Wicked Problems Demand Cooperation

Leadership scholar Keith Grint provides crucial insights into how different types of problems demand different leadership responses. In his influential article “Problems, Problems, Problems: The Social Construction of Leadership,” Grint categorizes problems as critical, tame, or wicked – each requiring a distinct approach. His central question is deceptively simply: What is good leadership for the problem at hand?Footnote ¹⁵

Critical problems call for a commander response. These are urgent, high-stakes situations – the building is on fire – where there’s no time for deliberation and the leader must provide a decisive answer for what to do.

Tame problems, Grint explains, are best addressed through management: planning, organizing, and applying proven solutions to well-defined challenges. Increasing factory production, creating transportation timetables, building bridges, and designing computers are all examples of tame problems – complex challenges that can be solved through technical expertise and established procedures. These are the problems that emerged alongside industrialization and respond well to Taylorism and the efficiency techniques taught in industrial engineering and MBA programs.

Wicked problems, by contrast, require a fundamentally different approach. These problems are deeply intertwined with other issues, shaped by conflicting values, and resistant to clear solutions. They demand leadership grounded in humility and cooperation. As Grint notes, the more wicked the problem, the greater the “requirement for collaborative resolution.” Wicked problems may not have definitive solutions, but they can be approached constructively through asking better questions and engaging others in the search for shared, workable paths forward.

This distinction matters because leaders often misdiagnose the problem type. Too frequently, leaders default to a commander or management approach not because it is suited to the problem, but because it is the response they’re most comfortable delivering. A leader who declares, “I have the answer,” in the face of a wicked problem may be acting on preference, not accurate assessment. Treating wicked problems as tame or critical risks overconfidence – and poor outcomes. Progress on wicked problems requires the humility to admit no single actor holds the answer, and that constructive action depends on asking good questions and fostering real cooperation

Norms of Cooperation

Leadership scholarship is performed by management scholars studying organizations. Given that expectations for cooperation so deeply permeate Nordic culture, it feels odd to call it out as a norm unique to the act of leadership. But on a comparative level, like the Nordics vis-à-vis the US, expectations for cooperation is readily apparent defining aspect of Nordic leadership.

Expectations for cooperation permeate all facets of Nordic society, evident from the youngest ages. Children are taught in childcare about democratic principles and resolving conflicts by leveraging cooperation and consensus-building. In grown-up venues, like negotiations between employers and labor unions, cooperative relationships are built upon trust and long-term mutual interests.Footnote ¹⁶ Perhaps not surprisingly, individuals from the Nordics are routinely sought on the global stage as effective and trustworthy peace brokers, able to establish a cooperative posture between various actors in the most conflict-ridden circumstances.

In the book Return of the Vikings, Chris Shern and Henrik Jeberg emphasize the central role of cooperation throughout Nordic life, drawing upon their comparative experiences, each working and living in the Nordics and the US. They offer that “collaboration and cooperation are effective in the workplace and in coalition politics in the Nordics because they come naturally. This way of thinking and acting is what people have known all their lives.”Footnote ¹⁷ The authors contrast US norms, describing how competition is routinely celebrated and embraced.

Bjerke emphasizes that Nordic cooperation is achieved through consensus-building and effective negotiation: “The typified Scandinavian business leader is a negotiator. Scandinavian top managers stress that their most important ability is to obtain results in cooperation with the employees, combined with their ability to negotiate.”Footnote ¹⁸ Bjerke further describes, “They are not autocratic, but use a delegating and participatory style; use power if necessary, but then based on legitimacy; consult their subordinates; look for cooperation, compromises, and consensus; are collective individuals.”Footnote ¹⁹ This seemingly contradictory idea of “collective individuals” took my American mind a long time to grasp.

Individuals throughout the US and Nordics value individual freedom and autonomy. Still, the Nordics maintain that individual freedom is more effectively achieved by considering the collective We, whereas the US embraces the Me as the means.

Like many cross-cultural leadership writings, the Nordic Leadership report relies heavily on the work of social psychologist Geert Hofstede. Hofstede constructed the masculine–feminine cultural dimension against which tendencies for (or against) cooperation and consensus-building are measured.Footnote ²⁰ The Nordic nations were deemed the most feminine societies globally. The US resides in the masculine zone.Footnote ²¹ The Nordic Leadership report provides this useful characterization of Hofstede’s masculine–feminine cultural dimension:

In Sustainability Leadership, Henrik Henriksson and Elaine Weidman Grunewald connect cooperation and consensus-building across Nordic societies to the global sustainability leadership role the Nordics has assumed, emphasizing the important role of leadership to establish a mutual purpose, and steering activities toward addressing that purpose.Footnote ²³

Norms of Modesty

Modesty is one of the more immediately observable norms of Nordic leadership. The need for “saving face” is rejected as a conspicuous act of self-promotion. In the Nordics, effective leadership requires leaders to look a bit foolish from time to time – not have all the answers – and to be able to laugh at themselves in a self-deprecating manner. The GLOBE study is arguably the most extensive cross-cultural comparative leadership study ever undertaken. Leadership norms related to modesty are discussed within comparisons of self-protective leadership:

When discussing the norm of modesty in Nordic leadership, individuals commonly reference Janteloven – a term derived from Aksel Sandemose’s 1933 satirical novel En flyktning krysser sitt spor (A Fugitive Crosses His Tracks). Originally conceived as a critique of small-town social control mechanisms, with the core principle “you’re not to think you are more important than anybody else,” Janteloven’s cultural interpretation has evolved. While Sandemose intended to illuminate the oppressive aspects of social conformity, contemporary Nordic discourse has reframed janteloven more positively as an expression of social solidarity and collective responsibility.

Contemporary scholarship discusses Janteloven’s paradoxical role in Nordic organizational culture. While potentially constraining individual excellence through what has been termed “tall-poppy syndrome,” the norm simultaneously facilitates cooperation by suppressing displays of individual superiority that might impede collective action.Footnote ²⁵ Organizational behavior research suggests that reduced status differentiation enhances information sharing and trust formation, critical components for effective stakeholder cooperation.

The norm of modesty (not worrying about “saving face”) is essential to effectively tackle wicked problems since these problems come with far more questions than answers. Revisiting Grint’s figure, we see that the more wicked a problem is, the more uncertainty about its solution. Asking questions is essential to better understanding potential courses of action. If concerned about saving face, one will be less likely to expose one’s lack of an answer by asking questions – and ultimately less likely to act.

Norms of Humanism

Ideals of humanism run deep in Nordic culture and are readily apparent in Nordic leadership. Humanism is “a democratic and ethical life stance that affirms that human beings have the right and responsibility to give meaning and shape to their own lives. Humanism stands for building a more humane society through an ethics based on values in a spirit of reason and free inquiry through human capabilities.”Footnote ²⁶

Humanism has not been explicitly called out as a leadership norm in prior scholarship, to my knowledge, but it is merited. In their report, The Nordic Perspective, the Nordic Council of Ministers wrote, “Compassion, tolerance, and conviction about the equal value of all people” are central to a Nordic approach to the world.Footnote ²⁷

When studying leadership in the Nordics, I saw individuals like Marianne Barner of IKEA and Mads Øvlisen of Novo Nordisk practice a humanistic leadership approach. Barner was the key architect and implementer of the humanistic policies IKEA established for its supply chain in the 1990s–2000s, including “what is in the best interest of the child” if one ever encountered the potential for child labor in a supply chain.Footnote ²⁸ At the time, many American-based firms facing pressures to address child labor in their supply chains adopted a rather simplistic compliance approach of dropping a supplier if child labor allegations arose for fear of consumer backlash and potential boycotts. However, as described in What Works for Working Children, this reaction can result in worse working conditions for a child laborer, including child prostitution.Footnote ²⁹

Through Barner’s leadership, IKEA developed procedures and a code of conduct to address the root causes of child labor and take action in the child’s best interest, resulting in the IWAY (for “IKEA Way”) standard of requirements for environmental, social, and working conditions. Harvard Business Review has since featured Barner as the protagonist of one of the most well-known Harvard case studies of responsible business leadership challenges. The case demonstrates how deep-seated reverence for humanism was embedded in the leadership shown by Barner and IKEA.Footnote ³⁰

Norms of Democracy

The Nordic region demonstrates a long-standing commitment to the ideals of democracy. Democratic ideals can be found in every aspect of society, including leadership. Democracy is fundamentally about the dispersion of power; the Nordic leadership norm of democracy is directly related to the norm to disperse power throughout the organization. Bjerke referred to this leadership approach in the Nordics as “non-authoritative” leadership.

The Nordic leadership norm of democracy and embracing the stakeholder approach are two sides of the same coin. The stakeholder approach represents an effort to extend democratic participation and disperse power. Swedish management scholar Eric Rhenman, a longtime champion of industrial democracy, was an originator of the stakeholder concept.

The first time “stakeholder” appeared in management literature anywhere in the world was in Rhenman’s classic 1968 book Industrial Democracy and Industrial Management.Footnote ³¹ Rhenman connected the practice of democratic leadership with improved efficiency and greater equality of opportunities for employees:

Rhenman connected his prescriptions for power dispersion to the broader debate between capitalism versus communism. He critiqued Marx’s assertion that capital owners and laborers were necessarily in conflict: “From the early days of industrialization and of the labor movement, conflict between employer and employee has been a marked social phenomenon … In his criticism of eighteenth-century capitalism, Marx was one of a motley company of writers, all extreme as himself, who in their different ways regarded conflict as something fundamental and explosive.”Footnote ³³

In Management in Scandinavia, authors Jette Schramm-Nielsen, Peter Lawrence, and Karl Henrik Sivesind described how the Nordic leadership norm of democracy is a product of culture and policy.Footnote ³⁴ They summarize Nordic leadership as “characterized by informality, equality, and restraint” that takes a “consensual, participative, and inclusive approach to decision making and change implementation.” The authors emphasize that Nordic leadership involves “a reluctance by most managers to articulate their power, an inclination to reasonableness and quiet persuasion, rather than to charismatic dominance.”Footnote ³⁵ They further connect the Nordic leadership democracy norm with efficiency, stating that the Nordics “have developed a management style which is extraordinarily participative and process-oriented without losing the battle for efficiency.”Footnote ³⁶

Norms of Pragmatism, Critical Thinking, Systems Thinking, and Stewardship

While the following norms of pragmatism, critical thinking, systems thinking, and stewardship are not well established in the leadership scholarship, through my own experiences, I am convinced of their importance to more fully describe Nordic leadership.

Pragmatism is deeply embedded in Nordic leadership. A pragmatic approach involves collecting and considering empirical evidence (data) to determine what works, then adjusting as needed to do more of what works and less of what does not. Bjerke summarized this approach as “rational and practical”: “Scandinavians prefer systematic, rational, and detailed problem-solving, where decisions may not necessarily come fast, but where problems are well penetrated when decisions are taken.”Footnote ³⁷

Nordic governmental agencies demonstrate “a voracious appetite for data,”Footnote ³⁸ and Nordic companies can say the same. In the Nordics, leadership depends heavily upon the merits of the rational argument and its supporting facts. Nordic leadership is strikingly less charismatic than in the US, where showmanship is more greatly valued. In the Nordics, facts and data matter most in influencing others to take action.

