The debate on the Norwegian economy is dominated by a small group of ageing economists who have all emerged from the same small and peculiar milieu at the Department of Economics at Blindern. They generally began their careers in the so-called iron triangle between the Ministry of Finance, Norges Bank and Statistics Norway. They later obtained far better-paid jobs as chief economists at private banks and as regular media oracles in the narrative-driven financial press. Their distorted view of the role of the state and of the market, however, they have retained intact.
Apart from the fact that, like Jens, they all come from Blindern, three things characterise them: They all have their red party membership cards in order, even if they keep them hidden in their inside pockets. They pronounce on interest-rate paths, price and exchange-rate developments and economic relationships as though economics were an exact science and as though only they knew the answers. And they are all consistently wrong, all the time. Developments eventually catch up with them and expose their dubious activities as fortune-tellers, but by then everything has usually been forgotten, and they can start afresh.
That they are wrong every time is one thing. Among ‘ordinary people’, few if any pay them any attention. And in financial circles, no one, at least among investors, can be bothered to listen to them. They are more of an irritation than a source of analysis and information. But they are nevertheless not without influence. The political class and the 169, who know little about most things outside the party offices – and even less about economics – evidently listen to them. And they have a more or less complete monopoly on explaining the government’s economic policy in Finansavisen, Dagens Næringsliv and NRK.
They are dangerous, not only because they are consistently wrong, but because they take the self-glorified ‘Norwegian model’ for granted. On the rare occasions when it is challenged, as when Martin Bech Holte gave them a lesson in why things went wrong in ‘The Country That Became Too Rich’ (Landet som ble for rikt), they scurry to the barricades like frightened chickens, armed with the most elaborate excuses. Ordinary consumers feel it in their own lives, but may not be fully aware that the Norwegian model, with a state-heavy, oil-driven, social-democratic welfare capitalism, represents an extreme outlier among OECD countries, and can hardly be characterised as a success.
The one-sided oil economy, and the financial wealth it has created, is one thing. There are also many Western European countries with large welfare states. But none has a public sector as large as Norway’s. Nor does any have a state that is simultaneously the country’s largest capitalist, with a vast oil fortune in state hands, and at the same time the largest owner on the country’s stock exchange, with a controlling stake in the largest bank, and public consumption, transfers and tax and duty policies that make households as dependent on political decisions as on wages and their own efforts. The Swedish Minister for Enterprise was not far from the truth when he characterised Norway as ‘the last communist state’, after the microphone had been switched off and he thought no one could hear him.
Norway indisputably has by far the strongest public finances in the OECD. Its liquidity is unique. But that is not the underlying performance of mainland Norway. It is worse than the economies of many OECD countries. And it is the performance of the mainland economy, or what little remains of it in the private sector, against which economic policy must be judged, not the fact that providence has been generous and supplied Norway with abundant quantities of oil, gas and hydropower. The state covers the growing deficit with ever larger withdrawals from the Oil Fund. This conceals the economic mismanagement of the mainland economy. And it conceals an abnormal and paradoxical form of state capitalism.
Access to the enormous pot of oil money, together with the heavy state ownership of the mainland economy, does not merely make the state the referee in the market. In Norway, the state is also the most dominant player on the field. This undermines the market mechanism, but gives the state, and the political class that controls it and the flows of money, enormous power and influence.
This is exercised through political appointments, the granting of licences, corporate governance, tax rates, duties and a redistribution policy involving massive transfers. This is what Støre and Stoltenberg call ‘safe governance’!? But in reality it is a ‘managed robbery’, taking from some groups of voters and giving to others. It is not only perceived as unfair by those affected; it also undermines the incentive structure in the market on which capitalism rests, and thereby undermines the development of prosperity for us all.
It facilitates conflicts of interest, rent-seeking, crony capitalism, clientelism and short-term policies designed to win voters, rather than costly but necessary long-term investments in important social infrastructure that do not produce immediate results in the opinion polls. That can hardly be called ‘safe governance’! It is irresponsible and short-sighted policy – and a waste of public funds.
The paradox of the Norwegian model is not only the dominant size of the state, the misuse of public funds and the fact that the state overrides where it should keep as far away as possible through a destructive tax and duty policy and an extreme redistribution policy, but at the same time that the state does not intervene where it should intervene, to ensure that the market functions as it should.
Norway is a small country and a small market, which is even smaller than it might have been had the state not been so large. Many producers and competition between them are prerequisites for the market mechanism to function. It works only when those who charge excessive prices, provide poor service or fall asleep at the wheel lose customers to someone who does better. Intervening to ensure effective competition, however, is something the Norwegian state does only to a very limited extent, far less than, for example, the United States and most EU countries, despite the fact that we have the same competition rules as the EU. That is perhaps not so surprising. The 169 probably understand little of what is going on, or that the competition rules exist to protect the market and consumers.
A small economy with small markets, such as Norway’s, is for natural reasons structurally prone to monopolistic tendencies. Dominant oligopolies have been established in almost every industry, with the result that Norwegian consumers pay more than they otherwise would for goods and services that are cheaper in our neighbouring countries and other countries with which it is natural to compare ourselves. It is the structure of the market, together with a dominant and inefficient state, that drives the cost level in the Norwegian economy, rather than the high wage level. In Norway, you encounter oligopolies everywhere: in the shop, at the bank, when buying insurance or petrol or potatoes and newspapers, or watching television.
The grocery trade is a pure oligopoly. Three grocery chains control almost the entire market: NorgesGruppen (44%), Coop (29%) and Rema 1000 (24%). It has been this way for years. To customers it looks like diversity, with different signs bearing names such as Kiwi, Meny, Spar, Extra, Obs and Rema. Behind the signs are three purchasing organisations, three wholesale systems, three logistics systems and three property strategies.
