Stockholm -- Sweden's governing Social Democrats face a serious challenge in the general election which comes in the fall, a result of the fact that the Swedish model of society -- the famous ''third way'' between communism and capitalism -- no longer commands the electoral majorities it did and no longer produces the economic success of the past.
The Social Democrats are in an intellectual as well as political crisis. They have no substitute or successor to the Swedish model of the welfare state they created in the 1920s and 1930s, to international acclaim. It is that of a society of great social homogeneity and consensus, with an exceedingly high level of prosperity, based on successful high-technology industry, producing equally high levels of government-funded social protections.
The Social Democratic Party came to power in Sweden during World War I, at the end of a long period of social unrest. As late as 1911, the Encyclopaedia Britannica could describe Sweden as a country with a ''low'' standard of living, experiencing scarcity and occasional famine in its northern regions. Nearly a million Swedes emigrated during the second half of the 19th century, most to the United States. This was equivalent to a fifth of the total population of the country in 1900.
Government was unrepresentative. Universal male suffrage in voting for the lower house of parliament had been conceded in 1907, but the crown still possessed an absolute veto on legislation. The Social Democrats in their first years of power produced an immense democratization of administration and law, as well as their ambitious social reforms. This created the famous Swedish consensus. The Social Democrats have been in power for virtually the entire period since.
Sweden at the same time experienced explosive economic development, based on its mineral resources, forestry, the development of hydroelectric power and new industries based on a happy series of Swedish inventions (dynamite, by Alfred Nobel, among them). There was a strong craft tradition of metalworking and tool-making, and Sweden became a major producer of specialty industrial products: steels, tools, bearings, arms. These could and did go on being produced and sold while the rest of Europe tore itself apart in World War II.
But the Swedish economy today is in serious competitive difficulties. Total outlay of government as a percentage of gross domestic product is the highest among all the Organization for Economic Cooperation and Development countries (60.1 percent in the latest published OECD comparisons; Denmark is next, at 56 percent; Germany is 45.1 percent, and the U.S. 36.1 percent). Savings as a percentage of disposable household income is by far the lowest in the OECD area (actually negative during the four last reported years: Swedes are spending from their savings). Real economic growth has been lower than the OECD average during 15 of the past 20 years.
These material failures combine with an ideological weakness to leave the Social Democrats in confusion. The party's long period of success has transformed it from the radical movement of its origins to an institutionally conservative force, accustomed to power, weakened by complacency and bureaucratization.
Its ideas long ago became the stock assumptions of Scandinavians, with the result that the younger generations ungratefully take for granted what their parents struggled to accomplish. They have proved increasingly inclined to take more out of society's bank of assets than they are willing to put in. This certainly is not only Sweden's problem, but presents a peculiar difficulty here, where the social code is egalitarian and takes for granted shared burdens.
The collapse of the Soviet model of socialism has also proved awkward, not because Swedish socialists ever approved of the Soviets' totalitarian socialism, but because they rather too freely assumed that while Soviet practice might be deplorable, the principles of social justice were on that side, while NATO was imperialist, unegalitarian, racist, sexist, skeptical of nuclear disarmament, etc.
The abject collapse of the Soviet system and the fury turned by its survivors and victims against its sometime Western apologists, has left all of the Scandinavian Social Democrats discomfited on that moral plane upon which they had until recently assumed themselves invulnerable.
The Swedish party's current electoral challenge will probably be beaten back, according to local observers. Even if the polls remain unfavorable, the Social Democrats have an unmatched party organization and can get out the vote favorable to them. At worst they will confront a new government of centrists and conservative parties, who when they last governed, between 1976 and 1982, were unable to find a strong common program.
Meanwhile, the Social Democrats have decided to take Sweden into the European Economic Community. Membership will intensify Sweden's competition and therefore, the argument goes, augment its competitiveness. It will be easier to justify austerity measures. The decision nonetheless suggests a search for an external solution to Sweden's internal problems.
Those are more radical than the Social Democrats seem ready to admit. Modern social conditions and the contemporary international economy have deeply undermined the traditional welfare state. The Swedish model badly needs to be re-examined in the light of where Europe stands today. So far, Scandinavia's Social Democrats do not seem ready for such a reexamination. It will be important to see what happens to the Swedish model when Sweden collides with Europe.
William Pfaff is a syndicated columnist.