Summary:  The fate of families and children in Sweden shows the truth of Ludwig von Mises's observation that "no compromise" is possible between capitalism and socialism. Here I show how the welfare state's growth can be viewed as the transfer of the "dependency" function from families to state employees. The process began in 19th-century Sweden, through the socialization of children's economic time via school attendance, child labor, and state old-age pension laws. These changes, in turn, created incentives to have only a few, or no children. In the 1930s, social democrats Gunnar and Alva Myrdal used the resulting "depopulation crisis" to argue for the full socialization of child rearing. Their "family policy," implemented over the next forty years, virtually destroyed the autonomous family in Sweden, substituting a "client society" where citizens are clients of public employees.  The old arguments for the socialization of children have also come to the United States.

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In his short volume Bureaucracy, Ludwig von Mises notes that modern socialism "holds the individual in tight rein from the womb to the tomb," while "the children and the adolescents are firmly integrated into the all-embracing apparatus of state control." In another context, he contrasts "capitalism" with "socialism," and concludes: "There is no compromise possible between these two systems. Contrary to a popular fallacy there is no middle way, no third system possible as a pattern of a permanent social order." My remarks focus on the validity of the latter statement, seen through the fate of family and children in the quintessential "middle way" state of modern Sweden.

In turning to Sweden, we find a classic case of bureaucratic manipulation to destroy the state's principal rival as a focus of loyalty: the family. Viewing this rivalry between state and family, it is important to understand that a basic level of "dependency" is a constant in all societies. In every human community, there are infants and children, persons who are very old, individuals who have severe handicaps, and others who are seriously ill. These people cannot take care of themselves. Without help from others, they will die. Every society must have a way of giving care to these dependents. Under the domain of liberty, the natural institution of the family (supplemented and supported by local communities and voluntary organizations) provides the protection and care which these "dependent" people need. Indeed, it is in the autonomous family—and only in the family—where the pure socialist principle actually works: from each according to his ability, to each according to his needs.

The rise of the welfare state can be written as the steady transfer of the "dependency" function from the family to the state; from persons tied together by blood, marriage or adoption to persons tied to public employees. The process began in Sweden in the mid-19th century, through bureaucratic projects that began dismantling the bonds between parents and their children. In classic pattern, the first assertion of state control over children came in the 1840s, with the passage of a mandatory school attendance law. While justified as a measure to improve the knowledge and welfare of the people, the deeper dynamic was the socialization of children's time, through the assumptions that state functionaries—the Swedish kingdom's bureaucrats—knew better than parents how children's time should be spent, and that parents could not be expected or trusted to protect their children from exploitation.

The next step came in 1912, with legislation that effectively banned child labor in factories, and to some degree on farms. Again, the implicit assumption was that state welfare officials were better judges of the use of children's time, and more compassionate toward children than parents were or could be.

The final step came at about the same time, when the Swedish government implemented a program of old-age or retirement pensions that quickly became universal. The underlying act here was the socializing of another dependency function, this time, the dependency of the "very old" and the "weak" on mature adults. For eons, the care of the elderly had been a family matter. Henceforward, it would be the state's concern. Taking all of these reforms together, the net effect was to socialize the economic value of children. The natural economy of the household, and the value that children had brought their parents—be it as workers in the family enterprise or as an 'insurance policy' for old age—was stripped away. Parents were still left with the costs of raising the children, but the economic gain they would eventually represent had been seized by "society," meaning the bureaucratic state.

The predictable result of this change, as an economist of the "Gary Becker School" would tell you, would be a diminished demand for children, and this is exactly what occurred in Sweden. Starting in the late 1800s, Swedish fertility went into free-fall and by 1935, Sweden had the lowest birthrate in the world, below the zero-growth level where a generation just managed to replace itself.

The standard theory of demographic transition has long been that this fall in the birthrate was the necessary, inevitable consequence of modern industrialization: that the incentives of a capitalist economy disrupt traditional family relations. While it is true that the traditional family structure faces a new kind of stress in industrial society, more recent work suggests that the greater challenge—in fact—derives from the growth of the state.

