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Anti-System Politics
JONATHAN Anti-System Politics

HOPKIN
The Crisis of Market
Liberalism in Rich Democracies
1
1
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Library of Congress Cataloging-in-Publication Data

Names: Hopkin, Jonathan, author.
Title: Anti-system politics : the crisis of market liberalism in rich
democracies /Jonathan Hopkin.
Description: New York : Oxford University Press, 2020. |
Includes bibliographical references and index.
Identifiers: LCCN 2019031627 (print) | LCCN 2019031628 (ebook) |
ISBN 9780190699765 (hardback) | ISBN 9780190699789 (epub) |
ISBN 9780190699772 | ISBN 9780190097707
Subjects: LCSH: Democracy—Economic aspects—Western countries. |
Capitalism—Political aspects—Western countries. |
Neoliberalism—Western countries. |
Western countries—Politics and government—21st century.
Classification: LCC JC423 .H7528 2020 (print) | LCC JC423 (ebook) |
DDC 320.51/3091821—dc23
LC record available at https://lccn.loc.gov/2019031627
LC ebook record available at https://lccn.loc.gov/2019031628
9 8 7 6 5 4 3 2 1
Printed by LSC Communications, United States of America
For Victoria
CON TEN TS
Acknowledgments ix
Introduction: A Quick History of the Present 1
PART ONE Capitalism, Democracy, and Crisis

1 Parties against Markets: The Rise and Fall of
Democratic Capitalism 21
2 Explaining the Rise of Anti-System
Parties: Inequality, Debt, and the Crisis 50
PART TWO Curbing Transatlantic Neoliberalism

3 American Nightmare: How Neoliberalism Broke
US Democracy 87
4 Taking Back Control: Britain Turns against the
Market 117
PART THREE The Breaking of Europe

5 The New North-South Divide: Bailout
Politics and the Return of the Left in Southern
Europe 153
6 Spain: Boom, Bust, and Breakup 187
7 Basta!: Anti-System Politics in Italy 216
Conclusions 248
Notes 259
Index 311
ACK NOW LEDGME NTS
T his book started life, awkwardly, as a paper about the surprisingly

timid reaction of Western electorates to the financial catastrophe of
2008 and the subsequent Great Recession. As I observed banks collapsing
and politicians scurrying to rescue the “Masters of the Universe,” my anxiety
was tempered with the soothing thought that the neoliberal consensus had
met its demise. As the dust settled and governments set about cutting social
programs rather than reforming capitalism, I realized I had jumped the gun.
But why did people vote for more punishment? Before I got very far in devel-
oping an answer to this question, people stopped voting for the punishment
and any of the politicians associated with it. But what were they voting for
instead? This book attempts to answer that question.
Mark Blyth, whose book Austerity is essential reading for anyone trying
to understand anti-system politics, pushed me to develop my ideas into a
book and commented on various drafts. David McBride at Oxford University
Press has been a great source of encouragement and guidance, and has shown
admirable patience as I have burned through deadlines. I am grateful for
the opportunity to present my research at various seminars, at Oxford,
Amsterdam, Leiden, the European University Institute, the Danish Institute
for International Studies, the Bucharest University of Economic Studies, and
the University of Westminster. I am very grateful for the feedback from all
the participants, especially Ben Ansell, Renira Corinna Angeles, Elisabetta
Brighi, Bjorn Bremer, Brian Burgoon, Pepper Culpepper, Clara Darabont,
Hanspeter Kriesi, Petr Kopecky, Bo Rothstein, Christian Lammert, Claus
Offe, Jakob Vestergaard, Guillem Vidal, and Boris Vormann. Alice Evans,
Chase Foster, and Javier Ortega took the time to read draft chapters and pro-
vide helpful and detailed comments. Alexandre Afonso, Luis Cornago Bonal,
Pedro Magalhaes, Scott Mainwaring, Nick Malkoutzis, and Carol Thanki
provided help with data.
Many other colleagues have been a source of inspiration, support, and
friendly criticism over the course of this project, notably Karen Anderson,
Lucio Baccaro, Cornel Ban, Pepe Fernández, Scott Greer, Sara Hobolt, Wade
Jacoby, Erik Jones, Dick Katz, Julie Lynch, Philip Manow, Matthias Matthijs,
Kate McNamara, Andrés Rodríguez Pose, Waltraud Schelkle, David Soskice,
Robin Varghese, and David Woodruff. Ken Shadlen not only provided great
academic advice but also pretended to laugh at my jokes. Javier Ortega kept
me sane by introducing a very British notion of 4 o’clock tea breaks at the
historic Wright’s Bar. The professional services staff of the Government
Department at the London School of Economics (LSE) have been efficient and
supportive, and Mark Bryceland in particular. Students at LSE are a joy to
teach and have helped me shape my thinking.
Finally, I am grateful to my family for putting up with me during this
project. Thanks to my parents, Gerald and Margaret Hopkin, my brother
Alastair and my sister Victoria, and my brother-in-law Alec for their love and
support over the years. We were devastated to lose Victoria in 2017, and this
book is dedicated to her memory. Grazie to Silvia and Giulia, for being there.
Il secondo album e’ sempre il piu’ difficile.
London, June 2019
x A c k n o w l e d g m e n t s
Introduction: A Quick History of
the Present
A billionaire decides to enter politics, after a successful business ca-

reer first in real estate and then in the entertainment industry. A skilled
communicator and salesman, he achieved celebrity status, his face appearing
in glossy magazines, sometimes alongside leading politicians he counted as
friends. Despite a history of legal troubles, heavy debts, and even alleged
mob connections, as well as marital infidelity (and perhaps worse), for many
his image is one of power and success. A political career is a natural step for
such a talented self-publicist, especially when the existing political estab-
lishment is widely perceived as corrupt, self-serving, and incompetent. The
billionaire stands for election and, to the astonishment of political observers
across the world, wins the presidency, despite never having held any political
office before. The pundit class and academic specialists are forced to rethink
their worldview.
Or maybe not. The events I am describing took place a quarter of a cen-
tury ago in Italy, and did not in fact lead to much fundamental rethinking of
how democratic politics works. In 1993 Silvio Berlusconi, a Milanese real es-
tate and media magnate, alarmed at the collapse of Italy’s political establish-
ment in the face of a sweeping anti-corruption drive, created a new political
movement, Forza Italia (“Come On Italy”). Forza Italia became Italy’s biggest
political party in the 1994 elections, and Berlusconi formed a government
in coalition with two other anti-system parties, the separatist Northern
League and the “post-fascist” National Alliance. A system of government
revolving around centrist parties that had ruled Italy for half a century had
been overturned.
This political earthquake was too easily dismissed as a typically Italian
exception to the rule of stable democratic politics in western Europe. And
indeed, although Berlusconi and his allies introduced a crude, populist lan-
guage to the previously arcane rituals of Italian politics, his victory was not
a harbinger of fundamental change, and still less of the “new Italian miracle”
he promised. But the fact that decades-old political parties could effectively
disappear in the space of little over a year, and that someone as unsuited to
office as Berlusconi could fill the gap, should have warned us of the vulnera-
bility of our political institutions to a hostile takeover. Even in wealthy, con-
solidated democracies, the political system could be captured by anti-system
forces.
Although Italy was by far the most extreme case, the political order of the
postwar era was facing new challenges elsewhere, too. In the late 1980s and
1990s, new right-wing parties began to win sizable vote shares in Denmark,
Norway, Switzerland, Austria, and France. These parties homed in on issues
such as immigration and European integration, targeting the voters of main-
stream center-right parties with xenophobic rhetoric. The chief beneficiaries
of these developments were center-left parties, which by the late 1990s were
in power in the United States and most of the European Union member
states. But by the mid-2000s the Center-Left was in decline, too, their voters
increasingly turning to fringe parties, or dropping out of formal political
participation altogether.
Against this backdrop, the bursting of a housing bubble in the United
States, combined with an over-leveraged and inadequately regulated finan-
cial system, set off the biggest economic crisis the world had seen since the
1930s. The same unpopular establishment politicians whose authority had
been eroding for some time—among them, ironically, Silvio Berlusconi
himself—were handed the task of rescuing the world economy. Inconceivable
sums of money were mobilized to bail out banks and insolvent governments,
while ordinary citizens were asked to pay higher taxes on their stagnant or
falling wages, all while government spending was cut. It would have been
surprising if there had not been a political backlash, but even so, most
politicians, opinion leaders, and academics still contrived to be entirely taken
aback by it.
The seismic events of 2016—first Britain’s vote to leave the European
Union, then Donald Trump’s election to the presidency six months later—
brought anti-system politics on to the front pages, but the pressure had been
building for some time. The Greek Socialist Party (PASOK), after presiding
2 I n t r o d u c t i o n
over a catastrophic bailout and brutal austerity measures, was effectively
wiped out in the 2012 election, its place taken by a radical left coalition,
Syriza. In Spain, centrist Catalan nationalists pivoted to a radical policy of
secession, while a powerful anti-austerity street movement directed millions
of voters toward an entirely new political party, Podemos (“We Can”). In
Italy, the Five Stars Movement, a party of ecologists and digital democracy
campaigners led by a comedian, became the biggest party in the 2013 elec-
tion. In Britain, Labour Party members elected veteran left-winger Jeremy
Corbyn as their new leader in 2015, soon after the pro-independence Scottish
Nationalist Party had won all but three parliamentary seats in Scotland.
Unlike Trump or the Brexit campaign, none of these movements had
adopted an anti-immigration or culturally conservative message—quite the
contrary. Instead, their campaigns focused on the failure of the political estab-
lishment to represent popular demands for protection from the brutal effects
of the economic crisis. The banking bailouts and the austerity measures that
followed them sparked popular outrage while sharpening preexisting polit-
ical conflicts and discrediting incumbent political elites. Some of this out-
rage was channeled by right-wing anti-system politicians demanding tighter
border controls and a reversal of globalization, but a good part of it went in
a very different direction. Social movements demanding a more participatory
form of democracy, an end to austerity, and a reining in of the power of the
wealthy elite—the “one percent”—were just as much part of the story as the
radical anti-migrant Right.
This book explains the rise of the xenophobic Right and the anti-capitalist
Left as part of a common global trend: anti-system politics. It explains why
anti-system politics is on the march, and why different forms of anti-system
politics prosper in different places and among different types of voters. Its
basic premise is that the political and economic “system” failed, and that
anti-system movements are a predictable, and in many ways welcome, re-
sponse to that failure. Dismissing angry opposition to the status quo as a
result of racism, self-indulgence, or susceptibility to foreign propaganda is
a serious mistake. What the anti-system Left and Right have in common is
their shared rejection of the political and economic order governing the rich
democracies at the beginning of the twenty-first century. This rejection is
most powerful in the democracies where inequality is highest, and where
the social and economic effects of the Global Financial Crisis have been most
severe.
The reasons for the rise in anti-system politics are structural, and have
been brewing a long time. The success of anti-system parties forces us to
ask ourselves fundamental questions about the nature of our political and
A Quick History of the Present 3

economic system, and the way in which the twenty-first-century market
economy affects people’s lives. Rather than dismissing anti-system politics
as “populism,” driven by racial hatred, nebulous foreign conspiracies, or an
irrational belief in “fake news,” we need to start by understanding what has
gone wrong in the rich democracies to alienate so many citizens from those
who govern them.
The Roots of “Anti-System” Politics

The term “anti-system” was coined by political scientist Giovanni Sartori
in the 1960s to describe political parties that articulated opposition to the
liberal democratic political order in Western democracies.1 The economic
and political successes of the postwar Western order ensured the domi-
nance of political parties representing liberal democratic political ideas,
such as liberalism, conservatism, Christian democracy, and social democ-
racy. These competing ideologies were articulated by well-organized po-
litical parties with deep roots in society, which used the powers available
to national governments to pursue and implement their distinctive visions
of a better society.
For conservatives and Christian democrats, this meant protecting the cap-
italist economic order and resisting pressures from emerging social groups
for cultural and political change. For socialists and social democrats, in con-
trast, it meant reshaping and reforming the capitalist system so that it could
better accommodate their aspirations for an egalitarian society. Liberals were
a minority force squeezed awkwardly between them, arguing for a society
based around both individual rights and freedoms and less economic and
social regulation. Across the Western democracies, these different party fam-
ilies formed the backbone of the political system, either sharing power in the
coalition governments typical of continental Europe, or competing for it in
the majoritarian democracies such as Britain or the United States.
Anti-system parties fundamentally opposed to liberal democracy enjoyed
significant electoral support only in France and Italy. These parties represented
the main available alternatives to democracy and the market system: com-
munism, the ruling ideology of the Soviet bloc and China, and fascism, the
ideology that had been defeated in World War II. With the memory of dem-
ocratic breakdown in interwar Europe still fresh, and the Cold War a constant
reminder that capitalism was not the only possible economic model, Sartori
and others took threats to the postwar liberal order seriously. Communist
parties averaged between 15 and 30 percent of the vote in France and Italy,
the extreme Right far less. Anti-system ideologies also animated terrorist
movements in Germany, Greece, Italy, Spain, and the United Kingdom.
The meaning of anti-system politics changed as the most economically
advanced democracies evolved toward a quite different type of political and
economic order, based on the primacy of markets over politics. The highly
regulated form of capitalism that emerged in the aftermath of the war was
gradually superseded by a more economically liberal model, as governments
sought to dismantle nonmarket institutions and promoted an economy
governed, wherever possible, by competition and the price mechanism. The
main political parties progressively converged around this market liberal
model, emptying electoral democracy of much of its meaning, as established
political elites increasingly resembled a “cartel” offering a limited range
of policy options.2 The main political parties across the democratic world,
from Left to Right, embraced a shared set of pro-market economic ideas.
Politicians such as Bill Clinton, Tony Blair, Massimo d’Alema, and Gerhard
Schroeder led their traditionally left-leaning parties over to what they called
the “progressive center,” from which they insisted that free markets and so-
cial justice were part of the same package.
Liberal democracy had become “neoliberal democracy,” in which an open
market model was no longer an object of political dispute and key decisions
had been taken out of the electoral arena.3 This new type of politics entrenched
market liberal thinking in the policy regimes of the advanced democracies in
a way that created the conditions for the backlash of the mid-2010s. It mar-
ginalized opposition to the decisive move toward trade openness, and in par-
ticular open capital markets, which were at the heart of the Global Financial
Crisis and the Great Recession that followed. But it also meant that when
the wheels came off the global economy in 2008, conventional democratic
politics was unable to provide adequate solutions to the acute economic dis-
tress this caused. The main political parties across the Western democracies
had invested heavily in the neoliberal ideas underpinning this failed system,
and had farmed out the most important economic policy tools to nonelected
bodies that had been completely wrong-footed by the crisis.
For this reason, contemporary anti-system politics should not be de-
fined in terms of opposition to liberal democracy as such.4 The xenophobic
Far Right is undoubtedly a threat to liberal democracy, and the behavior of
Trump, Salvini, Orban, and others in government is a cause for serious alarm.
But there is no evidence that Western publics are becoming less supportive
of democracy, or more xenophobic—quite the contrary.5 The Five Stars
Movement, nationalist movements in Catalonia and Scotland, and parties on
the anti-system Left, such as Podemos, Syriza, and the Corbyn and Sanders

campaigns, very clearly align themselves with progressive democratic values,
advocating greater involvement of grassroots political organizations in polit-
ical decision-making. Anti-system politics is born out of the failings of our
political institutions to represent popular demands.
Thinking Theoretically about Anti-System Politics

This book mostly avoids the concept of “populism,” which has become the ac-
cepted shorthand for anti-system politics in the political debate, in the media,
and to some extent also in academia. Populism is usually defined as an anti-
elitist discourse that purports to represent some morally charged idea of the
“people” as a whole, while condemning existing institutions for betraying or
failing to properly represent the people.6 Most contemporary anti-system parties
can be considered populist because, like the early populist movements of the
late nineteenth century in North America and Europe, they express “a powerful
sense of opposition to an establishment that remained entrenched and a belief
that democratic politics needed to be conducted differently and closer to the
people.”7 In other words, they advocate a different form of governance based
more explicitly on the popular will. This certainly captures the essence of the
anti-system movements discussed in this book, which all, in one way or another,
demand that politics be more responsive to the people they seek to represent.
However, the term “populist” has also been used to label nativist and
xenophobic political movements that reject pluralism;8 politicians prone to
dishonesty, corruption, and demagoguery; and even economic policymaking
that prioritizes short-term over long-term objectives.9 As a result, the term
has inescapably acquired a heavily pejorative connotation, undermining
serious and systematic analysis. Not only can describing opponents of the
status quo as “populist” imply that they are somehow wrong-headed or even
dangerous by definition, but it also leads to quite specific characteristics of
some populist movements being implicitly ascribed to others that do not in
fact share them. To describe Catalan nationalists, the Five Stars Movement,
or Syriza as populist runs the risk of implying that these movements share
the xenophobia and authoritarianism of Trump, Le Pen, or Salvini. To de-
scribe these movements as anti-system, however, precisely captures the un-
controversial fact that they all demand fundamental changes to the current
political and economic “system.”
The misuse of the concept of populism is unfortunate, because it obscures
the very insightful distinction between “liberal” and “populist” ideas of de-
mocracy present in political theory.10 In scholarly debates about democracy,
“liberalism”—another term stretched beyond usefulness in contemporary
political debate—is an idea of the political order that prioritizes the pro-
tection of individuals’ rights in the face of the potential for government to
tyrannically abuse its coercive power. Liberals prefer a system of divided
government with little ability to pursue grand collective projects, which in
practice implies a preference for free markets over government intervention
in the economy and strict constitutional constraints on politicians’ powers.
Populism, on the other hand, sees democracy as a means for the implemen-
tation of the people’s will, implying a greater scope for the state to shape the
economy and society in line with the demands of the political majority, po-
tentially to the detriment of the rights of minorities.
The anti-system parties studied in this book all, to a greater or lesser ex-
tent, adopt a populist view of democracy in this more specific sense of the
word. They invoke the rights of the people to use the power of the state to
protect the population as a collective, rather than to guarantee the rights
of individuals. The anti-system Right identifies the people as being the
national community (usually ethnically defined), whose interests must be
protected against “outside” threats of migration, hostile foreign powers, in-
ternational organizations, and terrorist groups. The state is the instrument
for delivering this protection, even if it undermines the rights of minority
groups and noncitizens. The anti-system Left instead identifies the enemy as
the capitalist system, and often the wealthy groups who benefit most from
it. The Left demands protection from the arbitrary decisions of unregulated
markets that overturn peoples’ lives by denying them work, dispossessing
them of their homes, and starving the government of the resources to pay for
welfare policies.
These ideas are far from new, nor have they always been regarded as hos-
tile to liberal democracy. In fact, the nationalism and authoritarianism of
the anti-system Right and the egalitarian interventionism of the anti-system
Left were present in the political discourse and policy practice of governing
parties through most of the postwar period. Conservative and Christian
democratic parties have long been skeptical of the idea of a multicultural
society where migrants enjoy full citizenship rights, and have also resisted
demands for sexual and racial equality. Similarly, the social democratic and
labor parties of today’s Center-Left were once committed to providing sub-
stantial social and welfare benefits, expanding and enforcing workers’ rights,
and maximizing growth and employment. So why are these positions today
mostly associated with anti-system forces?
The answer to this question is quite straightforward: the range of political
positions represented by the established political parties has narrowed over

time to the point where voters are left with little real choice at election time.
The postwar period pitted political parties with very different visions of how
society should be organized against each other, and voters were able to express
their preferences for these different visions. Elected politicians had access to
policy levers that could make a profound difference to the economic and so-
cial development of the countries they governed. Somewhere along the way,
however, democratic governments ceased to reflect differences in political
philosophies, and lost the ability to implement alternative policies. To un-
derstand anti-system politics, we need to understand the system it opposes: a
set of institutions and practices that we can call “neoliberal democracy.”
Priming the Backlash: Economic Fissures and

