Limiting Uncertainty: State Capacity and the Institutional Foundations of Nordic Welfare States

Jari Eloranta, University of Helsinki
Jeremy Land, University of Helsinki
Lars Christian Bruno, Norwegian Business School
Henric Häggqvist, Uppsala University

This paper analyzes the various indicators of Nordic state capacity starting from the beginning of the 19th century to today in terms of flow versus stock. We argue that the institutional foundations of Nordic states enabled them to retain more from the flows, thus developing a larger, more enduring stock of state capacity by 1800. In the next two hundred years, those features strengthened through crises’ responses and market integration. Using various measures, we assert that Nordic state capacity was intricately linked to three key institutional phenomena: 1) smaller gap between formal and informal institutions; 2) greater social capital and networks; 3) greater incorporation of non-state organizations into decision-making and welfare creation. Thus, in the last two centuries Nordic institutions developed greater and more effective ways to limit the uncertainties of life – i.e., hunger, poverty, expropriation of property, or risk to life – than other, similar societies in the western world.

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 Presented in Session 130. State Institutions and Development