Structural changes in the international system have often led to the implementation of new ideas concerning the needs and organisation of national defence and security. These ideas affect relationships between state and market actors in the provision of defence. In this study, we examine how markets for defence are reconfigured in moments of crisis and transformation. The importance of this question can be seen in Sweden’s recent ‘return’ to a system of ‘total defence’ to deal with what was understood as a deteriorating security situation in northern Europe.Footnote 1 Similar trends can be seen not only across the Nordic–Baltic regions but also in the rising interest in whole-of-society defence in countries across Europe and North America. For Sweden, this was a return to the defence policy of the Cold War, but in a very different political economic environment, where the defence industry was more privatised and internationalised, and the boundaries between defence and civilian military production were blurred.Footnote 2 In this context, in 2018, the Swedish government launched an investigation to examine the role of the private sector in Sweden’s ‘new’ total defence model.Footnote 3 In particular, the government asked for ‘ways for the government to make demands on the private sector’ and ‘to create incentives for increased private sector considerations for the needs of total defence’.Footnote 4 Several consequential decisions on security and defence followed, culminating with the NATO membership application in May 2022 (with Sweden formally joining on 7 March 2024), ending more than 200 years of neutrality and military non-alignment.Footnote 5
Analyses of defence transformation in Sweden – both those of the shift away from total defence in the 1990s and its return in the 2010s – have focused mainly on the shifting threat environment (the end of the Cold War, the recent ‘return’ of geopolitics, the impact of ‘realism’ and ‘idealism’ in Swedish foreign and defence policy), the development of various managerial modes of defence organising, and the effects of defence privatisation.Footnote 6 However, the re-emergence of total defence requires further attention to the role of businesses and state–firm–market relations.Footnote 7 Although the private sector has long influenced Swedish security and defence policy and organisation (through both the development of defence thinking and the governance of defence markets), a number of recent official inquiries, reports, and government decisions indicate that this role is changing.Footnote 8 As such, the new total defence poses an empirical puzzle that needs to be better understood.
Previous research on defence transformation has emphasised a broader ideological shift to neoliberalism that drove changes to the economy at large, including the defence economy.Footnote 9 These structural economic transformations have been seen as having important consequences for the development of a new approach to defence, emphasising competitive contracting, privatising and internationalising national defence firms, and linked shifts to changes in government management strategies. However, discussions of the precise character and development of the market for defence have often taken for granted a stark division between a state-led and market-led defence sector (or public versus private).Footnote 10 We want to instead emphasise how the state–market dynamic comes about through a process of conflict and consensus between various actors in the defence ‘field’.
How do we resolve the lack of attention to the market? First, we emphasise the institutional creation and reproduction of markets. While previous accounts of defence transformation all analyse key parts of the problem, we argue that more focus on the dynamics of firms, governing bodies (private and public), and the state in current (total) defence organising will help with understanding the specific institutionalisation of the market. Second, we adopt a sociology of markets perspective, arguing that changes in the purpose and structure of the political economy,Footnote 11 and especially the institutionalisation of the market, are fundamental to understanding changes in defence markets. Markets do not exist outside of broader socio-political life but are constructed and institutionalised through the actions of both firms and states.Footnote 12 Finally, we conceptualise the political economy of defence markets in institutional terms, probing the design of governance structures and modes of government oversight and control. Adopting a comparative historical framework, we examine two critical formative periods in Swedish defence policy: the crisis period of the late 1980s and early 1990s, and the return of total defence, starting in 2015.
The study contributes to the literature on defence transformation in three ways. First, it adapts Fligstein’s ‘markets as politics’ approach to understanding state–market relations and defence transformation.Footnote 13 While changing geopolitics is often seen as the driving factor for defence transformation, we show how it also needs to be contextualised in terms of the possibilities that are opened up. Exogenous factors – such as structural crises or ‘shocks’ – are important for setting historical contexts and legitimising specific decisions,Footnote 14 but the parameters and priorities of the market and its logic are produced through endogenous political–economic interactions between firms, the state, and other intermediaries. The ‘value-added’ of the approach is to reveal a dynamic between a variety of interested actors structured in a defence field, rather than focusing mainly on the state. We especially focus on different ‘settlements’ of the market field, examining ‘coercion’, ‘cooperation’, and ‘competition’ as different modalities. Second, we adopt a comparative historical approach to examining crisis, transition, and change in a case of far-reaching defence transformations, specifically in terms of the changing governance of state–market relations. Finally, we provide new insight into the Swedish case through revisiting the shifts in defence markets at the end of the Cold War and since the mid-2010s. Understanding the Swedish case can help to understand how states and organisations (such as NATO) are currently considering, organising, and implementing ‘whole-of-society’ approaches to defence and security, transforming military–society and state–market relations.
The article begins with an overview of the key literature on defence transformation, focusing on ways to bring the market back into the analysis. The second section develops the ‘markets as politics’ framework for understanding the institutionalisation of defence markets. The final section applies the analytical framework to the role of business in Swedish total defence, concentrating on the end of the Cold War and the return to total defence in 2015. The analysis will focus on the key institutional outcomes in the structure of defence markets based on the specific politics of the market of the time, drawing on official government documents and media statements. The conclusion considers the overall implications of the value of the ‘markets as politics’ approach and identifies several avenues for further research.
