The Nordic Welfare State in Three Eras

From Emancipation to Discipline

Johannes Kananen

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317022565
• Edition: 1
• Topic: Economics
• Subtopic: Economic Conditions
• Index: Economics

Nordic welfare states are known for a unique combination of equity and efficiency and for political institutions facilitating compromise and consensus between conflicting interests. The Nordic Welfare State in Three Eras: From Emancipation to Discipline analyses the historical and contemporary evolution of Nordic welfare states in Denmark, Sweden and Finland during three periods: the developmental period until the end of WWII, the period of emancipatory welfare institutions until the 1980s, and the period of restructuring from the 1980s until present times. The three eras discussed are shared in one way or another by all welfare states. However, Nordic welfare institutions are unique in the sense that they were particularly compatible with the ideas of Keynesian macro-economic management that constituted the blueprint of international economic ideas during the post-war period. This ground-breaking book will show how preceding emancipating elements of Nordic welfare states were largely lost in the process of renegotiating the post-war social order, and replaced by new elements of discipline and control.

Chapter 1
Introduction

The age of modernity contains a promise of and a belief in increasing human welfare. During medieval and pre-modern times the majority of people lived in conditions in which even hard work could not necessarily guarantee survival. A person born in poor conditions could not be expected to change her/his situation much during the life course. At the same time, a small privileged minority lived their lives under conditions of relative luxury. Since the day the members of this small (often aristocratic) minority were born, they did not have to rely on any external sources in order to maintain comfortable standards through the rest of their lives. To paraphrase Henrik Stenius: ‘You could perform your life drama badly or well, but once your hand was dealt, you could not ask for new cards’ (Stenius, 2010, p. 36).

Modern Enlightenment brought along emancipation in different ways. The American and French constitutions, along with the slogan ‘liberté, egalité, fraternité ’, created a hope that societies could be changed according to new, humane ideals. A modern trust in human reason liberated people from religious dogmas and hierarchies.

Perhaps most importantly, human creative potentials were liberated from previous bonds. Modern techniques of material production and modern ideas of equality allowed each individual to begin to reflect, more consciously than before, on their personal abilities, talents, hopes and aspirations, and on how to put these into use during their life courses. This transformation was associated with the emergence of modern sciences, modern states, modern cities, arts and infrastructure. To a lessening extent societies were structured on the conditions of a small privileged elite.

The transition to modern societies was not smooth or uncomplicated, as exemplified already by the French Revolution. The industrialisation of production was associated with an exploitation of workers, as famously pointed out by scholars, such as Karl Marx. The Christian Church and the more secular elites were not among the engines of change, but instead, sometimes acted as a source of conservatism and resistance. Thus, societal transformations were often associated with a contestation of former authorities.

The modern welfare state is another product of the Great Transformations (Polanyi, 1944) late nineteenth and early twentieth century societies experienced. The term ‘welfare state’ is often associated with the idea that all citizens are entitled to a minimum standard of living and basic services as a matter of social right (Dwyer, 2003; Dean, 2010; Kuhnle and Sander, 2010). Among modern welfare states, the Nordic ones are particularly interesting. The Nordic countries went through a fairly stable period of modernisation without the emergence of strongly differentiated class societies (as in England) or totalitarian political regimes (as in Germany, Italy or Spain, for instance). Furthermore, modernisation in the Nordic countries was associated with repeated and continuous redistribution of economic resources, coupled with ideals of universalism, solidarity and all humans being worth economic and social investments for the benefit of the future development of society.

Since the emergence of modern political ideologies, the Nordic countries have also been located – both geo-politically and ideologically – between socialism in the east and capitalism in the west (Alapuro, 2004), and have thus in a rather interesting way combined elements of both worlds. Most notably, the combination of the two worlds of socialism and capitalism was manifested in the original type of the modern welfare state that developed in the Nordic countries (for institutional characteristics of Nordic welfare states, see e.g. Esping-Andersen, 1990; Korpi and Palme, 1998; Castles, 2004).

Compared to many other so-called ‘Western’ countries, the processes of industrialisation began in the Nordic countries quite late and still continued in many ways during the twentieth century. Thus, with regard to economic production and standards of living, the Nordic countries did not before the twentieth century stand out as very special cases compared to other countries that were more advanced in these respects. Comparatively late industrialisation and urbanisation were not, however, the only aspects that distinguished the Nordic countries. Many of the necessary processes associated with the emergence of a modern economic order were in the Nordic countries associated with continuous redistribution of resources in society. The enclosures of common fields and the establishment of private landownership did not result in the kind of concentration of landownership that occured in Britain, where these processes allowed for rapid industrialisation and urbanisation. The timing of the modernisation of agriculture in the Nordic countries coincided, roughly speaking, with the emergence of modern political rights, whereas in Britain there was a long period of time between these processes.

