Democracy and Economic Inequality

Why does economic inequality rise in democracies?

Economic inequality is rising, and the United Nations reports that economic inequality impacts 70 percent of the world, even when we include democracies such as the US, UK, France, and Germany.

Why does democracy not reduce economic inequality? According to democratic theories, giving everyone the vote and allowing them to participate in democracy through protest should make policy-makers responsive to the public and reduce harm to them. Yet, this does not happen. Inequality rises in democracies.

Inequality may be the undoing of democracy.

This post explains why democracy has not reduced economic inequality. I rely on the innovative arguments of Dena Freeman in her seminal work, “De-Democratisation and Rising Inequality: The Underlying Cause of a Worrying Trend.”

Rising Inequality in Democracy: Elite Distribution and Voting Suffrage

Why has economic inequality increased alongside the rise in democratization? This is an old problem. Elites in the 19th century feared that the “universal suffrage” part of democracy would lead to the redistribution of wealth.

How would this redistribution happen? The democracy-reduces-inequality argument is the following:

In theory, the disadvantaged have greater voice in democracy, and therefore have greater impact on government response. This is an electoral politics argument about an agreement between the elite and the masses, otherwise known as “the class compromise of the post-war period.” It’s an exchange: The elite agree to redistribute economic resources through social welfare spending to the disadvantaged because the elite need the votes of the disadvantaged. The sheer size of the voting citizenry ensures that political parties operating within democracies must listen to a large and heterogeneous population. Thus, spending should be more universal than merely targeted to particular groups.

This is based, in part, on the median voter theory. This theory says that people are rational actors seeking to maximize benefits: parties want to win elections and thus end up proposing economic redistribution policies that benefit the median voter.

Democracies allow substantial bargaining power of labor — unions— that they can use to extract wages and other resources that reduce economic inequality.

DALL-E: “Photograph of Vote and Money”

Economic Redistribution Stopped Reducing Economic Inequality in the 1970s

Inequality did fall during the initial period of universal suffrage. But things changed dramatically during the 20th Century. As Piketty’s U-shaped graphs of economic inequality show, inequality declined, and then, in the 1970s, it rose.

Why the U turn? Unionization had helped to reduce economic inequality in the US, until the 1970s, when there was a great shift and a strong downturn in unionization. Some argue that the early 20th Century reduction in inequality was due to unusual circumstances. Once those circumstances ended, inequality resumed its normal upward path.

What were those circumstances? After the 1970s, there were major technological and economic changes:

Freeman’s Thesis: Vox Populi Lost Control over the Economy

Dena Freeman offers a different argument. She argues that the vox populi, the people in democracy, have lost control over the economic process. “Decisions regarding the organisation and functioning of economic matters,” Freeman writes, “have become less subject to democratic influence.”

In essence, democracy itself has changed, and not for the better.

Within the democratic process, people ceded control over the economy to private interests and the market, and thus lost political control over how the economy functions. This loss of control limits the policies that elected representatives can create and get through the legislative system.

The result, Freeman argues, is that “economic policies have increasingly been made in the interests of capital and the class compromise of the post-war period has been undermined.”

Neoliberalism and Democracy

Freeman blames neoliberalism. The economic crises of the 1970s introduced a change in economic ideology toward what would be called, “neoliberalism.” In neoliberalism, the economy is self-regulating, and thus the state should leave it alone. According to Freeman, Hayek’s “ideas about constitutional limits to democracy were effectively ways to ensure that the economic sphere would be carefully insulated from the demos and thus that democracy’s redistributive threat would be neutralized.” The economy should be lightly managed by experts and technocrats whose prime directive is to let the market dictate its own future.

Neoliberalism demands free markets that spread across the world. The free movement of capital around the world accelerated after the 1970s. The rich got richer and hid their wealth in tax havens.

