Policy makers who scapegoat international capital markets do so not necess- arily out of ideological bias. Sometimes, the global economy is a convenient cover for the negative consequences of past policy mistakes. Reform is necessary, leaders might argue, not because of past governments’ mismanagement of the public economy, but because domestic firms are falling behind and threatening to exit. Leaders also may attempt to provoke a shift in ideas regarding the appropriate relationship between state and market; in at least some instances, this promotion reflects strategic behaviour rather than learning or ideational change.20 For instance, in the face of steeply rising rates on government borrow- ing, Sweden underwent a significant amount of welfare state retrenchment in the 1990s. For some, this was evidence that the Swedish welfare state model was incompatible with globalisation. But the real roots of Sweden’s problems appear to have been domestic: once Sweden confronted its domestic fiscal crisis, which included a deficit/gross domestic product (GDP) ratio of 16 per cent in 1993, it experienced an economic recovery. At the end of the 1990s and the beginning of this decade, Sweden addressed pressures on its welfare state by trimming and modifying existing programmes, rather than by making funda- mental changes to its universalistic welfare state principles.21 And it was once again able to pursue many of the social policies that have been its hallmark.