With the advent of neoliberal globalism, democracy as a means for egalitarian political intervention in the economy fell into disrepute. Elites on both sides of the Atlantic led the way on this. They saw democracy as technocratically “under-complex” in the face of the “heightened complexity” of the world; prone to overburdening the state and the economy; and politically corrupt owing to its unwillingness to teach citizens “the laws of economics.”
According to this line of thinking, growth doesn’t come from redistribution from above, but from below: from stronger incentives to work—at the lower end of the income distribution, through the abolition of minimum wages and the reduction of social-security benefits; and at the upper end, by contrast, through improved opportunities for profit-making and salary-earning, supported by lower taxation. The underlying process was a transition to a new, Hayekian growth model, destined to replace its Keynesian predecessor as part of the neoliberal revolution.
As with any economic doctrine, these ideas must be understood as camouflaged representations of political constraints and opportunities arising from a historically contingent distribution of power, dressed up as manifestations of “natural” laws. The difference is that in the Hayekian world, democracy no longer appears as a productive force, but as a millstone around the neck of economic progress. For this reason, the spontaneous distributional activity of the market must be protected from democratic interference by Chinese walls of all kinds or, better yet, by replacing democracy with “global governance.”
The disintegration of the standard model of democratic capitalism amid advancing globalization has been much analyzed. In the course of about two decades, since the disappearance of Soviet Communism, neoliberalism has made an astonishing comeback: Hayek, long derided as a sectarian cult leader, eclipsed such towering figures of world affairs as Keynes and Lenin. Hayek’s ideas penetrated deeply into the thinking not only of economists and international institutions, but also national governments and political parties. These included his calls for a system in which private property would be internationally protected and global market freedom would prevail over national politics; for liberalization through identical legal systems in formally sovereign states (“isonomy”); for economic liberalization in heterogeneous international federations; for a prohibition against state interventionism through international competition law; and, not least, for the free movement of goods, services, capital, and people as a means of economically neutralizing the nation-state. National governments and political parties began to share the suspicions of public-choice theory—about themselves.
Until it was demystified by the Great Recession, neoliberalism thus became the dominant political-economic doctrine of modern capitalism: the utopia of a self-regulating global capitalist market economy, in which national policies were limited to the establishment and support of that economy, the promotion of flexible adaptation to it, and perhaps the folkloric preservation of local cultural and political traditions to make people feel at home in an increasingly homeless society.
“Responsibility came at the price of responsiveness.”
The advance of the globalist-neoliberal growth model was accompanied by a gradual erosion of the standard postwar model of democracy. Since the late 1970s, there has been a remarkable decline in participation in elections of all kinds in all capitalist democracies. This has been especially true among those at the bottom of the income and life-chances distribution, who are most in need of social protection and redistribution. At the same time, political parties, regardless of national institutional differences, experienced a dramatic decline in membership. The same was true of the trade unions, which since the late 1980s have rarely been able to exercise their right to strike with any prospect of success. As for the party system, as Peter Mair has shown, the established parties of the center increasingly withdrew from the society of their voters into the apparatus of the state, and their creeping statification had its counterpart in the privatization of civil society.
The main driving force in this process was the de facto compulsion to govern “responsibly,” as Mair puts it, derived from globalization itself—in other words, from the real or alleged lack of political alternatives to the spreading neoliberal pensée unique of the “Washington Consensus.” Just as trade unions that want to preserve their members’ jobs can only make moderate wage demands, political parties that want to govern their states, now embedded in the global market, can’t let themselves be influenced too much by their members. To use Mair’s terms: Responsibility came at the price of responsiveness.
The final collapse of the standard model coincided with the accelerated globalization of the 1990s. Four aspects of this process are characteristic of the liberal involution of capitalist democracy. What is involved here is a specific shift in the interests and attitudes represented by the center of the democratic political system, the formation of a corresponding pattern of political supply and demand, and increasing conflicts over the status of the nation-state in the face of growing interests in the restoration of a politics of protection and redistribution.
“Growing segments of the culturally conservative electorate were left politically homeless.”
First, in the standard postwar political systems, conservative center-right parties—which in Continental Europe often had a Christian-democratic orientation—had taken on the task of reconciling social traditionalism with capitalist modernization. This became increasingly difficult under the press of globalization. It wasn’t just that the end of actually existing socialism meant the disappearance of the antithesis of bourgeois conservatism, whose existence had facilitated the reconciliation of traditionalism with capitalism. There were also new competitive pressures on center-right parties to abandon their balancing act between progress and preservation and to side with the creative destructionists and cultural modernizers in the name of national economic competitiveness. (One example among many is the politically promoted transition to a social structure of universal labor market participation, which severely weakened society’s receptivity to conservative family policies.) Growing segments of the culturally conservative electorate were left politically homeless.