The manifestation of modern societal impulses was disrupted throughout the world in the early twentieth century by two World Wars. As the Nordic countries were not significant military powers they were not major partners in shaping the destinies in Europe, but instead depended on others in the shaping of their own destinies as independent nation states. Although the continued existence of many Nordic nations was uncertain during the first half of the twentieth century, modernisation processes continued under an atmosphere of renewed optimism after the end of World War II. It was under this atmosphere of post-war regeneration that the well-known Nordic institutions of modern welfare policies were established with Sweden at the forefront of implementing policy and creating consensus between the labour market parties (Kettunen, 2011).

Convincing historical evidence about the emergence of comparatively equal social and political structures in the Nordic countries does not, however, imply directly that freedom of individual choice and self-expression have been established once and for all. The emergence of modern political institutions made it possible to formulate general political goals and to create an administrative apparatus in order to implement these goals. Yet, it is possible to remain quite sceptical towards the modern ideals of individual choice and self-expression, and an acquaintance with the social sciences does not necessarily weaken such scepticism. For instance, it is not hard to find evidence that in spite of the existence of modern social structures, people’s choices regarding their individual lives tend to reveal quite systematic patterns so that gender, socio-economic background, occupation and geographical place of living tend to correlate strongly with many attitudes and choices that people have or make (Blomberg et al., 2012; Svallfors, 2012). Indeed, many of the social sciences that emerged in association with modern social structures have been preoccupied with analysing and mapping out such connections between these structures and people’s behaviour. Findings in these areas legitimise questions about whether choices of economic and social participation can even in theory be thought of as individual by nature, or whether individuals are bound, to some extent, to be products of their social environment. From another perspective it may be asked whether individual choices – if they exist in theory – are bound to be egoistic choices that pay no regard to communal matters, or whether individual choices can contribute to solidarity and community development. Such questions touch the core of what modern societal impulses may be about, and what kind of social development is possible or desirable.

Studying Politics and Modernity

The main interest of this study lies in the unfolding of modernity – the associated international impulses and their manifestations in the evolving Nordic welfare states. In other words, the Nordic welfare states will be placed in the larger context of modern societal change. In order to get a grip on this endeavour, the first aim will not, however, be to present another pre-emptive definition of ‘modernity’ or to ‘apply’ any existing ones in ‘practice’. Neither will the main focus be on the philosophical question of what distinguishes the modern age from pre-modern ages (for illuminating discussions about these questions, see Taylor, 1975, 1989; Wagner, 2001). Rather, the aim will be to establish a particular perspective (one specific point of view out of many possible ones) on modernity as a process which both emancipates and constrains individual human beings. Existing accounts and perspectives on societal development will be reviewed in Chapter 2. Emancipatory elements of societal development will be discussed in terms of the theories of T.H. Marshall (evolution of modern citizenship rights) and Amartya Sen (societal development and human ‘capabilites’). These theories of societal development may be complemented by theories of human agency in the field of sociology. Based on these reflections, emancipatory societal development may be more generally understood as the modern process of liberating and enhancing human creativity – with primary reference to the potential that during the modern age, it has, in principle, become possible for an increasing number of people to begin more consciously than before to reflect upon their positions in society, and to seek to define their various goals in life in an individual manner.

On the other hand there are also many constraining elements associated with societal development. Despite elevated goals of emancipation, modern societies have not in a linear and determined fashion progressed towards this goal, but instead, there have been many previous constraints that modern impulses have been forced to ‘penetrate through’. In addition, new constraints have emerged the more societal development has progressed. These constraints can be made subject to conceptualisation and increased understanding with the help of discussion by Karl Marx, Max Weber and Michel Foucault.

Thus, the main question this study seeks to answer is what the relationship between emancipatory and constraining elements has been throughout modern societal development in the Nordic countries. An initial observation is that different aspects of societal development are relevant to this relationship during different periods of time. Thus, there is no single institution or single political process that can be labelled ‘emancipatory’ or ‘constraining’. In the early stages of modernisation it seems that the distribution of landownership has been crucial. In later stages modern welfare state institutions become part of the conscious management of this relationship between emancipation and constraint in societal development.

