Wednesday, November 26, 2008

The Nordic Model of Government

The Nordic Model of Government: Is it Still Relevant?

Note: this briefing draws heavily upon the superb Scandinavian Politics Today by David Arter, the foremost scholar in this area of study.

‘Up to date statistics and common sense observation depict a society that has found a viable mean between equitable distribution and solid economic performance.’ Henry Milner 1989, p16.

‘Majority building is the whole point of Swedish politics.’
Jan Bergquist, Social Democrat parliamentarian

Almost certainly the so-called ‘Nordic Model’ is based to a large extent upon the Swedish social democratic system of government which has been impressing and horrifying, according to taste, since the thirties. In 1936 the American journalist, Marquis Childs, wrote a book called Sweden: The Middle Way and it became a best seller. This was because it was written at a time when 20 million Americans were out of work while countries like Germany and the USSR provided full employment but no political liberty.

For the left the Soviet Union was especially difficult to comprehend as in theory- having abolished private property- it was ‘socialist’ and represented the shape of things to come. US journalist Lincoln Steffens visited and returned to pronounce: ‘I’ve seen the future and it works’. Others on the left like GB Shaw, visited to praise the new system and the Webbs’ Soviet Communism: A New Civilisation, was the high point of leftwing naivety But despite the carefully shepherded trips around the new ‘utopia’, many on the left distrusted a system which curbed so many democratic powers and accorded its leader the same adulation as Hitler.

Sweden, then, was seen as a salvation: a form of socialism which was midway between the two extremes, producing material plenty while preserving democratic liberty. Since the 1930s it became a Mecca for those looking for the secret of the ‘Nordic Model’ of socialism, welfare and democracy.

‘A Harmonious Democracy’: this term was used by Herbert Tingsten in 1966 to describe Sweden’s ability to resolve conflict and maintain a high standard of living. Thomas Anton in 1969 discerned how he thought how Sweden avoided conflict:

i) Policy preparation ‘extraordinarily deliberative’ via the utredning or pre-legislative commission. These were dominated by experts and fed into autonomous central boards rather than individual ministerial decision-making.
ii) Policy-Making is ‘highly rationalistic’ based on extended, thorough investigations and conducted, according to Arter in a ‘pragmatic, intellectual style… Broadly the view was that the government was established to do things, not to talk about doing things or think about doing things.’(Arter 153)
iii) Policy process is ‘very open’: all interested parties are consulted. There is a ‘remiss procedure’ whereby draft proposals are distributed to any party or group likely to be affected by them. Anton argued that while this procedure did not remove conflict, it ‘domesticated’ it and helped remove it from public view.
iv) Policy-making is consensual, with the agreement sought and reached with ‘virtually all the parties to them’ with even the dissenting statements of a commission not challenging the consensus.

Elements of the Swedish Model : David Arter discerns four of them:

a) A dominant Social Democrat (SAP) party which controlled government but not all political power. The SAP ruled Sweden from 1936, apart from a few months right up to 1976, meaning their vision had an excellent chance of being realised, though, it has to be said, they could not have done so without demonstrating a high degree of success as that vision unfolded. It should also be remarked that Swedish history for the century before the SAP came to power was one of grinding poverty; so much so that one third of its population emigrated to the USA during the first decade of the century. Sweden was known as the ‘poor house of Europe’ and it’s possible it was only mass emigration which headed off famine and rebellion. This suggests that any improvement in material conditions must have been deeply appreciated. Arter also points out that, despite being in ‘power’, other parties had a good degree of ‘policy influence’ of a kind denied to oppositions in the UK where they are almost entirely excluded from government. One explanation of the left dominance is that Sweden industrialised rather late by European standards and the traditionally elitist hierarchical society began to be transformed as the weak middle class could not resist the demands of the enfranchised proletariat. Consequently the SAP was able to gain power unencumbered by a strong middle class Liberal party. Finally, SAP prime ministers seemed to rule for a long time. Per Albin Hansson was leader of four governments; Tage Erlander was PM 1946-1969 and if Olof Palme had not been assassinated in 1986, he might have managed more than his seven years in power. Since then prime ministerial reigns have not been so extended.

