Why Switzerland is not as capitalist as you might think

Switzerland is often thought of as a capitalist nation because of its famous (or infamous, if you prefer) banking sector. After all, can a country that proudly boasts being “one of the world's leading and most competitive financial centres" not be capitalist? 

But wait a bit before you jump to conclusions: what you are about to read may change your views in this matter.

What exactly is capitalism?

Without getting into too many technicalities, capitalism is an economic system that promotes free, private enterprise (as opposed to communism, where the government owns everything).

Taken in this context, Switzerland is indeed a capitalist country, as its economy is profit-driven. In this sense, it is no different from many other nations, including its most immediate European neighbours.

It is true that in some areas, capitalism in Switzerland is more pervasive than is in other  European states.

Take, for instance, its health insurance.

Like much of the European Union, Switzerland has a universal health system, which means everyone in the country is covered by insurance and has access to medical care.

The differences lie primarily in who finances the scheme — public versus private — and how the overall system functions.

In the EU, the government typically has control, to a lesser or greater extent, over funding, health insurance, and health providers.

Not so in Switzerland.

The system here is fundamentally different in that it is not state-run or tax-based. Instead, it requires everyone to purchase health insurance from one of dozens of private carriers.

READ ALSO : How is Swiss healthcare system different from the rest of Europe?

This emphasis on private, rather than on public sector, is another example of Switzerland’s capitalist leanings.

However, contrary to hard-core capitalist countries like the United States, which believe in no, or very minimal, government intervention in the economy or private lives, Switzerland adopted a flexible approach, where the state does have a say in certain matters.

For example, while private at its core, the health insurance system here is nevertheless overseen by the federal government to ensure that all insurance companies offer the same basic coverage to everyone and that they have the same pricing.

So you might say that Switzerland has a pragmatic type of capitalism — a government that does step in when it makes sense to do so.

In fact, “Switzerland owes its success to its liberal and pragmatic mentality,” according to a report by S-Ge, an organisation that works on behalf of the federal and cantonal governments to promote investment and entrepreneurship in Switzerland. 

What it boils down to is that the country mostly adheres to the principles of capitalism, but the government does interject itself here and there.

Wait…could Switzerland be socialist too?

You probably think it is not possible for a country to be both, as the two systems are total opposites of each other.

In a political and economic sense, Switzerland is not a socialist state.

However, if you take the term ‘socialism’ loosely, to mean social progress and a people-oriented political system, then Switzerland certainly fits the bill.

One common feature of socially progressive nations is the grass-roots participation in shaping the society: people themselves are catalysts for change.

Another feature is that the government listens to its citizens and is responsive to their needs.

Switzerland is a perfect example of both: its direct democracy system is possibly the most advanced, and progressive, in the world.

READ ALSO: How Switzerland’s direct democracy system works 

Liberal capitalists?

The common perception of capitalists is that they are conservative in their outlooks.

Yes, there are people and organisations in Switzerland with strongly conservative leanings — the populist Swiss People’s Party jumps to mind.

But don’t forget that the Swiss are also socially progressive, which suggests they are liberal thinkers, even though this liberalism may run counter to their capitalist economy.

However, there are many examples of the liberal mindset that is prevalent in Switzerland, including the country’s broad-minded and tolerant assisted suicide law, as well as its recycling culture.

As the Swiss government site explains, “although consumption rates are above the global average, Switzerland is often cited as a recycling role model because of its waste collection, separation and recovery system."

That is certainly liberal and progressive.  

Taking all these elements into account, Switzerland can be described as a capitalist country, with a bit of socialism mixed into it.