Stefan 0*lafsson M.A. Nuffield College, Oxford University MODERNIZATION AND SOCIAL STRATIFICATION IN ICELAND A thesis submitted for the degree of lector of Philosophy in the University of Oxford, Hilary Terrr., 1982. \ { * ' Stefan Olafsson M.A., Nuffield College: MODERNIZATION AND SOCIAL STRATIFICATION IN ICELAND, a thesis submitted for the degree of Doctor of Philosophy in the University of Oxford, Hilary Term 1982. Abstract Some myths of Icelandic society are examined and empirically tested in this thesis. The myths are variants of two basic themes: firstly, the idea that the Icelandic social structure is funda­ mentally unique, and, secondly, the belief that the contemporary society is exceptionally egalitarian in many respects. The uniqueness theme is reflected upon by maintaining an international comparative perspective throughout the presentation, and by examining the characteristics and degree of modernization in Icelandic society. In relation to the equality theme, some important aspects of socio-economic advantages are examined. Opportunities of individuals and class formation are also assessed, and then the analysis moves to the level of organizations and labour market relations, i.e., to unionism, conflict, and inflation. The findings seriously question or discard the themes which are considered. Thus, we show that Iceland has modernized to a very high level, sharing most of the basic social structural features which have been found to produce a "family resemblance" amongst advanced societies. Iceland is also found to have an inequality structure with familiar characteristics. The degree of income inequality seems to be on level with the Scandinavian societies, but when other related advantages are also considered, such as welfare and security aspects, the net outcome is that inequality appears to be greater in Iceland. Upward mobility has been extensive, mainly due to changes in the occupational structure, but the patterns are fairly typical. The structure of the industrial relations system has signifi­ cant affinities with comparable Scandinavian systems, but the level of industrial conflict has been extensive in Iceland. Inflation has similarly prevailed at a very high level for a long period. By relating inflation to distributional conflicts and the inequality structure, we offer a novel interpretation of this outstanding characteristic. Lastly, the relatively poor showing in the welfare league arid the intense distributional conflicts are explained by relating them to the distribution of political power in the society. Unlike the Scandinavian societies, Iceland has not been dominated by a large social-democratic party. The conservative Independence Party is the largest political party in the country and it has been the dorinant force in governments for most of the post-war period. PREFACE V This thesis has two fundamental aims which are closely connected, the first theoretical and the second empirical. Theoretically, the thesis attempts to follow through some new interpretations of Weberian stratification theory, especially as regards the interrelationship between distributional and organizational-relational aspects of the stratification system. This is reflected in the somewhat unusual composition of the subject matter, ranging from distributional inequalities to unionism and labour market relations. Thereby it is hoped to give a more comprehensive account of social stratification and its relevance in the contemporary society than has been common in such studies. As regards the empirical aspect, the aim is to examine the validity of some taken-for-granted beliefs, or myths, of Icelandic society. These basically concern issues of social development and inequality, which are intimately connected. Dealing with Icelandic society has produced specific problems, mainly because the social structure has not been much studied. We have therefore had to carry out considerable basic data collection and analyses which normally are available in secondary studies in other societies. One consequence of this is that the reader is, at tiraes, burdened with many references and details, no doubt reminiscent of "the creeping disease of bibliographical hypertrophy." We have also stretched the thesis very close to the maximum allowed length for the same reason and in order to give a clear comparative picture of the ii. aspects of Icelandic society which we cover. In respect to formalities, we must admit to having broken one rule of Icelandic grammar. This concerns the spelling of book and article titles. Only the first word of a title should be spelled with a capital letter in Icelandic, besides specific names. We have, however, followed the English convention in the interest of standardization. Special thanks are due