"Sweden's social-welfare economy was doomed to fail"

Sweden has been an enigma to orthodox "market" economists. If business is necessarily a ruthless struggle between self-interested competitors (which is how it tends to be portrayed by the media), how did Sweden's "softness" (social equality, humanitarianism, welfare and environmental concern) lead to such a strong economy (eg the period upto the early 1990s)?

Economists rationalised that Sweden was a small insulated exception to universal rules of economic struggle, and wouldn't hold out much longer, but since the late nineteenth century, Sweden has been a world economy highly exposed to trends in international trade.

Such is the arrogance, apparently, of economic reporters in the UK media, that The Financial Times and The Economist congratulated Sweden on ridding itself of its Social Democratic government (which had ruled almost continuously since 1932). The Swedes were assured that their economy would now improve. But GDP per person in Sweden, at the time, was $29,770 compared to $17,700 in the UK, ie the Swedes were already $12,000 per head better off than UK citizens.

(Source: The Seven Cultures of Capitalism by Charles Hampden-Turner and Fons Trompenaars; Piatkus, 1994)