



In his theory of cultural dimensions, Dutch sociologist Geert Hofstede identifies a number of dimensions of national cultures. One of them is that of individualism and it pertains to a “preference for a loosely-knit social framework”. According to comparative studies of the Hofstede Centre, the most individualistic nations on Earth are found in the north Atlantic with Scandinavians and Anglophones on top.

At least part of the explanation can be found in the Ricardian model. Northern winters are harsh and farming is more difficult in adverse weather. Thus from very early on, the scarcity of food stuffs originated a sparsely populated territory. Unlike southern Europe where the weather is mild and farming easy, in the north, the number of potential workers being limited and the territory vast, causes social hierarchy to remain levelled. In the south, conversely, the bargaining power of a landowner with his workers is higher given the bigger competition amongst labourers.

Northern cultures also naturally emphasize entrepreneurship: summers must be efficient to make up for long winters.

The industrial revolution was particularly beneficial to individualistic cultures but especially so for the smallest and most homogeneous ones. Mechanization robbed densely populated nations of their natural comparative advantage in relation to individualistic ones. Israel, Switzerland, Austria and the Nordic tigers, thanks in large part to their cultural homogeneity, can quickly adapt to global trends in trade – since they are export economies – and are not as dependent on agricultural and natural resource based economic models.

One of the features of individualistic societies is also their tendency for universalism and formal political structures at large. With parallel structures such as family, clan or tribe weakened by distance and self-reliance, the social imperative is for individual equality to be enforced impartially. Neutral bureaucratic constructs such as a state apparatus, are therefore crucial for the maintenance of the national individualist ethos. Larger, more complex and diverse societies on the other hand, deal badly with formal structures of governance because the emphasis on direct links between individual and government is corrupted by parallel social loyalties. This in turn explains why democracy tends to become dysfunctional in ethnically heterogeneous societies and why the grey economy is so prevalent in those cases too.

This reality is of interest for those who study the current economic crisis and how well the international institutions are faring in their response.

The European Commission, of course, is a regulatory entity par excellence. Its original mandate was to manage the implementation of the common market and its current legislative power stems from that mission. However, by legislating in more and more areas of governance within the European Union, the Commission is also inadvertently exporting the northern relative disadvantage of regulation, to weaker and less export driven economies in the south.

Southern cultures such as Italy while legislating plenty, also legislate worse and the effectiveness of regulation is further eroded by competing loyalties to family connections and the inertia of strong vertical hierarchy. Yet, a less effective legal system also provides more room for the informal economy and works as a competitive advantage in relation to more efficient economies; these, in spite of providing higher quality products, also impose more of a burden on investors in regards to rules compliance. Informality however can be an asset when fostering commercial ties with other informal societies.

Given that the EU’s benchmarking models feature the Nordic tigers as the paradigm of best practices, the incentives given to poorer nations such as the PIIGS, when it comes to ‘cohesion funds’, are bound to be based on further industrialization and export intensive models. This is best epitomized by the ‘Europe 2020’ strategy which basically tries to transpose Nordic virtues in the mythical Green or Knowledge Economy, into general European practice.



This is not necessarily negative since modernization is always welcome. The problem lies instead in whether the Nordic model is actually adaptable to different realities. In Mediterranean countries for instance, agricultural industrialization can only do so much if the majority of explorations are too small to sustain industrial monocultures. In Eastern Europe the funding of education will only go so far if the free flow of people facilitates brain drain into the bigger markets of Western Europe.

This concurrently begs the question of whether the northern economies themselves are subject to the same push for reform, as their southern partners are. If all the member-states have something to offer to the Union, then what exactly are the Nordics being asked to adapt to? If the answer is ‘not much’, then more serious issues are at stake such as whether the Commission’s envisioned path is unidirectional – and where that leaves countries that struggle to adapt – or how fair is a Union whose reforms are meant for some but not all.

This debate is not just theoretical. In matters of foreign policy as well as trade policy, the EU as a general rule pushes for more regulation and compliance with universalist – international law based – principles. Once again, this course is typical of knowledge economies in northern Europe: Norway has long since specialized in conflict mediation, the Swiss founded the Red Cross and most Nordic, Alpine and Low Countries capitals have at one time or another served as venues for major diplomatic treaties or organizations. These countries are also coherent with their foreign policy goals and regularly call for embargoes or sanctions against international human rights violators.

Of course it is easier to do so for a small export based economy. Many European member-states are not. They have larger populations whose economic fortunes depend much more on the market price of commodities and many have also historical links to the developing world which suffer every time the organizations in question denounce illiberal regimes or promote international discriminatory legislation against them.

The current crisis in Europe has exposed many fault lines. If we do not mean to widen them, then the opportunity must be seized by European decision-makers to rethink their approach to the process of European integration. It is time the EU embraces the diversity of its unity.