Abstract: Sweden is a famous example of the modern democratic welfare state. This chapter discusses the rise and fall of the ‘Swedish model’ and disputes Olson's analysis (in two separate publications) of the successful pre-crisis period and the subsequent crisis. Olson's analysis emphasizes the important long-run effect of encompassing interest organizations in the decline of the Swedish model. In contrast, Moberg, emphasizes the importance of the country's particular constitutional structure, and discusses the role of this structure in the emergence of encompassing organizations. He also points out the lack of flexibility in Swedish society, and in particular, in the labour market, which has increased the country's vulnerability to price shocks, and its subsequent dependence on the welfare state.

Keywords: constitution, encompassing interest organizations, encompassing organizations, flexibility, labour market, Sweden, welfare state,