Sorry Libertarians, But Norway is Indeed a Socialist Utopia

How libertarians swept the success of Scandinavian Socialism under the rug

As inequality surge, sea levels rise, and the rubbles of democracy collapse into bizarre dystopias of universal surveillance and unemployability — stretched to their snapping points in a tug of war between multinational corporations and populist strongmen: The revival of Democratic Socialism comes in the nick of time.

Socialism Revived

Like a slowly decaying remant from a bygone era, “Socialist” still remains the pejorative par excellence for discrediting U.S. progressives. A rhetorical battle-ax, sharpened for decades by the hone of Cold War tribalism. Readily drawn against any policymaker displaying even a tinge of red (Roosevelt, Clinton and Obama, were all labeled socialists by their political opponents).

Progressive, yet ambitious policymakers, forced to deal with this reality, are incentiviced to keep their distance, not only from socialism, but from everything associated with it—thus severely limiting their own repertoars of policies and talking points. The right naturally want to preserve this leverage. That’s what makes popular figures like Sanders’ and Ocasio-Cortez’ embrace of the term so threatening. It’s a glaring attempt to reappropriate it for the left.

The current wave of democratic socialists, point to Scandinavia as a paragon of “democratic socialism in action”. Scandinavia’s prosperity is clearly inconvenient for the right. Preserving the terms negative connotations, depends on reserving it for scarecrows like North Korea and Venezuela. Confronting Scandinavia, they are left with just two options, both erected on foundations of denial and cherry picked facts: They can dispute either its economic success; or its socialist leanings. Both of which has been vehemently pursued among think-tank and blogosphere-libertarians.

The Specter Of American Libertarians Pretending To Understand Scandinavian Economics

Like many of my fellow Scandinavians, I follow this spectacle with bemusement. From a distance, we witness these libertarian pundits publicly parading their utter ignorance about our region — marching column after column of uninformed opinions, past their jubilant in-group crowds. We witness their lack of intellectual humility, despite addressing a region that so clearly lies outside of their areas of expertise. Their shallow misconceptions presented as penetrating insights to a domestic audience even less informed than themselves. Triumphantly, the group sees their existing beliefs, once again, confirmed. The crowd erupts in self-congratulatory celebration in the comments sections, on Twitter and on Reddit. The atmosphere feels tribal, almost violent. Shrugging, we close the tab, returning our attention to whatvever we were supposed to be doing.

A recent experience of this was reading Jeffrey Dorfman’s clickbaity Forbes piece «Sorry Bernie Bros But Nordic Countries Are Not Socialist». An exemplary case study of sloppy research and ideological sophistry.

This article stands out with regards to its authorship, not some irrelevant think-tank hack, but a venerable UGA professor of economics. A public figure, institutionally bestowed a hefty aura of credibility. Someone who’s integrity ought to keep him from purveying junk-food assessments of this sort, garnished for his libertarian readership as a mouth-watering confirmation of their existing beliefs.

The assessment takes aim at bolstering the conservative right’s favored stereotype of The Socialist Dupe, naively disconnected from the real world. Sander’s supporters, denigrated as «bros», are brushed off as uninformed dimwits, too ignorant to even understand the meaning of their own professed ideology. The “Bro” specifically singled out by the story’s cover photo is the right-wing’s favorite new punching bag, congressional candidate Alexandria Ocasio-Cortez.

Dorfman starts of by clearing up the common misconception of socialism as synonymous with a generous welfare state, pointing out that “Socialism can take the form of government controlling or interfering with free markets, nationalizing industries, and subsidizing favored ones (green energy, anyone?)”, before blurting “The Nordic countries don’t actually do much of those things.”

What Democratic Socialism In Action Looks Like

Behold, the economy of Norway — Both an instructive instance of what democratic socialism looks like and, as my native country, the one I am most qualified to shine some light upon. In a 180 degree pivot from Dorfman’s stand, “controlling or interfering with free markets, nationalizing industries, and subsidizing favored ones”, is precisely how the Norwegian government ended up owning 60 % of net national wealth. This is twice the Chinese governments ownership of its nations wealth, and multiple weight divisions over the US, a net debter.

Source: https://wir2018.wid.world/files/download/wir2018-full-report-english.pdf

Like any viable economic system Norway’s is a mixed one. A fully socialized economy would be just as unfeasible as a fully privatized one. Any economy over-sloping towards either bound on the public-private ownership spectrum inevitably lose balance and stumble.

