Nordic model

This article is about the social and economic model in northern Europe. For the socioeconomic model in continental Europe and Germany in particular, see Rhenish model. For the political ideology often associated with the Nordic model, see Social democracy.

The Nordic model (or Nordic capitalism[1] or Nordic social democracy)[2][3] refers to the economic and social models of the Nordic countries (Denmark, Finland, Norway, Iceland, Greenland, Faroe Islands and Sweden), which involves the combination of a free market economy with a welfare state.[4]

Although there are significant differences among the Nordic countries, they all share some common traits. These include support for a "universalist" welfare state (relative to other developed countries) which is aimed specifically at enhancing individual autonomy, promoting social mobility and ensuring the universal provision of basic human rights, as well as for stabilizing the economy, alongside a commitment to free trade. The Nordic model is distinguished from other types of welfare states by its emphasis on maximizing labor force participation, promoting gender equality, egalitarian and extensive benefit levels, the large magnitude of income redistribution, and liberal use of expansionary fiscal policy.[5]

The Nordic model is described as a system of competitive capitalism combined with a large public sector (roughly 30% of the work force).[6] In 2013, The Economist described its countries as "stout free-traders who resist the temptation to intervene even to protect iconic companies" while also looking for ways to temper capitalism’s harsher effects, and declared that the Nordic countries "are probably the best-governed in the world."[6][7] The Nordic combination of extensive public provision of welfare and a culture of individualism has been described by Lars Trägårdh, of Ersta Sköndal University College, as "statist individualism."[6] Some economists have referred to the Nordic economic model as a form of "cuddly" capitalism, with low levels of inequality, generous welfare states and reduced concentration of top incomes, and contrast it with the more "cut-throat" capitalism of the United States, which has high levels of inequality and a larger concentration of top incomes.[8][9]

The Nordic model, however, is not a single identical set of policies and rules in every country; each of the Nordic countries has its own economic and social models, sometimes with large differences from its neighbors.[10] While Sweden's neoliberal reforms[11][12] have reduced the role of the public sector over the last decades, and saw the fastest growth in inequality of any OECD economy,[13] Sweden's income inequality still remains lower than most other countries'.[14]

Overview

Flags of the Nordic countries

"The Nordic Model - Embracing globalization and sharing risks" characterizes the system as follows:[15]

History

The Swedish Social Democratic Party, usually referred to just as 'The Social Democrats' (Socialdemokraterna); is the oldest and largest political party in Sweden, founded in 1889. The Norwegian Labour Party was founded in 1887[26] in Arendal and first ran in elections to the Parliament of Norway in 1894. It entered Parliament in 1904 after the 1903 election, and steadily increased its vote until 1927, when it became the largest party.[27] The Social Democratic Party of Finland was founded as the Finnish Labour Party in 1899 and the Social Democrats from Denmark were founded in 1871 .[28]

Nordic welfare model

The Nordic welfare model refers to the welfare policies of the Nordic countries, which also tie into their labor market policies.

While there are differences among different Nordic countries, they all share a broad commitment to social cohesion, a universal nature of welfare provision in order to safeguard individualism by providing protection for vulnerable individuals and groups in society, and maximizing public participation in social decision-making. It is characterized by flexibility and openness to innovation in the provision of welfare. The Nordic welfare systems are mainly funded through taxation.[29]

Despite the common values, the Nordic countries take different approaches to the practical administration of the welfare state. Denmark features a high degree of private sector provision of public services and welfare, alongside an assimilation immigration policy. Iceland's welfare model is based on a "welfare-to-work" (see: workfare) model, while part of Finland's welfare state includes the voluntary sector playing a significant role in providing care for the elderly. Norway relies most extensively on public provision of welfare.[29]

Poverty reduction

The Nordic model has been successful at significantly ameliorating poverty.[30] Poverty rates pre-tax/transfer are 24.4% in Denmark, 32.3% in Finland, 21% in Iceland, 25.7% in Norway, and 27.8% in Sweden, and post-tax/transfer poverty rates become 6%, 7.3%, 6.4%, 7.5%, and 9.1% respectively.[31]

Foreign perspectives

Jerry Mander has likened the Nordic model to a kind of "hybrid" economics which features a blend of capitalist and socialist visions.[32] According to sociologist Lane Kenworthy, in the context of the Nordic model, "social democracy" refers to a set of policies intended to improve capitalism as opposed to a system to replace capitalism.[33] Kenworthy advocates for the U.S. to make a gradual transition to an economic system similar to those of the Nordic countries.[34] United States Senator Bernie Sanders (I-VT), a self-described democratic socialist, has been a strong proponent of the Nordic system.[35][36]

According to Naomi Klein, former Soviet leader Mikhail Gorbachev sought to move the USSR in a similar direction to the Nordic system, combining free markets with a social safety net - but still retaining public ownership of key sectors - ingredients that he believed would transform the USSR into "a socialist beacon for all mankind."[37][38]