Neoliberal Democracy
Anti-system parties and politicians tend to present themselves self-
consciously as alternatives to a discredited establishment or elite. They ac-
cuse the mainstream politicians of behaving like Adam Smith’s tradesmen,
banding together in a “conspiracy against the public” to close the market
to new entrants and cheat their customers by offering them a restricted
choice.11 Typically, the mainstream political parties are depicted as being
indistinguishable from each other, their leaders a homogeneous collection of
careerists devoid of principles, interested solely in winning political office, or
maybe turning an illicit profit. There are plenty of examples of this kind of
behavior to give these accusations credibility.
But the failures of establishment politicians cannot be reduced solely to
venality or laziness. The narrowing of the political space owed much to the
serious difficulties politicians began to face, especially from the 1970s on,
in meeting citizens’ demands. The slowing of economic growth meant that
politicians had fewer resources to play with, while financial markets were
becoming more difficult to control, limiting national governments’ ability
to tax profits or borrow to fund public spending. The political “cartel” of
the late twentieth century emerged as politicians became increasingly pes-
simistic about the possibility of government intervention in the economy
to deliver social improvements, and settled instead for a more laissez-faire
approach, hoping that freer markets and lower taxes would keep their voters
happy.12
The neoliberal program created losers as well as winners, but the re-
turn of economic growth in the mid-1980s and the huge gains made by
some politically influential groups established small government and open
markets as the consensus position in Western politics. Serious alternatives
to the market system disappeared from the political debate. This neoliberal
consensus suited elected politicians in a variety of ways. The emphasis on the
market, rather than government, in determining the allocation of resources
got politicians off the hook for citizens’ economic fortunes. Politics became
a battle not between competing visions of the good society, but competing
teams of administrators of the market system, chosen on the basis of claims
to competence and honesty rather than for their ideas.
The progressively broader role for markets in social life translated almost
everywhere into higher inequality. Not only did markets tend to result in
a more unequal allocation of resources, but the same neoliberal logic also
undermined the kinds of nonmarket institutions that could mitigate these
inequalities, such as progressive taxation and redistributive government
spending. In the most extreme case, the United States, income inequality
rose dramatically, with the top 1 percent of earners taking 20 percent of total
income by 2010, double their share in 1980, while the bottom half traveled
in the opposite direction, their slice of the pie dropping from 20 percent to a
little over 12 percent in the same period.13 Growing inequality led to rising
social anxiety and health risks, especially among the most vulnerable groups,
but also among higher-income groups, as even many of the “winners” from
the market system were still exposed to economic threats.14
All of this may have been a price worth paying had the promise of
improved economic growth and a “trickle down” effect of higher earnings
across the rest of the economy come to fruition. Neoliberalism achieved some
successes—notably defeating inflation and eliminating some wasteful and
inefficient government regulation and expenditure—but it was unable to
match the economic record of the postwar period. The typical household
still enjoyed rising living standards in most countries, but poverty rates
also increased. Viewed from the mid-2000s, the neoliberal experiment had
yielded at best mixed results, and then in 2007 the intricate architecture of
the emerging global financial system, a system built on the neoliberal philos-
ophy of free markets and minimal government intervention, came crashing
down, devastating lives across the world.
The extent of the damage—on any measure the Global Financial Crisis
of 2007–2008 was the worst since the Wall Street Crash of 1929—was such
that business as usual was no longer possible. The “sink or swim” creed of
the neoliberals was hastily abandoned—for banks. The financial system
was backstopped by governments through injections of capital, lines of
soft credit, and even printing money to raise asset prices. These emergency

measures were successful, at least in the sense that a catastrophic financial
collapse and 1930s-style depression were averted.15 But as soon as the panic
in the financial markets subsided, policymakers attempted to revert to type
with harsh austerity measures, leaving households struggling to rescue their
own balance sheets.
The predictable, and indeed widely predicted,16 consequence of this turn
to austerity was a period of economic stagnation that has become known as
the Great Recession. Not surprisingly, electorates in the rich democracies
generally responded by voting out incumbents, not unreasonably blaming
their economic pain on the politicians in charge at the time of the crisis.
They were replaced by opposition politicians who were quick to claim that
the crisis was the result of their predecessors’ bad policies. Yet these elections
changed little, and the new governments, locked into the same neoliberal
model as their predecessors, quickly became as unpopular as those they
replaced.
The crisis of the late 2000s contains all the basic ingredients for a political
backlash: economic stagnation, high inequality, and a political system that
blocked off any prospect of effective change. Across the democratic world,
the share of the population benefiting from these economic and political
arrangements has contracted to such an extent that the dominant political
parties no longer have the votes to maintain themselves in office. The forty-
year-long experiment in leaving people at the mercy of the market produced
a top-heavy income distribution of a small number of big winners, a much
larger group of losers, and a squeezed middle fighting to maintain its posi-
tion in an increasingly insecure world. The political establishment had run
out of ideas to make things better. The rise of anti-system politics reflects the
exhaustion of neoliberal democracy: an economic model that ultimately only
worked for a minority, and a political system that closed off alternatives to it.
But What about Culture?

A plausible challenge to this argument is that anti-system politics is about
much more than economics. Donald Trump, after all, was a billionaire who
proudly boasted of avoiding paying taxes and spent much of his campaign
insulting liberals, Mexicans, and Muslims. Trump’s campaign slogan, Make
America Great Again, and his focus on capturing the votes of mainly white
Americans, pointed to a backlash against the more ethnically diverse and
culturally open society represented by the Obama presidency. A similar story
has been told about Brexit and the rise of far-right politicians in Europe: the
refugee crisis of the mid-2010s and a wave of terrorist attacks in France,
Belgium, and Germany pushed voters weary of mass migration and rapid
social change into the hands of “national-populists.”17 Norris and Inglehart
describe this as a “cultural backlash.”18
The evidence supporting this contention is that some survey data shows
that immigration and security issues were at the top of public concerns
across Western democracies over the decade following the financial crisis.19
Some voting studies show that authoritarian attitudes, racial anxiety, and
social trust are strongly correlated with the vote for the anti-system Right.
Education levels perform better than income levels in predicting voting be-
havior, suggesting that the socialization effect of higher education is more
important than economic circumstances in explaining Trump, Brexit, and
the rise of the European Far Right. Most studies have failed to show conclu-
sively that falling income predicts anti-system voting. So why insist that eco-
nomic problems, and the neoliberal model more broadly, explain the political
upheavals of the 2010s?
Cultural factors should not be dismissed, and cultural attitudes are of
course part of the explanation for why some voters are likely to support anti-
system options. However, immigration is a long way from being a novelty
in Western societies, and the evolution of public attitudes on immigration
does not provide a very compelling explanation for the rapid rise in anti-
system politics in the post–financial crisis period. Instead, attitudes toward
immigration in Western democracies have steadily become more liberal over
the past decades.20 The sharp rise in voting for the anti-system Right in
some countries after the financial crisis does not coincide with any partic-
ular change in migration flows, or an increase in negative attitudes toward
migrants. In any case, changes in attitudes toward migration are not a plau-
sible explanation for the rise in support for parties of the anti-system Left
or for secessionist parties that have mostly adopted progressive positions on
migration.
Where culture can plausibly play a role is in conditioning the different
kinds of anti-system appeals that attract different kinds of voters. It is true
that right-wing anti-system forces have tended to perform better in the
countries where strong labor markets have attracted greater inward migra-
tion flows, while left-wing anti-system parties have been stronger in coun-
tries with high unemployment and stronger outward flows.21 But vote shares
for the anti-system Right are negatively correlated with migrant presence at
the local level, suggesting that openness to a xenophobic appeal, rather than
any concrete negative experience of migration, is what drives voters toward
these parties.

What explains openness to a xenophobic diagnosis of economic distress is
the broader cultural and attitudinal characteristics of different social groups.
Across the Western democracies, xenophobic and authoritarian attitudes are
much stronger among older sectors of the population, and in particular among
less educated citizens.22 In contrast, younger and more educated voters are far
more likely to have liberal or progressive social attitudes and to have posi-
tive views of migration. Not surprisingly, therefore, right-wing xenophobic
parties are more successful among older, less educated, and particularly male
voters, especially in economically declining regions.23 In contrast, left-wing
anti-system parties perform better among younger cohorts, often in the most
economically dynamic urban areas.
Immigration and cultural rejection of it are not a good explanation for
the broad phenomenon of anti-system voting, because opposition to the
system can be expressed in very different ways. It is a simple matter of
causal logic that the simultaneous rise of anti-system movements of such
radically different kinds can only be convincingly explained by factors
that they have in common, rather than those that differ between them.
The failures of the neoliberal economy and its severe consequences for
society generate the kind of anger that fuels anti-system voting, but that
anger needs to be interpreted and mobilized in order for political change
to happen. As Mark Blyth puts it, “structures don’t come with an instruc-
tion sheet”:24 citizens may feel cheated and ignored, but the way they re-
spond depends on the stories they are told about why things are happening
and what should be done about them.
It is a great irony of the rise of anti-system politics that the voters most
likely to vote for xenophobic anti-immigration parties are those least likely
to be in contact with migrants, while the areas most exposed to migration
have the least support for such parties. The success of the anti-system Right
is not the direct result of the concrete impact of migration, but is instead a
function of the ways in which economic change has affected the voters that
are culturally most hostile to it. This book will show that anti-system voting
is conditioned by the ways in which different institutions and policies dis-
tribute economic benefits and risks. The greater the impact of inequality and
economic hardship, the higher the vote share for anti-system parties. Where
older and less educated voters feel more threatened by economic change,
right-wing xenophobic parties perform better than left-wing anti-system
forces. Where younger citizens are the ones most exposed to the crisis, left-
wing anti-system alternatives perform better than the anti-migrant Right.
Debt Matters: The Importance of Creditors and
Debtors for Anti-System Politics
The impact of immigration is tied up with the decades-long process of eco-
nomic globalization.25 Immigration was just one aspect of this globalization,
and in many ways less important than the growth in cross-border financial
flows or trade liberalization. After the 1970s, governments in the West aban-
doned capital controls and encouraged developing countries to do the same,
leading to a rapid acceleration of unregulated movements of money around
the world, accompanied by growing financial instability culminating in the
global meltdown of 2008. In the same period, successive rounds of interna-
tional trade negotiations removed many barriers to trade, further restricting
governments’ ability to control their national economies. Globalization
benefited large numbers of people in developing countries, and high-skilled
workers everywhere, but many lesser-skilled workers in the West lost out.26
A constant theme in the discussion of the political and economic upheavals
of the early twenty-first century is that globalization has created “winners”
and “losers,” and that anti-system politics is best understood as the product
of the resulting social conflict. The distributional consequences of globali-
zation are compounded by the ways in which the internationalization of the
economy strips nation-states of their ability to respond to electoral pressures.
Dani Rodrik describes this scenario as a “trilemma,” in which open economies
can only enjoy the economic benefits of globalization by either abandoning
democratic responsiveness or pooling sovereignty at the supranational level.
This framing is insightful and helpful, but it leaves much unexplained.
The countries that have faced the biggest political upheavals in the early
twenty-first century are not impotent victims of the unstoppable process of
internationalization of the economy, but rather some of its biggest champions.
The United States was the main driver of the globalization push of the late
twentieth century, with the United Kingdom an enthusiastic junior partner.
The southern European countries have been among the most committed
supporters of greater economic and political integration in Europe. On top of
this, the countries most exposed to globalization—the small open economies
of northern Europe—are the same ones that have coped best with the polit-
ical consequences of the crisis. Whether or not nations participated willingly
in the opening up of their economies to greater global competition, the ways
in which they dealt with the consequences were very much a matter of po-
litical choice.

What this tells us is that globalization creates common pressures, but that
rich democracies can respond to it in different ways, and that these responses
depend on the political and economic institutions with which they have
endowed themselves in the past. This book therefore focuses on the nature of
party politics and the development of economic and social policies in the rich
democracies, and finds that these variables explain why some countries have
been far better equipped to survive globalization and its attendant economic
shocks than others. Although the drift toward neoliberalism and the conse-
quent challenges to democratic institutions are common across the whole of
the rich world, some countries have protected their populations far more suc-
cessfully than others. Where inequalities have been allowed to grow highest,
and political institutions have been least able to address its consequences,
anti-system politics has been most powerful. Anti-system parties are like
antibodies: a reaction to the exposure of societies to an inadequately regu-
lated market economy.
Globalization is important, but it should not blind us to the consequences
of political choices made by politicians and regulators. When the financial
crisis hit, capital markets had to be rescued by governments, in a sudden
reversal of a power relationship that had previously subjected politics to the
whims of the market. The way this rescue was performed, and the meas-
ures taken to deal with the subsequent economic downturn, was very much
the product of political decisions made by states, which in large part passed
the bill for capitalists’ mistakes onto the people who had gained the least
out of the neoliberal revolution. Banking bailouts and austerity were po-
litical choices, and citizens could not be expected to be indifferent to their
consequences.
Capitalism against Democracy: It’s Not a

Love Story
This book draws on a very simple theory of political change in capitalist
democracies to explain the rise of anti-system politics across the West. It sees
this anti-system politics as part of what Karl Polanyi in his classic book The
Great Transformation described as the “double movement” of capitalist devel-
opment: as the logic of market exchange expands and threatens other valued
forms of social interaction, “counter-movements” arise as people organize
politically to demand protection against the market.27 Polanyi’s book was
published in 1944, and focused on explaining the upheavals of the interwar
period as political elites sought to reimpose the Gold Standard on a fragile
social fabric. For Polanyi, the dramatic collapse of the global political order
in the 1930s was the consequence of a bone-headed insistence on imposing
the implacable logic of the “self-regulating market” on a fragile society,
which led to a predictably violent reaction.
It has not escaped attention that the dynamics of the Global Financial
Crisis and the Great Recession bear more than a passing resemblance to the
interwar period.28 The final years of the twentieth century presented suf-
ficiently clear signs of a 1920s-style bubble to lead one economist to call
them “the roaring nineties.”29 After the 2008 crash, the rescue of the finan-
cial system with a wave of liquidity did suggest some policy-learning from
the disaster of the 1930s, but a premature turn to austerity suggested that
other lessons had gone unheeded.30 Keynes’s General Theory, published at
the height of the Great Depression, cautioned that under certain conditions,
governments must address economic downturns through expansionary fiscal
policy—a combination of tax cuts and/or higher public spending—or risk a
self-fulfilling downward spiral of deflation and debt. Yet as the world economy
emerged dazed from the financial emergency of 2007–2009, governments of
every color across the rich democracies turned to austerity, with the predict-
able result that the recovery was stopped in its tracks.
If the parallels with economic policy failures in the 1930s were not
stark enough, a collapse of political authority and the rise of anti-system
movements soon followed. It is a matter of some surprise to this author that
so many observers have either failed to notice the similarity or dismissed it as
pure coincidence. There are, of course, many important differences between
the 1930s and the world of the early twenty-first century, not least the dra-
matic improvements in living standards since then, and the development
of sophisticated institutions of social protection that cushion all Western
populations to some degree from the threats of financial and economic mis-
fortune. Greece or the United States in the 2010s are certainly not Germany
in the early 1930s. But it is hard to dispute that citizens’ expectations that
their democratically elected governments would help the whole of society
participate in rising living standards have been disappointed.
Anti-system political movements on the left and right are all offering an
answer to this disappointment. They all in their differing ways appeal to cit-
izens who feel they have been ignored and that governments have preferred
to protect the wealthy and powerful rather than ordinary people. They offer
different remedies, some demanding the return of robust national borders,
others the decentralization of powers to smaller subnational units, yet others
the extension of supranational authority to allow for burden-sharing across

national states. To reduce anti-system politics to cultural unease, the anxiety
of the “left behind” or the “places that don’t matter,” or the revival of national
sentiment misrepresents the phenomenon. At a very basic level, anti-system
politics is about reasserting the power of politics over markets and money.31
Polanyi would not be surprised. The politics of the rich democracies since
the 1970s have steadily eroded the power of politicians over markets, and his
theory of the “double movement” predicts that a political reaction to reassert
social interests over financial ones will follow. He also cautions that the exist-
ence of an anti-market revolt does not in itself solve the problem, and indeed
the ways in which neoliberal institutions lock themselves in place, closing
off avenues for the management of the market in the public interest, tend to
create a dangerous impasse in which extremism can prosper. The anti-system
wave pits the irresistible power of the market against the immovable object
of society.32 It took an unthinkable catastrophe to reconstruct capitalism in a
more politically manageable form in the mid-twentieth century. This book
is written in the hope that a better understanding of contemporary anti-
system politics can contribute to moving toward a timely recalibration of the
relationship between democracy and capitalism that puts markets in their
proper place.
Where We Go from Here: The Structure of the Book

The rest of this book is divided into three parts. Part One places contem-
porary anti-system politics in the longer-term perspective of the conflictual
relationship between capitalism and democracy over the past century. The
first chapter outlines the evolution of the relationship between the market
economy and political institutions of the Western countries over the last cen-
tury, showing how capitalism and democracy have a fundamentally unstable
relationship that produces regular political upheavals, of which the current
turbulence is the most recent example. Attempts to reduce popular control
over the market economy tend to provoke social reactions, which lead to gov-
ernment control over the economy being restored. The chapter shows how
the shape of political institutions, and in particular the organization, inter-
action, and ideological identities of political parties, conditions the impact
of markets on society, and how the dominance of liberal market ideas in the
late twentieth and early twenty-first centuries weakened democratic partic-
ipation and paved the way for a reemergence of political conflict through
anti-system forces.
Chapter 2 analyzes the electoral successes of these anti-system forces, and
shows how differences in the social, economic, and political institutions in
the rich democracies determine the extent and nature of anti-system support.
It shows that anti-system politics is stronger in countries that are structur-
ally prone to run trade deficits, have weak or badly designed welfare states,
and have electoral rules that artificially suppress the range of political options
voters can choose from. It further shows that the ways in which welfare sys-
tems distribute exposure to economic risks predict whether anti-system pol-
itics takes a predominantly left-wing or right-wing direction. Right-wing
anti-system politics is successful in creditor countries with very inclusive
welfare states, as the most vulnerable economic groups express their fears that
migratory pressures and transnational burden-sharing will undermine their
generous social protections. Left-wing anti-system politics is stronger in
debtor countries with “dualistic” welfare states, which particularly margin-
alize younger, more progressive-minded voters while protecting older, less
educated citizens. The countries with the most limited welfare arrangements
and most neoliberal institutions expose wide parts of the population to ec-
onomic insecurity and therefore generate both left-and right-wing anti-
system movements.
Parts Two and Three document the distinctive ways in which this anti-
system politics has transformed some of the rich democracies. Part Two
looks at the distinctive anti-system politics of the Anglo countries, driven
by a populist, nationalist Right, but also an interventionist Left, and
argues that these countries’ enthusiastic adoption of market liberal policies
has generated an intense demand for a political response to the resulting
acute social stresses. Chapter 3 argues that the 2016 election in the United
States is best understood in terms of the long-run consequences of the ne-
oliberal turn in the 1970s, and the way in which the financial crisis of the
late 2000s was addressed. Trump reflects one side of this anti-system re-
sponse, while the rise of the Left in the Democratic Party reflects the other.
Chapter 4 charts the very similar response to inequality and financial col-
lapse in the United Kingdom, with the anti-system Right represented
by the Brexit campaign, and the Left by Jeremy Corbyn’s takeover of the
Labour Party.
Part Three moves over to continental Europe and charts the anti-system
politics arising out of the way the financial crisis shook the foundations of
Europe’s Monetary Union. Chapter 5 analyzes the Eurozone debt crisis as
a conflict between creditor and debtor countries, pitting northern member
states against the southern periphery, before looking at the distributional
politics of austerity in the smaller southern Eurozone states of Greece and