The pragmatic leadership approach often leads to cooperation that spans traditional boundaries when such partnerships are of mutual benefit. Strong engagement and cooperation can be readily observed among Nordic companies, labor unions, government, universities, and research institutions.Footnote ³⁹ The collaborative relationships between company management and labor unions are essential in a Nordic context and directly supported by the pragmatism leadership norm.Footnote ⁴⁰

Critical thinking is pervasive in Nordic culture and, in my view, represents a unique Nordic leadership norm. Critical thinking is “the systematic evaluation or formulation of beliefs, or statements, by rational standards,”Footnote ⁴¹ and therefore related to pragmatism. Nordic educational systems emphasize critical thinking through specific pedagogical practices, including mandatory oral examinations where students must defend their analytical positions and extensive use of problem-based learning approaches.Footnote ⁴²

When I began teaching business school students in the Nordics, I was caught a bit off guard by many of my students’ capacity and predisposition for critically examining the readings I had assigned. While my US students were more likely to treat my assigned readings, from the Harvard Business Review, as a suite of “facts,” my Nordic students, by contrast, often picked apart the arguments within the articles, suggesting they were not sufficiently supported with sound empirical evidence or appropriate logic. Perhaps not surprisingly, Nordic countries perform conspicuously well in country-level measurements of critical thinking, like the Media Literacy Index that assesses a populace’s potential for resilience to “post-truth” politics and “fake news.”Footnote ⁴³

I am unaware of any formal cross-cultural academic study that draws out Nordic leadership as demonstrating comparatively more substantial critical thinking. However, when I encountered Donald Schön’s book The Reflective Practitioner,Footnote ⁴⁴ I found that he described what I had observed in the Nordics. The reflective practitioner exercises critical thinking as a central component of leadership, emphasizing the ability to reflect critically on one’s actions to engage in continuous learning. Critical thinking is a fundamental aspect of Nordic leadership.

Through my Nordic experiences, I became aware of the capacity to identify systemic problems and address them with effective systems. In contrast, I came to recognize a tendency in the US to push systems-level problems down to the individual in a reductionist approach. I found systems thinking to be a dominant leadership approach in the Nordics.

The reductionist approach that can be witnessed in the US arguably stems from a school of management developed and deployed in the Industrial Revolution; problems were considered solvable through rational means that involved reducing a problem to its elements and solving each more minor problem. Rittel and Webber poked holes in this “one-size-fit-all” approach by claiming that while a reductionist approach might work well to solve tame problems, wicked problems are different and require a view toward the overall system, to consider the “whole.”

Nordic educational systems connect directly to systems thinking and committed consideration for the whole. Denmark, with its traditions of the folkehøjskole (folk school) centering on the philosophical idea of Bildung, is a good example (Chapter 4).Footnote ⁴⁵ In 2020, David Brooks wrote in the New York Times about the Nordic approach of educating the whole person:Footnote ⁴⁶

The world is a system, and everything is connected – sustainability challenges are interconnected with other challenges.

The Nordic leadership norm, stewardship, serves as a helpful summation of all the Nordic leadership norms. Stewardship implies a self-imposed responsibility to care for something or someone for a considerable time. A stewardship approach focuses on value creation. In contrast, an extractive approach happens when one extracts as much value as possible. For a manager, this may mean extracting as much time and effort as possible from their direct reports. For a CEO or influential shareholder, this may mean extracting as much financial profit as possible from their company. An extractive approach tends to have a short-term perspective, whereas a stewardship approach emphasizes the longer term.

I realized stewardship was a fundamental norm of Nordic leadership through my engagements with Mads Øvlisen of Novo Nordisk. Øvlisen led the initiative during his tenure as CEO to change Novo Nordisk’s articles of association to explicitly express a corporate purpose “to conduct its activities in a financially, environmentally, and socially responsible way” consistent with a stewardship approach.Footnote ⁴⁷ I saw this tendency to embrace a stewardship approach with many Nordic leaders who worked hard to establish the structures to ensure better long-term success for their organizations.

The Rhenman Stakeholder Framework

Rhenman’s stakeholder framework departed from the corporate-centric view of business by conceptualizing the firm as a network of mutually dependent relationships. His stakeholder map – first published in Swedish in 1964 (see Figure 6.1) and translated into English in 1968 (see Figure 6.2) – was the first visualization of a stakeholder map to appear in management literature worldwide.

Figure 6.1 Stakeholder map (Rhenman, 1964).

Source: Eric Rhenman, Företagsdemokrati och företagsorganisation (Stockholm: Bokförlaget PAN/Norstedts, [1964] 1967), 36. Figure reproduced following good-faith efforts to obtain permission from Norstedts Förlagsgrupp; the rights holder could not be confirmed.

Figure 6.1Long description

This conceptual diagram is the original 1964 stakeholder map developed by Eric Rhenman. It consists of eight interlocking ovals arranged in a circular formation around a central oval labeled Företaget, the company.

Surrounding the company are the following stakeholder groups, clockwise from top:

• - Anställda, employees in English

• - Företagsledning, corporate management in English

• - Kommun, municipality in English

• - Ägare, owners in English

• - Kunder, customers in English

• - Stat, state in English

• - Leverantörer, suppliers in English

Each stakeholder group is shown in an oval that overlaps partially with the central company oval and with its neighboring ovals, visually representing the interdependence between the company and its various stakeholders, as well as among the stakeholders themselves. This non-hierarchical and interconnected layout reflects Rhenman’s Nordic stakeholder philosophy, emphasizing mutual responsibility and cooperation rather than competition.

Figure 6.2 Stakeholder map (Rhenman, 1968).

Source: Eric Rhenman, Industrial Democracy and Industrial Management (London: Tavistock Publications, 1968), 25. Figure reproduced following good-faith efforts to obtain permission; the book is out of print and the rights holder could not be confirmed.

Figure 6.2Long description

Conceptual diagram presents Eric Rhenman’s 1968 stakeholder map. A large circle labeled The company is placed at the center. Radiating outward from the central circle are seven capsule-shaped ovals, each partially overlapping with the company and pointing outward toward labeled stakeholder groups.

Clockwise from the top:

• - Employees

• - Management

• - Local authorities

• - Owners

• - Customers

• - The State

• - Suppliers

Each stakeholder is connected to the company with partial overlap, suggesting mutual dependency. The design reflects a circular, nonhierarchical arrangement, visually underscoring the idea that stakeholders and the company are interdependent rather than the company being dominant or separate.

This visualization preserves the cooperative ethos of Rhenman’s 1964 version while offering a cleaner, more symmetrical layout adapted for the English-language publication Industrial Democracy and Democracy Management.

Rhenman’s stakeholder maps depicted the company and its stakeholders through a series of overlapping ellipses, visually emphasizing the interdependence and mutual interests between the firm and its stakeholders. Rather than placing the corporation at the center of a hub-and-spoke model, as most subsequent visualizations would do, Rhenman’s framework portrayed an interconnected network where the company existed as one node within a broader web of relationships.

This visualization reflected core Nordic cultural values, emphasizing cooperation and mutual interdependence over hierarchy and competition. Throughout the 1960s, 1970s, and 1980s, Rhenman’s stakeholder framework achieved what scholars have termed “hegemonic status” in Nordic management academia, fundamentally shaping how Nordic companies approached stakeholder relationships.Footnote ⁸ Rhenman’s theoretical contributions emerged from and reinforced distinctly Nordic cultural values prioritizing cooperation over competition.

The 1979 publication of Porter’s “Five Forces” model highlighted the stark contrast between Nordic and American approaches. While Rhenman emphasized cooperation and mutual value creation, Porter’s deeply influential framework cast stakeholders as competitive threats to be managed. This fundamental difference shaped how managers viewed relationships with suppliers and employees – as either cooperative partners or sources of competitive tension.

This stark contrast in approaches reflected deeper cultural and philosophical differences in how businesses understood their stakeholder relationships. While Porter’s model reinforced an adversarial mindset, Rhenman’s framework suggested that stakeholder relationships represent opportunities for collaborative problem-solving and shared value creation.

Nordic Companies: Stakeholder Approach in Practice

The theoretical principles of the Nordic cooperative advantage – institutional support for stakeholder engagement, cultural norms favoring cooperation, and structures enabling long-term thinking – manifest distinctly in corporate practice. The following case studies illustrate how these principles translate into organizational behavior and strategic decision-making. Each case demonstrates different aspects of how Nordic institutional structures and cultural norms enable companies to pursue stakeholder cooperation more effectively than their global counterparts. Particularly noteworthy is how these companies connect stakeholder engagement to concrete sustainability outcomes aligned with the SDGs.

The case selection reflects three key considerations: sector diversity and associated sustainability challenges, distinctive manifestations of stakeholder cooperation, and contributions to specific SDGs. We begin with Ramboll, which exemplifies the core elements of Nordic capitalism discussed throughout this book. The subsequent cases then explore specific aspects of the Nordic cooperative advantage in greater detail.

LEGO

Founded in 1932 in Billund, Denmark, LEGO revolutionized toy manufacturing with the introduction of its interlocking brick system in 1958, for which the US patent is shown in Figure 6.3, a system that remains compatible across generations.

Figure 6.3 LEGO US Patent.

Source: U.S. Patent No. 3,005,282, filed July 28, 1958, and issued October 17, 1961, accessed May 25, 2025, https://shorturl.at/VL2NA.

Figure 6.3Long description

This U.S. patent diagram, filed July 28, 1958, and granted on October 24, 1961, Patent No. 3,005,282, illustrates the design of LEGO's interlocking brick system.

• - Left panel, which is figure 1: A perspective view shows a rectangular brick with eight cylindrical studs on top and three internal tubes extending downward. The studs are labeled 21, and the internal tubes are labeled 22. The underside of the brick includes the familiar hollow structure that allows for secure interlocking with other bricks.

• - Right panel, which is figure 2: A top-down sectional view of the same brick shows the spatial layout of the three internal tubes labeled 22, aligned beneath the top studs labeled 21. The outlines of eight top studs are also faintly visible, reinforcing the brick's regular 2x4 layout. The diagram is labeled G. K. Christiansen as the inventor and titled Toy Building Brick. It visually documents the engineering of LEGO's foundational design, which remains compatible across generations.

LEGO was born out of a broader Nordic cultural tradition that places high value on childhood as a protected and formative stage of life. Across the Nordic region, play is recognized as a vital foundation for cognitive, social, and emotional development. This ethos is embedded in LEGO’s very name – leg godt, meaning “play well” – and is aligned with Nordic ideals of supporting a good childhood.Footnote ¹⁵

LEGO’s approach to innovation and stakeholder engagement reflects core elements of Nordic business culture. This is particularly evident in three key areas: its child-centered development philosophy, its open approach to innovation, and its engagement with critics as partners. The Mindstorms case exemplifies this approach to stakeholder engagement.

When LEGO launched its Mindstorms robotics series in 1998, a hacker cracked the console’s code and posted it, prompting negative commentary on LEGO’s online platform. Rather than issuing lawsuits and shutting down its online platform, LEGO engaged with stakeholders – hackers and customers alike – to create value together.Footnote ¹⁶ LEGO adopted an approach of Open Innovation, where external contributors are invited into the innovation process through cooperative engagement and mutual value creation.Footnote ¹⁷ This catalyzed a dynamic ecosystem of user-generated content, educational tools, and entrepreneurial activity – and contributed to significant successes for the company.Footnote ¹⁸

LEGO products have since become foundational in many schools and learning environments, reinforcing the company’s alignment with SDG #4: Quality Education. In 2020, Forbes declared, “LEGO is probably the biggest education company on Earth,”Footnote ¹⁹ and LEGO consistently ranks at the top of corporate responsibility rankings.Footnote ²⁰

Volvo

Swedish automotive company Volvo pioneered safety innovations, including the three-point seatbelt, as shown in the original US patent in Figure 6.4. This innovation is considered the world’s most important traffic safety development and is estimated to have saved more than one million lives since its launch in 1959.Footnote ⁴⁴ Volvo immediately realized the potential societal benefits of its innovation if it were rapidly adopted across the automobile industry. So, rather than consider its innovation a “competitive advantage,” Volvo shared it with all automakers (similar to Carlsberg with the PH scale).

Figure 6.4 Volvo 3 Point Seatbelt US Patent.

Source: U.S. Patent No. 3,043,625, filed July 10, 1959, and issued July 10, 1962, accessed June 22, 2025, https://patents.google.com/patent/US3043625A.

Figure 6.4Long description

This U.S. patent diagram, filed August 17, 1959, and granted July 10, 1962, Patent No. 3,043,625, illustrates the original design for the 3-point seatbelt developed by Swedish engineer Nils Bohlin at Volvo.

