When the ‘wage-earner funds’ were discontinued in 1994, after a long political battle, a number of newly formed research foundations received a share of these funds’ capital. Mistra was entrusted with developing the field of environmental strategic research and helping to solve important environmental problems in society. The endowment was SEK 2.5 billion and this money, it was thought, would last ten years.
Watch the film about Mistra’s inception. How did the cross-party discussions about the wage-earner funds go? What did researchers think about the requirement of interdisciplinary work, and has the original conception of Mistra’s working methods remained viable?
The background to Mistra’s creation was the fierce battle about wage-earner funds that characterised political debate in Sweden in the 1970s and ’80s. The funds were originally the brainchild of the Swedish Trade Union Confederation (Landsorganisationen, LO), whose plan was for employees to obtain a share of business profits. Companies were opposed to the idea.
Political bone of contention
Despite intense opposition, the funds were introduced in 1982 by the Social Democratic Government. The principle was that companies would pay a special tax on profits, which would be collected in funds. The money was invested in equities, which in the long term would lead to the funds becoming important part-owners of Swedish companies. This led to protests from the business sector, and several major companies chose to move their headquarters abroad. One of their arguments was that the wage-earner funds would eventually become majority owners of many companies.
When the Social Democratic Government was forced to resign after losing the 1991 election, and was replaced by a non-socialist government, the funds were abolished.
Research investment despite economic crisis
The money in the dissolved funds was invested in Mistra and a number of other research foundations as a result of an agreement between the Social Democratic Party leader Ingvar Carlsson and the then Prime Minister and Moderate Party leader Carl Bildt. Their idea was that the capital that had accumulated in the funds would benefit both industry and employees, in the form of research and development that would modernise Sweden. The foundation form was chosen because it was a way of safeguarding the capital, so that subsequent governments would be unable to touch it.
This could be changed only if the Foundation’s purpose were considered to be fulfilled. In Mistra’s case, this would happen only if all environmental problems in society were solved.
Mistra received SEK 2.5 billion when it started in January 1994. The Foundation was expected to distribute SEK 250 million each year, and its running costs were to be covered by the return on its endowment. The idea was that the money would last a decade. However, thanks to wise investments and good returns, Mistra’s capital has grown to an even larger sum today than at the start — although, over the same period, several billion kronor have been invested in various research programmes.
Freedom of choice in funding
The foundation form and the fact that taxes were not the source of Mistra’s or the other foundations’ endowments have given them a freer role than, for example, the state research councils. In particular, Mistra can freely choose to invest more or less of its capital from one year to the next, based on how many worthwhile investments can be made.
This has enabled Mistra to realise a series of bold ideas over the years. One is that researchers from different disciplines should jointly try to solve environmental problems.
Capital from wage-earner funds
The following foundations were endowed with money from the wage-earner funds:
- Swedish Foundation for Strategic Environmental Research (Mistra)
- Swedish Foundation for Strategic Research (SSF)
- Knowledge Foundation (KK-stiftelsen)
- Swedish Foundation for Health Care Sciences and Allergy Research (Vårdalstiftelsen)
- Foundation for Baltic and East European Studies (Östersjöstiftelsen)
- Swedish Foundation for International Cooperation in Research and Higher Education (STINT)
- International Institute for Industrial Environmental Economics (IIIEE) at Lund University
- Foundation for the Culture of the Future (Stiftelsen framtidens kultur)
- ‘Innovation Centre Foundation’ (Stiftelsen innovationscentrum)
In addition, the existing Bank of Sweden Tercentenary Fund (as Riksbankens Jubileumsfond, RJ, was then called) received a further SEK 1.5 billion.