1982 Super-Devaluation of the Krona

Within hours of taking office in October 1982, Olof Palme‘s second cabinet and Finance Minister Kjell-Olof Feldt devalued the Swedish krona by 16 per cent — a much larger step than the 6-per-cent devaluation of 1976 or the 1981 bourgeois devaluation, and large enough to enter Swedish economic history under its own name: superdevalveringen. The cabinet bypassed the Riksbank’s planning process and forced the measure through; Riksbank chief Lars Wohlin was reportedly informed at very short notice.

The devaluation was the macroeconomic anchor of the SAP’s tredje vägen — the Third Way — the party’s response to stagflation that combined currency devaluation, restored export-sector profitability, and continued welfare-state defence. Lower labour’s share of national income to benefit capital and restore the industrial profit rate; defend welfare and union institutions on top of that recovered base; treat full employment as a binding constraint. It worked in the short term: Swedish exports surged, industrial profitability returned, and the late 1980s opened on a boom.

The longer-term consequences were less benign. The Third Way devaluation strategy lowered labour’s income share more than its architects had publicly defended, complicated the parallel introduction of wage-earner funds in 1983, and — combined with the 1989 currency-control deregulation and 1990 Nyckeln-affären — fed credit and asset-price overheating into the early-1990s banking crisis. The 1982 move remains the defining macroeconomic reference point of post-1980 Swedish economic historiography, and left and right historians frame it very differently.