(FORTUNE Magazine) – Social Democrats have run the country since 1982 and for 53 of the past 60 years, so they can hardly blame anyone else for Sweden's abundant woes, including recession and 11% inflation. Industry, put off by spiraling labor costs, last year invested twice as much abroad as at home. With elections slated for September, Prime Minister Ingvar Carlsson and his Social Democrats have seen approval ratings drop to an icy 30%. Some voters are threatening to back the New Democracy, a startup party with the motto ''Swedes have just got to have fun.'' It advocates fewer meter maids, cheap booze for Sweden's heavily taxed drinkers, and could be part of a winning conservative coalition. In defense, Carlsson has turned to Reaganesque reform: chopping top household tax rates from 80% to 50% and corporate taxes from 57% to 30%. A sacred cow likely to go: Sweden's practice of guaranteeing all citizens work. Unemployment, now at 2%, will be allowed to jump to 5% by 1993. This summer, Carlsson hopes to please voters by enrolling Sweden in the European Community. That could bring a surge of new business to Swedish companies and keep the socialists, if not socialism, on top.