:Nordic model

File:Nordiske-flag.jpg, from left to right: Finland, Iceland, Norway, Sweden, and Denmark]]

The Nordic model has been characterized as follows:{{cite book|title=The Nordic Model: Embracing globalization and sharing risks|url=http://www.arhiv.svrez.gov.si/fileadmin/svez.gov.si/pageuploads/docs/Strategija_razvoja_Slovenije/The_Nordic_Model.PDF#page=1&zoom=auto,371,608|format=PDF|first1=Torben M.|last1=Andersen|first2=Bengt|last2=Holmström|first3=Seppo|last3=Honkapohja|first4=Sixten|last4=Korkman|first5=Hans Tson|last5=Söderström|first6=Juhana|last6=Vartiainen|publisher=Taloustieto Oy|isbn=978-9516284685|location=Yliopistopaino, Helsinki|year=2007|accessdate=26 July 2016|archive-date=6 June 2013|archive-url=https://web.archive.org/web/20130606231627/http://www.arhiv.svrez.gov.si/fileadmin/svez.gov.si/pageuploads/docs/Strategija_razvoja_Slovenije/The_Nordic_Model.PDF#page=1&zoom=auto,371,608|url-status=live}}

• An elaborate social safety net, in addition to public services such as free education and universal healthcare in a largely tax-funded system.{{cite web| url=https://sweden.se/society/health-care-in-sweden/| title=Healthcare in Sweden| publisher=Sweden| date=12 June 2015| access-date=3 December 2019| archive-date=17 October 2019| archive-url=https://web.archive.org/web/20191017055443/https://sweden.se/society/health-care-in-sweden/| url-status=live}}
• Strong property rights, contract enforcement and overall ease of doing business.{{cite web |url=http://www.doingbusiness.org/rankings |title=Economy Rankings |publisher=The World Bank Group |website=Doing Business |year=2016 |access-date=26 July 2016 |archive-date=6 February 2015 |archive-url=https://web.archive.org/web/20150206025936/http://www.doingbusiness.org/rankings |url-status=live }}
• Public pension plans.
• High levels of democracy as seen in the Freedom in the World survey and Democracy Index.20 March 2020. [https://worldhappiness.report/ed/2020/the-nordic-exceptionalism-what-explains-why-the-nordic-countries-are-constantly-among-the-happiest-in-the-world/ The Nordic Exceptionalism: What Explains Why the Nordic Countries Are Constantly Among the Happiest in the World.] {{Webarchive|url=https://web.archive.org/web/20210826125507/https://worldhappiness.report/ed/2020/the-nordic-exceptionalism-what-explains-why-the-nordic-countries-are-constantly-among-the-happiest-in-the-world/ |date=26 August 2021 }} WHR 2020. Chapter 7. Retrieved: 2 September 2021.{{Cite web|url=https://www.eiu.com/n/campaigns/democracy-index-2020/|title=Democracy Index 2020: In sickness and in health?|website=EIU.com|url-access=registration|access-date=2 February 2021|archive-date=3 March 2021|archive-url=https://web.archive.org/web/20210303040250/https://www.eiu.com/n/campaigns/democracy-index-2020/|url-status=live}}
• Free trade combined with collective risk sharing (welfare social programmes and labour market institutions) which has provided a form of protection against the risks associated with economic openness.
• Little product market regulation. Nordic countries rank very high in product market freedom according to OECD rankings.
• Low levels of corruption. In Transparency International's 2022 Corruption Perceptions Index, Denmark, Finland, Norway and Sweden were ranked among the top 10 least corrupt of the 180 countries evaluated.{{cite web |url=https://www.transparency.org/en/cpi/2022 |title=CPI 2022 |date=31 January 2023 |publisher=Transparency International |access-date=31 January 2023 |archive-date=16 April 2023 |archive-url=https://web.archive.org/web/20230416180715/https://www.transparency.org/en/cpi/2022 |url-status=live }}
• A partnership between employers, trade unions and the government, whereby these social partners negotiate the terms to regulating the workplace amongst themselves, rather than the terms being imposed by law.{{cite web |url=http://www.nordiclabourjournal.org/i-fokus/in-focus-2001/the-nordic-model |title=The Nordic Model |publisher=Nordic Labour Journal |series=In focus 2001 |access-date=26 July 2016 |archive-date=7 September 2019 |archive-url=https://web.archive.org/web/20190907024505/http://www.nordiclabourjournal.org/i-fokus/in-focus-2001/the-nordic-model |url-status=live }}Anders Kjellberg (2017) [https://web.archive.org/web/20170418083350/http://portal.research.lu.se/ws/files/23904978/Kjellberg_FSNumhauserHenning_Self_Regulation_State_Regulation.pdf "Self-regulation versus State Regulation in Swedish Industrial Relations"]. In Mia Rönnmar and Jenny Julén Votinius (eds.) Festskrift till Ann Numhauser-Henning. Lund: Juristförlaget i Lund 2017, pp. 357–383. Sweden has decentralised wage co-ordination while Finland is ranked the least flexible. The changing economic conditions have given rise to fear among workers as well as resistance by trade unions in regards to reforms.
• High trade union density and collective bargaining coverage.{{cite book |last1=Bruhn |first1=Anders |last2=Kjellberg |first2=Anders |last3=Sandberg |first3=Åke |chapter=A New World of Work Challenging Swedish Unions |website=Lund University |year=2013 |chapter-url=https://portal.research.lu.se/en/publications/a-new-world-of-work-challenging-swedish-unions |access-date=25 September 2022 |pages=126–186 |editor-last=Sandberg |editor-first=Åke |editor-last2=Allvin |editor-first2=Michael |title=Nordic Lights. Work, Management and Welfare in Scandinavia |publication-place=Stockholm |isbn=978-9186949372 |oclc=860835691 |archive-date=25 September 2022 |archive-url=https://web.archive.org/web/20220925193128/https://portal.research.lu.se/en/publications/a-new-world-of-work-challenging-swedish-unions |url-status=live }} In 2019, trade union density was 90.7% in Iceland, 67.0% in Denmark, 65.2% in Sweden, 58.8% in Finland, and 50.4% in Norway; in comparison, trade union density was 16.3% in Germany and 9.9% in the United States.{{cite web |url=https://stats.oecd.org/Index.aspx?DataSetCode=TUD |title=Trade Union Density |website=OECD StatExtracts |publisher=OECD |year=2013 |access-date=26 July 2016 |archive-date=13 August 2019 |archive-url=https://web.archive.org/web/20190813183237/https://stats.oecd.org/Index.aspx?DataSetCode=TUD |url-status=live }} Additionally, in 2018, collective bargaining coverage was 90% in Iceland, 88.8% in Finland (2017), 88% in Sweden, 82% in Denmark, and 69% in Norway; in comparison collective bargaining coverage was 54% in Germany and 11.7% in the United States.{{cite web|title=Collective bargaining coverage|url=https://stats.oecd.org/index.aspx?DataSetCode=CBC|access-date=30 June 2021|publisher=OECD|archive-date=3 November 2017|archive-url=https://web.archive.org/web/20171103135859/http://stats.oecd.org/Index.aspx?DataSetCode=CBC|url-status=live}} The lower union density in Norway is mainly explained by the absence of a Ghent system since 1938. In contrast, Denmark, Finland and Sweden all have union-run unemployment funds.{{cite journal |series=Transfer: European Review of Labour and Research |url=http://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=155589&fileOId=625408 |format=pdf |via=Lund University |date=4 April 2006 |first=Anders |last=Kjellberg |title=The Swedish unemployment insurance – will the Ghent system survive? |journal=Transfer European Review of Labour and Research; Quarterly Review of the Etui Research Department |volume=12 |pages=87–98 |issn=1024-2589 |doi=10.1177/102425890601200109 |s2cid=153819218 |access-date=26 July 2016 |archive-date=4 March 2016 |archive-url=https://web.archive.org/web/20160304062553/http://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=155589&fileOId=625408 |url-status=live }}
• The Nordic countries received the highest ranking for protecting workers rights on the International Trade Union Confederation 2014 Global Rights Index, with Denmark being the only nation to receive a perfect score.{{cite news |url=https://www.theguardian.com/commentisfree/2014/may/22/worker-world-index-employment-rights-inequality |title=Where's the worst place to be a worker? Most of the world |first=David |last=Wearing |date=22 May 2014 |newspaper=The Guardian |access-date=27 July 2016 |archive-date=6 November 2018 |archive-url=https://web.archive.org/web/20181106234242/https://www.theguardian.com/commentisfree/2014/may/22/worker-world-index-employment-rights-inequality |url-status=live }}
• Significant public spending, with Norway at 48.3% of GDP, Sweden at 49.4%, Iceland at 49.8%, Denmark at 50.8% and Finland at 55.8%. This is high even compared to the OECD average of 46.3%.{{cite web |date=13 March 2025 |year= |title=Public finance and budgets {{!}} OECD |url=https://www.oecd.org/en/topics/policy-issues/public-finance-and-budgets.html |url-status=live |access-date= |work= |publisher=OECD}}
• Overall tax burdens as a percentage of GDP are high, with 35.9%, 41.4%, 41.4%, 42.4% and 43.4% for Iceland, Norway, Sweden, Finland and Denmark respectively. This is compared to the OECD average of 33.9%.{{Cite book |url=https://doi.org/10.1787/c87a3da5-en |title=Revenue Statistics 2024 |date=21 November 2024 |publisher=OECD |isbn=978-92-64-42218-6 |series=Revenue Statistics}} The Nordic countries also have a relatively progressive taxation system in place; this along with their generous welfare systems have made them among the least unequal countries in the world.{{Cite journal |last=Magne Mogstad, Kjell Salvanes, Gaute Torsvik |first= |date=12 February 2025 |title=Income Equality in The Nordic Countries: Myths, Facts, and Lessons |url=https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5133608 |journal=Becker Friedman Institute for Economics |pages=20 |via=Social Science Research Network}}
• The United Nations World Happiness Reports show that the happiest nations are concentrated in Northern Europe. The Nordics ranked highest on the metrics of real GDP per capita, healthy life expectancy, having someone to count on, perceived freedom to make life choices, generosity and freedom from corruption.{{cite news |url=http://www.huffingtonpost.com/2013/09/10/happiest-countries_n_3894274.html |title=The Happiest Countries In The World |first=Carolyn |last=Gregoire |date=1 August 2015 |publication-date=10 September 2013 |work=The Huffington Post |access-date=27 July 2016 |archive-date=20 October 2017 |archive-url=https://web.archive.org/web/20171020041525/https://www.huffingtonpost.com/2013/09/10/happiest-countries_n_3894274.html |url-status=live }} The Nordic countries place in the top 10 of the World Happiness Report 2018, with Finland and Norway taking the top spots.{{cite news|url=https://www.theguardian.com/world/2017/mar/20/norway-ousts-denmark-as-worlds-happiest-country-un-report|title=Happiness is on the wane in the US, UN global report finds|last=Rankin|first=Jennifer|date=20 March 2017|work=The Guardian|access-date=6 August 2017|archive-date=17 March 2020|archive-url=https://web.archive.org/web/20200317205655/https://www.theguardian.com/world/2017/mar/20/norway-ousts-denmark-as-worlds-happiest-country-un-report|url-status=live}}

