The case for acquitting social programs from the charge of retarding economic growth has thus far relied on newly available comparative evidence that sweeps across a score of OECD countries. Powerful as the comparative overview may be, we need a closer look at the specific policies and institutions of individual countries. Some of the needed country studies have already been written. Only one single-country chapter is ventured here, to complement the comparative analysis of Chapters 10 and 12.

In choosing that country, one might prefer Denmark, Germany, or the Netherlands for their pioneering roles and the extremes to which some of their labor-market institutions were pushed before being repaired in the 1990s. But the overwhelming choices of the English-language literature on the welfare state are Britain and Sweden. Revisiting British experience here is less valuable than a look at Sweden, however, since Britain's status as a welfare state has always been less clear, despite the traditional bows to Beveridge. For a welfare state prototype – either as the “third way” champion or as a socialist democracy run amok – the press has usually turned to Sweden. So Sweden it is.

The usual rhetoric about a “demise” or “crisis” of the welfare state misses the mark for Sweden, as well as for other countries. Sweden did have a set of economic crises between the mid-1970s and the mid-1990s and fell behind some other countries. Policy errors were indeed to blame for much of Sweden's difficulties.