Understanding Populist Challenges to the Liberal Order
May 11, 2017
16 Min read time
The idea that the rise of populism was caused by market-driven inequalities fails to address why populism is so cozy with crony capitalists.
Late on election night, November 8, 2016, Paul Krugman wrote in the New York Times: “. . . people like me, and probably like most readers of The New York Times, truly didn’t understand the country we live in. We thought that our fellow citizens would not, in the end, vote for a candidate . . . so scary yet ludicrous.” About two and half years before that night, many liberals in India felt something similar at Narendra Modi’s massive victory—though one should say, Modi is scary but not ludicrous.
The right-wing populist challenge to the liberal order is by no means limited to Donald Trump’s America or Modi’s India. The popular appeal of Britain’s Brexit, France’s Marine Le Pen, Russia’s Vladimir Putin, Hungary’s Viktor Orbán, Poland’s Jarosław Kaczyński, Turkey’s Recep Tayyip Erdoğan, and the Philippines’s Rodrigo Duterte has baffled social thinkers over the last few years. Meanwhile after a decades-long triumphal march of authoritarian and rapid economic growth, China’s increasingly repressive regime seems to be winning all the marbles in the global power game.
In deciphering a pattern in the looming illiberal challenge, an explanation has often been sought in the inexorable and unconscionable rise of economic inequality. The standard measures of income and wealth inequality show a significant rise in recent years, not just in rich but also in middle- and low-income countries (with the possible exception of some Latin American countries, although the levels of inequality there remain quite high). Liberalism, by encouraging the free play of market forces and relentless global competition and integration—particularly with the lifting of restrictions on international trade and capital flows—has accentuated inequalities and eroded the foundations of job security and social protection. The resultant dislocation, anxiety, and despair have supposedly driven workers into the arms of populist demagogues.
The idea that the rise of populism was caused by market-driven inequalities fails to address why populism is so cozy with crony capitalists.
But this explanation, while plausible, has some major gaps.
On the contentious issue of globalization, the line to the rise of right-wing populist anger is not clear. A 2016 survey in the Economist across nineteen countries suggests that countries as diverse as Vietnam, the Philippines, India, Thailand, Malaysia, Indonesia, Germany, Sweden, Denmark, and Hong Kong view globalization quite favorably. If China had been included in the survey, it would likely have made the list as well. Yet right-wing populism is no less rampant in India and the Philippines, and to a lesser extent in Indonesia, Germany, and Denmark. Of course skepticism about globalization is often greater in wealthy countries whose historically dominant positions in the international economy are slowly eroding. But even in France, where only 37 percent of all respondents agree that globalization is positive, 77 percent of those under the age of 24 concur. An earlier, 2014 Pew Research Center Survey of 44 countries yielded similar findings: 81 percent of respondents saw international trade and global business ties as good for their countries.
On the issue of jobs, as Thomas Piketty has shown in Capital in the Twenty-first Century (2013), market-driven losses for unskilled workers play only a small part in the large rise in inequality. The takeoff in the income and wealth of the top 1 percent may have more to do with the excessive financialization and the entrenchment of a financial oligarchy, as well as the astronomical salaries of super-managers. All these factors are more prominent in the United States than they are elsewhere.
Certainly in the manufacturing sector, the loss of jobs—or sluggish growth in the availability of good jobs—is starkly evident, not just in rich countries but also in many developing countries. The loss of manufacturing jobs in the United States due to competition from Chinese imports has now been widely documented. But this phenomenon is less documented in poor countries such as India, where job growth has been relatively stagnant while a surge in the youth population and an exodus from the agricultural sector continue unabated. In many cases, the impact of labor-replacing technological change is perhaps no less severe than that of cheap Chinese imports, though the latter often garners more attention. Even in traditional labor-intensive industries (such as footwear, electronic assembly, and textiles), manufacturing job expansion is stalled because of automation, chronic deficiencies in infrastructural facilities, and business and labor regulations, while China moves up the global value chain. In many cases the anger and despair are felt not just by the unemployed or the worst-off, but also by workers who are worried about the sustainability of their jobs and about their children’s futures. More than chronic job loss, the job churning brought about by domestic and foreign competition creates a climate of insecurity.
