January 1999                  

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Nordic model defended by Finnish Prime Minister

The social democratic model of the Nordic countries was vehemently defended by the Finnish Prime Minister Paavo Lipponen in an international conference in London on Thursday (14 January).

Lipponen joined Tony Blair and other prominent European centre-left politicians in claiming the high ground of international opinion-making in the wake of the alleged decline of neo-liberalism.

The conference was organised by the Institute for Public Policy Research, a think tank close to the Labour Party.

In defending the Nordic model, Lipponen said that "on the whole we have been successful in adapting our welfare state to economic constraints, retaining social security and an income distribution that is more equal than anywhere else in the world".

Lipponen admitted that the public sector as a whole is under pressure. In his opinion the situation cannot be rectified by raising taxes.

"Rather, we should lower taxes, widen the tax base, stimulate employment and thereby raise more revenue to finance adequate social services.

"The welfare state must be made more competitive in terms of its capacity to generate jobs. But we must reject neo-liberal ideas of seeking competitiveness through wider wage-differentials, through bargaining systems that disconnect the employee from unions.

"Lower wages mean more pressure on income transfer systems and thereby more pressure to raise taxes. Such a vicious circle would undermine economic efficiency", Lipponen said.

Tony Blair’s Third Way policies are most often seen as influencing other European centre-left parties. The Finnish Prime Minister, however, thinks that the New Labour is coming closer to the Nordic way of thinking.

"The goal is, and here Nordic Social Democracy and New Labour share a common approach, to help the individual in becoming and staying an active citizen, supporting him/herself through work. ‘The entitlement’ thinking of Amartya Sen is closely related to this social democratic idea: every human being has an equal right to have access to those resources that enable him/her to realise his/her full potential, if not through work, through meaningful activity."

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