Manufacturing debt: the co-evolution of housing and finance systems in Sweden

This thesis investigates long-run financial dynamics in Sweden in order to understand how changes in the constitution of housing finance have both shaped and been shaped by the Swedish housing system from the mid-nineteenth century to the present era. Once heralded as one of the most effective housing models in the world, Sweden’s housing system is, today, widely considered to be in a state of acute crisis. Housing scholars often attribute the current state of housing dysfunction to a ‘system switch’ which saw Sweden’s social market system ‘rapidly transition’ to neoliberalism during the 1990s. However, by citing processes such as neoliberalism as core drivers of contemporary housing system dysfunction, scholarly appeals to what are largely perceived as exogenous ideological influences tend to obscure the path-dependant nature of housing and finance system development. As such, the behavioural legacies, norms, and expectations which a housing stock and attendant system of housing finance generate over many decades, and the sectoral actors and interests which help to shape the rules of the game vis-à-vis housing investment, production, consumption and distribution are, all too often, left empirically and theoretically unchecked. This thesis argues that the Swedish model of housing, which was for so long held up as a paragon of social market efficiency and stability, was in fact an ephemeral phenomenon and that, far from being a contemporary aberration of financialised neoliberalism, the current levels of precarity and dysfunction in Sweden’s housing system have a longer pedigree than many scholars assume. I show how a unique model of political economy and industrial relations created a housing industrial complex, producing one of the most concentrated and powerful construction and finance sectors in the world. How speculative housing dynamics and changing attitudes to financial risk generated from outside formal banking channels undermined the basis of this complex and, with it, traditionally decommodified housing forms. How the state moved from attempting to mitigate the risk-taking behaviours of financiers, investors and households, to promoting speculative housing dynamics and embracing the development of a housing finance complex. And how, sponsored by the state, debt-fuelled housing consumption has been a central feature of the Swedish model of housing for over 40 years. Adopting an actor-centred, historicist approach, this thesis studies housing systems as complexes of production, distribution and exchange, which are inextricably linked to long-run evolutions in finance. Exploring longitudinal patterns and trends relating to credit flows to the housing sector, tenure composition, household debt, housing construction, and institutional governance, the thesis emphasises the centrality of housing finance system development – and the state’s role therein - in engendering particular practices and behaviours which, in turn, shape housing system dynamics and attitudes to housing risk on both the demand- and supply-side. In so doing, it positions housing and finance systems as proper objects of historical enquiry, whose path-dependent, coevolutionary dynamics can never be fully appreciated in isolation of each other, or, indeed, of broader political-economic trends. By examining the co-evolution of housing and financial forms in Sweden, this thesis seeks to answer fundamental questions such as: What impacts do changes in the constitution of housing finance have on housing system development? Which actors and expressions of interest have most influence over housing system outcomes? And: Why do housing policy regimes change?