Foreign Correspondent: Norway

Gilt-edged socialism?


Tjome, Norway. There is a strange notion floating about in the world, namely that there is such a thing as "Scandinavian socialism" which through extensive state planning has been enormously successful in combining maximum social welfare with maximum democratic liberty. The notion is treated with enthusiasm by the left ("socialism with a human face") and repugnance by the right ("Scandinavia—gloom, sin and suicide").

They are wrong, both right and left. There is no such thing as "Scandinavian socialism" if by that term is understood a particular set of policies, peculiar to Scandinavia, for which one can claim either human bliss or human misery. Much of what is called "socialism" in this part of the world is not much different from American "liberalism;" true, the taxation is higher and statism worse here than in the United States—but all in all there is not more of it than in many other Western countries.

But has Scandinavia been a success? In a way, yes—Sweden ranks third, Norway fifth in the world in per capita income among the developed nations, the social security is almost total. There is Rule of Law, political liberty, and even some measure of economic freedom. They are egalitarian societies with little social strife, few strikes, and overfull employment.

Norman Macrae, deputy editor of The Economist, some months ago wrote an article of unstinted praise about Norway. It appears that Mr. Macrae belongs to the British Labor Party; he saw in Scandinavia a (last?) hope for success of the very same policies that have run Great Britain aground. The trouble with the article was that it did not explain why the very same policies which have failed on his side of the North Sea should be such a success on mine. Mr. Macrae is no fool; why this glaring omission?

The answer is that he simply makes a common mistake; he tagged his socialist hopes for statist success on to the relative advantages of Scandinavia. And Scandinavia is exceptionally well suited for trying out new economic policies or social organizations—of the New Deal, Fair Deal and semi-socialist type.

For one thing, Norway and Sweden are exceptionally homogeneous countries, with very little genetic and cultural variety; people are almost exclusively white protestants who have known no waves of foreign immigration for the last thousand years. For another, they are both small populations, just big enough to warrant large-scale production, but without having to suffer the urban problems of huge population concentrations. And compared to most other countries, Norway and Sweden are sparsely populated with relatively little pressure on space, land, and other resources. Add to this that modern history has been very good to Scandinavia, both politically and economically, and you find the best possible conditions for social experimentation.

What Mr. Macrae did was simply to mistake the Scandinavian conditions, indispensable to the cause he believes in, for the cause—statist socialism—itself. The mistake is common enough these days, with the rapid decline of faith in the old dogmas, whether Keynesian or Marxist.

What is a hotter question, however, is whether the favorable circumstances of Scandinavia are enough to save statism from long-term failure. The truth is, Norway and Sweden are ceasing to be the examples of success. With the highest taxation in the world, the two countries now also have the highest levels of wages and other costs in the world. Those branches of the economy that are not already heavily subsidized (agriculture, fishing and transportation have been for a long time) produced to a large extent for inventory last year, aided by heavy credits from the State. This was done in order to avoid unemployment, which is still comparatively negligible, but rising. And it will continue to rise unless President Carter can work some economic miracle on an international scale.

The new nonsocialist government of Sweden now has to face the bleak facts of the biggest economic crisis since the 1930's, but does it by continuing the policies of Mr. Olaf Palme's Social Democratic Party.

The Norwegian Labor government, however, is in a far better-off position. Its great fortune is the North Sea oil, on which the government is borrowing heavily abroad in order to finance the cost of overfull-employment policies. Real inflation is above 10 percent ("officially" 9.2 percent, but the consumer price index is endlessly juggled by subsidies, price controls and change of composition), which the government financed last year by borrowing abroad to the same tune that Great Britain does. Since Norwegians number only 4 million (against 50 million in Britain) this means that Norway borrowed 12 times as much per capita abroad last year as did Great Britain. Not all of this money goes into governmental deficit financing—some is invested in oil exploration and production—but a good percentage does. The result is that Norway will have spent a good deal (and may have spent most) of the income from the oil, long before the oil gets out of the ground—or rather the sea.

It is a gamble with very high stakes, possibly very profitable from the Labor party's point of view. If it wins the election in the fall, it will have some $150 billion in oil money over the next 12 years to finance the establishment of a gilt-edged socialism, the likes of which the world has never seen. And they will do it, too, not because they necessarily believe firmly in socialist dogmas, but simply because they lack the imagination to conceive of "progress" as anything but continued centralization of economic and political power.

At the moment, the government is able to—and does—promise everything to everybody, and damn the consequences; the opposition parties have very little with which to oppose.

Not the prospect of a saner policy, but special interests fighting about the distribution of the oil money: this will be the issue of this year's election.

It may in the end be a sad story, one about a country going from rags to riches and back again in a century or so. But it has happened before, elsewhere.