Formalizing a new approach to economic policy - Bent Hansen, Gösta Rehn and the Swedish model

In the early postwar years, two trade-union economists, Gösta Rehn and Rudolf Meidner, presented a Swedish alternative to Keynesianism. The so-called Rehn- Meidner model recommends restrictive macroeconomic policies, labor market policy programs and solidarity wages to combine price stability with economic growth, equity and full employment. In the 1950s, Bent Hansen evaluated the effects of the Rehn-Meidner policy and the validity of its underpinning theory. Hansen’s rigor analysis shall not conceal that, even together with Rehn, he was unable to shed light on the positive relationship between average profits and labor scarcity in the Rehn-Meidner model or all relations between its policy means.