Now that a rising American left has made such subjects as economic inequality, social democracy and even democratic socialism required topics for our chattering classes, one popular argument that the center and right are advancing is that the Nordic countries—the closest the planet comes to democratic socialism—are really bastions of capitalism, albeit with a welfare state.
Take David Brooks (insert Henny Youngman joke here). In his column in today’s Times, Brooks writes that those nations “can afford to have strong welfare policies only because they have dynamic free-market economies. No Nordic country has a minimum wage law.”
He’s right that they don’t have minimum wage laws, but why is that? Probably because the vast majority of Scandinavian citizens belong to unions—indeed, the key to Nordic social democracy is that these nations have long been by far the world’s most unionized. The rates of unionization in the five Nordic nations are 81 percent in Iceland (a spinoff from Denmark, we should recall); 67 percent in Sweden; 65 percent in Denmark; 65 percent in Finland; and 52 percent in Norway. Under pressure from globalization, the rates in these nations have come down in recent decades; for most of the postwar period, for instance, the rate in Sweden was close to 90 percent.
In the United States today, the rate of unionization today is 10.5 percent; among private-sector workers, it’s 6.4 percent. That is, the share of unionized workers in Scandinavia is more than six times that in the U.S.
This disparity has huge effects on these countries’ comparative rates of economic inequality, for which the best measure is a nation’s Gini Coefficient, in which 0 signals complete economic equality and 1 means all of a nation’s income goes to just one person. In Denmark and Sweden, the Gini Coefficient is 0.25; in Finland and Norway, it’s 0.27; in Iceland, it’s 0.28. In the United States, it’s 0.47.
So which is the chicken and which the egg? Yes, the Nordic nations are capitalist social democracies, but the reason they are capitalist is that their Social Democratic parties created unprecedented levels of worker power, social welfare and income equality as far back as the 1930s, and had the power to maintain those levels to this very day. It was almost entirely due to those social democratic victories that those nations’ citizens allowed the flourishing of the capitalist enterprises that commentators like Brooks extol—because a distribution of those enterprises’ revenues and profits that is hugely more equitable than ours was baked into their systems. Brooks has it precisely backwards: It’s not, as he writes, that those nations “can afford to have strong welfare policies only because they have dynamic free-market economies.” In reality, those nations have dynamic free-market economics only because they have strong welfare policies—with real worker power.
So if the fallback position of centrists like Brooks and The Washington Post’s Chuck Lane is to extol what they see as the actually capitalist Scandinavian model (as distinct from what they claim is the idealized Scandinavia of Bernie Sanders, et al), they need to get with the actual Scandinavian program. They could start, modestly, by supporting legislation allowing workers to unionize without management interference—the sine qua non, if you will, of Scandinavian capitalism.