Nordic model

For the social and economic policies in continental Europe and Germany in particular, see Rhenish model.

Part of a series on
Economic systems
By ideology Anarchist Capitalist Communist Corporatist Dirigist Fascist Georgist Islamic Laissez-faire Market socialist Mercantilist Neo-mercantilist Participatory Protectionist Socialist Syndicalist
By coordination Closed (Autarky) Decentralized Digital Dual Gift Informal Market Mixed Natural Open Planned Robinson Crusoe Subsistence Underground Vertical archipelago Virtual
By regional model Anglo-Saxon Chinese East Asian German Nordic Rhenish Singaporean Soviet
Sectors Common property Private Public Voluntary
Transition Collectivization Communization Corporatization Demutualization Deregulation Expropriation Financialization Liberalization Marketization Municipalization Mutualization Nationalization Privatization Socialization
Coordination Barter Cybernetics Economic democracy Economic planning Free market In kind Indicative planning Market Material balancing Peer-to-peer Regulated market Self-managed
Other types Corporate capitalism Expeditionary Feudalism Hunter-gatherer Information Newly industrialized Palace Plantation Post-capitalist Post-industrial Resource-based Social market Socialist market State capitalist State monopoly capitalist Token Traditional Transition World
Business and economics portal

The Nordic model (or Nordic capitalism or Nordic social democracy) refers to the economic and social models of the Nordic countries (Denmark, Iceland, Norway, Sweden and Finland). 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 are aimed specifically at enhancing individual autonomy, promoting social mobility and ensuring the universal provision of basic human rights, as well as for stabilising the economy. The Nordic model is distinguished from other types of welfare states by its emphasis on maximising labour force participation, promoting gender equality, egalitarian and extensive benefit levels, the large magnitude of wealth redistribution, and liberal use of expansionary fiscal policy.

The Nordic combination of extensive public provision of welfare and individualism has been described by Lars Tragardh, of Ersta Skondal University College, as “statist individualism.” Sometimes mistaken by Americans as socialist, while simultaneously being criticized by Scandinavians as overly capitalistic, the Nordic model could best be described as a type of middle ground. It is neither fully capitalistic or socialistic, and attempts to merge the most desirable elements of both systems. In 2013, The Economist declared that the Nordic countries "are probably the best-governed in the world."

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 neighbours. Some Nordic countries, for example, have experimented with free market mechanisms in the past 20 years. Sweden's neo-liberal policies, such as reducing the role of the public sector over the last decades, has resulted in the fastest growth in inequality of any OECD economy.

Overview

Social democracy
Development Humanism Age of Enlightenment French Revolution Utopian socialism Trade unionism Revolutions of 1848 Orthodox Marxism Revisionism Progressivism Reformism Gradualism Frankfurt Declaration Ethical socialism
Ideas Representative democracy Democratic revolution Economic democracy Labor rights Mixed economy Nationalization Welfare state Fair trade Environmental protection Negative and positive rights Secularism Social corporatism Social market economy
Variants Bernsteinism Liberal socialism Nordic model Godesburg Third Way
People Attlee Awolowo Bernstein Ali Bhutto Branting Curtin Daszyński Debs Douglas Ecevit González Hilferding Jaurès Junmai Katayama Lassalle Layton Lévesque Mandela MacDonald Nader Nehru Batlle y Ordóñez Plekhanov Savage Palme Thomas
Organizations Social democratic parties Socialist International International Union of Socialist Youth Party of European Socialists Progressive Alliance Young European Socialists (YES) International Trade Union Confederation

Economic publications, such as "The Nordic Model - Embracing globalization and sharing risks", characterize the system as follows:

• An elaborate social safety net in addition to public services such as free education and universal healthcare.
• Strong property rights, contract enforcement, and overall ease of doing business.
• Public pension schemes.
• Low barriers to free trade. This is combined with collective risk sharing (social programmes, labour market institutions) which has provided a form of protection against the risks associated with economic openness.
• Little product market regulation. Nordic countries rank very high in product market freedom according to OECD rankings.
• Low levels of corruption. In Transparency International's 2012 Corruption Perceptions Index all five Nordic countries were ranked among the 11 least corrupt of 176 evaluated countries.
• High percentage of workers belonging to a labour union. In 2010, labour union density was 69.9% in Finland, 68.3% in Sweden, and 54.8% in Norway. In comparison, labour union density was 12.9% in Mexico and 11.3% in the United States.
• A partnership between employers, trade unions and the government, whereby these social partners negotiate the terms to regulating the workplace among themselves, rather than the terms being imposed by law. Sweden has decentralised wage co-ordination, while Finland is ranked the least flexible. The changing economic conditions have given rise to fear among workers as well as resistance by trade unions in regards to reforms. At the same time, reforms and favourable economic development seem to have reduced unemployment, which has traditionally been higher. Denmark's Social Democrats managed to push through reforms in 1994 and 1996 (see flexicurity).
• Sweden at 56.6% of GDP, Denmark at 51.7%, and Finland at 48.6% reflects very high public spending. One key reason for public spending is the very large number of public employees. These employees work in various fields including education, healthcare, and for the government itself. They often have lifelong job security and make up around a third of the workforce (more than 38% in Denmark). The public sector's low productivity growth has been compensated by an increase in the private sector’s share of government financed services which has included outsourcing. Public spending in social transfers such as unemployment benefits and early-retirement programmes is high. In 2001, the wage-based unemployment benefits were around 90% of wage in Denmark and 80% in Sweden, compared to 75% in the Netherlands and 60% in Germany. The unemployed were also able to receive benefits several years before reductions, compared to quick benefit reduction in other countries.
• Public expenditure for health and education is significantly higher in Denmark, Sweden, and Norway in comparison to the OECD average.
• Overall tax burdens (as a percentage of GDP) are among the world's highest; Sweden (51.1%), Denmark (46% in 2011), and Finland (43.3%), compared to non-Nordic countries like Germany (34.7%), Canada (33.5%), and Ireland (30.5%).

See also

• Folkhemmet
• Flexicurity
• Mixed economy
• Rhine capitalism
• Social Democracy
• Social market economy
• Swedish welfare
• Types of capitalism
• Welfare capitalism

Further reading

• Christiansen, Niels Finn et al. The Nordic Model of Welfare (2006)
• Hilson, Mary. The Nordic model: Scandinavia since 1945 (2008)
• Kvist, Jon, et al. Changing social equality: The Nordic welfare model in the 21st century (2011)
• Nik Brandal, Øivind Bratberg, Dag Einar Thorsen. The Nordic Model of Social Democracy (2013) ISBN 1137013265

External links

• The Nordic Way — World Economic Forum. Davos 2011
• Utopia sustained: The Nordic model of social democracy. Dag Einar Thorsen, Nik Brandal, Øivind Bratberg. Fabian Society, 8 April 2013.
• The secret of their success. The Economist. 2nd Feb 2013.
• What Can We Learn From Denmark? Bernie Sanders, Huffington Post. 26 May 2013.