Looking at the experience of many nations, Princeton University demographer Norman Ryder traces the central common cause of fertility decline to the introduction of mass public education. "Education of the junior generation is a subversive influence," he says. "Political organizations, like economic organizations, demand loyalty and attempt to neutralize family particularism. There is a struggle between the family and the state for the minds of the young," where the mandatory state school serves as "the chief instrument for teaching citizenship, in a direct appeal to the children over the heads of their parents." Confirming the universal validity of the Swedish example, Ryder adds that while mandatory education raises the cost to parents of children, bans on child labor further reduce their economic value. Moreover, a state system of social security cuts the natural bonds between generations of a family in still another way, leaving the state as the new locus of first loyalty.

While a nation's family system may reorganize, for a time, around the nuclear "husband-wife" unit of reproduction, even that basis of independence eventually dissolves. The end result of state intervention, Ryder says, is progressively diminished fertility, with living individuals left standing alone in a dependent relationship with the government.

The contradictions inherent in this method of social organization welled up in Sweden in the early 1930s. With the birth rate having fallen below the zero-growth level, Swedish conservatives grew frantic over the "depopulation threat," and the disappearance of Swedish children. These voices argued that the root problem was spiritual dislocation, or the decline of Christianity, or the rise of materialism, or personal selfishness. No one—not a single soul on the political right—focused on problems to be found in the educational and social legislation of the past 90 years. So as the "population crisis" reached high boil in Sweden, the opportunity was ripe for demagoguery and exploitation.

Into this situation walked two young Swedish social scientists, Gunnar Myrdal and his wife, Alva Myrdal. Before turning to their use and abuse of the population issue, allow me to say a few things about their background, and the influences brought to bear on their work.

Bureaucratic paternalism had a long history in Sweden, rooted in the state apparatus constructed by the Vasa Kings in the early 16th century, and advanced through the crushing of regional autonomy in wake of the unsuccessful Nils Dacke revolt of the 1540s. Yet the Myrdals represented something new, and "very 20th century." They were social scientists—intellectuals from the academy—dedicated to a new kind of state activism. As Alva Myrdal herself explained: "Politics has [now]...been brought under the control of logic and technical knowledge and so has been forced to become in essence constructive social engineering."

Second, even though we Americans have been hounded by repeated comments on the wisdom of "the Swedish model," it is important to note how much of the new Swedish welfare state rested on American experimentation. Both Myrdals spent the 1929–30 academic year, the waning months of "The Progressive Era," traveling in the United States, on fellowships provided by the Laura Spelman Rockefeller Foundation. During this time, Alva Myrdal fell under the influence of the so-called "Chicago school of sociology." William Ogburn, in particular, impressed on her his view that the state and the school had inevitably grown at the family's expense; and that the family faced a progressive "loss of function" as it retreated out of historical necessity to an exclusive concern with personality. Alva Myrdal also spent considerable time at the Child Development Institute of Columbia University and visiting experimental preschools and day care centers operating on Rockefeller Foundation grants, examples of social parenting that deeply impressed her.

For his part, Gunnar Myrdal's work at Columbia and at the University of Chicago made him aware of the tremendous political potential to be found in Sweden's emerging "population crisis" debate.

In an important 1932 article, "Social Policy's Dilemma," for the avant garde Swedish journal, Spektrum, Gunnar Myrdal put his finger on the necessary policy lever. He began by tracing the compromise in Europe before 1914 of a "liberal-infused socialism" with a "socialist-infused liberalism." Under this arrangement, he said, 19th century liberalism had abandoned its Malthusian pessimism and free-market dogmatism and instead embraced the necessity of reforms to protect workers; while the socialists had given up the goals of revolution and massive property redistribution, expressing contentment with incremental steps to aid the working class.

The World War, though, had shattered this compromise. Myrdal declared that classical liberalism was now dead, its partisans scattered. He also argued that the workers movement needed to be re-radicalized, and seek a new kind of social policy. Under the old compromise, Myrdal stated, social policy had been symptom-oriented, giving help to the poor, or the sick. The new social policy, he declared, must be preventive in nature. Social scientists, using modern research techniques, now had it in their power to use the state to prevent social pathologies from emerging. When based on human-oriented value premises and a rational science, he said, this preventive social policy led to a "natural marriage" of the correct technical with the politically radical solution. Myrdal specifically pointed to Sweden's population crisis, as an opportunity for rational sociological analysis to produce effective and radical ideas for state-enforced change.

