Socialisation of Investment


Or “Crowding Out Capitalism”


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Olof Palme

Crowding Out Capitalism: An Introduction

Crowding out Capitalism is a term in the theory of Historical Materialism referring to a) the process of the historical transition of human society from the capitalist mode of production to the socialist mode of production, b) to the strategy of the labour movement in its struggle for emancipation or c) in a more narrow sense to the economic policy as part of this strategy. Click for the article

- The Economic Policy of Crowding out Capitalism: A Presentation
- Crowding out Capitalism – A Simple Scenario
- Some empirical evidence on The Need for Crowding out Capitalism
- The Bourgeois Debate on International Capital Flows: Feldstein, M; Horioka, C. Domestic Savings and International Capital Flows, Economic Journal, Vol. 90, 1980, p. 314-329.

Rudolf Meidner. 1978. Wage Earner Investment Funds: An Approach to Collective Capital Formation. George Allen & Unwin; 1978.

This book presents the so-called “Meidner Plan” the Swedish way of socialising investment. The book is fundamental for the articles on this page.

Rudolf Meidner. 1993. The Story of Wage Earner Investment Funds

Excerpt from Rudolf Meidner. 1993. Why Did the Swedish Model Fail? Socialist Register, vol. 29, 1993, pp. 211-228. (see further below).

Abstract: The Socialisation of Investment was seen by Keynes as a long run inevitability to maintain full employment. The Swedish initiative (Meidner Plan) to establish Wage Earner Investment Funds in  the 1970ies and 1980ies must be seen as a first attempt to come to grips with the issue of collective capital formation. It is a rather difficult undertaking as Rudolf Meidner is showing in this short excerpt from his article “Why Did the Swedish Model Fail?”.

Trade Unions and Collective Capital Formation. A Review of Initiatives in Western European Countries

Karlsson, Gösta. European Trade Union Institute, Brussels: ETUI; 1983.
Abstract: The trade unions are striving to achieve a distribution of wealth which is more favourable to workers. This study endeavours to present an overall picture of the various current (1983) initiatives and objectives of worker’s capital formation in several European countries, the motives behind them and the form they take. The positions of the trade unions on capital formation form a central component.


Collective Asset Formation through Wage-Earner Funds

Meidner, Rudolf. International Labour Review 1981, 120, no. 3: 303-317.
Abstract: When a small group of researchers appointed by the Confederation of Swedish Trade Unions (LO) published a report on “wage-earner funds” in August 1975, Swedish public opinion reacted with surprise. The group had suggested a scheme for compulsory profit sharing which would cover all firms of more than a certain size and envisaged the formation of collectively owned funds financed by such profits and administered by employees and their organisations.

Political Economy of Wage-Earner Funds: Policy Debates and Swedish Experience

Donald A. R. George.Review of Political Economy 1993, Vol. 5, no. 4: 470-490.
Abstract: Various European proposals for wage-earner funds are briefly surveyed. The central issues of the policy debate surrounding these funds are then discussed. It is argued that the outcome of this debate was not determined solely by a rational appraisal of the economic costs and benefits of the various policy options. Wage-earner funds raise questions concerning the ownership and control of capital and have therefore been the focus of political conflict between powerful interest groups. The paper then analyses the experience of wage-earner funds in Sweden, dealing with their objectives, behaviour and economic performance.
Further articles by Donald A. R. George
- Collective Capital Formation: Implications of the Scandinavian Debate
Economic Analysis and Worker’s Management, 3, XIX, (1985), 281-293.
- Wage-Earner’s Investment Funds in the Long Run Economic Analysis and Worker’s Management, 1, XIX, (1985), 13-28
Copyright © 1985 Institute of Economic Sciences, Belgrade. Published with the kind permission of the IES.

Why did the Swedish Model Fail?