Monetary Policy, Trade Agreements, and Democracy

Independent central banks that set monetary policy are out of the control of vox populi.  “Monetary policy is instead increasingly governed by the financial markets and the interests of financial capital,” writes Freeman. Policy is a tug of war between the interests of capital and the interests of labor, and capital is winning.

International trade agreements can create enduring and hard-to-revoke rights of capital in terms of strengthening property rights; these rights are designed to outlast the government that signed on to them, to endure as democratic elections produce new governments. Trade agreements can impose harsh penalties on governments that try to reverse the policy.

International Financial Institutions and Democracy

International Financial Institutions (IFIs) – G7 and G20, World Economic Forum, etc. – are global organizations that are not representative of all of the countries that they impact. Membership is based on invitation only, and the wealthy elite are the ones who control the invitations. These institutions define the space in which policies are discussed and decisions are made.

This restricts the policy options available to individual nations for a few reasons: The elite nations:

  • are deeply committed to neoliberalism and the global trade agreements that restrict national policies that could deal with within-nation income inequality;
  • promote international competition for international corporations to locate their businesses there (e.g. low corporate tax rates);
  • favor policies that promote economic growth instead of social welfare.

“In the post-1970s” Freeman writes, “firms and their interest associations have lobbied governments for rollbacks and efficiency-oriented reforms in national systems of social protection. They have argued that social programmes negatively affect profits, investment, and job creation and they have also used the threat of relocation to more favourable environments in order to put pressure on domestic policymakers.”

Rich countries have tools to resist these changes. Poor countries do not. As a result, the developing poor countries reduce public spending and take loans from the IMF and others to pay for what public spending they do.

The consequence is a spiral of debt and loans and more debt that reduces what little political leverage these countries have to change the policies of global finance. In addition, this debt is increasingly financialized, “packaged and repackaged in different forms of securities and traded on the bond market.” Thus, poor developing countries have a difficult time renegotiating and managing their debt with the rich countries.

In the mid-1970s, rich democracies decided to limit vox populi on their democratic control over the economic system and the distribution of economic resources, especially over social welfare.

“Two new approaches were developed at this time – New Public Management Theory (NPM) and Governance theory. Both promoted their changes in the name of costcutting and efficiency. NPM can be seen as an extension of neoliberal theory as applied to the public sector. It calls for governments to embrace private sector management strategies.”

While the de-centralization of decision making within governments over economic matters can be seen as, on paper, more democratic, it ignores the basic problem of political inequality:

“While some have argued that this new form of policy-making is in fact more democratic than top-down government – because a wider range of stakeholders are involved, including also NGOs, consumer groups and other elements of civil society – it must be remembered that the resources available to large companies, TNCs and business associations to engage in these processes is far, far greater than that available to civil society groups, many of which are poorly funded and under-resourced. As one commentator noted, it is like lining up rowing boats against battle ships. Rather the shift to decision-making in multi-stakeholder policy networks has led to an increased representation of the private sector, and thus of capital, in the policy making process.”

Summary and Conclusion

Democracy was supposed to reduce economic inequality through economic redistribution to the masses. As the masses allow the elite to become representatives, the representatives were supposed to allow political control over the economic policies that make sure redistribution works.

This worked, until the 1970s. After then, there were large scale changes to the economy. There was a technological change that rewarded a small group of workers. Growing automation will only accelerate this trend. CEO compensation went through the roof. And the rules of global finance, accelerated through neoliberalism, made it easier to move money around the world, incentivizing the wealthy to hide their wealth (Panama Papers) and create tax havens (Pandora Papers).

Freeman argues that the people mentioned in “We the people” — vox populi — have lost political control over the economy. Democracy outsourced knowledge on financialization to the market and to political appointees who believe in the power of markets.

The result is the inequality grows, and democracy does little to stop it.

Further Reading

Acemoglu, Daron and James Robinson. 2008. Persistence of Power, Elites and Institutions. American Economic Review, 98: 267-291.

