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The Finnish Model of Economic and Social Policy – From Cold War Primitive Accumulation to Generational Conflicts?

The Nordic Varieties of Capitalism

ISBN: 978-0-85724-777-3, eISBN: 978-0-85724-778-0

ISSN: 0195-6310

Publication date: 18 October 2011

Abstract

The chapter presents a timeline and an analysis of economic and social policy in Finland. Finland is an example of an étatiste late industrialiser, in which the post-war period up to the mid-1980s was a phase of catching up and energetic mobilisation of resources. The policy regime relied on vigorous State intervention comparable to that of the Asian tiger regimes, in Finland's case motivated also by the stringent geopolitical constraints of Cold War. Public saving contributed to a high rate of capital accumulation, credit was rationed to favour manufacturing investment and corporatist incomes policy was used to sustain the profitability of key export industries. Keynesian demand management was largely neglected, and the high growth rate was associated with large fluctuations and devaluations cycles. The credit and financial market liberalisation of the 1980s resulted in overheating, a deep recession and a failure of the attempted fixed exchange rate anchor. In the 1990s, incomes policy was used to boost the rise of the information technology sector, whereas monetary stability was sought by a strive towards EMU membership. Finland's long-run growth performance has been good, but economic policy will be challenged by the sharp deterioration of the dependency ratio as well as the politics of right-wing nationalism. The wage setting regime is in a state of flux.

Citation

Vartiainen, J. (2011), "The Finnish Model of Economic and Social Policy – From Cold War Primitive Accumulation to Generational Conflicts?", Mjøset, L. (Ed.) The Nordic Varieties of Capitalism (Comparative Social Research, Vol. 28), Emerald Group Publishing Limited, Bingley, pp. 53-87. https://doi.org/10.1108/S0195-6310(2011)0000028006

Publisher

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Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited