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The Rehn-Meidner Economic Model

Decent Essays

Question 1: Describe the Rehn-Meidner economic model, its development and discuss its applicability in the contemporary economic landscape.
Answer 1: The Rehn-Meidner model was developed by the Swedish trade union confederation (Landsorganisitionen i Sverige) economists Gösta Rehn and Rudolf Meidner and presented during a LO congress in 1951. It is based on an active labor market policy, a solidarity wage policy and a restrictive macroeconomic policy which combined should lead to a full employment, fair wages, price stability and a high economic growth (Erixon, 2010: 677). Even though Sweden’s economic was in a good shape in comparison to other European states due its neutral status during the Second World War, the theory of Maynard Keynes …show more content…

In a European context, Sweden works more towards a liberal framework. Moreover, there is no unambiguous blueprint of the Rehn-Meidner Model in case of a depression which makes a judgement harder and less reliable. A high unemployment rate is not necessarily a sign of the turn-away from the Rehn-Meidner Model. Even under a social democratic government the economic policy was dominated by a mixture of Keynesian, Rehn-Meidner and ‘neo-monetarism’ (Erixon, 2010: 704). Other factors are the globalization, higher profit margins, higher profit shares and price stability that indicate a turn-away from the Rehn-Meidner Model. Because of the flexible exchange rates the fiscal policy became subordinate (Erixon, 2010: …show more content…

In the recent years Sweden participates in any mission alongside NATO states on a NATO mission. It began with the mission in Bosnia and Herzegovina in 1995 and continued with the ISAF mission in Afghanistan starting in 2003 and Libya in 2011 (NATO, 2015). Because of its EU-membership Sweden now shares the responsibility for the safety of the EU countries as it signed the solidarity clause and so losing military autonomy (Eur-lex.europa.eu, 2015). In the hindsight of the current problematic situation in Europe it is possible Sweden has to react in order of solidarity and alliance. Often Sweden’s foreign policy is described as non-alignment as they are not a member of the NATO or other treaties but as seen before its EU-membership can be seen as an alliance. Even though the self-image of Sweden is still dominated by the history of neutrality a public debate of a NATO membership rose in the 2000s and had strong supporters. Because of its recent history of cooperation Sweden could quickly integrate into the NATO as they have a small army with a high quality. As of right now Sweden participate at their mission but has no decision power about

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