The Nordic model, socialism and exploitation
What is it?
The purpose of this article is to dispel many strange, invalid or restrictive arguments about the Nordics, social democracy and socialism generally.
Is the ‘’Nordic model’’ capitalist?
It depends what is actually meant by ‘’capitalist’’ or the ‘’Nordic model.’’ If the Nordic model simply refers to all institutions that currently exist in the Nordic countries (Sweden, Denmark, Finland, Norway and Iceland), then it can be said so. But if the policies and political economies that have distinguished these countries from elsewhere are factored in, the answer is less unequivocal.
Firstly, it is important not to wash over where the so-called ‘’Nordic model’’ actually came from and why it exists. Blanketly referring to the institutions of Nordic countries as capitalist implicitly affirms the liberal or conservative arguments that socialists have never accomplished anything productive in representative democracies; and that all existing institutions are the successes of capitalist ideology rather than class struggle.
Indeed, the Nordic social democrats were very clear that they were socialists, and often drew their intellectual inspiration from Marxism. The Swedish Social Democrats established the welfare state because they believed it was a neccessary step toward socialism. The Social Democrats drew from a common Marxian understanding of development which characterizes socialism as growing from a material basis of capitalism.
Among the influences on Swedish social democracy was no less than Friedrich Engels’s work Socialism: Utopian and Scientific. The welfare state would both improve the material conditions of the working class and set up the transition to a socialist society through accelerated capitalist development — and without violence or suffering!
So we see that Nordic social democracy played a critical role in this development of social policy and redistribution, and these policies often came about from explicitly socialist intentions. Arguments that follow along the lines of ‘’The “nordic model” is just white supremacy with healthcare’’ or they are ‘’still capitalist’’ are not as radical or Marxist as they may appear at first glance. Instead, they serve the purposes capitalist ideological hegemony by obscuring the real accomplishments of the workers’ movement. To believe that the accomplishments of the international working class are with the Soviet Union or some imaginary and as of yet unrealized revolution, is perhaps among the greatest intellectual obstructions on the left. We can imagine the path towards a new society, as it has already been laid.
Secondly, the existence of a (currently) capitalist economy does not mean the Nordics do not possess many socialist property institutions. In Norway, oil production, hospitals and railways are nationalized, among many other public assets. The largest food manufacturers, retailers (hardware, groceries) and even many banks are co-operatives. The existence of large-scale social property is not something to overlook. Real steps have been taken towards democratizing the economy and opposing the ills of class society. It is beyond unwise for the left to discard genuine and practical examples of its economic ideals.
While opposing capitalism and socialism against each other makes sense as a generality or for the purpose of promoting an ideal goal; pretending that most economies are purely one or the other simply mystifies both, and helps perpetuate what Mark Fisher called ‘’capitalist realism.’’
Does it rely on exploitation?
Sometimes, critics from the left will say that unequal exchange between Northern and Southern nations takes place, transferring income and resources from the latter to the former. Goods are produced cheaply in developing countries, but sold at a higher value elsewhere in the world. Or goods are re-sold to where they were produced for much more than it cost to produce them.
This argument has some validity. Even social democrats themselves described the present Nordic countries, Europe and America as unfairly benefiting from the third world, if inadvertently. For example, here are the Finnish Social Democrats in their 1968 foreign policy manifesto:
‘’The exploitation and oppression supported by international capitalism and imperialism prevent the liberation of the peoples of the Third World.’’
’’Former colonial powers and other industrialized countries are still economically exploiting underdeveloped countries. Because of this international exploitation, neo-colonialism, state independence alone, in the current international relations, does not guarantee the right and opportunity of developing country citizens to fully develop their personalities and real power to decide on the material and spiritual achievements of their own work and community activities.’’
‘’The Finnish Social Democratic Party condemns the economic exploitation and coercion perpetrated by the United States in Latin America.’’
Indeed, the Social Democrats were the farthest thing from shills for capitalism and they even agreed in spirit with many of today’s revolutionary arguments. But obviously, the logical conclusion of observing international exploitation is not to give up, throw the table over and deny all the progress that has been made under the assumption that it is ‘’impure,’’ but to make as much progress as is possible in current conditions.
Though, it is still questionable whether unequal exchange really constitutes a massive and significant portion of Northern economies, enough to theorize all the institutions in the global North around this one particular factor and create a deterministic worldview. According to Jason Hickel, unequal exchange represents merely 7 percent of the observed size of global North economies, and it would be lower for those countries which import less. This means if a global North economy grew 3% (which is considered a fairly healthy, if arbitrary number), exploitation-by-country accounts for 0.21% of this GDP change. It would be 2.79% otherwise, assuming a perfectly equal global economy. We use numbers in the trillions, but to call this a revolutionary discovery is pure nonsense.
Most importantly, unequal exchange is a byproduct of the existence of money. Using this argument against progressive or socialist policies in developed countries is a non-sequitur. By definition, there is no form of socialism that can completely eliminate this inequality. If every country in the world were some form of socialist, unequal exchange between them would still rule. Commodity production and the international economy still continue, just as ever. Only the achievement of what Marx called the ‘’higher-stage of communism’’ (or simply communism) can abolish money. But even communists realize this is not a realistic goal for now.
Effectively, this argument about ‘’third world exploitation’’ just serves as an excuse by revolutionaries to avoid thinking about implementing leftist policies in developed countries. Even the most radical left-wing ideas that are theoretically possible (under current conditions of production) could not solve the stated problem. In this area, a revolutionary regime faces the same immediate problems as a ‘’Nordic model’’ one does.
Some communists seem to be simply looking for reasons as to why reformist socialist projects have to be put on hold, or disregarded, which are political arguments disguised as arguments for international social justice. It is a fundamentally fallacious argument.
Another reason it is fallacious is because it misunderstands how the welfare states are typically financed. They are financed through tax revenue, which has no bearing on the size of the economy. Expenditures grow in proportion with the economy. Tax revenue is not an absolute number that rises or declines as the economy grows or shrinks, but exists only relative to GDP. The Nordic economies could somehow be 20% of their former size than otherwise, and nothing would change. Ironically, this is the same bankrupt argument that American conservatives make. Conservatives often argue that it is only possible to have a large welfare state or universal healthcare in a small country, because only small countries can afford to finance such a social infrastructure. If they were larger, their expenditures would be uncontrollably higher. But we see that even despite their smaller size, Nordic economies raise more tax revenue than the largest economies in the world, such as the United States, Japan and China.
Some might then invoke the Marxist argument of a falling rate-of-profit, and the assumption that unequal exchange could prevent it from declining. I tend to agree with the TRPF thesis myself, it is an absolutely reasonable analysis. But ‘’profitability’’ here does not represent total, aggregate profits or even the total tax base from which a government can draw, it simply represents the ability of capitalist institutions to continue reproducing themselves. You can think of it as in the same spirit as the law of diminishing marginal returns. If this argument is ever invoked in these debates, it is almost guaranteed to be used incorrectly.
