The best examples we have of countries that have harnessed markets and government together to serve the common good are the Nordic countries, namely Denmark, Finland, Iceland, Norway, and Sweden. These are social-democratic mixed economies. They are not socialist in the classical sense: they are driven by financial markets rather than by central plans, although the state does play a strategic and guiding role in the economy. They have systems of law that protect personal and corporate property and help to enforce contracts. They are liberal democracies with checks, balances, and countervailing powers.
Nordic countries show that major egalitarian reforms and substantial welfare states are possible within prosperous capitalist countries that are highly engaged in global markets. Their success undermines the view that the most ideal capitalist economy is one where markets are unrestrained. They also show that humane and egalitarian outcomes are possible within capitalism, while full-blooded socialism has always in practice led to disaster.
The Nordic countries are among the most equal in terms of the distribution of income. They do less well in terms of wealth inequality, but they are more equal in that respect than the US. They have scored very highly in terms of major welfare and development indicators. Norway and Denmark have ranked first and fifth in the United Nations Human Development Index. Denmark, Finland, Norway, and Sweden have been among the six least corrupt countries in the world, according to the corruption perceptions index produced by Transparency International.
In terms of economic output (GDP) per capita (in 2016), Norway is 3 percent above the US, while Iceland, Denmark, Sweden, and Finland are respectively 11, 14, 14, and 25 percent below the US. This is a mixed, but still impressive, performance. Every Nordic country has a GDP per capita level higher than the UK, France, and Japan.
Clearly, the Nordic countries have achieved very high levels of welfare and wellbeing, alongside levels of economic output that compare well with other highly developed countries. These outcomes result from relatively high levels of social solidarity and taxation, alongside a politico-economic system that preserves enterprise, economic autonomy, and aspiration.
In this episode, I zoom in on the so-called Nordic model with the help of two friends and colleagues. Nina Witoszek is Senior Researcher at the University of Oslo’s Center for Development and the Environment. She is Polish by birth but has resided in Norway for many years and made it the object of her study in books such as The Origins of the Regime of Goodness: Remapping the Cultural History of Norway. Atle is Professor of Law and Governance at BI, Norway’s largest business school, where he specializes in the areas of energy and corporate social responsibility.
Nina and Atle are married to each other and the reason that I know them so well is because they are part of the Evolution Institute’s Norway Project, which examines Norway as a case study of cultural evolution leading to a high quality of life at the national scale. One major output of the Norway Project is a volume edited by Nina and Atle titled Sustainable Modernity: The Nordic Model and Beyond, which is available on open access from Routledge Press. Between their lived experience, academic qualifications, and engagement with the Norway Project, it would be hard to find two experts better qualified to comment on Norway and the other Nordic nations from a Third Way cultural evolutionary perspective.
David Sloan Wilson: Greetings, Nina and Atle! I have so many fond memories of being with you in Norway and discussing these topics over food, drink, and good company. Now this print conversation and podcast will have to do. To begin, is there anything you would like to add to Geoffrey Hodgson’s summary of the success of the so-called Nordic model? Let’s focus primarily on Norway and bring in the other nations as needed. Later in this conversation, we will focus on their differences.
Nina Witoszek and Atle Midttun: We think that Geoffrey has pinpointed well the main achievements of the Nordics. What we can add from our research, are insights on mechanisms that generate the Nordic welfare society. There are many factors behind the relative success of the Nordic model, but the pivotal feature – shared by all Nordic countries – is a long cultural tradition based on a replication of the ideal of teamwork. In our studies, we have shown how values tied to social cooperation and prosociality have been transmitted from generation to generation in the Nordic educational curricula, national literatures, and models of cherished national heroes.
DSW: This points to something that we will elaborate upon later—that cultural evolution includes elements seldom considered by economists and political scientists, such as childhood education and literature. Please continue.