The Myrdals fleshed out this program in their best selling 1934 book, Crisis in the Population Question, a brilliantly argued volume which substantially transformed Sweden. While Swedish conservatives continued to fret over sexual immorality, the Myrdals pointed directly at the contradictions created by an incomplete welfare state. Prior government actions such as mandatory school attendance, the ban on child labor, and state old age pensions, they admitted, had stripped away the value of children to parents. But the costs of children remained at home. In consequence, children had now become the chief cause of poverty. Given the incentives set up by the state, the very persons who contributed the most to the nation's survival by having children were dragged down into poverty, shoddy housing, poor nutrition, and limited recreational opportunities. A voluntary choice between poverty with children or a higher living standard without them was what young couples now faced. Young adults were forced to support the retired and the needy through the state's welfare system, and also the children to which they gave life. Under this multiple burden, they had chosen to reduce their number of children as the only factor over which they had control. The result, for Sweden, was depopulation and the specter of national extinction.

According to the Myrdals, there were only two alternatives. The first—the dismantling of state schooling, child labor laws, and state old-age pensions in order to restore family autonomy—was "not even worthy of being discussed." The other, and only practical alternative, was to complete the welfare state, and remove the existing disincentives to children by socializing virtually all of the direct costs involved in their birth and rearing. The real argument went something like this: in order to solve the problems caused, in large part, by prior state interventions, the government now needed to intervene completely.

This meant a commitment to a new kind of welfarism: "It concerns a preventive social policy, closely guided by the goal of raising the quality of human material, and at the same time carrying into effect radical redistribution policies making a significant portion of the child-support burden the concern of all society." The State bureaucracy had never before enjoyed such a mandate. By the very nature of the word, a "preventive" policy opened all Swedish families up to supports, scrutiny, and control. One could never know where a problem might occur: therefore, universal measures of bureaucratic intervention must be implemented to make prevention a reality.

Stressing this imperative, the Myrdals concluded: "the population question is hereby transformed into the most effective argument for a thorough and radical socialist remodeling of society." The alternative, they said simply, was national extinction.

Their program embraced universal state allowances for children's clothing, a universal health insurance plan, a universal entitlement to day care, state- operated summer camps for children, free school breakfasts and lunches, state-funded family housing, birth bonuses to cover the indirect costs of having babies, marriage loans, the expansion of state maternity and midwife services, centralized economic planning, and so on. Their goal was, in effect, the socialization of consumption, providing all families with a rationally determined, fairly uniform set of state services, managed by public employees, and funded through taxes imposed on the rich and the childless.

Criticisms that their program, in fact, threatened the family brought a characteristically blunt response: "the little modern family is almost...pathological," the Myrdals said. "The old ideals must die out with the generations which supported them."

Appeals to liberty and family autonomy evoked equally biting responses. The Myrdals charged that the "false individualistic desire" by parents for the "freedom" to raise their own children had an unhealthy origin: "...much of the tiresome pathos which defends 'individual freedom' and 'responsibility for one's own family,' is based on a sadistic disposition to extend this 'freedom' to an unbound and uncontrolled right to dominate others."

In order to raise children fit for a socially cooperative world, "we must free children more from ourselves," turning them over to state certified experts for care and training. The collective day nursery run by state-controlled experts, rather than the pathological little family, was more in line with the proper goals of eliminating social classes and building a society based on economic democracy.

Between 1935 and 1975, the Myrdals' domestic agenda guided, by fits and starts, the evolution of the Swedish welfare state. Periods of political and bureaucratic activism—1935 to 1938, 1944 to 1948, and 1965 to 1973—were punctuated by evidence of stubborn resistance among the Swedish populace, or by budgetary restraints that delayed full implementation. Yet by the end of the process, most elements of the Myrdals' family agenda were in place.

What were the specific results? With the family stripped, by state fiat, of all productive functions, of all insurance and welfare functions, and of most consumption functions, it should cause little surprise that ever fewer Swedes chose to live in families. The marriage rate fell to a record low among modern nations, while the proportion of adults living alone soared. In central Stockholm, for example, fully two-thirds of the population lived in single-person households by the mid-1980s. With the costs and benefits of children fully socialized, and with the natural economic gains from marriage intentionally eliminated by law, the bearing of children was also severed from marriage: by 1990, well over half of Swedish births were outside of marriage.