Boix, Carles. 2003. Democracy and Redistribution. Cambridge: Cambridge University Press.

Brady, David, Beckfield, Jason & Wei Zhao. 2007. The Consequences of Economic Globalization for Affluent Democracies. Annual Review of Sociology, 33: 313-334.

Freeman, John, and Dennis Quinn. 2012. The Economic Origins of Democracy Reconsidered. American Political Science Review, 106: 58–80

Gradstein, Mark and Milanovic Branko. 2004. Does Liberte = Egalite? A Survey of the Empirical Links between Democracy and Inequality with some evidence on the Transition Economies. Journal of Economic Surveys, 18,4: 515-537

Piketty, Thomas. 2014. Capital in the Twenty First Century. Cambridge: Harvard University Press. (trans: Arthur Goldhammer)

Timmons, Jeffrey. 2010. Does Democracy Reduce Economic Inequality? British Journal of Political Science, 40, 4: 741-757.

Copyright Joshua Dubrow Politicalinequality.org 2022

  1. Why does economic inequality rise in democracies?
    1. Rising Inequality in Democracy: Elite Distribution and Voting Suffrage
    2. Economic Redistribution Stopped Reducing Economic Inequality in the 1970s
    3. Freeman’s Thesis: Vox Populi Lost Control over the Economy
      1. Neoliberalism and Democracy
      2. Monetary Policy, Trade Agreements, and Democracy
      3. International Financial Institutions and Democracy
    4. Summary and Conclusion

Notes on Manza’s Essay “Political Inequality”

Social Scientist Jeff Manza Explored Political Inequality

Social scientist Jeff Manza wrote an article for Emerging Trends in the Social and Behavioral Sciences on “Political Inequality” (2015).

This post, in politicalinequality.org, provides notes and critique of Jeff Manza’s article.

Manza: Economic Inequality is Political Inequality

The abstract of the essay makes the ubiquitous argument that where there is democracy, there is also political inequality. Manza explains that his essay is about the impact of economic inequality on democratic politics. From the jump, Manza is arguing that political inequality is a dependent concept on economic inequality – the article is, after all, called “political inequality,” but Manza does not argue that political inequality is an analytically distinct form of inequality, on par with economic, gender, racial, etc. inequalities.

As Manza defines the term:

“Political inequality may refer to either differential inputs into policymaking processes, in which some actors have more influence than others, or it can refer to policy outputs, in particular those which encourage or sustain income and wealth inequality.” (1)

In Manza’s essay, political outcomes are seen in how they impact economic inequality, e.g. either income or wealth. Thus, the essay is more about the relationship of political inequality to economic inequality, rather than on political inequality as a distinct concept.

Manza begins with the idea that democracy can, theoretically, redistribute economic resources, but it does not do so in an equal way. Citing Galbraith:

“in Galbraith’s (1952) famous formulation, democratic political systems can be relatively egalitarian and produce redistributive outcomes so long as ordinary citizens have sufficient “countervailing power” to contest economic and political elites” (2).

Galbraith’s formulation was purely theoretical — no modern society, neither America nor any other, was ever politically equal. Manza argues that it is usually the left that provides Galbraith’s “countervailing power.” In capitalist democracies, governments must strongly include, and unequally include, business interests.

Capitalism has always produced an unequal economy – thus, the economically unequal also become the political beneficiaries. The result is what Manza calls the “structural conditions for a bias toward protecting and promoting the interests of economic elites and firms over everyone else” (3). Manza assumes that when the left comes into power, the structural conditions change. Manza admits that there are few cross-national studies that support this “structural power hypothesis” (3).

DALL-E generated picture: “Basquiat painting of money and voice”

Manza: Elite and Oligarchic Theories

Manza notes that democracies are unfairly redistributive. To explain this phenomenon, theories of political inequality are needed. In essence, Manza is looking for theories that explain the link between political inequality and economic inequality.