The Nordic model is underpinned by a mixed-market capitalist economic system that features high degrees of private ownership,{{cite book|chapter=Revisiting the Nordic Model: Evidence on Recent Macroeconomic Performance|last=Sachs|first=Jeffrey|year=2006|publisher=Center for Capitalism & Society, Venice Summer Institute|quote=First, like the Anglo-Saxon economies, the Nordic economies are overwhelmingly private-sector owned, open to trade, and oriented to international markets. Financial, labor, and product market forces operate powerfully throughout non-state sector. In short, these are capitalist economies. ... Second, there is no single Nordic model, and still less, an unchanging Nordic model. What has been consistently true for decades is a high level of public social outlays as a share of national income, and a sustained commitment to social insurance and redistributive social support for the poor, disabled, and otherwise vulnerable parts of the population.|doi=10.7551/mitpress/9780262015318.003.0012|title=Perspectives on the Performance of the Continental Economies|pages=387–412|isbn=978-0262015318|citeseerx=10.1.1.456.340}}{{cite web|url=http://www.investopedia.com/articles/investing/100714/nordic-model-pros-and-cons.asp|title=The Nordic Model: Pros and Cons|date=25 June 2013|last=McWhinney|first=James E.|publisher=Investopedia|access-date=16 September 2015|quote=The Nordic model is a term coined to capture the unique combination of free market capitalism and social benefits that have given rise to a society that enjoys a host of top-quality services, including free education and free healthcare, as well as generous, guaranteed pension payments for retirees. These benefits are funded by taxpayers and administered by the government for the benefit of all citizens.|archive-date=9 February 2019|archive-url=https://web.archive.org/web/20190209091218/https://www.investopedia.com/articles/investing/100714/nordic-model-pros-and-cons.asp|url-status=live}} with the exception of Norway which includes a large number of state-owned enterprises and state ownership in publicly listed firms.

The Nordic model is described as a system of competitive capitalism combined with a large percentage of the population employed by the public sector, which amounts to roughly 30% of the work force, in areas such as healthcare and higher education. In Norway, Finland, and Sweden, many companies and industries are state-run or state-owned{{cite web|url=https://vnk.fi/documents/10616/1221181/State_Shareholdings_in_Finland_2006.pdf/50a2bbc6-fbd3-4e80-9fda-a52f8d36893d|title=State Shareholdings in Finland|website=Valtioneuvoston kanslia|publisher=Prime Minister's Office/Ministry of Trade and Industry|date=2006|accessdate=31 August 2021|archive-date=26 August 2021|archive-url=https://web.archive.org/web/20210826104358/https://vnk.fi/documents/10616/1221181/State_Shareholdings_in_Finland_2006.pdf/50a2bbc6-fbd3-4e80-9fda-a52f8d36893d|url-status=live}}{{cite web | title=State shareholdings and parliamentary authorisations | website=Valtioneuvoston kanslia | date=8 April 2022 | url=https://vnk.fi/en/state-shareholdings-and-parliamentary-authorisations | access-date=28 April 2022 | archive-date=26 May 2022 | archive-url=https://web.archive.org/web/20220526105407/https://vnk.fi/en/state-shareholdings-and-parliamentary-authorisations | url-status=live }}{{cite web|url=https://www.government.se/government-policy/state-owned-enterprises/|title=State-owned enterprises|website=Regeringskansliet|publisher=Government Offices of Sweden|date=7 November 2014|accessdate=31 August 2021|archive-date=26 August 2021|archive-url=https://web.archive.org/web/20210826104716/https://www.government.se/government-policy/state-owned-enterprises/|url-status=live}}{{cite web|url=https://www.regjeringen.no/globalassets/departementene/nfd/bilder/eierskap/engelsk-side/the-state-ownership-report_web.pdf|title=The State Ownership Report|website=Regjeringen|publisher=Ministry of Trade, Industry and Fisheries|date=2019|accessdate=31 August 2021|archive-date=7 August 2021|archive-url=https://web.archive.org/web/20210807105545/https://www.regjeringen.no/globalassets/departementene/nfd/bilder/eierskap/engelsk-side/the-state-ownership-report_web.pdf|url-status=live}} like utilities, mail, rail transport, airlines, electrical power industry, fossil fuels, chemical industry, steel mill, electronics industry, machine industry, aerospace manufacturer, shipbuilding, and the arms industry.{{cite web|last=Bruening|first=Matt|date=5 August 2017|url=https://www.peoplespolicyproject.org/2017/08/05/nordic-socialism-is-realer-than-you-think/|title=Nordic Socialism Is Realer Than You Think|publisher=People's Policy Project|accessdate=31 August 2021|archive-date=26 August 2021|archive-url=https://web.archive.org/web/20210826105954/https://www.peoplespolicyproject.org/2017/08/05/nordic-socialism-is-realer-than-you-think/|url-status=live}} In 2013, The Economist described its countries as "stout free-traders who resist the temptation to intervene even to protect iconic companies", while also looking for ways to temper capitalism's harsher effects and declared that the Nordic countries "are probably the best-governed in the world."{{cite news|url=https://www.economist.com/news/special-report/21570835-nordic-countries-are-probably-best-governed-world-secret-their|title=The secret of their success|newspaper=The Economist|date=31 January 2013|accessdate=31 August 2021|archive-date=10 October 2017|archive-url=https://web.archive.org/web/20171010033845/https://www.economist.com/news/special-report/21570835-nordic-countries-are-probably-best-governed-world-secret-their|url-status=live}} Some economists have referred to the Nordic economic model as a form of "cuddly capitalism", with low levels of inequality, generous welfare states, and reduced concentration of top incomes, contrasting it with the more "cut-throat capitalism" of the United States, which has high levels of inequality and a larger concentration of top incomes, among other social inequalities.{{cite web|url=http://blogs.lse.ac.uk/europpblog/2014/01/29/lower-levels-of-inequality-are-linked-with-greater-innovation-in-economies/|title=Lower levels of inequality are linked with greater innovation in economies|first1=Jonathan|last1=Hopkin|author-link1=Jonathan Hopkin|first2=Victor|last2=Lapuente|first3=Lovisa|last3=Moller|date=29 January 2014|publisher=London School of Economics|accessdate=27 June 2016|archive-date=19 February 2016|archive-url=https://web.archive.org/web/20160219180907/http://blogs.lse.ac.uk/europpblog/2014/01/29/lower-levels-of-inequality-are-linked-with-greater-innovation-in-economies/|url-status=live}}{{cite book|title = Social Democratic America|first=Kenworthy|last=Lane|author-link=Lane Kenworthy|year=2013|isbn=978-0199322527|publisher=Oxford University Press|pages=[https://books.google.com/books?id=eVTSAQAAQBAJ&pg=PA88 88]–93|location=New York City}}

As a result of the Sweden financial crisis of 1990–1994, Sweden implemented economic reforms that were focused on deregulation and the strengthening of competition laws. Despite this however, Sweden still has the highest government spending-to-GDP ratio of all the Nordic countries, it retains national-level sectoral bargaining unlike Denmark and Iceland, with over 650 national-level bargaining agreements,{{cite web | url=https://lo.se/english/the_collective_agreement | title=The Collective Agreement | date=6 May 2013 | access-date=21 December 2023 | archive-date=21 December 2023 | archive-url=https://web.archive.org/web/20231221130138/https://lo.se/english/the_collective_agreement | url-status=live }} it retains the Ghent system unlike Norway and Iceland and consequently has the second-highest rate of unionization in the world.{{cite web | url=https://nordics.info/show/artikel/solidaristic-wage-policy#:~:text=While%20wage%20solidarity%20remains%20a,greater%20range%20for%20wage%20dispersion | title=Solidaristic wage policy | date=18 February 2019 | access-date=20 December 2023 | archive-date=20 December 2023 | archive-url=https://web.archive.org/web/20231220022515/https://nordics.info/show/artikel/solidaristic-wage-policy#:~:text=While%20wage%20solidarity%20remains%20a,greater%20range%20for%20wage%20dispersion | url-status=live }}{{cite journal|last1=Erlandsen|first1=Espen|last2=Lundsgaard|first2=Jens|year=2007|title=How Regulatory Reforms in Sweden Have Boosted Productivity|journal=OECD Economics Department Working Paper|series=OECD Economics Department Working Papers |location=Paris|publisher=OECD Publishing|issue=577|doi=10.1787/084244078600|doi-access=free}} Despite being one of the most equal OECD nations, from 1985 to the 2010s Sweden saw the largest growth in income inequality among OECD economies.{{cite book|url=https://www.oecd.org/els/soc/dividedwestandwhyinequalitykeepsrising.htm|title=Divided We Stand: Why Inequality Keeps Rising|edition=paperback|location=Paris|publisher=OECD Publishing|date=2011|isbn=978-9264111639|accessdate=30 June 2021|archive-date=9 July 2021|archive-url=https://web.archive.org/web/20210709182745/https://www.oecd.org/els/soc/dividedwestandwhyinequalitykeepsrising.htm|url-status=live}}{{cite news|last=Nilsson|first=Patricia|date=29 August 2018|url=https://www.ft.com/content/3b9566e4-941a-11e8-b747-fb1e803ee64e|title=Swedish society's big divisions – in 6 charts|work=Financial Times|accessdate=31 August 2021|archive-date=19 October 2021|archive-url=https://web.archive.org/web/20211019034218/https://www.ft.com/content/3b9566e4-941a-11e8-b747-fb1e803ee64e|url-status=live}} Other effects of the 1990s reforms was the substantial growth of mutual fund savings, which largely began with the government subsidizing mutual fund savings through the so-called Allemansfonder program in the 1980s;{{cite news|last=Hoikkala|first=Hanna|date=22 May 2019|url=https://www.bloombergquint.com/business/swedes-become-world-champions-with-100-stashing-cash-in-funds|title=Swedes Become World Champions With 100% Stashing Cash in Funds|website=BloombergQuint|agency=Bloomberg News|accessdate=31 August 2021|archive-date=19 October 2021|archive-url=https://web.archive.org/web/20211019034218/https://www.bloombergquint.com/business/swedes-become-world-champions-with-100-stashing-cash-in-funds|url-status=live}} today 4 out of 5 people aged 18–74 have fund savings.{{cite journal|last1=Heyman|first1=Fredrik|last2=Norbäck|first2=Pehr-Johan|last3=Persson|first3=Lars|date=24 June 2019|title=The Turnaround of the Swedish Economy: Lessons from Large Business Sector Reforms|journal=The World Bank Research Observer|volume=34|issue=2|pages=274–308|doi=10.1093/wbro/lky007|issn=0257-3032|hdl=10986/35085|hdl-access=free}}

