The Political Economy of the European Periphery: A Nordic Perspective
More specifically, late industrialization and geopolitical vulnerability (in interaction with other historical conditions) led these countries to develop unusually cohesive and encompassing social networks, spanning the private and public sector, multiple industries, employers and workers, elites and masses. These cohesive and encompassing networks have enabled the Nordic countries to scale new policies with remarkable speed. Ideational entrepreneurs can use persuasion and side payments to generate a strong consensus. This consensual approach facilitates coordinated action, with the result that the Nordic countries are commonly praised for the speed with their ability to adopt best practice in a staggering array of policy domains. These same characteristics that enable these countries to implement good ideas, however, also lead them to scale bad ones. And even good ideas can prove problematic when carried to extremes. In short, the same cohesive and encompassing social networks that facilitate reform also contribute to policy overshooting and economic crises.
The paper supports these arguments by identifying a series of economic crises in Nordic Europe, including the Swedish banking crisis of the early 1990s, the Finnish dot com crisis of the late 1990s and the Icelandic financial crisis of the late 2000s. Examining several distinct crises in different countries and time periods enables the paper to engage and eliminate a variety of alternative explanations. Most importantly, the different crises demonstrate that the Nordic countries continue to be affected by their development along the European periphery, even after achieving a high level of economic prosperity. Analysis is based on over one hundred and fifty interviews in Finland, Sweden and Iceland. Part of a larger book manuscript, this specific contribution attempts to generalize the argument by situating these three countries in comparative perspective. In particular, it contrasts Nordic “lateness” with the less prosperous, more polarized societies of southern Europe. In doing so, the paper identifies two distinct pathways by which late development can increase economic volatility.