Could the Nordic Tax Model effectively address the problems with capitalism without sacrificing productivity?

Nordic countries are consistently listed as among the happiest and most developed countries in the world. They manage to pay for extensive welfare programs, while still having free markets and thriving businesses. They do this by implementing high marginal income tax rates to pay for welfare, while also having relatively low corporate taxes. The low corporate taxes lead to a wealthy market economy, creating high wages, which pay for the welfare system to support less valuable workers. Is this the tax solution to the problems associated with a free market system?