NW/AM: In the project initiated by your Evolution Institute, we have pointed to a competitive advantage of collaboration. If you think of the Nordic model in terms of multilevel selection, the Scandinavian countries are productive and competitive precisely because they “select” cooperation at one level, which allows them to successfully compete at another. In a recent article on this topic, we contend that the central formula behind the Nordic productivity and high level of wellbeing lies in what we call the Nordic model’s ambidexterity – the capacity to combine collaborative and competitive elements and skillfully navigate between them. Using an interdisciplinary perspective (inspired by organization theory, cultural semiotics, and evolutionary analysis), we provide a conceptual basis for reinterpreting the Nordic Model as an ambidextrous combination of culturally rooted, collaborative strategies that are subsequently competitively exposed. (We refer to the paper published in New Political Economy (2019) https://www.tandfonline.com/doi/abs/10.1080/13563467.2019.1657078
DSW: This is indeed an excellent paper and your analysis is highly consistent with the thesis of the Third Way. Let’s elaborate upon your three inspirations for the benefit of our readers. The organization theory to which you refer is a Harvard Business Review article titled “The Ambidextrous Organization”, by Charles O’Reilly and Michael Tushman. They document that what it takes for a corporation to perform well in its current environment is different than what it takes to adapt to a changing environment. To be well adapted is different than being adaptable. To do both well requires combining different forms of governance in the right way; that is, to be ambidextrous. Please add to my description of their thesis for business corporations and explain how it relates to the Nordic model.
NW/AM: Reconciling innovation with efficiency has been a major challenge in economic organization. Charles O’Reilly and Michael Tushman show how this can be achieved by organizational design; i.e by separating new, exploratory units, from traditional, exploitative ones, allowing for different processes, structures, and cultures to follow their course at the same time. O’Reilly and Tushman call such companies “ambidextrous organizations”.
We have found ‘ambidexterity’ to be a useful concept for describing how the Nordics go about combining competition and collaboration. They do so, not by finding some kind of middle ground – as many observers wrongly think – but by separating collaborative and competitive ‘logics’ in different arenas, and then letting these arenas play productively together.
DSW: Allow me to reinforce the important point that you just made. There is a danger in recycling a phrase such as “Third Way”, which has previous connotations, but if I have learned anything from this series of conversations, it is that every keyword must be examined to reach mutual understanding. The evolutionary Third Way is not a simple compromise between the failed paradigms of laissez-faire and centralized planning. Rather, it is a separate paradigm with its own complicated dynamics. Wisely managing cultural evolution at multiple levels is no easy matter!
NW/AM: Then we are on the same page.
DSW: Your second inspiration—cultural semiotics—is especially important to elaborate upon and reflects Nina’s academic background. The Third Way is primarily a functional statement about how any successful change effort needs to be organized as a managed process of cultural evolution. But every culture has its own history, resulting in different specific mechanisms that result in action, which must replicate across generations (development)i. When we think of the historical, mechanistic, and developmental aspects of cultural evolution, we begin to appreciate aspects of culture that economists and political scientists tend to overlook, such as childrearing practices, religion, the arts, and informal norms. This is where careful historical scholarship about a given culture plays an essential role. Please elaborate, in general, and for the Nordic nations.
NW/AM: What has been often overlooked in the study of the success of some nations and failure of others, is the role of cultural evolution, driven by education, national curriculum, religious precepts, entrenched behavioral patterns, and value-charged narratives that together form and diffuse a habitus of a community. It is not an exaggeration to say that influential stories and practices – when replicated from generation to generation – start materializing in ways that come close to a self-fulfilling prophecy. By this, we mean that, if a community has selected the narratives of victimhood and martyrology, it will cultivate the backward look, passivity, and resentment which all contribute to stagnation. And vice versa, upbeat, empowering stories that emphasize public interest, contribute to socio-economic success. There is evidence to the effect that the Nordic founding fathers, at the time of nation-building in the nineteenth century, chose to invest in stories and action patterns that had little to do with rebuilding a competitive, aristocratic “Viking renaissance”; rather, they were forward-looking and fixated on building an egalitarian and cooperative “good society”. They were building their nations as inclusive folkhem (people’s home). Here the semiotics of work for the public good won over the semiotics of competitive rat race to the top. The result was a socially sustainable modernity. Similarly, societies that are polarized and torn by ethnic, religious, or other sectarian conflicts, do not emerge ex nihilo: their values are codified and reinforced semiotically – in family stories, habits, and myths that divide the world into us and them, create tensions and perpetuate inequalities.
