This dissertation adresses financialization – the increasing role of financial activities in the overall economy – in Sweden in 1900-2013. The focus is on the long run relationships between private debt, asset markets, inequality and financial crisis during this period. In line with established scholarship, the present study finds that changes in bank debt had a positive impact on the probability of financial crisis in Sweden. Functional income distribution between profits and wages was an underlying factor influencing the formation of bank debt levels through its impact on collateral in stock markets. Expenses related to the Swedish welfare state – the size of the public sector, government investment and housing construction – had a long run relationship with the wage share. The welfare state has been an effective counter-measure not just against a high profit share, but also against financialization. Moreover, the dissertation shows that the recent era of financialization in Swedish capitalism is not unique in kind. Rather, recent financialization is very similar to the macroeconomic situation during the early decades of the 20^th Century. These findings are consistent with much of heterodox economic theory, in particular the Neo-Marxist approach. 

This study demonstrates a long-run relationship between inequality and the bank debt to GDP ratio in Sweden in 1919–2012. The findings suggest that much of the impact of the top income share on the debt ratio comes from changes in the profit share. Earlier research claims that the rich, via the banks, have lent their savings to the poor as a substitute for wage gains, but this description seems ill-suited for Sweden. An alternative explanation is that banks consider profits to be an indicator of the safety of a loan. This is more in line with the study’s findings.

This investigation concerns the nexus between inequality, asset markets, and private debt, in the case of Sweden in 1900-2013. The evidence of the study suggests that financial wealth in stocks relative to GDP is an intermediary variable between the profit share and bank debt to GDP ratio. Though the study finds that there is a positive long run relationship between the profit share and the bank debt ratio in the case at hand, the inclusion of the stock market wealth ratio changes the sign of the profit share coefficient. Even so, there is also a positive long run relationship between the profit share and stock market wealth relative to GDP. This means that changes in the profit share may still have a positive impact on credit formation, though indirectly via the stock market. The study finds some evidence that collateral in the form of housing wealth is another determinant of the debt level.

Since the global financial crisis in 2008, there has been an elevated interest in private debt and as a macroeconomic variable. In light of the lack of high-frequency data, this study presents a unique monthly time series dataset on credit from and deposits in Swedish commercial banks from 1875 to 2020, covering 1,752 monthly observations and most of Swedish commercial banking history. In a first application, the study examines to what extent money in Sweden has been exogenous, created independently of demand by the central bank, or endogenous, created in response to demand by commercial banks, during different institutional settings. The results, derived via cointegration and impulse-response functions, show that though the relationship between deposits and credit has changed over time, both theories often hold validity simultaneously. While changes in deposits often have had significant impact on credit, the opposite has also been true. There are, however, differences between different regulatory regimes, as well as for different groups of banks.

This study presents new time series data for private debt in Sweden in 1900–2013, including credit from banks, mortgage institutes and credit companies. The reconstruction of the data is a scientific task by itself, and is complicated by changed definitions, breaks in the series, and the need for occasional interpolation and cross-reference of sources. The obtained data reveal both qualitative and quantitative changes in the structure of private debt in Sweden during the period. One finding is a pattern where the era starting with the deregulation of the credit market in 1985 resembles the era preceding World War Two. Both periods experienced a high level of private debt-to-GDP ratio as well as severe financial crises. In a first application of the data, the hypothesis of rising private debt in the years before a financial crisis is explored through logit regression. The findings are in line with international research, and suggest that higher lending, especially from banks, might aggravate the risk of financial crisis.

Financialisation has become a new buzz word in social sciences, but, although some of the earliest usages of the concept can be found with economic historians, the recent fad has largely been ignored by economic history. This is true also for the Nordic region. This survey article highlights a handful of studies on financialisation in the Nordic countries in general and within Nordic economic history, in particular, but more importantly, it relates Nordic economic history with a long wave approach to a corresponding stance in financialisation scholarship. It concludes that Nordic economic history is in an advantageous position to both shed light on contemporary financialisation with the help of historical examples. Moreover, it is also able to, through the lens of history, problematise some of the assumptions made within financialisation theory. In this, the Nordic region can provide apt case studies as varieties of financialisation over time and space. All in all, Nordic economic history has barely scratched the surface of this potential. 

This investigation explores the long-run relationship between the wage share in the non-construction private sector and government efforts to create jobs in public services and construction of infrastructure and houses, in Sweden in 1900 to 2016. In the present article, it is argued that the creation of employment with generous wages by the Swedish government has increased the bargaining power of workers outside of these sectors, thus raising the wage share, up to about 1980. Correspondingly, retrenchment from such policy has been detrimental for the wage share in recent decades. This argument is supported by the results of cointegration tests, estimation of long-run and short-run, speed of adjustment, coefficients, as well as by Impulse-response functions. While government consumption is often found to be an important determinant for the wage share, earlier research has neglected the full labor market effect of government job creation associated with an expansion of the welfare state. Sweden is an ideal case for studying the impact of welfare policy on the wage share, since it has been one of the most extensive welfare states and simultaneously has been one of the most egalitarian countries in the world.

This study explores the long run relationship between the wage share in the private sector and the extent of the Swedish welfare state in 1900-2013. It uses a novel approach where government intervention in the economy is broken down into three different aspects: Government consumption, government investment and residential construction. The construction of dwellings may seem questionable at first glance, since it to a large degree has been carried out by private interests. The fact that housing policy has been an important part of welfare policy through several channels motivates inclusion of the variable however. Government investment, mainly in infrastructure, and house construction as factors influencing the functional income distribution has been neglected in previous research. Through the use of single-equation cointegration technique, the study finds a positive and robust long run relationship between the private wage share and all three welfare variables.

Financialization is generally described as a trend occurring in the World economy since the late 1970s/early 1980s, but several scholars note that financialization is a historically recurrent phenomenon. Phases of financialization can be described as tides influenced by laissez-faire policy and collective intervention, most often via governments. By looking at three variables central to financialization – private debt levels, inequality and investment – this study finds that the finance-dominated capitalism in advanced economies between the Long depression, ending in the 1890s, and the Great depression in the early 1930s was similar to the current era of financialization: Rising inequality bred a higher debt-to-GDP ratio during both periods of financialization, mostly via larger collaterals and larger loanable funds. But whereas recent financialization, indicated by a rising debt-to-GDP ratio, has been associated with a declining investment-to-GDP ratio, financialization in the early 20th Century was positively associated with investment, manifest in the Second industrial revolution. During the “de-financialized” period after World War Two, inequality was neither associated with investment nor with private debt levels. Rather, macroeconomic policy reorientation and government management of financial markets led to a positive association between investment and private credit. The present study considers advanced capitalism as a totality rather than each country individually, since global capital flows play a crucial role during eras of financialization. A special focus is on institutional changes in the leading capitalist countries – The United States, Great Britain, Germany, France and Japan. The study also considers the special status of China in the World capitalist system. The coverage of advanced capitalist country GDP is about 75 per cent for the first era of financialization in 1896–1931, close to 90 per cent for the de-financialized era in 1946–1973, and almost 100 per cent for the recent period of financialization in 1983–2016. The dating of the three periods is based on available data and on established periodization by scholars in the fields of financialization, regulation theory and macroeconomic policy regimes. The conclusions are supported by cointegration tests, vector error correction models and impulse-response functions.