The drawing features a driver seated in a car, wearing a shoulder and lap belt combination. The belt system extends diagonally across the torso and horizontally across the pelvis, securing into a central locking mechanism near the seat base.

The belt’s attachment points, guiding mechanisms, and buckle system are labeled with reference numbers, highlighting the integrated design that allowed for both comfort and security. For instance, labels 5 and 6 refer to the upper belt anchor point on the car frame, and 13 represents the shoulder harness extending across the chest.

This visualization documents Volvo’s safety innovation, which was openly shared with the auto industry to accelerate adoption and maximize societal benefit, an act that has saved over a million lives and remains a defining example of corporate responsibility.

While Volvo typically protects its innovations, it determined that the societal benefits of the three-point seatbelt were too significant to restrict. By forgoing potential short-term competitive advantages and profits, Volvo demonstrated a cooperative approach that ultimately enhanced its global reputation as a leader in safety. This decision has contributed to both the company’s market position and its organizational culture, where safety innovation remains a source of pride among employees.

Nordic Theory of Love

Freedom is necessary to experience authentic love and friendship. This idea is the heart of the Nordic Theory of Love, a concept first articulated by Swedish scholars Lars Trägårdh and Henrik Berggren as the Swedish Theory of Love and later expanded by Anu Partanen to the Nordic Theory of Love (Chapters 4 and 6).Footnote ²⁹ Trägårdh and Berggren’s Swedish Theory of Love argues that Swedes, while fiercely individualistic, achieve freedom through state support rather than family dependency.Footnote ³⁰

Freedom is not achieved alone; we almost always depend upon support from elsewhere to secure freedom. Trägårdh and Berggren’s theory is that Swedes achieve individual freedom by combining the individual and State. This “statist individualism” can be seen in the State programs – healthcare, education, and so on – that Nordic countries hold as freedom enablers for the individual.

US citizens, by contrast, commonly achieve freedom through their families. Accessing healthcare and education in the US is often secured through one’s family, such as getting healthcare through a parent or spouse’s healthcare plan or relying upon a parent to pay tuition. In the States, women’s freedoms are also diminished by tending disproportionately to the home and childrearing; in the process, women become increasingly financially dependent on the men in their families. We could extend Trägårdh and Berggren’s nomenclature to call the US approach “familistic individualism,” where the individual secures freedom through one’s family.

Living in the US shaped Trägårdh’s view that the absence of social safety nets makes many US residents excessively dependent upon their families – parents, husbands, or rich uncles. Trägårdh and Berggren stress how freedom-limiting the US approach is for individuals, particularly those who do not win the birth lottery.Footnote ³¹

“Americans talk so much about freedom but have such little idea how little freedom they actually have,” a Danish exchange student told me at Copenhagen Business School. She was struck by how US students needed parental permission to change majors because their families paid tuition. “I can make my own choices without asking permission,” she noted, acknowledging that while Danes pay higher taxes for universal education, the freedom it provides is worth the cost. This contrast became vivid when I advised a UC Berkeley student to take the History of American Capitalism course. I said I thought he would appreciate the professor, who had authored the book Accounting for Slavery: Masters and Management.Footnote ³² He replied that the course sounded fascinating, but “My dad pays my tuition, and he would never let me take it.”

Before 1970, in-state students paid no tuition at University of California, Berkeley.Footnote ³³ Fast forward fifty years, and four years of in-state tuition costs over $60,000.Footnote ³⁴ UC Berkeley is a public university, but the financial burden has shifted to individual students paying increasingly higher tuition and widespread reliance upon philanthropic endeavors. (Reflecting upon her experiences as Chancellor of University of California, Berkeley, outgoing Chancellor Carol Christ remarked, “In the 1970s at Berkeley, there was no expectation that the chancellor was involved significantly in fundraising. Generally, we were generously supported by the state. Now, fundraising is probably the biggest part of my job.”Footnote ³⁵) For most students, increased tuition means increased dependence on their families. For prospective students whose families cannot provide the necessary support, the choice is to either take on significant debt or forego attending a university altogether.

When parents fund their adult children’s education and expenses, the relationship transforms from one of guidance to patronage, often extending into middle age. This financial dependency, coupled with potential future inheritance, can turn family relationships into transactional negotiations. Whether one acknowledges it or not, the freedom achieved through dependency upon family charity is a reality of US life. In contrast, the Nordic focus has been on expanding freedom for everyone, irrespective of family, and honestly acknowledging that we do not secure freedom entirely by ourselves.

Freedom: Positive and Negative

Few thinkers have contributed more to ideas about freedom than Latvian-born theorist Isaiah Berlin. Berlin’s family moved to Saint Petersburg, Russia, in 1909 when he was six. Witnessing the events of the 1917 October Revolution from their apartment window and feeling increased oppression as the Bolsheviks ascended to power, Berlin’s family later left for England in 1921.

As discussed earlier, Berlin’s distinction between negative and positive freedom provides a valuable lens. The Nordic model’s expansion of positive freedom – access to education, healthcare, childcare, and the natural world – underscores its alignment with Berlin’s trajectory of positive liberty.Footnote ³⁶ The continued expansion of positive freedoms is the foundation of the Nordic model. The “core of Nordic modernity,” wrote Bo Stråth in Egalitarianism in Scandinavia, “mainly follows Berlin’s trajectory of positive freedom.”Footnote ³⁷

Through democratic processes, Nordic societies establish and maintain efficient universal systems that ensure citizens’ access to essential services such as medical care and education. These systems are funded through income taxes supported by vibrant market economies, demonstrating how democracy and capitalism can work hand in hand. Democratic oversight helps keep these systems efficient and accountable while expanding positive freedoms for all citizens. This practical coupling of democratic processes with market dynamics makes Nordic societies powerful examples of democratic capitalism in action, increasing the likelihood that more citizens can flourish.

Positive freedom extends into property rights in the Nordics. Given how central property rights are to capitalism, this merits particular attention. Allemansrätten (Swedish) or Allemannsretten (Norwegian) translates to “everyman’s right,” referring to laws across the Nordics that ensure everyone has the freedom to hike, camp, and forage for berries and mushrooms on all lands, including privately owned (provided you stay five hundred feet from anyone’s home).

Also known as freedom-to-roam laws, the official website of Visit Norway explains, “The main rules are easy: Be considerate and thoughtful. Don’t damage nature and other surroundings. Leave the landscape as you would want to find it.” to roam represents “a traditional right from ancient times, and from 1957 it has also been part of the Outdoor Recreation Act. It ensures that everybody gets to experience nature, even in larger privately owned areas.”Footnote ³⁸ In 2017, Sweden listed the entire country on Airbnb – bookable without fee – thanks to its constitutional right to roam. This stands in sharp contrast to US signage threatening violence against trespassers, revealing radically different views on property and public access.Footnote ³⁹

The expansion of the freedom for everybody to roam entails a reduction of negative freedom for landowners whose freedom from having people roam on their land.Footnote ⁴⁰ The tradeoff that Nordic societies have accepted is that the expansion of positive freedoms for everybody is worth a reasonable reduction of negative freedoms for property owners. In stark contrast, Walmart sells signs in the US stating, “No Trespassing. No Soliciting. Violators will be shot,”Footnote ⁴¹ and “Private Property. No Trespassing. We do not call 911,” with an image of a gun, heavily implying that property owners have the freedom to shoot (and kill) anyone who comes onto their property.Footnote ⁴² Such signs would be absurd in the Nordics and considered a gross violation of custom and law.Footnote ⁴³

In contrast, the US has focused primarily on expanding negative freedoms throughout its history. Freedom in the US is frequently prioritized for individuals with power and property. Stråth writes, “the American dream of a society of equals often came close to the negative freedom as defined by Berlin … negative freedom is the freedom to do whatever one wants and becomes in the end a question of power.”Footnote ⁴⁴ In Berlin’s words, “freedom for the wolves has often meant death to the sheep.”Footnote ⁴⁵

There’s US history to consider, where the freedom to own another human being as property represented one of the most egregious examples of expanding negative freedom for a powerful few. When slavery was legal in the US, slavery advocates argued that abolishing slavery violated slaveholders’ freedom. The pro-slavery position supported the expansion of negative freedom for owners of slaves, advocating that they should have freedom from being interfered with by others to own human beings as property (consistent with the proprietarian ideology laid out in Chapter 4). Of course, such a position required a complete disregard for the freedoms of enslaved people.Footnote ⁴⁶ Tocqueville observed the propensity in the young US to grant an expansion of negative freedom for the powerful few, even at the cost of eradicating freedoms for others: “They want equality in liberty, and if they cannot have it, they still want it in slavery.”Footnote ⁴⁷

When assessing the claim that the US is the freest nation in the world, one could also ask freedom for whom?

Returning to the contentious matter of guns, Adults in the US have considerable freedom to own military-grade assault weapons, like the AR-15. Gun rights advocates in the US often frame the issue in terms of freedom from a tyrannical government, invoking an excerpt from the Second Amendment, “the right of the people to keep and bear arms, shall not be infringed.” Upon turning eighteen, the age of adulthood in the US, the Uvalde killer legally purchased two AR-15-style weapons that he used in the killings just two days later.

Adults in Nordic nations have the freedom to own guns – just not military-grade weapons. Finland routinely ranks among the highest levels of gun ownership in the world, with 32 guns per 100 people. Norway is close behind with 29 guns per 100 people. (The US consistently ranks first in the world with 120 guns per 100 people.Footnote ⁴⁸) However, civilian ownership of military-grade weapons is illegal across all Nordic nations. Therefore, adults in the Nordic nations have comparatively less freedom than their American adult counterparts to own and shoot military weapons as civilians.

However, concerning children, given the comparatively few military-grade weapons in circulation among Nordic citizens, children in Nordic nations enjoy greater freedom to go to school without fear that military-grade weapons could be present. The concept of freedom for children in a school setting usually involves a safe environment for learning and personal growth. Therefore, children in the US enjoy comparatively less freedom in this regard. Active shooter drills are now commonplace across US schools, resulting in increased anxiety, stress, and depression among children.Footnote ⁴⁹ In this case of considering freedom for whom, the US appears to effectively prioritize the freedom of adults to own military-grade assault weapons, and the Nordics appear to effectively prioritize the freedom of children to live without fear of encountering military-grade assault weapons.

Leaky Buckets: Reducing Negative Freedom

Taxes represent a reduction in negative freedoms, as they are mandatory, reducing one’s freedom from coercion. Economists have long used a “leaky bucket” metaphor as a visual for how collecting taxes addresses issues of inequality, implying that all efforts to address inequality inevitably result in inefficiencies.

According to Arthur Okun (Chapters 2 and 3), efficiency is reduced when individuals receive universal benefits because they now have reduced incentives to work. The individuals paying increased taxes have reduced incentives to work since high taxes mean they keep less money. Additionally, administrative efforts must collect the taxes and direct the collected tax revenues wherever they go. According to Okun, collecting taxes to address inequality will always reduce efficiency, just as water is continuously lost from a leaky bucket.Footnote ⁵⁰

The leaky bucket metaphor has had significant staying power, influencing how US economists think about inequality and the role of taxes in the US.

Efficient Hand Pumps: Increasing Positive Freedom

The leaky bucket metaphor fails to acknowledge that inequalities, when allowed to grow excessively, can impose their own efficiency costs on society. Trickle-down economics has also been extensively evaluated and found unsupported by empirical evidence. As Robert Reich summarizes, “Trickle-down economics is a cruel hoax.”Footnote ⁵¹

An “efficient hand pump” is a counter-metaphor to the leaky bucket, and this one is more suitable for describing the Nordics. A leaky bucket implies a subservient relationship, where the poor continually depend upon the rich to bring them water (and much water will be spilled along the way). In contrast, an efficient hand pump represents a commitment to increasing the freedom of individuals who can pump their water without dependency upon others. Installing and maintaining efficient hand pumps throughout society increases freedom for individuals who work hard to get their own water. The efficient hand pump metaphor aligns with insights from institutional economics, which demonstrate that well-designed universal systems can improve efficiency across society. Figure 7.2 contrasts two metaphors – the leaky bucket and the efficient hand pump.Footnote ⁵²

Figure 7.2 Leaky bucket versus efficient hand pump.