Meidner, Rudolf.Socialist Register 1993: 211-228.
Abstract: ‘From Marx to Market’ is not only the title of a well-known book’ or a play on words: the slogan can also be used as a telegraphed history of the Swedish labour movement. The late 19th century pioneers of the movement were strongly influenced by German Marxists and had as a concrete goal the transfer of the means of production into collective ownership. Their modern followers have abandoned – as have most socialists in Western democracies – the issue of ownership as the essence of socialism. The market economy is now generally accepted as the arena for the exchange of privately produced goods and services – albeit with restrictions and modifications in the interest of a fair distribution of wealth.

Collective Capital Formation for Economic Democracy. The Fordist History in Germany and Sweden and the Post-Fordist Future

Sjöberg, Stephan. Stockholm: Centre for Marxist Social Studies; 2006.
Abstract: The article analyses the German and Swedish experiences of elaborating collective capital formation as a strategy for economic democracy. It stresses how the original Swedish wage-earner funds (WEF), to a large extent were influenced by proposals for capital formation funds that had already been elaborated in Germany. The original WEFs should be considered as a socialist strategy aiming to transform the power and property relations in order to achieve economic democracy. The WEF struggle resulted in a hegemonic turning-point; up to this point Swedish social democracy had for decades strengthened its power position, but the WEF struggle meant that the bourgeois actors managed to unite as a hegemonic force which have had important consequences for the development afterwards. To understand the origin and decline of the plans for collective capital formation in Germany and Sweden, the analysis needs to take into account the transformation from a Fordist to a Post-fordist mode of production. This transformation has important implications regarding the possibilities for the labour movement to once again work out strategies of collective capital formation for economic democracy, e.g. trade union pension funds.

Sozialkapital und Sozialfonds als Mittel der Vermögenspolitik

Gleitze, Bruno. WWI-Studie Nr. 1, Köln: Bund-Verlag; 1969.
Abstract: This is a fundamental German study on collective capital formation by the director of the WWI, the West-German Trade Union Economic Institute, Prof. Dr. Bruno Gleitze, successor to Viktor Agartz (see the German page of MIME). The WWI has been renamed in 1972 into WSI and is since 1995 part of the Hans-Böckler-Stiftung. The so-called ‘Gleitze Plan’ does not aim at crowding out capitalism – there is no space for such thoughts in German economic institutes, including trade union institutes – but it aims only to introduce a fairer distribution of wealth by proposing to have the workers participating in the profits of the major companies. The profits should remain in the companies but the ownership of this capital being transferred to collective investment funds and by those attributed to all employees in the German economy according to some rule. The study presents the history of the ‘Gleitze Plan’, some institutional considerations, an analysis of the wealth distribution in Germany and a documentation of the discussions which had followed the proposal. The plan in its original form had never a chance of being put into practice. The social-democratic governments had only succeeded to introduce some worker’s savings schemes supported by tax-incentives. Although these schemes are helpful to increase living standards of the employees they have not really an impact on the distribution of productive wealth.(see the ETUI study above).

The “Crowding Out Capitalism” à la français

Nasser Mansouri-Guiliani et Jean-Christophe Le Duigou: 10 propositions pour sortir de La Crise, sans recommencer comme avant! Paris: Les Éditions de l’Atelier/Éditions Ouvrières; 2009, pp. 149-152.
Abstract: À la crise du système, solutions systémiques Conclusion du livre des économistes de la CGT.

Paying for the War

John Maynard Keynes. The Times, November 14th and 15th, 1939.
reprinted in: Donald Moggridgge (ed.) The Collected Writings of John Maynard Keynes, Vol. XXII, Activities 1939-1945. Internal War Finance. London and Basingstoke: Macmillan; Cambridge University Press; 1978; pp. 40-41.
Abstract: In November 1939 Mr. Keynes had proposed a compulsory savings scheme to accumulate wealth in the hands of the workers, not in order to introduce economic democracy and worker’s emancipation but to pay for the war. However, the proposal had its merits. It begins with: “Nothing is more certain than that the wages bill of this country will increase …”
- Maital, Shlomo. 1972. Inflation, Taxation and Equity: How to Pay for the War Revisited. The Economic Journal 82, no. 325 (March 1): 158-169.

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