Elites come from a narrow slice of the social structure and wield disproportionate influence over the spheres in which they are elite – some of these elites occupy multiple spheres of influence. See Pareto, Mills, Domhoff, and other classic elite theorists.

Manza discusses here the book by Jeffrey Winters called Oligarchy (2011). Winters argues that extreme wealth holders work within the political system to defend their economic interests. Winters calls these people, “oligarchs.” Oligarchs create and support policy that furthers their wealth, or defends it from radical redistribution. Marx thought the same, but Manza does not make that point. Manza points out that Winters’ theory does not explain why non-oligarchs – i.e. the 99% – support the policies that oligarchs support.

Manza: Power Resources

Power resources is the most popular theory, writes Manza:

“The dominant political sociological model for studying comparative political inequality in recent decades has been what is loosely known as the power resources approach (Esping-Andersen, 1990; Korpi, 1983).” (7)

As Fred Solt and others also wrote, unequal economic relationships – manifested in the class structure – create organized groups. These groups can be manifested as parties that compete for power over economic redistribution.

Elections are supposed to be a way for democracy to cleanly and fairly sort out these competing interests. The result, however, has been economic inequality. Why? Because organized groups have different organizational capacities – some are better organized than others, usually because they have greater access to the economic resources that enable organizational capacity.

As Manza notes, Esping-Anderson argued that there are three types of political regimes that emerge from the many democratic class struggles:

“social democracies (typically those of Northern Europe), Christian democracies (common in Continental Europe), and liberal democracies (primarily in the Anglo-American countries). In each case, a combination of similar political forces and political institutions give rise to similar kinds of policy outputs.” (8)

There are alternatives to this simplistic tripartite typology, as exemplified in the “Varieties of Capitalism” literature.

Manza argues that the power resources model does not explain why “in an era where unions and social democratic parties are declining or retreating from historic commitments, redistributive social spending in many countries has persisted at high levels (albeit not enough to reverse rising income inequality).”

One could argue that this is a simplistic model that does not capture changes in the last few decades in the varieties of party ideologies, or why disadvantaged groups, such as the working class, support lower levels of economic redistribution.

Manza: The Globalization Hypothesis

Manza argues that political inequality has risen around the world. He provides no evidence to support the claim, unless one measures political inequality with economic inequality. Manza argues that a major aspect of globalization is the mobility of capital:

“Here, the growing international mobility of capital is viewed as inducing “race to the bottom”: that is, pressures on governments seeking to maintain competitiveness and avoid disinvestment lead governments to avoid adopting tax and transfer programs that will discourage investment. In limiting the policy options available to national governments, economic globalization provides incentive for policymakers to turn away from traditional forms of social provision in favor of growth politics that favor capital accumulation.” (8 – 9)

However, nations can do many things to protect themselves from the pernicious effects of globalization while attempting to reap benefits. Globalization does not necessarily lead to an increase in political inequality. Again, it is worth pointing out that Manza does not specify “political inequality of what?”, and thus he cannot point out any mechanism of globalization that would impact political inequality.

Manza: Participatory Inequalities, Political Insiders and Outsiders

In Manza’ essay, participatory inequalities seem to refer to access to politicians and the political decisions they make. This refers to voting and other classic forms of political participation. Manza’s point is that there are group differences in political participation.

Manza: Future Research on Political and Economic Inequality

On trying to define future research, Manza argues that we need to examine the causal link between political and economic inequalities. He advocates going deep inside a particular country to explore these mechanisms. He argues that the links between political and economic inequalities are not straightforward. For example, while most posit that “money in politics” is a problem for the US, there is little evidence that legislators’ votes are “bought” by directly by donors.

One reaches a similar conclusion about political lobbying in the US:

“Political lobbying is perhaps better viewed as an arms race—given its pervasiveness, few groups will feel comfortable not participating, so everyone does it, but the impacts are mixed, hard to pin down, and in general cannot systematically explain political inequality.” (12)

Further Reading

Ansolabehere, S., de Figueiredo, J., & Snyder, J. (2003). Why is there so little money in U.S. politics? Journal of Economic Perspectives, 17, 105–130.

