By Otto Kyyrönen
HELSINKI: In Finland, the liberal-conservative National Coalition Party and the far-right Finns Party, whose members together add up to nearly 90 percent of the current government, have united around a shared political project: authoritarian neoliberalism. The right-wing government is taking from the poor to give to the rich while dismantling Finland’s rule-of-law state and civil society.
Prime Minister Petteri Orpo’s coalition government took office on June 20, 2023. That same day, it unveiled its plan to slash public spending — primarily on health care and social security — by €4 billion by 2027, while granting a tax cut to individuals earning over €85,800 a year in wages and salary. The plan also included undermining the power of trade unions.
Less than a year later, this April 16, Orpo’s government announced an additional €1.6 billion in spending cuts and a 1.5 percentage point increase in the value-added tax rate, signaling its rejection of progressive tax-reform proposals. The situation worsened in July when President Alexander Stubb, a member of the National Coalition Party, signed a controversial bill granting the government the power to block asylum seekers from entering Finland through Russia. The bill violated constitutional and international laws, as well as migrants’ human rights, and marked the partial fulfilment of the Finns Party’s long-standing goal of closing the country’s borders to migrants.
On August 8, Finance Minister Riikka Purra revealed that the 2025 budget would include an additional €100 million in cuts to public spending. A month later, reports emerged that Orpo’s government, along with the Ministry of Finance, had urged the European Commission to alter the criteria for assessing Finland’s public indebtedness. This move will make it significantly harder for Finland to comply with the European Union’s new fiscal rules without imposing further spending cuts.
These and other reforms highlight how neoliberalism is turning increasingly authoritarian in Finland. While the world often views Finland as a model of well-functioning social democracy, Orpo’s government has launched a relentless attack on the Finnish welfare state, eroding the pillars of the Nordic welfare model that made it so famous in the first place.
In his 1979 essay, “The Great Moving Right Show,” cultural theorist Stuart Hall reflected on Britain’s political shift to the Right during the 1970s. Hall sought to explain “how a capitalist economic recession is . . . ‘lived,’ for increasing numbers of people, through the themes and representations (ideologically) of a virulent, emergent ‘petty-bourgeois’ ideology.”
Hall’s inquiry centered on Thatcherism, the British variant of neoliberalism. It championed, he said, “the restoration of competition and personal responsibility for effort and reward, the image of the over-taxed individual, enervated by welfare coddling, his initiative sapped by handouts by the state.” Since then, neoliberalism has spread across the globe, including to Finland, where the early 1990s depression threw open the Overton window and paved the way for Finland’s transition from Fordism to neoliberalism.
The financial crisis caused Finland’s real GDP to drop by 8 percent in 2009. In its wake, the Finns Party emerged as a major force during the 2011 parliamentary election, becoming the third-largest party virtually overnight. Running a right-wing populist campaign, the party criticized Finland’s financial support for other EU countries that were more severely affected by the crisis. It argued that these resources should have been used to benefit Finns instead. While this redistributive message later proved to be mere rhetoric, the party capitalized on a void in Finland’s representative democracy left by neoliberal technocrats unresponsive to popular grievances.
Over the past thirteen years, the Finns Party has successfully normalized far-right ideas while shifting further to the Right itself. Last year, the party became part of the government for the second time, joining Orpo’s coalition. Its partnership with the National Coalition Party demonstrates how neoliberal and far-right forces have aligned.
Thirty-five years after Hall’s essay, political scientist Ian Bruff coined the term “authoritarian neoliberalism” to argue that authoritarianism has always been intrinsic to neoliberalism and that such tendencies have become increasingly pronounced since the financial crisis. This also offers the best way of reading Orpo’s government and its policies. Authoritarian neoliberalism serves as the ideological terrain on which the National Coalition Party and the Finns Party have discovered one another as like-minded political collaborators.
The public-spending cuts announced in 2023 amount to 1.5 percent of Finland’s GDP, with over 60 percent targeting health care and social security. Because society’s most vulnerable members depend heavily on public services and benefits, these reforms alone are projected to push 51,000 adults and 17,000 minors into poverty in 2024.
The new austerity measures introduced this April will further exacerbate inequality and force even more people below the poverty line. The accompanying tax reform, intended to generate an additional €1.4 billion in fiscal revenue, will disproportionately impact the lower end of the income distribution. Since the value-added tax is a flat tax, raising it causes the least trouble for the rich while hitting the poor hardest.
Before the government decided to introduce new spending cuts and increase the value-added tax rate, some NGOs and trade unions proposed alternative solutions to address fiscal deficits. The Finnish Federation for Social Affairs and Health (SOSTE) advocated for a progressive tax reform that would have raised over €3 billion annually while also reducing income inequality. Patrizio Lainà, chief economist of the Finnish Confederation of Professionals, went further, suggesting a progressive tax reform capable of generating €8 billion in additional revenues.
Both proposals included taxing capital at higher rates. Finland’s dual income tax system taxes labour income and capital income differently. Since the richest Finns primarily earn capital income — which is taxed at significantly lower rates than high labour incomes — the total tax burden becomes regressive within the top 1 percent. Despite this unfair situation, the government ignored these proposals and chose not to raise the corporate tax rate or the capital income-tax rate, even though these rates remain relatively low in Finland and are paid by those most capable of paying more.
Orpo’s government claims that spending cuts will boost employment by incentivizing the poor to accept job offers after their benefits are reduced. The aim is to increase employment numbers by some 100,000 individuals, which would ostensibly lower the social security bill by €2 billion. However, even if employment did rise by 100,000, the Ministry of Finance estimates that the poorest third of Finnish society would still experience income losses due to the reforms announced in 2023.
The plan to raise employment by cutting social security — backed up by questionable microeconomic estimates from the Ministry of Finance — is unrealistic at best and harmful at worst. More plausibly, the cuts targeting the incomes of the poor will reduce consumption demand, further weakening investments and GDP growth. This, in turn, risks lower employment levels and diminished productivity growth. Boosting employment would instead require public spending to stimulate labour demand and greater investment in employment services.
Higher inequality is a typical outcome of neoliberal policies, as Finland’s experiences since the early 1990s imply. Orpo’s government appears committed to authoritarian measures to raise the incomes of the rich at the expense of the poor — no matter the consequence. (IPA Service)
Courtesy: Jacobin