The Shift in Corporate Governance Ideology of the Swedish Social Democrats That Caused Increased Concentration of Top Incomes

Concerns about contemporary capitalism and increasing inequality is heavily centered around concentration of the power of wealthy firms and individuals. Less attention has been tilted towards answering questions on why top incomes surged during left governments. The strong centralized Social Democratic governance in Sweden the first half of 20th century involved anti-foreign-investors and taxation on capital gains/equity holdings. From 1980s, the Swedish Social Democrats reoriented corporate governance policies by allowing more foreign and institutional investors than ever. Value of institutional investor's asset has now passed well above 150 % of GDP. Swedish firms, though, are still most frequent users of dual class and pyramidal ownership structure. In this paper I use 1) historical analysis and argue that the Swedish Social Democratic approach to corporate governance do not fit with the current notion in the literature that places left parties as pro-shareholder (Cioffi/Höpner, 2006), nor anti-capital (Roe, 2003). The Swedish Social Democratic approach to corporate governance and finance capitalism have rather been driven by an anti-foreign capital ideology and lobbying by business associations only played a minor role in their corporate governance policies. The powerful and concentrated Swedish business elites rather used effort to lobby for other issues. Further, I 2) argue and use econometric analysis showing that the Swedish Social Democrats' shift from a historically strong and active tax policy that encouraged domestic reinvestment and disfavored equity holdings keeping the stock market in check, surged economic inequality in Sweden during the last two decades.