Portugal. Chapters 6 and 7 chart the evolution of anti-system politics in
Spain and Italy, respectively. These three chapters show that the southern
European countries display a resurgent Left demanding greater burden-
sharing at a European level and a strengthening of social protection at home.
In contrast, the anti-system Right has been much stronger in the northern
European creditor countries.
The final chapter assesses the implications of anti-system politics for the
future of capitalism and democracy in the advanced countries. It argues that
the current wave of anti-system support reflects the ultimate failure of the
project of market liberalism, in that the limitations of the market logic have
been laid bare by the financial crisis and the inability of the free market
model to deliver prosperity and security. The answer to this crisis is likely to
involve a reassertion of political authority over the market: either a revival
of social democracy, the guiding ideology of the inclusive capitalism of the
second half of the twentieth century, or a return to the nationalism and mer-
cantilism of the interwar period.
PART ONE CAPITALISM,
DEMOCRACY,
AND CRISIS
CHAPTER 1 Parties against Markets: The Rise
and Fall of Democratic Capitalism
Introduction
The political instability of the 2010s should have surprised no one. Capitalism
and democracy have always been in tension, and the easy relationship between
liberal democratic institutions and free markets proclaimed by some observers
at the end of the Cold War1 was based on ahistorical delusions. The history of
capitalism is marked by the battle between economic forces pushing for the
primacy of profit and political forces demanding its regulation in the social
interest. Markets can create prosperity, but they also heighten inequality and
insecurity.2 As a result, attempts to impose the logic of the market on demo-
cratic societies are fraught with difficulty, because citizens mobilize to respond
to threats to their economic and social well-being. However, popular mobili-
zation is also fragile and difficult to sustain, leaving openings for pro-market
forces to push back against protective social institutions.
This chapter shows how democracy collided with the market economy
throughout the twentieth century, a collision at the root of the political and
economic instability of the early twenty-first century. Political parties are
the central protagonists in this story. Parties provide citizens with choices of
policy programs and candidates for political office at election time, and also
fill key government positions. But their role in democracies can go well be-
yond this minimalist contribution: historically, parties have articulated dif-
ferent social identities and visions of society, and sought to implement these
visions though government action. As Elmer E. Schattschneider put it in the
1940s, “democracy is unthinkable save in terms of parties.”3
But political parties themselves evolved as patterns of democratic gov-
ernance changed. In recent decades political parties became less and less able
to perform the functions traditionally attributed to them, with the result
that citizens felt less and less represented. The rise of anti-system parties
is the direct consequence of the loosening of the bond between voters and
the representatives they elect, and of the increasing perception that polit-
ical parties serve a narrow elite of career politicians and insider interests.
This crisis of political representation is the consequence of economic changes
that have subjected Western societies to growing inequality and insecurity,
while undermining the ability of political institutions to respond to popular
pressures. The rest of this chapter shows how.
The Origins of Party Democracy

The first political parties were formed inside the parliaments of the
protodemocratic regimes that emerged in western Europe and North America
through the eighteenth and nineteenth centuries. These were described by
Maurice Duverger as “cadre parties”4—loose associations of elites who agreed
on common governing priorities. In the limited-suffrage regimes of that
period, politicians had no need for highly developed local organizations to
win over their small electorates of propertied men, and remained relatively
detached from the rest of society. In the “rotten boroughs” of prereform
England, many parliamentarians won election unopposed, or were able to
win the votes of their tiny electorates through a mixture of local prestige,
trading of favors, or simple bribery, such as plying voters with free alcohol.
It was an unapologetically elitist form of government with limited represen-
tative ambitions.5
This early form of party democracy came under pressure in the second
half of the nineteenth century, as mass movements representing the emerging
industrial working class and landless peasants demanded political change.
The socialist or labor parties established in the majority of Western countries
demanded opportunities for political participation, and restrictions on the
franchise were loosened, expanding the size of the electorate. These “mass
parties,” as Duverger called them, built networks of activists to support
party candidates at election time, but also to build relationships with stable
constituencies of voters. Mass parties sought to “encapsulate” their target
electorate through party newspapers, social clubs, youth sections, summer
camps, and so on. Voting for the party would become such an instinctive
and natural act that, for many voters, it was unthinkable to support anyone
22 P A R T ONE: CAPITALISM, DEMOCRACY, AND CRISIS

else: partisan identification was born and provided democracy with a stable
structure of political competition.
The economic system of the industrial age generated prosperity, but also
extreme inequality: at the beginning of the twentieth century around half of
pre-tax income typically accrued to the richest 10 percent of the population
in Western countries.6 Democracy, in contrast, was based on fundamentally
egalitarian principles: it implied broad-based mass participation in political
decision-making, giving the poor majority decisive influence over the con-
duct of government. This conflict between economic inequality and political
equality was at the heart of elite resistance to democratic reforms in the nine-
teenth century: even apparently enlightened liberal thinkers as John Stuart
Mill or the American Federalists feared that democracy would hand power
over to an unruly mob that could threaten the rights of property-holders, the
only social class considered worthy of political representation.7 Mill, a sup-
porter of extending voting rights, nevertheless argued that recipients of poor
relief should not be enfranchised, on the grounds that “he who cannot by his
labour suffice for his own support has no claim to the privilege of helping
himself to the money of others.”8
Ruling elites were particularly threatened by democracy because they were
unaccustomed to having to win mass support for their plans. In some coun-
tries, such as Britain, elites were quick to build their own party structures.
The Conservative Primrose League, which by 1910 had over two million
members, organized meetings, speeches, and social events, and members
swore allegiance to the Crown, the empire, and free enterprise. The Liberals,
the other main party at that time, had built their own mass membership or-
ganization, centered around Joseph Chamberlain’s Birmingham “caucus” of
activists, which lobbied for trade protectionism. Although the labor move-
ment initially worked with the Liberals to achieve worker representation,
by 1900 the British trade unions founded their own Labour Party, which
steadily supplanted the Liberals as the main alternative to Conservatism. For
most of the period after World War II, UK electoral politics revolved around
these two strong mass organizations, each reflecting distinctive political
ideologies and social classes.
In other parts of Europe the path to democracy was far more conflictual.
In Germany, Italy, and Spain the labor movement was torn between rad-
ical and pragmatic factions, a divide formalized after the Russian Revolution
with the creation of communist parties. Reactionary ruling elites were reluc-
tant to extend political rights to the working class, and the threat of the rev-
olutionary Left led to the mobilization of more conservative sectors around
fascism. It is easy to forget after seventy years of peaceful democratic rule
Parties Against Markets 23

in most high-income countries that the rise of mass politics between the
wars also took the form of aggressive anti-liberal, anti-democratic, and some-
times totalitarian movements. It is these parties, and their successor parties
after World War II, that inspired Giovanni Sartori to coin the concept of
“anti-system” parties.9 These anti-system parties were directly responsible
for overturning the democratic order between 1918 and 1945.
The interwar period witnessed the first attempt at reconciling mass pol-
itics and market capitalism in Europe.10 It was a period of intense political
mobilization, as the working class pressed for political and social rights and
demanded a greater share of economic output,11 while governing elites sought
to reimpose the macroeconomic discipline of the prewar Gold Standard. Their
ultimate failure demonstrated, not for the first time in financial history, that
unsustainable debt burdens and restrictive monetary conditions would lead
to economic collapse and conflict.12 The lack of protective social institutions
to cushion labor from market adjustments drove industrial conflict and bol-
stered anti-capitalist and anti-democratic political movements. The experi-
ence of the 1930s revealed the limitations of the liberal order, showing that
markets could break down under political pressure, potentially destroying
democracy as well as capitalism.13
The human costs of the catastrophe were incalculable, but the economic
costs can be measured: Thomas Piketty estimates that the financial damage
caused by the two world wars and the intervening slump destroyed capital
worth around four times GDP in Britain, France, and Germany.14 This loss of
wealth diminished the political influence of economic elites and facilitated a
rebalancing of political power in favor of the laboring classes. The magnitude
of the disaster convinced political elites that capitalism would need to learn
to coexist with popular democracy, and with the political ideologies articu-
lated by mass political parties: ideologies that were suspicious of unfettered
markets.
The Democratization of Capitalism: Political

Parties and the Welfare State in the Postwar Order
The defeat of fascism in World War II gave Western liberal elites the opportu-
nity to rebuild the market system within a democratic framework, applying
some of the lessons of the interwar period. Led by the United Kingdom’s
representative John Maynard Keynes, a long-standing critic of the post-1918
arrangements, and his US counterpart Harry Dexter White, the Bretton

Woods Conference in 1944 decided on a regime of stable, managed exchange
rates, with capital controls and safeguards to deal with imbalances in inter-
national payments.15 By averting the need for harsh domestic adjustments,
these arrangements gave national governments the scope to adopt protec-
tive welfare policies and seek to maximize employment. The postwar order
reestablished capitalist production while cushioning society from market
instability.
This shift amounted to a “democratization” of capitalism in which the
balance of power moved from international finance to the national state,
which in western Europe and North America meant empowering democrati-
cally accountable governments.16 Absent the threat of capital flight, popular
pressure could be channeled into policies that cushioned society from the
market while allowing capitalism to generate profitable investment. It was
helpful that fascism and national socialism had been discredited—and in
some cases, such as West Germany, formally outlawed—eliminating one po-
tentially destructive avenue for market-curbing politics. A second nondemo-
cratic threat to capitalism—Soviet-style socialism—was less easily defeated,
and elites were concerned to prevent the labor movement in Western Europe
being tempted by the communist option. The threat of communism and the
strength of organized labor made a repeat of the interwar period’s attempts
to impose market orthodoxy unthinkable.17
This “democratic capitalism”18—the exercise of state power to tame the
market and shape an economy in response to social needs—required organ-
ized political parties. Parties performed the key functions of recruitment and
representation and the articulation of coherent political programs that could
connect with the ambitions and interests of key social groups. The postwar
period was a propitious time for government interventionism and social
policy development, and in all the Western countries that had democratic
elections at that time, governments pushed back against the laissez-faire or-
thodoxy that had failed between the wars. In the face of well-organized left-
wing parties and unions, business and financial interests were incentivized,
indeed perhaps coerced, into accepting class compromise, in the form of
institutions that redistributed resources and risks more evenly between cap-
ital and labor. Political parties acted as the underwriters, mediators, and in
some cases initiators of this new bargain between the employer and investor
classes and the rest of society.19
Across the democracies, participation in government revolved around po-
litical parties representing the dominant ideological traditions of conserva-
tism, liberalism, Christian democracy, and social democracy. All these parties
favored, to varying degrees, the idea that governments ought to be involved

in managing the economy by regulating finance, directing public invest-
ment, running key industries and utilities, and using progressive taxation to
fund social programs. This economic interventionism was embraced particu-
larly strongly by socialist or social democratic parties, and their allied trade
unions, and the growth of these organizations in the first half of the twentieth
century hit its high point in the postwar period.20 Protected by the fixed ex-
change rates and capital controls of the Bretton Woods system, governments
were now freer to use the levers of macroeconomic policy, such as interest
rates and deficit spending, to pursue full employment.21
The strong economic growth Western countries enjoyed in the 1950s
and 1960s provided governments with abundant resources to reward voters
with concrete benefits in return for their support.22 Government spending in
the industrialized countries averaged around 10 percent of GDP at the end
of the nineteenth century; by the end of the twentieth century it averaged
45–50 percent.23 These opportunities incentivized party activism, and trade
union membership, as well as high levels of citizen participation in elections.
As mass parties took power and developed policy programs in accordance
with their ideological outlook and electoral constituencies, they were able to
use the state not only to achieve policy outcomes, but also to enhance and en-
trench their own role in the political system.24 Government spending created
constituencies of beneficiaries that could identify the parties responsible as
their protectors. The postwar “golden age” of inclusive economic growth was
therefore also the golden age of the mass party.
The postwar period saw the consolidation of patterns of political repre-
sentation whose essential stability underlined the grip mass political parties
had over society. Early studies of electoral behavior showed that voters tended
to identify with particular parties and vote in terms of partisan loyalty.25
These loyalties reflected the stability of the key dividing lines—economic,
religious, cultural—cutting through the electorate, which mass parties both
reflected and reinforced.26 Often partisan identities went well beyond the
ballot box, influencing patterns of housing, schooling, leisure, and employ-
ment. British workers socialized in working-men’s clubs tightly connected
to unions and the Labour Party, and Italian workers congregated in the Case
del Popolo (People’s Houses), social clubs close to the Communist Party. Party
leaders stood at the head of organizations that were deeply embedded in both
society and the state machinery, providing them with substantial clout in
their exercise of government power.
Figure 1.1 illustrates the degree of party organization, and the extent of
labor mobilization, at the height of the postwar golden age. Across sixteen
consolidated democracies in 1970, 44 percent of workers on average were

Partisanship and Labor Mobilization, 1970
Share of Electorate/Labor Force
80%
70%
60%
50%
40%
30%
20%
10%
0%
d m
N d
Av es
Ze s
d
Fi k
Au ia
y
D um
Sw y
e
Be ia
U wit en
d
G ce
h ly
ew nd
ag
an
wa
n
d lan
ar
an
ni gdo
lan
al
str
at
N Ita
an
d
ala
m
i
er
N erla
m
str
nl
St
or
lg
r
Ire
Fr
n
ze
en
er
Au
i
K
te
et
S
te
U
ni
Party Membership Union Membership Total Left Vote
Figure 1.1 Mass Mobilization in the “Golden Age”: Indicators of Strength of

Organized Labor, 1970
union members, and left-wing parties won more than a third of the vote,
while close to a tenth of the electorate on average were enrolled as members
of a political party. In some countries, such as Austria, Denmark, Ireland,
Sweden, and Norway, well over half of workers were in a union, while even
in the United States approximately a quarter of the workforce was unionized.
Party membership varied considerably, but in Austria more than a quarter
of voters were members of a political party, while Denmark, Finland, Italy,
and New Zealand were also above the average. Turnout in elections was
very high in this period, averaging over 80 percent, with more than 90 per-
cent of voters casting ballots in Australia, Austria, Belgium, Italy, and the
Netherlands. High levels of popular participation in politics, added to high
levels of worker organization, constituted a formidable counterweight to the
power of wealthy capital owners.
The importance of mass participation can be seen in patterns of policy-
making and ultimately in the income distribution. Figure 1.2 shows a strong
cross-national correlation between trade union membership and levels of in-
come inequality in the golden age period. The countries with high levels
of trade union membership, and particularly those where unions were po-
litically affiliated with the Left, delivered more left-leaning governments,
with socialist/social democratic or labor parties gaining higher than average
vote shares. Sweden is a paradigmatic case, with the Social Democratic Party
(SAP) winning power already in the early 1930s and consolidating its grip
on power, dominating governments until the 1970s. Trade union density
reached 70 percent of the labor force in the 1960s, and continued to rise

Union Membership and Inequality, 1970s
40
Gini coefficient, Disposable Income

35 France Italy
30 US Australia Ireland
1975 or nearest year Denmark
25 Germany
UK Sweden
Netherlands Norway
20
Finland
15
10
5
0
0% 10% 20% 30% 40% 50% 60% 70% 80%
Union Membership as Share of Labor Force
Figure 1.2 Union Membership and Inequality, 1970s
before peaking at 90 percent in the 1990s.27 Norway, Denmark, Austria, and

Belgium all exhibited similarly high levels of left mobilization. These coun-
tries were in the forefront of welfare state development in the postwar period,
developing extensive universalistic social protections, and achieving some of
the lowest levels of inequality recorded in Western democracies.28
In other countries, the social democrats were less successful. This was not
so much because the Left was not mobilized, but rather that it was divided
among different left factions, principally because of a strong communist party
to rival the social democrats. Finland, France, Germany, and Italy all had sig-
nificant communist parties, and in Greece, Portugal, and Spain communism
played a major role in the opposition to dictatorship. Conservative interests
tended to coalesce around Christian democracy as an alternative to both so-
cialism and liberalism. In Italy, the Christian Democrats (DC) dominated
governments for nearly half a century, building an extensive welfare state
offering generous protection for politically favored groups, such as public
employees, small businesses, and retirees, in part as a strategic response to the
communist-led labor movement.29 In the continental and southern European
countries a “Bismarckian”30 occupation- based welfare predominated, in
which work status defined access to social protection. Social and Christian
Democrats had differing priorities and electoral clienteles, but both accepted
the principle of generous social provision to compensate for the inequalities
generated by the market.
In the English-speaking countries, both Christian democracy and com-
munism were absent and political competition revolved around a straight
battle between the organized Left pushing for welfare state expansion and
a lay conservative Right mostly skeptical of the role of government in

reducing economic inequality. Majoritarian electoral systems made coalition
politics inviable and accentuated the zero-sum nature of distributional con-
flict, tending to undermine the labor movement’s ability to win government
power.31 In Britain, Australia, and New Zealand, labor parties were relatively
successful in winning government power on the back of a strong trade union
movement, though in the 1980s neoliberal forces pushed back, reducing so-
cial protection considerably. In the United States, Ireland, and Canada, the
labor movement was weaker historically and welfare more limited, especially
in the United States where a combination of divided government, scale, and
ethnic heterogeneity restricted the ability of the federal government to raise
sufficient revenues to fund an extensive welfare state.32
The high degree of political mobilization characteristic of this pe-
riod allowed the most economically vulnerable sectors of society to over-
come their collective action dilemmas and challenge the structural power of
wealth-holders. Under voter pressure, governments increasingly dedicated
a large share of society’s resources to the provision of old age pensions, dis-
ability benefits, family benefits, and unemployment compensation, all of
which tended to redistribute resources from higher-income to lower-income
groups.33 Most voters were net beneficiaries of such policies, paying less tax
than they received in social transfers, meaning that politicians could win
elections by promising expansions of public spending.
The benign postwar environment of a stable international monetary order,
entrenched popular representation, and egalitarian economic growth came to
an end in the early 1970s. If the boom years of the postwar period had been
a period of political constraints on capital, the 1970s and 1980s saw the
gradual erosion of the system of capital controls that had facilitated popular
governance of the economy. With the abrupt end to continuous growth and
full employment, the dominant economic policy paradigm of the postwar era
was suddenly open to challenge. Keynesian-style government intervention
to secure full employment and the benign view of the state as an effective
administrator of the economy were increasingly questioned, and neoliberal,
pro-market theories made a comeback.34
The crisis of the 1970s sparked the reemergence of a clear conflict be-
tween capital and labor, fighting over the allocation of the pain of economic
adjustment. Business was keen to push back against inflation and achieve
wage restraint, as well as restore workplace discipline, which in countries
as diverse as the United Kingdom, France, Italy, Spain, and Sweden had be-
come severely compromised. The labor movement, in turn, was reluctant
to give up on egalitarian income growth, and the 1970s were a period of
intense labor mobilization in many Western countries. The destabilizing of

the postwar arrangements provoked a high degree of industrial disruption as
workers sought to maintain real wage levels in the face of inflation. Strike ac-
tivity hit a postwar peak, and unions successfully mobilized a growing share
of the labor force.35
In some countries, such as Germany, labor and capital reached coopera-
tive bargains that sought to preserve investment and employment through
wage restraint. But in many others, such as the United Kingdom, France,
and Italy, governments responded to this climate of worker militancy by
shifting their policy positions to accommodate labor demands. As a result,
employers and investors were forced to take the strain in the form of reduced
profits, either through inflationary pay demands, interruptions in produc-
tion, or both. Concessions on employment law, inflationary pay increases,
and increased public spending emboldened organized labor and undermined
efforts to achieve price stability and bring government borrowing under con-
trol. Business interests were increasingly concerned that the capitalist system
itself was under threat, and became more and more receptive to reversing the
trend toward government interventionism.
Market Liberalism and Democracy: Shrinking

