• Dawson Vosburg

Don't Believe Nonsense About the Nordics

When asked about where their ideas have worked, many socialists—particularly democratic and market socialists—point to the Nordic countries, especially contemporary Norway and Finland and Sweden prior to 1990. There are two typical responses to this: either a) the Nordics are indeed good economies but are not socialist, or b) the Nordics are indeed socialist but are actually not good. Option B has fallen out of favor lately, so I will set it to the side and deal with the most typical objection that the Nordics do not count as socialist. Almost everything about this argument is bound up with slippery, equivocating use of the term “socialist” combined with the hope that readers of the argument will be satisfied enough not to look into the actual economic policies of the Nordic countries.

The claim goes something like this: While the Nordic countries might appear socialist from the outside, they are nothing more than capitalist countries with lots of welfare programs, a sort of kinder and gentler capitalism rather than socialism. It is indeed true that the Nordic countries have exemplary welfare states: the logic of their model for welfare is essentially the one I argue for here at ELI. It’s based on universalist benefits for groups of people who don’t receive either labor or capital income. Are those who advance this argument thus saying, “We should be like the Nordics and adopt this style of welfare”? I have never seen a Christian make that conclusion from this argument, even though it would be far more logical than the conclusion Christian anti-socialists usually reach.

What is not true, however, is that the economy underneath the welfare state is laissez-faire capitalism, anything like the American libertarian model. The Nordics are more different from one another in this regard than they are in terms of the welfare state, but all of them contrast significantly with the United States both in terms of labor and capital. In every Nordic country, the majority of workers are covered by union contracts—Norway is the lowest of these at 67%, and Finland is the highest at 89.3%. In the US, the same figure is a puny 11.5%. Labor unions are the primary means by which these countries have achieved very low levels of wage inequality. Worker protections—very weak in the US, where at-will employment is very common—are robust in the Nordics as well. All of the Nordics have codetermination laws, whereby employees appoint representatives to the firm’s board of directors.

The Nordics are also substantially different in terms of capital. While the United States has very few state-owned companies or wealth, the Nordics have it in spades. To the degree that one uses collective control over the means of production as the metric for socialism, Norway stands out: excluding owner-occupied houses (typically not considered to be productive property), the Norwegian state owns three quarters of the country’s wealth. This includes its many state-owned companies which are worth more than 80% of the nation’s annual GDP as well as its massive social wealth fund. Norway’s wealth fund is truly staggering: it owns nearly $1.3 trillion in investments, the proceeds of which it uses to fund public spending for the good of all Norwegians. That’s nearly $250,000 for every Norwegian, including children. Scaled for population, this is akin to the US owning around $80 trillion in wealth collectively, or about three-quarters of total American wealth. If someone proposed that the US government ought to own that magnitude of wealth on behalf of its citizens, I have no doubt the proposal would be labeled well and truly socialist.

If you are a purist and only want to give the term “socialist” to a society which has reached the “end state” of socialism, that is up to you. But this is not how most of these arguments actually go, since their proponents make the unfortunate move of also insisting that Venezuela is an example of socialist failure. That so many are eager to call Venezuela socialist but argue until the cows come home that the Nordics are all but free-market utopias indicates the motivated reasoning at work here. As Matt Bruenig has pointed out, there is no metric by which Venezuela is more socialist than Norway, and in fact the key difference between the two is that rather than spending the revenue from its state-owned oil company directly (as Venezuela did), Norway made the more socialist choice to use those funds to buy up more collectively owned wealth (the aforementioned $1.3 trillion wealth fund). When oil prices cratered, then, Venezuela was left in an inflationary spiral while Norway survived not because Venezuela was truly socialist and Norway secretly capitalist, but because Norway had socialized a huge amount of financial wealth. The boundary between “socialist” and “not socialist” in these arguments is not drawn according to actual economic characteristics, but by whether or not a country is a failure. If it is not a failure, it cannot be “real socialism.”

The argumentative technique at work here is what I and others call reductio ad socialism: advocating the exact policies the Nordics have gets you labeled a “socialist” in the US, but when you say that socialism seems to work in the Nordics, the same people will tell you the Nordics are not socialist. This is a dishonesty unbefitting Christian engagement.

I would briefly like to mention two additional (somewhat desperate) claims that are frequently made about why, even though the Nordics are successful, their economic policies cannot be used in the United States: 1) the Nordics are small and 2) the Nordics are homogeneous. The argument about size, I think, is completely backwards. The US certainly can do universalistic welfare programs: we have one called Social Security, and it’s wildly popular and effective at poverty reduction. Additionally, the vastness and diversity of the American economy means that it is much less reliant on exports from a small number of industries for economic survival, making a Venezuela-like crash much less likely. It also means that the US would not have to wholesale nationalize a single profitable industry to finance a collective wealth fund; it could do so more gradually by means of broader-based taxation.

The argument from homogeneity is the one that bothers me much more. It is not usually paired with any kind of causal logic. It is not, “The Nordics are homogeneous, therefore….”, it is simply “The Nordics are homogeneous.” What about the difference in (cultural? racial? ethnic?) homogeneity would cause universalistic welfare to not reduce poverty, or unions to not decrease wage inequality? Is the argument that since these countries are more homogeneous, it is politically easier to accomplish these policies? I don’t doubt that racism in the US is a meaningful reason why we haven’t accomplished many of these policies, but it hardly seems like an argument against the policies themselves.

The Nordic countries are not perfect societies, but they do stand testimony to a key reality: poverty and inequality do not have to be as bad as they are here, and you do not have to have an over-realized eschatology to believe this. There are real places with real, knowable policies that constrain the evils of economic injustice. Christians should work to become more familiar with the Nordics as we consider what it means for an economy to honor God and other human beings.