Are the Nordic Countries an Exception to Hayek's The Road to Serfdom?
One of the most common questions I receive when presenting the results of my coauthored work with Gabriel Benzecry and Nicholas Reinarts using V-Dem’s State Ownership of the Economy data to examine Hayek’s hypothesis in The Road to Serfdom on the incompatibility of socialism and democratic freedom, is that Nordic countries (Sweden, Denmark, Finland, Iceland, and Norway) offer an important counterexample. Sure, socialist regimes in the past resulted in tyranny, but now we have more knowledge, better constraints, and are more enlightened and aware of the potential pitfalls.
Do the Nordic countries offer a modern counterexample? We can evaluate this claim using V-Dem’s State Ownership of the Economy data for these Nordic countries, where 0 = complete state ownership or control of the economy and 4 = complete private ownership of the economy:
According to the data, these Nordic countries are not, and never were, primarily socialist. The closest example to a 2 on the 4-point scale, is Norway during Nazi Germany’s fascist occupation. All of these countries are, according to the data, mixed economies, with Sweden even falling into the moderate to heavy capitalist range.
Yes, the Nordic countries rank favorably when it comes to democratic freedom. But they are not socialist. They are capitalist countries with large welfare states (which, arguably, could not be financed under a socialist system). This data is also confirmed by their Economic Freedom scores and world ranking from Fraser Institute’s Economic Freedom of the World Report (the United States is 8.14/10 - 5th):
Denmark: 8.1/10 - 7th
Iceland: 7.93/10 - 14th
Sweden: 7.81/10 - 17th
Finland: 7.81/10 -17th
Norway 7.6/10 - 29th
The Nordic countries do not offer a modern counterexample to Hayek’s hypothesis.