Marching Finnish schoolchildren, bundled against the winter cold, lit up a dark December afternoon with thousands of candles recently to celebrate the anniversary of their country's 1917 independence from Russia.

The long procession wound through snow-covered streets of this Nordic capital still graced by the stately pastel beauty of some of the finest imperial Russian buildings outside Leningrad.

A few nights later, prosperous-looking Finnish families filled architect Alvar Aalto's soaring marble masterpiece, Finlandia Hall, to hear a Soviet virtuoso, Victoria Mullova, play the Sibelius violin concerto with which she had won the 1980 Sibelius violin competition. The audience, for whom the music of Jean Sibelius is a national treasure, repeatedly applauded her back onto the stage after a commanding performance that more than justified her winning the international competition held here every five years.

Across Helsinki, on one of the many fingers of the icy Baltic Sea that reach deep into the city, a passenger ferry took shape in to the immense new workshed of the Wartsila Shipyard. The vast structure, which shelters workers from below-zero winter temperatures in this northernmost of the world's industrial countries, symbolizes Wartsila's emerging leadership in the construction of specialized ships such as passenger ferries, cruise liners and icebreakers.

Wartsila, which began building ships in 1741, has become a $500-million-a-year conglomerate with 14,000 employes who also make diesel engines, printing presses, washing machines and world famous Arabia pottery and ceramics. Many of its ships, mostly icebreakers to keep shipping lanes open in the Arctic winter, are sold to the Soviet Union.

Inside the old stone fortress of the Bank of Finland, which regulates the Finnish economy with a stern monetarist hand, its president explained how Finland can maintain a robust, open-market economy, sophisticated Western society and strong national identity while cultivating close relations with its giant neighbor, the Soviet Union. There is no alternative, no matter what Finland's friends in the West may think, the bank's president, former prime minister Ahti Karjalainen, said, because "we are very alone."

Finns and Western diplomats here believe the Finnish-Soviet relationship, built on extensive mutual trade, a friendship treaty from the end of World War II and obvious efforts by the Finns to avoid unnecessarily annoying the Soviets, is still widely misunderstood. The jargon for it, "Finlandization," conjures up an image of a quivering, helpless country bought off with Soviet trade and intimated by Soviet might, practically inside the Eastern Bloc and anxious to do whatever the Kremlin bids.

Attention is once again being focused on Finland and Finlandization as East-West tensions increase. Questions have been raised about what might happen to Finland if the Soviet Union invaded another of its neighbors, Poland. American commentators and officials have warned Western Europe of the danger of becoming Finlandized if it becomes too dependent on trade with the Soviets, does not help Washington beef up Western defenses and becomes too fearful of standing up to Moscow.

But the Finns believe they are better off than they have ever been. They are much more independent now than they wer as a Russian duchy for a hundred years or as part of the Swedish empire for 700 years before that.

After keeping the Soviets at bay in fierce fighting during the war, the Finns were forced by their much bigger foe to give up a slice of buffer territory, to promise not to allow Finland to be used to invade the Soviet Union, and to pay heavy financial reparations. Despite their careful and often convoluted public expressions of friendship, many Finns still speak disparagingly about the Soviets in private.

Quite unlike a communist Soviet satellite, however, Finland is a free-market, Western democracy. In a postwar boom, Finland transformed itself in a generation or two from a forest-based agrarian society to a rapidly expanding, advanced industrial economy. It has the highest economic growth rate in Europe and provides a glittering showcase of successful bootstrap capitalism for the tens of thousands of Soviet tourists who come here each year.

Finland is the Soviet Union's primary source of Western products, from ships to shoes and cloth to candy. Helsinki, linked to Moscow by railroad, also is a vital supply depot for Westerners living in the Soviet Union, who buy everything from household appliances to fresh vegetables from Helsinki's sprawling Stockman's department store.

The Finns trade Western goods and technology to the Soviet Union for oil. They buy two-thirds of their imported oil from the Soviets in a barter agreement that cushions Finland against the soaring price of oil and world economic fluctuations. Whenever the cost of the oil it buys from the Soviet Union goes up, Finland sells the Soviets more goods, further expanding the Finnish economy.