b) A system which gave precedence ‘to representative over accountable government.’ By this he means, relating to the point above, that instead of holding governments to ‘account’ every four or five years, the inclusivity of the Swedish system, enables people to feel ‘the government is representative of the people as a whole. The notion of accountability, by contrast, is weak’ (p155).

c) A system which also was: founded on a historic compromise between capital and labour: organised by the social democratic party; and had established close relations with the major economic groups in society. The 1938 Saltsjobaden Pact between industry and labour was a crucial underpinning of the ‘compromise’. In effect the government invited in business representatives to advise on the economy and finance, leading to good relations between the SAP and business. This was strengthened by the informal Thursday Club discussions in the 1950s (a search on the web suggested this is now a dating agency!). ‘In short’ comments Arter, ‘neo-corporatism’ was at the heart of policy-making in the Swedish model.’

d) A political culture based upon consensus: traditionally Sweden has had a disposition to agree rather than disagree. Olof Peterson wrote(1994) ‘the aim of political decision-making has been to avoid divisive conflicts; and emphasis on compromise and pragmatic solutions has led to a political culture based on consensus’. Arter quotes Einborn and Logue to the effect that while parliamentary institutions are not dissimilar to other countries, it is the informal aspects, corporatism and political culture which make Sweden ‘more unique’. Arter explains that such a culture facilitates and reinforces a ‘bargaining democracy’ whereby ground is given in exchange for reciprocation, or as Stenelo and Jerneck suggest: ‘negotiations do not as a method of conflict resolution predominate over voting but naturally do not exclude it.’

Arter considers the deviations from this ‘Swedish model’ in other parts of Scandinavia:

Norway: this is the ‘closest fit’ in that: the Labour Party served for long periods after the war apart from a short time in 1963 and, unlike Sweden, never in coalition. Einar Gerhardsen was another long serving PM, leading four governments 1945-1965. Labour was careful to involve a wide range of group interests in the country. Again like its neighbour, using the commission device to prepare policy was traditional dating back into the 19th century, averaging about ten a year. It has been used along with the ‘remiss’ procedure to ensure new laws have been built on consensus. Group representatives are regularly co-opted onto planning committees. The Norwegian political scientist Stein Rokkan distinguished between the electoral channel determining the party in power and the corporate channel, determining what actually happens; as he pronounced: ‘votes count but resources decide’.

Denmark: here the social democratic hegemony was not present as this party had to rule in coalition for some of the 1960s but nevertheless they ‘could… be said to have exercised decisive influence on the policy agenda.’ Here again pre-legislative consultation was a feature of Danish politics long before the growth of the welfare state. ‘Corporatism’ was also a feature of Danish political practices since the 19th century, as the famous September Compromise in 1899 between unions and employers illustrated; in fact this was the first agreement of its kind in the world. On balance most students of Danish politics discern a ‘co-operative parliamentarianism in which pragmatism, tolerance, willingness to negotiate and competence are key behavioural norms’ (Fitzmaurice, 1981); all these recognisable as elements of the Nordic Model.

Finland: this country was not so famous for a consensual political culture but there was agreement for many years on keeping the USSR sweet. Also, in 1977 a meeting had established the Korpilampi Spirit when as gathering of leading pressure groups agreed to work together to stimulate the economy. Arter, however, points to clear deviations from the Nordic Model:
a) the existence of two parties on the left: the communist dominated Finnish Democratic League and the Social Democrats. The Agrarians were the party of government for many years before the rise of the Social Democrats.
b) Pre-legislative consultation was less open and less usual than elsewhere in Nordic countries. Instead interdepartmental working groups filled the gap.
c) Nor were there any significant examples of remiss and commissions of inquiry.
A kind of labour-employer compromise was agreed during the Winter war in 1940, renewed in 1946 but it was far from effective in surviving the 1950s and 60s. However a series of income policy agreements emerged from the 60s and an era of a more consensus political culture.

