Abstract
The industrial sophistication of today’s Sweden has its roots far back in history. The argument in this chapter is that it depends to a not negligible extent on the historic role of Swedish Government as an advanced customer of privately demanded public goods and infrastructure investments, for a long time largely military equipment but later also investments in railroads, electrical power generation and distribution, and telecommunications networks. Most of this would never have gotten under way spontaneously in the market. It was either that the customer engaged was public, or a public monopoly, or the private payback horizon was too distant. Infrastructure projects such as railroads, electrical power generation and distribution, and telecommunications networks have been cited as the typical examples, but military exports have been a steadily growing source of income for Swedish Government for centuries. It is symptomatic, for instance, that the countries that did not start building railroads early in the nineteenth century (and frequently this was at the initiative of a prudent government) never became industrial economies. It is also interesting to note that the vast territory of China at that time was integrated through a system of canals, built at an enormous cost. The owners of that canal system seem to have been capable of preventing the modernization of land transports in China through railroads. They therefore also prevented the industrialization of China (Boserup 1981:160ff).
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Notes
- 1.
Or a very large monopoly company. Large companies that would benefit from the heavy load transport capacity of railroads often built their own local railroad tracks, for instance, the then Swedish mining company Grängesberg. It however took a government initiative and a national railroad system for the networking synergies to come into full play. See Andersson-Skog (2009).
- 2.
More than 500 years earlier, the age of the Scandinavian Vikings was a period of war but also of trade and industry but of a smaller scale family business kind. Again, to herald the story to follow, the Vikings were as much traders and industrialists as they were warriors, writes Wax and Wax (1955), but in the complete absence of institutions that could enforce legal order, they needed to carry weapons to protect their goods. Wax and Wax had studied the (later) Viking literature and concluded that also in spirit “the cradle of capitalist thought and action” was to be found among the Vikings. Also see Holmqvist (1979).
- 3.
This came on top of a dangerously fragmented engineering organization of shipyard work. Systems integration was an unknown concept at that time. Large warships represented top-of-the-line industrial technology and complexity, and they had been growing so big that systems properties were becoming an issue that shipbuilding practice took its time to recognize. One person had been responsible for the hull of Wasa , another for the rigging, and a third for the weaponry. And the three worked independently of one another. In addition the lack of standards of tools and parts proved destructive. The Dutch and Swedish carpenters, for instance, used differently scaled measurement sticks.
- 4.
The world’s first “modern” production line with specialized machines and sequential manufacture of parts, the “block factory,” was opened in Portsmouth, England, in 1805. This modern naval yard was the result of decades of innovative design development aimed at securing the dominance of Great Britain of the seas of the world (Ny Teknik , Special Supplement, Nr 41, Oct.7.2009:18).
- 5.
The name of the river Boo was combined with the Swedish name for a waterfall or rapids (“fors”) to Bofors.
- 6.
Both merged with the factories of the Swedish defense (FFV ) in 1943. To get the history right, it should be mentioned that the Aerotech division of FFV was once a partner with Saab, Volvo Flygmotor (now Volvo Aero , that was acquired by the UK GKN in 2012) and Ericsson Microwave Systems (now Saab Microwave Systems ) in the industry group (IG) JAS that was established in 1981 to develop the new combat aircraft Gripen . FFV Aerotech was responsible for the testing and maintenance of equipment.
- 7.
SBL was founded as a government laboratory in 1909, incorporated in 1993, acquired by Active Biotech in 1997 to be finally acquired (after some additional ownership changes) by Dutch vaccine company Crucell in 2006.
- 8.
A US company and world leader in laser technology. It was acquired by Pharos in 1990, an AGA subsidiary. AGA was also actively engaged in a diversifying program away from its dependency on gas and military products that also failed. Aga, founded by Gustaf Dalen in 1904 on his invention of an autonomous lighthouse, later developed into the largest manufacturer of industrial gases in Northern Europe, to be acquired by German gas manufacturer Linde in the early 2000s.
- 9.
Once the second largest in the world, the Swedish shipyard industry consisting of six major yards perished slowly under the government subsidy medication during the entire 1970s and part of the 1980s. It had locked into the wrong product mix; it turned out after the oil crises, so its fate was sealed already in the early 1970s (Eliasson 1970). The drawn out terminal subsidy treatment cost Sweden a significant loss in manufacturing growth (Carlsson 1983a, b; Carlsson et al. 2014, and Sect. 14.6).
- 10.
Also Nokia failed, and what remained of Datasaab was acquired by English ICL in 1991. ICL also failed, only to be acquired by Japanese Fujitsu that needed to complement its mainframe computer technology with “PC competence.” So some of old Datasaab technology is surviving within Japan’s largest computer maker.
- 11.
To what extent this is more than the second-degree remediable lock-in in Margolis’ (2009) terminology (see Sect. 1.3) is an open question. The lock-in of the Swedish shipyards was sorted out when subsidy medication was terminated, and all civilian yards closed down. When almost exactly the meted out subsidies to each of the six yards was withdrawn in a simulation on the Swedish micro to macro model (see Sect. 13.6), the yards were shut down in the model simulation, as well as in reality (Carlsson 1983a, b; Carlsson et al. 2014).
- 12.
In 1991 Bofors merged with Swedish FFV into Swedish Ordnance within the Celsius Group, which was acquired by Saab in 1999. Saab sold the Bofors cannon part to United Defense , which was acquired by BAE Systems in 2005 and is now called BAE Systems Bofors (see Sect. 6.2).
BAE Systems was formed in 1999 as a merger between Marconi Electronic Systems and British Aerospace.
- 13.
Or rather, Hägglunds Vehicles was sold to British Alvis in 1997, which was acquired by BAE Systems in 2004.
- 14.
Also the regional economy of Örnsköldsvik in the north of Sweden belongs here (see Chap. 7, and Eliasson and Peterson 2011).
- 15.
See Solow (1987).
- 16.
By the founder of Sandvik, Göran Fredrik Göransson.
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Eliasson, G. (2017). The Role of the Competent and Demanding Customer and Technological Product Competition in Industrial Evolution: A Historic Perspective. In: Visible Costs and Invisible Benefits. Economics of Science, Technology and Innovation. Springer, Cham. https://doi.org/10.1007/978-3-319-66993-9_2
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