The state of Norway has ownership stakes in many of the country's largest publicly listed companies, owning 37% of the Oslo stock market{{cite news|url=https://www.economist.com/news/special-report/21570842-oil-makes-norway-different-rest-region-only-up-point-rich|title=Norway: The rich cousin – Oil makes Norway different from the rest of the region, but only up to a point|date=2 February 2013|newspaper=The Economist|access-date=1 January 2016|archive-date=15 March 2018|archive-url=https://web.archive.org/web/20180315074202/https://www.economist.com/news/special-report/21570842-oil-makes-norway-different-rest-region-only-up-point-rich|url-status=live}} and operating the country's largest non-listed companies, including Equinor and Statkraft. In January 2013, The Economist reported that "after the second world war the government nationalised all German business interests in Norway and ended up owning 44% of Norsk Hydro's shares. The formula of controlling business through shares rather than regulation seemed to work well, so the government used it wherever possible. 'We invented the Chinese way of doing things before the Chinese', says Torger Reve of the Norwegian Business School." The government also operates a sovereign wealth fund, the Government Pension Fund of Norway, whose partial objective is to prepare Norway for a post-oil future but "unusually among oil-producing nations, it is also a big advocate of human rights{{snd}}and a powerful one, thanks to its control of the Nobel peace prize."

Norway is the only major economy in the north of Europe where younger generations are getting richer, with a 13% increase in disposable income income for 2018, bucking the trend seen in other european-northern nations of Millennials becoming poorer than the generations which came before.{{cite news|last=Savage|first=Maddy|date=10 July 2018|title=Unlike most millennials, Norway's are rich|url=http://www.bbc.com/capital/story/20180709-unlike-most-millennials-norways-are-rich|agency=BBC News|accessdate=11 July 2018|archive-date=11 July 2018|archive-url=https://web.archive.org/web/20180711013838/http://www.bbc.com/capital/story/20180709-unlike-most-millennials-norways-are-rich|url-status=live}}

[[File:Social democratic parties in Nordic countries - percentage.jpg|thumb|300px|Vote percentage over time of the main social democratic parties in Denmark, Finland, Sweden, and Norway:{{cite book |last1=Brandal |first1=Nik |title=The Nordic model of social democracy |last2=Bratberg |first2=Øivind |last3=Thorsen |first3=Dag |date=2013 |publisher=Springer |isbn=978-1349436699 |page=2 |doi=10.1057/9781137013279}}

{{legend|#fd0100|Labour Party (Norway)}}

{{legend|#c10001|Swedish Social Democratic Party}}

{{legend|#fcc0bf|Social Democrats (Denmark)}}

{{legend|#ff7266|Social Democratic Party of Finland}}]]

Social democrats have played a pivotal role in shaping the Nordic model, with policies enacted by social democrats being pivotal in fostering the social cohesion in the Nordic countries.{{cite book |last1=Brandal |first1=Nik |title=The Nordic model of social democracy |last2=Bratberg |first2=Øivind |last3=Thorsen |first3=Dag |date=2013 |publisher=Springer |isbn=978-1349436699 |pages=vi & 159 |doi=10.1057/9781137013279}} Among political scientists and sociologists, the term social democracy has become widespread to describe the Nordic model due to the influence of social democratic party governance in Sweden and Norway, in contrast to other classifications such as liberal or Christian democratic.{{cite journal |last1=Ferragina |first1=Emanuele |last2=Seeleib-Kaiser |first2=Martin |date=October 2011 |title=Welfare Regime Debate: Past, Present, Futures? |url=https://halshs.archives-ouvertes.fr/halshs-01347336/file/Welfare_regime_debate.pdf |url-status=live |journal=Policy and Politics |publisher=Policy Press |volume=39 |issue=4 |pages=583–611 |doi=10.1332/030557311X603592 |s2cid=146986126 |archive-url=https://web.archive.org/web/20210729152045/https://halshs.archives-ouvertes.fr/halshs-01347336/file/Welfare_regime_debate.pdf |archive-date=29 July 2021 |access-date=29 July 2021}} According to sociologist Lane Kenworthy, the meaning of social democracy in this context refers to a variant of capitalism based on the predominance of private property and market allocation mechanisms alongside a set of policies for promoting economic security and opportunity within the framework of a capitalist economy as opposed to a political ideology that aims to replace capitalism.{{cite journal |last=Kenworthy |first=Lane |date=January 2014 |title=America's Social Democratic Future |url=http://www.foreignaffairs.com/articles/140345/lane-kenworthy/americas-social-democratic-future |url-status=live |journal=Foreign Affairs |volume=93 |issue=January/February 2014 |archive-url=https://web.archive.org/web/20161224161458/http://foreignaffairs.com/articles/140345/lane-kenworthy/americas-social-democratic-future/ |archive-date=24 December 2016 |access-date=2 April 2014}}{{cite web |last=Kenworthy |first=Lane |date=1 March 2016 |title=Social Democracy |url=https://thenextsystem.org/social-democracy |url-status=live |archive-url=https://web.archive.org/web/20200508052539/https://thenextsystem.org/social-democracy |archive-date=8 May 2020 |access-date=27 April 2020 |website=The Next System Project |quote=The chief goals social democracy attempts to realize, and that distinguish it from other actually-existing capitalisms, are economic security, equality (low inequality) of opportunity, and shared prosperity. ... Modern social democracy consists, to put it simply, of market capitalism plus generous and employment-friendly social policy... .}}

While many countries have been categorized as social democratic, the Nordic countries have been the only ones to be constantly categorized as such. In a review by Emanuele Ferragina and Martin Seeleib-Kaiser of works about the different models of welfare states, apart from Belgium and the Netherlands, categorized as "medium-high socialism", the Scandinavian countries analyzed (Denmark, Norway, and Sweden) were the only ones to be categorized by sociologist Gøsta Esping-Andersen as "high socialism", which is defined as socialist attributes and values (equality and universalism) and the social democratic model, which is characterized by "a high level of decommodification and a low degree of stratification. Social policies are perceived as 'politics against the market.'" They summarized the social democratic model as being based on "the principle of universalism, granting access to benefits and services based on citizenship. Such a welfare state is said to provide a relatively high degree of autonomy, limiting the reliance on family and market."

According to Johan Strang, since the 1990s, politicians, researchers and the media have shifted to explaining the Nordic model with cultural rather than political factors. These cultural explanations benefit neoliberalism, whose rise this cultural phenomenon coincided with. By the 2010s, politics has been re-entering the conversation on the Nordic model.