Although the aim is to complement existing perspectives and possibly open up new ones, this study will obviously draw on many findings presented in the existing body of academic literature on social and political change. In its efforts to contribute to the academic debate, the study will be placed in the juncture between the traditional disciplines of sociology, political science and history. Of these, particularly the discipline of sociology has largely grown out of a concern with how societies change and evolve during the era that has been labelled ‘modern’.

Lately, the discipline of sociology has evolved from a dominant concern of societies as organic entities towards efforts to try to understand the further evolution of modern societies. In such efforts, the focus has ranged from accounts of ‘information’ or ‘network’ society (Castells, 2004; Kallinikos, 2006) and changes in the organisation of work (Boltanski and Chiapello 2005; Sennett, 2006; Julkunen, 2008) to accounts of ‘detraditionalisation’ and ‘individualisation’ (Giddens, 1991; Beck, 1992; Beck et al., 1994; Beck and Beck-Gernsheim, 2002; Touraine, 2002). In addition to these efforts to understand the further evolution of modernity, the idea of ‘cosmopolitanism’ has also emerged as a critique and reaction against ‘methodological nationalism’ (Beck, 2000; Chernilo, 2006), which may be interpreted as a reaction against the tradition of associating social issues with one particular nation state.

This study shares with sociological literature the interest in the evolution of modern societies – and the methods of relating particular events to general transformations. However, in sociological literature, there is often a lack of the political dimension of societal development and change in the sense that the study of the contents of state and government policies has usually been left to the discipline of political science. Thus, in an effort to relate political reforms to greater socio-historical transformations, this study will share a field of interest with the discipline of political science as well.

Particularly in Anglo-American political science there is a quite strong and vibrant tradition of comparative historical research about the relationship between the modern state apparatus and economic production according to the (capitalist) logic of supply and demand (for a review, see e.g. Mahoney and Ruschmeyer, 2003). Often aiming at quite holistic research settings, this branch of academic research has dealt with the question how politics and political forces are related to practical solutions in the management of modern nation states and their economies. Starting from the analysis of the emergence of various welfare states in industrialised societies (Wilensky, 1975) this academic tradition with its various sub-traditions has moved towards the study of ‘varieties of capitalism’ (Hall and Soskice, 2001) and the study of how political forces have reacted to the emergence of a new international economic order since the 1970s (e.g. McNamara, 1998; Scharpf and Schmidt, 2000; Pierson, 2001; Huber and Stephens, 2001; Blyth, 2002). Related to this Anglo-American branch of political science literature is a slightly more specific branch that to some extent can perhaps be regarded as its offspring, namely the branch of comparative welfare state studies. Particularly relevant for this study is the part of this literature that includes the Nordic countries in the analysis. In this respect, it is possible to detect an evolution from pioneering comparisons between West European ‘centres’ and ‘peripheries’ (Flora et al., 1983; Rokkan and Urwin, 1983; Flora, 1986) to the study of ‘welfare regimes’ (Esping-Andersen, 1990, 1999), and more recently, towards the study of the ‘continuity of the Nordic model’ (Kuhnle, 2000; Kuhnle and Alestalo, 2000; Rothstein, 2000; Kautto et al., 2001; Kangas and Palme, 2005; for a cross disciplinary approach, see Kettunen and Petersen, 2011) and the study of the emergence of the principle of ‘reciprocity’ or ‘workfare’ in welfare politics (Gilbert, 1992; Lødemel and Trickey, 2001; Jessop, 2002; Kvist, 2003; Kildahl and Kuhnle, 2005; Dean, 2007; Hvinden and Johansson, 2007; van Aerschot, 2008).

In addition to the aforementioned perspectives borrowed from political science and sociology, there is one more perspective that this study will seek to adopt. By including a historical dimension in the study, the aim here will be to establish a critical distance towards contemporary political reforms and societal transformations. Arguably, this distance is sometimes missing from studies in the field of political science in the sense that conceptualisations related to the present time are taken for granted. Michel Foucault termed the effort to create this critical distance a ‘history of the present’ (see also Kettunen, 2008, pp. 129–30). It seems that this kind of critical distance is most needed in relation to contemporary conceptualisations of ‘globalisation’ and the political challenges that are associated with this contested concept.

