By Adam Peggs
Many of us admire the huge gains in quality of life and fighting poverty in the Scandinavian countries and Iceland, alongside advances in battling sexism and the region’s historic distaste for militaristic foreign policy. But the veneration of the Nordic countries as beacons of equity and progress has always rested on shaky ground, while the description of them as democratic socialist in nature has involved a dilution of the term.
Many readers will be aware that the Nordic countries tend to be world leaders on indicators like quality of life, child well-being and exceptional access to things like education and healthcare. This might spill over into an understanding that much of what the Labour Party stands for points toward a vision of a society more like Norway and Sweden than contemporary Britain. A number of the Labour’s core domestic policies are the norm in the five Nordic countries: public ownership of major utilities, more progressive taxes and universal higher education and child care. It is certainly worth re-stating that the Scandinavian countries do have significantly more progressive and ‘social’ economic models than the UK, and much of Europe, including universally accessible healthcare, childcare and higher education, better housing provision, slightly shorter working hours and fairer wages.
Born out of the compromise between Scandinavia’s industrialists and dissatisfied workers, a model which favoured reduced income inequality, expansive public services, principles of universalism and workers’ rights emerged and took hold for decades. Its aspiration was to break down all the social and economic barriers that now divide citizens into the privileged and unfortunate. Yet, even at its strongest there was little doubt that the Nordic Model was the exemplar of social democracy, rather than a profound economic alternative. The Nordic status quo has historically represented a system based on strong services, redistribution, curbing poverty and tempering inequality, but with little aspiration toward democratic control of industry or a fundamental shift.
Hence in even the golden years of Scandinavia’s social democracy, ordinary people had little say over the day to day running of the services and industries around them. The commanding heights of the Nordic countries always remained relatively shielded from democratic, public accountability, even though their economies typically had more favourable conditions for working people than the rest of Europe or North America. The golden era is better described as social democracy or “social democratic welfare capitalism” than in other terms. This era did see big advances in workers’ rights (including stronger representation within companies) and more “decision-making power delegated to the shop-floor”, yet this was always rooted within a framework which saw bargaining as the objective, rather than envisioning a more pronounced shift.
Since this ‘golden’ period, many of the Scandinavian nations have slid back toward an economy comparable to Britain and the United States. Full employment has disappeared, welfare policies have fallen victim to a marked degree of fiscal conservatism, market policies have been directed at public services and privatisation has been introduced. While in Sweden for instance, in the last few decades, income and wealth inequality have both risen faster than in any other OECD country, with poverty also rising in conjunction.
The country has joined in with the wave of market-style reforms present across much of Europe over the last few decades, as have Denmark and Finland. Taxes on the economic elites have been slashed, market mechanisms have been inserted into frontline public services, the number of nationalised industries has diminished, while social spending has failed to keep up with growth.
Sweden has served as the blueprint of a new, marketised system of education in which state schools can be run for profit by private companies, essentially making them less accountable. This is true across the surrounding countries and may well be symptomatic of a shift in the thinking of social democrats. And it is worth referencing that Sweden’s highly market-oriented school system, is beloved by David Cameron and Tory school reformers. The context here is one in which in the last few decades, European social democrats have often tried to accommodate globalisation and market reforms, whilst accepting the leverage of business leaders in all realms of society, including major public services.
These days most of the Scandinavian countries face particularly high levels of wealth inequality and the absence for some time of tax regimes likely to diminish this form of inequality, be it inheritance taxes or wealth taxes. So while the gap between different employees’ pay levels tends to be smaller, the gap between ordinary people on the one hand and landowners and fat cats on the other tend to be large. Surprising as it might seem to some, Denmark and Sweden even have higher levels of wealth inequality than Britain, with the richest tenth of Scandinavia’s population owning around two thirds of the national wealth.
And to some extent the Nordic Countries are dependent on revenue from sources that are anathema to many on the left, with Norway’s economy dependent on its oil and Sweden benefitting from an outsized involvement in exporting weapons.
Recent years have seen Scandinavia’s progressive appearance in increasing jeopardy. You have the migrant ghettos in Denmark (supported by the Social Democrats) and the seizing of refugees’ heirlooms. In Sweden you have the rise of hard-nationalism, while racism in Finland has become especially prevalent. Overtly discriminatory nationalism has become commonplace in many of the Scandinavian countries – with the strength of the far-right in the region a likely consequence of this.
These problems are not the fault of the Nordic economic model itself, but have arisen in the context of political systems which have historically imposed draconian measures on minority groups and which place considerable emphasis on the idea of a homogenous homeland. The Nordic Model’s mythos, much like its material basis contains deep deficiencies which should arouse suspicion.
That’s not to say that ordinary people haven’t made large gains in Scandinavian countries, they have. Norway in particular has much of the commanding heights of its economy in public ownership – though I would question the extent to which these industries are run socially and democratically, rather than on the old bureaucratic model. But the Nordic Model peaked in the late 1970s and early 1980s, and even at its best it did not constitute a vision of an equitable society. Its idea of consensus-based decision making has always left an outsized influence, not justified by any criteria, for the very wealthiest. This model always placed limits on ambitions for industrial democracy, or an economy accountable to the people more generally.It placed more emphasis on reducing the pay gap between different workers than pursuing a more comprehensively fair society. This focus on earned income from labour necessarily sidelined the role of wealth accumulation and income derived from assets, effectively reimagining class divides as a divide between employees rather than between workers and the super-rich. Today the situation has only worsened; the Scandinavian approach has faced pressures and conceded rightwards – with ordinary people paying the price. Public policy has become less redistributive, wealth inequalities are particularly substantial and public services have shifted away from democratic accountability.
Its failure to realise transformational change, particularly with the failure to implement the Meidner Plan, which would have sought to “buy the corporations for the working class” (it now has a fairly similar parallel in Labour policy) marks the torpidity of Nordic social democracy. For this reason developments in left-wing thought such as Open Democracy’s ‘New Thinking For The British Economy’, McDonnell and Long-Bailey’s ‘Alternative Models of Ownership’ and McDonnell’s compilation ‘Economics For The Many’ are especially welcome.
The Nordic Model has delivered on a number of the historic demands of socialists, education and healthcare for all, universal childcare and serious attempts to tackle poverty, yet its limits are clear to see. The model, particularly nowadays, has done little to temper the substantial disparities in wealth, while a glut of these nations’ resources are summarily siphoned off by the top and exploitation and poverty persist. Market logic has in some cases burrowed deep into public services, while working people and consumers play little role in influencing the economic decisions which shape their day to day lives.
Those who look to the Nordic countries as sketches for an alternative, yet also see the need for re-organising political and economic life along co-operative lines must bear in mind that this alternative falls decisively short. Diminished income inequality is no doubt desirable but the aim is to ultimately offer an emphatic challenge to what Ralph Miliband berated as a “class ridden and class encrusted society, end exploitation and move forward along the lines of cooperation and solidarity.