Some academics have theorized that Lutheranism, the dominant traditional religion of the Nordic countries, had an effect on the development of social democracy there. Schröder posits that Lutheranism promoted the idea of a nationwide community of believers and led to increased state involvement in economic and social life, allowing for nationwide welfare solidarity and economic co-ordination.{{cite book|last=Schröder|first=Martin|year=2013|title=Integrating Varieties of Capitalism and Welfare State Research|location=London|publisher=Palgrave Macmillan|pages=96, 144–145, 149, 155, 157}}{{cite journal|last=Markkola|first=Pirjo|editor1-last=Kettunen|editor1-first=Pauli|editor2-last=Petersen|editor2-first=Klaus|year=2011|url=https://books.google.com/books?id=4ChHcCoq7f0C&pg=PA102|title=The Lutheran Nordic Welfare States|journal=Beyond Welfare State Models. Transnational Historical Perspectives on Social Policy|location=Cheltenham|publisher=Edward Elgar Publishing|pages=102–118|isbn=978-1849809603|via=Google Books|access-date=27 August 2020|archive-date=3 November 2023|archive-url=https://web.archive.org/web/20231103161406/https://books.google.com/books?id=4ChHcCoq7f0C&pg=PA102#v=onepage&q&f=false|url-status=live}}{{cite journal|last=Kettunen|first=Pauli|year=2010|url=https://helda.helsinki.fi/bitstream/handle/10138/41875/nordwel1.pdf?sequence=1#page=18|title=The Sellers of Labour Power as Social Citizens: A Utopian Wage Work Society in the Nordic Visions of Welfare|journal=NordWel Studies in Historical Welfare State Research|pages=16–45|access-date=11 January 2020|archive-date=5 August 2020|archive-url=https://web.archive.org/web/20200805170126/https://helda.helsinki.fi/bitstream/handle/10138/41875/nordwel1.pdf?sequence=1#page=18|url-status=live}} Esa Mangeloja says that the revival movements helped to pave the way for the modern Finnish welfare state. During that process, the church lost some of its most important social responsibilities (health care, education, and social work) as these tasks were assumed by the secular Finnish state.{{Cite book|url = https://oa.finlit.fi/site/books/10.21435/sfh.25/read/?loc=On_the_Legacy_of_Lutheranism_in_Finland-19.xhtml|doi = 10.21435/sfh.25|title = On the Legacy of Lutheranism in Finland: Societal Perspectives|year = 2019|isbn = 978-9518581355|editor1-last = Sinnemäki|editor1-first = Kaius|editor2-last = Portman|editor2-first = Anneli|editor3-last = Tilli|editor3-first = Jouni|editor4-last = Nelson|editor4-first = Robert H|access-date = 11 September 2020|archive-date = 23 October 2020|archive-url = https://web.archive.org/web/20201023150219/https://oa.finlit.fi/site/books/10.21435/sfh.25/read/?loc=On_the_Legacy_of_Lutheranism_in_Finland-19.xhtml|url-status = live}} Pauli Kettunen presents the Nordic model as the outcome of a sort of mythical "Lutheran peasant enlightenment", portraying the Nordic model as the result of a sort of "secularized Lutheranism";{{cite book|last=Nelson|first=Robert H.|year=2017|url=https://books.google.com/books?id=j4FaDwAAQBAJ|title=Lutheranism and the Nordic Spirit of Social Democracy: A Different Protestant Ethic|location=Bristol|publisher=ISD|pages=21, 121|isbn=978-87-7184-416-0|via=Google Books|access-date=11 January 2020|archive-date=3 November 2023|archive-url=https://web.archive.org/web/20231103161358/https://books.google.com/books?id=j4FaDwAAQBAJ|url-status=live}} however, mainstream academic discourse on the subject focuses on "historical specificity", with the centralized structure of the Lutheran church being but one aspect of the cultural values and state structures that led to the development of the welfare state in Scandinavia.{{cite book|last=Hilson|first=Mary|year=2008|url=https://books.google.com/books?id=m_xi60bdHXoC&pg=PA112|title=The Nordic Model: Scandinavia since 1945|location=London|publisher=Reaktion Books|pages=112–133|isbn=978-1861894618|via=Google Books|access-date=28 February 2020|archive-date=3 November 2023|archive-url=https://web.archive.org/web/20231103161358/https://books.google.com/books?id=m_xi60bdHXoC&pg=PA112#v=onepage&q&f=false|url-status=live}}

The Nordic countries share active labour market policies as part of a social corporatist economic model intended to reduce conflict between labour and the interests of capital. This corporatist system is most extensive in Norway and Sweden, where employer federations and labour representatives bargain at the national level mediated by the government. Labour market interventions are aimed at providing job retraining and relocation.{{cite book|last1=Rosser|first1=Mariana V.|last2=Rosser Jr.|first2=J. Barkley|title=Comparative Economics in a Transforming World Economy|publisher=MIT Press|date= 2003|isbn=978-0262182348|page=226|quote=Liberal corporatism is largely self-organized between labor and management, with only a supporting role for government. Leading examples of such systems are found in small, ethnically homogeneous countries with strong traditions of social democratic or labor party rule, such as Sweden's Nordic neighbors. Using a scale of 0.0 to 2.0 and subjectively assigning values based on six previous studies, Frederic Pryor in 1988 found Norway and Sweden the most corporatist at 2.0 each, followed by Austria at 1.8, the Netherlands at 1.5, Finland, Denmark, and Belgium at 1.3 each, and Switzerland and West Germany at 1.0 each. ... [W]ith the exception of Iceland, all the Nordic countries have higher taxes, larger welfare states, and greater corporatist tendencies than most social market economies.}}

The Nordic labour market is flexible, with laws making it easy for employers to hire and shed workers or introduce labour-saving technology. To mitigate the negative effect on workers, the government labour market policies are designed to provide generous social welfare, job retraining and relocation services to limit any conflicts between capital and labour that might arise from this process.{{cite web|url=http://www.investopedia.com/articles/investing/100714/nordic-model-pros-and-cons.asp|title=The Nordic Model: Pros and Cons|date=25 June 2013|last=McWhinney|first=James E.|publisher=Investopedia|access-date=16 September 2015|quote=The model is underpinned by a capitalist economy that encourages creative destruction. While the laws make it is easy for companies to shed workers and implement transformative business models, employees are supported by generous social welfare programs.|archive-date=9 February 2019|archive-url=https://web.archive.org/web/20190209091218/https://www.investopedia.com/articles/investing/100714/nordic-model-pros-and-cons.asp|url-status=live}}

The Nordic welfare model refers to the welfare policies of the Nordic countries, which also tie into their labour market policies. The Nordic model of welfare is distinguished from other types of welfare states by its emphasis on maximising labour force participation, promoting gender equality, egalitarian, and extensive benefit levels, the large magnitude of income redistribution and liberal use of expansionary fiscal policy.{{cite book |last=Esping-Andersen |first=G. |year=1991 |title=The three worlds of welfare capitalism |location=Princeton, New Jersey |publisher=Princeton University Press}}

While there are differences among the Nordic countries, they all share a broad commitment to social cohesion, a universal nature of welfare provision in order to safeguard individualism by providing protection for vulnerable individuals and groups in society, and maximising public participation in social decision-making. It is characterized by flexibility and openness to innovation in the provision of welfare. The Nordic welfare systems are mainly funded through taxation.{{cite web |url=http://www.norden.org/en/about-nordic-co-operation/areas-of-co-operation/the-nordic-welfare-model/about-the-nordic-welfare-model |title=About the Nordic welfare model |author=The Nordic Council |publisher=Norden |access-date=2 April 2014 |archive-url=https://web.archive.org/web/20140407084537/http://www.norden.org/en/about-nordic-co-operation/areas-of-co-operation/the-nordic-welfare-model/about-the-nordic-welfare-model |archive-date=7 April 2014 |url-status=dead }}

Despite the common values, the Nordic countries take different approaches to the practical administration of the welfare state. Denmark features a high degree of private sector provision of public services and welfare, alongside an assimilation immigration policy. Iceland's welfare model is based on a "welfare-to-work" (see workfare) model while part of Finland's welfare state includes the voluntary sector playing a significant role in providing care for the elderly. Norway relies most extensively on public provision of welfare.

When it comes to gender equality, the Nordic countries hold one of the smallest gaps in gender employment inequality of all OECD countries,{{cite journal|date=May 2018|title=Is the Last Mile the Longest?|url=https://www.oecd.org/els/emp/last-mile-longest-gender-nordic-countries-brief.pdf|journal=Nordic Council of Ministers|via=OECD|access-date=21 April 2019|archive-date=30 June 2019|archive-url=https://web.archive.org/web/20190630135346/https://www.oecd.org/els/emp/last-mile-longest-gender-nordic-countries-brief.pdf|url-status=live}} with less than 8 points in all Nordic countries according to International Labour Organization standards.{{cite web|url=https://www.ilo.org/global/about-the-ilo/multimedia/maps-and-charts/enhanced/WCMS_556528/lang--en/index.htm|title=Which countries have the highest gender gap in the workplace?|website=International Labor Organization|date=6 June 2017|access-date=12 January 2020|archive-date=5 February 2020|archive-url=https://web.archive.org/web/20200205224707/http://www.ilo.org/global/about-the-ilo/multimedia/maps-and-charts/enhanced/WCMS_556528/lang--en/index.htm|url-status=live}} They have been at the front of the implementation of policies that promote gender equality; the Scandinavian governments were some of the first to make it unlawful for companies to dismiss women on grounds of marriage or motherhood. Mothers in Nordic countries are more likely to be working mothers than in any other region and families enjoy pioneering legislation on parental leave policies that compensate parents for moving from work to home to care for their child, including fathers.{{cite web|url=https://www.nikk.no/en/about-nikk/background/family-policy-2009-2011/nordic-family-policies-between-quotas-and-freedom-of-choice/|title=Nordic family policies – between quotas and freedom of choice|last=Moustgaard|first=Ulrikke|date=19 October 2017|website=Nordic Information on Gender|access-date=1 April 2019|archive-url=https://web.archive.org/web/20190523172621/https://www.nikk.no/en/about-nikk/background/family-policy-2009-2011/nordic-family-policies-between-quotas-and-freedom-of-choice/|archive-date=23 May 2019|url-status=dead}} Although the specifics of gender equality policies in regards to the work place vary from country to country, there is a widespread focus in Nordic countries to highlight "continuous full-time employment" for both men and women as well as single parents as they fully recognize that some of the most salient gender gaps arise from parenthood. Aside from receiving incentives to take shareable parental leave, Nordic families benefit from subsidized early childhood education and care and activities for out-of-school hours for those children that have enrolled in full-time education.

The Nordic countries have been at the forefront of championing gender equality and this has been historically shown by substantial increases in women's employment. Between 1965 and 1990, Sweden's employment rate for women in working-age (15–64) went from 52.8% to 81.0%. In 2016, nearly three out of every four women in working-age in the Nordic countries were taking part in paid work. Nevertheless, women are still the main users of the shareable parental leave (fathers use less than 30% of their paid parental-leave-days), foreign women are being subjected to under-representation, and Finland still holds a notable gender pay-gap; the average woman's salary is 83% of that of a man, not accounting for confounding factors such as career choice.{{cite web|url=https://yle.fi/uutiset/osasto/news/thursdays_papers_finlands_gender_pay_gap_our_duty_to_help_and_cheaper_microbreweries/10333748|title=Thursday's papers: Finland's gender pay gap, our duty to help, and cheaper microbreweries|date=2 August 2018|website=YLE|access-date=1 April 2019|archive-date=21 April 2019|archive-url=https://web.archive.org/web/20190421195232/https://yle.fi/uutiset/osasto/news/thursdays_papers_finlands_gender_pay_gap_our_duty_to_help_and_cheaper_microbreweries/10333748|url-status=live}}

The Nordic model has been successful at significantly reducing poverty.{{cite magazine |first=Kevin |last=Drum |date=26 September 2013 |url=https://www.motherjones.com/kevin-drum/2013/09/we-can-reduce-poverty-if-we-want-we-just-have-want |title=We Can Reduce Poverty If We Want To. We Just Have To Want To. |magazine=Mother Jones |access-date=5 October 2013 |archive-date=16 November 2019 |archive-url=https://web.archive.org/web/20191116064014/https://www.motherjones.com/kevin-drum/2013/09/we-can-reduce-poverty-if-we-want-we-just-have-want/ |url-status=live }} In 2011, poverty rates before taking into account the effects of taxes and transfers stood at 24.7% in Denmark, 31.9% in Finland, 21.6% in Iceland, 25.6% in Norway, and 26.5% in Sweden. After accounting for taxes and transfers, the poverty rates for the same year became 6%, 7.5%, 5.7%, 7.7% and 9.7% respectively, for an average reduction of 18.7 p.p.{{cite web|url=http://www.compareyourcountry.org/inequality?cr=usa&lg=en|title=Compare your country – Income distribution and poverty|publisher=OECD|access-date=12 May 2015|archive-date=3 November 2023|archive-url=https://web.archive.org/web/20231103161405/http://www.compareyourcountry.org/inequality?cr=usa&lg=en|url-status=live}} Compared to the United States, which has a poverty level pre-tax of 28.3% and post-tax of 17.4% for a reduction of 10.9 p.p., the effects of tax and transfers on poverty in all the Nordic countries are substantially bigger. In comparison to France (27 p.p. reduction) and Germany (24.2 p.p. reduction), the taxes and transfers in the Nordic countries are smaller on average.

