But in Norway, the state is still grandpa

Neil Clark finds the last true socialists in Norway

We lost in eastern Europe and we lost in the west, too. The past 20 years have been years of retreat for socialists the continent over. But in one corner of Europe, social solidarity and egalitarianism remain strong. Is Norway Europe's last surviving socialist country?

Almost half of Norway's GDP is produced by the public sector, the highest proportion in western Europe. The state owns majority shareholdings in the two largest companies - Norsk Hydro and Statoil. A universal, tax-financed health service is used by almost all Norway's 4.5 million people. The welfare system provides peace of mind from cradle to grave: not for Norwegian pensioners the indignity of having to surrender a lifetime's savings to get into a privately owned old people's home. State education is excellent; only a small minority are educated privately. Nearly a quarter of the adult population takes advantage of the numerous continuing education courses offered by the local authorities, among others.

Taxation is steeply and heroically progressive. Marginal tax rates on wages rise to 64.7 per cent (or 55.3 per cent, excluding social security contributions). Other sources of income, from capital, shares and so on, are taxed at a standard 28 per cent, with surtaxes of 13.5 per cent on incomes above roughly £29,000 and 19.5 per cent on those above roughly £74,000.

Public rights of access to some of the most beautiful landscape in the world is enshrined in law - so Norwegians can wander anywhere in their own country without fearing the approach of a shotgun-bearing gamekeeper.

Sadly, the neoliberal ideology that has wreaked so much havoc through the rest of Europe has recently made inroads in Norway, too. The most recent Labour government was the first to flirt with privatisation, selling a minority stake in Statoil. Since then, a centre-right government, which came to power in 2001, has sold off more public stakes in various enterprises. The present government makes no secret of its desire to cut wealth taxes. Income inequality has been rising slowly in Norway for some time. The share of total income received by the richest 10 per cent rose from 19 per cent in 1990 to 23.6 per cent in 2002, while the share of the bottom 10 per cent fell from 4 per cent to 3.6 per cent. The trend sharply accelerated in the final year of that period.

The state health service has also been undermined. The number of private hospitals is increasing and a 2001 law introduced appointment fees for those who had not previously chosen a GP. As social stratification begins to grow, so public rights of access have come under threat. The freedom to walk the length of Norway's coastline has been challenged by nouveau riche property owners with homes overlooking the sea.

But it would be premature to write off egalitarianism in Norway just yet. The neoliberals who wish to turn Norway into just another every-man-for-himself jungle have got a fight on their hands: against the majority of Norwegians. More than a quarter of a million have joined the union-sponsored "For the Welfare State" organisation to fight privatisation and other neoliberal reforms. Opinion polls suggest that the left will form the government after the next general election, due in 2005.

Whatever the colour of the present government, the political consensus remains leftist. "For many Norwegians," says Bjarte B0e, a social anthropologist, "the state is still grandpa." Most are happy to continue paying relatively high taxes - if the result is social cohesion, no underclass and world-class hospitals and schools. Despite the recent growth in inequality, Norway remains second only to Denmark as the country with the smallest income inequality in Europe; Britain is 16th.

Anybody who thinks Norwegian socialism is an example of the Blairite "Third Way" ought to get out more. Throughout Norway, Britain's Prime Minister is regarded as a figure of fun, and is the subject of unremitting ridicule. For decades, Norwegians, with their policies of tax-and-spend and maintaining a large state-owned sector, have done exactly the opposite to the orthodox neoliberal prescription that Blair embraces - and have been rewarded with one of the most successful economies and fairest societies in the world.

Revenues from North Sea oil and gas have helped enormously, but Norway followed a quite different route from the UK, which made similar discoveries at the same time. It followed the much-maligned Bennite path: it formed a state-owned oil company, to guarantee that the nation and not foreign multinationals derived the lion's share of the benefit, and established a Petroleum Fund (now worth roughly $145bn) to pay for future health and pension expenses. Oil and gas income has also been used to pay for reindustrialisation and subsidies to small-scale, ecologically friendly agriculture. And it has enabled Norway to be, per capita, the largest donor of overseas aid in the world. Margaret Thatcher's Britain, by contrast, used its cash windfall to grant tax cuts to the rich and pay three million people not to work.