Figure 7.2Long description

Image shows two line drawings placed side by side. On the left is a wooden bucket with two handles; water is leaking from a hole near the base, forming a puddle beneath it. On the right is a manual hand pump with a curved handle and a spout, from which a single drop of water is falling. The background is blank.

This metaphor can be extended further: Imagine if every individual had to dig their own well and install their own handpump to access water. Some would succeed through tremendous individual effort, while others might fail despite working equally hard due to hitting bedrock or lacking proper tools. Meanwhile, some individuals inherit fully functioning wells from their families, allowing them to access water with minimal effort. Those with inherited wells might look down on others struggling to build theirs, labeling them as lazy or undeserving – ignoring the vast difference in starting positions.

This scenario mirrors how many Americans access essential services, such as healthcare and education. Some must build their access from scratch, often facing nearly insurmountable obstacles, while others inherit access through family wealth and connections. The resulting system is not only deeply inefficient at a societal level – with countless individuals expending enormous effort to duplicate infrastructure – but it also undermines the American Dream’s promise of equal opportunity. Just as it would be more efficient to build a water system serving everyone, universal access to education and healthcare through public systems represents a more efficient approach than requiring each individual or family to secure access independently.

When the expressed purpose for collecting taxes is to expand positive freedoms for all citizens to access such essential services as medical care and education, and taxes are used efficiently to achieve said purposes, the overall societal-level efficiencies can be increased.Footnote ⁵³ In these cases, a society may willingly choose a reasonable reduction in negative freedom (paying higher taxes) to secure a meaningful increase in positive freedoms (access to medical care and education).

Nordic citizens expect the value of the services they access will outweigh the taxes they pay. Nordic societies are responsive to citizens. Should citizens reject “leaky hand pumps” (i.e., if a service or program were inefficient), it must be improved or eliminated.

Universal access to education through university for all Nordic citizens has proven an efficient hand pump. Universal access to quality healthcare paid parental leave, and subsidized childcare ensures every child gets a good start, expanding their positive freedoms. Access to medical care – including preventative care – is an efficient hand pump to ensure sustained health that will serve the individual well into the future. (Finland’s under-five child mortality rate is 1.7 per 1,000 live births – the lowest in the world; the US is 6.53.Footnote ⁵⁴)

The Nordic model can be seen as a collection of efficient hand pumps positioned throughout society that all citizens have the right to access. Nordic societies’ universal services result in efficiency gains at the societal level.

In the Nordics, the State is expected to expand the positive freedoms of every citizen. The state is discussed as an extension of the Nordic people, a mechanism for coordinating efforts and establishing efficient systems to address problems more significant than any individual or local group can effectively address. In the US, the State is characterized as the enemy, which has the impact of diminishing the negative freedoms of its citizens.

I have realized that many people in the US do not realize how inefficient US society is. US citizens often accumulate overwhelming out-of-pocket costs in the march toward paying fewer taxes. People still need healthcare and education, and US citizens pay for these services at levels higher than citizens of other nations pay in taxes. Partanen summarized:

Partanen’s words echo those of Olof Palme, who contrasted Swedish experiences with the US while speaking at Stanford University in the 1970s.

Reliably Good Defaults Expand Freedom

The Nordic model provides reliably good default options – universal healthcare, high-quality education, safe transportation – that reduce stress and expand freedom. I could not fully appreciate the liberating effect of these defaults until I lived in the Nordics. In contrast, Americans have grown accustomed to constant anxiety, forced to fight for basic services that should be guaranteed.

When Finnish journalist Anu Partanen moved to the US, she described, “It’s hard to exaggerate how fundamentally the loss of health insurance destroyed my sense of personal security and well-being.”Footnote ⁶⁹ Some might argue she had more freedom in America – she could “choose” from many insurance options – but the burden of navigating complex markets did not constitute freedom for Partanen. A lottery of poorly structured choices is no substitute for a well-designed, efficient default.

Psychologist Barry Schwartz’s The Paradox of Choice illustrates how excessive choice can overwhelm rather than liberate. Having to make constant decisions in complex systems – especially when opting out leads to personal or financial collapse – undermines freedom.Footnote ⁷⁰ Few of us are healthcare experts or can reliably predict the risk of a family member getting sick or injured in the upcoming year. We are prone to select a plan that is too small (“I’m never going to get sick”) or too big (incurring excessively high premiums), depending upon our personality types and risk appetite.

Nudge Theory, developed by Nobel laureate Richard Thaler, demonstrates that well-designed defaults can improve outcomes without limiting choice. Automatic enrollment in retirement savings plans, for example, boosts long-term financial security while preserving individual freedom. Thaler and co-author Cass Sunstein argue that nudges promote better decisions at a systems level and expand individual freedoms.Footnote ⁷¹

The Nordics embed such nudges into daily life. In Copenhagen, even on rainy days, biking remains the most convenient form of transport because systems are designed to make it so. Exercise, health, and environmental benefits flow from infrastructure choices. Healthcare, too, is universal: Everyone has access to a solid baseline of care, and additional coverage is available on the market. Sarah and I chose the default, and it worked well – with no stressful insurance shopping required.

Creating good defaults requires systems thinking, democratic legitimacy, and economic efficiency. In Nordic societies, transparent public processes, not private interests, shape critical systems like healthcare and education. This ensures both effectiveness and trust. In contrast, the US often relies on market mechanisms that undermine democratic accountability and deliver suboptimal results. The Nordic experience shows that defaults, when designed thoughtfully with transparent, democratic oversight, can expand individual and societal-level freedom.

Yeah, but the Nordics Overconsume

While Nordic countries are celebrated for their commitment to sustainability, their per capita ecological footprints rank among the highest in the world, alongside other developed OECD nations. This critique highlights a crucial distinction: the difference between system design and system outcomes. Nordic capitalism’s institutional design may offer valuable lessons despite its present unsustainable consumption patterns. As scientists studying planetary boundaries concluded in 2025, “There are currently no countries that achieve good social outcomes while staying within their fair share of planetary boundaries.”Footnote ¹

Nordic societies’ excessive consumption illustrates what ecological economists like Herman Daly have termed the “growth-sustainability paradox.” This paradox, where economic growth in developed nations increasingly conflicts with planetary boundaries, presents a fundamental challenge to both Nordic and American models of capitalism. The Nordics’ violation of planetary boundaries despite their environmental consciousness demonstrates how deeply growth imperatives are embedded in modern economic systems. If everyone consumed like the average Nordic citizen, we would need almost four Earths to keep up with consumption.Footnote ² Critiques of the Nordics for overconsumption are well-founded, like the critique levied by Greta Thunberg at the start of this chapter.

Overconsumption by Nordic societies violates the second half of the definition of sustainable development: “without compromising the ability of future generations to meet their own needs.” Overconsumption steals from future generations. The problem of overconsumption exists across all developed economies represented by the OECD nations. Given the excessively high consumption patterns among the wealthiest individuals, overconsumption is pronounced in societies with heightened levels of inequality (Chapter 2).

Despite their overconsumption – a serious challenge that Thunberg rightly criticizes – the Nordics present a promising path forward for other advanced economies. While Nordic nations currently violate the second half of sustainable development’s definition by consuming beyond planetary boundaries, they are uniquely positioned to address this challenge precisely because they have effectively met the first half: “development that meets the needs of the present.” This achievement provides the social and political stability needed to tackle overconsumption. In SDG terms, the Nordics are effectively meeting SDG #1 “No Poverty,” SDG #2 “Zero Hunger,” SDG #3 “Good Health and Well-Being,” SDG #4 “Quality Education,” SDG #5 “Gender Equality,” and SDG #6 “Clean Water and Sanitation.” The US cannot claim that. Basic needs such as food, healthcare, education, and clean water are routinely unmet for millions of Americans, including many children.Footnote ³

By effectively meeting the needs of the present, the Nordics are better positioned to address problems of overconsumption. When the basic needs of the present generation go unmet, and vast swaths of a population are effectively operating in survival mode, sufficiently considering the well-being of future generations is far less likely. As Paul Farmer asserted, “It’s my conviction that poverty and inequality are the two ranking problems facing our crowded and beautiful planet – not the only problems, but perhaps the most severe, and two that, if addressed, could bring us a little closer to tackling some of the other ones.”Footnote ⁴

In his article, “The Dark Side of the Nordic Model,” Jason Hickel summarized,

This tension between social democratic achievements and ecological limits reveals a fundamental theoretical challenge in sustainable development: How can societies maintain high levels of human well-being while operating within planetary boundaries? The Nordic experience suggests that social democracy may provide crucial institutional foundations for addressing this challenge. Three key theoretical mechanisms link social democratic institutions to environmental sustainability.

First, by reducing economic insecurity through universal social programs, social democracies create the political space needed for long-term environmental planning. When basic needs are met, citizens and policymakers can focus on longer-term challenges like climate change rather than immediate survival concerns. Second, the strong democratic institutions and traditions of social consensus-building in social democracies facilitate the kind of collective action needed to address environmental challenges. The same institutional frameworks that enabled Nordic countries to negotiate labor–capital compromises in the twentieth century now help them build agreement around environmental policies. Third, social democratic emphasis on public goods and market regulation provides tools for addressing market failures around environmental externalities. The Nordic willingness to use state capacity to shape markets aligns with the interventions needed for environmental protection.

The fixation on GDP growth represents one of the starkest differences between American and Nordic capitalism, illustrating how these theoretical mechanisms play out in practice. While GDP growth has become almost religious doctrine in American economic policy – “one stat to rule them all” – Nordic nations maintain a more nuanced relationship with this metric. Ironically, even Simon Kuznets, the American economist who invented GDP and was later awarded the Nobel Memorial Prize in Economics, warned against using GDP to measure societal well-being. Yet while America embraced GDP growth as its primary economic objective, Nordic nations demonstrated that prosperity doesn’t require sacrificing everything at the altar of GDP growth. Their experience suggests that sustainable development requires moving beyond this single-minded focus on growth to consider a broader array of social and environmental metrics.Footnote ^6, Footnote ⁷

The Nordics are assuming a leadership position among the advanced economies through a three-pronged policy approach: first, implementing market-based mechanisms like carbon taxes; second, investing in circular economy initiatives that decouple growth from resource use; and third, developing new metrics beyond GDP to measure societal progress. This comprehensive policy framework, while still evolving, offers important lessons for other nations grappling with sustainability challenges.

Notably, the Nordics are betting on democracy to address sustainability challenges – and it’s a smart bet. “Inequality and climate change are the twin challenges of our time, and more democracy is the answer to both,” offered The Sum of Us author Heather McGhee in the book All We Can Save: Truth, Courage, and Solutions for the Climate Crisis.Footnote ⁸ Returning to Kate Raworth’s concept of doughnut economics (Chapter 2), the Nordics live above the hole of the doughnut, which is to say, above the collection of lower control limits. The Nordics are now making significant strides to establish policies to ensure they live below the upper control limits representing the planetary boundaries.

The Nordics have demonstrated a commitment to democracy and a strong belief that robust democracies are needed to address our greatest sustainability challenges.Footnote ⁹

Yeah, but Aging Populations Are Breaking the Nordic Welfare Systems

Demographic aging presents a critical test case for Nordic welfare states’ adaptability and resilience. Empirical evidence suggests a systematic erosion of eldercare infrastructure: Sweden’s care home capacity contracted by 25 percent between 2000 and 2015, while access rates for octogenarians declined from 20 percent to 11 percent by 2020. Meanwhile, waiting times for care home placement increased from fifty-one to sixty-four days, with municipalities citing resource constraints.Footnote ¹⁰ Access to eldercare has become more restrictive, with higher threshold requirements for assistance than two decades ago. The result is increasing privatization and reliance on informal care networks – more people must either pay for private services or rely on family members for care.Footnote ¹¹

The Nordics have attempted to address the aging population challenge through various means. Their family-friendly policies, including generous parental leave and subsidized childcare, help maintain higher fertility rates than many developed nations. While still below replacement level, birth rates in Sweden, Norway, and Denmark typically exceed those of other wealthy countries. High female labor force participation also helps maintain the tax base needed for social programs. However, these measures alone may prove insufficient.