Finally, the idea that the phenomenal rise of China represents the greatest success in the global illiberal challenge over the last three decades is not entirely accurate. Many, both inside and outside China, now believe in the so-called Beijing Consensus on economic development. In practice this consensus foregrounds an authoritarian, meritocratic state leadership in guiding a market economy toward long-term goals of massive infrastructural investment, as well as agressive adoption of cutting-edge technology, all in a single-minded pursuit of nationalist glory. And all the while trampling upon minor encumbrances such as human rights and democratic processes. There is even a new though ill-defined term frequently used in Chinese strategic papers: the “China Solution” or zhongguo fang’an, touted as the cure for many of the world’s major problems.
This, however, is not a solution if one values individual autonomy, participation, and deliberation as an intrinsic part of development, as Amartya Sen does in his book Development as Freedom (1999). Even if one does not, such a “solution” chokes the flow of independent information from below, thus delaying the correction of policy mistakes; suppresses institutions of open public scrutiny that can check official corruption or collusion with business in matters of land grabbing, work safety, or toxic pollution; and encourages debt-fueled overinvestment and excess capacity in state-controlled or politically connected firms. It is also worth keeping in mind that some of the beneficial aspects of Chinese governance follow less from illiberal practices and more from historically unique features of Chinese governmental organization, such as the meritocratic selection of bureaucrats, the systematic use of performance incentives in career promotion, and the remarkable combination of political centralization with a large degree of economic and administrative decentralization, quite unusual for an authoritarian system.
Is the culprit Homo economicus, with his hyper-rational pursuit of greed and self-interest?
Perhaps above all, what the common explanation fails to explain is why, if global workers are angry with market-driven inequalities, they are gravitating toward leaders who are either plutocrats—such as Trump, Farage, Le Pen, Orbán, Erdoğan, and Putin—or are cozy with crony capitalists, such as Modi. Why, for example, are poor Louisianans more resentful, as Arlie Hochschild reports in Strangers in Their Own Land (2016), of ethnic minorities and immigrants than of the petrochemical companies that have ravaged their communities for decades?
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Several new books try to answer these questions. Beyond these economic and governance-related challenges to liberalism, there is a general critique of liberal modernity, popular with postmodernists and cultural theorists, that resonates ideologically with the turn toward populism. This critique usually associates modernity with cutthroat capitalism, and the ravages of imperialism with a presiding technocratic nation-state. It traces the poison all the way to the Enlightenment, even though Karl Marx and Mao Zedong are as much the children of this modernity as are Adam Smith and Milton Friedman. This critique of modernity is now quite familiar from the reading lists of any self-respecting cultural studies department. Here I shall confine myself to its exposition in a new book by Pankaj Mishra, The Age of Anger (2017), in which it is directly related to the populist anger that concerns us here. Going back to the eighteenth century, Mishra recalls Jean-Jacques Rousseau’s romanticist reaction to the Enlightenment’s rationalist narrative of unyielding progress, finding a reflection of that reaction in today’s illiberal challenge, from the angry worker in the U.S. Rust Belt to the Islamist suicide bomber. Ressentiment, born out of “an intense mix of envy and sense of humiliation and powerlessness,” is undermining civic society. Homo economicus in its hyper-rational pursuit of greed and self-interest is the culprit, we are made to believe.
For all the faults of capitalism (and economics, for that matter), this is too sweeping a judgment. In trying to explain too much, it actually explains very little. Contrary to the image of an angry East reacting to the destabilizing effects of Western capitalism, this rage appears to be less intense in those parts of the East (such as East, Southeast and South Asia) where capitalist growth has been relatively successful, than in West Asia and North Africa, where capitalist growth has been stunted and economic misery has been accentuated by corrupt political tyranny. The highly popular Arab Spring, now snuffed out, was a rebellion not against Western liberalism but against domestic tyranny and youth unemployment. The traditional Islamists seem disturbed less by the rational pursuit of money (Islam has nothing against profit-seeking) than by the collusion between domestic and foreign oligarchies. In fighting the “crusaders,” the Islamists try to build an apparatus with all its modernist techno-military paraphernalia.
The working class seems angrier about cultural elites than about the financial elites who are the target of the left.
Contrary to Mishra’s view, there is an intellectual tradition that suggests that economic interests can in fact tame human passions. In The General Theory of Employment, Interest and Money (1936), John Maynard Keynes writes, “Dangerous human proclivities can be canalized into comparatively harmless channels by the existence of opportunity for money-making and private wealth, which, if they cannot be satisfied in this way, may find their outlet in cruelty, the reckless pursuit of personal power and authority, and other forms of self-aggrandizement.” Albert O. Hirschman’s The Passions and the Interests (1977) has a more nuanced discussion of the relationship between interests and passions. However, both Keynes and Hirschman were talking about earlier times in Europe. Today, when the opportunities for money-making have opened up in countries such as China and India, passions are channeled by the ruling party in both countries into the service of a national aggrandizement that capitalist growth has at last made possible.
