About Hayek's Comments On Sweden
Reason: If big government is really the culprit, why do Sweden and many Scandinavian welfare states seem to be prospering?
Hayek: Well, we mustn't generalize. Sweden and Switzerland are the two countries which have escaped the damages of two wars and have become repositories of a large part of the capital of Europe. In Switzerland, there is still some traditional instinct against government interference. Switzerland is a marvelous example where, when the politicians become too progressive, the people hold a referendum and promptly say, "No!"
Reason: Yet Sweden is reasonably successful...
Hayek: Yes. But there is perhaps more social discontent in Sweden than in almost any other country I have been. The standard feeling that life is really not worth living is very strong in Sweden. Although they can hardly conceive of things being different than what they're used to, I think the doubt about their past doctrines is quite strong...
I didn't even exist in 1977, so I have obviously no personal experience of "the standard feeling" in Sweden in 1977, but judging from what I've heard from my parents and others that did live in Sweden in 1977, I am quite sure that the situation wasn't anywhere near as grim as Hayek claimed it was. Sweden was one of the richest countries in the world then and people in general clearly felt that life was worth living and there wasn't more social discontent than elsewhere. As for "doubt about past doctrines" I am not sure just what "doctrines" he is talking about.
A far better to Reason's question would have been the one that I gave here a few years ago, and that in short was that Sweden's success came in the 1870-1950 period when Sweden was a relatively free economy that managed to stay out of the wars that devastated much of Europe. By the 1970s, Sweden was still relatively rich thanks to the massive progress in the 1870-1950 period, but by then the increasing socialism had caused growth to fall to lower levels than most other countries.