Crisis of Democracy in the West

A significant number of reports, such as “Freedom in the World” of Freedom House or the annual “Democracy Index Report” of the Economist magazine, describe a relative retreat of democracy. Most of the literature in the last years focuses on the so-called “illiberal democracies,” i.e. regimes, which hold regular elections but disdain human rights, and do not respect minorities or rule of law. As modern democracies comprise two essential elements, on the one hand, the majority rule/self-government and on the other, liberalism/rule of law, this pathology is an eclipse of the second component. However, there is also the inverse pathology of mature western democracies: By the confluence of globalization, neoliberalism, and the delegation of important economic decisions to politically unaccountable decision makers, such as central banks and private regulators, emerges a regime, which encases the economy from the “risks” of democracy. In it, human rights, especially economic and property rights, are fully protected, but self-rule does not fully function, as the will of the majority has little, if any, influence on decisions related to the economic governance, which remains anchored to a neoliberal orthodoxy.

This “undemocratic liberalism” is a catalyst for the generation of its inversed idol, the “illiberal democracy” and a more formidable threat to democracy: citizens voting for authoritarian leaders is much less a problem that citizens who believe their votes do not count. This feeling of impotence and irrelevance of political processes, in tandem with the decline of the welfare state, is resulting in political apathy or alienation from representative institutions. In the same vein, these two factors are producing another leading characteristic of our era: populism, which should be understood less as a cause than a symptom of the crisis, not so much a threat to democracy but a sign of its failure.

A number of global surveys corroborate these hypotheses. The more interesting finding of them, besides the obvious dissatisfaction regarding the function of representative democracy, is that the biggest concern of the citizens is about social problems related to poverty, inequality, and political corruption (see Graph 1).

Indicative of the crisis of trust is the belief that the government serves only a minority, not the common good (see Graphs 2-3).

The reasons for these trends are related to socio-economic, not institutional processes. The slow erosion of the welfare state of the last decades, precipitated by the recent economic and pandemic crises, has dramatically uprooted confidence and produced a huge gap of trust towards the political institutions, both national and transnational. In Europe, it has been the result of confluence of two parallel trends: the general deregulating impact of globalization and the gradual erosion of the European social model by the dominant in EU neoliberal policies of the last decades. Already in the 1970’s, Crozier, Huntington, and Watanuki, commissioned by the Trilateral Commission to write a report on “The Crisis of Democracy,” remarked that “the historical record indicates that democracy works best – indeed, that it may only work – when there is a gradual but relatively constant increase in the economic well-being of society. (…) Reasonable rates of economic growth and relatively stable prices are essential for the achievement of socioeconomic equity.”

This feeling of gradual improvement of the well-being has evaporated after the rising neoliberalism of the 1980’s. Our generation is the first in the West to fear that our children are going to have a worse life than ours. The working class is not any more a “dangerous class” for the socio-political system, as in the 19^th century, but an “anxious class” for its future, according to R. Reich, former labour secretary of President Clinton.

The wages are not following the productivity growth, the real income of the middle and the working class is, at best, stagnating, more often dropping. The power of trade unions, an institutional counterweight to the power of capital, has been dramatically reduced by labour market deregulation and anti-trade union laws. The stagnation of wages is combined with dramatic decrease of social spending and consecutive cuts of transfers, such as welfare assistance or public retirement benefits. A huge decline of the progressivity of taxation has undermined the funding of the welfare state and widened the inequalities. According to OECD, top marginal tax rates, which have been above 80% in 1960’s, have fallen from 59% in 1980’s to 30% in 2009; the average rate of Corporation Tax cut from a nominal 34% in 1995 to 22% in 2017. The deterioration of provision of public goods that boosted productivity and growth in the past is also associated with the massive privatization of important social services.

All these trends result in an explosion of inequalities and the pauperisation of a great part of the population. What is worse for the legitimacy of the political system is that these inequalities can no longer be considered the unavoidable result of the invisible hand of the market, as they stem from very concrete political decisions that favour the “haves” over the “have nots.” A number of global surveys (see Graph 3), indicate that majorities in all western democracies, with the exception of the Nordic ones, agree that “the economy is rigged to advantage the rich and the powerful.”

This feeling is combined with a growing alienation of the electorate from the established political parties and the elites, which return the favour ignoring their interests and sometimes calling them “a basket of deplorables,” like Hillary Clinton did in 2016. (see Graph 4).

These trends at national level are exacerbated by the undermining of the regulatory capacity of nation-states by the globalization, which is not balanced by the development of efficient democratic international governance institutions. Instead of an emergence of a cosmopolitan community, we see rather a global dominance of the economy over politics and of market values over democratic ones. The main issue both for a democratic international order and for safeguarding the democratic character of national democracies is, therefore, to put limits to the asymmetric transnational economic power. Now that globalization “gets in the way of national democracy,” so the re-politicization of the global economic relations and the democratization of the agencies and structures of the global economy is imperative. As the emergence of global demos is not possible in the foreseeable future, one should try to increase openness, public participation, and transparency at the international level in order to mitigate the impact of unleashed globalization on the democratic national regulation.