Children, too, enjoyed as 'rights' a great parcel of benefits provided by the state: free medical and dental care; abundant and cheap public transport; free meals; free education; and even state "child advocates" available to intervene when parents overstepped their bounds. Children, too, no longer needed "family": the state now served as their real parent.

Indeed, Rutgers University sociologist David Poponoe suggests that the term 'welfare state' no longer does justice to this form of total personal dependence on the government. Instead, he uses the label, "client society," to describe a nation "in which citizens are for the most part clients of a large group of public employees who take care of them throughout their lives."

In Sweden, the elderly are "free" of potential dependence on their grown children; infants, small children, and teenagers are "free" of reliance on their parents for protection and basic support; grown adults are "free" of meaningful obligations either to their biological parents, or to their children; and men and women are "free" of any of the mutual promises once embodied in marriage. This "freedom" has come in exchange for a universal, common dependence on the state, and the nearly complete bureaucratization of what had once been family living. Von Mises was right: there proved to be no "middle way" here; rather, Sweden represents a more complete and therefore more oppressive version of the socialist domestic order, one surpassing in its comprehensiveness even that of the Soviet Union. But the modern Swedish welfare state contains its own contradictions, problems now coming to the fore.

To begin with, the "demographic contradiction" of the welfare state is not so easily banished. In a rent-seeking democratic order, those who control the greater number of votes enjoy a greater gain. And even in Sweden, it remains true that the old vote; while children do not. While Swedish "family policy" has been effective enough to destroy the family as an independent entity, it has not been successful in ending the net flow of state programs and income from the relatively young to the relatively old.

Second, the client state can never provide all the needed care in a society, simply because to do so would be too expensive. Yet at the same time, families in the welfare state are penalized when they do provide care to their own, because they thereby give up the benefits of public care; and they are rewarded with public care only when they stop giving family-based care. Danish welfare official Bent Andersen has explained the problem this way:

The rationally founded welfare state has a built-in contradiction: if it is to fulfill its intended functions, its citizens must refrain from exploiting to the fullest its services and provisions—that is, they must behave irrationally, motivated by informal social controls, which, however, tend to disappear as the welfare state grows.

By all the signs, then, it would appear that the Swedish model, "the middle way," the third option, has been discredited, at the same time as Communism, the second way, has collapsed into a heap. Unfortunately, however, the Swedish model lives—and may soon thrive—here in the United States, where the very logic and arguments used by the Myrdals in the 1930s are on the verge of political success.

In When the Bough Breaks, issued by Basic Books (the pre-eminent neo-conservative publishing house), economist Sylvia Ann Hewlett writes: "In the [modern] world, not only are children 'worthless' to their parents, they involve major expenditures of money. Estimates of the cost of raising a child range from $171,000 to $265,000. In return for such expenditures, 'a child is expected to provide love, smiles, and emotional satisfaction,' but no money or labor."

She continues: "Which brings us to a critical American dilemma. We expect parents to expend extraordinary amounts of money and energy on raising their children, when it is society at large that reaps the material rewards. The costs are private; the benefits are increasingly public. . . . In the modern age, relying on irrational parental attachment to underwrite the child-rearing enterprise is a risky, foolhardy, and cruel business. It is time we learned to share the costs and burdens of raising our children. It is time to take some collective responsibility for the next generation."

Hewlett goes on to lay out a policy agenda for America, including mandated parental leave, guaranteed free access to maternal and child health care, the state provision of quality child care, more "educational investment," substantial housing subsidies for families with children, and so on.

Does this sound familiar? It should: these are the very arguments and the basic agenda proposed for Swedes by Alva and Gunnar Myrdal, back in 1934, albeit shorn of their more radical, openly socialist rhetoric. Nonetheless, this is a book which led the Chairman (retired) of Proctor and Gamble, Owen Butler, to state: "The conclusion is inescapable. Unless we invest more wisely in our children today, the nation's economic and social future are in jeopardy." These are also the arguments that are dominating the so-called new politics of children, in Barack Obama’s Washington.