Demographic aging has exposed fundamental contradictions in Nordic policy approaches. Even as Denmark implements increasingly restrictive refugee policies and Sweden dramatically cuts refugee acceptance, their economies increasingly depend on immigrant labor. This demographic reality has created an inherent tension: while population aging and labor market needs suggest increasing immigration, political pressures push toward restriction.Footnote ¹²

The demographic challenge represents a crucial test case for Nordic capitalism’s adaptive capacity in the twenty-first century. These pressures create fundamental contradictions: While demographic and labor market needs suggest a need for more immigration, political pressures push toward restriction. The coming decades will reveal whether Nordic capitalism can maintain its universal aspirations while navigating between these competing imperatives.

Yeah, but the Nordics Are Small

Population size differences between the US and Nordic nations present an obvious challenge for comparative analysis. With 330 million inhabitants, the US is over fifty times larger than Denmark (6 million) and more than ten times larger than all Nordic nations combined (28 million). This dramatic scale difference is frequently cited as reason to dismiss Nordic experiences as irrelevant to US policy challenges.

However, this objection overlooks how comparative analysis can operate at multiple levels of social organization. While “small state studies” have long demonstrated how smaller nations can offer valuable insights for larger ones, the Nordic region presents particularly rich learning opportunities across various units of analysis.Footnote ¹³ Organizations of similar scale can be meaningfully compared regardless of national context, as evidenced by decades of successful cross-border business benchmarking. Cities face comparable challenges in delivering services and improving quality of life whether situated in Minnesota or Norway, Wyoming or Iceland, or California or Sweden. The key to effective learning lies not in exact matching of scale, but in identifying relevant points of comparison and specific domains where innovation has produced demonstrable results.

My own experience with cross-national learning offers an instructive parallel, not at the city level but at the organizational level – comparing practices between Toyota and IBM. Early in my career as an industrial engineer, I was among countless professionals worldwide captivated by Japan’s remarkable advances of the 1970s–1990s, particularly Toyota’s innovations (Chapter 2). Despite Japan having only one-third the US population and being far more demographically homogeneous, the collective fascination with Toyota’s methods proved well founded. At IBM, I found that approaching Toyota’s practices with curiosity rather than skepticism about contextual differences enabled me to adapt their principles to create significant operational improvements in a very different organizational setting. This experience, shared by countless other efficiency professionals who successfully adapted Japanese methods to Western contexts, demonstrated how thoughtful benchmarking across seemingly distinct contexts can drive meaningful innovation.

Benchmarking the Nordics and applying lessons learned in the US should not be different. Nordic nations, Nordic cities, and Nordic companies (like those featured in Chapter 6) each afford excellent benchmarking opportunities, each at differing units of analysis.

The value derived from comparative analysis often reflects the mindset brought to the exercise. Approaching other societies’ experiences with skepticism and dismissiveness ensures no learning will occur. Conversely, examining different contexts with curiosity and humility – while maintaining analytical rigor – can yield valuable insights for policy innovation. The Nordic experience, properly understood, offers precisely such an opportunity for thoughtful adaptation rather than wholesale adoption.

Case for Benchmarking Nordic Nations and Applying Lessons at the American State Level

Nordic nations are similar to a mid sized American state. The average Nordic nation is approximately 5.5 million people, comparable in size to Wisconsin or Minnesota, the twentieth- and twenty-second-most populated states, and therefore falls somewhere in the middle of the fifty US states in terms of population.Footnote ¹⁴ Wisconsin’s real gross domestic product (GDP) is $349 billion,Footnote ¹⁵ and Minnesota’s is $383 billion, which also places them in the range of a Nordic nation, as shown in Table 8.1.Footnote ¹⁶

Table 8.1Populations and economies

Note:

^a Bear in mind, real GDP per capita is an average. As the saying goes, the person with their head in the oven and feet in the icebox is, on average, a bit warm. So, too, the extreme concentration of wealth and income in America skews GDP per capita figures upward, even though they may not reflect the wealth or income of the “average” person. (See Chapter 7.)

Source: Central Intelligence Agency, The World Factbook, estimates as of July 2021, accessed January 1, 2022, www.cia.gov/the-world-factbook/.

Table 8.1Long description

Table has seven columns that list nation, population, global population rank, real GDP, real GDP rank, real GDP per capita, and real GDP per capita rank. The data from the table are as follows. US: 335 million, 3, 20.5 trillion dollars, 2, 62,530 dollars, and 15. Wisconsin: 5.9 million, blank, 349 billion dollars, blank, 59,000 dollars, and blank. Minnesota: 5.7 million, blank, 383 billion dollars, blank, 67,000 dollars, and blank. Nordics: 28 million, 53, 1.5 trillion dollars, 18, 54,806 dollars, and 25. Denmark: 5.9 million, 113 336 billion dollars, 57,804 dollars, and 20. Finland: 5.6 million, 115 269 billion dollars, 60, 48,668 dollars, and 33. Iceland: 0.35 million, 177, 20 billion dollars, 152, 55,874 dollars, and 24. Norway: 5.5 million, 117, 340 billion dollars, 52, 63,633 dollars, and 14. Sweden: 10.3, 91, 548 billion dollars, 39, 53,240 dollars, and 26.

Given these similarities, Nordic nations offer highly relevant benchmarks for US states. Rather than waiting for federal reforms, states can act as living laboratories – testing and adapting ideas already proven effective in similarly sized and economically comparable societies.

Consider education: Finland routinely ranks at the top of global educational performance measurements.Footnote ¹⁷ But that was not the case just two generations ago. “In 1951, the future of Finland was predicted to be ‘grey and dreary,’ but the Finns were tenacious,” wrote Danny Dorling and Annika Koljonen in their book Finntopia. “Finland’s postwar recovery and its capacity to establish itself as a serious country depended on the transformation of its (now world-renowned) education system.”Footnote ¹⁸ Finland regularly tops the EIU’s Worldwide Educating for the Future Index (WEFFI).Footnote ¹⁹ “Finland has become, in 100 years as a nation-state, one of the world’s benchmarks for quality in school education … The world of education follows what happens in Finland,” remarked Eduardo Andere in his 2020 treatise, The Future of Schools and Teacher Education: How Far Ahead is Finland?Footnote ²⁰

Given that education in the US is primarily organized at the state level, Finland offers valuable lessons for individual states. Finland’s educational policies and their effective implementation have significantly contributed to the nation’s strong performance on SDGs. More specifically, the targets for SDG #4 “Quality Education,” include the following for which Finland performs exceptionally well: Target 4.1, which ensures that all children complete free, equitable, and quality primary and secondary education leading to relevant and effective learning outcomes; Target 4.2, which ensures that all children have access to quality early childhood development and pre-primary education so they are ready for primary education; and Target 4.3, which ensures equal access for all women and men to affordable and quality technical, vocational, and tertiary education, including university.

Let’s consider how Nordic countries manage healthcare. Sweden and Denmark spend only about 10 percent of GDP on universal healthcare compared to the US, which spends about 17 percent, yet the overall health outcomes for Swedes and Danes are just as good (if not better). US healthcare is hyper-inefficient, meaning US states have much to learn from their Nordic counterparts about efficiently delivering healthcare services.

In addition to being hyper-inefficient, healthcare in the US is highly inequitable. 4.3 million children ages 0–18 years are without access to healthcare.Footnote ²¹ One million children in Texas alone do not have access to healthcare, representing 13 percent of all Texas children, the highest percentage of any US state (15,000 Wyoming children, 11 percent; 161,000 Arizona children, 9 percent; 18,000 Alaskan children, 9 percent; 15,000 North Dakotan children, 8 percent; and 343,000 Florida children, 8 percent, do not have access to healthcare).Footnote ²² Access to healthcare is a fundamental element of freedom, whereas not having access to healthcare represents a significant deficiency of freedom. Zero children across the Nordics are without access to healthcare, meaning Nordic children enjoy significantly greater freedom than their US counterparts.

Access to healthcare directly supports SDG #3 “Good Health and Well-Being.” Target 3.8 measures the degree to which every member of society has access to quality essential healthcare services. Some states are already experimenting with Nordic-style policies and seeing success. We previously reviewed how Minnesota established a state-level policy in 1976, the Minnesota Comprehensive Health Association (MCHA), to ensure every Minnesotan had access to healthcare, which my family utilized when we were denied healthcare (Chapter 1). At just 3 percent (42,000 children), Minnesota has the second-lowest percentage of children without access to healthcare of any US state. Massachusetts has the lowest percentage at 2 percent (22,000 children), thanks to passing the similarly styled MassHealth Children’s Health Insurance Program.

Consider renewable energy: About 80 percent of Denmark’s electricity consumption comes from renewable sources – including wind, solar, hydro, and biomass,Footnote ²³ compared to about 20 percent in the US.Footnote ²⁴ Regarding wind energy, about half – and rising – of Denmark’s electricity is generated through wind power.Footnote ²⁵ Denmark produces more wind energy per capita than any other OECD country, almost twice as much as the runner-up among industrialized countries.Footnote ²⁶ Danish wind turbines generated sixty-eight percent of Denmark’s electricity consumption during the month of January 2022.Footnote ²⁷ The US, by contrast, produces only about 8 percent of its electricity consumption through wind power.

Denmark shows that transitioning from fossil fuel to renewable energy can occur rapidly and bring incredible benefits. However, transitioning from fossil fuels to renewables does not magically occur; it demands smart policy and investment.Footnote ²⁸

After the oil crisis of 1973, Denmark began investing in wind energy. Its successful transition to mostly renewable energy has ensured energy independence from foreign energy sources, meaning greater freedom for Denmark and its citizens. Wind energy is democratic energy. Unlike fossil fuels, wind energy is not subject to oligarchic forces, nor is it associated with geopolitical threats recently exemplified by Russia’s war on Ukraine and its withholding of fossil fuel supplies to Germany. Wind energy disperses power in the world more consistent with democratic ideals. Denmark is not at the mercy of geopolitics associated with fossil fuels and thus has strengthened its resilience in the face of future oil crises.

Denmark’s rapid wind energy development directly contributes to its strength in SDG #7 “Affordable and Clean Energy,” Target 7.2, increasing its share of renewable energy in the global energy mix. It also positions Denmark to assume a leadership position in SDG #13 “Climate Action.” While the US lags significantly behind Denmark, Iowa generates about half its electricity consumption through wind, showing that US states can do the same.Footnote ²⁹ Denmark’s investments in wind energy are more intensive, directly contributing to its strength in SDG #8 “Decent Work and Economic Growth.” Denmark demonstrates solid performances in Target 8.3, promoting development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity, and innovation, and Target 8.5, achieving full and productive employment and decent work for all. Instead of desperately clinging to the jobs of a fossil-fuel past, the Nordics are investing in opportunities for a sustainable future. Denmark enjoys a robust base of employment tied to wind energy and is creating future-oriented industries with the likes of Vestas and Ørsted.