Defence transformation and state–market relations
In the following we focus on key literature evaluating defence transformation and markets. We start with the examination of two watershed moments for Swedish defence policy concerning total defence, then move to key debates about states and markets in defence transformation, ending with theoretical positioning concerning the sociology of markets perspective. There is a voluminous literature on defence transformation, much of it focusing on the end of the Cold War. The decline of superpower conflict and the rise of new non-state threats have been seen as important for the changing dynamics of security provision in terms of what constitutes a security threat, how those threats should be addressed, and by whom.Footnote 15 At the heart of these changes was also a shift in the governing ideologies of political economy, one that saw a generalised global shift from a form of Keynesian interventionist economic management to one of ‘neoliberalism’, focused on the market as the key governing principle of political economy and public economic policy.Footnote 16 In the Swedish context, the end of the Cold War saw an era of military downsizing and of implementing forms of cost-effectiveness through new management strategies and privatisation.Footnote 17 In research on the Swedish case, those focusing on privatisation have drawn on literatures concerned with shifts in the public sector and public policy more generally. For example, Ledberg et al. focus on modes of control, emphasising changing modes of governance via management strategies.Footnote 18 In a broader context, Britz suggests focusing on marketisation as a way of understanding the Europeanisation of defence policy and industry, with the changes in Sweden in the 1990s being part of that dynamic.Footnote 19
A second period of transformation occurred in the 2010s, moving away from the post–Cold War emphasis on internationalism and towards ‘total defence’, shaped by the new bureaucratic and defence environment and triggered by a ‘territorial re-turn’ around the time of the Russian annexation of Crimea in 2014.Footnote 20 The ‘new’ total defence is also seen as going beyond the focus in the Cold War, which mainly concerned the state’s mobilisation of civil society for defence purposes: as Stiglund observes, ‘total’ now ‘refers to how virtually all societal phenomena may be considered “dangerous” and therefore a potential “security matter” to be handled by a “security professional” and sorted into frameworks for risk management or threat mitigation’.Footnote 21 However, another key dimension concerns interactions between commercial firms and the government in the dynamics of defence transformation.Footnote 22 Though the role of firms has been noted as being important in the past, the ‘new’ total defence has seen their role shifting to one where they need to be mobilised via the market.
The end of the Cold War also saw a shift in the understanding of how defence industries operated. Analysts and practitioners pointed to the necessities of the market logic and argued that even protected industries such as defence would have to give way to the dynamics of globalisation (for better or worse).Footnote 23 Initial challenges of arms production governance were extended to debates about security privatisation and outsourcing, which saw the development of private security firms as another part of this trend, outsourcing core security functions of the state.Footnote 24 The ‘market’ in this context was often conflated with the ‘private’ (or non-state).Footnote 25 The main question raised by outsourcing concerned issues of governance. For example, Avant focuses on the question of state control – a primary concern when outsourcing a public good or service – and on the parameters of finance and provision (or delivery).Footnote 26
In research on defence transformation, economic markets mainly figure on the edges: ‘the market’ is a liberal or neoliberal structure that imposes particular logics rather than being a social or theoretical object in its own right.Footnote 27 Much of the security privatisation literature is clearly focused on competing ideologies of market governance, contrasting a more Keynesian interventionist version with a neoliberal ‘free market’ version.Footnote 28 The assumption is that markets are mainly about allowing defence or force to be subject to free exchange set by the dynamics of supply and demand. Privatisation is seen as eroding the monopoly over the financing or the provision of security or force. What privatisation entails in terms of a theory of the market is left out: it is this stark dichotomy of state versus private that needs to be further interrogated.
Dunigan and Petersohn move towards a sociological definition and develop a typology of markets: a neoliberal, a hybrid, and a racketeer market.Footnote 29 They argue that most scholars have assumed the ‘neoliberal’ market, to the detriment of the analysis. However, the idea of the ‘neoliberal market’ needs to be further unpacked. As Watson has argued, in contemporary articulations of economic markets, there are often two different and conflated ideas at work.Footnote 30 The first is the ideology of the market, which is the aspect that gives the market some sense of agency especially in relation to market governance: ‘the market’ is a ‘thing’ that causes action, and it must variously be intervened in, left alone, or is the autonomous source of political problems, depending on the core political economic ideology at work. The ideological aspect is important in mobilising political economic action for legitimating new market frameworks. The second refers to the market in economic theory: this has moved from a more descriptive version from the late eighteenth and early nineteenth centuries, to the abstract and formalised version in contemporary economics (e.g., equilibrium models of supply and demand).Footnote 31
We agree with Watson, who suggests that going back to a more descriptive account in economic theory can provide a better understanding of economic markets. Starting from an account that can disaggregate the economic ideology from the market as an abstraction can help uncover the politics and power behind the creation and support of specific markets. Such arguments have been taken further in economic sociology, which looks at how markets function as a particular social space. In one review, Fligstein and Dauter observe that ‘markets imply social spaces where repeated exchanges occur between buyers and sellers under a set of formal and informal roles governing relations between competitors, suppliers, and customers’.Footnote 32 Even liberal free markets are social spaces defined by social action. This leaves us with an important starting point for investigating defence and security markets: how can we understand ‘the market’ in relation to defence transformation and the ‘re-emergence’ of a market for total defence?
Defence markets as politics
A focus on the politics and institutionalisation of markets can better explicate the ways in which markets are created and maintained through the power of both states and firms. Polanyi’s idea of embeddedness draws attention to the institutionalisation of markets, in that markets themselves are always social, not abstracted spaces of rational behaviour.Footnote 33 Polanyi’s key argument concerned the ways in which market freedom was predicated on political intervention: that free markets only existed through the active separation of economy and politics. The economic sociology of markets has further explored the social embedding of the market through a focus on relational ties between actors (social networks), the impact of technology and economic ideas on economic rationality (the performative character of markets), and the institutionalisation of economic action.Footnote 34 It is this final sense we wish to draw on further: that the market for defence is a social construct, just like all markets, and as such requires a focus on how concrete institutions structure economic life and can be seen as part of politics itself.