This is a highly concentrated oligopoly with high barriers to entry. Access to premises has for years been blocked by exclusive leases and restrictive covenants. Lidl and ICA have already tried to enter the Norwegian market, but had to abandon the attempt after a short time. The three monitor each other’s prices week by week and do not need secret meetings for prices to move in step.
The chains give the usual answer: that margins are low. NorgesGruppen had revenues of NOK 125.3 billion in 2025, with an operating margin of 3.3% and an annual profit of NOK 3.95 billion. A margin of three øre per krone sounds modest, but gives an incomplete picture because of the high volumes. A low sales margin and a high return on capital can coexist when volumes are large, demand is stable and new entry is almost impossible. NorgesGruppen’s return on equity is consistently as high as 20%. It is not without reason that Reitan and Hagen have become multibillionaires.
The agricultural co-operatives Tine, Nortura and Felleskjøpet constitute something close to a pure monopoly. In addition, the state protects Norwegian agricultural products from foreign competition through import protection. The high food prices in Norway are primarily due to the concentration in the grocery trade, the agricultural co-operatives and import protection. The concentration in the grocery market is also due to the competition authorities’ failure to enforce the competition rules. The high food prices are largely self-inflicted, and are the responsibility of the politicians.
The same applies to interest rates. They are higher in Norway than in our neighbouring countries. The reason is much the same. Interest-rate policy is one thing, but the banking market is more centralised and consolidated in Norway than in Sweden and Denmark. The largest bank, DNB, is majority-owned by the state and controls around a quarter of the retail market and even more of the corporate market. The local savings banks have been merged into Sparebanken Norge and the SpareBank 1 alliance. The result is that banks in Norway can charge a far higher interest margin than they can in Sweden and Denmark. In 2025, the banks had an aggregate return on equity of 14.0%. DNB delivered 15.9%. That is very high considering that the banks’ risk and downside are covered by the state.
Something similar applies in the insurance industry. The four largest companies (Gjensidige, If, Fremtind and Tryg) control fully 80% of the market. The same applies to petrol and diesel. There are five petrol-station chains, which plainly coordinate the pricing of petrol. In addition, more than 50% of the price is already set by the state through duties. As if that were not enough, even the news and commentary served to us by the press are highly centralised and concentrated.
The press is consolidated into three large media groups: Amedia, Schibsted and Polaris Media. Is it any wonder that they operate as a pure echo chamber, as uniform in their news and opinion coverage as the banks, insurance companies, grocery chains, pharmacies and petrol stations are in their pricing? Here too, the state has a hand on the wheel through press subsidies. And NRK is a pure state monopoly financed by taxpayers whether they like it or not.
When competition disappears, price ceases to be information. It becomes a levy that established businesses can collect. Profit ceases to be a reward for risk and effort and becomes a fixed return that can be harvested without risk and a barrier to the establishment of new competitors. When the state or a monopoly determines the price, it is no longer a market. Competition is the prerequisite for private property and free price formation to serve more than the owners who already control the shelves, the loans, the premiums, the pumps, the opinions and the headlines.
Adam Smith knew that merchants seldom meet without the conversation ending in a conspiracy against their customers. That is why the capitalist order needs rules against precisely that. Not so that the state can take over the shop. Nor so that the state can run the shop, but to prevent the shop from controlling the market. The task of the state is therefore twofold, and in that order. It should intervene as little as possible, but intervene when necessary for competition to take place. It should break up cartels, stop mergers that close the door to others, tear down barriers to entry and make life difficult for those who exploit their market power.
In Norway, it is the opposite. Typical of Norwegian state capitalism is an overgrown, far too large and dominant state, and, paradoxically, a state that does not intervene when it should. Allowing three grocery chains, a handful of banks and insurance companies and three media groups to control what little remains of private initiative in Norway is about as far down the road towards a communist planned economy as it is possible to go.
In practice, people encounter the same few players when they buy food, take out a mortgage, insure their house, fill their tank and read the newspaper. That is not ‘safe governance’. Nor is it good governance. Norway is structurally prone to monopolistic tendencies, with a small market in which a few providers can see each other’s hands and high barriers shield them from new competitors. All the more important, then, is a state that understands its own limitations, but which also intervenes when necessary to ensure that the market functions.
When the grocery chain owns pharmacies, when the same family owns both Rema and Uno-X, and when the banking alliance owns insurance, it is not only economies of scale and synergies that increase. So too does the ability to retain the customer across several markets at once. It is not a planned economy. But nor is it market competition. It is a destructive hybrid containing the worst of the planned economy and the worst of the market economy – the overgrown state of the planned economy and the monopolistic tendencies of the market.
Norway is a small market with a far too large state and a far too small private sector in which market competition is merely apparent. As in the grocery market, there are not too few signs. Norway has too few independent decision-makers behind the signs. Without a state that ensures the door remains open to challengers, prevents the large players from buying their way to dominant market shares and makes it cheap and easy to leave an expensive supplier, the oligopoly will continue to look like a market. And the shopping bag, the mortgage, the insurance premium and the price per litre will continue to bear its imprint.
It is not market failure alone. It is the politicians’ sin of omission. The competition rules are there to ensure that competition is maintained, and not merely for appearance’s sake. Much of the blame for the large state and the inefficient market lies with the red economists from Blindern, Jens’s comrades, who have made it their life’s work to explain away the market, and who are now well paid by the same banks that ‘squeeze’ their customers for all they can.