the Space for Parties and Voters?
The market liberal (or neoliberal) turn was more than a set of alternative
ideas of how to run the economy; it instead implied a very different kind
of state and a different model of democracy. Democratic capitalism was, in
William Riker’s use of the term, “populist”: it saw the role of government as
responding to citizen demands, and actively intervening in society and the
economy to meet the expectations expressed through competitive elections.
Elected politicians, in this understanding of democracy, were entitled to
manage the economy in accordance with the popular will, which in turn
implied a more activist approach to markets, which were seen as technically
improvable, and whose outcomes had little intrinsic normative value. Since
it could be assumed that in a context of economic inequality the majority of
the population would prefer a more equal sharing out of the national income,
democratic capitalism implied political action to secure greater equality
through the active management of the market economy.
The economists and philosophers whose ideas underpinned the lib-
eral turn took a very different view. The capitalist system, built on free
interactions of individuals and firms in competitive markets, was in itself

a source of legitimacy, and its outcomes had the ethical status of resulting
from individual acts of free will. In this view, clearly articulated, for example,
in Milton Friedman’s book Capitalism and Freedom,36 market exchanges had
the virtue of not resulting from coercion, while government regulation and
taxation were underpinned by the coercive use of state power, and therefore
undermined liberty. Aside from the broader philosophical questions this ar-
gument raises, it clearly advocated a particular form of state: a minimalist
government, able to define and enforce property rights and oversee mone-
tary arrangements, but do little else. Popular democracy based on the ma-
jority will was not only an insufficient basis for interfering with individual
rights and choices, it was not in fact a desirable value at all.37 Democratic
institutions should instead be designed with a view to preserving individual
freedom. Individual wants should be satisfied by free, unrestricted exchange
in the marketplace rather than collective action.38
This radical liberal conception of the state had major implications for po-
litical representation. Neoliberals saw left-wing parties and unions as vehicles
for exercising coercion against individual rights in the form of restrictive
regulations on trade and investment, confiscatory taxes, and fiscal and mon-
etary policies that eroded property rights through inflation.39 Democratic
capitalism was a “populist” arrangement that “overloaded” the state with
insatiable demands for social rights and expenditures.40 The influential
Trilateral Commission report The Crisis of Democracy lamented that “the oper-
ations of the democratic process [ . . . ] appear to have generated a breakdown
of traditional means of social control, a delegitimation of political and other
forms of authority, and an overload of demands on government, exceeding
its capacity to respond.”41 The “overload” thesis implied bringing monetary
and fiscal policy back onto a more conservative footing, by insulating them
as much as possible from popular pressure.
The primary means of adjusting monetary policy was to orient central
bank policy toward price stability, overriding other objectives such as full
employment. A key tool for achieving this was central bank independence—
the removal of direct partisan influence over interest rates, which would be
set by “independent” experts rather than elected politicians. Central bank
independence spread rapidly across the Western democracies as politicians
became persuaded that giving up direct operation of monetary policy was
the most effective way of controlling inflation.42 This turn toward stricter
monetary policy also had implications for government budgets, which
could no longer be cheaply financed through central bank purchases. By
the 1990s most Western governments were subscribing to “fiscal rules,”
binding themselves to borrowing limits, either through participation in

the European Monetary Union, or in the case of the United Kingdom, as a
way of preempting threats to financial stability. This delegation of political
decisions to “non-majoritarian” agencies43 run by technocratic experts has
been described as a “hollowing out of the state.”44
The new policy orthodoxy severely circumscribed government policy
discretionality, and was ultimately successful in easing the pressure on
governments to meet popular demands for redistributive interventions. As
mainstream political parties progressively adhered to these restraints, the
outcomes of elections became less and less important for macroeconomic
policy, particularly in the Eurozone, where monetary policy was removed
entirely from national control and fiscal policy was subject to strict limits.
Some areas of policy difference did remain, with social democratic parties
more likely to prefer public investment in education and training to enhance
productivity, while conservative parties tended to prefer more private-sector
oriented solutions to labor market problems.45 But even in these “supply-
side” areas, policy increasingly converged around market deregulation and
privatization.
As well as entrenched monetary rigor, the neoliberal project was also keen
to curb the power of trade unions. Tight monetary policy could discipline
labor by forcing up unemployment, but regulatory reforms also weakened
the bargaining power of organized labor by raising the costs of strike ac-
tion and discouraging union membership. The United States and the United
Kingdom were trailblazers in this regard, with the Reagan and Thatcher
administrations deploying a variety of legal, political, and economic resources
to weaken the most powerful unions. But even in continental and northern
Europe, where union membership remained high, a steady stream of regu-
latory reforms undermined collective bargaining, weakened workplace or-
ganization, and challenged employment protections.46 Industrial unrest fell
steadily after the 1970s as a result. By the 1990s, strike action had become a
rarity (see Figure 1.3). The decline of unions was a serious problem for parties
of the Left, and indeed the Thatcher reforms in the United Kingdom had the
explicit aim of fatally weakening the Labour Party as a political force.47
As party politicians progressively lost their central role in governing the
economy, political parties’ grassroots presence and voter attachment began
to decline. Figure 1.4 shows that party membership as a share of the elec-
torate peaked around 1960 at an average of 13 percent, and fell continu-
ously through the first decade of the twenty-first century. Another measure
of party penetration into the social fabric—the numbers of voters expressing
attachment or identification with the party—also declined. Dalton and
Wattenberg found that, in nine European democracies for which time series

7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
1960
1961
1963
1965
1967
1969
1971
1972
1974
1976
1978
1979
1981
1983
1984
1986
1988
1989
1991
1993
1994
1996
1998
1999
2001
2003
2004
2006
2008
2009
2011
2013
2014
Industrial Disputes Work Days Lost, 1,000s Days Lost per 1000 Workers
Figure 1.3 Industrial Disputes, 19 Democracies, 1960–2015

Source: Klaus Armingeon, Virginia Wenger, Fiona Wiedemeier, Christian Isler,
Laura Knöpfel, David Weisstanner, and Sarah Engler, Comparative Political Data Set
1960–2014 (Bern: Institute of Political Science, University of Berne, 2017).
30
Party Membership/Electorate (%)
25
20
15
10
0
1950 1960 1970 1980 1990 2000 2008
Austria France Germany Italy
New Zealand Sweden United Kingdom
Average, 18 Democracies
Figure 1.4 Party Membership in Selected Democracies, 1950–2008

Source: Susan Scarrow, Beyond Party Members: Changing Approaches to Partisan
Mobilization (Oxford: Oxford University Press, 2014), p.96.
data was available, the number of voters who did not identify with any polit-
ical party grew from around 30 percent in the mid-1970s to over 40 percent
by the early 1990s, while the number of sympathizers with a party traveled
in the opposite direction, from 40 to 30 percent.48 Alongside the decline in
membership, this reflected an increasing distance between party organiza-
tions and most of the electorate, threatening the future survival of the par-
tisan structures that underpinned democratic politics.
The waning ability of mass parties to mobilize their loyal supporters and the
interest of party elites in winning government power generated internal conflict
as office-holders sought to appeal to broader electoral audiences, diluting parties’
ideological identities and insulating themselves from grassroots pressures. This
“catch-all” politics49 set in motion a self-reinforcing shift away from the grass-
roots activists toward career politicians, and weakened parties’ connections with
their core voters. But delivering benefits to a broader-based and more fickle
electorate was increasingly costly, pushing parties to use more and more gov-
ernment resources to secure their political and organizational survival. As econ-
omies ran into trouble from the early 1970s, governing parties were caught
between the pressures of an increasingly demanding labor movement seeking
continued wage rises and increases in public spending, on the one hand, and
the financial pressures of rising deficits and nervous bond markets, on the other.
The decline of ideological appeals and the dampening of popular expec-
tations about what government could achieve undermined the motivation of
party volunteers and left parties short of the labor power that underpinned the
mass party model. A new organizational form was therefore necessary, which
relied less on the labor-intensive grassroots activism of the early phase of de-
mocracy, and could exploit more capital-intensive campaigning techniques
revolving around television, mass advertising, and opinion polling.50 But
this new professionalized model both cost money and alienated parties’ core
electorates, accelerating the decline of traditional sources of funding such as
party membership subscriptions and contributions from ancillary organiza-
tions such as trade unions.
The financial crisis of political parties could be addressed in two ways: public
money or private donations. Public subsidies freed parties from some of the
financial strains resulting from the increasing costs of electoral campaigning
and the declining revenues accruing from membership fees. But they came
at a reputational cost, as it did not escape public attention that it was the
parties themselves that voted to divert taxpayer money to their own organiza-
tions, usually by making secretive agreements with their opponents.51 Public
funding was predictably unpopular among voters, but the alternative was
just as bad: private donations pitted the broad, collective interest of millions

of voters against the narrow, exclusive interests of corporations or wealthy
individuals.52 In the case of social democratic parties, private funding risked
subordinating ideological and programmatic commitments to the needs of
donors. The resulting scandals were hugely damaging to parties’ reputations
and their relationship with the traditional voter base.53
Public funding of political parties avoided the stark inequality of polit-
ical influence associated with private donations, but it generated a new form
of disconnect, by relieving parties of the need to maintain deep organiza-
tional roots among their social base. Instead of party conferences to repre-
sent the demands of the core constituency, party leaders could commission
opinion polling to identify popular policies, and part of the activists’ job of
canvassing for support could be delegated to professionalized media-oriented
campaign strategists. Elected politicians were increasingly able to operate
at arm’s-length from party supporters, and indeed very often built polit-
ical careers inside metropolitan political elite circles, with little experience
of grassroots activism. But this implied a far more superficial and volatile
relationship between parties and voters, and a greater fragility of the party
system as a whole.
After the Party: Cartel Politics and

Democratic Disaffection
Electoral politics in the golden age period was characterized by high levels
of stability, with parties enjoying reliable support from their core electorates.
Lipset and Rokkan described Western party systems as “frozen,” pointing
out that “the party systems of the 1960s reflect, with few but significant
exceptions, the cleavage structures of the 1920s. . . . [T]‌he party alternatives,
and in remarkably many cases the party organizations, are older than the
majorities of the national electorates.”54 Although the political turbulence of
the 1970s brought an increased level of electoral instability, this remained
largely true for the first decade of the twenty-first century, too. For example,
in the year 2000, Britain, France, Germany, and Sweden were all governed
by socialist or social democratic parties that had already held office in the im-
mediate postwar period, and indeed had a century or more of history behind
them.55
But the parties of the early twenty-first century, despite mostly keeping
the same names, were very different from their predecessors of a few decades
earlier. Parties that could once count on a reliable base of activists and a

reservoir of loyal partisan voters were now extraordinarily fragile. As we have
already seen, levels of party membership were in steep decline, with on av-
erage just one member for every twenty voters. Moreover their shares of the
overall vote had also declined, not only because of the growing fragmentation
of the vote, with growing shares going to new “challenger” parties, but also
because voter turnout had been declining in the vast majority of democracies,
very sharply in some, such as the United Kingdom and Italy, and more mod-
erately in others. Another sign of parties’ waning grip on their supporters
was the growing share of the electorate willing to change their vote from one
election to the next: electoral volatility (net vote share changes, calculated
by summing the changes in party support between successive elections56)
also reached its lowest point in the early 1960s, rising steadily until an even
sharper rise in the 2010s (see Figure 1.5).
The growth in political disengagement should not be mistaken for
a sign of passive contentment. There were strong indications that the
30
25
20
15
%
10
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Volatility (Pedersen Index) Abstention Rate (% Electorate)
Figure 1.5 Indicators of Party Decline, 21 Democracies, 1960–2015

Source: Data for non-European countries from Scott Mainwaring, Carlos Gervasoni,
and Annabella España-Najera (2017), “Extra-and Within-System Electoral
Volatility,” Party Politics 23(6): 623–635; Armingeon et al., Comparative Political
Data Set 1960–2014 (see Figure 1.3).

disenfranchisement implicit in the cartel party model was keenly felt by citi-
zens, and that falling electoral turnout was a sign of frustration at the lack of
options available, rather than of indifference to politics.57 Party decline was
matched by democratic disaffection, and growing numbers of voters expressed
mistrust of politicians and the democratic institutions more broadly.58 This
frustration could be detected in declining turnout and, among those who
voted, an active rejection of the traditional political parties and growing sup-
port for new parties, almost all of which in some way sought to present them-
selves as alternatives to the existing elites.
These developments reflected a fundamental weakening of political
parties’ ability to perform their traditional representative function as a link
or “transmission belt” between identifiable social groups and the policy pro-
cess. However, this did not pose an immediate threat to the survival of the
established parties. With the safety net of public subsidies, parties could
secure their survival as long as they were able to maintain adequate levels of
electoral support, and the inertia of most voters’ behavior and high barriers
to entry for new parties provided a degree of protection against the loosening
of their connection with the electorate. The main political parties became,
in the words of Katz and Mair,59 “cartel parties,” colluding to preserve the
existing party system and to limit the range of acceptable policy positions.60
Once social democratic parties had abandoned their commitments to
public ownership of the economy and full employment, and conservative
parties had accepted a substantial role for the state in protecting incomes and
providing essential services, the stakes of political competition were lowered.
Not by accident, sometime around the mid-1990s it became accepted ter-
minology in public debate to refer to the rival establishment parties as being
on the “center-left” or the “center-right”—the notion of a party not adja-
cent to the center proving seemingly inconceivable. The characteristic form
of electoral competition of the cartel party era revolved around leadership
competence, marginal variations in distributive politics, and (often largely
symbolic) differences in cultural identities and values.61 Political parties were
no longer competing over different models of society, but instead over their
ability to manage the only possible model: a market liberal society with an
increasingly strained welfare state.
This sharp reduction in the range of policies on offer is depicted in Figure
1.6, which uses text analysis of party manifestos to estimate party positions.
It presents the average trend on economic policy issues for the main polit-
ical party families in western Europe since World War II: a centrist position
would be represented by a zero on the vertical axis, a left-wing position by
a negative score, and a right-wing position by a positive one.62 At the start

15
10
–5
–10
–15
–20
1945–49
1950–54
1955–59
1960–64
1965–69
1970–74
1975–79
1980–84
1985–89
1990–94
1995–99
2000–04
2005–09
2010–14
2015–17
Social Democratic/Labor
Liberal
Christian Democratic
Conservative
Figure 1.6 Average Economic Policy Positions for Each Party Family, 14–
16 Democracies, 1945–2017 (Percentage of Right-Wing Statements Minus
Percentage of Left-Wing Statements). The chart includes fourteen democracies for
the whole period and adds Portugal and Spain after 1975.
Source: Andrea Volkens, Werner Krause, Pola Lehmann, Theres Matthieß, Nicolas
Merz, Sven Regel, and Bernhard Weßels, The Manifesto Data Collection: Manifesto
Project (MRG /CMP /MARPOR), version 2018b (Berlin: Wissenschaftszentrum
Berlin für Sozialforschung, 2018) (https://doi.org/10.25522/manifesto.
mpds.2018b).
of the period, the gap between social democratic, socialist, and labor parties
and the other three types was very large, reflecting the commitment of these
parties to fundamental socialist transformation. However, over time the so-
cial democratic position moved in a centrist direction, while the liberal and
Christian democratic parties, and later the conservatives, trended leftward, as
they embraced the preservation of the most popular elements of the postwar
welfare state. The turn back to the Left of the social democrats in the early
twenty-first century, and in particular after the Global Financial Crisis, was
matched by the other parties.
Voters may have been freer of partisan ties than ever before, but the range
of choices on offer was far narrower. Key political cleavages or dividing lines
that had structured politics during the postwar period, such as socioeco-
nomic class or religion, ceased to be strong predictors of voting choice.63
Voters had become detached from stable political loyalties, and rather than

unthinkingly backing the same party every election, “began to choose” the
politicians and policies that they preferred, voting in response to parties’ pro-
grammatic offerings, leadership attractiveness, and performance in govern-
ment.64 But this emergence of a new, more mobile and fickle voter coincided
with a curtailing of real political choice.
The decline of the mass party, once it began, was self-perpetuating and
ultimately destructive of democracy. As Peter Mair documented in his pre-
scient book Ruling the Void,65 political parties, shorn of their ideological and
social referents, became little more than state agencies charged with pro-
viding voters with a menu of options to exercise notional democratic choice
within highly constrained parameters. Not only were elections less and less
meaningful in terms of providing instructions and guidance for those gov-
erning, but political parties were less and less autonomous from the state in
terms of their organization and funding, and as a result more insulated from
popular pressure. But by distancing themselves from their core support and
making superficial “catch-all” appeals to less committed voters, the estab-
lished political parties were exposing themselves to much greater levels of
electoral and political risk.
Neoliberal Democracy: Inequality, Plutonomy, and

Governance by Markets
Cartel parties were an effective vehicle for governing the liberal order be-
cause they allowed democracy to serve capitalism, by securing mass consent
for policies that insulated markets from the protectionist and redistributive
instincts of voters, especially those in the lower-and middle-income brackets.
Elections could come and go without significant disturbances to monetary
and fiscal policies and regulatory institutions, which were determined to a
large degree by international agreements and nonelected institutions either
at the national or supranational level. Cartel politics rested on a shared belief
between the main political parties that government could not, and should
not, interfere too much with the workings of markets, so that voters had
little opportunity to vote against market liberalism. Liberal democracy had
become “neoliberal” democracy.66
But at the same time that cartel politics was making voters more polit-
ically powerless, the emerging liberal market economy was placing them
under growing stress. Most obviously, the distribution of income was be-
coming more unequal. Figure 1.7 shows that in the large industrialized

60%
Top 10 % Share of Pre-Tax Income

50%
40%
30%
20%
10%
0%
1900
1904
1908
1912
1916
1920
1924
1928
1932
1936
1940
1944
1948
1952
1956
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
France Germany United Kingdom
United States Japan Sweden
Italy Canada Denmark
Australia New Zealand
Figure 1.7 Top Income Shares in 11 Democracies, 20th Century

