Growth and Equity in Finland

This paper presents a brief socioeconomic history of Finland from the 1860s to the present. In particular, we are interested in examining the extent to which economic growth and equitable socioeconomic arrangements came to co-exist. We have therefore emphasized the role of conflicts and conflict resolution in socioeconomic development. The paper combines the analysis of socioeconomic institutions with an analysis of how different socioeconomic risks have been managed to combine equity and growth. During the past century, the Finnish economy experienced fairly rapid economic growth and, more lately, strong productivity growth. While the unemployment rate is currently uncomfortably high, largely as a consequence of the economic shock in the early 1990s, labour markets have long been characterized by a high degree of female labour force participation. The level of economic inequality is very low by international standards, despite steep increases in the 1990s. At face value, the Finnish economy has combined comparatively high levels of economic growth with a fairly equitable distribution of resources. This paper examines how this came to be. We focus on broad economic developments, such as economic growth and the evolution of economic institutions, on economic inequality and on social policy as socioeconomic risk management. The paper proceeds to briefly describe Finnish economic and social history in the ‘long 20th century. Important events or aspects of this history include the last major European subsistence famine in 1866-68, and the civil war of 1918, a conflict rooted in part in class divisions and disparities in land ownership. After establishing that Finland suffered from difficult economic shocks and social conflicts in the early part of the 20th century we go on to discuss the institutions for growth, conflict and social risk management.