Consider democracy: Nordic nations are routinely cited as global democracy leaders. One component of a strong democracy is high voter turnout. Whereas only 55 percent of eligible voters cast their votes in the US 2016 presidential election, and a record-breaking 67 percent in the 2020 presidential election, over 80 percent of eligible citizens typically vote in Sweden and Denmark.Footnote ^30, Footnote ³¹ US elections are overseen at the state level, another reason to consider what can be learned from Nordic nations given their comparable size. Nordic nations have established systems to ensure better voter turnout, like automatic voter registration, supported across political lines.Footnote ³²

Furthermore, Nordic nations are global leaders in media literacy, having invested efforts to develop critical thinking to combat misinformation and unfounded conspiracy theories. Finland has a countrywide media literacy program at all levels of education and scores as the top European country for media-related critical thinking, with Denmark ranked number two.Footnote ³³ Finnish educators develop pedagogical skills for teaching to encourage students to detect unsubstantiated claims and logical fallacies. The EIU’s WEFFI emphasizes the need for advanced critical thinking – with the capacity to readily identify and reject lies and logical fallacies – as vital for strengthening democracies worldwide. “With nativism, populism, and similar forces on the march, students must acquire the skills to fight back.”Footnote ³⁴ Nordic educational systems are structured to do exactly that.

The list goes on of strong performances by Nordic nations that the US may prosperously benchmark for consideration at the state level. In virtually all the Nordic examples, we find evidence of smart policies enacted through democratic means, investments in public goods, transparency and good governance, systems thinking, and the continued pursuit of increased efficiency rooted in facts and logical discourse. None of the Nordic successes magically happened; they resulted from deliberate choices and a willingness to apply systems thinking to address systemic problems.

Yeah, but the Nordics Are Homogenous

The frequent dismissal of Nordic achievements on the basis of demographic homogeneity – whether real or perceived – merits careful examination. During the widespread benchmarking of Japanese manufacturing efficiency in the 1990s, Japan’s homogeneity was rarely, if ever, cited as a barrier to learning in the US. Yet the same characteristic is routinely invoked to discount the relevance of Nordic achievements in sustainability and societal well-being.

Benchmarking is about learning from top performers. Japan, often ranked as the world’s most or second-most homogeneous country, served as a global reference point for manufacturing excellence in the 1990s. Japanese practices were presented as the gold standard in my industrial engineering education. I and countless other efficiency professionals successfully applied benchmarking lessons from Japan in the more heterogeneous context of the US.

As discussed in Chapter 2, effective benchmarking begins with curiosity. It starts by identifying strong performers and studying how they achieve their results. Contextual differences matter, but they are best considered after understanding the drivers of performance. To begin with disqualifying differences is to short-circuit the learning process before it begins.

To be sure, the Nordic region and the US differ in many ways, including levels of demographic diversity. Nordic countries routinely measure as more homogeneous than the US. However, causal claims that demographic homogeneity explains national sustainability performance – such as those implied in the frequent “yeah, but they’re homogeneous” responses to Nordic leadership in the SDGs – do not hold up to empirical scrutiny. Many homogeneous nations worldwide do not exhibit strong sustainability performance.

The 2021 edition of the SDG Index ranked homogeneous countries such as Japan, South Korea, Argentina, Haiti, and Australia at #18, #28, #52, #150, and #35, respectively. More heterogeneous countries like Belgium, Canada, Chad, Nigeria, and Switzerland ranked #5, #16, #163, #160, and #21, respectively. The US ranked #32. This distribution reveals no discernible correlation between demographic homogeneity and SDG performance, suggesting that other factors – particularly institutional structures and policy choices – more plausibly explain variation in outcomes.

One may reasonably ask whether homogeneity can help enable or inhibit the processes that lead to these institutional structures and policies.Footnote ⁴³ That is a wise and worthwhile line of inquiry. But such questions should follow, not precede, the benchmarking of the policies and practices in question – approached with genuine curiosity rather than used as a pretext for dismissal. For example, one might begin by investigating the impacts of carbon taxes, universally subsidized childcare, or efficient urban bicycle infrastructure on sustainability outcomes and societal well-being. After examining these policies and practices with curiosity, one can then productively consider how contextual factors – such as differences in demographic homogeneity – might influence efforts to implement them elsewhere.

In my view, invocations of Nordic homogeneity in US policy debates often reflect anxieties about social fragmentation more than genuine efforts at comparative analysis. These deflections warrant close scrutiny, particularly given the US’s distinct historical context. Frequently, the homogeneity critique serves to mask a deeper assumption: that the US is simply too divided to adopt universal policies that have promoted cohesion and well-being elsewhere. A more constructive approach would confront these divisions directly – especially those rooted in racial and economic inequality – rather than dismissing the Nordic experience as irrelevant. Indeed, we may well find that policies proven effective in the Nordics – such as universally subsidized childcare – could contribute to mending the social fabric of the US.

Yeah, but Inequalities Are Rising in the Nordics

Despite their reputation for equality, Nordic countries haven’t been immune to the global trend of rising economic inequality. This development presents a crucial test for the Nordic model: can its strong social welfare systems adapt to twenty-first-century pressures? Global economic forces and domestic policy shifts toward market liberalization have begun eroding some welfare benefits, leading to patterns familiar to Americans: increased wealth concentration at the top and wage stagnation for middle and lower-income brackets. Yet unlike in the US, Nordic societies retain the democratic institutions and social solidarity needed to address these challenges.

While income inequality has increased in Nordic countries since the 1980s, their Gini coefficients remain among the lowest in the OECD. As of 2020, Denmark (0.28), Norway (0.26), and Finland (0.27) maintained significantly lower inequality than the US (0.38), while sustaining robust social protections that help prevent the extreme inequality seen in other developed nations.Footnote ⁴⁴

Tax policies in the Nordics, traditionally progressive with higher rates on higher wage earners, have recently seen adjustments that favor higher income earners, exacerbating inequality. The concentration of wealth has also led to increased visibility of poverty and social exclusion, challenging the Nordic model’s ability to mediate income disparities effectively. Discussions around reforming the tax system to be more equitable are ongoing, with significant public and political debate.

Moreover, technological advancements and globalization have led to job polarization, where high-skill and low-skill jobs increase, but those in the middle diminish. This economic shift has left certain population segments behind, particularly those with lower educational backgrounds, increasing the socioeconomic divides. Nordic countries are actively exploring educational reforms and continuous learning programs to equip their citizens to better meet the demands of a changing economy.

Yeah, but Racial Inequalities Present a Stark Contradiction to the Egalitarian Image of Nordic Societies

Nordic societies’ celebrated reputation for egalitarianism can contrast with their more complex record on racial equality and inclusion – a reality that challenges idealized portrayals of these nations as egalitarian utopias.

In 1966, Dr. Martin Luther King Jr. lauded Sweden for its efforts to address racial injustices, stating, “Never before has a nation come forth with such total commitment to our cause. Truly, Sweden is a nation with a conscience.”Footnote ⁴⁵ A few years later, American historian Robert Weisbord examined this perception more systematically, asking, “Scandinavia: A Racial Utopia?”Footnote ⁴⁶ While such praise may reflect genuine Nordic commitments to racial justice, these assessments likely served more as critiques of American racial inequality than as comprehensive examinations of racism within Nordic societies.

Indeed, Sweden’s and the broader Nordic region’s actual record on racial issues proves far more complex. Despite its reputation for equality, racism persists in Swedish society, manifesting in both institutional barriers and everyday discrimination, as the critical examination within the pages Even in Sweden describe.Footnote ⁴⁷ Swedish citizens who have experienced racial discrimination would likely challenge such idealized portrayals as King and others have offered. Jason Diakité’s memoir, A Drop of Midnight, provides a poignant personal example, detailing his encounters with racism in modern Sweden that challenge depictions of Sweden as having achieved racial harmony.Footnote ⁴⁸

Recent years have seen a growing recognition of structural racism across Nordic societies. Studies document persistent disparities in employment, housing, and education outcomes for racial minorities and immigrants. The rise of far-right political movements, particularly in response to immigration, has forced these nations to confront uncomfortable truths about racism. While Nordic nations have implemented various anti-discrimination policies, their effectiveness remains limited by what critics have termed “Nordic exceptionalism” – a self-congratulatory tendency to view racism as a problem that exists elsewhere while remaining blind to discrimination at home. This mindset, scholars argue, actually impedes progress on racial equity by making it harder to acknowledge and address systemic racism within Nordic societies.Footnote ⁴⁹

The entrenchment of racial assumptions in Nordic societies manifests even in everyday language. Consider the Danish expression “ikke vær så blåøjet” (don’t be so blue-eyed), meaning don’t be so naive. While ostensibly just an idiom, the expression reveals how whiteness – symbolized by blue eyes – has become synonymous with innocence and purity in Nordic cultural consciousness. This linguistic naturalization of whiteness as purity parallels what Toni Morrison explored in The Bluest Eye, where coded associations reveal deeper societal beliefs about race.Footnote ⁵⁰ The persistence of such expressions in everyday Nordic language illustrates how racial assumptions can remain embedded in society even as official policies promote equality.

However, acknowledging these shortcomings should not obscure an important, outcome of Nordic universal systems. While not designed specifically to address racial discrimination, universal welfare systems are arguably among the most effective tools for reducing racial inequities. Speaking to a US audience, Martin Luther King Jr. emphasized his belief in universal access to healthcare to address racial discrimination. “Of all the forms of inequality, injustice in health is the most shocking and inhumane.”Footnote ⁵¹ The Nordic approach to healthcare, education, and social services – making them universal rather than allocated according to the marketplace – provides crucial protections for marginalized communities. While the administration of these systems remains imperfect,Footnote ⁵² their universal structure helps prevent racial disparities while proving more politically resilient than means-tested alternatives.

Looking ahead, Nordic societies face a critical challenge in developing more sophisticated approaches to addressing racial inequalities. The US, due to its history as a society founded on domestic slavery – where racial categorization became fundamentally tied to the institution of slavery, and descendants of enslaved people remain marked by race as American citizens today – has been forced to confront racism more directly, albeit imperfectly.Footnote ⁵³ Nordic nations, whose involvement in slavery occurred primarily through foreign trade rather than on domestic soil, have maintained a “colorblind” approach that obscures rather than addresses discrimination.Footnote ⁵⁴

How Nordic societies navigate these fundamental challenges – maintaining their commitment to universal welfare while developing more effective approaches to combat systemic racism – may determine whether their version of capitalism can be considered a viable model for diverse societies seeking to address economic and racial inequalities.

Yeah, but Nordic Capitalism Is Decreasingly Relevant in a Multipolar World Where Power Shifts from West to East

Nordic capitalism faces multifaceted challenges stemming from European integration and shifting global economic and power dynamics. As the EU has increasingly embraced a neoliberal agenda since the 1990s, Nordic nations find their policy autonomy increasingly constrained, especially concerning social welfare systems. Denmark’s renowned flexicurity model has come under strain from EU labor market regulations, while Sweden’s collective bargaining system has faced legal challenges with shareholder interests increasingly prioritized over labor rights.

Additionally, the global economic center of gravity is shifting eastward, with Asia’s emerging economies gaining prominence. With China’s GDP surpassing the entire EU’s in terms of purchasing power parity and projections indicating India will become the world’s third-largest economy by 2030 behind China and the US, the small, open economies of the Nordic countries are exposed to unprecedented competitive pressures. The viability of their high-wage, high-tax model is being tested as emerging economies enhance their production and innovation capabilities.

While critics argue that Nordic capitalism thrived during a period dominated by Western economic supremacy and might struggle in a diversifying global landscape, such views may overlook the region’s historical adaptability and tradition of good governance rooted in strong democratic practices.

Given their small domestic markets, Nordic nations have necessarily maintained an international orientation. Nordic companies and economies have long needed to venture beyond their borders, developing deep expertise in building globally competitive enterprises capable of thriving amid economic turbulence. This outward orientation and good governance practices have fostered remarkable adaptability in the face of global economic shifts.

By fostering education, innovation, and social cohesion through democratic means, Nordic nations have demonstrated remarkable resilience in economic transitions. Their pioneering efforts in sustainability and stakeholder capitalism, developed through transparent and democratically accountable processes, may position them advantageously as international focus increasingly turns towards climate action and social equity.

The relevance of Nordic capitalism in this shifting global landscape lies not in its size but in its potential to inspire evolution in larger economies, particularly the US. While Nordic nations represent just a small fraction of global GDP, their demonstrated ability to balance market efficiency with social welfare offers valuable lessons as nations worldwide grapple with sustainability challenges. As power continues to shift from West to East, the US remains a dominant global force, and its response to sustainability challenges in coming decades will significantly impact whether pressing global challenges – from climate change to rising inequality – are effectively addressed.