to my supervisors, John H. Goldthorpe of Nuffield College, and John Ridge of the Department of Social and Administrative Studies, for continued guidance and encouragement. Thanks also go to Clive Payne, of the Computing and Research Support Unit of the Faculty of Social Studies, for help with computing problems. In Iceland, 6lafur R. Grimsson, Svanur Kristjansson, Olafur £>. Har&arson, and k5rolfur E>6rlindsson read parts or the whole of the thesis and provided valuable criticisms. Anne Cotterill typed the last version of the manuscript, and Lilja Karlsdottir drew the diagrams, both with admirable skill and patience. in. Dedication To Kblli, who in a special way Drovided crucial stimulation TABLE OF CONTENTS PREFACE .......................... ii I. THEMES AND HYPOTHESES .................. 1 1.1. Myths of Icelandic Society ............. 1 1.2. The Theoretical Approach ............. 6 1.2.1. The Basic Theoretical and Methodological Framework .......... 6 1.2.2. Dimensions of Inequality ........... 12 1.2.3. Class and Status ............... 17 1.3. The Myths Located and Analyzed .......... 24 1.3.1. Iceland as a Fundamentally Unique Society ... 24 1.3.2. Icelandic Value Patterns ........... 23 1.3.3. Theoretical Excursion: Erosion of Status and Persistence of Class? ...... 36 1.3.4. A Myth of Equality in a Semi-traditional Society? .......... 41 1.3.5. The Myth of the "Myth of Equality" in its Logical Place ............ 55 1.3.6. Modernization and Mobility .......... 67 1.3.7. The Structure of the Thesis: A Summary ............. 72 II. MODERNIZATION ..................... 75 11.1.1. Introduction ................. 75 11.1.2. Some Conditions of Modernization ....... 78 11.1.3. Industrialization and Employment Developments .......... 85 11.1.4. Is Iceland an Industrial Society? ...... 91 11.1.5. Booms and Slumps: The Gracth and Expenditure of National Income ....... 98 11.1.6. Population Developments ........... 102 11.1.7. Labour Conditions .............. 108 II.2.1. The Occupational Structure 1930-1975 ..... 127 v. II.2.2. Occupational Developments 1964-1975 ..... 135 III. INEQUALITY OF MATERIAL CONDITIONS ........... 142 III.l. Income Inequality ............... 142 III. 1.1. Introduction ................ 142 I I I. 1.2. A Broad International Comparison ...... 144 III. 1.3. The Trend in Income Inequality in Iceland . 153 III. 1.4. Explaining Occupational Earnings Differentials ............... 159 III. 1.5. Trends in Occupational Class Differentials 1934-1975 .......... 163 III. 1.6. Trends in the Occupational-Incomes Hierarchy 1963-1975 ............ 1&8 III. 1.7. Causes of the Trend Towards Equality in the Personal Distribution of Incomes ... 196 III. 1.8. Females in the Labour Market ......... 197 III. 1.9. Career Prospects in Occupational Earnings . 201 III. 2. Taxation and Provision of Collective Welfare .............. 206 II I. 2.1. Redistribution of Incomes By Means of Taxation ............. 207 III. 2. 2. The Extent and Characteristics of Taxation and Welfare Provisions ...... 210 III. 2. 3. A Note on the Distribution of Wealth ..... 214 III. 2. 4. Work Load .................. 216 III. 3. Employment Security and Rights ......... 222 III. 3.1. Unemployment ................ 222 III .3.2. Further Aspects of Security and Rights in Work ............ 227 III. 4. The Structure of Inequality: Some Considerations ............ 229 IV. MOBILITY AND CLASS STRUCTURE IV. 1.1. Introduction .. IV.1.2. The Data and Comparability ......... IV.1.3. Recruitment and Formation of Classes: Inflow Analysis .............. 246 IV.1.4. Mobility Opportunities by Class Origins: Outflow Analysis .............. 253 VI. IV.1.5. Actual Mobility Opportunities ........ 259 IV.1.6. Mobility and Meritocratic Ideology ..... 26 3 IV.2. Openness of the Icelandic Society ........ 273 IV.2.1. Introduction ................ 273 IV.2.2. The Method of Analysis ........... 274 IV.2.3. Designing and Fitting the Model ....... 277 IV.2.4. The Pattern of Exchange Mobility and Class Boundaries ........... 282 Appendix IV.1. .................... 289 V. "INTERMEZZO": Rediscovering Uniqueness ......... 290 VI. TRADE UNIONISM, CONFLICT, AND INFLATION ........ 293 VI.1. Class Formation and the Structure of the Labour Movement ............ 293 VI.1.1. Unionization ................ 293 VI.1.2. Types of Unions ............... 297 VI.1.3. Collective Bargaining and Earnings Determination .......... 302 VI.1.4. Explaining the Growth of Unionism ...... 311 VI.2. Industrial Conflict ............... 321 VI.2.1. The Data and Background ........... 321 VI.2.2. The Pattern of Industrial Conflict in Iceland ................ 323 VI.2.3. International Comparison of Industrial Conflict ............ 333 VI.2.4. The Legality of Strikes ........... 341 VI.2.5. A Failure of the Institutional