The term 'peasant republic' is sometimes applied to certain communities in Scandinavia during the Viking Age and High Middle Ages, especially in Sweden, where royal power seems to have been initially somewhat weak,Peter Sawyer: The Making of Sweden. 1988, pp. 3–4 and in areas of modern day Sweden that were not under the rule of the Swedish king yet, as well as in Iceland where the Icelandic Commonwealth serves as an example of an unusually large and sophisticated peasant republic building on the same democratic traditions.Arnulf Krause: Die Welt der Wikinger. Campus, Frankfurt/Main 2006, pp. 155–158 Some historians have also argued that Gotland was a peasant republic before the attack by the Danes in 1361.{{cite book |last=Staecker |first=Jörn |title=Prozesse der Normbildung und Normveränderung im mittelalterlichen Europa |date=2000 |publisher=Steiner |editor1-last=Ruhe |editor1-first=Doris |location=Stuttgart |page=149f |language=de |trans-title=Processes of norm formation and norm change in medieval Europe |chapter=Die normierte Bestattung – Gotlands Kirchfriedhöfe im Spiegel mittelalterlicher Normen und Gesetze |trans-chapter=The standardized burial – Gotland's church cemeteries as reflected in medieval norms and laws |editor2-last=Spieß |editor2-first=Karl-Heinz}} Central for the old Scandinavian democratic traditions was the assemblies called the Thing or Moot.

The Nordic model traces its foundation to the "grand compromise" between workers and employers spearheaded by farmer and worker parties in the 1930s. Following a long period of economic crisis and class struggle, the "grand compromise" served as the foundation for the post-World War II Nordic model of welfare and labour market organization. The key characteristics of the Nordic model were the centralized coordination of wage negotiation between employers and labour organizations, termed a social partnership, as well as providing a peaceful means to address class conflict between capital and labour.{{cite book|last=Simon Reid|first=Henry|date=2015|title=The Political Origins of Inequality: Why a More Equal World Is Better for Us All|publisher=University of Chicago Press|page=132|isbn=978-0226236797|quote=The dynamics were slightly different in each country. The social welfare reforms that emerged out of the Kanslergae Agreement in Denmark in 1933 came at the height of the interwar economic crisis and was part of a wider compromise package to save the Danish economy. It was a coincidence, but a telling one, that on the same day that the agreement was ratified, Hitler was appointed Chancellor of the Reich in Berlin, convinced that he had a better way of saving the economy. In Sweden, the politics of grand compromise were pushed forward with the so-called Basic Agreement – essentially a commitment to the spirit of give-and-take in labour disputes – signed by the employer and labour union associations at the unprepossessing seaside retreat of Saltsjobaden in 1938 ... But in truth the Agreement was the foundation for the relative industrial harmony that would mark Scandinavian industrial relations throughout Europe's Golden Age. In Norway, the empowerment of women as well as workers was key. Women workers marched in 1905 and achieved limited suffrage in 1907, with full suffrage coming in 1913, some five years before it came to Sweden.}}

Magnus Bergli Rasmussen has challenged that farmers played an important role in ushering Nordic welfare states. A 2022 study by him found that farmers had strong incentives to resist welfare state expansion and farmer MPs consistently opposed generous welfare policies.{{Cite journal |last=Rasmussen |first=Magnus Bergli |date=2022 |title=Farmers and the Origin of the Welfare State: Evidence from 308 Roll Call Votes between 1882 and 1940 |url=https://onlinelibrary.wiley.com/doi/10.1111/1467-9477.12222 |journal=Scandinavian Political Studies |volume=45 |issue=2 |pages=202–226 |doi=10.1111/1467-9477.12222 |issn=0080-6757 |access-date=11 March 2022 |archive-date=11 March 2022 |archive-url=https://web.archive.org/web/20220311035056/https://onlinelibrary.wiley.com/doi/10.1111/1467-9477.12222 |url-status=live }}

Although often linked to social democratic governance, the Nordic model's parentage also stems from a mixture of mainly social democratic, centrist, and right-wing political parties, especially in Finland and Iceland, along with the social trust that emerged from the "great compromise" between capital and labour. The influence of each of these factors on each Nordic country varied as social democratic parties played a larger role in the formation of the Nordic model in Sweden and Norway, whereas in Iceland and Finland, right-wing political parties played a much more significant role in shaping their countries' social models. However, even in Iceland and Finland, strong labour unions contributed to the development of universal welfare.{{cite book|last1=Dolvik|first1=Jon Erick|last2=Flotten|first2=Tone|last3=Hippe|first3=Jon M.|last4= Jordfald|first4=Bard|title=The Nordic Model towards 2030: A New Chapter? NordMod2030|date=2015|isbn=978-8232401857|page=23|quote=The Nordic model therefore cannot exclusively be tied to social democratic party support and political dominance. In Sweden, Denmark and Norway, where the social democrats held power for large periods from the 1930s onwards, that description fits better than it does for Finland and Iceland, where centrist and right-leaning parties have set the terms of debate. But in these countries, too, the building of strong labour unions – in line with Walter Korpi's power resource mobilization thesis (Korpi 1981) – was crucial to the central role of labour and employer organizations in developing universal welfare schemes. A variety of modern social security programmes, whether sickness benefits or pensions, first appeared in negotiated collective agreements. It is moreover likely that inspirational ideas and learning experiences that passed between Nordic countries also transcended party lines within these countries. The political underpinnings of the Nordic model have thus been built on broadbased power mobilization and a higher degree of balance between the core interests in society than is evident in most other countries.}}

Social security and collective wage bargaining policies were rolled back following economic imbalances in the 1980s and the financial crises of the 1990s which led to more restrictive budgetary policies that were most pronounced in Sweden and Iceland. Nonetheless, welfare expenditure remained high in these countries, compared to the European average.{{cite journal|last=Veggel|first=Noralv|year=2014|title=The Nordic Model – Its Arrival and Decline|url=https://journalofbusiness.org/index.php/GJMBR/article/view/1472/1379|journal=Global Journal of Management and Business Research: Administration and Management|volume=14|issue=9|pages=60–94|issn=2249-4588|access-date=30 March 2020|archive-date=9 October 2020|archive-url=https://web.archive.org/web/20201009194712/https://journalofbusiness.org/index.php/GJMBR/article/view/1472/1379|url-status=live}}

Social welfare reforms emerged from the Kanslergade Agreement of 1933 as part of a compromise package to save the Danish economy. Denmark was the first Nordic country to join the European Union in the 1970s, reflecting the different political approaches to it among the Nordic countries.

The early 1990s recession affected the Nordic countries and caused a deep crisis in Finland, and came amid the context of the dissolution of the Soviet Union and collapse of trade from the Eastern Bloc. Like in Sweden, Finland's universalistic welfare state based on the Nordic model was weakened and no longer based on the social-democratic middle ground, as several social welfare policies were often permanently dismantled; however, Finland was hit even harder than Sweden. During the crisis, Finland looked to the European Union, which they were more committed and open to joining than Sweden and especially Norway, while Denmark had already joined the EU by the 1970s. Finland is, to date, the only Nordic country to become a Eurozone member state after fully adopting the euro as its official currency in 2002.{{cite web | title=Finland and the euro | website=Economy and Finance | date=1 January 1999 | url=https://economy-finance.ec.europa.eu/euro/eu-countries-and-euro/finland-and-euro_en | access-date=29 August 2023 | archive-date=12 September 2023 | archive-url=https://web.archive.org/web/20230912134254/https://economy-finance.ec.europa.eu/euro/eu-countries-and-euro/finland-and-euro_en | url-status=live }}

According to analyst Harpa Njálsdóttir, Iceland in the late 2010s moved away from the Nordic model towards the economic liberal model of workfare. She also noted that with the large changes having been made to the social security system, "70% of elderly people now live well below national subsistence criteria, while about 70% of those who live alone and in bad conditions are women."{{cite news|last=Demurtas|first=Alice|date=9 May 2018|url=https://grapevine.is/news/2018/05/09/iceland-no-longer-following-nordic-welfare-model/|title=Iceland No Longer Following Nordic Welfare Model|work=The Reykjavík Grapevine|accessdate=31 August 2021|archive-date=31 August 2021|archive-url=https://web.archive.org/web/20210831013308/https://grapevine.is/news/2018/05/09/iceland-no-longer-following-nordic-welfare-model/|url-status=live}} Despite this, as of 2021, Iceland has the lowest poverty rate in the OECD of only 4.9%.{{Cite web |date=2021 |title=Government at a Glance 2021: Country Fact Sheet |url=https://www.oecd.org/gov/gov-at-a-glance-2021-iceland.pdf |website=OECD |access-date=24 June 2023 |archive-date=24 June 2023 |archive-url=https://web.archive.org/web/20230624235128/https://www.oecd.org/gov/gov-at-a-glance-2021-iceland.pdf |url-status=live }}