Yeah, but Trust in the Nordics Is Eroding

The rising rates of disability benefits in Norway present a critical challenge to the social trust underpinning Nordic capitalism. With approximately 10 percent of working-age adults receiving disability support – far exceeding OECD averages – research by Knut Røed shows that regional variations reflect cultural norms more than health conditions, raising questions about the sustainability of universal welfare systems.Footnote ⁵⁵

This challenge strikes at the heart of what researchers call “Nordic gold” – the high levels of social trust that enable Nordic capitalism to function. This concept of trust as social capital has been central to institutional theory,Footnote ⁵⁶ with research suggesting that universal welfare systems may generate rather than deplete such social resources. When too many people are perceived as taking advantage of the system, it can undermine public support for universal welfare programs and weaken the social contract between citizens and the state. As we have seen, this trust is fundamental to the Nordic Theory of Love, where authentic relationships depend upon reduced dependencies enabled by universal systems.

The disability support challenge also reveals tensions in Nordic capitalism’s promise of combining economic efficiency with social security. While the system aims to protect vulnerable citizens, extensive benefits may create disincentives to work that ultimately threaten economic sustainability.

Looking ahead, maintaining social trust will be crucial for Nordic capitalism’s continued success. The system’s effectiveness depends on citizens believing that most people contribute fairly and use benefits appropriately. If trust erodes – whether through actual abuse or perceived misuse of welfare systems – it could trigger a downward spiral where diminishing public support leads to program cuts, potentially undermining the universal nature of Nordic welfare systems that has proven key to their success. The challenge for Nordic societies will be to maintain their commitment to universal welfare while ensuring systems are not subject to abuse that could erode the trust upon which they depend.

Yeah, but Nordic Welfare States Depend on Strict Immigration Control

A contentious critique of Nordic capitalism concerns the tension between maintaining universal welfare systems and managing immigration. Nordic politicians, particularly in Denmark, argue that maintaining their comprehensive welfare states requires restricting immigration. This position has drawn criticism from American progressives who view it as betraying humanitarian values. The tension reveals a fundamental challenge: can universal welfare systems coexist with high immigration levels?

Sweden’s experience offers a sobering case study. Following conflicts in Syria and elsewhere in the early 2010s, Sweden accepted more immigrants per capita than any other European nation, reflecting its humanitarian aspirations. Prime Minister Stefan Löfven, in 2015, declared, “My Europe accepts people fleeing from war, with solidarity and in cooperation. My Europe does not build walls, we help out when the need is great,” highlighting Sweden’s lofty aspirations for humanitarian immigration policies.Footnote ⁵⁷ However, the subsequent challenges – including high unemployment rates among immigrant populations and increased urban violence fueled in part by Sweden’s inability to sufficiently integrate immigrants into Swedish society – provided ammunition for right-wing groups like the Sweden Democrats, whose political influence has grown significantly. These internal pressures led to a significant policy shift by 2017, when Löfven pledged that Sweden would “never go back” to the prior levels of mass immigration following a failed asylum seeker’s involvement in a truck attack that killed four people in Stockholm.Footnote ⁵⁸ Other Nordic nations cite Sweden’s experiences as justification for more restrictive immigration policies, highlighting the complex relationship between immigration, social cohesion, and the sustainability of universal welfare systems.Footnote ⁵⁹

Denmark’s Social Democrats, led by Prime Minister Mette Frederiksen, maintain that their restrictive immigration stance is not merely tactical but fundamental to preserving the Nordic model. They argue that extensive welfare systems require high levels of social trust and cohesion, which they believe can be strained by rapid demographic change. This position has proven politically successful – Denmark has largely avoided the rise of far-right parties seen elsewhere in Europe while maintaining its comprehensive welfare state.Footnote ⁶⁰

Critics contend this stance represents a moral failure, placing national welfare above global humanitarian obligations. They argue it reflects an ethnocentric solidarity conception that contradicts progressive inclusion and multiculturalism values. The controversy is particularly acute among American progressives who view the Nordic nations as role models for social democracy but find their immigration policies difficult to reconcile with progressive values.

This critique raises profound questions about the future viability of Nordic capitalism in a world increasingly shaped by climate change and conflict, likely leading to unprecedented human displacement. As these pressures mount, can the Nordic model evolve to become more inclusive while maintaining its distinctive features? Central to this inquiry is whether maintaining universal welfare systems necessitates tight immigration controls. How should Nordic nations balance their robust domestic social commitments with their global moral obligations?

Currently, Nordic nations commonly lead globally in humanitarian aid and peacekeeping efforts – endeavors that depend on strong domestic institutions and political stability. Their reliable democratic institutions enable their consistent and predictable engagements with international allies, providing a vitally important stabilizing force in a turbulent world. The predictable, stabilizing role of the Nordics is particularly crucial as the US’s domestic political volatility has rendered it a less dependable partner, affecting historical alliances and international stability. But are these efforts enough?

As climate change and potential conflicts are likely to drive unprecedented human displacement in the upcoming decades, how well Nordic societies navigate the simultaneous demands on domestic institutions and international obligations will shape whether Nordic capitalism is ultimately viewed as a compelling model for other nations seeking to balance domestic social solidarity with global responsibilities.

Yeah, but Nordic Capitalism Is Still Just Capitalism: Why Not Abandon Capitalism Altogether?

A common critique of this book’s premise comes from those who argue that examining Nordic capitalism misses a more fundamental point: Perhaps we should abandon capitalism entirely. This perspective, whether advocating for socialism or other alternatives, deserves serious consideration. While this book focuses on evolving capitalism toward sustainability, it is worth examining why I maintain that properly structured capitalist systems offer the most promising path forward.

Capitalism’s capacity for efficient resource allocation and innovation, when properly regulated through democratic processes, represents a powerful tool for addressing sustainability challenges. A key insight from Nordic capitalism is that markets function best when power is sufficiently dispersed – a principle it shares with democracy. Both systems require preventing excessive concentration of power, whether economic or political, to operate effectively. This constructive tension between democratic and market forces, when properly balanced, can drive innovation while ensuring broader societal benefits.

Critics rightly point to alternatives. Socialist models emphasize collective ownership and planned economies to ensure equitable distribution and prevent exploitation. Socialist perspectives have helped shape Nordic capitalism’s strong labor protections and universal welfare systems. The challenge is how to embed markets within strong democratic institutions that can direct their power toward sustainable development. Nordic capitalism demonstrates how this can work: maintaining dynamic markets while using democratic processes to ensure their benefits are widely shared and aligned with sustainability goals.

This book, therefore, focuses on how capitalism can be transformed to realize sustainable development rather than replaced altogether. The Nordic experience shows how market economies can be structured to serve broader societal goals while maintaining efficiency advantages. Their example suggests that the path to sustainability lies not in abandoning capitalism but in strengthening democratic institutions to ensure markets serve the common good.

However, this evolution of capitalism must be informed by wisdom from other traditions, including indigenous approaches that offer profound insights about humanity’s relationship with the natural world. Traditional indigenous understanding of circular systems – where little is wasted and plant and animal life is respected – has begun inspiring modern circular economy concepts. Their deep respect for all living things, including animals and plants, and recognition of humanity’s role as stewards rather than nature owners provides crucial guidance for developing sustainable practices. The Nordic “freedom to roam” laws (allemannsretten), which balance private property rights with public access to nature, reflect some of these indigenous principles about humanity’s relationship with the natural world.

As we transform capitalism to meet today’s sustainability challenges, indigenous wisdom is likely to become relied upon for inspiring necessary changes.

Yeah, but Historical Context and Institutional Complexity Matter

Institutional economists, including Kathleen Thelen and Wolfgang Streeck, raise a fundamental challenge to replicating Nordic capitalism: its success depends on a complex web of institutions that evolved together over generations.Footnote ⁶¹ The Nordic model’s effectiveness emerges from the intricate interplay of mutually reinforcing systems – labor markets, education, welfare policies, and more – developed and refined through decades of democratic negotiation and adjustment. This deep institutional interdependence makes simply transplanting Nordic practices into different contexts particularly challenging.

Peter Hall and David Soskice’s co-edited Varieties of Capitalism framework further suggests that Nordic institutions function effectively precisely because they operate as a coherent system.Footnote ⁶² Attempting to transplant the entire system into different institutional contexts may fail and potentially destabilize existing institutional arrangements. For instance, strong labor unions work effectively in the Nordic context because employer associations and state mediation balance them – a tripartite arrangement that took generations to develop.

The institutional architecture of Nordic capitalism is embedded within broader geopolitical constraints. Streeck’s analysis demonstrates how these nations’ position within the global economic order has been instrumental to their success: Their capacity to sustain comprehensive welfare states while functioning as small, export-oriented economies has historically relied on the military security and market access provided by larger powers, particularly the US.Footnote ⁶³

While these institutional arguments compellingly challenge attempts at wholesale system transfer of “the Nordic model,” they strengthen the case for careful experimentation with individual elements of Nordic capitalism. Individual US states, for instance, could experiment with specific Nordic policies without threatening broader institutional stability to the nation. Universal subsidized childcare offers a prime example – a state could implement such a program independently, much as states have historically served as “laboratories of democracy” for testing new policies.Footnote ⁶⁴ The success of such programs could then inform broader adoption, allowing for gradual, organic institutional evolution rather than wholesale system transfer. Indeed, this approach aligns with how Nordic innovations historically developed – through pragmatic experimentation and gradual expansion of successful programs.

Dismissiveness Can Be Denial

I’ve come to see that at least some of the many “yeah, but” remarks I encounter from US citizens are akin to willful denial. It is not that the US could not prosperously learn from the Nordics; it is just that many in the US do not want to. Many individuals in the US seem to perceive any challenge to the idea of US superiority as a threat. Denial becomes the path of immediate comfort.

Instead of denying the reality of others’ relative successes, potential lessons should be seen as an opportunity to improve the US. Benchmarking exercises represent a competition with oneself to improve. Given the highly competitive US spirit, I believe inquiries can be constructively reframed in competitive terms to challenge and improve the US for the benefit of people in the US.

General Motors ran the “No Way, Norway” ad during Super Bowl LV in 2021, which humorously displayed America’s competitive-fueled approach to challenging itself.Footnote ⁶⁵ The ad begins with actor and comedian Will Ferrell asking, “Did you know that Norway sells way more electric cars per capita than the US?” Over half of the new cars sold in Norway in 2020 were electric vehicles (EVs), compared to just 2 percent in the US.Footnote ⁶⁶ Ferrell begrudgingly laughs and says, “Norway,” then punches his fist through a globe in a rage. “Well, I won’t stand for it … We’re going to crush those lugers. Crush them! Let’s go, America!”

Instead of embracing Ferrell’s competitive zeal and acknowledging the US can improve, many chose the “yeah, but” path of denial. The General Motors advertisement was met by a loud chorus of deniers who took to social media. One such message on Twitter stated:

The statement implies the US is beyond compare to a nation like Norway. While the US and Norway are certainly very different places, the dismissal represents a logical fallacy related to the nirvana fallacy. The nirvana fallacy is also described as the fallacy of demanding impossible perfection.Footnote ⁶⁷ Here, we see a particular variant of the nirvana fallacy: the fallacy of demanding the impossibly perfect comparison. When a body of empirical evidence is not presented through a US frame of reference with nearly perfect comparability to the US, I have seen a tendency for individuals to frequently dismiss the evidence, focusing instead on the differences between the US and whatever context is presented (skipping the first three benchmarking steps described in Chapter 2).