Second, a corresponding development took place within the mainly social-democratic parties on the other, left half of the political center. The accelerated opening of national economies had deprived them of the most important instrument in their political toolbox: Keynesian economic policy in its postwar version. The same can be said of the rapid rise in public debt after the 1970s and the fact that, in open international markets, the costs of a nationally based, decommodifying social policy threatened to become a competitive disadvantage. If the conservative parties of the center became the managers of capitalist progress, their social-democratic counterparts became its facilitators, guarantors, and propagandists, enthusiastically telling their voters about the light of renewed prosperity at the end of the globalization tunnel.
In Germany, for example, traditional social-democratic constituencies were told that they had better reinvent themselves as individual entrepreneurs—as Egos, Inc.—with state support, if necessary. They were also told that the modern epoch required an investment-oriented social policy, rather than one oriented around consumption; that flexible adaptation was preferable to early retirement; and that international solidarity now meant submitting to competition in international markets. This didn’t go down well, either. While the victors among their supporters felt partially represented—but only partially, as a good proportion of them moved to the new, green parties of the center left—the losers of globalization, finding all this too much to cope with, abandoned the banner of social-democratic modernization, first by not showing up at the polls, then by turning to a new right, away from the capitalist-democratic path.
Third, by joining the united front of globalism, both the center right and the center left lost their political identities, however vaguely defined they had been in the first place. In the process of adapting to the world market, postwar democratic politics changed from the long-term pursuit of different models of an ideal society—a paternalistic-hierarchical model, on the one hand, and an egalitarian-classless model, on the other—into a series of pragmatic, short-term reactions to constantly and unpredictably changing world market conditions. Politics and policy became less ideological than ever, without perspective and, therefore, indistinguishable from each other. Thus, democracy could turn into post-democracy, entertaining voters as passive spectators while bringing in spin doctors and p.r. technicians to design policies.
Voting behavior—both the intentions counted on by electoral strategists and the choices of the voters themselves—changed accordingly: no longer oriented toward a collective social ideal, a common future to strive for as citizens, but decoupled from class positions and ideologies, reacting to the moment, rather than to an ideal future. As a result, voter turnover between parties increased, while the old parties of the standard model could count less and less on the stable support of an established base.
Fourth, the pragmatic depoliticization of politics brought about by globalization, especially in the sphere of political economy, coupled with the emergence of a uniform, market-conforming economic policy, ended the structuring of party-political conflict along the capital-labor axis, as it had shaped political differentiation and integration in the standard model. It was replaced by a new cleavage that cut across the patronage structure of the old system, between a shrinking majority that felt broadly represented in post-democratic politics and a growing minority that felt excluded. This was reflected, among other things, in a decline in voter turnout and a high degree of electoral volatility, as well as a dramatic decline in citizens’ trust and expectations of politics and parties across all groups.
In the years of internationalism and its crises, another cleavage crystallized between a national and an international orientation of perceived political interests. Those who felt they had benefited from globalization in one way or another found themselves in the narrow band of Third Way politics. By contrast, among the economic and cultural losers of globalization, those who didn’t find themselves represented by the reorganized political center, there developed a long unarticulated, and politically submerged preference for a restoration of the political autonomy and capacity of the nation-state. This preference could increasingly be mobilized by parties and movements oriented towards a right-wing or left-wing nationalism—and, for this reason, excluded as “populist” from the mainstream spectrum.
The 2008 crisis marked the end of the heyday of neoliberalism. Too much had been promised, too little delivered. Doubts about democracy, if not about capitalism, began to grow among ordinary people, who rediscovered and reconstituted themselves politically in various forms and colors, as protesters as well as voters. A loss of stability and trust, an increasingly unequal distribution of ever-slower-growing wealth, and economic stagnation despite demands for structural change, together with growing cultural insecurity and elite contempt for those left behind, gave rise to plebeian popular counter-movements from below. The post-democratic neoliberal regime reacted to these movements with horror.
“The 2008 crisis marked the end of the heyday of neoliberalism.”
Whether they grew out of the experience of globalized everyday life or were opportunistically fomented by new political actors, what they had in common was and is a deep mistrust of any kind of “opening up” with uncertain events, from free trade to migration, accompanied by a rediscovery of local solidarity and local justice, on a regional, national, and class basis, in all imaginable combinations. Already in the years before the crisis, globalization had been the subject of protest; afterward, through a multitude of detours, it brought about a repoliticization of a political life that had been at a standstill for a while, culminating in a fundamental, more or less articulated dispute over the correct and rightful place of politics, democracy, and solidarity in society.
Today, in all the countries of OECD capitalism, some of the surviving remnants of the standard model of postwar democracy are being rediscovered and put to use as institutional resources for popular resistance against accelerated capitalist and cultural modernization and the politically disempowering structural change driven by globalization. What this amounts to is a bitter struggle over the future character of statehood, both domestic and international: centralized and integrated to safeguard globalization, or decentralized and subdivided to prevent its further advance; elitist or egalitarian; (petty) bourgeois or plebeian; technocratic or democratic? In the years before Covid, the outlines of a reversal of the downward trend in political participation began to emerge, with an increase in protests and more frequent strikes. The deserted standard-model parties and their media allies had little to do with this. In fact, they fought the new wave of politicization with the full arsenal of weapons at their disposal—propagandistic, cultural, legal, institutional—often unintentionally blowing wind in the sails of those they had framed as enemies not only of democracy, but also of the state.