The Finns see their relationship with the Soviet Union as one of mutual, self-interest: the Finns want to preserve their freedom and prosperity and the Soviets want the reassurance of a stable relationship and safe border plus a window to the West.

A veteran Finnish journalist specializing in foreign affairs said he doubts whether Finland would be much affected if the Soviets were to invade Poland and the West were to retaliate with diplomatic and economic sanctions. p

"Whenever the East-West situation becomes more unstable, the Soviet Union and Finland work harder to maintain the stability of their relationship," he said. Finland's flourishing trade with the Soviet Union, he added, might actually benefit from a NATO-led trade embargo of the Soviets.

"It's not ideological, but simply self-interest," he said. "We are a small country."

The Finns are known to drive a hard bargain with the Soviets in trade negotiations. Under the leaderhip for the past 24 years of President Urho Kekkonen, 80, who has maintained a close personal relationship with his fellow senior citizens in the Kremlin, the Finns also have resisted repeated Soviet prodding to tilt more toward the East.

Finland maintains a well-armed military that it has not allowed to mingle with those of the Warsaw Pact countries despite at least one high-level Soviet suggestion in recent years about holding joint maneuvers. The Finns believe Soviet land forces in the Kola Peninsula near Finland are sufficient only to defend the powerful Soviet fleet based at Murmansk, which in turn aims its nuclear missiles at targets far beyond Finland.

"It doesn't make any sense for anyone to try to take this God-forsaken place; it isn't worth the trouble or cost," a Finnish journalist said. "The Finns are a stubborn people and will fight. We are prepred to mobilize up to 600,000 men in a couple of days. The Soviets do try to take political and economic advantage whenever they can, but we do well in resisting them."

"This is the only relationship the Finns can have with the Soviets," said a senior Western diplomat who occasionally confers with Kekkonen. "It is a very stable relationship and can withstand changes in the outside world. The Finns may cater to Soviet whims in what they say publicly, but they run their own show and do mostly stay neutral in their foreign policy."

Economically and culturally Finland has been turning to the West. Two-thirds of its trade is now with Western Europe. It is also trading more with the United States, to which it recently sold three, $100 million offshore oil-drilling platforms. American movies predominate. English is the almost universally taught second language, and government and business officials complain that it is difficult to find Finns who speak Russian.

Forced by economic circumstances to trail Scandinavia in building its postwar welfare state, Finland has gone about it with characteristic caution. There is still extensive private participation in its national health care and retirement plans. The Finns say they want to remain more self-reliant than they believe the government-dominated Swedes are.

"Sweden used to be our model," said Max Jakobson, managing director of the Council of Economic Organizations in Finland and a former top diplomat. "We used to criticize things by saying they had not yet reached the Swedish level. But today we see Sweden as a warning of how things can get out of hand."

Finland's Social Democrats, who head the left-of-center ruling coalition, also appear quite conservative economically. Prime Minister Mauno Koivisto, who was recently president of the Bank of Finland, is popular for his strong monetarist views and restrictive credit policies.

Finnish Communist Party has been weaned by many years of participation in the coalition government away from its once-threatening Stalinist wing. One senior government official said, "It helps, in carrying out a realistic economic policy that might increase unemployment, to have that policy approved and carried out by a labor minister who is also secretary general of the Communist Party."

Finland enjoyed 7 percent economic growth while most of the rest of the Western world was fighting a recession in 1980. Although Finnish economists expect the recession to catch up with Finland this year or next, they still forecast 2 to 4 percent growth in 1981, which would be welcome anywhere else in Europe.

The government and Bank of Finland also are trying to limit government spending, consumer borrowing and wage increases to bring inflation down from its present 13 percent, which is seen as the primary danger to continuing Finnish prosperity.

Finns are beginning to invest more abroad and have undertaken extensive construction projects in the Middle East and Africa, where they have found that Finland can benefit from being seen as unencumbered by the ideological baggage of the superpowers or their allies.

"Our biggest problem," a senior Finnish official who has had extensive contact with the Soviets said in a candid assessment, "is our big neighbor, and that will always be our biggest problem. We need our Western friends, but they cannot help us if we do not solve our problem with the Soviet Union."