Source: World Inequality Database (https://wid.world).
countries the income share of the top decile declined dramatically through
the interwar years and the postwar golden age, but from the 1980s on it
began to rise again.67 This reflected both secular changes in the economy
and shorter-term political decisions. Thomas Piketty argues that this rise in
inequality was driven by the recovery of capital after the turmoil of the two
world wars, which led to the capital share of income following a clear linear
upward trend across the Western democracies, reaching around 25–30 per-
cent by 2010.68 This implied a loss of 10–15 percent of GDP for wage-
earners. And as the labor share of income was sacrificed, income inequality
also inevitably increased, since labor was the main source of income for most
households.
As the top income groups took a larger and larger share of the pie, their
connection to the rest of society became correspondingly weaker. The emer-
gence of the very wealthy as a distinct social group, with political interests
dramatically at odds with the rest of society, was displayed with unusual
candor in a notorious report produced by a Citigroup analyst, which described
the United States and other similar countries as “plutonomies” where “eco-
nomic growth is powered by and largely consumed by the wealthy few.”69 As
billionaire investor Warren Buffett put it, “there is class warfare [ . . . ] But
it’s my class, the rich class, that is making war, and we’re winning.”70 A clear
indicator of the increasing power of the wealthy was that even as their share

of economic output grew, their contribution to the public coffers through
taxation, which had reached extraordinary heights in the immediate postwar
period, was relentlessly cut.71
At the same time that this group enjoyed unprecedented wealth, life was
becoming more precarious for most of the rest of the population. The danger
of locking in market liberalism was that the policies it implied produced
increasing inequality and insecurity, if not by design then as a predictable
result of the deliberate weakening of egalitarian and protective institutions.
Typically, these reforms—which became such an entrenched orthodoxy in
policy circles that they began to be described using the neutered phrase
“structural reforms”—sought to enhance market competition, reduce the
frictions and restrictions on trade and exchange inherent in government reg-
ulation and redistribution, and give greater scope to the price mechanism,
rather than political or social rights and institutions, to allocate resources.
We can see the destabilizing consequences of market liberalization very
clearly in the world of work, the principal source of income for the vast ma-
jority of households. Market liberal reforms to the labor market sought to
individualize as much as possible the contracts tying workers to employers.
Collective bargaining, which offered workers greater protection from dis-
missal, better working conditions, and more equal wages, was subject to
withering critiques from conservative economists and policymakers, who
argued that it made labor compensation too inflexible, with damaging effects
on company competitiveness and overall levels of employment.72 Similarly,
employment protection legislation— the laws regulating and restricting
dismissals and guaranteed basic rights in the workplace—was considered to
destroy jobs, hinder industrial adjustment, and raise labor costs. Finally, wel-
fare policies designed to provide income guarantees for unemployed workers
were criticized for discouraging workers from accepting jobs paying the
market rate, and pushing up non-wage-labor costs because of the expensive
social contributions required to finance them.
In markets for goods and services, a preference for light-touch regulation,
both domestically and internationally, prevailed. In the national context, reg-
ulation of markets was seen as an impediment to economic efficiency, and
economists were strongly influenced by ideas about regulatory capture73 and
the susceptibility of governments to legislate to protect special interests at
the expense of consumers, which it is assumed would benefit from market
forces. In the international arena, free trade was regarded as of unambiguous
benefit for all, and the removal of formal and informal barriers to trade as
making for greater economic efficiency and therefore prosperity.74 Needless
to say, state ownership of productive activities that could be delivered by the

private sector was considered inefficient at best, and corrupt and wasteful
at worst.
In financial markets, levers of government control over the investment
function were also increasingly regarded as inefficient and politically un-
desirable.75 Direct political interventions in the banking system, through
state ownership of credit institutions, was discouraged, and in those coun-
tries where it existed programs of privatization were launched, often by
governments of the center-left. But regulation of the banking system was
also out of tune with the strong preference of the economic policy commu-
nity for arm’s-length supervision of credit, based on the belief that financial
institutions had sufficient incentives to avoid practices that would imperil fi-
nancial stability. Finally, government’s own involvement in the credit system
through its borrowing was increasingly circumscribed, with central bank
monetization of government debt largely outlawed and the emergence of
fiscal rules preventing government borrowing exceeding the narrow confines
of automatic stabilizers in mild downturns.
The political success of market liberalism was all the more remark-
able because many of the measures that mainstream politicians accepted as
the orthodoxy were deeply unpopular. The former European Commission
President Jean-Claude Juncker once candidly admitted, “we all know what
to do, we just don’t know how to get re-elected once we’ve done it.”76 For
example, cuts to state pensions and other popular spending commitments
provoked fierce public opposition, as did regulatory reforms to reduce labor
protections and promote more “flexible” forms of employment. As a result,
democratic accountability was fundamentally threatening to this new ortho-
doxy, and increasing efforts were made to circumvent democratic institutions
in order to implement it, through the growing role of nonelected authorities
described earlier. The market liberal economy required democratic politics
be kept on a tight rein.
The emergence of this orthodoxy and its implementation to varying
degrees across the rich democracies is all the more remarkable because the
economic ideas that inspired it were far from uncontroversial even within
the economics profession, and were very strongly contested outside it.
Moreover, the evidence has mounted ever since that these ideas were fun-
damentally flawed, in some cases so obviously that one economist described
them as “zombie ideas”: no matter how often they are debunked, they keep
coming back.77 Even before the financial crisis of the 2000s, growth rates in
the advanced democracies were slow to display signs of benefiting from the
recommended reforms. Yet market liberal policies such as privatization and
the deregulation of labor and financial markets were frequently presented as

being essentially technical fixes designed to make economies work better,
based on the kind of sound scientific advice that governments would seek
before setting policy on, say, public health or climate change.
Presenting market liberal policies as scientifically grounded technical fixes
meant that their distributional implications were rarely discussed. Policies
designed to dismantle protective institutions such as restrictions on firing,
collective wage negotiations, trade barriers, and limits to credit creation cre-
ated both winners and losers. The underlying assumption of the structural
reform agenda was that societies as a whole would be so much better off
that the distributional effects of the policies were not worth much attention.
But dismantling collective bargaining made low-skilled workers poorer,78
the opening up of protected markets to new competition destroyed many
jobs, and the expansion of credit inflated asset prices and generated income
streams from poorer to wealthier citizens.
These policies inevitably increased inequality, poverty, and insecurity,
placing a greater strain on welfare states. Even the OECD’s own econometric
analyses found that the reductions in employment protection legislation that
it was advocating to member states were significantly predictive of increased
inequality.79 Market-friendly reforms also made for greater insecurity, as
livelihoods were increasingly tied to market dynamics while, as a result of the
same broad reform agenda, markets were becoming less and less predictable.
The numbers of workers on temporary contracts, exposed to sudden losses
of income as market conditions and employer needs change, dramatically
increased.80 Protections against dismissal for workers on permanent contracts
were also relaxed.81
Yet governments in the high-income countries were busy attempting to
contain social spending even as the demands on the welfare state acceler-
ated.82 Unemployment benefits were subject to increasingly strict condition-
ality, and many countries made moves away from state-backed pay-as-you-go
pensions, introducing a greater private market involvement in retirement
provision.83 Provision of social housing was also pared back, exposing
households to the vagaries of real estate and credit markets to a much greater
extent than in the past.84 Home ownership became increasingly important
for living standards, but housing markets were made more subject to the
fluctuations of the credit cycle, increasing households’ vulnerability to finan-
cial shocks. Ordinary citizens were exposed to growing economic insecurity
at work and through the life cycle.
By reducing the scope of collectively determined decisions and enhancing
individual exchange, market liberalism accentuated inequalities of resources
between economic actors and exposed weaker parties in economic exchange

to greater uncertainty and insecurity. The structural shift in the political
economy in favor of the wealthy was abetted by policy changes that limited
the ability of governments to compensate the wage-earning classes for their
declining share of income and the growing material uncertainty they faced.
The arguments for reducing government’s ability to regulate markets and
redistribute income and risk rested on contested claims that rolling back the
state would improve the performance of the economy overall, making eve-
ryone better off. But the 1990s and 2000s was also a period of weak wage
growth, as well as rising wage inequality and, in most countries, welfare
retrenchment.85 The electorate could be forgiven for thinking that cartel
politics worked largely in the interests of the wealthiest sectors of society,
who saw their share of income grow almost everywhere, in some cases quite
spectacularly.
The “Flaw in the Model”: Market Liberalism and

the Global Financial Crisis
The postwar period was unprecedented for the almost total absence of
banking crises in the Western industrialized economies. The capital controls
and strict financial regulation of the Bretton Woods era disincentivized or
outright prohibited the kinds of risky behavior that could bring down fi-
nancial institutions, and prevented problems becoming systemic. Credit was
restricted and controlled in myriad ways, placing limits on the ability of
corporations, households, and governments to build up high levels of debt.
But as governments began to dismantle these restrictions in the 1970s, fi-
nancial instability began to grow and banking crises and bubble dynamics
subjected household finances to higher levels of volatility. Even the more
prosperous groups were exposed to greater economic uncertainty under
these circumstances, and the rise in inequality raised the stakes, with wrong
decisions or simply bad luck in the labor or financial markets having poten-
tially devastating consequences.
The financial collapse of the late 2000s is now so thoroughly studied and
apparently well understood that it is difficult to believe that almost nobody
predicted it.86 The intellectual blinkers that contributed to this inability to
anticipate the consequences of a long period of reckless lending and inade-
quate regulation gave it the appearance of an “exogenous shock,” a “black
swan” on the outer reaches of what was considered possible or even think-
able.87 This element of surprise was not merited, as the 2008 collapse was

quite easily slotted into the regular cycle of financial crises associated with
volatile, mobile capital and arm’s-length regulation of the banking sector, a
cycle identified and reasonably well understood a long time ago by scholars
such as Keynes, Minsky, and Kindelberger.88 The crisis may not have been
precisely predicted in its timing or it proximate triggers, but the signs of se-
rious financial fragility had been identified by some astute observers.89
The failure to avert the crisis may have been to some extent a failure of
policy design and individual judgment in the part of key actors, but at its
heart it was an intellectual failure. Governments and regulators had been
captured by market liberal thinking to such an extent that policy was based
on the naive belief that market actors would avoid risky behaviors because
it was in their self-interest to do so. The logical implication of this was that
government regulation was either futile or counterproductive: investors had
“skin in the game” and would not build positions that would endanger the
financial system.90 This fanciful idea was forcefully applied by luminaries
such as Alan Greenspan, chair of the US Federal Reserve until just before the
crisis, and Harvard economist Larry Summers, US treasury secretary under
Bill Clinton, who actively resisted any drift toward greater regulation and
oversight. After the fact, Greenspan contritely admitted to a congressional
committee that he had detected a “flaw” in the free market model that had
underpinned his lengthy tenure at the head of the global financial system.91
This flawed model was shared by many influential figures both in politics
and academia, but it was also sustained by the very real gains that it deliv-
ered to Wall Street and financial elites across the Western democracies. Over
the period preceding the 2008 crash, financial sector compensation soared,
particularly in the United States and the United Kingdom. The beneficiaries
of inadequate financial regulation used part of their gains to buy political in-
fluence, by funding political campaigns and extensive lobbying activities to
protect their gains.92 When the crisis hit, this infrastructure of political in-
fluence smoothed the path to the massive bailouts the governments resorted
to in the face of a global economic meltdown. There was a compelling case
that bailouts were necessary and that allowing systemic financial institutions
to fail would have wreaked havoc across the world economy. But the bailouts
were deeply unpopular, involving the sudden deployment of inconceivably
large amounts of money to rescue financial assets mostly held by the wealth-
iest sectors of society.
The bailouts may have prevented a catastrophic collapse, but they were
unable to avert the largest downturn across the industrialized world since
the 1930s. Half of the twenty Western democracies for which we have
data suffered negative median income growth between 2007 and 2014.93

Moreover, declining incomes were accompanied by significant reductions in
the growth of government spending, creating further discontent as health-
care, education, and other public services were pared back.94 But although
the financial crisis and the “Great Recession” that followed it affected the
whole global economy, it affected some countries far more than others. And
the countries that were most affected by the crisis proved to be the countries
most subject to anti-system political backlash in the 2010s.
Figure 1.8 shows that countries running high current account deficits—
in other words, those that were importing more than they exported, and
therefore were borrowing to finance spending—on the eve of the crisis had
the worst performance in terms of median income growth in the years after-
ward. Most of these countries had credit booms in the 2000s, which gave
way to banking crises and in some cases sovereign debt crises after the 2008
meltdown. Current accounts on the eve of the financial crisis in the countries
studied here varied from a deficit of over 15 percent of GDP in Greece to a
surplus of 17 percent in the case of Norway. Figure 1.8 shows that the me-
dian income losses during the financial crisis and the Great Recession were
highest in the most indebted countries, especially Greece, but also Spain,
Ireland, Italy, and Portugal.95 Less indebted countries mostly had modest in-
come gains in the same period.
The connection between high inequality and exposure to financial
crises has been the subject of an interesting but inconclusive debate among
economists. High inequality may have encouraged policymakers to loosen
Pre-Crisis Current Account Deficit and Post-Crisis Income Growth

20
Current Account Balance 2008 Q2
15 NOR
10
DEU
5
(%/GDP)
0 ITA
–5 IRL
–10 UK USA
ESP PRT
–15 GRC
–20
–25
–25 –20 –15 –10 –5 0 5 10
Median Income Change 2007–2014 (%)
Figure 1.8 Pre-Crisis Current Account Deficit and Post-Crisis Income Growth
Source: OECD, “Current Account” (https://data.oecd.org/trade/current-account-
balance.htm); OECD, “Income Distribution Database (IDD)” (http://www.oecd.
org/social/income-distribution-database.htm).

financial regulation, leading to excessive credit expansion, asset price infla-
tion, and unsustainable flows of capital to overheated economies that ulti-
mately crashed.96 But the correlation between inequality and crisis could
equally be a spurious one: successful export economies—such as Germany
and the smaller European social market economies—share a tradition of
corporatist bargaining between labor unions and employers, in which wage
moderation is traded for a more egalitarian wage structure and generous
welfare arrangements.97 Their low levels of inequality may therefore be only
indirectly related to their current account surpluses, but either way, the
populations of the surplus countries were far less exposed to the ravages of
the crisis, and have had correspondingly lower levels of political instability,
as the next chapter will show.
The historically large trade imbalances between surplus and deficit coun-
tries before the crisis meant that the former were building up financial claims
on the latter: put crudely, surplus countries were also creditors, lending def-
icit countries the money to buy their exports.98 This meant that the post-
crisis adjustment was asymmetric: deeply painful for debtor countries such
as those in southern Europe and the Anglosphere, more manageable for the
export powerhouses of northern Europe. To balance their current accounts,
the debtor countries needed to sharply reduce their consumption, cut real
wages, and expand their exports to replace the lost demand. However, cred-
itor countries, most of which also underwent significant banking crises, were
retrenching at the same time, meaning that the debtor nations had little
hope of achieving a balance without a large reduction in internal demand.
The channel through which this reduction took place was a sharp tightening
of credit conditions in the private sector and fiscal retrenchment (tax rises and
spending cuts) in the public sector: in other words, austerity.
Creditor countries were also affected by the crisis, since the global down-
turn that followed the financial crisis undermined their export markets, and
governments’ reluctance to substitute external demand with internal de-
mand by fiscal stimulus, in case it resulted in higher inflation affecting com-
petitiveness, also implied a degree of austerity, though far less acute. Even in
the relatively stable economies such as Germany, the Netherlands, or Austria,
wage growth was anemic in the aftermath of the crisis and fiscal policy, after
the initial stimulus in 2009–2010, was neutral or even contractionary, doing
little or nothing to expand demand. Moreover, despite their overall creditor
status, these countries were exposed to the debt crisis in two ways. First,
banks that had invested heavily in risky assets, often in debtor countries,
found themselves in deep trouble, some of them requiring direct government
assistance. Second, the creditor countries of the European Union were first

in line to finance rescue packages for the debtor countries on the Eurozone
periphery. Although the costs of these bailouts in concrete terms had little
incidence on government budgets, they were deeply unpopular among voters
who themselves were also facing the consequences of the downturn, albeit
less severely.
These troubles were real enough to have political consequences, but they
paled in comparison to those suffered by debtor countries. Countries that were
reliant on flows of capital from outside sustaining domestic consumption—
such as Greece, Spain, Ireland, and the United Kingdom—had to drasti-
cally, and suddenly, rein in their spending. The loss of internal demand was
especially hard to cope with because the same thing was happening to other
countries, so there were no growing neighboring markets that could make up
for it. Exporting one’s way out of the slump was nearly impossible for these
countries. Germany also suffered a short-term hit with the slump in demand
from southern Europe, but its export-oriented economic model enabled it to
grow in other markets, such as Asia, benefiting from the weakening of the
euro currency. The United States was also hit by the crisis, but its status as
the issuer of the global reserve currency gave it much greater flexibility to
cope with the squeeze in demand. The weakness of these countries’ welfare
institutions ensured that large shares of the population suffered brutal eco-
nomic and social consequences.
Conclusion
To recapitulate, the market liberal orthodoxy of the late twentieth century
placed Western publics under a level of stress not seen since the 1930s. They
had been subjected first to increasing inequality and insecurity, as labor
market protections and welfare provisions were rolled back, while wealthy
elites took most of the gains from economic growth. Then the market vol-
atility generated by a separate plank of the neoliberal reform agenda pro-
voked a global crisis, which cost millions of citizens their jobs and wrecked
the household balance sheets of many more. Governments bailed out finan-
cial institutions to the disproportionate advantage of the wealthiest groups,
while imposing harsh austerity on everyone else. Meanwhile, the promise that
“tightening belts” would lead to a swift recovery proved to be entirely false,
as the majority of citizens took years to return to their pre-crisis incomes, and
in many cases were made permanently poorer.
One would expect this succession of events to provoke both a great deal of
anger toward the politicians and financiers who had provoked the crisis and

a clamor for a reversal of the policy measures that had caused the mess. The
anger was real enough, as the heavy defeats of governing parties in post-crisis
elections across the Western democracies attest. But policy change was far
more muted than would have been predicted. Financial regulation was tight-
ened, but without the radical measures, such as breaking up “too big to fail”
institutions or tighter government controls on credit, that many demanded.99
The bonus culture among top bankers persisted. Monetary policy remained
loose, which relieved the pressure on households to some degree, but meas-
ures to expand the money supply focused on backstopping asset markets
and easing pressures on bank balance sheets, rather than helping financially
stressed households. The panic about government debt, led by controver-
sial neoliberal economists such as Alberto Alesina,100 Carmen Reinhart, and
Kenneth Rogoff,101 led to a doubling down on welfare cuts. Finally, the dom-
inant response to post-crisis unemployment was further labor market deregu-
lation, rather than government investment or other forms of fiscal stimulus.102
How could the spectacular unraveling of a set of contested political and
economic ideas, which caused damage on a global scale, lead to so little policy
change? The market liberal consensus that underpinned policy across the
Western democracies after the 1970s proved surprisingly resilient.103 There
was no doubting that Western publics were anything but relaxed about
the crisis and its consequences. But politics was slow to turn. There was no
shortage of intellectual armory to bring to the problem, as the crisis sparked
a lively debate in economics, with leading figures in the field challenging
the neoliberal consensus and suggesting a range of possible reforms, from a
return to expansionary fiscal policy, innovative ideas in monetary policy, and
arguments for an increased role for public investment. But politicians in the
main political parties were strangely reluctant to pick up on the opportuni-
ties to shift the policy agenda and respond to the demand for change. Their
failure to react left the field open to enterprising anti-system politicians ca-
pable of cashing in on popular anger and resentment.

CHAPTER 2 Explaining the Rise of
Anti-System Parties: Inequality,
Debt, and the Crisis
T he history of capitalism and democracy tells us we should have

expected years of rising inequality and a massive financial crisis to pro-
duce a political backlash. The tendency of financial crises to produce po-
litical upheaval, and often authoritarian reactions, is well documented. Yet
many observers have insisted that spectacular political shocks such as Trump,
Brexit, and the anti-system takeovers in the southern Eurozone had little to
with economics.1 Instead, it is argued, immigration and social change are to
blame for pushing culturally conservative voters toward right-wing author-
itarianism. The weakness of this explanation is immediately apparent: not
only have immigration and shifting cultural norms been a constant feature
of Western societies for decades, but in several countries political instability
has taken the form of left-wing movements that celebrate cultural change
and even demand solidarity with refugees. A theory that explains only some
anti-system movements is not a robust theory.
However, it is also true that the relationship between the economic shock
and its political consequences is often indirect and hard to pin down. Anti-
system parties are not necessarily supported by the most economically vul-
nerable citizens, and are present in economically successful countries as well
as those most affected by the crisis. What we need therefore is a theory of
anti-system politics that puts economic change at center stage, and that can
explain how the extent and nature of anti-system politics varies over time and
across countries. This chapter presents such a framework, and then presents
some evidence of how exposure to inequality and financial insecurity predicts
anti-system politics better than cultural changes of patterns of migration.
This framework then informs the case studies in the rest of the book.
What Is Anti-System Politics?