Norway's "grand compromise" emerged as a response to the crisis of the early 1930s between the trade union confederation and Norwegian Employers' Association, agreeing on national standards in labour–capital relations and creating the foundation for social harmony throughout the period of compromises. For a period between the 1980s and the 1990s, Norway underwent more neoliberal reforms and marketization than Sweden during the same time frame, while still holding to the traditional foundations of the "social democratic compromise" that was specific to Western capitalism from 1945 to 1973.{{cite journal|last1=Fagerberg|first1=Jan|last2=Cappelen|first2= Adne|last3= Mjøset|first3= Lars|last4=Skarstein|first4=Rune|date=May 1990|title= The Decline of Social-Democratic State Capitalism in Norway|url=https://www.researchgate.net/publication/271521097|journal=New Left Review|pages=60–94|access-date= 30 March 2020|quote=Norway has, together with Sweden, often been idealized as the most successful case of postwar social democracy...the neo-liberal 'blue wave' which rolled over Western Europe in the 1980s has had considerably greater impact in Norway than in Sweden, combining with the pressures of a destabilized international economy to threaten many of the postwar structures. This makes it easier to appreciate the earlier accomplishments of social democracy, but it also shows that the Nordic innovations often depended upon the convergence of specific national conditions with the dynamic phase of Western capitalism that lasted from 1945 to 1973.}}

Norway was the Nordic country least willing to join the European Union. While Finland and Sweden suffered greatly from the 1990s recession, Norway began to earn enough revenue from their oil. As of 2007, the Norwegian state maintained large ownership positions in key industrial sectors, among them petroleum, natural gas, minerals, lumber, seafood and fresh water. The petroleum industry accounts for around a quarter of the country's gross domestic product.{{cite news|last=Acher|first=John|url=https://uk.reuters.com/article/norway-economy-forecasts/update-1-statistics-norway-raises-07-gdp-outlook-cuts-08-idUKL0674675920070906|title=Update 1-Statistics Norway raises '07 GDP outlook, cuts '08|work=Reuters|date=6 September 2007|access-date=21 May 2020|archive-date=8 May 2020|archive-url=https://web.archive.org/web/20200508062116/https://uk.reuters.com/article/norway-economy-forecasts/update-1-statistics-norway-raises-07-gdp-outlook-cuts-08-idUKL0674675920070906|url-status=dead}}

In Sweden, the grand compromise was pushed forward by the Saltsjöbaden Agreement signed by employer and trade union associations at the seaside retreat of Saltsjöbaden in 1938. This agreement provided the foundation for Scandinavian industrial relations throughout Europe's Golden Age of Capitalism. The Swedish model of capitalism developed under the auspices of the Swedish Social Democratic Party which assumed power in 1932 and retained uninterrupted power until 1976. Initially differing very little from other industrialized capitalist countries, the state's role in providing comprehensive welfare and infrastructure expanded after the Second World War until reaching a broadly social democratic consensus in the 1950s which would become known as the social liberal paradigm, which was followed by the neoliberal paradigm by the 1980s and 1990s.{{cite book|last=Carson|first=Marcus|year=2004|title=From Common Market to Social Europe?: Paradigm Shift & Institutional Change in European Union Policy on Food, Asbestos & Chemicals, & Gender Equality|location=Stockholm|publisher=Stockholm University|page=231|isbn=978-9122020882}} According to Phillip O'Hara, "Sweden eventually became part of the Great Capitalist Restoration of the 1980s and 1990s. In all the industrial democracies and beyond, this recent era has seen the retrenchment of the welfare state by reduced social spending in real terms, tax cuts, deregulation and privatization, and a weakening of the influence of organized labor."{{cite book|last=O'Hara|first=Phillip|year=1999|title=Encyclopedia of Political Economy: L–Z|location=London|publisher=Routledge|page=1248|isbn=978-0415154260}}

In the 1950s, Olof Palme and the prime minister Tage Erlander formulated the basis of Swedish social democracy and what would become known as the "Swedish model", drawing inspiration from the reformist socialism of party founder Hjalmar Branting, who stated that socialism "would not be created by brutalized...slaves [but by] the best positioned workers, those who have gradually obtained a normal workday, protective legislation, minimum wages." Arguing against those to their left, the party favored moderatism and wanted to help workers in the here and now, and followed the Fabian argument that the policies were steps on the road to socialism, which would not come about through violent revolution but through the social corporative model of welfare capitalism,{{cite book|last=Berman|first=Sheri|year=2006|title=The Primacy of Politics: Social Democracy and the Making of Europe's Twentieth Century|location=Cambridge|publisher=Cambridge University Press|page=156|isbn=978-1139457590}} to be seen as progressive in providing institutional legitimacy to the labour movement by recognizing the existence of the class conflict between the bourgeoisie and the proletariat as a class compromise within the context of existing class conflict.{{cite book|last=Moschonas|first=Gerassimos|translator-last=Elliott|translator-first=Gregory|year=2002|title=In the Name of Social Democracy: The Great Transformation, 1945 to the Present|location=London|publisher=Verso Books|pages=69–70|isbn=978-1859846391}} This Swedish model was characterized by a strong labour movement as well as inclusive publicly funded and often publicly administered welfare institutions.

By the early 1980s, the Swedish model began to suffer from international imbalances, declining competitiveness and capital flight. Two polar opposite solutions emerged to restructure the Swedish economy, the first being a transition to socialism by socializing the ownership of industry and the second providing favorable conditions for the formation of private capital by embracing neoliberalism. The Swedish model was first challenged in 1976 by the Meidner Plan promoted by the Swedish Trade Union Confederation and trade unions which aimed at the gradual socialization of Swedish companies through wage earner funds. The Meidner Plan aimed to collectivize capital formation in two generations by having the wage earner funds own predominant stakes in Swedish corporations on behalf of workers. This proposal was supported by Palme and the Social Democratic party leadership, but it did not garner enough support upon Palme's assassination and was defeated by the conservatives in the 1991 Swedish general election.{{cite book|last=O'Hara|first=Phillip|title=Encyclopedia of Political Economy: L–Z|publisher=Routledge|year=1999|isbn=978-0415154260|page=1248|quote=The critical issues were perhaps revealed most clearly in the Swedish case. Among the most advanced of the social welfare states, Sweden in the early 1980s faced a pivotal choice between capitalism and the transition to socialism. In the discourse focused upon its nagging problems of international imbalances, declining competitiveness, and capital flight, two polar solutions emerged. Olof Palme supported an aggressive use of workers' funds, by which capital formation would have been largely collectivized in two generations. The funds would have come to own predominant stakes in Swedish corporations on behalf of workers. The other alternative was to retrench the welfare state and provide conditions favorable to private capitals formation. Palme's proposal appears never to have garnered widespread support and was left with no champion in the wake of his assassination.}}

Upon returning to power in 1982, the Social Democratic party inherited a slowing economy resulting from the end of the post-war boom. The Social Democrats adopted monetarist and neoliberal policies, deregulating the banking industry, and liberalizing currency in the 1980s. The economic crisis of the 1990s saw greater austerity measures, deregulation, and the privatization of public services. Into the 21st century, it greatly affected Sweden and its universalistic welfare state, although not as hard as Finland. Sweden remained more Eurosceptic than Finland, and its struggles affected all the other Nordic countries, as it was seen as "the guiding star of the north", and with Sweden fading away, other Nordic countries also felt like they were losing their political identities. When the Nordic model was then gradually rediscovered, cultural explanations were sought for the special features of the Nordic countries.

The Nordic model has been positively received by some American politicians and political commentators. Jerry Mander has likened the Nordic model to a kind of "hybrid" system which features a blend of capitalist economics with socialist values, representing an alternative to American-style capitalism.{{cite magazine |author-link=Jerry Mander |first=Jerry |last=Mander |date=24 July 2013 |url=http://www.alternet.org/books/there-are-good-alternatives-us-capitalism-no-way-get-there?page=0%2C2 |title=There Are Good Alternatives to US Capitalism, But No Way to Get There |magazine=Alternet |access-date=27 July 2013 |archive-date=20 October 2017 |archive-url=https://web.archive.org/web/20171020041538/https://www.alternet.org/books/there-are-good-alternatives-us-capitalism-no-way-get-there?page=0%2C2 |url-status=live }} Vermont Senator Bernie Sanders has pointed to Scandinavia and the Nordic model as something the United States can learn from, in particular with respect to the benefits and social protections the Nordic model affords workers and its provision of universal healthcare.{{cite news |last=Sanders |first=Bernie |date=26 May 2013 |url=http://www.huffingtonpost.com/rep-bernie-sanders/what-can-we-learn-from-de_b_3339736.html |title=What Can We Learn From Denmark? |work=The Huffington Post |access-date=11 March 2014 |archive-date=10 December 2015 |archive-url=https://web.archive.org/web/20151210152900/http://www.huffingtonpost.com/rep-bernie-sanders/what-can-we-learn-from-de_b_3339736.html |url-status=live }}{{cite news|first=Sasha|last=Issenberg|date=9 January 2010|url=http://www.boston.com/news/nation/washington/articles/2010/01/09/sanders_a_growing_force_on_the_far_far_left/?page=1|title=Sanders a growing force on the far, far left|newspaper=Boston Globe|quote=You go to Scandinavia, and you will find that people have a much higher standard of living, in terms of education, health care, and decent paying jobs.|access-date=11 March 2014|archive-date=4 April 2014|archive-url=https://web.archive.org/web/20140404153943/http://www.boston.com/news/nation/washington/articles/2010/01/09/sanders_a_growing_force_on_the_far_far_left/?page=1|url-status=live}}{{cite web |first=Zeeshan |last=Aleem |date=4 May 2015 |url=http://mic.com/articles/117334/bernie-sanders-says-the-u-s-could-learn-a-lot-from-scandinavia-here-s-why-he-s-right |title=Bernie Sanders Says the U.S. Could Learn a Lot From Scandinavia. Here's Why He's Right |work=Mic |access-date=5 May 2015 |archive-date=5 May 2015 |archive-url=https://web.archive.org/web/20150505190042/http://mic.com/articles/117334/bernie-sanders-says-the-u-s-could-learn-a-lot-from-scandinavia-here-s-why-he-s-right |url-status=live }} Scandinavian political scientist Daniel Schatz argued that Sanders is wrong, saying that "the success of Nordic countries like Sweden{{snd}}as measured by relatively high living standards accompanied by low poverty, with government-funded education through university, universal health coverage, generous parental-leave policies and long life spans{{snd}}precedes the contemporary welfare state.", adding that "Research has suggested that the Northern European success story has its roots in cultural rather than economic factors. The Scandinavian countries ... historically developed remarkably high levels of social trust, a robust work ethic and considerable social cohesion".{{Cite web |last=Schatz |first=Daniel |date=15 March 2020 |title=I'm a Scandinavian political scientist. Bernie's wrong about democratic socialism. |url=https://www.nbcnews.com/think/opinion/bernie-sanders-wrong-democratic-socialism-sweden-everywhere-else-ncna1158636 |access-date=6 July 2023 |website=NBC News |language=en |archive-date=7 July 2023 |archive-url=https://web.archive.org/web/20230707162310/https://www.nbcnews.com/think/opinion/bernie-sanders-wrong-democratic-socialism-sweden-everywhere-else-ncna1158636 |url-status=live }}