But Rousseau’s romantic search for community may be relevant to the present crisis. A common element of reactions across rich and poor countries is that the working class seems angrier about the cultural elite than about the financial elites who are the target of the left (incidentally, coming from Geneva, Rousseau himself felt like an outsider in the Parisian salons of high culture). For many populist supporters, the liberal elite’s lofty preaching of multiculturalism and cosmopolitanism offends their sense of cultural rootedness in family, community, and nation, making them easy prey for the militant ethnic nationalism that is often the first refuge of demagogues. Likewise, liberal criticism of demagogues is often easily dismissed as elitist and anti-national. Meanwhile minorities and immigrants are demonized by populist leaders as obstacles to national unity; historical facts about the role those minorities and immigrants played in nation-building are not allowed to interfere with nationalist myths. As nineteenth-century French philosopher and historian Ernest Renan famously quipped, “Getting its history wrong is part of being a nation.”
This is how immigration as part of a globally fluid economy becomes a sensitive issue. It is also why economists’ usual arguments about the value of immigrants to the economy do not cut much ice. In the Economist survey cited above, only a minority of respondents in seventeen of the nineteen countries considered the effect of immigrants on their countries to be positive.
This anti-immigrant sentiment is part of a larger majoritarian perception of siege and victimhood, exacerbated by the majority community’s perception that it is now less secure or privileged than it was in the past. In widely-noted research by Anne Case and Angus Deaton about the “deaths of despair” from suicide, drug overdose, or alcohol abuse among middle-aged whites in the United States, the authors document how the rising mortality rates of people with a high school degree or less for whites are now converging with those of similar less-educated blacks.
In India Muslims are on average socially and economically much worse off than Hindus, and yet Hindu resentments provide fuel for the right-wing resurgence. Hindus constitute about 80 percent of the population, while Muslims constitute a mere 13 percent, and yet the supposed higher fertility rates of Muslims is cited to stoke fears among Hindus about becoming outnumbered. Fearmongering about the threat of terrorism only adds to this. The traumatic history of Partition and the proximity of Muslim-majority Pakistan make Muslims an easy suspect. In the United States, Europe, and India, crime and violence are routinely attributed to minorities (Muslims, gypsies, Hispanics, blacks), and the blatant discrimination and ghettoization of these minority groups can often make such perceptions self-fulfilling.
In the United States, Europe, India, Turkey, and elsewhere, the perceived appeasement of minorities—which is assumed to be implicit in the liberal support for minority rights—fosters resentment amongst the majority, which find the liberal rhetoric of diversity and political correctness condescending if not outright threatening. Conversely a Trump or a Modi’s thinly-veiled rantings, taken as anti-establishment raw spontaneity, energize this base. In Hochschild’s book, her white working-class respondents in Louisiana sense that all demographic groups other than theirs receive sympathy from liberals. Hochschild quotes a gospel singer and avid Rush Limbaugh fan saying, “Oh, liberals think that Bible-believing Southerners are ignorant, backward, rednecks, losers. They think we’re racist, sexist, homophobic, and maybe fat.” A Tea Party enthusiast claims, “People think we’re not good people if we don’t feel sorry for blacks and immigrants and Syrian refugees. . . . But I am a good person and I don’t feel sorry for them.”
There is an intellectual tradition that suggests that economic interests can in fact tame human passions.
In recent years the gulf between the working class and the liberal elite has widened. Elites have become isolated by effectively segregating themselves in large gentrified cities, marrying within their class, and adopting mostly professional occupations. The consequences of this disjuncture are particularly important in the context of the shrinking influence of worker organizations. With wage stagnation and job losses, blue-collar trade unions cannot deliver on their economic promises, and membership continues to decline. With this decline of trade unions all over the world, the traditional institutions that used to tame and transcend nativist passions and intolerance of working-class families are now sorely missing.