Anti-system political movements are defined by the system they oppose: they
share a rejection of “the prevailing political or social order,”2 and the values
it represents. But anti-system parties do far more than agitate to overturn
existing elites: they also express uncompromising opposition to the domi-
nant form of political and economic organization, which for the current pe-
riod means support for or acceptance of globalization and the institutional
architecture of international cooperation that underpins it, a broadly pro-
market position on economic and social policy, and support for the liberal
order and currently existing national states. Anti-system politics also gen-
erally combines a blanket condemnation of the existing political class or es-
tablishment with demands for a greater degree of voter input into political
decision-making.3
This oppositional attitude has led to the wide and sometimes indiscrimi-
nate use of the term “populism” to describe anti-system politicians. Certainly
populism is a workable concept for describing the highly charged rhetoric,
anti-elitism, and simplification of complex political problems characteristic
of politicians like Trump, Beppe Grillo, or Nigel Farage. But there are also
ways of opposing the existing political and economic order that do not reject
basic liberal democratic values such as pluralism, the rule of law, and evidence-
based policymaking. Aside from the definitional disputes surrounding the
term and its highly charged normative implications, this book avoids relying
on the concept of populism because it only very partially captures the nature
of anti-system politics while at the same time attributing the same negative
connotations to widely differing political movements.
In the public debate and even to some extent in academia, populism is
often presented as antithetical to liberalism.4 Unfortunately, liberalism is
an equally misused concept, deployed variously to describe quite different
and often incompatible political values. In the United States, a “liberal” is
what in Europe would be described as a social democrat, favoring govern-
ment intervention to secure economic fairness and equal rights for victims
of discrimination. In continental Europe, “liberalism” means the exact
Explaining the Rise of Anti-System Parties 51

opposite—a preference for limited government and free markets, giving
primacy to individual rights, and especially property rights. It is there-
fore useful to distinguish between these two understandings of liberalism,
which become important in defining the differences between anti-system
political movements. Social liberalism emphasizes equality of rights and
freedom from oppression on the grounds of gender, ethnicity, religion, or
sexuality: positions that are often described, mostly pejoratively, as “identity
politics.” Economic liberalism emphasizes the protection of individual rights
to interact in markets with as little government regulation and taxation as
possible.
These two dimensions of liberalism are often conflated, with a generic
populist wave pitted against the “liberal elite.” But anti-system movements
are not defined by their opposition to liberalism in the broadest sense, but
by their rejection of “neoliberal democracy”: the closed version of democ-
racy that places the governance of the market outside the purview of rep-
resentative politics. Their proposed alternatives, however, are quite varied.
The anti-system Left rejects economic liberalism in favor of greater govern-
ment intervention in the economy, but embraces social liberalism. The anti-
system Right rejects some aspects of economic liberalism—in particular
the global reach of markets and the permeability of national boundaries—
but mostly favors a capitalist economy, while vehemently rejecting social
liberalism. Both these forms of anti-system politics share a clear rejection
of the existing order and the basic values underpinning it, and demand
better representation for ideas that have not been adequately represented
by the mainstream elites. But they have quite different diagnoses of the
reasons for the failure of the existing order, and different prescriptions for
overcoming it.
This approach to defining anti-system parties allows for a more precise
definition than loose references to “populism.” First, it does not require a
party to be located necessarily in opposition. Some parties that we could
consider to be anti-system, such as far-right parties in Denmark or Austria,
or indeed radical left or green parties in some northern European countries,
have participated in government coalitions, which is inconsistent with the
anti-establishment logic of anti-system politics. Here I count parties as anti-
system when their opposition to immigration, trade openness or the market
economy in general, and current practices of democratic governance puts
them outside the mainstream pro-market and pro-globalization positions as-
sociated with the mainstream parties over recent decades. This definition
includes right-wing populists alongside left anti-capitalist movements and
secessionist parties.
52 P A R T ONE: CAPITALISM, DEMOCRACY AND CRISIS

Second, this allows us to exclude from the analysis new parties that express
opposition to the “establishment” and the entrenched governing elites, while
remaining inside the mainstream consensus on economic policy. For example,
Macron’s “En Marche” movement and Ciudadanos in Spain are completely
new political movements that have mobilized around the demand for change
and in particular for turnover of governing elites, but whose discourse and
policy proposals cannot be regarded as especially threatening to neoliberal
democracy. These parties are best defined as challenger5 or “outsider” parties
rather than anti-system parties in that they challenge established elites, but
not established democratic practices or the liberal market economy.
The positioning of anti-system parties on the economic dimension is cen-
tral to our argument. Although these parties can adopt markedly different
positions on the values dimension, on the economic dimension they almost
universally favor positions to the left of the mainstream parties whose voters
they are competing for. As left-wing anti-system parties push the bound-
aries of economic discourse to the left, right-wing anti-system parties push
social and cultural values to the right of the existing consensus. This di-
rectly compromises the attempts by mainstream parties to control the terms
of political debate. By advocating closing borders to migratory movements
(which are mostly driven by economic motives) and demanding looser mon-
etary and fiscal policies, these parties have extended the range of political
options available to voters. In a period of deep economic crisis, alternative
political forces have exploited voter discontent to break the neoliberal cartel.
Although these positions appear beyond the pale to many supporters of ex-
isting arrangements, it should be noted that border restrictions and political
control of monetary and fiscal policies were well within the range of accept-
able policies during the “golden age” era. In many respects the current crisis
of representation is little more than a return to a conflictual and competitive
political environment.
Figure 2.1 illustrates these patterns of anti-system politics and their rela-
tion to the established party system, drawing on a two-dimensional mapping
of political positions commonly used in political science.6 The horizontal
dimension charts positions on the standard socioeconomic left-right scale,
which ranges from a more “statist” position on the economy, favoring more
government regulation and redistribution, to a more “liberal” one empha-
sizing less regulated markets, lower taxes, and less government spending.
The vertical dimension charts parties’ positions on the social-cultural di-
mension, depending on whether they emphasize conservative and author-
itarian social values or more liberal and progressive values.7 On the right,
mainstream conservative parties and Christian democrats mostly adopt more

Economic Dimension
← More State vs. More Market →
← More Liberal vs. More Conservative →

Conservatives
Social-Cultural Dimension
Christian
Democrats
Social Liberals
Democrats
Figure 2.1 Dimensions of Competition in the Established Party System
pro-market positions on the economic dimension, and more socially conser-

vative positions on the social-cultural dimension. Liberal parties are both
economically and socially liberal. On the left, social democrats, at least in
the recent period, have moved toward rather centrist positions on the eco-
nomic dimension, combining support for, or at least acquiescence in, liberal
markets, but with some compensatory redistribution. They are increasingly
associated with very liberal positions on the social-cultural dimension.
These four party families have dominated the party systems of the
Western democracies since World War II.8 On the whole, the positions they
have adopted reflect a prevailing centrist consensus, consisting of economic
liberalism with some redistribution, combined with positions on the social-
cultural scale that range from very liberal to moderately conservative. A large
open space can be seen in the top left-hand corner combining social-cultural
conservativism and statist economic positions. The increasingly centrist ori-
entation of social democratic parties also left a growing space to their left on
the economic dimension. In a context of economic difficulty, these two spaces
presented the opportunity for anti-system parties to win support by offering
a more economically interventionist approach.
This schematic representation of the emerging patterns of party compe-
tition around the turn of the century is supported by the available data on
party positions. Political scientists have used two distinct ways of systemati-
cally comparing political positioning: expert surveys9 and content analysis of
political documents such as electoral programs.10 Figure 2.2 uses the latter,
since expert survey data only covers Europe. The parties are from twenty
countries in western Europe, North America, Australasia, and East Asia that
have been democracies since at least the 1970s, and the positions are taken

Established Parties Anti-System Parties
60 60
40 40
Social-Cultural Left-Right
Social-Cultural Left-Right
20 20
0 0
–20 –20
–40 –40
–60 –60
–60 –40 –20 0 20 40 60 –60 –40 –20 0 20 40 60
Economic Left-Right Economic Left-Right
Figure 2.2 Party Positions on Sociocultural and Economic Dimensions,

Established Parties, and Anti-System Parties
from the most recent party manifestos available, between 2010 and 2017.
Central and eastern European democracies are excluded from the analysis,
in part because their party systems have not been sufficiently stable to dis-
tinguish established parties from anti-system parties. The left-hand chart
plots the positions of the established parties on both the economic and social-
cultural scales, while the right-hand chart plots the positions of the anti-
system parties.
Established parties here are those that are affiliated with the main party
Internationals11 or European Parliament Party Groups (for European Union
member states) representing the liberal, conservative, Christian democrat,
and socialist party families.12 Some new political parties, such as Macron’s
En Marche in France and Ciudadanos in Spain, are therefore coded as es-
tablished, since their centrist positions on most issues mean they cannot be
realistically described as anti-system. Mainstream conservative parties in
the Euroskeptic Alliance of Conservatives and Reformists in Europe group,
like the UK Conservatives, are coded as established parties, the others, such
as the Danish People’s Party, are clearly located on the anti-system Right.
New parties that have been excluded from government office are coded as
anti-system, as are groups with clear anti-system discourses but that have
participated in national government, such as The Finns and the Austrian
Freedom Party (FPO). Most Green parties in Europe—those belonging to the
European Green Party group—are also coded as part of the established party
system, given their long experience of working with the other mainstream

party families in national parliaments and in the European institutions.
Ethnoregionalist parties in the European Free Alliance group that do not ad-
vocate secessionism are also coded as “established.”13
The right-hand chart plots the positions of the parties coded as “anti-
system” on the same two dimensions. These are parties outside the estab-
lished Internationals and European party groups, which with few exceptions
are internationally affiliated with organizations on the anti-system Right,14
or on the anti-system Left.15 Ethnoregionalist parties seeking secession are
also coded as anti-system, as is the Italian Five Stars Movement (M5S), which
is ideologically ambiguous, but unequivocally oriented toward fundamental
political system change. Table 2.1 lists the anti-system parties in the dataset
used for Figure 2.2. Note that anti-system forces that have taken over existing
parties—as has occurred in the established parties of the United Kingdom
and the United States—are not included in this list.
The established parties in the left-hand chart are mostly bunched around
a position just to the left of center on both economic and social-cultural
issues—outliers are mostly very small parties of little relevance to government
formation. The main axis of competition runs diagonally from the moderate
Left on both dimensions to a rather centrist position. A large area of this map
of possible political positions remains essentially unoccupied, leaving voters
with more radical attitudes unrepresented. There are two quadrants that are
particularly neglected: the comprehensively liberal position of free markets
and progressive values on the bottom right, and the combination of state in-
terventionism in the economy with cultural authoritarianism on the top left.
The right-hand chart shows that anti-system parties have tended to be
located almost exclusively on the center and left of the economy dimen-
sion, but represent a wide range of positions on the social-cultural dimen-
sion. With the addition of anti-system parties, the economic dimension is
extended out leftward, while the social-cultural dimension is extended out
rightward. These measures are inevitably imprecise and fail to capture the
nuances of party positions, and also leave out cases of anti-system factions in-
side established party organizations, such as the Tea Party or Trump strand of
the Republican party, the socialist Left wing of the Democratic Party led by
Bernie Sanders, and the Labour Party under Jeremy Corbyn. But these data
are suggestive of broad patterns of party competition. The established party
system left gaps for enterprising anti-system politicians to exploit on the left
of the economic policy debate and on the right of the social-cultural debate,
since these were the areas that established parties were failing to represent
adequately.

Table 2.1 Anti-System Parties in 20 Democracies
Left and Ethnoregionalist Right
Australia One Nation

Austria Freiheitliche Partei Österreichs
Bündnis Zukunft Österreich
Belgium Parti du Travail de Belgique/ Front National; Vlaams Belang
Partij van de Arbeid van
België
Canada Bloc Québecois Reform Party
Denmark Socialistisk Folkeparti Dansk Folkeparti
Enhedslisten—De
Rød-Grønne
Finland Vasemmistoliitto Perussuomalaiset
France France Insoumise Front National
Parti Communiste Français
Front de Gauche
Germany Die Linke Alternative für Deutschland
Greece Syriza Chrysí Avgí
Kommounistikó Kómma LAOS
Elládas Anexartitoi Ellines
Ireland Sinn Fein
People Before Profit
Italy Sinistra e Liberta’ Lega
Liberi e Uguali Fratelli d’Italia
Movimento 5 Stelle
Japan Japan Communist Party
Netherlands Socialistische Partij Partij voor de Vrijheid
New Zealand Alliance New Zealand First
Norway Rødt Fremskrittspartiet
Portugal Bloco de Esquerda
Coligação Democrática
Unitária
(Continued)

Table 2.1 Continued
Left and Ethnoregionalist Right
Spain Podemos
Izquierda Unida
Esquerra Republicana de
Catalunya
Bildu
Switzerland Schweizerische Volkspartei
Lega di Ticino
Mouvement Citoyens Genevois
Sweden Vänsterpartiet Sverigedemokraterna
UK Sinn Fein United Kingdom
Scottish National Party Independence Party
Plaid Cymru Democratic Unionist Party
Anti-System Parties and the Gap in the

Electoral Market
Studies of voter attitudes confirm that anti-system parties have tapped into
unmet demand in the electorate. Socially conservative attitudes— such
as opposition to same-sex marriage or drug legalization and hostility to
immigration—are strongly held by large sectors of society in most Western
countries, particularly among older generations.16 Yet established political
parties, even those on the mainstream Right, have tended to acquiesce in
the liberalizing reforms promoted by centrist or center-left parties, and in
some cases conservative parties even proposed such reforms themselves (for
example, the UK Conservatives under David Cameron brought in same-
sex marriage in 2013 as part of their coalition agreement with the Liberal
Democrats). The growing size of the more socially and culturally liberal
shares of the electorate17 have clearly pushed the balance of power in the
party system in a more liberal direction, which opens up space for a “cultural
backlash” on the right.18 This creates the potential for politics to revolve
around “culture wars,” as the more liberal younger generations push for fur-
ther reforms and older more conservative voters fight back.19
But there has been also been a serious decline in political competition
on the economic dimension, reflected in the clustering of the established
party system around centrist positions in Figure 2.2. The previous chapter

described how the established parties moved toward an increasingly centrist
position on economic issues, combining less regulated markets, a less active
role for government in managing the macroeconomy, and the maintenance,
rather than the expansion, of existing social rights. This was particularly the
case for social democratic parties, whose historic commitment to Keynesian
macroeconomic interventionism and extensive welfare provision were effec-
tively abandoned between the 1980s and the early 1990s. This coincided
with a shift in the support base of center-left parties away from the tradi-
tional blue-collar working class, and toward a more heterogeneous coalition
in which the educated middle classes predominate.20
The relationship between this neoliberal economic policy consensus and
voter preferences in Western countries is unclear. On the one hand, some
studies have shown that the average voter position has shifted to the left
during the neoliberal period,21 while others show that voters have on average
moved to the right,22 or that voter preferences on the economic dimension
have converged around a broadly centrist position.23 But on specific policy
questions there is strong evidence that voters prefer greater government ac-
tion to combat economic problems such as unemployment and inequality.
In the UK, survey data shows that two-thirds of voters believe inequality is
too high and that governments should act to redistribute from rich to poor,
a number that has barely shifted for thirty years.24 In the United States, sup-
port for progressive taxation to reduce inequality is also surprisingly high,25
while, more predictably, a majority of French respondents expected govern-
ment to act to reduce inequality.26 Yet policy over recent decades has gener-
ally moved in a very different direction: the established parties converged on
a neoliberal model of lower welfare spending, limited labor rights, and less
progressive taxation, which has brought higher inequality.
As a result, voter preferences had difficulty filtering through into policy
measures, as the public were only allowed a limited range of options to choose
from at election time, This was particularly acute in the countries where the
neoliberal strategy was executed most thoroughly, the United Kingdom and
the United States. In the United Kingdom, Labour’s abandonment of gov-
ernment interventionism and overt redistribution coincided with a dramatic
drop in voter turnout, which Evans and Tilley link to Labour’s neglect of
working-class interests from the mid-1990s on.27 In the United States, a
similar exclusion of the interests of lower-income voters from effective dem-
ocratic representation has been documented by numerous researchers.28 This
foreshortening of democratic choice, especially marked in the two-party pol-
itics of Britain and the United States, provided an opening for politicians
offering popular policies rejected by the established parties.

This is all consistent with an explanation of anti-system politics as a
predictable response to the failure of the established party systems in the
rich democracies to offer the kinds of policies that voters were actually de-
manding.29 The steady erosion of support for the governing “cartel” of parties
was visible well before the financial crisis, and there is also strong evidence
that parties were failing to represent and implement mass preferences, par-
ticularly in regard to economic policies. This presented a gap in the electoral
market, but to fill this gap successfully, anti-system forces had to offer what
the established parties could not: an alternative to neoliberalism.
Anti-system parties have in common a rejection of the constraints imposed
by the neoliberal model of democratic governance, but the anti-system Left
and the anti-system Right draw on very different sources of ideological in-
spiration. The anti-system Left draws on what Ronald Inglehart describes
as “postmaterialism” and others have described as liberal or left-libertarian
social-cultural values. The anti-system Right draws on conservative or even
authoritarian social-cultural values. The high degree of political polarization
around these alternative visions of society that has emerged in some Western
countries gives some plausibility to Norris and Inglehart’s claim that anti-
system politics is primarily a conflict over social-cultural values, and that the
different sides of this conflict feed off each other. This “culture wars” thesis is
reinforced by the high salience in public debate of some of the key issues that
mark these dividing lines, most notably immigration and the status of ethnic
and religious minorities in Western societies.
As the rest of this chapter will show, the patterns of support for anti-
system parties in Western democracies suggest otherwise. In fact, divisions
over economics are at the heart of the surge of anti-system parties. One of the
reasons this is so difficult to observe clearly is that our instinctive resort to bi-
nary divisions forces the anti-system parties into a box labeled “populist,” set
against the mainstream or establishment forces. But anti-system parties are
just as opposed to each other as they are to the establishment. The “system”
is being attacked on both flanks, but anti-system parties differ fundamentally
in what they propose replacing it with. Contemporary politics in Western
democracies pits three broad ideologies against each other, in a way deeply
reminiscent of the interwar period. The primacy of liberalism in the early
twenty-first-century political economy, just like in the 1920s and 1930s,
is contested by ideologies that purport to bring the market economy under
control in order to safeguard key political and social values. Those ideologies
are nationalism (or sometimes fascism), on the one hand, and socialism or
social democracy, on the other.30 The inspiration for the anti-system Right is
the former and for the anti-system Left the latter.

