"The fundamental issue in this election," declared Ufee Ellemann Jensen, the policy spokesman in parliament for Denmark's centrist Liberal Party, "is the question of union power. Will the unions take control of the country?"

The Liberals, supported by middle-class Danes and farmers, the Conservatives, supported by businessmen, and two much smaller parties have formed a nonsocialist coalition. It is trying to oust the union-based Social Democrats from power in Tuesday's national election.

Although muted in comparison on politics in many other countries, this campaign is unusually polarized by Danish standards, pitting left against right and labor supporters versus antiunion voters. Danes normally run their affairs by painstakingly constructed consensus among unions, business owners and an unusually wide spectrum of political parties.

But here, and throughout the rest of Scandinavia, that consensus has been undermined by chronic economic problems. These problems have made it difficult to maintain both the extensive welfare state and the high personal standard of living for which the Scandinavians are noted. Drastic decisions must be made about government spending, taxes, wages, profits and industrial investment to curb runaway inflation, cut huge budget and trading deficits and restore the competitiveness of exports on which the ecomonies of the Scandinavian nations depent.

In Denmark, a small country of 5 million people on a peninsula and neighboring islands in the Baltic Sea,everyone seems to agree that something must be done to reduce double-digit inflation and labor costs. But the labor unions have refused to agree to a freeze on wages and prices unless a list of their demands are met.

The unions want the government to spend more money to provide jobs for the growing number of unemployed and to further level out wealth in Denmark by reducing mortgage-interest tax deductions claimed by higher-income taxpayers. But their most controversial demand is that all firms be forced to share some of their profits with their workers, who would use the money to buy into the businesses.

The unions forced the last Danish government to resign last month and to call Tuesday's election by insisting on these demands.

The popular Social Democratic prime minister, Anker Jorgensen, formed an unusual coalition of Social Democrats and Liberals a year ago to try to make drastic economic changes. But the coalition was destroyed when the unions forced Jorgensen to insist on their conditions for a wage freeze and the Liberals refused to agree to them.

So the Liberals moved back to the right to form a nonsocialist coalition slate that seeks to replace the Social Democrats in power. Public opinion polls forecast a close contest, with the Social Democrats losing votes and the Liberals and Conservatives gaining ground.

This matches a shift to the right in other Scandinavian nation. But it is likely to leave Denmark, like the others, with a weaker government.

As usual, neither the nonsocialists nor the Social Democrats have any chance of winning a majority in Denmark's fragmented parliament, in which 11 parties now divide the seats. And a minority government would have less chance of winning a consensus for its policies in a more polarized parliament divided more equally between left and right.

This has happened throughout Scandinavia this year: Sweden's election last month produced a nonsocialist government with a shaky single-seat majority in parliament, which faces equally difficult economic decisions.

In Norway's local government elections the next day, the nonsocialist parties, especially the Conservatives, scored huge gains that undermined the leftist Labor Party's national government.

Earlier this year, the Conservatives also gained ground in parliamentary elections in Finland. This made it difficult to form a working coalition government there under Finland's strong but aging president, Urho Kekkonen, 79.

The vast majority of Scandinavians remain strongly committed to the welfare state, which unions, business and government worked closely together to build after World War II.

Despite the extensive welfare state, most industry remains privately owned. Scandinavians are quick to point out that there is much more socialism, in the form of government-owned businesses, in a country like Britain than in Denmark or Sweden.

But during the 1970s, the huge oil price increases that upset the economies of the entire industralized world hit Scandinavia's trading nations particularly hard and put great financial strains on their generous welfare states.

"Our welfare system was created in a different economic time," explained Jensen of the Danish Liberal Party. "Our system of unemployment benefits, for example, was created when we had virtually no unemployment, especially among higher-paid white-collar workers.

With unemployment around 6 percent, many unemployed white-collar workers are entitled to collect the maximum benefit of about $15,000 each year for four years before being forced to take jobs outside their fields, Jensen said.

"This system ties up workers in overcrowded fields who can afford to stay unemployed," Jensen added, "so while 150,000 people are unemployed, many of our factories are screaming for labor and we are losing export orders that cannot be filled."

The total Danish tax burden, which claims half or more of the average person's income, has been increased about 1 percent each year for the past several years in vain attempts to keep up with the cost of the Danish welfare state and squeeze inflation out of the economy. Despite the serious systemic long-range threat to their prosperity, most Danes still have or can borrow plenty of money, which drives inflation still higher. Both consumer prices and per-capita incomes in Denmark are among the highest in the world.

Government economists, bankers and most political leaders have agreed that wages and prices should be frozen to stop this inflation and keep the cost of Danish exports from rising more.

"We don't necessarily disagree with that," said economist Preben Karlsen of the Danish Trades Union Congress. "But we believe that if that is the only thing that is done, it will also depress the labor market, create strikes and lower productivity, which could ruin our economy. We have remained until now a notably strike-free and highly productive labor force."

Karlsen said the Danish unions would agree to "a very slow rise in wages," if the government agreed to its additional economic proposals.

Whoever wins Tuesday's election in Denmark will find that not just the unions but also the Danish parliamentary system will make drastic economic changes difficult. Because any party that wins more than 2 percent of the total vote gains seats in parliament, 11 different parties were represented in the last parliament. They range from four Communist and Socialist factions well to the left of the Social Democrats to the far-right Progress Party of tax protestor Mogens Glistrup.