DSW: I did a podcast with two of your colleagues, Carsta Simon and Hilde Mobekk, on the Norwegian custom of Dugnad that illustrates your point. Let’s dwell on this further, in part because it is so important at this moment in American history. A common way to dismiss Norway as a model for other nations is to say that it is culturally homogenous. In the first place, this is an exaggeration. As a mountainous country, there was so much isolation between regions that some dialects were mutually incomprehensible. As a maritime trading and warfaring nation, there was plenty of genetic and cultural admixture along the coast. Before the advent of Christianity, there was incessant warfare among tiny polities. The most important point to make is that in all cultures, identities are socially constructed through the mechanisms that you list above. If Norway is culturally homogenous, it is thanks to those mechanisms and not some accident of history. Likewise, a nation such as the USA can become homogenous thanks to metaphors such as a melting pot and actions that authentically deliver on the meaning of the metaphor. I am aware—and at this moment of history it is crucial to acknowledge—that the melting pot metaphor was never extended to all peoples within the USA, but it was extended to some, and for them, it created the kind of communitarian ethos that you describe for Norway. This is why Tocqueville marveled over American inclusiveness, compared to his nation of France, in the 1830s, which historians dub “The Era of Good Feelings”. This means that every nation has the semiotic means to create a culture of unity and inclusiveness—but also that these are in competition with other semiotic means that promote discord. This brings us to Multilevel Selection (MLS) Theory, your third inspiration, but first please comment on the points I have just made.
NW/AM: There are similarities and differences between 19th century Scandinavia and the US. As Tocqueville remarked, the US was unique in the sense of crafting an egalitarian democracy, which became a benchmark for similar European projects. Generations of Americans and Scandinavians were brought up on ideas of freedom and equality which they cherish to this day. But culturally, “the American Dream” involved an element of hubris: it featured a ruthless, often brutal competition to be number one, A Great Gatsby, a “wolf of Wall Street.” The Nordic Dream, on the other hand, has consistently celebrated happy mediocrity. That said, comparing the US with the Nordics is a bit strained due to a problem of scale. A relevant comparison would be the US-Europe and not the US-miniscule Nordic countries. At this level, we see significant differences. Europe’s way to democracy went via ethnic and national fragmentation. We had to decompose the Habsburg empire and create autonomous nation-states that then fought two world wars before they got their democratic act together. What rose from the ashes was the European Union which now attempts to maintain a fragile European togetherness. In the US, on the other hand, the engine of nation-building has been the idea of a melting pot.
DSW: Your third inspiration is MLS Theory, which reveals an essential interplay between cooperation and competition better than any other theoretical framework. For positive social change to take place at a large scale such as a whole nation, best practices must be selected compared to less-best practices. This is a competitive process but one in which the criterion for selection is carefully managed (the Third Way). Otherwise, competition among lower-level entities disrupts rather than benefitting the higher-level common good, which is the whole problem with laissez-faire. Crucially, for any given entity to succeed in competition with other entities, it must be internally cooperative. Think of the cooperation that takes place among the cells of every organism, to make them collectively competitive against other organisms! MLS theory tells us that human social groups must be cooperative in the same way in order to compete. And you are saying that the Nordic nations do a particularly good job at that balancing act. Please elaborate.
NW /AM: As small nations in open economies, the Nordics are competitively exposed in international markets. They have therefore had to put their collaborative strategies to the test of competition at a higher level. This is perhaps best illustrated by the Nordic flexicurity model, which represents an ambidextrous arrangement whereby competitive market dynamics are allowed to play out in a liberal labor market, while redundant employees may rely on coordinated welfare state guarantees, family subsistence, and retraining. As Uffe Østergård (2011) has pointed out, the system – as practiced in Denmark – contains an unwritten social agreement. The trade unions have accepted short notice for laying off workers in return for an insurance system designed in such a way that that the lowest-paid workers, from the first day of unemployment to up to two years (previously four years), are entitled to benefits equal to 90% of their former wage.
DSW: From an American perspective, this is amazing!
NW /AM: This has enabled a liberal labor market policy where employers can fire and hire at very short notice. The ‘flexicurity’ model and its combination of liberal market dynamics with active labor market policy is currently widely embraced also in the other Nordic economies and geared up from its traditional function as an employment facilitator, to take on a stronger role in industrial transformation.