The Benefits of the Nordic Model
Economy: constantly expanding economic growth together with high-wage standards of living. Keeping business ‘onside’ meant there were few industrial disputes and satisfaction with their way of life, with their shining public services was high-some accused them of being ‘smug’ and ‘holier than thou’. But the economic system was most definitely capitalist, not ‘command’ as under communism or state -owned/nationalised as in UK. However the profitable outcome of the state’s business activities was translated into tax revenue and distributed to fund those excellent public services. An OECD report recently concluded a study on Nordic countries with:

“Income equality and poverty rates were lower in Denmark and Sweden than in any other OECD country, and they were below OECD average in Finland and Norway.”

Welfare Benefits include:

Medical free medical and dental treatment,
Education- free at all levels
High unemployment benefit-up to 80% of former wage plus plentiful retraining progammes for the unemployed.
Wage solidarity- worker differentials were initially reduced deliberately.
Parental leave: Gwladys Fouche in the Observer 16th November 2008 praises the benefits which return to Swedish citizens in return for their 60% tax rate:

“But the most eye-catching benefit is probably parental leave. Parents enjoy a joint parental leave lasting 480 days. For 390 days they receive 80 per cent of their income, capped at 440,000 kronor a year (£35,800), while for the remaining 90 days they receive 180 kronor (£14.60) a day. In theory the leave is split fifty-fifty, but it is up to the couple to decide how they want to organise it. One partner can give as many days as he or she wants to the other so long as each parent takes up to 60 days at the minimum. A single parent is entitled to the full 480-day period.”

The Nordic Model was and still is for many the envy of large parts of the world who felt it represented a viable ‘third way’ of material plenty plus

The Costs of the Nordic Model
These include:
High taxation, in many cases over 50% of take home pay. In the mid seventies the rightwing parties briefly were in government as anger at taxation was expressed in the ballot box.
Low Job Creation: Johan Norberg claims Sweden is good at making things but not good at creating jobs.
Economic Decline: from 1975-2000 per capita income grew by 72% in the US; 64% in Western Europe but only 43% in Sweden. By 2000 Sweden was only 14th in the OECD rankings, down from 4th in 1970.
Exploitation of the System: it was hard to prove but it widely felt to be the case: i)10% of retired people claiming invalidity benefit was more than was justified. ii) Even though Swedes are very healthy, in 2004 sickness benefits absorbed 16% of the government budget.
iii)One member of the Swedish union movement calculated that real unemployment when all the ‘hidden’ pockets were included, amounted to 20%.

Stultifying Conformity? Critics of Nordic countries focus on the conformity of their inhabitants. Madeleine Bunting, for example(Guardian August 2008) expresses it this way:

‘On successive visits to Denmark, Norway and now, just back from two weeks in Finland, I've kept bumping up against the same puzzling phenomenon: a kind of unquestioning assumption of how things should be, a form of social control about the way to behave and one's responsibilities to others. The point when it became starkly apparent in Finland was at Sunday family lunch in a country barn restaurant; every table was full but all you could hear were murmured whispers and the scrape of cutlery on china - until our families arrived, anarchic, squabbling and full of chatter, despite my Finnish friend's attempts to get us to be quiet.’

Andrew Brown, author of a charming book on Sweden called Fishing in Utopia, puts it thus:

“Everyone knows exactly what you have to do in every circumstance, everyone tries to do it, confident that everyone else is doing it and anyone who fails will be subjected to the justified scorn of everybody,"

Jante’s Law: this is a cultural phenomenon which is widespread throughout Scandinavia and it means simply:

Don't think you're anyone special or that you're better than us.