To analyse the institutionalisation of the market for total defence, we draw on Fligstein’s account of ‘markets as politics’Footnote 35 and examine markets in two dimensions: first in terms of the ways in which market institutions are contested and constructed by powerful actors and often in times of crisis (focusing more on the actions of states); second, that markets entail a struggle for control (focusing more on the actions of firms). States and governments create frameworks for action for firms – that are in essence the social space of the market – through the creation of institutions, legal frameworks, and governance structures that give coherence to markets. Firms try to use these frameworks to gain advantage through control of prices and to deal with internal power struggles over the shape of the firm itself, but can also challenge and contest the parameters of the market. Such a view goes beyond the idea that institutions merely provide stable orders that are then contested and toppled: the field of social action is part of a constant struggle. The emphasis on the market as an institution highlights that the market itself does not impose a logic on action; it is a ‘strategic action field’ created by the interaction between market actors (firms) and market governance (state institutionalisation).Footnote 36
In terms of states, what is most crucial for our analysis is the way in which market creation is reliant on states to create stable institutions and governance structures for markets to operate, and how such developments can enhance the power and position of already dominant social groups. Crises or ‘shocks’ play an important role in dislodging old market and power structures, which give new possibilities for institutional development.Footnote 37 Crises create opportunities for change based on interpretations of crisis and how they enable mobilisation for political action.Footnote 38 In moments of market crisis, hierarchies can become destabilised, requiring some form of state intervention. In terms of firms, we see the development of a politics of markets based on how firms locate themselves within this new context, and a potential struggle in terms of how firms will be able to control markets.Footnote 39
In moments of crisis, new actors (‘challengers’) try to make most of opportunities, and established actors (‘incumbents’) try to maintain their position, and there are attempts to stabilise the new market by finding ways to find a common conception of control.Footnote 40 In the space of the strategic action field, market control can be established though methods such as cooperation, price controls, limiting production, licencing agreements, and joint ownership of production; intra-firm strategies include methods such as integration and diversification.Footnote 41
In more recent work, Fligstein and McAdam have added ‘governance units’ as another actor that plays a role in the development of the market as a strategic action field. Governance units are non-state actors that play a role in compliance: for example, organisations like business groups, which help to mediate the interests of firms vis-à-vis the state. However, as Fligstein and McAdam note, ‘regardless of the legitimating rhetoric that motivates the creation of such units, they are generally there not to serve as neutral arbiters of conflicts between incumbents and challengers, but to reinforce the dominant logic, and safeguard the interests of the incumbents’.Footnote 42
The terms of the ‘settlement’ of the new field also mainly entails three modes of organisation: coercion, cooperation, or competition. Coercion denotes the use of threats to get actors to comply; cooperation involves actors working together to stabilise the field; competition has actors struggling against one another, without coercion.Footnote 43 The focus on interpretations of crises, the attempted creation and settlement of a revised strategic action field encompassing the defence market (the ‘defence market field’), and the interactions of firms, states, and governance units will be examined via four questions outlined in the next section.
Methods and analytic approach
Our longitudinal single-case study design focuses on the comparison of two moments of change: the first in the late 1980s and early 1990s, when changes to the Swedish economic model and the broader geopolitical context shifted the Swedish approach to defence; the second c. 2015, when total defence ‘re-emerged’. While these moments differ in terms of broad causal factors – the first had clearly both economic and geopolitical factors, while the second was mostly prompted by the geopolitical context – they were both key moments of crisis for the Swedish defence economy. The first case involved several systemic crises at the international and domestic level that changed the overall direction of economic and security policy: both an ideological shift framing economic policy and the systemic shift of the end of the Cold War. The second case saw mainly a shifting conception of geopolitics, with the rising assertiveness of Russia leading the idea of a change in defence policy.
For both crisis moments, we analyse the development of defence markets as a social action field, focusing on the action of firms, ‘governance units’, and the state via the concept of control. Methodologically, this is meant as a test of the ‘markets as politics’ framework, in what George and Bennett describe as a ‘disciplined configurative case’, in order to examine how the framework would provide a different perspective on the state–market dichotomy so prevalent in the literature, in the two instances of defence transformation within the case of Sweden.Footnote 44 The purpose is mainly to see the endogenous state and firm dynamics in market creation that can be found in the markets as politics model as opposed to seeing the opposition of the state and market. The market itself is a product of political–economic mobilisation: while fuelled by political economic ideas that play a legitimating role for particular visions of market structure, the structuring of markets is a product of political conflict and compromise. The comparison of two moments of change in Sweden’s market for defence provides a synchronic analysis of defence market creation and transformation.
Empirically, we analyse official documents, including government decisions and inquiries, parliamentary reports, and public statements and position papers produced or published by key market actors, such as business organisations and large defence-related companies. Drawing on Fligstein’s (and McAdam’s) theoretical model, for each moment, we address the following four questions:Footnote 45
1. How did crises become interpreted and mobilised in ways that reshaped the defence market field?
2. What were the dynamics between incumbent and challenger firms in the development of the new market?
3. In what ways did governance units attempt to shape the new market?
4. What state regulatory institutions were developed to order or structure the new market?
Our approach is mainly deductive, and the analysis of two moments of change will probe the contention that different market outcomes depend on the politics of the market, that market structure requires changing norms and institutions governing the market for defence, and these are caused by the interpretation of crises, the interaction of firms, states, and governance units. We focus on the concept of the settlement of the defence market field as a means to understand the different ways the politics of the market are enacted. The analysis can be described as ‘thematic’ in the sense that we seek to identify key elements (mainly in text) that convey meaning around crises and the role and functions of market actors in the defence realm.