Open Secrets: THE TOP 10 THINGS EVERY VOTER SHOULD KNOW ABOUT MONEY-IN-POLITICS

Political Inequality in an Age of Democracy: Cross-national Perspectives Edited by Joshua Kjerulf Dubrow, Routledge – 2014.

Lopez, Matias and Joshua K. Dubrow. 2020. “Politics and Inequality in Comparative Perspective: A Research Agenda.” American Behavioral Scientist 64(9): 1199 – 1210.

Schakel, Wouter, and Brian Burgoon. “The party road to representation: Unequal responsiveness in party platforms.” European Journal of Political Research 61, no. 2 (2022): 304-325.

Neoliberalism and Democracy

The planet earth swimming in an unreal sea of money

This is a guest post by Alex Afouxenidis, Professor at the National Centre for Social Research, Athens, Greece. It is based on his chapter in, Political Inequality in an Age of Democracy (Routledge).

What is neoliberalism and how does it impact democracy?

Neoliberalism is based on the idea of ignoring fundamental human needs.

The success of neoliberal political strategies rests on a mixture of rhetoric and control of democracy’s major local and global institutions. It is also based on the erosion of the key actors and institutions that are the main underpinnings of contemporary democracies, such as pressure groups, civic organizations, and educational institutes.

In neoliberalism’s economic sphere, economic growth does not need to translate into growth of equality. Considering rising social, economic, and political inequalities, we are looking at abuse being taken for granted.

Table of Contents

  1. What is neoliberalism and how does it impact democracy?
    1. Understanding Democracies’ Political Shift toward Neoliberalism
      1. Market idealization is not working: it has generated profound constraints on people’s liberty and self-determination.
    2. Neoliberalism and Four Dimensions of Democratic Organization
      1. Neoliberalism and Democracy: The Economic Sphere
      2. Neoliberalism and Democracy: The Social and Political Spheres
      3. Neoliberalism and Democracy: The Cultural Sphere
        1. In global terms ‘neoliberalism’ itself has become part of popular culture packed with iconic figure heads such as Thatcher or Reagan and reactionary representational references to anti-statism, individuality, and consumerism.
    3. Neoliberalism, Democracy, and Crisis

Understanding Democracies’ Political Shift toward Neoliberalism

The pervasive counter-democratic ideological force of neoliberalism has had a deep impact on people’s lives, identities and beliefs despite its obvious failure to sustain any meaningful sense of ‘economic growth’. This is evident in many regions across the world where economies are being re-structured and reformed generating greater forms of inequality and limiting political freedom. Political crises have become everyday occurrence for many nations. Governments are in a continuous state of instability and many turn to (semi?) authoritarian rule in order to retain power.

Market idealization is not working: it has generated profound constraints on people’s liberty and self-determination.

As one reflects upon the countless analyses and informed criticisms on the impact of neoliberal ideology and strategy, it becomes increasingly clear that the main constitutive element of this sort of ‘philosophy’ is related to the idea of ignoring fundamental human needs. This conceptualization has generated a rupture with respect to western classical liberal discourses such as those, for example, put forward by J. Locke, J.S. Mill or J. Rawls. For, even though they strongly suggested personal autonomy, they equally forcefully reflected upon the idea that if the needs of individuals are not adequately met then liberty will be limited.

This radical shift in the liberal ideological agenda that emerged during the early 1980s used the language of freedom and individuality to promote a basically dehumanizing and oppressive status quo. Humanity thus was re-defined vertically and horizontally along and across the usual bi-polarities: poor/wealthy, in/out of work, males/females, gay/straight, western/non-western, north/south, black/white, moral/immoral, productive/un-productive, private/public and so forth. The question, in this respect, is not so much whether these categories actually exist or not, but rather how and in which ways they are used to generate and reproduce a vocabulary and a subsequent series of political practices and agendas.

