The Editorial 20 Sept, 2022 - Scandinavian Model

20 Sep, 2022

1. Scandinavian Model.

Theme : Governance & Polity

Related Paper : GS - 2


  1. Context
  2. Socialism & Scandinavia
  3. Scandinavian / Nordic Region
  4. What is so significant about the recent Sweden elections?
  5. Aspects of Nordic Model
  6. Success of Nordic Nations
  7. What are the reasons for the thriving social democratic model?

Context :
The 2022 Sweden elections is a watershed moment for the country since for the first time an ultra-nationalist, anti-immigrant party would be a part of the ruling coalition to influence Sweden’s public policy.

Socialism & Scandinavia :

  • Socialism is a political, social, and economic philosophy encompassing a range of economic and social systems characterized by social ownership of the means of production and workers' self-management of enterprises.
  • Global media likes to portray Scandinavia as socialist. But “cuddly capitalism” is a much more accurate term.Some economists refer to it as cuddly capitalism, contrasting with what is seen as cut-throat capitalism in other Western countries.
  • The key feature of the Nordic Model is social partnership. That's centralized coordination of wage negotiation and rights between employers and workers.
  • In the Scandinavian countries, on one hand, the systems are more akin to typical “social democracies” — reliance on representative and participatory democratic institutions where separation of powers is ensured; a comprehensive social welfare scheme with emphasis on publicly provided social services and investment in child care, education and research.
  • All these countries also follow a capitalist model of development, allowing for entrepreneurism and funding of welfare policies through a large degree of wage taxation in relation to corporate taxes.


Scandinavian / Nordic Region : 

  • Geographically, there are 3 Scandinavian countries (Denmark, Sweden, and Norway).
  • Culturally, there are 6 Scandinavian countries: Denmark, Sweden, Norway, Iceland, Finland and The Faroe Islands.
  • The Nordic Region consists of Denmark, Norway, Sweden, Finland, and Iceland, as well as the Faroe Islands, Greenland, and Åland.

What is so significant about the recent Sweden elections?

  • The Social Democratic Party, which has been in power since 2014, was edged out by the right-wing Opposition.
  • Sweden Democrats is an ultra-nationalist, far-right party which traces its origins to neo-Nazi groups of the 1980s.
  • Sweden has traditionally been accepting immigrants and asylum-seekers, not merely as national policy but also as a matter of national pride.
  • Stereotyping- Over time, the coloured immigrant communities either could not gain acceptance or were not accepted as part of the Swedish national identity.
  • Exclusion from the mainstream- The immigrants began to be seen as people who have come to exploit the country’s generous welfare system.
  • Unemployment- The unemployment among Sweden’s immigrant population is four times that of native Swedes.

Aspects of Nordic Model :

  • Generous social safety net and public pension system with well-funded public services in a relatively high-tax economy
  • Strong property rights and contract enforcement coupled with an overall ease of doing business
  • Free trade combined with collective risk sharing, allowing the benefits of globalism while protecting against many of the risks
  • Low levels of regulation on product markets
  • Low levels of corruption – in 2015 five of the top ten spots were taken by Norway, Sweden, Denmark, Finland and Iceland in the Corruption Perceptions Index
  • High levels of unionization – 51% in Norway up to 88% in Iceland compared with the levels of 18% in Germany, 11% in the US and 8% in France
  • A partnership between government, businesses and unions leading to everyone feeling invested in a system that works well for all
  • A relatively high personal tax burden: At 45.9%, Denmark has one of the highest tax burdens in the world. Tax rates are also fairly flat so even medium and lower income households pay relatively high levels of tax compared with the progressive systems in most Western countries

Success of Nordic Nations :

  • The commonalities in the Scandinavian countries — Norway, Sweden, Denmark, Finland and Iceland — on many of these counts are measurable. For example, among countries in the Organization for Economic Cooperation and Development (OECD) (featuring most high-income countries in the world), Iceland, Denmark, Sweden, Finland and Norway have the highest proportion of the workforce belonging to trade unions.
  • Education is free in all the Nordic States; health care is free in Denmark and Finland and partially free in Norway, Sweden and Iceland ;
  • workers get several benefits — from unemployment insurance to old age pensions, besides effective child care. Therefore, labor participation rates in these countries are among the highest in the world (even among women).
  • The five Nordic nations rank in the top 10 among OECD countries in government expenditure on health and education if calculated as percentage of GDP.
  • India can take a cue from the Nordic model since the State needs to find employment for its youth as well as provide welfare support to its vast section of vulnerable population.

What are the reasons for the thriving social democratic model?

  • The relatively smaller and more homogenous population in Nordic countries enables focused governance.
  • The corporatist model of involving interests of both capital and labor, mediated by the government has allowed for smoother transition from agrarian to industrial to post-industrial economies.
  • They emphasized social policies that facilitate expansion of modern production, and thus more and better paid jobs.
  • The Social Democratic Parties in these countries fortified democracy leading to equal citizenship rights and pragmatic class compromises.