Tuesday, December 11, 2012

Social Solidarity and Trust

A friend and I were talking about how the economies of Sweden, Norway, Denmark and Finland have not only grown dramatically over the years but continue to survive the current European financial crisis.

World Bank statistics show that between  1960 and 1986, except between 1975 and 1982, the US was leading these countries in per capita GDP growth. Since 2006 up to 2010, except for 2009 when the US overtook Sweden, per capita GDP growth in the US has lagged behind these countries.

In a paper entitled Nordic Capitalism,  written for the 2011 World Economic Forum in Davos, economist and professor Klas Ekkland debunked the notion held by many people that the Nordic countries have found a compromise between capitalism and socialism.

He said that while all four countries have high per capita incomes,  a  large public sector with high taxes, and inclusive welfare states, all four have adopted a tradition of "consensus-seeking policy solutions" that strongly emphasized labor and work ethics.

In another paper entitled Social Trust and  Radical Individualism,  written for the same Davos forum, historians and political experts Henrik Berggren  and Lars Trägårdh attributed the economic efficiency of the Nordic countries to  individual autonomy and social solidarity, which they defined as  "the  ability to subordinate individual interest to collective rationality."

Berggren and  Trägårdh said that "from an economic point of view, social trust and adherence to the rule of law translate into a great systemic advantage, which we fundamentally can describe in economic terms as “low transaction costs.”
Are there lessons to be learned from the Nordic variety of captialism?

Berggren and  Trägårdh have the following observations:

1. Nordic capitalism shows that individualism need not lead to fragmentation, distrust and short-term maximization of material interests.

2. Nordic capitalism also demonstrates the systemic advantage of having a positive view of the state, not just as an ally of the weak but as the promoter of ideals of equality and individual autonomy.

3. A strong state and individual autonomy are not a threat to civil society, but are instead its prerequisites. Citizens who join together not mainly to protect themselves from arbitrary abuse by vested state or business interests but rather to increase their potential for self-realization and personal independence are more likely to make positive contributions to society as a whole.

Perhaps we in the US can learn something from the Nordic experience.


- Ariel Murphy


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