Nordic Model is So Last Century!

By Risto E. J. Penttilä
CEO, Central Chamber of Commerce of Finland

This article was published on NORDICUM 3/2010

The Nordic Model was the talk of the town ten years ago. Now everyone wants to copy Singapore. What happened? Why did Singapore overtake Finland and the other Nordic states? And, most importantly, is there still life left in the Nordic Model? Who is the most influential person in the world? This is the question that I have put to audiences across Finland and abroad. Normally somebody offers President Obama. Another puts forward Prime Minister Wen Jiaboa. Young people carrying iPhones and iPads suggest Steve Jobs.

Well, it is none of the above. In my view the most influential person is Lee Kuan Yew. He was Prime Minister of Singapore from 1959 to 1990. Now his official title is Mentor Minister. He is the most influential man because some of the biggest and the most rapidly growing nations are following in his footsteps. China wants to copy the Singapore model. So does Russia. Vietnam is a fan. And so is most of Africa. The Singaporean brand of authoritarian capitalism has found a great following in many emerging nations. Indeed, it has become the ideological challenge to the Western model of liberal democracy.

It has not been an easy road. When Singapore became independent in 1965 very few people believed that the city-state would survive. It has not only survived. It has prospered. Its economy has grown by more than 7 percent per year since independence. Now it has one of the highest per-capita incomes in the world. There are no homeless people. Extreme poverty has been eradicated.

But Singapore is not only about economic success. It is also about environmental sustainability. Despite having the highest concentration of people in the world (5,900 per square kilometer), only half of the city-state has been used for commercial, residential or industrial purposes. The other half is full of forests, parks, water catchment areas and other types of green zones. High taxes on automobiles mean that the number of cars is relatively low. There is an excellent system of public transportation – yet it is not subsidized by the state. And, according to Kishore Mahbunani, the most famous spokesperson for the Singapore model, there is more biodiversity in Singapore than in all of the United States.

It is quite a list of achievements: Growth! Welfare! Public transport! Equal opportunity! Biodiversity! These used to be the slogans of the Nordic Model. Now they are all associated with the Singapore Model. What is more: while the Nordic States are struggling with the global economic crisis, Singapore is growing rapidly. Does this mean that the Nordic Model was good for the 20th century but is ill-suited for the 21st?

Not necessarily. The Singapore model is based on the separation of private and public freedoms. People are free to consume, travel, shop, study, own property. In other words, they are free to make choices about their everyday life. Furthermore, they can complain about bureaucracy, bad public services and so on. But they are not free to criticize the government. This is the bargain that people of Singapore and China have accepted. This is the bargain that people in Russia and in many other parts of the world would be ready to accept. If governments give the people growth, security and personal freedoms, people are ready to forego public freedoms.

Or are they? The Singapore Model may work for populous states in a rapid state of economic development. But would it work for an OECD-country? I sincerely doubt it. Once people get used to a full range of personal and public freedoms, they are not ready to give them up – not even if the government promises growth and security. That is why the Nordic Model and the Singapore Model do not compete in the same league. The Singapore Model is a pragmatic and successful way to tackle the challenges of emerging nations. The Nordic Model is a pragmatic and successful way to tackle the challenges of mature nations. The two models can learn from each other but they should not be seen as rivals. Long live the Nordic Model! Long live the Singapore Model!