There is a saying that people who want to be intelligent and intellectual but don’t do their substantive homework walk around with yogurt in their shirt pockets. If they ever doubt that they are cool, they can just put their fingers in their pockets and be reassured.
In my line of work, which has spanned academia, public policy, and politics, from time to time I come across people who walk around with yogurt in their shirt pockets. They are nice acquaintances, but on occasion, their analytical shortcomings have tangible consequences, as they reach positions where they can influence matters that affect the lives of millions of people.
This is not much of a problem in academia. Its influence on the world is limited, and at least historically academics have been good at peer-reviewing yogurt pockets out of the system. It is easier to find them in public policy and politics, where there is no apparent parallel to the peer review system.
The standard-bearing institutions—think tanks and independent publications—normally have a political slant to begin with, which makes it easier for sloppy analysis to mingle with dispassionate scholarship. Work of more tepid quality can slip through the cracks by virtue simply of sharing the ideological bent of the publishing outfit.
A case in point is The Mirage of Swedish Socialism, a longer policy paper by Cato Institute senior fellow Johan Norberg. Published by the Fraser Institute, The Mirage supposedly tells us the story of how Sweden became socialist for a little bit, and then became a capitalist free-market economy again.
In this paper, which Norberg refers to as a book, he makes a long list of both big and small errors. It matters to point them out not only for intellectual honesty—bad analysis is a waste of its reader’s time—but also because Norberg has been around for a while and has built somewhat of a readership. His work finds its way into the minds of people with a direct influence over American policymaking.
In other words, what he writes could very well be used as a premise for conservative politicians who ponder how to reform the American welfare state. For this reason alone, it is essential to call out Norberg on all the errors in The Mirage; the fact that the honor of good scholarship also demands that we do this is only a cherry on the top.
Let me first of all note that the content of The Mirage is in no way original. Norberg explained its salient points in 2019 in a “Teaching Freedom Speech” at the Fund for American Studies. Some of the narrative is also available in his documentary from the same year, called “Sweden: Lessons for America?”
In short, Norberg has had plenty of time to correct the analytical errors that he has now written in stone in the Fraser Institute publication.
The fundamental flaw in Norberg’s Mirage is that it is supposed to analyze socialism in Sweden, yet he does not provide a definition of ‘socialism’. Over its 84 pages of substance, and probably 20 references to the term in the running text, there is no definition offered that can be used to understand his argument on when Sweden was a socialist country, and when it was not.
He alludes to a definition on p. 21:
Sweden never became a textbook socialist country, with the means of production in government hands. Social democrats considered taking control of big business with the “Employee Funds,” a labour union plan from 1976 in which a portion of company profits taxed by the government were to be used to buy shares in Swedish companies.
Let us not belabor the point that Norberg’s date for the origin of the “Employee Funds” is five years behind, but I happen to have documented their history on pp. 117-122 in Democracy or Socialism. Of more importance is that he casually suggests that there is a “textbook” definition of socialism with the meaning that government takes over ownership of private businesses. By this definition, Sweden ceased to be a socialist state when the Wage Earners’ Trust Funds—the formal term for the “Employee Funds”—were terminated less than a decade after being created in 1983.
The problem with defining Swedish socialism in this way is that Sweden never came close to being socialist. As I explain in the cited reference above, at the height of their existence, Swedish households owned shares in the stock market worth 33 times what the Wage Earners’ Trust Funds owned.
Another problem for Norberg is that the funds were never dissolved in the genuine sense. They were just rolled into the government-run public pension system. Therefore, following Norberg’s own logic, socialism did not actually end in Sweden.
Again: by writing The Mirage without a concise and analytically useful definition of socialism, Norberg cannot separate the decades he refers to as a socialist experiment from the periods before and after that experiment. So long as a definition is absent, Norberg cannot explain to his reader why socialism started; the corollary, his inability to explain why it ended, should be self-evident.
As long as this omission is made in eclectic conversations among friends, it lives its life shielded from public scrutiny. However, The Mirage is aimed at setting the tone for a policy issue—in this case, the role of government in the economy. This turns his analytical error into a ball chain around its ankle.
To see why this is important, consider the debate over how we should organize and fund medical services. Most European countries rely on a virtual or actual single-payer model with government as the predominant source of funds for health care. America still depends primarily on private funding, and the Netherlands depends to a higher degree than America on privately funded health insurance.