To address the first question, for the first period, we look at both the secondary literature dealing with the defence industrial changes and the way this was described in a variety of government reports; for the more recent period we rely on threat perceptions as framed or understood by the Swedish Defence Commission, SDC – a parliamentary body with the express mandate to reach a broad political consensus on Swedish security and defence and to suggest courses of action and decisions to the government.Footnote 46 The second question will be addressed by looking at statements by leading incumbent firms in relation to new players in the market, as well as official reports conceptualising these shifts. To address the third question, we turn to statements and position papers by leading companies and business organisations in the defence and security arena. For question four, we turn to key government propositions and decisions on defence around the time of our two junctures.
While this study contributes important new insight into state–market relations and the development of defence markets at pivotal moments, it is limited in that it draws mainly on official documents and statements, while future work could also include interviews; it also provides a starting point for additional and multiple-case studies. As such it is limited in its generalisability but can provide the basis for further research.Footnote 47
Reshaping the Cold War defence market
The first illustrative case looks at defence transformation after the end of the Cold War, situating the shifting approach to defence markets in the broader context of the markets as politics model.
Q1. How did crises become interpreted and mobilised in ways that reshaped the defence market field? The end of the Cold War provided a moment for the reinterpretation of Swedish defence planning and for the overall coordination of defence-related industries. While the fall of the Soviet Union provided a convenient breakpoint and gave certainty to the new geopolitical environment, many key political economic changes occurred prior to that moment. With the end of the Cold War, there was the possibility of a move away from the commitment to total defence, and along with it a substantial downsizing of defence structures and spending, which in turn reshaped the domestic market for defence.Footnote 48 These shifts were partially a continuation of a broader political economic crisis and transformation that emerged in the 1970s and situated major economic policy shifts of the 1980s and 1990s. The core issue concerned contestation over macroeconomic management that occurred across the industrialised world in light of the economic crisis of the 1970s. In the Swedish context, a major conflict developed around the future of the ‘Swedish model’, a challenge to the mixed economy focused on full employment and government intervention, to a new, more marketised model.Footnote 49 The new approach to the economy focused on the ‘rules based’ management of monetary policy, central bank independence, the floating of the krona, and the central macroeconomic goal of managing inflation and price stability. These new macroeconomic policies, as Lindvall argues, were not just tweaks to how the economy was managed but also challenged existing norms of the political purpose of the state.Footnote 50
The dual shift set the context for changes in the make-up of defence industrial policy. The shifting geopolitical context provided a new environment for Sweden to negotiate defence spending and its emphasis on both neutrality and self-sufficiency in arms production.Footnote 51 While during the Cold War Sweden had specifically pursued a policy of autonomy in arms production in order to implement the system of total defence, the possibilities of a small state pursuing such strategies were becoming increasingly difficult, and defence spending would also need to be cut in line with the new realities of defence.Footnote 52 Even during the Cold War, it was clear that the Swedish defence industry could not survive on national markets alone, but this became more pronounced at the end of the Cold War: if Sweden was to maintain the possibility of self-sufficiency in arms production, exports were seen as a necessity, as was the possibility of cross-border cooperation (though to remain tightly regulated through government oversight).Footnote 53 However, the global defence market and production structure was changing to reflect broader globalisation trends. There was an increasing sense that Swedish firms were facing challenges from globalising production trends (rising costs of production, internationalisation of production, firm integration) and needed to transform the mainly state coordinated sector of national firms to this environment.Footnote 54
Q2. What were the dynamics between incumbent and challenger firms in the development of the new market? The changes that were inaugurated in the early 1990s were driven and managed by negotiations between industry and government, which led to the establishment of more internationally competitive firms in the key areas of Swedish defence production: aircraft, ships, submarines, missiles, and artillery. Leading (incumbent) firms worked with the government to restructure and remain globally competitive and keep Sweden relatively autarkic in defence manufacturing. This meant consolidating firms and inviting internationalisation through FDI. The key players from the previous system – SAAB, Kockums, Bofors – were therefore a central part of the reorganisation of the sector: the new firms were repurposed versions of older firms. As Devore argues, an ‘adaptation strategy’ was developed that focused on making firms more competitive globally, making SAAB a more central and global defence firm, and integrating other Swedish firms into the European defence market.Footnote 55 For example, Celsius was re-recreated in 1991 to form a national defence firm dealing with the production of ammunition. The Swedish state had a large investment in Celsius but in 1999 sold its shares to SAAB.Footnote 56 SAAB also purchased Ericsson’s defence work: SAAB now contained aerospace, missiles, and radar from all three corporations.Footnote 57
In addition to the restructuring of domestic industry, ownership structures also changed.Footnote 58 While initial efforts grappling with the issues of foreign sales and investment were concerned about the possibility of foreign shareholders buying into key Swedish firms,Footnote 59 these concerns needed to be balanced with need for investment, and the route taken was through further internationalisation. This was well represented by the sale of Kockums (a naval ship manufacturer) in 1999 to the German firm HDW; through the internationalisation of SAAB (e.g., through a 1995 joint venture company with British firm BAE Systems to produce the SAAB–BAE Gripen fighter; BAE also owned 35 per cent of SAAB AB shares from 1998–2005);Footnote 60 and the sale of Bofors to United Defense (a US firm) in 1999.Footnote 61
