In the early 1990s the Swedish welfare system was struck by capital flight and a national financial crisis creating severe problems for the Swedish economy. This crisis became the final blow to Swedish welfare policies as we once knew them, that is, based on Keynesian economic policies and a politically coordinated market economy with active labour market measures aimed at full employment, industrial restruc-turing and maximal economic growth; a continuous expansion of state-produced welfare services based on taxation and aimed at reducing social inequalities and individual risks through redistribution and universal public services (Benner 1997; Huber and Stephens 2001); and funded on corporatist cross-class compromises as well as knowledge-based social engineering implemented through a reform bureaucracy (Korpi 2006; Rothstein 1992, 1996; Wisselgren 2008).