According to Luciano Pellicani, the social and political measures adopted in countries like Sweden and Denmark are the same that some other European left-wing politicians theorised to combine justice and freedom, referring to liberal socialism and movements like Giustizia e Libertà and Fabian Society.{{cite news|last=Petti|first=Edoardo|url=https://formiche.net/2014/12/renzi-blair-parla-pellicani/|title=Le critiche di D'Alema alla Terza Via? Frutto della presunzione storica del Pci. Parla Pellicani|newspaper=Formiche.net|language=it|date=1 December 2014|access-date=28 February 2022|archive-date=21 February 2022|archive-url=https://web.archive.org/web/20220221124810/https://formiche.net/2014/12/renzi-blair-parla-pellicani/|url-status=live}} According to Naomi Klein, former Soviet leader Mikhail Gorbachev sought to move the Soviet Union in a similar direction to the Nordic system, combining free markets with a social safety net, but still retaining public ownership of key sectors of the economy{{snd}}ingredients that he believed would transform the Soviet Union into "a socialist beacon for all mankind."{{cite book |author-link=Naomi Klein |last=Klein |first=Naomi |year=2008 |title=The Shock Doctrine: The Rise of Disaster Capitalism |publisher=Picador |isbn=978-0312427993 |url=https://books.google.com/books?id=PwHUAq5LPOQC&pg=PA276 |page=276 |access-date=28 February 2020 |archive-date=3 November 2023 |archive-url=https://web.archive.org/web/20231103161401/https://books.google.com/books?id=PwHUAq5LPOQC&pg=PA276#v=onepage&q&f=false |url-status=live }}{{cite book |first1=Philip |last1=Whyman |first2=Mark |last2=Baimbridge |first3=Andrew |last3=Mullen |year=2012 |title=The Political Economy of the European Social Model (Routledge Studies in the European Economy) |publisher=Routledge |isbn=978-0415476294 |url=https://books.google.com/books?id=e-M_cdwdgoMC&pg=PA108 |page=108 |quote=In short, Gorbachev aimed to lead the Soviet Union towards the Scandinavian social democratic model. |access-date=28 February 2020 |archive-date=3 November 2023 |archive-url=https://web.archive.org/web/20231103161402/https://books.google.com/books?id=e-M_cdwdgoMC&pg=PA108#v=onepage&q&f=false |url-status=live }}

The Nordic model has also been positively received by various social scientists and economists. American professor of sociology and political science Lane Kenworthy advocates for the United States to make a gradual transition toward a social democracy similar to those of the Nordic countries, defining social democracy as such: "The idea behind social democracy was to make capitalism better. There is disagreement about how exactly to do that, and others might think the proposals in my book aren't true social democracy. But I think of it as a commitment to use government to make life better for people in a capitalist economy. To a large extent, that consists of using public insurance programs{{snd}}government transfers and services."{{cite news |last=Matthews |first=Dylan |date=9 January 2014 |url=https://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/09/this-sociologist-has-a-plan-to-make-america-more-like-sweden/ |title=This sociologist has a plan to make America more like Sweden |newspaper=The Washington Post |access-date=11 March 2014 |archive-date=14 January 2014 |archive-url=https://web.archive.org/web/20140114091917/http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/09/this-sociologist-has-a-plan-to-make-america-more-like-sweden/ |url-status=live }}

Nobel Prize-winning economist Joseph Stiglitz says that there is higher social mobility in the Scandinavian countries than in the United States and posits that Scandinavia is now the land of opportunity that the United States once was.{{cite web |url=https://money.cnn.com/2015/06/03/news/economy/stiglitz-income-inequality/index.html |title='Scandinavian Dream' is true fix for America's income inequality |work=CNN Money |date=3 June 2015 |access-date=21 December 2019 |archive-date=8 June 2020 |archive-url=https://web.archive.org/web/20200608125534/https://money.cnn.com/2015/06/03/news/economy/stiglitz-income-inequality/index.html |url-status=live }} American author Ann Jones, who lived in Norway for four years, posits that "the Nordic countries give their populations freedom from the market by using capitalism as a tool to benefit everyone" whereas in the United States "neoliberal politics puts the foxes in charge of the henhouse, and capitalists have used the wealth generated by their enterprises (as well as financial and political manipulations) to capture the state and pluck the chickens."{{cite journal |url=https://www.thenation.com/article/archive/after-i-lived-in-norway-america-felt-backward-heres-why/ |title=After I Lived in Norway, America Felt Backward. Here's Why |journal=The Nation |date=28 January 2016 |access-date=21 December 2019 |archive-date=30 January 2020 |archive-url=https://web.archive.org/web/20200130013750/https://www.thenation.com/article/archive/after-i-lived-in-norway-america-felt-backward-heres-why/ |url-status=live }}

Economist Jeffrey Sachs is a proponent of the Nordic model, having pointed out that the Nordic model is "the proof that modern capitalism can be combined with decency, fairness, trust, honesty, and environmental sustainability."{{cite web |url=http://www.globalhealthminders.dk/prof-jeffrey-sachs-plea-to-the-nordic-countries/ |title=Prof Jeffrey Sachs' plea to the Nordic countries |work=Global Health Minders |date=18 November 2015 |access-date=21 December 2019 |archive-url=https://web.archive.org/web/20190901042717/http://www.globalhealthminders.dk/prof-jeffrey-sachs-plea-to-the-nordic-countries/ |archive-date=1 September 2019 |url-status=dead }} The Nordic combination of extensive public provision of welfare and a culture of individualism has been described by Lars Trägårdh of Ersta Sköndal University College as "statist individualism."{{cite news |url=https://www.economist.com/news/special-report/21570835-nordic-countries-are-probably-best-governed-world-secret-their |title=The secret of their success |newspaper=The Economist |date=2 February 2013 |access-date=21 December 2019 |archive-date=10 October 2017 |archive-url=https://web.archive.org/web/20171010033845/https://www.economist.com/news/special-report/21570835-nordic-countries-are-probably-best-governed-world-secret-their |url-status=live }} A 2016 survey by the think tank Israel Democracy Institute found that nearly 60 percent of Israeli Jews preferred a "Scandinavian model" economy, with high taxes and a robust welfare state.{{cite news|last=Sales|first=Ben|title=Survey: Israeli Jews Want Broader Welfare State, Israeli Arabs Prefer 'American Model'|url=http://www.haaretz.com/israel-news/1.721012|work=Haaretz|date=23 May 2016|access-date=21 December 2019|archive-date=20 October 2017|archive-url=https://web.archive.org/web/20171020075457/https://www.haaretz.com/israel-news/1.721012|url-status=live}}

Socialist economists Pranab Bardhan and John Roemer criticize Nordic-style social democracy for its questionable effectiveness in promoting relative egalitarianism as well as its sustainability. They posit that Nordic social democracy requires a strong labour movement to sustain the heavy redistribution required, arguing that it is idealistic to think similar levels of redistribution can be accomplished in countries with weaker labour movements. They say that even in the Scandinavian countries social democracy has been in decline since the weakening of the labour movement in the early 1990s, arguing that the sustainability of social democracy is limited. Roemer and Bardham posit that establishing a market-based socialist economy by changing enterprise ownership would be more effective than social democratic redistribution at promoting egalitarian outcomes, particularly in countries with weak labour movements.{{cite journal|title=Market socialism, a case for rejuvenation|first1=Pranab|last1=Bardhan|first2=Johen E.|last2=Roemer|year=1992|journal=Journal of Economic Perspectives|volume=6|number=3|page=104|quote=[W]e believe that social democracy requires rather special political circumstances that are absent in many countries for which our market socialism proposal may be feasible. Since it (social democracy) permits a powerful capitalist class to exist (90 percent of productive assets are privately owned in Sweden), only a strong and unified labor movement can win the redistribution through taxes that is characteristic of social democracy. It is idealistic to believe that tax concessions of this magnitude can be effected simply through electoral democracy without an organized labor movement, when capitalists organize and finance influential political parties. Even in the Scandinavian countries, strong apex labor organizations have been difficult to sustain and social democracy is somewhat on the decline now.|doi=10.1257/jep.6.3.101|doi-access=free}}

Historian Guðmundur Jónsson said that it would be historically inaccurate to include Iceland in one aspect of the Nordic model, that of consensus democracy. Addressing the time period from 1950 to 2000, Jónsson writes that "Icelandic democracy is better described as more adversarial than consensual in style and practice. The labour market was rife with conflict and strikes more frequent than in Europe, resulting in strained government–trade union relationship. Secondly, Iceland did not share the Nordic tradition of power-sharing or corporatism as regards labour market policies or macro-economic policy management, primarily because of the weakness of Social Democrats and the Left in general. Thirdly, the legislative process did not show a strong tendency towards consensus-building between government and opposition with regard to government seeking consultation or support for key legislation. Fourthly, the political style in legislative procedures and public debate in general tended to be adversarial rather than consensual in nature."{{cite journal|title=Iceland and the Nordic Model of Consensus Democracy|journal=Scandinavian Journal of History|date=8 August 2014|issn=0346-8755|pages=510–528|volume=39|issue=4|doi=10.1080/03468755.2014.935473|first=Guðmundur|last=Jónsson|s2cid=143545092}}

