity when social scientists act as policy experts and policy advisers. In view of the increasingly important role of economists in the policy process, such objectivity problems have important consequences for the democratic process as well as for the progress of social science.

''Eurosclerosis and the Sclerosis of Objectivity: On the Role of Values among Economic Policy Experts'' by Walter Korpi is published in the November 1996 issue of the Economic Journal. Korpi is Professor of Sociology and Social Policy at the, Swedish Institute for Social Research, Stockholm University.