In the latter part of the 1930s, the direction of Swedish transport and communications policy changed. The policies which had been formed during the industrialization process, which began in the 1850s, had been characterized by dual regimes. Even if the State-owned public utility enterprises (affärsverken) had the largest market shares within these dual regimes, they coexisted with private enterprises. However, during the 1930s and 40s the segments within the Swedish transport and communication infrastructure which were controlled by the private enterprises were nationalized. Against this background, this paper examines how this relation between the Swedish National Power Board (Vattenfall) and the private electricity enterprises unfolded with regard to the control and ownership of the national power grid.
The national power grid is the infrastructure which provides the transmission of power between the power plants and industries and households. During the examined time period, many hydro power plants were constructed in the northern part of Sweden, which was sparsely-populated and agrarian. Consequently, the electricity they produced had to be transmitted to the industrialized and urban parts in the middle and southern parts of Sweden. This situation actualized the need for an expansion of the national power grid. Consequently, new power transmission lines had to be constructed.
At first, this situation produced a conflict of interest between the Swedish National Power Board on the one hand and the private electricity enterprises on the other hand as they could not agree upon their respective roles in the process. However, after mediation efforts from the government, the previous cooperation within the dual regime was reestablished. As a result, the Swedish National Power Board and the private electricity enterprises would cooperate regarding the construction of the power transmission lines within the national power grid. Over time, this cooperation was considered so successful that they in 1945 planned to form a joint enterprise for the construction and control of the national power grid.
However, the direction of government electricity policy since the last years of the 1930s had been shifting towards emphasizing the need for a State monopoly over the national power grid, rather than upholding the dual regime. At several times, the Social Democratic and Agrarian parties expressed strong suspicion that the private enterprises eventually would put their own commercial interests and not the public interest first if the existing cooperation arrangements were allowed to carry on. In 1946, as a Social Democratic majority government had come into office, the plans for a joint national grid enterprise was rejected. Instead, the Swedish National Power Board was given a monopoly over the national power grid.
The national power grid had then been nationalized just as the railways (in 1939), the trunk roads and highways (in 1944) and the civil airports (in 1946). In the paper, this shift in policy is explained by the ambition of the Social Democrats to use transport policy as an instrument and mechanism to influence the direction of the economy as a whole. As for the national power grid, it was deemed necessary to control the production and distribution of electricity in order to ensure the competitiveness and development of Swedish industry.
Already in 1934, Professor Gunnar Myrdal had outlined the general principles for a Social Democratic transport policy. Myrdal stated that private enterprises in sectors such as transport and communications should be regarded as profit-maximizing agents, which could not serve the public interest as constructed by the political majority in society. Instead, these tasks had to be performed by companies controlled by a public agent. Accordingly, the dual regimes in the transport and communications sector were replaced by State monopolies as the State-owned public utility enterprises amalgated the operations from the private enterprises into their own structures.
In the final part of the paper, this aspect is discussed as an important factor behind the decision to nationalize the transport and communication infrastructure, while other sectors of the economy were left in private ownership (although heavily regulated). Here, an institutionalist perspective is applied. It is argued that as the State-owned public utility enterprises already were dominating agents within their domain, they provided politicians and decision-makers with an existing alternative, into where the private operations only had to be amalgated. As a result, the role of the State-owned public utility enterprises also changed. From being dominating agents in a dual regime, they were transformed into monopolists and would keep that role until the Swedish transport and communication markets were deregulated during the first part of the 1990s.
Umeå: Umeå universitet, Institutionen för geografi och ekonomisk historia , 2011. , 32 p.
Sweden, economic history, electricity producers, national power grid, regime change
Projektet finansieras av Ragnar Söderbergs stiftelse genom anslag E41/11.