The dynamics of this development can be seen in the reversal of the long decline in voter turnout in the 2000s. Prior to that, voter turnout in European democracies had been on a downward trajectory, continuing a long trend that began in the late 1960s. This was most pronounced at the lower end of the social and economic spectrum. In the mid-aughts, however, there was a rise in voter turnout of about three percentage points, accompanied by a rapid increase in the average vote share of so-called right-wing populist parties to 17 percent, up from 11 percent. While the parties of the new right, favored by the political and economic conditions of neoliberal post-democracy, were initially able to mobilize apathetic or disgruntled non-voters, their success, in turn, helped the old and new parties of the center to mobilize, if not new sympathizers, then at least the opponents of their opponents.
The reversal of the long-lamented disengagement of large segments of the electorate from politics was due primarily to the rise of the new right-wing parties, which were diagnosed as undemocratic or even anti-democratic by the incumbents. This inconvenient turn of events has forced liberal commentators to switch from a participatory to a revisionist theory of democracy, such as that of Seymour Martin Lipset, according to which high voter turnout is an expression of political discontent that risks leading to political radicalization, thus endangering rather than strengthening democracy.
Three decades of neoliberal political-economic centralization and unification have changed Western democracies in their core: Centrist political parties declined as electoral turnout recovered, trade unions lost members and political status, and new right-wing parties, or populist currents within existing parties, ate into centrist conservatism, including traditional social democracy. By 2023, the new opposition had in all Western countries turned into a more or less influential political force to be reckoned with, in some becoming an informal or formal partner in government, sometimes even as its dominant political force.
This holds true for the United States and Britain, as well for Italy, France, Austria, and the whole of Scandinavia, let alone Poland, Hungary, and Central and Eastern Europe more broadly. Whatever may divide the new right-wing nationalists, what they have in common is opposition to internationalization and the centralization and integration of governance that come with it, bringing into the open and politicizing a line of conflict in capitalist democracies inherent in the post-1990 New World Order of global neoliberalism.
Today, pressures for local self-rule—for decentralization of governance through the restoration of national sovereignty—and the question of how to respond to them are a central issue of policy and politics in national and international political and economic contexts. Political forces that insist on the sovereignty of their nation-states—in relation to other, imperial states as well as to international organizations dominated by the latter, or to global or continental free markets—can claim that they are defending an indispensable condition of national democracy, even if they want it just for themselves, and not also for their opponents. Those trying to preserve the liberal democracy of the neoliberal period tend to underestimate the power of the opposition to it while overestimating the capacity to govern, politically as well as technically, of supranational organizations and imperial hegemonic countries. Neoliberal democracy had been unable to prevent a profound loss of confidence in its institutions on the part of citizens, which is another dramatic long-term result of the three neoliberal decades since the early 1990s. Nor was neoliberal centralism able to sustain national or international institutions capable of stabilizing a global market economy; as markets failed, neoliberal politics, which had placed its bets on their infallibility, was bound to fail as well.
The neoliberal revolution had thoroughly shredded the political and social order of the postwar compromise, ruling out a simple return to it. This makes it all the more necessary to understand the precise causes of the failure of supranational centralism in order to understand the possible contours of post-globalist and post-neoliberal democracy. Only in this way can we hope to fill the political void left by neoliberalism with a functional equivalent of the standard postwar model. Like its globalist predecessor, a post-globalist model of—decentralized—democracy would have to be embedded in an accommodating international order that respects local political autonomy and national state sovereignty as fundamental conditions for democracy in society and economy.
“The fate of the European Union offers lessons about the fragility of statist internationalism.”
In this respect, the fate of the European Union offers lessons about the fragility of statist internationalism, the limits of supranationally centralized governance, of integration as unification—in short, about the futility of more or less well-intentioned attempts to consign the nation-state as the site of distributed sovereignty to the dustbin of history. Looking in particular at the state of the European Union at the end of neoliberalism and the beginning of post-globalism, one can learn about the forces of resistance to a hierarchical-technocratic supranational upscaling of policy, such as those that drove apart EU member states that were supposed to grow into a United States of Europe.
Moreover, the way in which the reins were retightened and centralization restored in the course of the war in Ukraine suggests that the supranational unification of sovereign nation-states is best pursued with the help of a common enemy or ally—an imperial state acting as an external unifier by defining or even creating a common international security problem to be dealt with supranationally under imperial leadership: a matter of life and death, quite different from a voluntary surrender of national sovereignty for the sake of economic prosperity and cosmopolitan comfort, and extremely dangerous to boot.
Note: This essay was adapted from the author’s latest book, Taking Back Control?: States and State Systems After Globalism, published on Tuesday by Verso.