The Secret Story of Nordic Prosperity

The story they don’t want to tell you about how Nordic countries got prosperous.

Understanding the Nordic model can be confusing.

Here is the sugar coated version they do want to tell you: In the early 1900s free wheeling capitalism unleashed the creative spirits of free enterprise and made the Nordic economies blossom. It was all good, until at some point in the 1970s reckless socialists took over, wasted all the money and tanked the economy. It sucked but the sane pro-market people got back in charge, deregulated and got everything running smoothly again.

Or at least that is what free market think tanks such as the Heritage Foundation, Cato Institute and Ludwig von Mises Institute would like you to think.

This mythology about the Nordic countries is mirrored in the standard description of the Nordic model presented to English speakers at sites such as Investopedia:

The Nordic model is the combination of social welfare and economic systems adopted by Nordic countries. It combines features of capitalism, such as a market economy and economic efficiency, with social benefits, such as state pensions and income distribution.

It is not an entirely incorrect description, although as all other descriptions you can dig up at respectable site, the world “socialism” has been chemically erased. Oh such a nasty little word. We don’t want it there. It ruins the pretty capitalism picture the boys at the Cato Institute and Heritage Foundation have drawn.

Instead it has been replaced with a more innocent, less provocative “social benefits.” They want you to think that Nordic countries are really just the same as the US. They just have a bit higher taxes and a couple of more welfare services. A bit of free health care and some dollops of free college. Nothing much.

This U-turn is somewhat ironic given that all the way back to the 1930s American conservatives spoke in alarming terms about the horrors of Swedish socialism. Of the attempt to characterize the Swedish system as totally socialist utterly backfired when Sweden failed to fail, and instead along with the other Nordic countries became model countries, other nations would want to follow.

Ouch!