Even the conservative right’s favorite example of public ownership, the adamant touchstone case of socialism — The Soviet Union, had a mixture of small, private businesses and major state owned industries and financial institutions. The 1921 ‘New Economic Policy’ reform, was proclaimed by Lenin to introduce «a free market and capitalism, both subject to state control» with «socialized state enterprises [operating] on a profit basis». Sure, most socialists dismiss the “socialist” label for the Soviet Union, just like most libertarians dismiss it for Norway.

This is classic black/white thinking. The label “Democratic Socialist”, doesn’t have to be reserved for a total absence of markets or private property. Ditto for “Capitalism” not implying a total absence of public ownership and regulations.

“Democratic socialism” is a straight forward way of referring to “a democracy, leaning towards the public bound of the private — public ownership spectrum”. It is exactly what it sounds like: An economy where major corporation are controlled by the government, while the government in turn is controlled by the people.

This secures de facto popular control of the economy. The government function as an intermediary managing corporations on behalf of the people. The greater control the government exerts over the economy, and the greater control the people exerts over the government, the better the description “democratic socialism” fits.

The Norwegian government grabbed the levers of its economy by securing ownership of major industries and financial institutions. This was achieved not by confiscation, but by purchasing stocks on the open marked. While America’s government spent the past decades ceding authority to the market, Norway’s government utilized the marked to bolster its authority.

The Norwegian public currently holds about 40 % of the stocks traded on Oslo Børs (the Norwegian Stock Exchange). By far the highest amount of any European country.

Companies with public ownership exceeding 33 % (securing it «negative control» ie. the power to veto any board decisions requiring two thirds majority) constitutes 56 % of Norway’s total market capitalization.

The public benefits of this are hard to miss. Would a corporate culture like Enron’s be conceivable with government representatives present at every single board meeting, controlling a third of the votes? How about the sub-prime mortgage crisis?

The following graph contains the most striking datapoint of any OECD graph.

Once the public has secured this level of ownership a new political spectrum opens up: the marked socialism — planned economy spectrum. Leaning towards marked socialism means running corporations like profit maximizing corporations. Leaning towards planned economy means utilizing them as tools for accomplishing wider political goals.

This spectrum is where the «democratic» part of «democratic socialism» comes into play. Political parties will hold conflicting views on where to strike the balance. Replacing an incumbent government will typically involve a slight shift on this spectrum. Deciding what the primary purpose of the economy ought to be, is now under democratic control. Contrast this with a neoliberal system where private investors defined the purpose of the economy as maximizing their own personal profits. Democracy is about people having equal influence over the guiding values and direction of their community. If this excludes control over something as significant as the economy, democracy is profoundly limited!

Norway’s 70 fully or partially state controlled enterprises includes: 35–70 % holdings of the nations four major corporations: the petroleum company Equinor, the telecom giant Telenor; the energy and aluminum producer Norsk Hydro; and the chemical producer Yara International. About 90 % of its electrical power is supplied by public hydroelectric power plants, and its three main commercial banks all have about 33 % public ownership.

This relationship between the public and private sector is thus the polar opposite of the American one. In America government is bought and controlled by powerful corporations . In Norway powerful corporations are bought and controlled by government.

Libertarian Double-talk

This is of course irrelevant to the libertarian true believers, who will insist on calling Venezuela an example of a failed socialist economy, while refusing to call Norway an example of a successful one. Never mind the fact that state ownership is more extensive in Norway than in Venezuela. Never mind the fact that Venezuela’s economic collapse was largely caused by a combination of bad luck and irrational monetary policies.

Libertarian pundits willfully neglects to explain this, leaving readers with the impression that ‘Venezuela’s economy is collapsing, because Socialism sucks’. The secret to Scandinavia’s success, on the other hand, the befuddled libertarian claims to be “allowing businesses to be productive.”

Matthew Bruenig recently gave an excellent account of this doubletalk:

“For conservatives, the word “socialism” does not really refer to state or collective ownership of capital, but rather poorly-managed state or collective ownership of capital. From there, the claim that “socialism” leads to poor management becomes tautological, as every example of well-managed collective ownership is either ignored entirely or conveniently excluded from the socialist label.”

