The ‘Nordic Model’ Narrative Is a Lie

Scandinavian countries are beautiful, as in this picture of Copenhagen, Denmark. But they are less socialist than people think. OlgaCanals/iStock

Commentary

Many socialists don’t understand socialism, and many commonly used narratives such as the “Nordic Model” are based on disinformation—and sometimes outright lies. These are among the claims made by economics professors Robert Lawson and Benjamin Powell in their new book, “Socialism Sucks: Two Economists Drink Their Way Through the Unfree World.”

Lawson described the book as “the bastard stepchild of Anthony Bourdain and Milton Friedman.” He said they wanted a style with the energy and carousing of Bourdain, but with genuine substance to explain their premise. In the book, the writers travel through both the free and socialist “unfree” worlds, telling a story of politics through the quality of beer.

"Socialism Sucks: Two Economists Drink Their Way Through the Unfree World," by economics professors Robert Lawson and Benjamin Powell. Courtesy of Robert Lawson

The book begins with something near and dear to the hearts of all followers of socialism in America: the mysterious “Nordic Model” touted as that Utopian land across the sea. Thus the writers’ journey starts in Sweden, and the book makes it clear with the title of its first section that the “Nordic Model” narrative is all a clever deception: “Not Socialism: Sweden.”

“It’s not socialist,” Lawson said. By the classical definition, he explained, a socialist system is one in which the means of production are seized by the state, and labor, land, and capital are owned “collectively” by the state. While it’s fair to say that the “democratic socialists” desire this system of state dominance, the “Nordic Model” in no way represents it.

Lawson noted that in Sweden, “they have high taxes,” and with those taxes they do provide some services beyond what the U.S. government provides. Yet, he noted, “except for taxes, it is, structurally speaking, the same kind of economies we have in the United States.”

“It’s a market economy,” he said. “It’s a private market economy with a lot of taxes.”

He noted that if socialists in America really wanted the “Nordic Model,” they should be clear on what that means: taxes around 50 percent higher than in the United States to supplement free health care and college with questionable efficiency and stability.

But that’s not what socialists in America are talking about. What they’re talking about is not the “Nordic Model,” Lawson said. What they want is a more complete socialism, meaning that “they’re taking over factories, they’re taking over hotels, they’re running restaurants.”

“That is something that has been done in this world—and we have evidence of how that turned out—but that’s not what Sweden’s doing,” he said.

Of course, there are different elements of socialism. Economics is one part, but socialism also includes cultural policies such as identity politics, and policies in the ideological realm such as its philosophy of struggle under Marxist concepts like “critical theory” and “repressive tolerance.”

In the United States, however, what’s usually talked about on the surface by those who demand socialism is the economic system, while its other forms work as tools to shut down debate or manufacture enemy “privileged” classes for its followers to struggle against.

State Ownership Versus Private Ownership

While socialism is often portrayed as taking power away from big business, and fighting “greed” and “oligarchy,” it doesn’t get rid of the institutions it claims to eliminate—let alone the moral problems within those institutions.

Capitalism is the ability of independent people to engage in trade, while socialism is the system of “state-capitalism” in which an all-powerful regime seizes control of business and bars average people from the free market. Historically, the socialist policies of state intervention have often led to oligarchy, and the systems are often marred by corruption as the greedy few turn from free markets to government positions.

“It’s not either socialism or capitalism,” Lawson said. “It’s a continuum, of sorts.” Many countries have adopted varying degrees of socialism into their economic systems, and this is defined by how much state control and intervention there is, versus how much they allow in private ownership.

He noted that as a professor of economics, he works on the Economic Freedom of the World index, which rates countries on a scale of zero to 10, with 10 being the most capitalist in the world market. And he noted that while the United States ranks high, so does Sweden—which sits “in the top 25 percent of all the countries rated.”