The Swedish governance of political economy was characterised by a bargaining between public and private actors, with the intent on maintaining the viability of national defence firms (SAAB being the key example). This helps to understand the more cooperative settlement of the crisis moment in the Swedish case, where the new defence market field was created through intra-industry and industry–state cooperation. This contrasts, for example, with the more competitive approach in the United States, where in 1993 Secretary of Defense Les Aspin held a ‘last supper’ for key defence contractors, where it was indicated that a decline in defence spending would necessitate industry consolidation (and the US government would also facilitate this process): US firms were basically told to ‘combine or die’.Footnote 62 In Europe more broadly, there was a mix of models developed – though all focusing on consolidation – from a competition-focused approach in the UK to a more cooperative approach in France.Footnote 63
The compromises that led to a new system of Swedish defence production also led to the concentration of power in private actors (maintaining the power of key incumbent firms) and an elite consensus on the overall approach to Swedish defence manufacturing and security policy.Footnote 64 Swedish firms focused on a model of control that featured cooperation within industry and with the state, but also in terms of ways of managing domestic under-consumption of Swedish defence products (through the possibility of foreign sales) and broader globalisation trends (through opening up to FDI and partnerships with other defence firms). The Swedish state not only had a key role as a facilitator of economic restructuring but is also the primary customer for Swedish defence firms, as well as promoter of Swedish firms abroad.Footnote 65
Q3. In what ways did governance units attempt to shape the new market? The Defence Industry Association (Försvarsindustriföreningen, FIF) was created in 1986 by leaders in the defence industry sector and was key in coordinating efforts by leading defence firms to adapt to a changing international environment (in effect coordinating the views of incumbent firms). Much of the work of FIF focused on the export sector and how to organise for the end of the Cold War and the integration of Swedish defence exports with the EU/European market and with NATO. Prior to the end of the Cold War, FIF was already leading the way in pushing back against export controls for the Swedish defence industry. Lennart Forsman, CEO of FIF, argued in 1989 that there was an uncertain environment created by the government’s lack of clarity on future defence needs and policy around export control.Footnote 66 More direct opposition to export controls was also led by firms such as Bofors, as well as FIF (and other Swedish business organisations).Footnote 67 By 1992, the new Moderate government was supporting the FIF and industry position, with Defence Minister Anders Björck specifically making the case that increased collaboration with foreign partners was key for the future of Swedish defence.Footnote 68 By the mid-1990s, the industry and the government were pushing the need for greater exports.Footnote 69
With Sweden joining the EU in 1995, there was also an effort by FIF to push for Sweden to join key arms manufacturing organisations within the European context, as a means of maintaining its market share. In 1996, FIF urged the government to join the Western European Armaments Group (WEAG) and the European Defence Industry Group (EDIG),Footnote 70 which the government also followed up on, arguing that without further integration into the European marketplace, Sweden would lose its competitiveness and become increasingly isolated.Footnote 71 There was opposition from within the WEAG for Swedish (and Finnish) membership for political reasons, but FIF still saw the relationship with the group as important and desirable.Footnote 72 FIF also began campaigning for opening up exports beyond Europe, for example to the Gulf States.Footnote 73
There were also pushbacks and contention around the role of industry organising in the time period.Footnote 74 Opposition parties and those in Parliament that were against increased arms exports were one important consideration. However, there were also concerns voiced throughout the 1990s concerning the close relationship between the government (and specific public authorities and committees within the state) and industry. For example, an argument was made that there was too close a relationship between the government, the War Material Inspectorate (Krigsmaterielinspektionen, KMI), and FIF.Footnote 75 A heated debate about industry influence (and something of a civil–military crisis) also emerged in 1997 when Defence Minister Thage G. Peterson accused the industry and the military of working against the government.Footnote 76
Overall, the 1990s were shaped by market reorganisation and attendant renegotiations of state–market relations. Companies and business organisations pushed back against propositions for tighter export controls and argued for an integration of the Swedish defence industry into the European market, supporting key interests of incumbent firms in the defence market field.Footnote 77 The FIF played a key role in leveraging the interests of the large defence companies, its influence likely aided by its close relationship with the armed forces (for instance, in 2000, a former deputy supreme commander – Percurt Green – became the CEO of FIF).Footnote 78 The start of the new millennium saw growing industry criticism of military downsizing and of government propositions to buy ‘off-the-shelf’ defence systems and thus to shrink state-funded R&D programmes.Footnote 79 In addition to organisations such as FIF, the Wallenberg Group retained its influence over the market through its role as largest stakeholders in SAAB and Ericsson, expanding its shareholding in the early 2000s.Footnote 80 In 2007, FIF changed its name to the Swedish Security & Defence Industry Association (Säkerhets- och försvarsföretagen, SOFF) to better reflect the broadening of the security sector.Footnote 81
Q4. What state regulatory institutions were developed to order or structure the new market? Three main shifts – the development of ‘new public management’, the opening up of Swedish defence firms to foreign investment, and the greater promotion of international arms sales – all became part of the legal landscape of Swedish defence in the 1990s and 2000s. Regarding the development of ‘New Public Management’ (NPM), the 1990s saw major changes to the organisation of the armed forces in Sweden. There was first a merging of numerous independent agencies into one overarching organisation, the Swedish Armed Forces (SAF).Footnote 82 Part of the rationale for this merger was to give more political control over the armed forces, but a review of the merger in 1996 noted that this had not been achieved, and further investigations led to more reforms to the system.Footnote 83 While other reforms are often seen as central to the overall implementation of NPM,Footnote 84 one central to this was the development of a ‘client–contractor model’ for managing the budget of the SAF: ‘the SAF had the role as client and the common agencies performed services. These services were mostly financed with a fee, which also meant that the SAF was assigned most of the appropriations for the defence sector.’Footnote 85 More generally, the NPM shift was to focus more on accountability for outcomes in agencies working under the umbrella of the SAF.