For Dorfman’s audience, the evils of socialism remain an article of faith — bolstered by Americas Cold War role as the free world’s counterweight to the socialist heft of evil. Socialism implies stealing from the “makers”, to give to the “takers”, in their facile victim blaming lingo. As a stable supplier of confirmations of their existing biases, he secures a loyal libertarian readership.

Yes, Norway Is In Fact Democratic Socialist

The lack of minimum wage legislation is regularly portrayed as evidence that Norway is not Socialist. In fact, powerful trade unions and corporatist collective bargaining ensures de facto minimum wages far exceeding the pathetic US federal minimum wage of 7.25 USD/hour.

Wages are negotiated annually between the labor unions and the employers unions, with the state brokering the deal. Wages are negotiated cross sectorally: Whenever wages for some profession lags too far behind the rest, unions will prioritize this profession in the coming negotiation. They will compromise by accepting wage stagnation for other sections of the labor force in order to smooth out this inequality. The result has been one of the world’s highest rates of income/wealth equality:

Gini index: Norway ranks as the 3rd most equal economy in the world

Palma ratio: Norway ranks as the most equal economy in the world

Corporations also have to compete with the public sector for prospective employees. About a third of the Norwegian labor force is employed by this cuddly, pro-worker rights employer.

Private schools are indeed legal in Norway, but unlike their US counterparts, these are not means for passing on socioeconomic class to the next generations, by bestowing children of the rich education of higher quality than children of the poor. Norway allows “ideological” private schools, disagreeing with the pedagogical underpinnings of the public school. The vast majority of these are non-profit “Steiner Schools”, whose curriculum are based on Rudolph Steiner’s pedagogic theory.

It is also worth mentioning that every single university in Norway is public and tuition-free and every student receives a public scholarship of 14.400 USD/year.

Every hospital is public, with fees capped at reasonable a level for unlimited medical treatment, of any duration and complexity. 85 % of Norway’s total healthcare expenditure is covered by the government. No injured Norwegian ever had to beg bystanders not to call an ambulance because she couldn’t afford treatment.

The result is top ranks on most eminent indicator of prosperity:

The «Economic Freedom Index» Is a Neoliberal Propaganda Tool And Proves Nothing

Dorfman’s self-assured final-nail-in-the-coffin proof is the Fraser Institute’s «Economic Freedom Index». This libertarian, Koch brothers funded think-tank has, he assures us, crafted a «comprehensive measure of capitalism relative to socialism.». The claim to convey as multilayered a concept as «economic freedom» with a single number, should warrant a lavish dose of skepticism.

A brief peek under the well-polished hood of this index reveals it’s mechanism to be the non-weighted arithmetic mean of five peculiar indicators:

Sticking with Dorfman’s description of socialism as «government controlling or interfering with free markets, nationalizing industries, and subsidizing favored ones”, the indicator best suited for describing position on the capitalism — socialism spectrum is «Size of Government». This indicator consists of 4 factors: «Government consumption», «Transfers and subsidies», «Government enterprises and investment» and «Top marginal tax rate». It singlehandedly measure most of Dorfman’s criteria for applying the term «Socialist». Here, Norway ranks as number 147 out of 159 countries. By flipping the scale, Norway is ranked as the 13th most socialist economy in the world. Sweden is ranked as 3rd and Denmark as 6th most socialist.

For a further exploration of this index, you might want to check out my full essay on the topic

The ‘Economic Freedom Index’ Is a Steaming Pile of Neoliberal Bullshit!

In His Final Paragraph Dorfman Fatuously Concludes

«If the left insists on naming a system of generous government benefits combined with a free market democratic socialism, I cannot stop them. That seems unnecessarily confusing since the government is actually running no industries other than education (and meddling somewhat in healthcare). It certainly isn’t socialism.»

The claim that Scandinavian governments merely runs education and meddle somewhat in healthcare, is at best tragicomically uninformed. At worst it’s a perverse abuse of institutionally bestowed power to deceive his audience in promotion of his own ideological ends.

As the same old plutocrats carry on bankrolling the same old parties; founding the same old think tanks; spitting in the face of democracy. As economic growth ends up in an ever shrinking number of ever greedier hands. As the gust of technologically-driven mass unemployability impends. The success of Scandinavia proves that extensive public ownership can be a road to prosperity rather than serfdom.