Industrial History and Dynamics in Sweden

Swedish Industry and Industrial Revolutions

Introduction

  • The lecture focuses on industrial dynamics in Swedish industrial history.

  • The reading material is "Personal and Economic History of Modern Sweden" by Lennart Schön, which serves as an encyclopedia for Swedish industrial history.

  • Lennart Schön uses concepts like development blocks and structural cycles to explain Swedish industrial dynamics.

  • Structural cycles include a crisis, transformation, rationalization, and another structural crisis.

  • The lecture will cover the Swedish industry today, industrial revolutions, specific industrial areas, and Sweden's current industrial setting.

Key Swedish Companies

  • A list of prominent Swedish companies is provided, including:

    • IKEA

    • ABB

    • Atlas Copco

    • Volvo (split into Volvo Cars and Volvo Group)

    • Essity

    • Sandvik

    • Ericsson

Historical Context

  • Historically, Sweden had iron works, mines, and was a significant exporter of wood and iron.

  • The roots of Swedish industry can be traced back to these resources.

  • Sweden was a laggard in adopting the first industrial revolution but caught up later.

  • Peak manufacturing occurred in the 1960s and 1970s.

  • The knowledge economy has risen in recent decades, with companies like Spotify emerging.

Industrial Revolutions

  • The lecture adopts Lennart Schön's division of three industrial revolutions.

  • Industrial revolutions are marked by the commercialization of general-purpose technologies related to communication, energy, or transport.

First Industrial Revolution

  • Key technologies: steam engine, blast furnace, railroads, and telegraph.

  • Sweden adopted these technologies in the mid-1800s.

  • Innovations often utilized domestic resources like metals, iron, and timber.

Second Industrial Revolution

  • Key technologies: electric power, internal combustion engine, telephone, and electromagnetic waves (radio).

  • Marked by institutional differences, such as liberal Western countries versus feudal Russia.

  • Saw the rise of new ideologies like fascism, communism, and capitalist liberalism.

Third Industrial Revolution

  • Key technology: the microprocessor (Intel 4004 in 1971).

  • Productivity increases became evident in the late 1990s after a fully developed system was built around microprocessors.

Structural Cycles

  • Each industrial revolution consists of two structural cycles.

  • The first cycle involves the initial commercialization of inventions.

  • The second cycle involves the full potential of production and efficiency increases.

  • The current revolution of IoT (Internet of Things) is based on inventions commercialized in the 1970s.

Recap of Industrial Revolutions

First Industrial Revolution Details

  • Blast furnaces increased steel manufacturing output.

  • Railroads improved transportation and communication.

  • England was the starting point due to its institutional context and individual freedoms.

  • The Enlightenment's emphasis on reason, science, individualism, and skepticism played a crucial role.

  • Countries that adopted railway knowledge early experienced significant economic growth.

  • The Crimean War demonstrated the impact of new technologies on warfare.

Second Industrial Revolution Details

  • Thomas Edison commercialized the light bulb, and generators were installed in New York in 1882.

  • Took decades for societal productivity to increase due to these inventions.

Transformation Pressure

  • Transformation pressure from the first industrial revolution was between liberal Western countries and feudal Russia.

  • Wars following the second industrial revolution were demarcated by institutional differences.

Productivity Increase

  • Major productivity increase with the third industrial revolution required a fully developed system and new business models.

  • Computers became widespread in the 1980s, but productivity increase wasn't evident until the late 1990s.

Swedish Industrial History Through Revolutions

  • Early industrialization and agrarian society transformed during the first industrial revolution.

  • The breakthrough of modern industrial society occurred during the second industrial revolution.

  • The breakthrough of the service economy and post-industrial society began during the third industrial revolution.

Demographic and Economic Trends

  • Agriculture's dominance declined from the 1960s.

  • More people moved into industry and then into the service sector.

  • The service sector is now the largest employer in Sweden.

  • Inventions like the steam engine and blast furnace transformed agriculture.

  • Developed railway systems marked the second part of the first industrial revolution.

  • Electric and combustion engines in the 1890s led to fully developed systems by the 1920s and 1930s.

  • The annual growth rate has been roughly 2%.

  • Sweden's biggest economic boom was in the early 1900s.

  • Sweden recovered from crises quicker than other European countries, except for the United States.

Energy Consumption

  • Biomass has been used for a long time.

  • Coal was introduced after the first industrial revolution.

  • Oil became the dominant energy source until the 1970s oil crisis.

  • Expansion of hydropower was significant for industry.

  • Nuclear power was introduced to substitute oil.

  • The 1970s oil crisis heavily impacted Swedish industry due to reliance on oil imports and decreased export demand.

Factors for Economic Productivity

  • Three basic factors:

    • Investments

    • Innovations

    • Institutions

  • Stable institutions are crucial for investor confidence.

  • Institutions must adapt to technological and organizational change.

  • Both renewal and increased efficiency are required for economic growth.

Pre-Industrial Sweden

  • Sweden was one of the poorest countries in Europe in the 1800s.

  • The country experienced a rapid transformation from the mid-1800s to mid-1900s.

  • Shift movements in farming improved efficiency.

  • Farmers had a strong political voice, and there was no serfdom.

  • A Lutheran Protestant society emphasized simplicity, work ethic, education, and literacy.

  • Introduction of railroads in the 1850s led to international integration and policy transformations.

Industrial Takeoff

  • The industrial takeoff occurred in the late 1800s.

  • Fueled by improved transport, mechanization, and communication.

  • Engineering boom led to the formation of companies like LM Ericsson, SKF, and Alfa Laval.

  • competitive phone from LM Ericson had both integrated loudspeaker and microphone.

  • Continued exports of iron and timber.

  • New companies in shipbuilding and automotive industries.

  • Increasing electrification with hydropower, coal power and biomass.

Complete Development Blocks

  • An electric power and automotive development block formed in Sweden.

  • Rapid export growth of processed goods and innovative engineering products.

  • Improved transportation and power supply reduced the importance of localization.

  • Traditional handicraft areas, like Tibro and Småland, became industrialized.

Servitization and Microelectronics

  • The period from 1975 to 2010 saw the breakthrough of servitization.

  • Oil crisis and industrial crisis in the 1970s.

  • Liberal ideologies and increased economic liberties in the 1980s.

  • Decrease in industrialization and increase in IT-based companies.

Automotive and Shipbuilding Industry Examples

Automotive Industry

  • Many companies surged during the formation of the Swedish automotive development block.

  • Companies faced bankruptcy due to economic crises.

  • The finance family of Wallenberg discontinued some productions after acquiring stakes in numerous competitors.

Shipbuilding Industry

  • The shipbuilding industry faced a crisis in the 1970s.

  • Global oil crisis and reduced market demand.

  • Increased competition from Asia with lower wages and government support.

  • The industry largely collapsed, with remnants focused on the defense industry.

Green Boom in Northern Sweden

  • Recent years have seen large-scale industrial projects with a green image.

  • Projects aim to substitute for cultures with green electricity.

  • Investments have become more shaky recently.

  • Potential demand of 30 terawatt-hours in northern Sweden, while the current surplus is around 15 terawatt-hours.

Conclusion

  • The lecture connects the history of companies with Lennart Schön's book.

  • Analytical tools and concepts will be used to analyze industries and companies.

  • Transformation pressure, development blocks, and structural tensions are key concepts.

  • The next lecture will focus on industrial dynamics and theories.