Authors: George Lakey
Labor leaders agreed that the owners could continue to own and guide their firms. Labor expected that their political instrument, the Labor Party, would restrict owners through government regulation and control the overall direction of the economy. The intensifying nonviolent struggle by workers and farmers, plus middle-class allies, created a fundamental power shift.
In 1937, the Labor Party won the largest share of the vote (although
still a minority, in a multi-party election), stepped up its Keynesian stimulus of the economy to counter the depression, and distributed more relief to the poor.
More middle-class people swung to support the Labor Party, both because the Party was recruiting them more actively (through family ties to workers, for example), and because some middle-class people began to see that Labor could deliver concrete benefits for the people.
The Labor Party’s vision of nonviolent revolution resulting in a completely socialist society remained in its manifesto until 1949, reminding the owning class that another round of militant capitalist resistance to change might lead to a more radical outcome than what they already were living with.
Not until 1965—three decades after the Basic Agreement—did the Conservative Party get a chance to govern, leading a coalition of bourgeois parties. By then the Nordic model was securely in place and the Conservatives accepted the basic changes in the rules of the game.
This came fully home to me only when I sat in the Mathiesen living room in Skien in 1973 and watched a televised election debate among national party leaders. I commented to Berit that it hardly seemed a debate; it was almost boring. I spoke in English so her father Johannes, also watching, wouldn’t think I was trivializing his country’s politics. But Berit agreed that the major parties no longer fought over the design of the economy.
In the debate, I heard little attraction to the command economy
of the Soviet Union next door, nor to the free-market economy of the United States across the sea. Norwegians didn’t completely scorn the market. After all, a market can provide flexibility and the constant feedback and corrections that support the well-being of the whole. They thought a small stock market could be useful but needed regulation so its own excesses didn’t destroy it. The financial sector remained small, and a good deal of it was owned publicly and the rest highly regulated.
After the bitter strikes and loss of productivity that resulted from the class struggle back in the day, the election debate I watched in the Mathiesen living room reflected industrial peace. By 1973, Norwegians seemed to have consensus on a carefully guided market, full employment, free and universal health care, free higher education, and efficient and affordable public transportation. The party spokespeople agreed on the goal of good housing for all but argued that their own party would get it faster than the other parties would. Taxes weren’t really an issue; the people knew they needed to pay high taxes to get abundant services.
In my experience, Norwegians don’t like to talk about “the bad old days” of harsh polarization and open struggle. Most enjoy their reputation in the wider world as consensus-seekers and experts in conflict resolution. Their backstory, however, is different: they needed to fight to achieve the amount of freedom and equality they now enjoy. As Martin Luther King, Jr., observed, “Freedom is not free.”
When Berit was a teenager, she often babysat for Finn Gjaerum, an entrepreneur in her hometown of Skien. When I moved to Norway she was eager for me to meet Finn’s young family, with whom she’d gone on trips. I had a delightful time, drank a lot of coffee, and asked Finn what it was like to run his chemical import firm in Norway.
“It’s absorbing, and satisfying,” he said. “I like to make decisions and I’m okay with the responsibility of meeting payroll. I like being my own boss. And Norwegian workers are very reliable and conscientious, so I don’t have to worry about setting and meeting deadlines.”
Over time I realized that, even under a government usually run by the workers’ party, Norwegians recognize their entrepreneurs. Take Kjell Inge Røkke. He started out as a fisherman, reportedly too dyslexic to finish secondary school. He worked on fishing trawlers in Alaska and returned to Norway to become an industrialist with assets reportedly worth $3 billion. My own town
has reason to be grateful to him: his shipbuilding firm Aker saved the Philadelphia Navy Yard from giving up its centuries-old mission of building ships.
Rates of start-up creation in Norway are among the highest in the developed world, and Norway has more entrepreneurs per capita than the United States, according to a report by a Boston-based research consortium.
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The flurry of new Norwegian enterprise was news to me. I assumed that my own country would consistently lead the start-up economy. But the U.S. Small Business Administration released a study in 2010 reporting that U.S. start-up activity fell behind not only Norway but also Canada, Denmark, and Switzerland.
In 2010, Max Chafkin did a survey of Norwegian entrepreneurs for
Inc. Magazine
, where he was a senior writer. While in Norway he noted the liveliness of the start-up scene. When he returned home he consulted Zoltan J. Acs, the chief economist for the U.S. Small Business Administration’s Office of Advocacy. Chafkin asked why more Norwegians than Americans would be taking the risk of starting their own businesses. Acs said, “The three things we as Americans worry about—education, retirement, and medical expenses—are things that Norwegians don’t worry about.”
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Mark Zandi, chief economist for Moody’s Analytics, in 2014 added another reason for start-ups lagging in the United States. Thirty-somethings, a demographic usually productive of risk-taking and start-ups, are often held back by student loan debt.
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The Nordic model’s free higher education opens doors. The Norwegian Entrepreneurship Program is a collaboration of all seven of the Norwegian universities, nine university colleges, and some business and architecture schools. The program cooperates with international partners, including the University of California at Berkeley. Budding entrepreneurs take academic and practical courses and spend three months working in a start-up company with a technological focus.
