November 29, 2022

Is Iceland a Capitalist Country?

Although some form of capitalism underpins nearly all economies today, it was only one of two major approaches to economic organization for much of the previous century. The state owns the means of production in socialism, and state-owned enterprises seek to maximize social good rather than profits.

Iceland’s economy was mixed in the last century. Many businesses were owned and operated by the state and municipalities, though many were privately owned. Many of these companies were sold to private parties by the state and municipalities in the second half of the twentieth century.

Capitalism became more visible at the turn of the century. Private parties acquired all of the state and community banks, and the country’s economy was inflated in a few years, culminating in a collapse at the start of the financial crisis in 2008. Following the collapse, the state took over two large banks. Although parts of the second bank were sold, the state still owns a large bank. Although private companies provide various health services, the health system is mostly run by the state.

Apart from the aforementioned, I would describe the Icelandic economy as mostly capitalist. Anyone can start a business and invest in a thriving stock market. Competition is active, though it must be actively monitored. Icelanders have a lot of freedom to choose what products they buy, where they work, and how they express themselves.

I would say that the Icelandic economy is a hybrid of capitalist and socialist principles that have proven to be extremely successful in all Nordic countries, for example. Icelanders have incredible freedom, but when things go wrong, the safety net catches us all, rich or poor. Isn’t this an excellent model?