Each critique offers an opportunity for improvement when approached with generosity and a willingness to strengthen the underlying arguments. Perhaps the critique can help highlight how the global sustainability challenges faced are much more significant than what could be addressed by EV sales in a small nation like Norway. Norway represents just a blip compared to the world’s largest consuming nation: the US.Footnote ⁶⁸

Furthermore, transitioning fossil-fuel automobiles to EVs represents just a blip to achieve necessary sustainability needs on a global scale. Fossil-fuel automobiles must be eliminated, but reliance upon automobiles as the primary means of transportation must also be overcome. Automobiles – fossil fuel or EV – are inefficient to move large numbers of people. That means we need massive increases in public transportation systems, including trains, metros, buses, bicycling, pedestrian infrastructure, and accommodations for elderly and disabled citizens.Footnote ⁶⁹ Instead of fixating on shifting from fossil-fuel automobiles to 100 percent EVs, we must see the transition from fossil fuel vehicles to EVs as a sliver of the solution and raise our gaze to the overall transportation system and its effects on society.Footnote ⁷⁰

Nevertheless, Norway’s rapid transition to EVs is a fascinating story that may serve as an excellent case for how to go about establishing policies that can result in major systemic transformations. As recently as 2011, Norway had about the same EV sales percentage as the US when both nations were near zero percent. What did Norway do between 2011 and 2020 to shoot from almost 0 to over 50 percent of EV sales, with a realistic target of achieving 100 percent by 2025?Footnote ⁷¹ The answer lies in an innovative mixture of policy measures (tax incentives, market mechanisms like EV parking spots, and reduced toll fees) and investments in public transportation systems. The famous Norwegian pop band, a-ha, responsible for the hit “Take on Me,” my favorite song as a kid, is also bizarrely at the center of the story. In the 1990s, members of a-ha drove around Norway in an electric-converted Fiat Panda. Norway’s regulations did not accommodate registering EVs, so a-ha members drove without paying costly road tolls, parked illegally, and ignored every citation received. The Norwegian police impounded their car and auctioned it off, but a-ha was there to repurchase it. The stunt attracted massive media attention. A-ha’s antics directly led to Norway exempting EVs from road tolls and establishing several other EV tax advantages.Footnote ⁷²

Norway’s rapid transition to EVs stems not from its size but from systematic policy design.Footnote ⁷³

Yeah, but the Nordics Don’t Innovate

Critics in the US often dismiss the Nordic countries as lacking innovation. This view was plainly expressed during my 2019 testimony before the U.S. House Small and Medium-Sized Business Committee, when Representative Jim Hagdorn proclaimed that the US is the source of virtually all global innovation, and that the rest of the world merely steals from the US.Footnote ⁷⁴

The US has undoubtedly produced numerous transformative innovations. But it is far from alone. Nordic countries have given rise to widely adopted advances – from Volvo’s life-saving three-point seatbelt to the iconic LEGO brick, and more recently, Bluetooth, named after Viking king Harald “Blátǫnn” Gormsson, who united Denmark and Norway much as the technology unites communication protocols.Footnote ⁷⁵ These are not isolated cases. The Nordics consistently perform at the top of global innovation rankings: Sweden placed #2 in the 2024 Global Innovation Index, ahead of the US at #3, with Finland (#7) and Denmark (#10) also ranked among the global leaders.Footnote ⁷⁶

Furthermore, Nordic societies excel at systematic improvement through expert benchmarking: they consistently identify proven solutions from around the world, adapt them effectively to their local context, and implement them to benefit their entire population. However, this only begins to describe the Nordic approach to innovation. As Nina Witoszek and Atle Midttun wrote in Sustainable Modernity and the Architecture of the ‘Well-Being Society’:

Scandinavian Airlines’ 2020 commercial, “What is truly Scandinavian?”Footnote ⁷⁸ nicely sums up the successes of effective Nordic benchmarking. “We are proud of our Scandinavian heritage. Many of the things we call Scandinavian today were brought here and refined by curious, open-minded, and innovative Scandinavians.” The dialogue reads as a manifesto for effective benchmarking:

Rather than primarily concern us whether an idea was “invented here,” of greater importance for a society’s well-being is the capacity to identify the best ideas from around the world – those ideas proven to make life better for people – and successfully put those ideas into practice. As Open Innovation expert Henry Chesbrough often says, you don’t have to invent it to be innovative with it. Embracing an approach of continuous benchmarking and adapting proven ideas from elsewhere requires a healthy dose of humility, curiosity, and creativity.

The US can furthermore draw a valuable lesson from the Nordics to see innovation beyond the technological variety and extend it into public policy. Daron Acemoglu and James Robinson’s book, The Narrow Corridor: States, Societies, and the Fate of Liberty emphasizes that the policy and institutional innovations of the state, and the cooperative interactions fostered between business, labor unions, and the state, are of central importance in measuring the successes of the Nordic model.

Nordic societies excel at systematic improvement through expert benchmarking: they identify proven solutions globally, adapt them effectively locally, and implement them to benefit their entire population. Their success stems not from claiming to invent everything, but from their pragmatic willingness to learn from and improve upon others’ innovations.

Yeah, but They Don’t Have Any Harvards

This brings us to perhaps the most revealing of the “yeah, but” dismissals. Whether citing Harvards or Stanfords, Amazons or Facebooks, or the world’s wealthiest individuals, critics of Nordic societies invariably point to the absence of such exceptionalism as evidence of these societies’ limitations. But this criticism reveals more about American values than Nordic shortcomings.

The degree to which I hear this particular “yeah, but” reveals something about the mindsets of individuals in the US versus our Nordic counterparts, differences in how “success” is defined, and differing views of purpose.

Society is a system, but many in the US focus on individual elements. When an individual element of US society is deemed exceptional, like a Harvard, a billionaire, or some mega-corporation, many in the US tend to showcase that element and claim that the overall US system is exceptional. By contrast, there may not be as many exceptional elements within Nordic society – no Harvard, per se – but the many elements within Nordic societies are consistently good.

Establishing consistently good elements throughout Nordic societies has resulted in an overall system that is nothing short of exceptional. Good schools for everyone, not just elite schools for some and poor schools for many others. Good healthcare for everyone, not just exceptional healthcare for some, while millions of others go without healthcare. While those from the US may boast about exceptional elements within US society, as an overall system, the shortcomings of US society are apparent.

The Nordic approach reveals a profound difference in how societies can define success. While American capitalism celebrates individual excellence and exceptional achievement, Nordic capitalism pursues what I call the Nordic Theory of the Exceptionally Good – the idea that a society succeeds when it ensures consistently high quality of life for everyone, rather than exceptional opportunities for a few. This theory, deeply connected to the Nordic concept of lagom, produces a paradoxical result: by focusing on making things consistently good for everyone rather than exceptional for some, Nordic societies achieve exceptional outcomes at the societal level. Their educational systems may not produce a Harvard, but they produce the world’s highest literacy rates. Their healthcare systems may not house the world’s most advanced private hospitals, but they ensure universal access to high-quality care. This systematic pursuit of the consistently good over the individually exceptional represents perhaps the most important lesson Nordic capitalism offers other nations.

The way Norway approaches access to sports is symbolic of its overall societal approach. At the 2022 Winter Olympics, Norway won the most gold and total medals of any country. Why? “There just seems to be a lot more emphasis on including everybody,” said Atle McGrath, a twenty-one-year-old Norwegian Alpine skier, in the February 20, 2022 New York Times article, “It’s Norway’s Games Again. What’s Its Secret?”

Norway is committed to ensuring that all Norwegian children have access to good opportunities in sports – skiing and beyond. Norway’s universal commitments to children are expressed in its “Children’s Rights in Sports” document, “with a focus on participation and socialization rather than hardcore competition.”Footnote ⁸⁰ Everyone in Norway at the individual level has access to consistently good resources – they may not be exceptional, but they are consistently good for everyone. And the outcomes at a societal level are nothing short of exceptional.

When I talk to friends and colleagues in the Nordics, many remark on the juxtaposition of American exceptionalism directly alongside US society’s shocking extremes and cruelty. US society is out of balance. They wonder how the US can have Amazon and Facebook and such opulence in Silicon Valley, yet such cruel living conditions within view … rampant homeless encampments and extreme poverty nearby. My Danish friend Bjarne has lived in US for several years, and he succinctly summed up how denial is central to the US experience: “When I return from Denmark to the US, I have to put back on my American blinders just to function.”

Many of us wear American blinders to survive in the US. But to improve the US, the blinders must be removed, and problems must be faced head-on. Redefining success would be a helpful place to start, shifting a collective gaze from some of the exceptional elements within US society and instead adopting a societal-level view to consider how exceptional a society can be when most everyone can have it good.

Yeah, but Nordic Welfare Systems Depend on US Military Protection

Since World War II, Nordic nations have consistently expressed gratitude to the US for its vital role in military protection in maintaining regional security. Norway, Denmark, and Iceland joined NATO as founding members in 1949, aligning with Western democratic powers under American leadership to countervail the Soviet Union threat.

However, critics contend that the sustainability of Nordic welfare states is dependent upon US military protection. The argument goes that by spending less on defense, Nordic societies can spend more on social programs. Indeed, while Nordic countries traditionally maintain military budgets around 1.5 percent of GDP – significantly lower than US expenditures exceeding 3 percent – this perspective overlooks several key factors.

First, a considerable portion of US military spending is driven by US policy choices in domains one may argue are unnecessary. The wars in Iraq and Afghanistan cost the US military trillions, and arguably without bolstering global stability. Second, the recent geopolitical shifts, including Finland and Sweden’s 2024 accession to NATO and escalated military budgets across the Nordics, like Norway’s substantial support for Ukraine in 2025, underscore a growing commitment to shared military responsibilities. Third, Nordic nations contribute to global stability through their extensive involvement in diplomatic engagement, peacekeeping missions, and consensus-building efforts, which have cemented their reputation as reliable mediators of international cooperation. Their emphasis on dialogue and mutual understanding over confrontation often yields superior returns for global security, irrespective of whether they can be measured through a military budget.

Furthermore, the argument does not account for the pronounced efficiency differences in social spending between the Nordics and the US. For instance, the US allocates about 17 percent of its GDP to healthcare, significantly outstripping the 10 percent expended by Nordic nations, while achieving worse outcomes – with shorter life expectancies and significantly higher infant mortality rates.Footnote ⁸¹ This disparity suggests that the effectiveness of Nordic social systems stems more from their design of efficient, democratically accountable institutions than from reduced military spending. If the US were to achieve Nordic levels of healthcare efficiency, the savings would exceed three times the US military budget.

Nordic capitalism demonstrates how market efficiency improves when power is effectively dispersed rather than concentrated among oligarchic interests. Their healthcare system exemplifies this principle: Built on democratic oversight and transparent governance, it prevents the accumulation of market power that characterizes the US system. As Bradley and Taylor conclude in their systematic analysis of global healthcare systems, “Americans have overlooked the true healthcare stars of the world… Sweden, Denmark, and Norway truly outperform the US … The Scandinavian approach has consistently achieved the best health outcomes in the world at a reasonable cost.”Footnote ⁸²

Thus, the efficacy of Nordic welfare systems stems not from reduced military expenditure but from institutional structures that enhance market efficiency through democratic accountability and power dispersion – a model that consistently delivers superior outcomes at lower costs.

Critics might counter that Nordic healthcare efficiencies stem from their smaller scale – an argument addressed earlier in this chapter. While individual US states could theoretically implement universal healthcare programs, offering significant advantages to businesses currently burdened with healthcare administration, such reforms face substantial political obstacles. Even with compelling evidence that Nordic citizens’ tax contributions toward healthcare result in lower personal expenditure than Americans’ out-of-pocket costs, the transition to tax-funded universal healthcare represents a paradigmatic shift many Americans remain reluctant to embrace. This resistance persists despite clear evidence that such systems could reduce costs while expanding access.

At this point in discussions with American audiences, one might turn their “Yeah, but” rhetoric back upon them: “Yeah, but perhaps Americans do not have the ability to build more efficient systems.” This provocation often proves helpful in provoking insightful discourse, appealing to the American competitive identity, and challenging deeply held beliefs about American exceptionalism.