Methods of Research and Observation

In establishing a critical perspective with regard to contemporary socio-economic transformations, a study of history seems appropriate. But in order to avoid treating history as a linear progression towards the present, it also seems appropriate to try and distinguish between different historical periods and breaking points between these periods. In this study, the Giddensian notion of ‘episodic history’ will serve as a starting point for such a periodisation (Giddens, 1984, pp. 244–6; for an application, see Broman-Kananen, 2005, p. 33). In short, this understanding of history implies that instead of linear progression, historical change contains important breaking points, after which change assumes a new direction and a new logic. Thus, identifying one particular course of change in a particular historical period does not imply that one can necessarily predict the future course of history. Thus, an episodic understanding of history recognises both the contingency associated with historical change, and the possibility of stable and linear-like progression within a particular period. Chapter 2 will deal with the periodisation adopted in this study with regard to socio-economic change in the Nordic countries.

As the time frame is fairly broad – beginning from the eighteenth century and stretching until the early twenty-first century – the choice of the level of analysis is obviously a crucial choice as well. When previous studies have made efforts to achieve general characterisations of socio-economic change, they have usually sought to include as many countries as possible – for instance the totality of Organisation for Economic Co-operation and Development (OECD) countries or even larger numbers (see e.g. Esping-Andersen, 1990; Huber and Stephens, 2001; Swank, 2002; Iversen, 2005). When the number of countries is increased, although allowing for the identification of general trends, this is inevitably at the cost of precision with regard to the analysis of individual countries (in political science a related dilemma has been termed the ‘small N’ versus the ‘big N’ dilemma, see e.g. Blyth, 2002, p. 13; Mahoney and Ruschmeyer, 2003, p. 17). Although the strength of such research settings is the potential level of generality achieved, the weakness is that a great deal of information is lost in the crude quantitative observations that are made about each individual country. Problems regarding the loss of country-specific information may be solved by carrying out studies with international research teams (see e.g. Scharpf and Schmidt, 2000; Taylor-Gooby, 2004, 2005). If, however, findings are not compared along the way of the analysis, it is rather difficult to decide what the most important similarities and differences are, and findings on the general level may remain without the nuance that they could have had.

This study attempts to find a balance with regard to the level of historical analysis of socio-economic change by selecting three Nordic countries as main entities of comparison: i.e. Sweden, Denmark and Finland. The idea is that choosing these three countries will allow one to make observations that are potentially valid for all Nordic countries, even though Norway, Iceland and the Färö Islands are excluded from the study. The selection of countries has been made on the basis of geographical distribution and in an effort to include a representative selection of the Nordic ‘Social Democratic’ welfare states (cf. Lloyd, 2011). It is interesting to compare developments in these countries, where Social Democratic representation in politics has been strong, trade unions powerful and mutual exchange of ideas frequent (Petersen, 2011). Sweden, historically an old Empire and located geo-politically in the middle of the Nordic countries is usually regarded as a prime example of Scandinavia in international comparisons (Hilson, 2008, p. 179). Although this remains a topic of debate, it appears sensible to include this ‘model country’ in a comparative study. Including Denmark and Finland is justifiable on the grounds that they are border countries in the Nordic region; Finland sharing a long border with Russia, and Denmark being in a favourable position with regard to overseas trade with the west. Selecting three countries as main entities of comparison will, given the large time frame, allow for a detailed study of historical, cultural and political characteristics of each country.

Despite being interesting cases in modern socio-economic development, the Nordic countries are not similar in all respects. The ‘East-Nordic’ modern Swedish state is rather all-encompassing, having historically included both landowning peasants and organised workers in the processes of state formation. ‘West-Nordic’ Denmark has, despite a tradition of absolutism and serfdom, retained more liberal cultural and political traits against a tradition of stronger opposition between political elites and rural groups (see e.g. Knudsen and Rothstein, 1994, p. 218). Thus, including these two countries will provide an opportunity to compare two different historical traditions. Furthermore, including Finland will provide the opportunity to observe how a ‘late-comer’ follows the historical experiences of other Nordic countries. Norway has been excluded from the study since, in terms of more contemporary developments, it differs slightly from the three selected countries. Sharing features with both Finland and the two Nordic prime examples Sweden and Denmark, Norway was united with Sweden between 1814–1905 (Stråth, 2005), but unlike Sweden, Denmark and Finland, Norway later on adopted a path of socio-economic development outside the European Union (EU). Since the 1970s Norway has also been supported economically by large oil reserves. Sweden, Denmark and Finland thus constitute, perhaps, the most similar cases among the Nordic countries, which should allow for fruitful comparison of societal development.

Historical periodisations are always subject to debate, and by identifying a number of temporal divisions, this study does not wish to imply that the periodisation adopted here has somehow existed independent of historical interpretation (cf. Kettunen, 2008, p. 131). On the contrary, historical periodisation will be posited after a discussion of various persp...