Viking Economics
Popular and partisan, but the clearest short account of the Nordic bargain.
Summary
Lakey, an American activist and academic, describes the Nordic economic model in Norway, Denmark, Sweden and Iceland and argues that the United States could adopt it. He covers the historical development, the current arrangements and the political process that produced them.
The substantive description covers: the flexicurity arrangement in Denmark, in which employers can dismiss workers easily while the state supplies generous unemployment support and active retraining, which produces labour mobility without individual catastrophe; universal rather than means-tested provision of health, education and childcare, which he argues sustains political support because everyone receives it; strong unions negotiating at sector level rather than firm level, which takes wages out of competition between firms; free higher education and the resulting absence of student debt; Norway's sovereign wealth fund and the rule limiting withdrawals to the expected real return; and Iceland's response to its banking collapse, in which it let the banks fail and prosecuted bankers.
His historical argument is that these arrangements were won through decades of organised labour and popular movements rather than granted, and that Nordic countries were poor and unequal before that.
The book is advocacy and the analysis is thin. Lakey does not seriously address the small homogeneous populations, the high tax burden including regressive value added taxes, the resource wealth in Norway's case, the labour market participation requirements, or the constraints on adopting these arrangements in a much larger and more diverse economy. Read it as an accessible description of the arrangements with the transferability argument treated sceptically.
Key takeaways 7
- Danish flexicurity combines easy dismissal with generous unemployment support and retraining, which produces labour mobility without individual catastrophe.
- Universal rather than means-tested provision sustains political support because everyone receives the benefit and therefore has an interest in its quality.
- Sector-level rather than firm-level wage bargaining removes wages from competition between firms, which changes what firms compete on.
- Nordic countries were poor and unequal before these arrangements, which were won through organised labour and popular movements rather than inherited.
- Norway's fund rule limits annual withdrawals to the expected real return, which converts a depleting resource into a permanent income.
- Iceland allowed its banks to fail and prosecuted bankers, and recovered faster than countries that socialised bank losses.
- Free higher education removes the debt that constrains career and family choices for graduates in systems that charge for it.
Who should read it
Readers who want an accessible description of Nordic economic arrangements, with the argument for transferability treated as advocacy.
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Where it sits in the reference 4
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