In fact these are populist images of societal structures based on rather simplistic belief systems. In cultural terms, they advocate exclusivity of the ‘West’ over all others, intentionally promoting ideas which view the ‘West’ as a single all embracing cultural unit. In political terms, the market and economic ‘freedom’ are dissociated from the inner workings of democracy. Hence, if democratic procedures and/or processes contradict neoliberal thinking, then they may be overlooked.

Success of neoliberal political strategies rests on a mixture of rhetoric, force and, more importantly, control of the major local and global institutions such as the state and/or international financial organizations. In addition, it is also very much based on the slow or rapid fragmentation and, ultimately, severe erosion if not destruction of diverse agents such as public actors, pressure groups, civic organizations, think tanks, educational institutes and a variety of other structures which have formed the main underpinnings of contemporary democracies.

Neoliberalism and Four Dimensions of Democratic Organization

Over the past 35 years, a very powerful fable has been used to legitimize economic and social intervention operating across the four major areas of democratic organization, namely the economic, political, social and cultural spheres.

Neoliberalism and Democracy: The Economic Sphere

In the economic sphere, the main neoliberal idea is that societies and countries have to shift away from policies related to integration and replace them with policies – and the corresponding ideologies – of divergence. Economic growth therefore does not need to translate into growth of equality.

Neoliberalism and Democracy: The Social and Political Spheres

Divergence and accompanying growing gaps in political inequality and social inequality have become accepted as systemic norms.

Accordingly, the nature of political systems has to be altered to accommodate for increased inequality, inequity and exploitation coupled by a reduced public sphere and an enlarged, dominating private sector through the diminution of all sorts of political participation and a reduction of the state’s capacity to organize civil life.

Neoliberalism and Democracy: The Cultural Sphere

In simpler terms, in an enforced alteration of political culture, the façade of a well organized democracy is only required to counter-balance the harsh re-constitution of society: to make it somewhat more respectable to the eyes of people. In total, neoliberal strategies have played a significant role in the realignment of the cultural sphere and cultural politics.

DALL-E “Gustav Klimt painting of democracy and money”

Neoliberalism, Democracy, and Crisis

Although some writers seem to be rather optimistic on the reversal of the neoliberal political project, mostly because of the effects of the current crisis, we should be more cautious.

For a long time the system has gone through various crises, and has nevertheless flourished despite massive reactions from a variety of people and organizations across the world. Neoliberal ideology has not been fundamentally challenged and if anything it seems that neoliberalism has gained, for example via the post-2008 crisis, influence and as a consequence a whole new range of economic, political, social and cultural strategies have been deployed.

The political process has been ‘de-legitimized’ to a large extent and liberal democracy appears deficient, and yet for the neoliberal political agenda this is probably good news. When one looks at the rising figures of social and political inequality, the widening gap between rich and poor and instances of extreme poverty within and across nations and regions, one looks at the same time at abuse being taken for granted. And much more research is required precisely on that last point.

Prof. Alex Afouxenidis is a Researcher at the National Centre for Social Research, Athens, Greece and specializes in Political Sociology. He is the editor of The Greek Review of Social Research, and recently edited a special issue on social media and politics. He can be reached at www.ekke.gr and afouxenidis@ekke.gr

This piece is based on the chapter “Neoliberalism and Democracy”, in Dubrow, J. (ed), Political Inequality in an Age of Democracy: Cross-national Perspectives, London: Routledge, pp. 40-48.

Elites care about inequality, but probably not in the way that you think

This is a guest post by Matias Lopez, Universidad Católica, Chile.

Do the elite care about inequality?