DSW: This is a great example of having the welfare of the whole system in mind when formulating economic policy! It helps that all sectors of the society—labor, capital, and the state—have a powerful say in the matter, along with that collaborative spirit you keep talking about.
NW/AM: Yes, in Scandinavia we can talk about a democratic polyphony that puts a brake on radical social inequalities.
DSW: Before continuing, it is important to stress that MLS theory doesn’t make everything nice and that this results in a dark side to the Nordic model. To pick the example of Norway, amazingly for such a tiny nation, it has turned its oil revenues into the world’s largest sovereign fund, to be invested for the benefit of Norway. But how it enriches itself as a nation can be at the expense of other nations and the planet as a whole, not to speak of the fact that the very source of its wealth is contributing to climate change (go here for more). And Norway has not been immune from excluding certain people from its national identity, resulting in the inhumane treatment of the Sami people, for example. Please elaborate on the dark side of the Nordic model, to make it clear that we are not naively portraying it as good in all respects. Later, we will focus on the outsize role that the Nordic nations have played in working toward worldwide cooperation.
NW/AM: What you call the ‘dark side’ of the Nordic model is the country’s petroleum production, which – it is important to remember – Norway has driven together with at least 100 other countries, among which USA, Saudi Arabia, and Russia are the dominant players. Yes, like other petro-societies, the Norwegians are selfish, but their petroleum wealth has been used to generate a fair society, with relatively few inequalities. Today the Norwegian policy is to produce oil and gas with as little environmental degradation and CO2 emissions as possible. After Saudi Arabia, which has now shifted to powering much of its oil production with renewable energy, Norwegian Equinor has one of the industry’s lowest upstream carbon intensities. Further, we have to remember that the mainstream Norwegian politicians are committed to the Paris goals, also as far as petroleum is concerned. The direct emissions from oil and gas production are therefore included in the EU quota system (EU ETS). Last but not least, the Norwegian petroleum production is subject to exceptional CO2 taxation to the Norwegian state. Norway has already established a totally renewable electricity supply and is rapidly electrifying its road transport – two main sources of CO2 emissions worldwide. When other countries follow suit, the market for petroleum products will shrink accordingly – and Norway is preparing for it – with a large gas-to hydrogen project with carbon sequestration, as well as substantial investment in offshore floating wind energy. True, more and more green idealists in Norway have advocated an early shutdown of Norwegian oil and gas production. But they have against them a strong pragmatic lobby, including the trade unions. The latter reason that if such a shutdown takes place before European oil and gas consumption is ended, it would only imply the import of oil products from other petroleum producers, many of whom have higher upstream carbon intensities as well as serious local pollution.
DSW: Very clever of you! You have turned my putative example of Norway as a selfish nation into an example of Norway as a Third Way genius at the international scale! Now let’s turn to social exclusion.
NW/AM: Well into the 1970s, the Nordics – like most Protestant countries – practiced a distorted version of social Darwinism, i.e. weeding off the “unfit” elements from their societies via mandatory sterilizations of Sami or Tatere populations. It was less an attempt of forging a “master race” in the Nazi sense, and more a rational, modernist conviction that the performance and productivity of their populations depended on national health and strong identity. But this is not the end of the story. As my journalist colleague, Maciej Zaremba, has argued, Scandinavian modernity was married to the Protestant idea of “hereditary sin”, implying that all disabilities and deformities were part of biological inheritance and hence had to be uprooted. Thus, unlike the Catholics, who resorted to the universal idea of the “original sin” and did not practice racial hygiene, the Protestants used a combination of “scientific” biological reasoning and religious justification to support the idea of social engineering. This practice stopped when deliberative democracy kicked in and the social experiments were condemned as violating human rights. As our Sami friends say, once upon a time it was a shame to be a Sami. Then, at the end of the 1879s, it was fashionable and romantic to be a Sami. In the 1980s and 1990, it was advantageous to be a Sami: we got our Parliament and we could get drunk while driving because our culture prevented the police from throwing us to prison. And now the Sami are just like everybody else, which is a bit sad.
