Nordic Aspirations?

Published: 22 April 2014

A previous piece on the potential for “A Scottish Nordic Model” outlined how the Nordic states developed their particular brand of social democratic social investment states commonly lauded as “The Nordic Model”.  I don’t want to repeat those arguments, but I do wish to add a little more to those ideas.

Despite the divergence within the Nordic model as a result of different reactions to various political (increasing instances of centre-right governments) and economic (crises, especially in the 1990s and from 2008-10) changes, there remain several common features which underpin the Nordic model.  Esping-Andersen and Korpi identified three in their 1987 work: the comprehensiveness of social security systems; institutionalised social rights; and social solidarity accompanied by universalism.    More recently, Brandal et al. consider some broader themes as part of the model, including the tripartite bargaining systems, widespread unionisation, political consensus and the wider political economy.

The model has been challenged in recent years, most particularly in Sweden, which has seen a substantial contraction in some areas of welfare spending.  A centre-right coalition has played a role here, so too has a weakening of the tripartite bargaining system amidst declining unionisation and increased conflict between employers and employees.  Nevertheless, the fundamental principles remain, and the outcomes are largely reminiscent of the objectives of social democracy during the Golden Era of the 1960s and 1970s.

How is this relevant to the Scottish constitutional debate?  Well, the Nordic model has featured occasionally on both sides of the debate.  Pre-global financial crash, nationalists lauded the Nordics (and Ireland) as the ‘arc of prosperity’, which was subsequently ridiculed as the ‘arc of insolvency’ by critics.  While neither is a particularly illuminating position, these discussions indicate the interest political elites, as well as civic organisations such as Nordic Horizons and the Reid Foundation, have in Nordic thinking.  The latter in particular has recently been promoting Nordic ideas and campaigning for Scotland to deliver Nordic-style equality through a more progressive taxation system, increased childcare provision, and active labour market policies.  Universalism in public services is seen as a prerequisite for delivering such policies.

There are clear Nordic influences in the Scottish Government’s white paper on independence, Scotland’s Future, most particularly with regards to the provisions for expanding childcare and the desire to help more mothers back into the labour force.  The policy has been criticised by the Scottish Parliament’s own information centre (SPICe), not for the principles underlying it, but for the lack of economic modelling involved in the development of the policy.  While they did not explicitly mention it, affordability was at the heart of this criticism.  The Scottish Government’s white paper indicates that the policy would pay for itself in the long run, though indications from the SPICe office are that there are limited numbers of mothers who would take up full-time employment should childcare facilities (and, indeed, the employment opportunities themselves) be available.

And herein lies the divergence between the potential expectations of a “Scottish Nordic Model” and the reality of what could be delivered.  The Nordic states, despite their recent challenges and adaptations, continue to follow the social investment approach, funding high levels of social spending through high levels of personal taxation (which, in turn, is funded by high wage levels).  That this model was acceptable to their respective populations derived from historical circumstance (the social solidarity forged in the post-war period played a role here) and the strength and institutionalisation of trades unions in tripartite bargaining and wage negotiations. 

Wages are not as high in Scotland, and trades unions are smaller, less influential and have little experience of an institutional role in wage bargaining.  Such elements are key to how the Nordic model has developed, and without them, the prospects for these kinds of developments – at least on the revenue side of the ledger – appear limited.  The Scottish population are generally amenable to the idea of generous and universal public services (as the abolition of university tuition and prescription charges has show) but would be resistant to any attempt to increase taxation in order to extend public services further. 

The development of the model in the Nordic states was a decades-long process, and continues to develop in the twenty-first century.  If Scotland wants to follow this path – as advocated by the Reid Foundation – then it will have to develop the institutional capacity first.   

Small Nations in a Big World: What Scotland Can Learn by Michael Keating and Malcolm Harvey will be available in early May and is published by Luath Press Limited.

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