In a 2017 study, economists James Heckman and Rasmus Landersøn compared American and Danish social mobility, and found that social mobility is not as high as figures might suggest in the Nordic countries, although they did find that Denmark ranks higher in income mobility. When looking exclusively at wages (before taxes and transfers), Danish and American social mobility are very similar; it is only after taxes and transfers are taken into account that Danish social mobility improves, indicating that Danish economic redistribution policies are the key drivers of greater mobility. Additionally, Denmark's greater investment in public education did not improve educational mobility significantly, meaning children of non-college educated parents are still unlikely to receive college education, although this public investment did result in improved cognitive skills amongst poor Danish children compared to their American peers. There was evidence that generous welfare policies could discourage the pursuit of higher-level education due to decreasing the economic benefits that college education level jobs offer and increasing welfare for workers of a lower education level.{{cite journal|first1=James|last1=Heckman|first2=Rasmus|last2=Landersøn|title=The Scandinavian Fantasy: The Sources of Intergenerational Mobility in Denmark and the US|journal=Scandinavian Journal of Economics|volume=119|issue=1|year=2017|pages=178–230|doi=10.1111/sjoe.12219|pmid=28649168|pmc=5476927|url=http://www.nber.org/papers/w22465.pdf|access-date=7 June 2017|archive-date=22 July 2017|archive-url=https://web.archive.org/web/20170722081621/http://www.nber.org/papers/w22465.pdf|url-status=live}}

Some welfare and gender researchers based in the Nordic countries suggest that these states have often been over-privileged when different European societies are being assessed in terms of how far they have achieved gender equality. They posit that such assessments often utilise international comparisons adopting conventional economic, political, educational, and well-being measures.{{cite web|date=2019|title=Mind the 100 Year Gap: 2020|url=https://www.weforum.org/reports/gender-gap-2020-report-100-years-pay-equality|url-status=live|archive-url=https://web.archive.org/web/20210213113412/https://www.weforum.org/reports/gender-gap-2020-report-100-years-pay-equality|archive-date=13 February 2021|access-date=19 January 2021|website=World Economic Forum}} By contrast, they suggest that if one takes a broader perspective on well-being incorporating, such as social issues associated with bodily integrity or bodily citizenship,{{cite book|last=Pringle|first=Keith|year=2016|chapter=Doing (Oppressive) Gender via Men's Relations with Children|editor-last1=Häyrén|editor-first1=Anneli|editor-last2=Wahlström Henriksson|editor-first2=Helena|title=Critical Perspectives on Masculinities and Relationalities: In Relation to What?|location=New York|publisher=Springer|pages=23–34|isbn=978-3319290119}} then some major forms of men's domination still stubbornly persist in the Nordic countries, e.g. business, violence to women, sexual violence to children, the military, academia, and religion.{{cite book|last1=Hearn|first1=Jeff|last2=Pringle|first2=Keith|year=2006|title=European Perspectives on Men and Masculinities: National and Transnational Approaches|location=Houndmills|publisher=Palgrave Macmillan|isbn=978-0230594470}}{{cite book|last=Pringle|first=Keith|year=2011|chapter=Comparative Studies of Well-Being in Terms of Gender, Ethnicity and the Concept of Bodily Citizenship: Turning Esping-Andersen on His Head?|editor-last1=Golańska|editor-first1=Dorota|editor-last2=Hearn|editor-first2=Jeff|editor-last3=Olesky|editor-first3=Elżbieta H.|title=The Limits of Gendered Citizenship: Contexts and Complexities|location=London|publisher=Routledge|pages=137–156|isbn=978-0415851268}}{{cite book|last1=Balkamar|first1=Dag|last2=Hearn|first2=Jeff|last3=Pringle|first3=Keith|year=2018|chapter=Men, Masculinities and Social Policy|editor-last=Shaver|editor-first=Sheila|title=Handbook of Gender and Social Policy|location=Oxford|publisher=Edward Elgar|pages=55–73|isbn=978-1785367120}}

While praising the Nordic model as a "clear and compelling contrast to the neoliberal ideology that has strafed the rest of the world with inequality, ill-health and needless poverty," economic anthropologist Jason Hickel sharply criticizes the "ecological disaster" that accompanies it, noting that data shows the Nordic countries "have some of the highest levels of resource use and CO2 emissions in the world, in consumption based terms, drastically overshooting safe planetary boundaries," and rank towards the bottom of the Sustainable Development Index. He argues that the model needs to be updated for the Anthropocene, and reduce overconsumption while retaining the positive elements of progressive social democracy including universal healthcare and education, paid vacations and reasonable working hours, which have resulted in much better health outcomes and poverty reduction compared to overtly neoliberal countries like the United States, in order to "stand as a beacon for the rest of the world in the 21st century."{{cite news|last=Hickel|first=Jason|date=6 December 2019|title=The dark side of the Nordic model|url=https://www.aljazeera.com/opinions/2019/12/6/the-dark-side-of-the-nordic-model|work=Al Jazeera|location=|access-date=29 June 2022|archive-date=29 June 2022|archive-url=https://web.archive.org/web/20220629180110/https://www.aljazeera.com/opinions/2019/12/6/the-dark-side-of-the-nordic-model|url-status=live}}{{cite journal |last1=Sullivan |first1=Dylan |last2=Hickel|first2=Jason|date=2023 |title=Capitalism and extreme poverty: A global analysis of real wages, human height, and mortality since the long 16th century|url= |journal=World Development|volume=161 |issue= |page=106026 |doi=10.1016/j.worlddev.2022.106026|s2cid=252315733 |access-date=|quote=...amongst the developed capitalist countries, the social democracies with generous welfare states (i.e., Scandinavia) have superior health outcomes to neo-liberal states like the US. Poverty alleviation and gains in human health have historically been linked to socialist political movements and public action, not to capitalism.|doi-access=free}}

Swedish economist John Gustavsson, writing for American conservative magazine The Dispatch, criticized the Nordic model for its high taxation rates, including on the middle class and poor people.{{Cite web |last=Gustavsson |first=John |date=12 October 2021 |title=Why the Nordic Model Wouldn't Work in the U.S. |url=https://thedispatch.com/article/why-the-nordic-model-wouldnt-work/ |access-date=18 June 2023 |website=The Dispatch |language=en-US |archive-date=18 June 2023 |archive-url=https://web.archive.org/web/20230618204400/https://thedispatch.com/article/why-the-nordic-model-wouldnt-work/ |url-status=live }}

Political scientist Michael Cottakis has noted the rise of right-wing populist and anti-immigration sentiment in the Nordic countries, arguing that these countries, in particular Sweden, have failed to handle immigration effectively.{{Cite web |date=21 September 2018 |title=What is wrong with the Nordic model? |url=https://blogs.lse.ac.uk/europpblog/2018/09/21/what-is-wrong-with-the-nordic-model/ |access-date=18 June 2023 |website=EUROPP |archive-date=18 June 2023 |archive-url=https://web.archive.org/web/20230618204359/https://blogs.lse.ac.uk/europpblog/2018/09/21/what-is-wrong-with-the-nordic-model/ |url-status=live }}

George Lakey, author of Viking Economics, says that Americans generally misunderstand the nature of the Nordic model, commenting: "Americans imagine that "welfare state" means the U.S. welfare system on steroids. Actually, the Nordics scrapped their American-style welfare system at least 60 years ago, and substituted universal services, which means everyone{{snd}}rich and poor{{snd}}gets free higher education, free medical services, free eldercare, etc."{{cite news|url=http://americamagazine.org/content/all-things/continuing-revelation-scandinavian-economies|title=The "Continuing Revelation" of Scandinavian Economies|work=America|date=22 July 2016|access-date=21 December 2019|archive-date=1 September 2019|archive-url=https://web.archive.org/web/20190901042717/https://www.americamagazine.org/content/all-things/continuing-revelation-scandinavian-economies|url-status=live}}

In a speech at Harvard's Kennedy School of Government, Lars Løkke Rasmussen, the centre-right Danish prime minister from the conservative-liberal Venstre party, addressed the American misconception that the Nordic model is a form of socialism, which is conflated with any form of planned economy, stating: "I know that some people in the US associate the Nordic model with some sort of socialism. Therefore, I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy."{{cite news|url=https://www.vox.com/2015/10/31/9650030/denmark-prime-minister-bernie-sanders|title=Denmark's prime minister says Bernie Sanders is wrong to call his country socialist|website=Vox|date=31 October 2015|accessdate=21 December 2019|archive-date=4 February 2020|archive-url=https://web.archive.org/web/20200204164216/https://www.vox.com/2015/10/31/9650030/denmark-prime-minister-bernie-sanders|url-status=live}}

{{div col|colwidth=21em}}

• Dirigisme, a socioeconomic model associated with France
• Folkhemmet
• Liberal socialism
• Market socialism
• Nefco
• Polder model
• Rehn–Meidner model
• Rhenish model, a socioeconomic model associated with Germany
• Social democracy
• Social market economy
• Welfare in Finland
• Welfare in Sweden

{{div col end}}

{{div col|colwidth=21em}}

• Human Development Index
• Legatum Prosperity Index
• List of countries by GDP per capita
• List of countries by income equality
• List of countries by life expectancy
• List of countries by share of income of the richest one percent
• List of countries by wealth per adult
• List of international rankings
• Press Freedom Index
• Social Progress Index
• Where-to-be-born Index

{{div col end}}

{{reflist}}

{{refbegin|30em}}

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• {{cite book|last=Lakey|first=George|title=Viking Economics: How the Scandinavians Got It Right{{snd}}and How We Can, Too|publisher=Melville House|location=Brooklyn|year=2016|isbn=978-1612195360}}
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{{refend}}

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{{aspects of capitalism}}

{{social democracy}}

{{social models in Europe}}

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Category:Nordic model

Category:Capitalism

Category:Corporatism

Category:Economic policy in Europe

Category:Economic systems

Category:Mixed economies

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Category:Political-economic models

Category:Social democracy

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