Would it be correct to say that Laissez Faire economics lead to Nordic prosperity in the 1800-present?

by bronyraur
ReaperReader

I'm going to answer this mainly for Scandinavia as I'm afraid I don't know much about Iceland. 

Denmark, Norway and Sweden started seeing rising incomes at a time of relatively uninterventionist governments. That doesn't necessarily mean that the laissez faire policies were therefore the drivers of the industrialisation, economies are complex things with many things going on at any particular time, it could have been a coincidence. Just as the fact that a country like Japan had an active industrial policy when they industrialised doesn't mean that their growth was thereby due to the policy. 

Denmark and Sweden (Norway wasn't fully independent of Sweden until 1905) were generally liberal and non-interventionist around the time that economic growth took off in those countries, the countries embraced trade, particularly with other European states, and to the best of my knowledge didn't have an industrialision  policy or engage in financing of companies on a significant scale. Sweden in particular had some strong domestic intellectual influences in the direction of liberalism.  Anders Chydenius in the 18th century, a young priest from Österbotten (now in Finland, then in Sweden), was an advocate for free markets in the form of trade liberalisation, reduced subsidies and lower-taxes. He was also anti-aristocracy and pro-freedom of the press. His ideas influenced Johan August Gripenstedt, a Swedish businessman and politician. Gripendtedt was the Swedish Minister of Finance from 1856 to 1866, and pushed through a number of free market reforms, including abolishing tariffs, and reducing customs duties, and signing free trade agreements with other European countries. 

On the other hand, the states were involved, in things like buiding railways and in expanding education, which likely contributed to economic growth. But how much did they contribute? The economic historian Robert Fogel estimated in 1964 that for the USA, railways weren't that important:

that the level of per capita income achieved by January 1, 1890 would have been reached by March 31, 1890, if railroads had never been invented

But I don't know of anyone who has tried this calculation for a Nordic country, and their geographies and climates are different so perhaps a different result would be reached.

Denmark, and to a lesser extent, Sweden also saw land reforms in the early 19th century, although these appear to have been more bottom-up from the villages, rather than top-down. 

Finland was different, being part of Russia until 1917, though it did have some autonomy from 1809 when it was established as a Grand Duchy, and it formed its own parliament in 1863. Finnish economic growth was slower in the 19th century, but that might have been at least in part due to the orientation of Finnish trade to Russia, while Denmark and Sweden were orientated more to faster growing Britain and Germany. Or some other factor that we can't properly measure. 

In summary, the Scandinavian countries were mainly liberal and non-interventionist during the time of economic take off of those countries. Is that 'laissez faire'? It depends on your definition. Did that definitely drive growth? I don't think that can be answered rigorously. 

Sources

Henriksen, Ingrid. “An Economic History of Denmark”. EH.Net Encyclopedia, edited by Robert Whaples. October 6, 2006. URL http://eh.net/encyclopedia/an-economic-history-of-denmark/

Grytten, Ola. “The Economic History of Norway”. EH.Net Encyclopedia, edited by Robert Whaples. March 16, 2008. URL http://eh.net/encyclopedia/the-economic-history-of-norway/

 Lennart Jörberg (1965) Structural change and economic growth: Sweden in the 19th century, Economy and History, 8:1, 3-46, DOI: 10.1080/00708852.1965.10418997, https://www.tandfonline.com/doi/pdf/10.1080/00708852.1965.10418997

 Schön, Lennart. “Sweden – Economic Growth and Structural Change, 1800-2000″. EH.Net Encyclopedia, edited by Robert Whaples. February 10, 2008. URL http://eh.net/encyclopedia/sweden-economic-growth-and-structural-change-1800-2000/