DSW: Right, but adopting a strong higher-level identity does not necessarily require losing a lower-level identity. For example, individuals who become bonded by working together in small groups celebrate each other’s individuality, as long as it is aligned with the purpose of the group. Likewise, Woodrow Wilson’s idea of patriotism was for America to be a leader on the world stage, as I discuss with Tryg Throntveit in the first conversation of this series. Actually, Norway can be used to make this very point. I know from spending time there that Norwegians are at least as patriotic as Americans, displaying their flag at every opportunity, but their national pride is oriented toward being an exemplar and facilitator for the rest of the world. Please elaborate on this point and provide some examples, including the arctic explorer and ambassador to the world, Fridtjof Nansen.
NW/AM: Norway is not necessarily attempting to be an exemplar, though occasionally it is deconstructed by progressive national elites as narcissistic and megalomaniac. The more realistic picture is, however, that Norway and the other Nordics, as small open economies, are dependent on a fair play and rule-based international environment, which perhaps makes us look nice. We cannot like superpowers, get away with bullying our way through. As to the flag-waving, it expresses what has been called a “banal nationalism”: the joy of being well functioning, relatively happy societies with spectacularly beautiful nature. Fridtjof Nansen, who you mentioned, would not quite agree. Yes, he got a Nobel prize for saving the lives of millions of starving and displaced people (Nina was given a Nansen passport when she came to Norway as a stateless refugee from communist Poland). But Nansen died a bitter and disillusioned man, convinced that Norway and the League of Nations did not do enough to stop the slaughter of Armenians.
DSW: You have already provided some examples of Third Way (=ambidextrous) thinking and action, such as the flexicurity model and petro industry. Let’s add one more—the response of the Nordic nations to the coronavirus pandemic. While we’re at it, let’s begin discussing differences between the Nordic nations, since Sweden adopted a very different policy toward the pandemic than the others.
NW/AM: It is too early to say anything definite about which strategy has been most effective, but apparently four of the 5 Nordic countries (DK, FI, No, I) have done fairly well in reducing infection and deaths through early lockdowns and maintaining personal discipline in social distancing. Sweden is an outlier, choosing only a partial lock-down (with open schools, so that parents could go to work) and imposing isolation on the elderly and vulnerable groups. So far the result has been its record high death tolls and infection figures. At the basis of this approach lies a different socio-political tradition that rests on experts and institutions that are independent of politicians and enjoy high social trust. Hence, while the four other Nordics have orchestrated their COVID response in a dialogue between medical experts and politicians, the Swedes have relied almost entirely on the suggestions of medical authorities, with little interference of political actors.
DSW: Interesting. It’s not as if Sweden couldn’t have acted in a coordinated fashion like the other Nordics, but that their decision-making process was not sufficiently inclusive and relied too much on a small number of medical experts. This has been a wonderful conversation and I’d like to finish by covering two major points. First, what are some of the threats to the Nordic model? Just because it works so well doesn’t mean that it is immune to disruption.
NW/AM: The Nordics were successful in building an exemplary welfare state in the 20th century. The challenge is to maintain this balancing of high productivity, prosociality, and ecological sustainability in the conditions of radical deregulation, globalization, and oligopolistic digitalization. So far, as we have argued in our book on sustainable modernity, the Nordic model(s) have a potential for innovative reform, as long as the collaborative cultural basis is robust and remains part of the national Bildung.
DSW: Finally, let’s end on how other nations can emulate the Nordic model, even though they have different cultural histories, mechanisms, and developmental pathways.
NW/AM: As we have said, cultural heritage matters, and it cannot be mechanically imported from one country to another. At the same time, however, some arrangements – such as flexicurity and women’s employment – can be used by any government in any country that cares about the welfare of its societies. We also find evidence that there is a collaborative potential – a repository of stories and behavioral patterns based on dugnad – that can be found in almost every country. Hopefully, the Nordic example can inspire others to unearth this potential and use it to forge fair societies.
DSW: Thanks so much! This conversation enriches the Third Way series. I look forward to the next time we can be together in person, having deep conversations like this over good food, drink, and company in that wonderful nation of yours.
NW/AM: Dear David, talking to you is always a Platonic feast.
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[i] The idea that four questions needed to be asked about any product of evolution, concerning their function, history, mechanism, and development was stressed by the Nobel laureate scientist Niko Tinbergen and is elaborated upon in my book This View of Life: Completing the Darwinian Revolution.
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