The opening up of foreign investment in Swedish firms and the easing of restrictions on foreign sales went together, as part of the process of the globalisation of the defence industry.Footnote 86 As noted above, the Swedish approach was to embrace globalisation while still holding on to leading national firms that would provide autonomous defence production capacity, while also retaining firm regulatory oversight by the Swedish state. The 1990s saw a series of legislative moves to inaugurate these changes: to allow for the expansion of defence exports and the possibilities for the internationalisation of key defence companies (all with regulatory oversight and approval by the state).Footnote 87 A key part of this was the creation in 1996 of the Inspectorate for Strategic Products (Inspektionen för strategiska produkter, ISP) as a new public authority. The ISP is responsible for managing both foreign direct investment and exports for the arms industry and dual use technologies.Footnote 88
Overall, the case demonstrates that the end of the Cold War provided an opportunity to reshape the defence market field in Sweden, one that was driven by interpretation about the nature of the crisis (focusing on the shifting geopolitical landscape and the globalisation of industry), and where the settlement of the new market field was a cooperative one, driven by incumbent firms and the Swedish state. The state created a structure to facilitate the stability of the new defence market field in Sweden, while also creating the possibilities for further expansion to Europe and beyond.
The return to total defence
The second moment of change involves the Russian annexation of Crimea in 2014, triggering the return of total defence planning and organising, and a shift back to territorial defence. Again, the four analytical questions guide the analysis.
Q1. How did crises become interpreted and mobilised in ways that reshaped the defence market field? The Russian annexation of Crimea in 2014 was pivotal for the reinterpretation of the needs of Swedish defence policy, returning to a version of territorial Swedish defence and security policy and practice. In the previous decades, policies had largely focused on building Swedish security internationally, for instance through engagement in NATO-led military operations as part of the global war on terror. The change of perspective is clear in the 2014 instructions to the Swedish Defence Commission (SDC), issued by the minister for defence and resulting in a reassessment of threats to national security.Footnote 89 The report paints a broad picture of intensified ‘traditional’ as well as ‘hybrid’ or ‘transboundary’ threats. The SDC also identifies several changes needed to rebuild territorial defence capabilities after more than two decades of military downsizing and disarmament.Footnote 90 Societal security, the 2014 report concludes, is a collective concern for the whole of society, including for commercial actors.Footnote 91
As a result of the changing nature and gravity of threats, mainly emanating from Russian aggression towards other countries in the region (both the invasion of Georgia in 2008 and the annexation of Crimea are highlighted), the SDC argued for ‘war preparedness’ and to rebuild the military’s territorial defence capabilities. Yet total defence did not become the key tenet of Swedish defence policy and practice until one year later; in December 2015, the government decided to restart total defence planning and organising.Footnote 92 In later SDC reports, it is evident that domestically, total defence is once more at the core of defence policy thinking.Footnote 93 As Angstrom and Ljungkvist point out, the return of total defence in Sweden can be seen at once as a response to ‘new’ sets of hybrid threats and grey zone activities and as a way to organise for ‘conventional’ threats and war.Footnote 94
In the context of external threats and potential crisis, then, total defence makes a return as the fundamental principle of Swedish defence policy and practice. However, this is not merely a case of going ‘back to the future’Footnote 95 – especially not in relation to the role and function of the private sector. Firstly, while key principles remained the same, many of the structures and institutions of previous iterations of Swedish total defence were dismantled from the 1990s and onwards. Secondly, new globalised ownership structures meant the rules and regulations previously governing or motivating the involvement of private enterprises in total defence were, in many cases, found to be outdated or no longer viable for long-term planning, stockpiling, and so on.Footnote 96 In view of these challenges, the government commissioned several inquiries into the role of business in total defence, seeking ways to create structures, regulations, and incentives for market involvement adapted for a new time.Footnote 97 This crisis moment, as in the previous case, also provided an opportunity to recreate the defence market field.
Q2. What were the dynamics between incumbent and challenger firms in the development of the new market? The reliance on private firms is not a new occurrence in Swedish total defence. In the past, many arrangements involving private firms were essentially ‘coercive’ in that companies deemed important for national defence were identified and covered by special legislation, allowing the state under certain circumstances to requisition their resources and facilities. In recent reports, the Defence Commission and others have suggested that such regulations be revised and updated to develop state–market relations for total defence collaboration and to secure long-term access to private sector resources and services in times of heightened states of alert or war. Such an approach was already used with the government pressuring SAAB to re-acquire Kockums from EDW in 2014.Footnote 98 Other suggestions include using (and changing) public procurement systems and contracting processes to increase access to stockpiles and services.Footnote 99 There are national and EU level regulations and rules for companies in certain sectors, covering, for instance, information security work and maintaining critical services such as banking. In addition, since 7 March 2024, there are NATO standards and baseline requirements (on civil defence and resilience) that Sweden is working to conform to. All in all, the process to (re-)create a functioning market for total defence is still very much an ongoing process and has not reached a stable settlement.
Yet there the emerging, ‘new’ total defence structure is equally (if not more) dependent on the private sector for a host of key functions and services, including military hardware to security of supply (e.g., water, food, electricity, communications, etc.), and stockpiling (e.g., fuel, medical supplies, etc.). While private companies generally express willingness to support the total defence effort, there are limits to this engagement, particularly if competition is seen as skewed or if compensation or other incentives are lacking.Footnote 100 Some incumbent firms are already closely connected with national security structures and organisations, while others lack a ‘natural’ (or previously established) connection to the defence and security policy domain. Here we can see some contention over the settlement of the defence market field, which on the side of the state the goal is more cooperative, while industry focuses more on competition.