Markets against the People: Anti-System Critiques
of Neoliberalism
The social authoritarianism and xenophobia associated with far-right polit-
ical movements is a familiar enough story. Donald Trump’s appeal to white
America, his demonization of illegal immigrants and Muslims, his misogyny,
and his often violent rhetoric sits comfortably alongside his relaxed attitude
toward white supremacists in America and his open support for far-right
politicians elsewhere, such as Benjamin Netanyahu in Israel or Jair Bolsonaro
in Brazil. Similar traits can be observed across the spectrum of the anti-
system Right in Europe. Lurid warnings of immigrants, especially Muslims,
“invading” and “taking over” the continent, and appeals to harsh repression
of illegal immigration and the implementation of tight border controls are
a staple of the Far Right. Demands for a restoration of conservative social
values on sexuality and the family are also typical. These positions are so at
odds with the dominant values of mainstream politics, and evoke such hor-
rific memories of fascist experiences in the past, that relatively little attention
is paid to what the Far Right says about economics.
The anti-system Right’s hostility to liberalism goes well beyond so-
cial and cultural issues and extends to deep suspicion of the kind of market
system that has resulted from the neoliberal project. This suspicion stems
from discomfort with the ways in which a market system based on individual
rights can trump collective identities and values, such as community and
nationhood, loyalty, and hierarchy, that are dear to the anti-system Right. It
is not so much the inequality produced by the market system that is seen as
problematic, but the way in which it subverts the kind of inequality inherent
in some preferred system of social stratification.31 As a result, the anti-system
Right frequently embraces mercantilist and protectionist policies, because
the market cannot be allowed to undermine its vision of the collective na-
tional interest. Immigration controls are not only a way of providing cultural
protection and safeguarding its particular view of national values but also a
way of ensuring preference for citizens over foreigners in access to the labor
market and the welfare state.
The anti-system Right often selectively subscribes to aspects of the neo-
liberal program, albeit constrained within the nation-state framework. The
first wave of right-wing anti-system parties, which emerged in France, Italy,
Austria, Switzerland, Denmark, and Norway in the late 1980s and early
1990s, adopted relatively liberal economic policy positions, protesting high
taxes and government regulation.32 These positions appealed to a social base
that included large numbers of petty bourgeois voters, such as shopkeepers

and the self-employed, a historic staple of the Far Right.33 As the process of
globalization evolved and neoliberalism became entrenched, large numbers
of voters with right-wing social-cultural predispositions began to face high
levels of economic insecurity. Small business owners faced growing threats
from the dismantling of regulatory protections, which exposed them to com-
petition either from low-cost production overseas or from large domestic
corporations. Blue-collar workers in general were threatened by increasing
trade openness, which exposed them to fierce competition.34
These developments provided an opening for an anti-system Right with
an explicitly economically protectionist orientation.35 The Northern League
in Italy was an early mover on this, advocating tariff barriers to protect
northern Italian manufacturing from Chinese competition, and moving to-
ward a Euroskeptic position at a time when all other Italian parties were
enthusiastic supporters of further European integration. The Austrian
Freedom Party under Jorg Haider and the Swiss People’s Party (SVP) also
adopted strongly Euroskeptic positions, alongside their anti- immigrant
stance. Although the anti-system Right varies in its position on economic
policy across Europe, often obfuscating between neoliberal and protectionist
positions, hostility to the process of European integration and to economic
openness more broadly has been a common feature.36 In the United States,
Trump’s campaign message was openly protectionist, promising a trade war
with China and a renegotiation of the NAFTA trade deal with Canada and
Mexico. Other movements on the anti-system Right, such as the Dutch
Freedom Party (PVV) and the Swiss SVP, have been less opposed to free trade
per se, while right-wing supporters of Brexit in the United Kingdom have
combined hostility to immigration with a quixotic appeal to global free trade
outside the European Union.
The increasing pressures on the welfare state, which have become particu-
larly acute since the financial crisis, have opened up the space for an appeal to
“welfare chauvinism”: the restriction of welfare rights to “deserving” citizens
and the exclusion of migrants from social protection.37 The Brexit campaign
made great play of the purported pressures on the National Health Service
and other areas of social provision due to “uncontrolled immigration” from
other European Union member states. The Sweden Democrats (SD), who
made an electoral breakthrough in 2018, not only emphasized the supposed
security and cultural threat posed by the Swedish government’s decision to
welcome large numbers of refugees, but also highlighted the purported costs
for Sweden’s generous welfare state. The SD went as far as demanding “mul-
ticultural financial statements” for local government services to distinguish
between money spent on Swedes and that spent on migrants, in order to

prioritize the former.38 Trump’s mantra of “America First” has been copied
wholesale by European anti-system politicians, such as the leader of Italy’s
League, Matteo Salvini, who called for Italian citizens to have preferential
access to education and welfare services over migrants.39
The anti-system Right also exploited popular disgust at the politics
of the post-crash financial bailouts. Super-rich bankers drawing outsized
bonuses after taxpayer-funded bailouts were an easy target for anti-system
politicians, and the parties of the anti-system Right were not slow to
join the chorus of condemnation of the financial system. The Tea Party
movement in the United States, the precursor to Trump’s 2016 campaign,
mobilized directly around resentment over the bailouts and opposition
to plans by the Obama administration to offer financial assistance to in-
debted mortgage-holders and other needy groups.40 Trump himself railed
against Wall Street in his presidential campaign and promised to reform
tax loopholes that allowed hedge funds to pay lower taxes than most
Americans.41 Salvini was similarly critical of financial bailouts in Italy,
frequently pointing to connections between the center-left Democratic
Party and a failing Tuscan bank.42 And the anti-system Right in the cred-
itor countries of continental Europe were visceral in their opposition to
financial bailouts of weaker debtor states of the South, and indeed of their
own banking systems.
The anti-system Right’s critical attitude toward the world of finance
was to be expected given the unpopularity of the banking sector after
the crisis, but it also connects with a deeper tradition in the Far Right
of hostility to the world of money, often tinged with anti-Semitism. This
found its clearest expression in the far-right movements of central and
eastern Europe, where parties such as Viktor Orban’s Fidesz and Jaroslaw
Kaczyński’s Law and Justice party (PiS) established “illiberal” regimes
openly critical of the global neoliberal order. Fidesz saw “globalization, ne-
oliberalism, consumerism, privatization to foreign investors and cosmopol-
itanism . . . aimed at establishing the world dominance of certain economic
and political powers.”43 The success of this discourse can be traced back to
the dire consequences of Hungary’s experience of financial liberalization,
which allowed an accumulation of unsustainable external debt before the
2008 crisis, leading to an IMF bailout. The Orban government’s nation-
alist response was to harshly tax foreign banks and companies, nationalize
pensions, and force banks into renegotiating the terms of household debts.44
In Poland, the financial crisis was less severe, but the PiS also tempered past
liberalization measures with an expansion of welfare support for families and
government interventionism in markets.45

This kind of market skepticism was more established in the central and
eastern European Right than in western Europe,46 but it illustrates the oppor-
tunities presented to the anti-system Right by increased economic insecurity
and inequality. While accepting the basic principles of a market economy, es-
pecially private property and a certain work ethic, the anti-system Right can
simultaneously advocate government interventions that protect the domestic
market from foreign competition (usually described as unfair or “rigged” in
some way), a greedy or corrupt financial system, and uncontrolled immi-
gration. While neoliberalism establishes the principle that prices allocate
resources and discrimination against goods, services, and indeed people on
the basis of nationality should be suppressed, the anti-system Right instead
insists that the nation comes first, and that markets should be organized
around that national favoritism. They therefore attack institutions of eco-
nomic integration that prevent national governments from limiting the
freedom of workers to cross borders or companies to relocate, and advocate
a return to national sovereignty that would allow governments to properly
defend the interests of their people.
Alongside the right-wing nationalist appeal, present in almost all Western
countries, substate nationalist and secessionist movements also prospered in
multinational states such as Canada, the United Kingdom, Belgium, Italy,
and Spain. These movements mostly shun the anti-immigration and anti-
trade discourses of the right-wing nationalists, and appeal to a less socially
and culturally authoritarian electorate. Usually located in small and relatively
prosperous regions such as Flanders, Catalonia, the Basque Country, and
Scotland, these parties have less reason to embrace protectionist discourses,
and instead advocate secession from their host states while remaining in-
side the European Union. They share with the right-wing nationalists some
resentment over burden-sharing in welfare arrangements, but they mostly
adopt progressive discourses around social policy, and mobilize a younger and
more educated electorate, so, with the exception of Italy’s Northern League,
they have much in common with the anti-system Left.
The anti-system Left opposes contemporary neoliberalism with a much
more consistent critique of the idea of the market economy and a commit-
ment to greater equality.47 Markets are seen as a source of inequality and
injustice, curbing individual freedom rather than enhancing it. While the
anti-system Right mostly accepts the market economy, while rejecting its
globalized version, the anti-system Left opposes globalization on the grounds
that it entrenches the injustices of the market system, while adopting a tol-
erant line on immigration and refugees. Unlike the nationalist Right, these
parties mostly embrace the cultural diversity brought by migration and

generally refuse to blame stagnant living standards and pressures on the wel-
fare state on migrants. Instead, the fault lies with capitalist exploitation and
the post-crisis austerity policies, which have impoverished the weakest. The
answer is to enhance the role of government in the economy, reversing wel-
fare cuts and labor market deregulation. The wealthy elite—the so-called
one percent—and corporations are often blamed for the crisis, austerity, and
poverty, while the political elite—often lambasted as a “caste” of privileged
elites, is blamed for minding its own interests rather than those of the people.
Several anti-system Left movements acknowledge a socialist or com-
munist heritage. Syriza in Greece identifies with “twenty-first century so-
cialism.”48 The German left party Die Linke has its origins in the PDS, the
Party of Democratic Socialism, the successor to the East German Communist
Party.49 The main coalition of the French anti-system Left, France Insoumise,
consists of a splinter group from the Socialist Party called Socialist Left, al-
lied with the French Communist Party and other radical left-wing groups,50
The Bloco Esquerda (Left Bloc) in Portugal has roots in parties that claim a
socialist heritage, while the other main force on the Portuguese anti-system
Left, the Unitary Democratic Coalition (CDU), is led by the Portuguese
Communist Party. Bernie Sanders in the United States describes himself as
an “independent socialist,” while Jeremy Corbyn in the United Kingdom
also identifies with the socialist tradition. These parties’ long-standing iden-
tification with the Marxist or socialist Left places them in an unambiguously
antagonistic position toward neoliberalism and toward the market system in
general. The centrist drift of most established social democratic parties gen-
erated a large pool of dissatisfied voters on the left who could be attracted by
this kind of message.
The other main strand of the anti-system Left hails from a “left liber-
tarian” or “postmaterialist” tradition. Left libertarianism, like socialism, is
hostile to the market system because of its excessive materialism and dis-
regard for social ties and for the environment, but it parts company with
socialism in its distrust of “the centralized bureaucratic welfare state and
the hegemony of professional expertise in public policy and society,”51 Left
libertarians have often allied with other radical left groups, so they can be
found in many of the anti-system Left coalitions mentioned in the previous
paragraph. In some cases, they have formed parties that retain a distinc-
tive left-libertarian identity, such as the parties of the Nordic Green Left in
Scandinavia, and Green parties in countries such as Germany, Austria, and
the Netherlands. Green parties have in many cases entered the mainstream,
becoming reliable coalition partners for the established parties, such as in
Germany, where they governed with the Social Democrats under a centrist

leader, Schroeder. Elsewhere they have remained in an anti-system position,
often with limited vote shares.
The anti-system Left also contains parties that are less easy to classify.
Podemos in Spain is generally perceived as aligned with the Left, but shuns
too clear a formal identification with the socialist tradition (partly because it
competes with the Spanish Socialist Party) and seeks to appeal beyond ide-
ological boundaries, while at the same time invoking classic socialist aims
such as redistribution of income and wealth, the regulation of finance, and
the broad reconfiguration of political power.52 Another prominent case that
is much harder to classify is the M5S in Italy. Some scholars have classi-
fied it alongside Podemos as a new kind of “technopopulist” party, which
avoids any clear ideological identification in favor of supposedly “practical”
and “technical” solutions to political problems.53 Unlike Podemos, how-
ever, M5S avoids any reference to socialism in its discourse, and its only co-
herent ideological resemblance is with postmaterialist and environmentalist
movements, although these do not constitute the movement’s dominant
identity. It is therefore only tentatively defined as an anti-system Left party.
Anti-system Left parties have varied attitudes toward globalization and
European integration. Most have strongly opposed post-crisis austerity meas-
ures, and in Eurozone countries that faced externally imposed austerity as
part of their financial bailouts, this was their central political message, and
in the case of Podemos, the main reason for the party’s creation. However,
opposition to austerity did not necessarily follow a Euroskeptic logic: while
Podemos and M5S at various times hinted at a referendum on euro member-
ship, Syriza’s position was to demand greater solidarity from creditor coun-
tries in the Eurozone rather than to seriously contemplate “Grexit.” Some
veteran politicians on the anti-system Left, such as Jean-Luc Mélenchon in
France and Jeremy Corbyn in the United Kingdom, expressed Euroskeptic
views on the grounds that the European Union institutionalizes a neolib-
eral idea of the market economy. Others, however, see the European Union
as a potential arena for transnational cooperation to bring global capitalism
under the people’s control.54 The anti-system Left has rarely expressed hos-
tility to migration, and anti-racism is a core part of most of these parties’
political identities.
In short, anti-system politics has taken a critical stance toward the neolib-
eral economy and the way in which globalization and European integration
have affected economic and social well-being. Anti-system parties are similar
in their demand for some form of political intervention to cushion the vaga-
ries of global markets, with an emphasis on capital flows, foreign investment,
and monetary hawkishness on the left, and a focus on immigration, and to

Economic Dimension
← More State vs. More Market →
← More Liberal vs. More Conservative →

Anti-System
Social-Cultural Dimension
Right
Secession- ists
Anti-System
Left
Figure 2.3 Dimensions of Anti-System Politics
some extent trade, on the right. The Left in the debtor countries advocates
burden-sharing both within and across societies, while the Right in cred-
itor countries is instinctively hostile to bailouts of other nations. These anti-
system parties share a rejection of the incumbent political elites and the
broad policy consensus they represented, a consensus around broadly market
liberal policies in the economic sphere and an increasingly liberal position on
social and cultural issues too. Where they part company is in their radically
different attitudes to social and cultural change. If the anti-system Right is
culturally conservative and the anti-system Left culturally liberal, then it
makes little sense that they should both be protesting against the system
because of fears about immigration. Instead, their common rejection of neo-
liberalism is a much more compelling explanation.
Exposing the Flaws: Anti-System Politics Meets

the Global Financial Crisis
The success of anti-system politics is directly related to the extent of the ec-
onomic and social failure of the neoliberal policies that have dominated in
Western countries over the last decades, charted in c hapter 1. The greater
the economic distress caused by the failures of the market system, and the
smaller the share of voters that unambiguously benefit from it, the bigger
is the pool of potential anti-system voters. Anti-system voting is higher, all
else being equal, where income growth has been lowest, where inequality

and insecurity are highest, and where the financial crisis had the most dam-
aging consequences for the social fabric: in short, where markets wreak the
most damage. This should be visible both over time and across space: in
periods of economic distress, anti-system politics can be expected to grow
more than when the economy is performing well, and anti-system voting can
be predicted to be higher in places—countries or regions—that have suffered
the most from economic problems.
The vulnerability of the established political parties to an angry and
disenfranchised electorate was exposed by the global financial collapse of the
late 2000s and subsequent austerity. Standard models of voting behavior, which
predict that voters vote down governments in economic hard times, suggested
that incumbent parties would suffer defeats.55 But historical scholarship also
shows that deep financial crises also provoke nativist and nationalist backlashes
as voters respond to economic anxiety by blaming outsiders and seeking the
protection of the nation-state.56 In contemporary democracies, financial crises
threaten the wealth holdings of voters,57 while resulting austerity measures
saddle the costs of bailouts on economically vulnerable groups.58
The evidence that the crisis led to heightened political stability is clear.
Figure 2.4 presents data on electoral volatility in twenty-one Western dem-
ocracies over the post–World War II period, and shows that disruption
to normal patterns of politics tends to coincide with periods of economic
crisis, such as the early 1980s, the early 1990s, and especially the late 2000s.
Volatility—the net change in party vote shares between two successive
elections59—rose sharply after the Global Financial Crisis: out of fourteen
postwar elections where net changes in party support exceeded 30 percent,
seven of them came after 2008. This vote-switching disproportionately neg-
atively affected governing parties, as Figure 2.5 shows, leading to unusu-
ally heavy losses of governing parties and very high levels of government
turnover: in just four out of the sixteen western European countries did the
governing parties or coalitions survive intact the first election after the crisis.
Incumbent defeats in the midst of an economic crisis could be expected, but
the numbers of votes lost by incumbents was far higher than the historical
norm, in some cases up to 30 percent (Figure 2.5): more than half of the
cases of incumbent losses of more than 10 percent of vote share in the whole
postwar period occurred after 2008.
Few governments survived the first election after the crisis. In the United
States, the Republicans lost the White House two months after the financial
collapse and banking bailout of September 2008. In the United Kingdom the

60
50
Volatility (Pedersen Index)
40
30
20
10
0
1950 1960 1970 1980 1990 2000 2010 2020
Austria Belgium Denmark

Finland France Germany* (West before 1994)
Greece Ireland Italy
Norway Portugal Spain
Sweden Switzerland Netherlands
United Kingdom Canada Australia
Japan New Zealand USA (House)
Figure 2.4 Electoral Volatility in 21 Democracies, 1950–2018

Sources: Ruth Dassonneville, Net Volatility in Western Europe: 1950–2014
(University of Leuven, 2015); Scott Mainwaring, Carlos Gervasoni, and Annabella
España-Najera (2017), “Extra-and Within-System Electoral Volatility,” Party
Politics 23(6): 623–635.
15
Vote Change for Incumbent Parties, % of Electorate
10
5
0
–5
–10
Italy
–15 2018
Spain
–20 Netherlands
Ireland 2015
2017
2012
–25 Ireland
2017 France
–30 Greece 2017
2012
–35
1985 1990 1995 2000 2005 2010 2015 2020
Figure 2.5 Incumbent Vote Change, 16 European Democracies, 1989–2018

1960–2014 (Bern: Institute of Political Science, University of Bern, 2017).
Labour government of Gordon Brown limped on until 2010 before falling
to defeat, shedding almost a third of its vote. Spain’s Socialist government
under Zapatero fell in 2011, and the conservative Popular Party (PP) under
Mariano Rajoy won an absolute majority. Nicholas Sarkozy lost the French
presidency to the Socialist Hollande in 2012 and Italy’s center-right coali-
tion government under Berlusconi fell in 2012 and was defeated in the polls
in 2013. The prominent exceptions to this trend were German Chancellor
Angela Merkel and Canadian Prime Minister Stephen Harper, both of whom
presided over less severe financial crises.
Governing parties not only were defeated, but in many cases also
polled historically low vote shares. The most spectacular case is that of the
Panhellenic Socialist Party (PASOK) in Greece, which after regaining power
in the immediate aftermath of the crisis had to preside over the Troika bailout
and was almost annihilated in the 2012 election, dropping from 43.9 percent
to just 13.2 percent of the vote in less than three years. But other governing
parties also suffered historic defeats. The French Socialists and their allies lost
38.4 percent of the vote between 2012 and 2017, the Parti Socialiste falling
to just 7.5 percent in the legislative elections, its poorest result ever. Fianna
Fail, in charge during Ireland’s banking crisis, lost the support of 24.4 per-
cent of the Irish electorate in 2011, while Fine Gael and the Labour Party,
which entered into coalition in 2011, lost 23.4 percent between them in the
subsequent 2016 election. The Dutch Labour Party (PvdA) dropped from
24.8 percent in 2012 to just 5.7 percent in 2017, another historic low. Such
heavy defeats of governing parties were rare during the postwar period, yet
became common after the financial crisis.
Figure 2.6 shows the relationship between the depth of the crisis and the
average electoral punishment meted out to governing parties in elections
after 2008. Although governing parties everywhere suffered in the post-crisis
period—in no country did incumbents increase their vote share in the first
post-crisis election—,the losses tended to be higher in countries that suffered
most in the crisis. Incumbent parties in countries with low or negative me-
dian income growth were more likely to suffer heavy losses.
Volatility can take the form of heavy defeats for governing parties to the
benefit of opposition parties, resulting in simple alternation between estab-
lished political forces, and in most of the elections immediately following
the crisis this was the case. Labour’s defeat in the United Kingdom bene-
fited the oldest political party in Europe, the Conservative Party, the Gaullist
Sarkozy in France gave way to the Socialist Party, and even in Greece it was
the established conservative opposition, New Democracy, that won power
after the implosion of PASOK. The first round of post-crisis elections was

Average Incumbent Vote Loss 2008–2018
0
USA CAN
NZL AUT
AUS NOR
–5 BEL SWE
ESP UK
FIN DNK
–10 PRT GER JAP
ITA
GRC NLD
–15
FRA
–20
IRE
–25
–0.25 –0.20 –0.15 –0.10 –0.05 0.00 0.05 0.10
Median Household Income Change 2007–2014
Figure 2.6 Median Income Change and Average Incumbent Vote Loss after
the Crisis
Source: Armingeon et al., Comparative Political Data Set 1960–2014 (Vote Change)
(see Figure 2.5); OECD, “Income Distribution Database” (Income Change).
consistent with typical patterns of economic voting, with the punishment of

incumbents matching the depth of the economic downturn. But the second
round of elections under economic conditions that had improved little and
in some cases had become even worse, gave voters the difficult choice of
reinstating the parties that had presided over the beginning of the crisis, or
sticking with incumbents who had failed to pull the economy out of it. This
presented obvious opportunities to anti-system forces.
Figure 2.7 shows average support for anti-system parties since 1989 in
twenty-one Democracies in western Europe, Australasia, North America
and East Asia, and breaks that average down into averages for left and right
anti-system parties. As we can see, anti-system parties have been present
throughout the period since 1989, but there has been a consistent increase
over time in anti-system vote share, as well as a jump in frequency of high
anti-system shares since the late 2000s. The pattern mirrors the trend in
electoral volatility, with elections increasingly likely not only to throw up
heavy defeats of mainstream parties, especially those in government, but
also spikes in support for anti-system parties. This suggests that many
voters were sufficiently exasperated by the political and economic situation
that they felt the need to send a much stronger signal than simply voting
for the established alternatives. Anti-system party vote shares had rarely
reached 15 percent before the crisis, afterward the total rises to almost un-
precedented shares of over 25 percent, with left-wing anti-system forces
gaining particularly strongly.

