When Bernie Sanders said in his debate with Hillary Clinton that Denmark was a socialist country, which the United States ought to consider emulating, it created a big debate. Danish Prime Minister Lars Løkke Rasmussen weighed in, saying that his country had a market economy, not a planned economy.
Cathie Jo Martin and Kathleen Thelen are scholars of comparative political economy who have recently written books that talk about the Danish model. Martin is a professor of political science at Boston University; her book with Duane Swank, “The Political Construction of Business Interests,” asks why businesses in countries like Denmark are willing to work with social partners to shape active policies on labor. Thelen is the Ford professor of political science at MIT. Her book “Varieties of Liberalization and the New Politics of Social Solidarity” examines how Denmark has found a way to deal with global market pressures that eludes many other European countries. The interview has been lightly edited for style.
Henry Farrell: Denmark’s prime minister says that Denmark is not a socialist country and that Denmark is a market economy. How does the Danish model differ from stereotypes of “big brother socialism”?
Kathleen Thelen: Where to start? When people think of the “Danish model” they tend to think first about the country’s generous social policies, and assume that the point of all of this is to protect people from the market. This is wrong: Danish labor markets are very flexible. The difference with the United States is that [Danish] labor market policies are precisely designed to move the unemployed into training programs that enhance their marketable skills. This helps them reenter the labor market as soon as possible and is the core of the country’s famous “flexicurity” model — high flexibility in the labor market combined with extensive state support for skill development. Denmark spends more on active labor market policies than other OECD countries, far and away more than the United States, which is a laggard in this respect, as the graph below shows.
Cathie Jo Martin: I agree! Denmark is the most egalitarian country in the world, but in December 2014, Forbes (once again) ranked Denmark as the best country in the world to do business. (The U.S. ranking was 18th.) The country’s formula for growth is a high level of workforce skills and extensive cooperation among employers and workers to support labor market flexibility. Denmark experienced slower growth rates after the financial crisis, but these largely reflected poor policy decisions about the housing market that had little to do with the core features of the Danish growth strategy.
Read the full piece at The Washington Post.