It has ten subdivisions including:
1. Don't think you are anything
2. Don't think you are as good as us.
3. Don't think you are smarter than us.
4. Don't fancy yourself better than us.
5. Don't think you know more than us
Given the ubiquity of this attitude it is hardly surprising there is such a pressure to conform to modest, discreet behaviour, not to seek to stand out or deviate from the norm.
Bunting concludes her critique with the advice that whilst we might admire the Nordic Model we should not ‘try to import it’:
“One Swede in Brown's book talks about the need for 100% "social control" in which "everyone works together": you could call it consensual authoritarianism, and it is profoundly foreign to most Britons. Despite the persistent illusions of the liberal left, it's part of why the Scandinavian welfare state has been one of the region's least successful exports.”
The next day letter writers begged to disagree: ‘what’s wrong with a remarkable degree of mutual trust and expectation’? asked one, Another pointed out at Finland has the highest number of people in higher education and the lowest number in prison. Yet another asked how we could criticise Finns for ‘not imposing their private conversations on everyone else in a restaurant’? Finally someone wondered if we might not benefit from a dose of ‘egalitarian conformity’.
Can We Transfer Nordic Model to UK?
Writer Johan Norberg comments:
‘To say that other countries should emulate the Swedish social model is about as helpful as telling an average –looking person to look like a Swedish super model. There are special circumstances and a certain background that limit the ability to imitate. In the case of the supermodel it is about genetics. In the context of economical and political models it is about the historical and cultural background.’
Sweden’s is political culture so much more consensual than the historically class divided British one.
Sweden is more unified with a small population of 9 million.
Sweden has a tradition of viewing their country as ‘The Peoples’ Home’ and trusts government to spend tax-payers’ money wisely on welfare benefits for all.
These problems however have not deterred Conservatives from urging a version of Sweden’s ‘free schools’ on the UK. When the Tories talked about a ‘voucher’ system, it failed to make much headway as the proposed values were so much less than fees for public schools. However, the success of the not dissimilar Swedish innovation has emboldened them to recommend imitation. Since 1992 Sweden has been funding private schools to educate children on behalf of the taxpayer. 900 schools, teaching 15% of children have opened up, with, it seems considerable success. Michael Gove is convinced, as The Economist (2/10/08) has it, of such

‘innovative entrants “selling themselves to parents” and driving up standards to previously unimagined heights.’
Has the Nordic Model Faded?
The articles quoted above suggest the Nordic Model is still alive and well and arousing all the old reactions of drooling jealousy on the left and sneering ridicule on the right. Arter’s analysis focuses more on the analytic:
1. Social democracy is not as strong now in Sweden where the rightwing Fredrik Reinfeldt rules; the Liberal Anders Rasmussen in Denmark; Mattie Vanhanen of the Centre party is in charge in Finland though Jens Stoltenberg sustains Labour in Norway.
2. The practice of widespread consultation is showing signs of decline. The number of commissions in Sweden is reducing; more single civil servant inquiries are being carried out; but inquiries including interest groups has remained steady at about one third of the whole. In Norway something similar is under way and a process more akin to British-US lobbying has taken its place.
In 1990 Kjell Olof Feldt, the Swedish Finance Minister regretted the failure of the unions to cooperate with its own government and predicted the ‘collapse of the Swedish model’. In November 2006 The Economist declared “ Farewell Nordic Model” judging that high taxes and inefficient public sectors made them in appropriate and old fashioned. Other articles cited in this briefing suggest these gleaming welfare utopias in northern Europe, have not lost their ability to fascinate and encourage imitation however inappropriate.

Reading
David Arter, (2008) Scandinavian Politics Today, MUP
Andrew Brown(2008), Fishing in Utopia, Granta.
Roland Huntford (1972) The New Totalitarians.
Johan Norberg, Swedish Models, National Interest Online, 6/1/06
Gwladys Fouche Where tax goes up to 60 per cent and everybody’s happy paying it. Observer, 16/11/08
Madelaine Bunting, ‘We may admire the Nordic way, but don’t try to import it.’ Guardian 15/8/08
Economist, 2/10/08, Swedish Lessons: the Tories assume the mantle of social democracy.
Bill Jones, 24/11/08 htttp//skipper59.blogspot.com/

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