See also

Lists

References

  1. ↑ The Nordic Way, Klas Eklund, Henrik Berggren and Lars Trägårdh. 2011.
  2. ↑ Nik Brandal, Øivind Bratberg, Dag Einar Thorsen. The Nordic Model of Social Democracy. Palgrave Macmillan, 2013. ISBN 1137013265
  3. ↑ Pontusson, Jonas (2011). Once Again A Model: Nordic Social Democracy in a Globalized World. pp 89-115 in What's Left of the Left: Democrats and Social Democrats in Challenging Times. Edited by James E. Cronin , George W. Ross, and James Shoch. Duke University Press. ISBN 0822350793.
  4. ↑ "The surprising ingredients of Swedish success - free markets and social cohesion" (PDF). Institute of Economic Affairs. June 25, 2013. Retrieved January 15, 2014.
  5. ↑ Esping-Andersen, G. (1991). The three worlds of welfare capitalism. Princeton, NJ: Princeton University Press.
  6. ↑ 6.0 6.1 6.2 "The Nordic countries: The next supermodel" The Economist. Retrieved 27 July 2013.
  7. ↑ "The secret of their success". The Economist. 2013.
  8. ↑ Jonathan Hopkin, Victor Lapuente and Lovisa Moller (25 January 2014). Lower levels of inequality are linked with greater innovation in economies. London School of Economics. Retrieved 23 February 2014.
  9. ↑ Kenworthy, Lane (2014). Social Democratic America. Oxford University Press. ISBN 0199322511 p. 88-93.
  10. ↑ Kenworthy, Lane (2014). Social Democratic America. Oxford University Press. ISBN 0199322511 p. 138.
  11. ↑ Per-Åke Westerlund (22 March 2014). Is Sweden a Model to Follow? Socialist Alternative. Retrieved 3 April 2014.
  12. ↑ Michal Rozworski (27 February 2015). Beyond the Swedish Model. Jacobin. 27 February 2015.
  13. ↑ Swedish riots rage for fourth night. The Guardian. 23 May 2013.
  14. ↑ Higgins, Andrew (26 May 2013). "In Sweden, Riots Put an Identity in Question." The New York Times. Retrieved 29 June 2013.
  15. ↑ 15.0 15.1 15.2 15.3 15.4 15.5 15.6 15.7 Torben M. Andersen, Bengt Holmström, Seppo Honkapohja, Sixten Korkman, Hans Tson Söderström, Juhana Vartiainen. The Nordic Model - Embracing globalization and sharing risks
  16. ↑ http://www.doingbusiness.org/rankings
  17. ↑ 17.0 17.1 Index of Economic Freedom
  18. ↑ "CPI 2012 table". Transparency International. Retrieved 2013-04-23.
  19. ↑ "Trade Union Density" OECD StatExtracts. 2010. Accessed: 3 May 2013.
  20. ↑ Kjellberg, Anders "The Swedish unemployment insurance - will the Ghent system survive?", Transfer – European Review of Labour and Research no 1 2006, pp. 87-98, ISSN 1024-2589. Accessed: 19 January 2014.
  21. ↑ http://www.nordiclabourjournal.org/i-fokus/in-focus-2001/the-nordic-model
  22. ↑ OECD. Growing Unequal? Income Distribution and Poverty in OECD Countries. Organisation for Economic Co-Operation and Development. 2008. p. 232, p. 233
  23. ↑ "Skattetrykket". Danish Ministry of Taxation. Retrieved 2012-06-24.
  24. ↑ Carolyn Gregoire (10 September 2013). The Happiest Countries In The World (INFOGRAPHIC). The Huffington Post. Retrieved 1 October 2013.
  25. ↑ David Wearing (22 May 2014). Where's the worst place to be a worker? Most of the world. The Guardian. Retrieved 26 June 2014.
  26. ↑ Svennik Hoyer. "The Political Economy of the Norwegian Press" (PDF). Tidsskrift. Retrieved 30 December 2014.
  27. ↑ "Hva historien forteller.. 1920 - 1935". Arbeiderpartiet. Retrieved 17 January 2013.
  28. ↑ "Socialdemokraterne - Socialdemokratiet - Det Kongelige Bibliotek". Kb.dk. Retrieved 18 November 2013.
  29. ↑ 29.0 29.1 The Nordic Council. "About the Nordic welfare model". Norden. Retrieved 2 April 2014.
  30. ↑ Kevin Drum (26 September 2013). We Can Reduce Poverty If We Want To. We Just Have To Want To. Mother Jones. Retrieved 5 October 2013.
  31. ↑ Income distribution and poverty - OECD. OECD
  32. ↑ Jerry Mander (24 July 2013). "There Are Good Alternatives to US Capitalism, But No Way to Get There." Alternet. Retrieved 27 July 2013.
  33. ↑ Lane Kenworthy (January 2014). "America's Social Democratic Future". Foreign Affairs. Retrieved 2 April 2014.
  34. ↑ Matthews, Dylan (January 2014). This sociologist has a plan to make America more like Sweden The Washington Post. Retrieved 11 March 2014.
  35. ↑ Sanders, Bernie (May 26, 2013). What Can We Learn From Denmark? The Huffington Post. Retrieved 11 March 2014.
  36. ↑ Issenberg, Sasha (January 9, 2010). "Sanders a growing force on the far, far left". Boston Globe. You go to Scandinavia, and you will find that people have a much higher standard of living, in terms of education, health care, and decent paying jobs.
  37. ↑ Klein, Naomi (2008). The Shock Doctrine: The Rise of Disaster Capitalism. Picador. ISBN 0312427999 p. 276
  38. ↑ Philip Whyman, Mark Baimbridge and Andrew Mullen (2012). The Political Economy of the European Social Model (Routledge Studies in the European Economy). Routledge. ISBN 0415476291 p. 108 "In short, Gorbachev aimed to lead the Soviet Union towards the Scandinavian social democratic model."

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