When it comes to countries where the government owns and controls business and resources, the more the state controls, the more tyrannical the regime. “Those are those Venezuelas of the world, or the Congos or the world, or the Argentinas of the world,” Lawson said. “They’re not the Swedens of the world.

“From the standpoint of an Argentinian or Congolese citizen, Sweden would be a massive reduction in government ownership and control.”

He noted that while people like Bernie Sanders use Sweden as a talking point for socialism, “most of the world would look up at Sweden and say that they are way more capitalist than we are.”

While the Nordic countries began adopting socialist policies, they also began backing off those policies as they proved unsustainable. Lawson noted that all Nordic countries have backed off their high-tax, social service safety-net programs because of the high price tags.

“In 1960, the United States and Sweden were about the same level of income and had about the same size of government. And what happens is 1960 is both governments got bigger, but Sweden’s got really big and Sweden’s growth rate really started to suffer,” he said.

As things now stand, Lawson said Sweden has much less income than the United States, and the high cost of its social services has shown its negative impact. “Maybe it’s a price they’re willing to pay, but the vitality of the Swedish economy has slowed and not kept pace with the rest of Europe—and certainly not with the United States,” he said.

“Swedes are recognizing that the Swedish economy is struggling to keep up.”

He noted that as things decline, these countries are backing off their social welfare programs and adjusting them accordingly.

State Intervention

Austrian economist Ludwig von Mises wrote in his book “Socialism: An Economic and Sociological Analysis” in 1951, “Nothing is more unpopular today than the free market economy, i.e., capitalism.” He goes on to explain how nearly every faction in society of the time blamed capitalism for the problems they saw in the world, and that the viewpoints of each group typically contradicted the viewpoints of the next.

Yet, he noted, “although capitalism is the economic system of modern Western civilization, the policies of all Western nations are guided by utterly anti-capitalistic ideas.”

Many of the problems people observed in capitalism, he said, didn’t originate from capitalism, but instead from socialist interventionist policies that had been adopted into capitalism. Mises wrote, “The aim of these interventionist policies is not to preserve capitalism, but to substitute a mixed economy for it.”

This “mixed economy” was seen by many of the time as the middle-ground stance with socialism, yet the socialist elements adopted into capitalism became the main points of contention against capitalism.

Ludwig von Mises. Courtesy Ludwig von Mises Institute via Wikimedia Commons

Lawson noted that “the areas of our economy that we’re the least satisfied with are the ones that government is most involved with.”

“We complain about the quality of our schools,” but government owns and operates most of them, Lawson said. “We’re upset about the cost and the quality of our health care, and that’s exactly the area where the government is taking over.” The same applies to high college tuition costs, where government loans have only acted to drive up prices.

“The more the government tries to sort of engage itself in one way or another—either through loans or through education subsidies and health care—those sectors seem to perform much worse. And we complained more about them,” he said.

When it comes to technology, Lawson noted that the government is fairly hands-off, and “we get great products and are more or less happy with the prices.”

The same applies to many areas of food production and distribution, and with grocery stores that the government leaves alone. Yet, many are terribly unhappy with things like banks, “and that’s one of the areas where the government is most directly involved in.”

“The high cost is frequently the cause of the government,” he said.

Among the socialist policies that create these problems are the subsidizing of demand, and the redistribution of money. As examples, he noted the U.S. government subsidizes student loans, which have driven up tuition costs; and it subsidizes parts of the health industry, which also drives up costs.

Then, in addition to subsidizing demand, government policy also “actively restricts the supply.”

“You don’t have to to have a Ph.D. in economics to know what happens to prices when you subsidize the buyers, but restrict the sellers,” he said. “It is a guaranteed recipe for higher prices. And that’s exactly what we get in education and health care.”

He noted that market principles such as this should be in Economy 101. “It’s something you would teach a freshman on day one of a class, and oddly enough, our politicians don’t seem to get it,” he said.

Lawson said it’s a basic economic principle that “if you try to control an economy—and that’s what socialism does, they try to control the economy—you will get reverse reactions.”