The Family That Finances Sweden
The Wallenbergs are both the benefactors and beneficiaries of Sweden’s political economy. Five generations in, they demonstrate the viability of dynastic owners in an age of managers.
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Sweden has cultivated a reputation of being an economically egalitarian “moral superpower,” 1 emphasizing the country’s progressive credentials on immigration policy, income equality, and a generous welfare state. This reputation has been validated by metrics like the Gini coefficient, which quantifies the level of income inequality in a country, and where Sweden ranks very well. According to the World Bank, Sweden had a Gini coefficient of 29.3 in 2019, one of the lowest in the world. For reference, Slovakia had the lowest measured income inequality at 23.2, while South Africa had the highest at 63.0. The United States, for comparison, was at 41.5, China at 38.2, and Russia at 35.3. 2 But while Swedish social democracy has led to limited income inequality, concentration of wealth is extreme. In 2021, Sweden measured 87.2 on the wealth inequality index, 3 higher than the U.S. (85), China (70.4), India (82.3), and just slightly less than Russia (87.8), the latter of which in particular is sometimes characterized as a rapacious oligarchy. 4 Sweden ranks exceptionally high even among the other Nordic countries; Norway is the second highest at just 78.5. Contrary to its egalitarian branding, Sweden’s political economy is instead characterized by concentrated wealth within a small number of influential families and prestigious industrial groups. The vast majority of this accumulated wealth is held by as little as seventeen major dynasties and groups, among which fourteen are eminent families who can trace their riches to either the immediate postwar era or even further back to the late nineteenth century.
Sweden’s great families control large sectors of industry and commerce through asset holding companies, either directly or through foundations. The Schörling family’s holdings, for example, center around Melker Schörling AB, while the Douglas family relies on Investment AB Latour. But the Wallenberg family is by far the most prominent in Sweden. Its main holding company, Investor AB, is the most valuable publicly traded company in Sweden, with a market capitalization of over $60 billion in May 2022, equivalent to about 10% of Sweden’s entire GDP. For context, the only U.S. companies whose market capitalizations exceed 10% of U.S. GDP are Apple and Microsoft.
The Wallenberg business empire spans five generations. André Oscar Wallenberg founded it in 1856 by creating Stockholms Enskilda Bank (SEB), one of Sweden’s first major investment banks and still a central pillar of the family’s wealth. Like many prominent families, they have not been limited to business, with family members serving the Swedish state as diplomats, military officers, and envoys. Knut Agathon Wallenberg, for example, served as Sweden’s foreign minister from 1914–17, while Raoul Wallenberg served as a Swedish diplomat in Hungary during WWII and famously helped rescue thousands of local Jews from Nazi persecution by issuing them Swedish papers. Despite his fame, Raoul Wallenberg was a peripheral member of the family at the time. During the same period, Jacob “Jaju” Wallenberg was one of the country’s trade representatives to Nazi Germany while his younger brother Marcus played the same role for the Allies.5
The family’s close relationship with Sweden’s preeminent political party, the Social Democrats, has also made them a critical part of Sweden’s political economy. The family also stands out from Sweden’s modern business elites. They continue to rely on a corporate governance model centered around charitable foundations that own controlling shares in major for-profit enterprises, where dividends are recycled into philanthropic works. This model was once conventional in Sweden but has been increasingly replaced by direct ownership. Five generations is an anomaly in corporate governance terms, and the family attributes its longevity to the fact no individual can access the assets stored in the various foundations.6 Despite the vast wealth over which the Wallenbergs exert either total or partial control, the Wallenbergs themselves are thought to have a combined net worth of just about $1 billion and do not even appear on Swedish billionaire lists.7
Going by pure market capitalization, the family’s control of the Swedish economy has been watered down by increased competition with other families. Still, the Wallenbergs remain the exceptional first family of the Swedish state. As the family begins a slow process of transferring leadership to its sixth generation, its continuing and vast influence in Sweden serves as a strong counterexample to the idea that dynastic owners do not have a useful role in an industrialized democracy. Despite the professed egalitarian goals of the European model of social democracy, which is arguably epitomized by the Nordic states, it has preserved small and wealthy dynastic owners to a far greater degree than the more market-oriented model of the United States, to the benefit of the Wallenberg empire.
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Originally published at the Bismarck Brief on May 4, 2022.