With the establishment of a ‘new’ market, we can expect converging interest among firms across sectors. Yet we can also expect some firms and interest group organisations – not least by virtue of their established connections or previous engagement in defence – to play the role of ‘lead’ organisations, and thus be better placed to influence emerging policies on market structures and public–private relations. Some ‘traditional’ (incumbent) firms and organisations are clearly leading the way in shaping the total defence market. For instance, SAAB frequently declares allegiance with ‘Swedish’ societal norms and ideas, including positioning themselves as ‘part of total defence’.Footnote 101 One of SAAB’s subsidiaries, Combitech, a tech and consulting company, also presents itself as ‘part of the Swedish defence’. In addition, Combitech produces an annual ‘Total Defence Report’ on the status of total defence awareness and readiness among private firms in Sweden.Footnote 102 Also, and as we shall see, business organisations such the Swedish Security and Defence Industry Association (SOFF) or the Security Delegation of the Confederation of Swedish Enterprise are also very active in trying to shape the structure of the new market field for total defence, for instance by creating incentives for involvement or streamlining public–private relations, including contracting and tendering processes.
Q3. In what ways did governance units attempt to shape the new market? The FIF became the SOFF in 2007. The organisation currently represents around 250 companies in the defence and security sectors. Traditional defence industry members include BAE Systems (Hägglunds and Bofors), Kongsberg, Patria, and SAAB. As early as 2017, SOFF identified total defence and societal security as an ‘emerging new market’,Footnote 103 and it has since been working to ‘illuminate for our decision-makers the indispensable role that our companies play in safeguarding our communities’, describing their work as being ‘at the forefront of shaping security policy, making a safer future for all’.Footnote 104
Since the restart of total defence planning and organising in 2015, SOFF has produced several policy papers on total defence and societal security, outlining the need for structured state–market relations and calling on the state to include private firms in the early phases of planning and organising, and for close state–market collaboration for the protection of critical societal functions. According to SOFF, the market for total defence is different from the traditional market for defence, not least in terms of the fragmented client base (including public and private actors on the national, regional, and local levels). The organisation also points out that there is no central level procurement structure for total defence and societal security, and that the structure of responsibility and policy implementation is highly decentralised.Footnote 105 This likely points to another important difference from the 1990s, in that there might be multiple overlapping defence market fields.
Discussing its position vis-à-vis total defence further, SOFF outlines several key areas for market development and private business involvement in shaping policy:
Currently, many firms are integrated into a matrix of international ownership configurations and global subcontractor supply chains. By proactively establishing the right conditions within Sweden, the groundwork is set for triumph on the global defence stage. […]
The paramount goal of SOFF is to ensure that security and defence enterprises in Sweden are afforded the most favourable conditions for growth and success […]. To achieve this, SOFF endeavours to shape the creation and execution of policies and legislative structures that impact the security and defence sector.Footnote 106
Although the organisation’s commitment to Swedish defence is made clear, it is equally clear that private sector involvement in the market for total defence needs to be governed by ‘favourable conditions’ and trading terms. Similar ideas are expressed by the Security Delegation of the Confederation of Swedish Enterprise, SNSD. The Confederation represents some 60,000 companies and forty-nine industry and employer organisations, working both nationally and internationally to establish free enterprise, effectively representing ‘the entire Swedish enterprise community’.Footnote 107 The Security Delegation – a forum for exchange of ideas, experience, and knowledge on security issues – identifies total defence as one of their three priority areas and concludes that ‘[e]nterprise is the basis of total defence’, and that companies need to be apprised of their roles in total defence and how they will be compensated.Footnote 108 Judging from the state’s heavy dependence on the private sector to generate total defence capabilities, it is reasonable to expect that the impact of organisations such as SOFF and SNSD on shaping policies on the settlement of the defence market field is, and will be, substantial. Also, considering the already strong position of SOFF, SNSD, and several of their member companies in Sweden, these business organisations clearly play leading roles in shaping private sector positions on the settlement of the (total) defence market field.
Q4. What state regulatory institutions were developed to order or structure the new market? The role of business in total defence has formed the subject of debate and official investigations over several years. In terms of concrete actions, a few suggestions and decisions are of particular interest here. First, in 2019, one inquiry into the role of business in total defence suggested the formation of a national, cross-sectoral business council for total defence.Footnote 109 The Council was eventually announced in January 2023 and held its first meeting in March the same year.Footnote 110 The Council is led by the minister for civil defence, and members include business organisations (such as SOFF) and employer organisations from several different sectors, as well as trade unions. The government describes the council as a strategic level ‘forum for information exchange on issues of common concern for businesses, employers, and the state concerning total defence and crisis management’.Footnote 111 In effect, the business council is an additional public–private forum – or structure – for total defence organising and planning at the national level. As such, it underscores the importance of the market involvement in total defence and an attempt to resolve some of the issues around state control and regulation. In addition, it signals a willingness on the part of the state to give the private sector a degree of influence over strategic level planning.Footnote 112
Second, although security of supply and supply chain integrity have been part of the discussion on private sector involvement in total defence, many issues surrounding (public) procurement and contracting remain unresolved. Yet in 2023, an official inquiry suggested – in line with several previous suggestions, including the ones by SOFF discussed above – a change in the legal framework for public procurement. Under the revised law, the National Agency for Public Procurement is given the express task to
contribute to ensuring that due consideration of crisis preparedness and total defence aspects is included in the procurement of services of critical societal importance, and services necessary for total defence.Footnote 113
As in the case of the Business Council, the establishment of new or revised legal instruments for public procurement (entering into force in January 2025) creates governance structures for the emerging market. Such structures will not resolve all the perceived challenges of balancing national and EU public procurement regulations and restrictions with the state’s defence priorities and needs, but it is clear that considerable efforts are being made to create a functioning market for total defence. As a final example, the Swedish Civil Defence and Resilience Agency (formerly the Civil Contingencies Agency, MSB), published a brochure entitled Preparedness for Businesses: In Case of Crisis or War.Footnote 114 The brochure provides advice to businesses in terms of contingency planning and preparedness and underscores total defence planning as a ‘collective responsibility’ involving all parts and actors in society. While this brochure does not introduce new rules for the market, it certainly outlines important normative expectations, again pointing to the state’s desire for a more cooperative settlement to the defence market field.Footnote 115
Overall, the second case demonstrates that the new era of geopolitics and hybrid threats has created another opportunity to reshape the defence market field in Sweden. While there is some agreement amongst key actors about the nature of the crisis – especially the importance of business for societal security – there remains contention on the terms of settlement of the market field. The state would like a more coordinated effort (that is portrayed as more coercive by business), while business wants a commitment to competition, though one where incumbents continue to play a leading role.
