Denmark is a beautiful Nordic country with a rich history and a long journey to the prosperous state it is today.
There is, however, a myth that Denmark relies on some version of ‘democratic socialism’ to which it owes its growing welfare.
Denmark is not a socialist country. It has a mixed welfare-state economy, meaning there is a huge public sector that provides social benefits like free healthcare and education.
Yet, the model is based on capitalist principles such as the free market and the protection of private property.
The Nordic welfare state model is often mistaken for a socialist economy.
However, the fundamental principles of socialism as an economic philosophy are central planning and public ownership of property and the means of production.
None of these features can be found in Denmark, where economics is based on the free market and the right to private property.
Also, see Is Sweden Socialist? to learn more.
Why do people think Denmark is socialist?
While Denmark being a socialist state is a myth, it is quite widespread.
The confusion first started during the presidential race of 2015, when Bernie Sanders referred to Denmark as an example of what he would like to achieve as a “democratic socialist” president. [1]
The myth that Denmark is a socialist state came from Bernie Sanders’ speech in 2015 and quickly spread among Americans.
The main reason people believe it is because they do not have a clear understanding of what socialism is and how it is different from other economic models.
Sanders’ rhetoric brought the belief of Denmark being a socialist state to the masses.
While many have tried to argue, from Dutch journalists to the prime minister of Denmark himself, Sanders never abandoned the idea and was never really challenged on the subject.
Today, parties and ideologies are not a big part of the political debate.
After the end of the Cold War, it seemed that one ideology won over the other, and the focus of political rhetoric shifted to appealing to people’s values and ideals.
Because arguing about ideology is not a major part of politics anymore, there are fewer people who understand what each of the ideologies implies.
Therefore, it is easy to confuse the public on the matter.
Still, there is extensive evidence that the economy of Denmark is not a socialist one, and the myth can be easily exposed by basic research.
Also, see Is Norway Socialist? to learn more.
Does Denmark value capitalism?
In response to Bernie Sanders’ statements, the Prime Minister of Denmark, Lars Løkke Rasmussen, addressed the issue in his speech at Harvard.
He described the idea of the Nordic model and explained how it is different from other Western economies but emphasized its capitalist nature, which is ‘far from a socialist planned economy.’ [2]
Denmark values capitalism. Focusing on the social sector does not imply that the country is socialist.
Rasmussen emphasized the capitalist values that underpin the country’s economic model, such as the free market, low business regulations, and private property protection.
Denmark, of course, prioritizes welfare measures and social security more than many other capitalist countries do.
It also has a vast public sector that takes up as much as about 30% of the economy, making it similar to post-soviet states. [3]
Yet, the economy of Denmark is very far from a closed and regulated socialist model.
It is sometimes even more successful as a capitalist state than many other countries that would come to mind when the word “capitalism” is mentioned.
Actually, statistics show that the protection of private property in Denmark is stronger than in America.
According to research from 2017, Denmark and other Nordic welfare states are ranked higher than many other developed capitalist countries, with Denmark being ninth, the UK fourteenth, and the US eighteenth.
In terms of the freedom of the market and regulations posed on business, Denmark is also most similar to predominantly open market states.
In terms of free trade, Denmark again performs better than any others, ranking ninth, with the UK at tenth and the US being as far as number 55. [4]
Thus, it is safe to say that Denmark shares the values of capitalism, and they are the basis of the country’s economic system.
As Rasmussen put it, ‘it is a successful market economy with much freedom to pursue your dreams and live your life as you wish.’
Also, see What Is Sweden Known For? to learn more.
Is Denmark a rich or a poor country?
Denmark is one of the wealthiest countries in the world. It ranks seventh on the list of the world’s richest countries by GDP per capita, right after the US at sixth.
According to the Danish central bank, households in Denmark are the richest among the countries in the EU.
Many link the prosperity of Denmark to the Nordic model and consider it proof of the welfare-state success.
In fact, Denmark became a wealthy state before it started implementing the Nordic model.
It allowed the country to gradually raise taxes while also affording the process of figuring out how to optimize the welfare-state system and correct mistakes made along the way. [5]
The Dutch maintain a high standard of living, their GDP sees steady growth, and their economy is still a very strong one.
The extensive welfare benefits come at the cost of high taxes, but people’s income is correspondingly high.
In 2018, Denmark ranked eighth on the list of best countries for business. [6]
A significant role is also played by the people’s trust in the government, which makes it possible to charge high taxes in exchange for extensive social benefits.
A part of that relationship between the citizens and the state is that Denmark has very little corruption.
This fact itself is a crucial part of the country’s prosperity.
So, while the Nordic model is currently thriving in Denmark, it is not a silver bullet.
It requires a lot of resources to begin with, and it became possible in Scandinavia because of the unique conditions that exist there.
Still, Denmark successfully remains one of the wealthiest countries in the world.
Conclusion
Denmark being a socialist state is a myth. Denmark is a mixed-economy welfare state that relies on a capitalist model.
Also, see Why Does Sweden Have So Many Islands? to learn more.