A survey of over 800 elites in six Latin American countries reveals that they acknowledge economic inequality as a problem, but see little incentive to reduce inequality. The elite from stronger and more stable democracies tend to be more aware of inequality as a political problem. Yet they do not view equitable income re-distribution as the answer.

The Problem of an Elite in Democracy

Latin America has some of the highest levels of economic inequality in the world, and it also has many democracies.

That a tiny elite accumulates excessive wealth and power prompts concern about the future of democracy. We know from several studies that this inequality may generate conflict and support for non-democratic leadership — a perilous situation recognized by citizens of the United States and Europe.

Questions:

  • What do elites themselves think about the risks of inequality?
  • Do they feel comfortable living with these risks, or do they feel worried about them?
  • And if they feel worried, what are they willing to do about it?

Exploring Elites and Democracy in Latin America

To answer these questions, Latin America provides a very useful set of cases.

Many large and durable democracies in the region, such as Argentina, Brazil, and Mexico, have high levels of economic inequality even though this inequality creates urban violence and social unrest. Extreme inequality in a democracy is a problem for average citizens because it puts in doubt Lincoln’s principle of “government of the people, by the people, for the people.”

Meanwhile, elites also have good reasons to fear inequality as they are clearly impacted by the political turmoil and the social violence that can follow.

I looked at the University of São Paulo survey conducted in six Latin American countries of over 800 members of the elite in the realms of politics, business, and civil society.

I found out that most of the elite share the usual concerns about inequality and democratic stability.

But the relationship between concern and action has not to do with inequality itself, but with the strength and stability of democracy.

Stronger and more stable democracies tend to have more members of the elite concerned about inequality. This seems intuitive, since stronger democracies may have more to lose from the sort of social menaces that accompany extreme inequality.

But if concern over the perils of high inequality would, rationally speaking, lead the elite to act to reduce inequality, then my second finding is counter-intuitive:

I also found out that, by and large, the Latin American elite have little desire to lower the level of economic inequality.

Inequality, over the past decade, has decreased significantly in Brazil, Argentina, Mexico and Chile. I found that countries whose inequality dropped also have elite who show the highest levels of concern. Brazil is a very interesting case in this regard. The country’s inequality has recently fallen but remains among the highest in the world. As in other Latin American countries, Brazilian elites share concern over the problem of inequality, but do not feel that they should be part of the solution. For example, they are strongly averse to paying more taxes, as shown in the figure below.

Figure 1. Brazilian Elite Agreement with Further Social Investment and with Further Taxation

matias-lopez-elite-figure-1

Source: USP 2008

Except for union leaders, all elite sectors in Brazil scored much higher for welfare spending than for taxation. Union leaders may believe that they will not be the ones paying extra taxes, as they often picture themselves as part of the working class, not the elite. Business elites seem to be aware that they would be preferential targets of taxation. On average, the elite do like the idea of increasing social welfare, as long as they are not asked to contribute more to it.

Summary

In sum, the elite often worry a lot about inequality. But they also feel that they get away with doing nothing substantive about it, and feel no need to sacrifice their own resources to end it.

This article is based on the chapter, “Elite Perception of Inequality as a Threat to Democracy in Six Latin American Countries,” in the book, Political Inequality in an Age of Democracy: Cross-national Perspectives.

Matias Lopez is a PhD candidate in political science at the Universidad Católica, Chile. His research is on democratic stability in contexts of high inequality. He can be reached at matiaslopez.uy[at]gmail.com

The Nationalist Retrenchment Hypothesis

As populist nationalists push back on neoliberal arguments on globalization, we see a diminished power of international bodies who attempt to solve global problems. Where once there was the hope of global governance, there is now Trumpism, John Birch-ism, Bolsanaro-ism, Orban-ism, and other societal ills.

A main cause of why nationalist retrenchment became so, well, entrenched, is that there was an inherent political inequality within nations and in the global governance institutions such as the United Nations.

This post asks, Is global governance inevitable? Is democratic global governance likely? The main thesis is that political inequality at home became political Inequality in global governance.