Conclusion
Our starting point was to examine the ways in which crises help shape changes in state–market relations in defence. We examined this through a comparative analysis of two crisis moments in Swedish defence policy, each of which led to a rethinking and a (potential) new settlement for the defence market field. The first period saw a restructuring of incumbent firms, a way of both shoring up the Swedish defence industry in a globalised environment and a means for the state to retain self-sufficiency in arms production. The shift did not see a radical overhaul of power structures but did provide a new institutionalisation of the defence market, focused on internationalisation strategies, while keeping domestic sales. The second crisis was a reaction to a new threat environment, especially reflecting Russian aggression and ‘hybrid’ threats. The globalised economic context of the previous shift was still present, so much of what was proposed concerned how state and market could adapt to the new threats and a renewed idea of total defence. The broadening of what was considered threatening behaviour also expanded the possibility for commercial opportunities in the defence sphere.
A key part of our study was to show how a sociology of markets framework – ‘markets as politics’ – can help us move beyond the state versus market approach that has been predominant in literature on defence transformation. As shown above, this approach can bring important new insights into the process of (defence) market transformation, especially by focusing on the interactions between domestic actors in producing a specific market field. The politics of markets approach provides a different narrative of the change; instead of focusing on the marketisation of defence provision and setting markets against the state, we saw key interactions between leading firms, business organisations (‘governance units’), and the state setting up the parameters of what we refer to as the defence market field.
The process of market field settlement helped illuminate ways in which interactions shaped the dynamics of the new market. The analysis indicated that the post–Cold War defence market settlement focused mainly on cooperation (between incumbent firms, industry associations, and the government), while the new total defence market field is still undetermined, with the government focusing more on cooperation, and the private sector on competition. The focus on firm strategies also showed that incumbent firms retain great weight (and structural power) in the system, leading the way in shaping market structures and positionings. However, the new range of threats and a different marketspace have led to a proliferation of new firms that create a very different – and more complicated – set of state–market relations.
In terms of regulation, the first period saw an institutionalisation of the new market. Interactions among leading firms, business groups, and government developed a set of new rules framing the management of defence (and defence contracting), the internationalisation of firms through FDI and mergers, and a framework for arms exports. In the second period, we see efforts to shape a new regulatory environment for a ‘new’ market for (total) defence that has expanded well beyond conventional boundaries, but one that is still not entirely determined. Additionally, industry associations played a key role; both FIF and SOFF have been crucial for giving a unified voice to industry but also to the key incumbent firms seeking to secure their market share during moments of crisis. The Swedish case demonstrates how integrated the business organisations were with state and government policy.
The ‘markets as politics’ framework is promising for comparing national defence contexts to identify commonalities and differences across country and regional contexts. First, it can help develop emerging research comparing different approaches to ‘total defence’ or ‘comprehensive security’, and to see how such whole-of-society approaches differ from other defence concepts.Footnote 116 Second, the framework is also useful for analysing a wider set of defence and security actors. In our study, we also found that the relationship between the national defence market field and other fields is important, and future research into market transformation and institutionalisation should include supra-state actors such as NATO and the EU, as well as international business organisations. Current research in this area has explored themes that overlap with the field approach developed here, and analysing interlocking and overlapping defence market fields promises to add further to this literature.Footnote 117 Overall, examining the politics of the defence market in the Swedish case facilitated an analysis of the particularities of endogenous political mobilisation in creating a new market field in a post-crisis environment. Focusing on the market as a strategic action field opens up new possibilities for the analysis of defence markets in Sweden and beyond.
Acknowledgements
Earlier versions of the paper were presented at the Peace Research in Sweden (PRIS) conference in 2022 and the 2023 European International Studies Association conference; thanks to the panels for helpful comments, and to the respective discussants Ralph Sundeberg and Chris Rossdale. Wayne Coetzee and Srdjan Vucetic also gave important feedback at various stages. Lastly, we would also like to thank the two anonymous reviewers for their helpful feedback.
Competing interests
The authors declare none.
Funding Statement
The authors’ work with this article has been funded by the Total Defence for the 21st-Century project at the School of Global Studies (Swedish Research Council, project no. VR2021–06292). The research conforms with the ethical guidelines from the Swedish Research Council.
Bryan Mabee is an associate professor at the School of Global Studies, University of Gothenburg. His current research interests concern militarism, the political economy of war and security, and the history of international thought. He has recently published articles on the conceptual history of militarism and the international thought of C. Wright Mills.
Joakim Berndtsson is a professor at the School of Global Studies, University of Gothenburg. Berndtsson’s research interests include civilian–military collaboration, Swedish and Nordic total defence, and public opinion on Swedish defence and security policies and organisation.
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