Because the Norwegian Entrepreneurship Program is for Norwegians wanting to make a major commitment, the government has set up other programs that are more introductory, designed to clarify people’s intention. Oslo offers free introductory courses on how to start a company. The course instructors teach in English in order to catch new immigrants whose Norwegian skills may not be very secure yet.
Many immigrants live in the city of Drammen, where workers went on one of Norway’s earliest strikes. Drammen now hosts a national pilot program for immigrants to support entrepreneurial spirit and professionalization, and the project emphasizes the contribution of immigrants.
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Conventional wisdom links innovation to wide
in
equality. The belief is that inequality motivates, by increasing both the risk and potential reward, attracting talented people who love adventure. The bold ones make the breakthroughs that propel invention and innovation. It sounds reasonable.
Three researchers at the London School of Economics put this
assumption to the test by examining, among other things, patent filings in different countries. They found that Sweden, which gets sneers from some red-in-tooth-and-claw capitalists as a “nanny state,” had more patent filings per resident than the United States for most of the last half-century. The LSE researchers then turned to the Global Innovation Index and compared innovation with inequality. They found that innovation in the United States lags behind a number of OECD countries that have lower inequality.
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The advocates of inequality invoke the concept of meritocracy. They point to the olden days in the United States when high rates of upward mobility showed that the poor with talent and grit found our country a land of opportunity, and that this was an important measure of freedom.
In 2012,
The New York Times
reported on economist Markus Jantti’s studies of mobility.
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Professor Jantti asked how different countries compare in giving young people the chance of upward mobility.
To measure this, Jantti looked at the rates of sons and daughters moving in just one generation from their father’s spot in the income ladder to a higher spot for themselves. The most dramatic change, he reasoned, would be for children whose fathers were in the bottom fifth of earners to leap to the top fifth.
Jantti found that in Norway, Denmark, and Sweden, the daughters and sons from the bottom fifth had a much better chance of making that leap than they do in the UK and the United States.
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His finding lines up with equality studies comparing the OECD countries that found that the more equal a society is, the more mobility it has.
It turns out that freedom (shown by mobility and innovation) and equality are not necessarily opposed. In fact, by these
measures,
equality supports freedom
. The track record suggests that the Nordic economic design has features that are synergistic: the more equality, the more freedom.
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One reason why Norway picked up quickly on the Danish model of flexicurity is because it increases an entrepreneur’s freedom. If the business you own can no longer compete in the world market, it’s fine with the Norwegian government for you to close it and lay off your workers. Flexicurity means the government has a social contract with those laid-off workers to do everything possible to help them land a new job that’s just as good or better for them. Your unproductive capital becomes available for a new start-up.
Still another way that the government helps is to minimize the red tape for start-ups. According to a World Bank report published in 2012, the time it takes in Norway to establish a new company is seven days.
Norwegian-American Susanne Kromberg told me that the gender dynamic is an important part of the Viking economic story. She asked me to consider what was happening in Norwegian villages a thousand years ago while men were “going Viking.” “The women,” she said, “had to have legal authority, to be able to defend themselves, and manage every aspect of life in the village without the men present.”
Viking women could hold property and easily obtain a divorce in response to her husband beating her or for some other reason.
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That was then. By the nineteenth century, Norwegian women had fallen into a Victorian oppression that stirred Norwegian dramatist Henrik Ibsen to rage against sexism in his plays.
Sexism was still very much alive in the 1950s. When Berit graduated from the junior college in Skien that specializes in business administration, she placed first in her class. In that school, placing first marked the grad as CEO material. The college principal, however, told Berit’s mother in congratulating her that Berit would some day make a CEO a fine executive secretary!
Since those days, Nordic women have gained more freedom and equality, tracking closely with the growing sophistication of the economic design. In 1986, newly elected Labor prime minister Gro Harlem Brundtland made history by announcing a cabinet that was dubbed “the women’s government.” Eight of the eighteen ministers were women.
The Nordic countries now have high women’s participation in their parliaments, an average of 40 percent, and most have had a woman prime minister. Norway became the first to adopt affirmative action for corporate boards of directors, requiring by law at least 40 percent women on the board.
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The descendants of the Vikings have the world’s highest employment rates for women. Over three-quarters of Norwegian women work outside the home, compared with 68 percent in the United States and 65 percent in the European Union.
The heritage of sexism, however, still shows up in several ways. One is that women comprise the majority of employees in the public sector while men make up the vast majority of workers in the private sector. Another is that women are less likely to be in top managerial positions. I’m told that this is changing, but the most recent figures I’ve found were from 2005, when women’s
percentages in top management were in the low twenties. Even in middle-level management spots, women in private companies made up only 27 percent.
A factor that will likely make a difference over time is that three of five students at universities and colleges are now women. Women form the majority of students in the traditionally high-status schools of law and medicine. The fact that the universities are free increases the freedom of women to develop fully their careers.
Two male cabinet members in the recent Norwegian Labor government, justice minister Knut Storberget and minister of equality Audun Lysbakken, took three and four months off while in office to look after the new children in each of their families. A major preoccupation in Norway is increasing innovation and productivity by breaking out of rigid gender roles.
Former Norwegian prime minister Jens Stoltenberg is an economist by trade. In 2011,
The New York Times
interviewed him during his second term as prime minister. The reporter asked for the secret of Norway’s economic success. He said, “One Norwegian lesson is that if you can raise female participation, it helps the economy, birth rates, and the budget.”