At the same time, "preventive social policy" has become the rallying cry for other American proponents of change. The arguments ring familiar: help by state officials early in life is more economical and more effective than help later on; the longer we wait before discovering symptoms of stress, the more costly it will be; "early interventions present the problem of all investments in growth- the dividends come later," etc., etc. It all sounds reasonable, in a way, but the end product would be a nightmare of bureaucratic rule, and the virtual destruction of the family in America.

As early as 1991, we could catch the flavor of this looming, new American order. The U.S. Advisory Board on Child Abuse and Neglect, appointed exclusively by the Reagan and Bush administrations, called child abuse a "national emergency," adding: "No other problem may equal its power to cause or exacerbate a range of social ills." The key finding of the report is that the Federal and state governments have spent too much time investigating suspected cases of abuse; instead, the Federal government should focus on preventing abuse and neglect before it happens. The Board recommends that the Federal government immediately develop a national program of "home visits" to all new parents and their babies by government health workers and social investigators, who would identify potential abusers and help them.

In addition to this "welfare bureaucrat in every home" approach, the Board called for a "national child protection policy" where the Federal government would guarantee the right of all children to live in a safe environment, with appropriate vehicles of enforcement.

Hewlett is right, of course, about the flaws in the existing American welfare state: we have socialized the economic value of children here; but we have left the costs with individual parents. The United States today, as Sweden in 1934, has an incomplete version of the pure welfare state model. She's correct, too, that this exacts a price: the number of American children born annually inside of marriage has been stagnant for decades, at a level 30 percent below the zero-growth rate. Americans are simply not investing their own time and money in more than one or two children, largely because its not worth their while. (The overall birthrate, it is true, has climbed, but this is due entirely to the sharp rise in the number of out-of-wedlock births from 665,000 in 1980 to over 1,600,000 in 2007; these births, it appears, our welfare system subsidizes well.)

But there is an alternative to the "Swedish solution." It's one that Dr. Hewlett declines to mention; and it's the one that the Myrdals dismissed as "beyond reasonable debate" sixty years ago. This option is called a "free society," where instead of completing the client/welfare state by extending bureaucratic tentacles completely around children, we instead dismantle what we already have done. The agenda here is simple, radical and pragmatically anti-bureaucratic:

1. end state-mandated and state-controlled education, leaving the training and rearing of children up to their own parents or legal guardians;

2. abolish child-labor laws, again reasoning that parents or guardians are the best judges of their children's interests and welfare, vastly better than any combination of state bureaucrats;

3. and dismantle the Social Security system, leaving protection or security in old age to be provided, once again, by individuals and their families.

These acts would restore the economic benefits of children to parents, and so end the anti-child contradiction that lies at the center of the incomplete welfare state.

Most commentators would respond that these would be impossible, inconceivable actions in a modern, industrial society. Given the realities or complexities of the modern world, they would say chaos would be the sure result, if we engaged in such reactionary efforts.

My response would be to point to scattered groups in America which, through some amazing historical quirk or some political miracle, still inhabit one of our few remaining "zones of liberty" and which survive under such an "impossible" regime.

One unexpected but interesting example would be the Old Order Amish, who beat off government challenges to their special limited educational practices (namely, schooling only by Amish teachers and only through the eighth grade), who make heavy use of child labor, and who avoid Social Security and Medicare (as well as government farm welfare) out of principle. Not only have the Amish managed to survive in an industrial, market milieu; they have thrived. Their families are three times the size of the American average. When facing fair competition, their farms turn profits in "good times and bad."

Their savings rate is extraordinarily high. Their farming practices, from any environmental standard, are exemplary, marked by a committed stewardship of the soil and avoidance of chemicals and artificial fertilizers. During a time when the number of American farmers has fallen sharply, Amish farm colonies have spread widely, from a base in southeastern Pennsylvania to Ohio, Indiana, Iowa, Tennessee, Wisconsin, Minnesota, and another dozen states.

It is probably true that relatively few contemporary Americans would choose to live like the Amish, given a true freedom of choice. Then again, no one can be quite sure what America would look like, if citizens were actually freed from the bureaucratic rule over families that began to be imposed here, over one hundred years ago, starting with the rise of the mandated public school.

I have absolutely no doubt, though, that under a true regime of liberty, families would be stronger, children more plentiful, and men and women happier and more content. For me, that's enough.