By Zaldy Dandan – Variety Editor
AS commentators in the U.S. have noted, socialism is in vogue again, especially among young people. What is there not to like about the platform of the “democratic socialists”? Free this, affordable that, price and rent controls, wage hikes, regulations galore, government-controlled enterprises, and a “fair” tax system that targets the rich. Rainbows and ponies for everyone!
And as history shows, the actual — and often disastrous — results of such policies are easily forgotten or explained away because “the arc of history” will eventually bend toward “socialism” à la Norway.
Wait, you may say; Norway is not a socialist country. And you would be right. Yet whatever they believe Norway has is what many of our democratic socialist friends say they admire and want to implement. Which suggests they may not have a complete picture of what makes Norway work. (Spoiler alert: it is not socialism.)
But we are getting ahead of ourselves. Let us return to the sad observation that socialism is once again popular, as though it has never been thoroughly discredited by the experiences of the many nations that tried it.
Did socialism ever really go out of style? Not quite. Its most well-known brand — Marxism as practiced by Lenin, Stalin, and Mao — crashed and burned in spectacular fashion, yet it continues to attract adherents, particularly on university campuses. They are still out there assuring one another that “real socialism has not been tried yet.” Then there are the democratic socialists who insist they intend to practice “real socialism,” and that this time it will work.
If you are young, politically minded, and intellectually inclined, you, too, may come to believe that socialism is the theory that explains what is wrong with human society and how to fix it. Eventually, if you remain open-minded and willing to see how ideas fare when implemented, you may notice that countries that declared themselves socialist often ended up impoverished or worse, even as some socialists continue to insist that socialism works — in countries like Norway, which, again, is not socialist.
Norway has a free-market economy that uses its immense capitalist wealth to fund a generous social safety net. True socialism requires the state to own the means of production, eliminate private property, and centrally plan the economy rather than allow prices to determine supply and demand. Norway does none of these things.
According to major global indices, Norway consistently ranks near the top — often higher than the United States — in measures such as business freedom, monetary freedom, and property rights. Prices for goods and services are determined by the forces of supply and demand, not by government decree. Starting a private corporation takes only a few days. Regulation is streamlined, predictable, and transparent — the very opposite of a bureaucratically choked socialist state.
Socialist economies have historically leaned toward isolationism, protectionism, and heavy trade barriers designed to shield state-run industries. Norway, by contrast, is an open, export-driven economy that thrives on international trade and globalization. It is deeply integrated into the European Single Market through the European Economic Area and aggressively pursues trade opportunities abroad. Norwegians understand that a small nation can generate substantial wealth only by competing successfully in the global marketplace.
Norway does not even have a government-mandated national minimum wage. Instead, wages are determined through a decentralized, market-adjacent system of collective bargaining between private trade unions and employer federations. The government largely stays out of the process, allowing labor markets to reach agreements based on productivity and economic realities.
Norway, in short, uses free-market capitalism to generate enormous tax revenue and national wealth. Only after that wealth has been created does the government tax a portion of it to fund healthcare, education, and welfare benefits. It is a welfare state, certainly, but one financed by capitalist engines.
Norway’s state-owned enterprises are also treated much like private, profit-driven corporations. They are run by independent boards, listed on public stock exchanges, and tasked with a highly capitalistic objective: maximizing shareholder value. The state acts primarily as an investor rather than a central planner.
Through its Government Pension Fund Global — its sovereign wealth fund built on oil revenues — Norway has become one of the largest institutional investors in the world, owning roughly 1.5% of all publicly traded shares globally. In effect, Norway is one of the world’s largest capitalists.
The country has figured out a simple reality: if you want an extensive social safety net, you first need a highly productive and efficient economy capable of paying for it.
Consider taxes. Norway’s standard corporate income tax rate is a flat 22%, which is actually lower than the combined federal and state corporate tax rates in many parts of the United States. Norway also takes steps to reduce the tax risk faced by businesses during difficult periods.
The primary funding source for Norway’s welfare state is a Value-Added Tax, or VAT, which is a tax on consumption. The standard VAT rate is 25%, while food and beverages are taxed at 15%. Moreover, Norway’s middle class bears a substantial share of the tax burden. The top marginal income tax rate is about 47.4%, and the system depends on a broad, compliant tax base rather than the notion that “taxing billionaires” alone can pay for everything. Norway does not subscribe to that fairy tale.
To be sure, Norway imposes a 78% marginal tax rate on companies extracting oil from its continental shelf. However, much of that revenue is not spent through the government’s annual operating budget. Instead, it is invested through the sovereign wealth fund in global stocks, bonds, and real estate. This allows Norway to live off the returns generated by those investments rather than exhausting its oil wealth in a single generation.
Norway does not overtax corporate profits because Norwegians want businesses to grow, innovate, and remain competitive. They allow capitalism to generate wealth, tax income and consumption to finance the safety net, and use their unique natural resources to build long-term national savings.
What Norway has is not socialism. And if democratic socialists truly want what Norway has, they may face an uncomfortable reality: Norway practices capitalism, the very system they claim to oppose.
Confusing a capitalist welfare state with socialism encourages people to believe that prosperity can be legislated into existence rather than earned through innovation, investment, entrepreneurship, and hard work. Hence, the enduring “popularity” of socialism.
But Norway got rich by embracing many of the things socialists oppose. It is not proof that socialism works. It is proof that capitalism works so well that even socialists cite it as their best example.
Send feedback to [email protected]
Zaldy Dandan is the recipient of the NMI Society of Professional Journalists’ Best in Editorial Writing Award and the NMI Humanities Award for Outstanding Contributions to Journalism. His four books are available on amazon.com/.