Would it be an act of socialism to transform the American system into a fully tax-paid system? Per Norberg’s “textbook” definition, this is not the case, not even in health care. All it takes to avoid expanding socialism is to let hospitals be privately owned, and for doctors to keep their private clinics open. The only thing that changes is that all their revenue comes from government.
Suppose we generalize this model, and let government pay for everything we need: food, shelter, clothing, health care, education, phones, computers, haircuts, cars, life insurance… Is America now a socialist country?
Let us try this from the other angle. Suppose government took over the ownership of all businesses but those businesses were still operated as they are today. Suppose the German government gobbled up all the country’s car manufacturers but maintained competition between them, kept paying everyone the same, and made no other changes to the companies than the formal ownership. Suppose the same happened in every industry, with every market of the economy.
Is Germany now a socialist country?
Based on the “textbook” definition, Germany is socialist but America is not.
Suppose instead that we pursue an analytically useful definition. Suppose we establish that socialism is an ideology for the elimination of economic differences between individual citizens (c.f. Democracy or Socialism, ch. 1).
With this definition, the ‘American’ case above is one of socialism in practice; the ‘German’ case may or may not be a case of socialism. It depends on why the government would take over businesses. If it does so to eliminate the incomes of ‘the rich’ and reduce economic differences among people, then the business takeover is socialist (in fact communist; communism being a special case of socialism).
Just as the American and German examples demonstrate, any attempt at discussing socialism without a concise definition becomes an ad-hoc exercise. To this point, Norberg alludes to the end of the Swedish socialist experiment as the beginning of the era of the “capitalist welfare state.” However, he does not explain why this is so; his “textbook” definition of socialism is entirely inapplicable here. In his usual, casual fashion he alludes to reforms of the welfare state that somehow ended its function as a conduit for socialist policy, but he does not give the reader any link back to how those reforms were ‘anti-socialist’.
The only reform of any substance that he points to is a limited school-voucher system. Still in effect today, it allows for school choice but only permits private schools if national and local public school boards approve.
If instead we define socialism as economic redistribution for the purposes of ending so-called income inequality, we quickly see that the Swedish welfare state is as socialist today as it was in the 1970s—and earlier. This purpose-based definition puts the focus where it needs to be, namely on why socialist politicians advocate certain policies.
Since Norberg does not approach socialism this way, he makes another major error in his attempt to explain socialism in Sweden. He completely omits the period of intense construction of the welfare state: the social-democrat government began eliminating private functions in the economy and replacing them with government systems already in the 1930s. By 1960, they had almost all the components in place to call it a full-fledged welfare state (c.f. The Rise of Big Government, ch. 3). They had a single-payer health care system; a nationalized, tuition-free, and centrally governed school system; a housing policy that was heavily slanted toward benefiting low-income families at the expense of those with higher incomes; tax-funded income insurance for paid and sick leave; a tax-funded, redistributive pension system; etc.
Perhaps the most glaring consequence of Norberg’s sloppiness is that he provides no argument whatsoever against similar policies in America. Incidentally, he shares this flaw with Rand Paul, the Republican U.S. Senator often lauded as a hard-core libertarian. In 2019, Senator Paul published a book, The Case Against Socialism, which in tone and structure is strikingly similar to Johan Norberg’s writings. Apparently, the good senator is a big fan of Norberg, so much so that in chapter 14 he suggests that there is nothing socialist at all about the Nordic welfare states.
For this reason, neither Johan Norberg nor Rand Paul nor anyone else who opposes socialism has any argument to present against socialists such as U.S. Senator Bernie Sanders, when they—in the name of socialism—want to expand government in America in the same way it has been expanded in Sweden: single-payer health care, single-payer child care, a massive income-security system for paid family and sick leave, etc.
According to Norberg, these policies are not at all socialist, but—as he points out in The Mirage—actually capitalist. Therefore, neither he nor Senator Paul can oppose all the new spending programs that Bernie Sanders and other socialists in America want to implement.
If only Norberg and Paul would bother to define socialism by its purpose, they could explain that it is not the government’s job to reduce economic differences between individual citizens. Unfortunately, Norberg squandered that opportunity with The Mirage. Let us hope he repents in the future.