In different parts of the world, political leaders who are adept in machine politics are cognizant of the electoral payoff of stoking feelings of siege and victimhood in majority communities. The current ruling parties in the two largest democracies, India and the United States, have mastered this. As a result, there is now considerable tension between the politics of electoral mobilization and the procedural aspects of democracy. Mobilized followers do not care much about the procedural niceties of a liberal order. They often show impatience with the encumbrances of due process and affirmative action. They hanker for strong leaders who can embody the “will of the people,” surpass those encumbrances, and provide seductively simple solutions to problems. The organizational norms of traditional political parties that once disciplined mass fanaticism are being cast aside—voters are choosing political outsiders, or, within established political parties, leaders who defy traditionalists.
The hard-to-define word populism is used in political discourse in many senses. Economists use it to mean pandering to short-term interests at the expense of the long-term. They often point to left-wing populism (familiar in Latin American history) that is prone to encouraging fiscal extravagance. Here I use it to mean when a leader claims to organically embody the popular will, thereby rendering standard institutions of representative democracy (along with minority rights and procedures) less relevant. From the procedural point of view they enjoy a culture of impunity in violating liberal norms and dismissing critical media as purveyors of “fake news.” In Hungary Orban openly advocates an “illiberal democracy.” Of course, institutions of checks and balances are still much stronger in the United States than they are in India, Turkey, or Hungary.
Such populism is right wing in the sense of being both business-friendly and congenial to ethnic hubris and muscular nationalism. But it is not right wing in the sense of insisting on a minimalist state. It calls for an active role of the state in both boardrooms and bedrooms. Paradoxically, China may also fall under this category of right-wing populism. The ruling party (represented by its “core” leader) is supposed to embody the popular will by being business-friendly, ultra-nationalist, and a vigorous propopent of state policy. But China is not populist in the economist’s sense of short-termist.
Political leaders adept at machine politics are cognizant of the payoff of stoking feelings of siege and victimhood in majority communities.
Going back to Rousseau’s idea of the community, many people today believe that their basic values, as well as their nostalgia for a (false) golden past, are disrespected by a cosmopolitan elite whose liberalism prioritizes individual freedom over community bonding and traditional loyalties. In this sense, liberty and fraternity are clearly not always in harmony.
A deeper conflict in the conception of the individual may also be at stake here. In his recent book, On Human Nature (2017), the conservative philosopher Roger Scruton distinguishes between the liberal individual, self-possessed in her autonomous decisions, consent, contract, and trade, and the conservative individual who endows meaning to her life mainly through her identity in relation to a community with established traditions. If there is anything to this, then the traditional role of trade unions and other worker associations in linking up with neighborhoods and communities in local cultural and social activities becomes all the more important, beyond mere wage bargaining. Their role in sustaining politically the network of social insurance and protection is also crucial in keeping despondent workers away from demagogues.
The trend of rising white mortality rates in the United States, highlighted by the Case-Deaton study, does not apply to whites in Western Europe or Canada. One possible reason for this is that structures of social insurance (along with worker retraining programs) are much stronger there. Perhaps there is a shred of hope in the fact that Trump is finding it difficult to decimate U.S. health care provisions for the poor, or that Modi has decided to keep India’s minimal welfare measures intact, which he had earlier dismissively described as “dole.” Focusing on measures to alleviate the financial insecurity of workers—including those from the majority community and religious conservatives—with active involvement of worker associations in those communities may help relieve some of their perceived cultural insecurities. Worker and religious organizations may in fact find some common cause on matters of social and environmental protection.
If sluggish wage and job growth continue, fueling mass disaffection with liberal politics, and the pace of automation becomes inexorable, worker organizations should give serious consideration to demanding more public investment in job-creating renewable energy and public health care services; more participation in the internal governance of firms, particularly in decisions to outsource and relocate; and the institution of a basic income.
The labor movement is weak today. In rich countries, many blue-collar workers have dropped out of unions, and other workers, such as professionals and those in the so-called gig economy, never belonged to one. In poor countries, most workers are in the informal sector outside unions. The demand for a basic income as part of a citizen’s rights may provide a common bridge for the currently divided labor force. In general, the labor movement has been dissipated by the constant threat of capital moving abroad, facilitated by the part of globalization not emphasized enough in the standard attitude surveys (like those cited above), that of opening up the capital account. In demanding some restrictions on capital movement and other universal pro-labor measures such as basic income, the strengthening of the structure of unions toward a more coordinated and confederate mode may become necessary. For now, outside Nordic countries and Central Europe, labor unions are much too fragmented to achieve such countrywide goals.
May 11, 2017
16 Min read time