Didn't work for whom?
To suggest that political changes happen due to "it didn't work" seems like a pretty shallow conclusion. There are a lot that can be said about the last decades of free-market privatization & reforms in Europe, and in Sweden in particular, but that it was done out of necessity rather than a general political shift after the collapse of the Soviet Union is simply a biased take.
Everyone from voting public in liberal democracies (Sweden, Canada, Germany), to the voting public in less liberal democracies (India), the Islamic world (Egypt), to communist regimes (China, Vietnam).
In Sweden it's glaringly obvious that the privatizations have provided worse outcomes than before - even the free-market think-tanks are smart to avoid that subject. Unfortunately for us, they instead tend to focus on supporting voices that blame immigration for the consequences of sky-rocketing inequality. I guess they'll have to wait another decade or so before the myth building of the inherently incompetent state is on more fertile ground.
Maybe voters in Sweden and voters in India and party functionaries in China all just got some “right wing”virus at the same time. Or maybe they were reaction to the unworkability of an economic system they had tried. You know what they say: those who don’t understand history are doomed to repeat it.
You talk about incentives? The amount of money that has been concentrated to the wealthiest portions of society is simply staggering, even in superficially equal countries like Sweden. The privatization of state-owned industry, properties, and the welfare system has been an unprecedented goldmine for private interests. Essentially a smaller Scandinavian version of a post-USSR wealth transfer. The incentives for people in power in less democratic and/or corrupt countries is even more obvious.
The virus was the global shock-wave due to the collapse of soviet-Union? Come on. It was not like the shift to third-way social-democracy was a grassroots movement. Party politics is more fluid than voting patterns. A sentiment of "It's new times now, we need to go along with the flow" (not that dissimilar to today's politicians accepting the gig-economy, but that's another topic), rather than "we can clearly see that state-owned industry just isn't working, we have no choice but to try something new". If it actually was the latter, it would've be repeated by right-wing representatives on every political debate since the 1990, but that hasn't happened.
I'll leave it there, I think I've gotten my point across.
And pray tell, how did that happen? How do people come into power in Sweden? I thought that it has a system where people propose what they will do, and the population votes on whose ideas and proposals they like the most, doesn't it?