I wrote this in 2013. Unfortunately, the nationalist retrenchment thing happened. The nationalists are winning. Global governance is on the run. Democratic backsliding is real.

What is global governance?

Borrowing from Elke Krahmann, we can define global governance as regulation of international relations without centralized authority, meaning that collaborative efforts to address interdependent needs are voluntary. Because global governance challenges national sovereignty, nation-states resist centralizing too much power in a single global body.

Despite that global governance challenges national sovereignty, its institutionalization has accelerated; nations are aware that no one nation can solve global problems, and globalization has forced even the most nationalistic countries to collaborate across state lines.

Is global governance inevitable? Two Rival Hypotheses

In addressing the question of governance inevitability, there are two major hypotheses: the global governance hypothesis, and the nationalist retrenchment hypothesis.

Global Governance Hypothesis

The more problems are global in scope, the greater the chance that global governance will emerge and be enhanced.

An alternative hypothesis posits a world in which the opposite occurs: Despite growing global problems, countries will shrink from international commitments that they think will limit their ability to act in their parochial self-interest. This is the nationalist
retrenchment hypothesis.

Nationalist Retrenchment Hypothesis

The more problems are global in scope, the greater the nationalist retrenchment.

By nationalist, I mean a nation-centric view of world events, akin to unilateralism. By retrenchment, I mean a stop and backslide toward unilaterialism in which countries eschew global governance strategies.

Is Nationalist Retrenchment a Possibility? (I asked in 2013)

Nationalist retrenchment may be a mere theoretical counterfactual, something that at its fullest extent is not now possible.

What evidence do we have in the modern era of nationalist retrenchment? (I asked that in 2013. Josh in 2022 says, “Plenty“) The relationship between the United States and the UN is a useful case study. The “U.S. out of the UN!” movement has its roots in the ultra-right wing John Birch Society, and despite some occasional resurgence, it has never truly threatened to pull the United States from the UN or eject the UN from its New York City headquarters. Although the U.S. Congress has historically been skeptical of the UN, diehard members of the nationalist retrenchment club—anachronistic throwbacks to the pre- Wilsonian era (or the 1930s)—are a rare breed.

This possibility blossomed under Donald Trump’s surprise presidency in 2016, and culminated, thus far, in the insurrection (or “riot”) at the US Capitol on January 6, 2021.

Political Inequality at Home leads to Political Inequality in Global Governance

If global governance is inevitable, we can now turn to the next question: Is democratic global governance likely?

Here is where the notion of political inequality is important.

There is plenty of evidence to support the view that global governance organizations are characterized by political inequality. Kofi Annan, former secretary general of the UN, said that “we cannot claim that there is perfect equality between member states.” Political inequality, according to Annan, can differ in extent: he says that the “small and powerless feel less unequal” at the UN than in other major international organizations.  Nevertheless, political inequality in terms of unequal voice and response continues to challenge the legitimacy of existing global governance institutions.

If international organizations, individual nations and social movements have thus far been relatively ineffective democratizers of global governance structures, it may be because political inequality at home translates into political inequality on the global stage.

Nationalists and internationalists—or, unilateralists and multilateralists— are battling for supremacy over foreign policy within their own nations and in global governance organizations. We can imagine a situation in which nationalists win policy battles more often than internationalists, and where the scope of the policies made by nationalists precludes or minimizes actions to internationalize.

In a world where few countries have a lot and most have little, nationalist retrenchment can also weaken democratic development of these structures by de-funding these organizations and neglecting the needs of the disadvantaged.

This post is based on the article, Dubrow, Joshua Kjerulf. 2013. “Democratic Global Governance, Political Inequality, and the Nationalist Retrenchment Hypothesis.” International Journal of Sociology 43(2): 55 – 69.

Further Reading

What Populists Do to Democracies – The Atlantic

US Congress investigates the January 6, 2021 attack