30
25
20
Vote Share (%)
15
10
0
19 4
19 5
19 6
19 7
19 8
20 9
20 0
20 1
20 2
20 3
20 4
20 5
20 6
20 7
20 8
20 9
20 0
20 1
20 2
20 3
20 4
20 5
20 6
20 7
18
9
9
9
9
9
9
0
0
0
0
0
0
0
0
0
0
1
1
1
1
1
1
1
1
19
Total Anti-System Right Anti-System Left/Catch-All Anti-System
Figure 2.7 Anti-System Vote Share, Western Europe, 1994–2018

Source: Armingeon et al., Comparative Political Data Set 1960–2014 (see
Figure 2.5).
This combination of harsh electoral defeat for incumbents, and the high
support for anti-system parties, implied that electorates were doing far more
than simply prompting government alternation to “throw the bums out.”
Instead, major changes, and even wholesale realignments, of party systems
were emerging. Subsequent elections saw not only heavy defeats for incum-
bent parties but also pluralities for previously marginal political forces.
If the first elections after the crisis mostly resulted in incumbent defeats,
the subsequent post-crisis votes presented voters with a different kind of
choice. Business cycles in the postwar period involved short periods of re-
cession followed by much longer periods of expansion, meaning that op-
position parties benefiting from economic voting in one election had good
prospects of taking credit for the economic recovery in the next. The eco-
nomic pain of the post-2008 period was unprecedented in both depth and
duration, so by the time of the second or third post-crisis election, two sets
of incumbent parties or coalitions would be targets for voter ire. For many
voters in Western democracies, this meant that the whole governing elite was
discredited, opening up a space for anti-system politicians to move beyond
traditional limits to their support.
This safety valve of retrospective voting and government alternation
explains the delayed reaction of Western electorates to the economic cat-
aclysm they were facing. In countries where electoral and legislative poli-
tics revolves around rival parties or coalitions alternating in power, the crisis
offered opposition parties the opportunity to win election by pinning the
blame on incumbents’ policies, and promising that their approach would

provide an answer. But the failure of economies to recover within the usual
electoral cycle meant that the new incumbents’ analysis of the crisis was
quickly falsified and voter frustrations prompted a search for some other al-
ternative. By the second or third post-crisis election, such alternatives could
credibly claim that the existing political establishment had failed, and that
only a clean break with the system could improve things.
Why It’s “the Economy” and That’s Far

from Stupid
The broad pattern of conventional alternation followed by an anti-system
backlash can be observed in most of the Western democracies, but the ex-
tent and form of this anti-system surge varied. For example, in the United
Kingdom the Conservatives blamed the incumbent Labour government for
the severity of the financial crisis, arguing that they had “overspent” and that
Britain’s high fiscal deficit required a dose of austerity to reduce wasteful
government programs and overgenerous welfare. The Brexit vote of 2016
came after the failure of six years of this austerity to improve living standards.
Much the same pattern can be seen in Spain, where the severe defeat of a
Socialist government and the election of a conservative government in 2011
led to austerity and an aggressive labor reform, and the surge of anti-system
forces in 2015. The same dynamic also played out in the opposite ideological
direction: in France the Gaullist president Sarkozy lost the first post-crisis
election to the Socialist Hollande, but the failure of the conventional political
Left to bring about any significant policy shift or economic results led to the
near annihilation of the Socialist Party five years later. In Greece, Portugal,
and Ireland, both the center-left and the center-right parties alternated re-
sponsibility for managing their countries’ Troika bailouts before elections
brought a sharp turn to the anti-system Left. In the United States, the crisis
brought Obama to the White House, but the 2016 election saw powerful
anti-system pressures on both the Left and the Right.
But the differing fortunes of anti-system forces across Western democra-
cies are anything but random. Instead, there are clear patterns, not only in
the extent of anti-system voting, but also in the type of anti-system parties
that are most likely to prosper at different times and in different places. Anti-
system parties emerged first in the strong welfare states of continental and
northern Europe, but have been unable to dislodge established parties from
power, or shake the policy consensus of economic openness and generous

social protection in those countries. Where anti-system parties have had the
biggest impact is in the weaker or more divided welfare states of the English-
speaking democracies and southern Europe. Anti-system parties took longer
to break through in those countries, but did so with dramatic force after the
financial crisis. These different patterns of anti-system success reflect funda-
mental differences in political and economic institutions: their electoral sys-
tems, the extent of economic redistribution achieved by their welfare states,
and their exposure to international financial markets.
Electoral systems play an important role in the development of anti-
system politics. In countries with proportional representation (PR) and low
thresholds for entry into parliament, anti-system forces can gain representa-
tion more easily, because voters are less likely to vote tactically for one of the
established parties in order to avoid “wasting” their vote. This kind of PR is
common across continental Europe and Scandinavia, and allowed voter dis-
content to be defused more easily, with anti-system parties of the right and
left libertarian parties winning substantial vote shares as early as the 1990s.
In southern Europe, the democratic systems established in the 1970s adopted
forms of PR with quite high electoral thresholds to discourage voters from
supporting extremist parties, with the result that anti-system forces had
greater difficulty winning representation. In the “pure” majoritarian systems
such as the United Kingdom and the United States, the established parties
have enjoyed even greater protection from outsider parties, who struggle to
win any seats even with substantial numbers of votes. These more “closed”
electoral systems tend to magnify shifts in popular support, and contributed
to anti-system politics breaking through with greater force in the 2010s.
Electoral systems may mediate the emergence of anti-system politics, but
cannot easily explain electoral change, since in most countries electoral sys-
tems remain constant over long periods. However, electoral systems do make
different kinds of economic and social arrangements possible. Proportional
representation countries tend to be “coordinated market economies,” which
are economically open and have strong exporting industries, alongside gen-
erous welfare states and strong labor representation. Under PR, inequality is
generally lower, because these countries tend to include a wider variety of so-
cial interests in the policy process, and also commonly have other integrating
institutions, such as strong trade unions and generous welfare systems, that
ensure that inequality is kept under control.60 Countries with more majori-
tarian or closed electoral systems generally lack these integrating institutions
and have weaker welfare states and higher inequality, exposing their citizens
to greater economic insecurity.

This combination of political integration and protective social institutions
is strongly related to anti-system politics. The peaks in total anti-system
support after the 2008 crisis correlate strongly with economic inequality
(measured as the post-tax Gini coefficient), as Figure 2.8 shows. The highest
anti-system scores are found in Italy, Greece, the United Kingdom (the Leave
vote in the EU referendum) and the United States (the vote for Trump in
2016), all countries with high inequality. Similarly, the lowest anti-system
vote shares after 2010 are to be found in countries such as Belgium, Ireland,
Germany, and Finland, which have lower levels of inequality. This is entirely
as one would expect if economic anxiety were driving anti-system voting, as
inequality is a reasonable proxy for levels of objective economic insecurity at
the country level, and the post-crisis environment escalated this insecurity
dramatically. In the most developed welfare states, labor market institutions
make it harder to shed labor in response to lower demand, and people who
do lose their jobs or suffer drops in income are protected to a high degree by
unemployment or other social benefits and public assistance to retrain and
find new work. In the higher inequality countries these institutions are either
absent or have insufficient resources to compensate for economic misfortune,
leaving citizens more exposed to the force of market fluctuations.
Worse, these same high inequality countries suffered more severe crises
than the more egalitarian countries, because they had mostly built up high
levels of external debt, which forced them to sharply reduce their consump-
tion when international financial flows dried up. The biggest political crises
can all be found among these high-inequality, high-debt countries: out of
six countries in Figure 2.8 with Gini coefficients of higher than 0.30, all
six of them have seen major upheavals in their political systems involving
Highest Anti-System Vote Share (%)
70
60 GRC 2015
IT 2018 UK 2016
50
US 2016
40 AUT 2017
DNK 2015 FRA 2017
30 SWE 2018 ESP 2015
NLD 2010
20 FIN 2011 DEU 2017 PRT 2015
10 IRE 2016
BEL 2010
0
0.2 0.25 0.3 0.35 0.4
Gini Coefficient Post-Tax Income, 2010
Figure 2.8 Inequality and Peak Anti-System Vote, Western Europe and United
States, 2010s

anti-system movements or candidates taking over government, or forcing
major constitutional changes. Although anti- system parties have joined
government coalitions in three of the creditor countries (Austria, Finland,
and Norway) and made gains in three others (Sweden, Netherlands, and
Germany), they have remained peripheral actors in their party systems. In
several debtor countries they have become central political actors. In Greece
and Italy openly anti-system parties have taken over the national govern-
ment, and in Portugal and Spain anti-system parties have underpinned the
governing majority. Spain’s second most populous region, Catalonia, came
close to secession. In Britain, a majority voted in a referendum to leave the
European Union, creating constitutional havoc and potentially throwing the
country’s economic model into chaos. And, of course, Trump became presi-
dent of the United States.
Why Left and Right Reactions? How Welfare

States and Labor Markets, Not Migration, Explain
Anti-System Voting
The extent of the anti-system backlash after the Global Financial Crisis
can be predicted by three broad variables: the electoral system, the welfare
system, and a country’s exposure to international financial conditions. These
factors are tightly related to each other, so that countries with closed electoral
systems also tend to have weaker welfare protections and are more exposed to
financial shocks than those with open electoral systems, strong welfare states,
and financial surpluses. But we can go further and show how these same
factors also predict which types of anti-system parties—whether right-wing
nationalist or left-libertarian and socialist—are likely to prosper in different
institutional and economic environments.
One clear pattern that emerges is that left-wing anti-system parties have
been more successful than the Right in southern Europe. Syriza’s election
victory in 2015, supplanting the socialist party PASOK, is the most striking
example of a left backlash in a country subject to by far the worst post-crisis
slump of any established Western democracy. But a similar pattern can be
observed in Portugal and Spain. In Portugal the Socialists formed a gov-
erning alliance with the anti-system Left in 2015 to turf the conservatives
out of power, while the Spanish Socialists also averted “Pasokification” by
shifting to the left under Pedro Sánchez and forming a government with

the support of the anti-system Left Podemos. Finally in Italy the main anti-
system force is the M5S, which is not as clearly aligned with the Left, but
makes a similar appeal.
As debtor countries suffering harsh austerity imposed from outside,
southern Europeans have little scope for turning to economic nationalism
and protectionism, which would have high costs. Syriza flirted with the idea
of leaving the euro, but ultimately caved in to external pressures, and instead
pressed European allies—largely unsuccessfully—to adopt a more forgiving
approach to Greece’s debt problems.61 A similar appeal to wider European
burden-sharing is present in the discourse of Podemos. The internationalism
and emphasis on the value of solidarity, and the focus on the misdeeds of fi-
nancial institutions, rather than the scapegoating of immigrants, is a logical
response to the predicament of Europe’s indebted periphery, since debt relief
would benefit the majority of citizens with little wealth, at the expense of
the financial elite.62 Moreover, these countries have suffered very high unem-
ployment in the Great Recession, leading many citizens to migrate, often
to member states in the North of the European Union. An appeal to open
borders and tolerance of migrants also addresses the interests of large shares
of the population in the South, underpinning support for the Left.63
The flipside of this pattern is reflected in the relative advantage of the anti-
system Right over the anti-system Left in the creditor countries of northern
Europe. Whereas in Portugal, Greece, and Spain the Far Right has struggled
to make much headway, it has enjoyed big successes in Switzerland, Austria,
France, and Denmark, polling well over 20 percent at times in those coun-
tries, and significant shares also exist in the Netherlands and Norway. The
sudden rise of the AfD in Germany and the Sweden Democrats in the 2010s,
albeit with lower vote shares, also fits into this pattern. In the creditor coun-
tries of Europe, an appeal to national self-interest and a rejection of burden-
sharing, consisting of opposition to immigration and financial bailouts of
weaker Eurozone members, has an obvious appeal. This appeal can more co-
herently be made by the anti-system Right with its traditional opposition to
globalization and international cooperation.
Figure 2.9 presents data on the electoral fortunes of anti-system parties
of the Left and Right in Europe, charting the distinct trends in creditor
and debtor nations (measured by pre-crisis current account balances: cred-
itors run surpluses, and debtors run deficits). Although there is a good de-
gree of noise and the distinction between creditor and debtor nations is less
meaningful for borderline cases, the patterns of voting confirm that the anti-
system response skews to the left in debtor countries and to the right in cred-
itor countries. The chart resembles a crocodile: the upper jaw showing the

25
20
Vote Share (%) 15
10
0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Creditor Countries Right Creditor Countries Left
Debtor Countries Right Debtor Countries Left
Figure 2.9 The “Crocodile Chart”: Left and Right Anti-System Vote Shares,
Creditor and Debtor Countries
rise of the anti-system Left in the debtor countries and the anti-system Right
in the creditor countries, the lower jaw showing how the anti-system Right
in the debtor countries and the anti-system Left in the creditor countries have
flatlined. By 2018, support for the anti-system Right was around 19 percent
in creditor countries, compared with around 7 percent in debtor countries.
In contrast the anti-system Left won on average just short of 20 percent of
the vote in debtor countries, but only around 8 percent in creditor countries.
The anti-system Right has also enjoyed success in the United Kingdom
and the United States, the two English-speaking democracies at the epi-
center of the financial crisis. This suggests that exposure to a “sudden stop” in
capital inflows can also lead to a strong right-wing backlash. However, both
of these countries have also had significant movements on the anti-system
Left: Jeremy Corbyn’s takeover of the Labour Party in 2015 and the party’s
strong electoral showing under his leadership in 2017, and the strong sup-
port for the Bernie Sanders campaign in 2016 and subsequently, show that
debt crises can provoke anti-system responses on both sides of the ideological
divide. Neither can this be explained in terms of the depth of their economic
problems: although the financial meltdown hit the United Kingdom and
the United States first, and brought about generalized crisis of their entire
financial system, the recovery was far stronger than in southern Europe, and
their median income growth, while weak, was not much below some of the
northern European surplus countries (Figure 2.8).
What does mark out the two Anglo-Saxon cases from the rest is their very
high levels of inequality and weak institutions of social protection. As subse-
quent chapters will show, the United Kingdom and the United States spent
much of the period after the 1980s chipping away at their welfare states,

weakening trade unions, and deregulating their labor market, while financial
market reforms opened up spectacular gains for the wealthiest groups. As a
result, economic insecurity affected larger shares of the population than in
most other Western democracies, while high inequality meant that the ec-
onomic recovery left many people behind as gains were concentrated at the
top. If anti-system politics is a function of exposure to economic risk, the
United Kingdom and the United States should be expected to experience a
very high level of anti-system voting.
Extending our analysis to the structures of the labor market and the
institutions of social protection and redistribution adds further insights into
the patterns of anti-system voting across countries and over time. Extensive
research has shown that right-wing nationalist and anti-immigrant parties
do not generally attract support from a wide and differentiated selection of
voters, but instead focus on particular regions, demographics, and occupa-
tional groups. The typical voter for right-wing anti-system parties is an older
blue-collar worker, usually male, in a region in economic decline, and with
socially conservative views—the so-called white working class.64 Although
the cultural dimension of political conflict appears to be most salient in the
communication of the anti-system Right, its voters are very often econom-
ically dissatisfied, but frame this dissatisfaction around issues such as im-
migration and globalization, rather than the classic left-right dimension of
markets and redistribution.65 This raises the question of why these kinds of
voters have supported anti-system parties in larger numbers in the creditor
countries compared to the debtor countries?
The answer to this question does not seem to revolve around exposure to
immigration. Historic immigration levels are higher in the creditor countries
of northern Europe than in the South, but the South has had greater recent
increases, and parts of the Mediterranean coast have been on the front line of
the refugee crisis, particularly in southern Italy and Greece. Although there
is tentative evidence that local-level exposure to large volumes of refugee
arrivals makes voters more likely to vote for the Extreme Right,66 the poor
performance of right-wing anti-system parties in the broader regions where
refugees arrive suggests little effect. Anti-system Right voting in northern
Europe tends to be higher in economically declining regions—such as rural
or postindustrial areas—which have the least immigration, and lower in dy-
namic areas, such as large cities, with more immigration.67 Finally, migration
is usually countercyclical, increasing in periods of economic expansion and
declining during downturns, even though hostility to migration tends to
increase during downturns,68 suggesting that the objective facts about mi-
gration are not what is driving anti-migrant sentiment.

Conservative cultural attitudes are a better predictor at the individual
level of support for right- wing anti- system parties than contact with
migrants, but this effect does not explain differences at the societal level. On
average, conservative social-cultural attitudes are more prevalent in southern
and eastern Europe than in northern Europe,69 yet votes for the anti-system
Right are lowest in the South, highest in the East, and somewhere in be-
tween in the North. What we need is a better understanding of how cultural
predispositions interact with economic circumstances to produce a political
reaction: some of the time voters with culturally conservative or even so-
cially authoritarian values will stick with mainstream, established parties,
but under certain circumstances an anti-system party can “activate” these
predispositions. Patterns of distributional conflict emerging out of a rapid
process of market liberalization followed by a major financial crisis and harsh
austerity are a likely “trigger” of this switch.
Anti-system right parties have been able to convince large numbers
of culturally conservative voters that migrants and international burden-
sharing constitute a threat to their well-being. This is more likely to be
a compelling argument when these voters are indeed suffering economic
distress. Although creditor countries maintained comparatively generous
welfare states and suffered far less in the aftermath of the financial crisis
than debtor countries, some groups still had objective reasons to feel ag-
grieved. Austerity measures may have been harsher in the debtor countries
of southern Europe and the Anglosphere, but spending cuts and revisions
to social entitlements were also present in the creditor countries. Losing
entitlements, at the same time as important migratory flows and pleas for
financial assistance from European partners, provides an obvious opening
for the anti-system Right.
Germany is a case in point: after reunification, its economy suffered
high unemployment and slow growth, only recovering after a series of labor
reforms and restrictions of welfare entitlements, which forced down wages,
allowing German exports to become competitive again.70 This had dramatic
consequences, particularly for lower-skilled workers, and wage inequality in
Germany accelerated far more quickly than in comparable countries, leaving
parts of the labor market exposed to rapidly deteriorating conditions.71
Support for the far-right AfD, as in most of the rest of Europe, was higher
among lower-skilled and lower-income groups, in rural areas with an aging
population.72 In contrast, the share of foreigners living in an area had a neg-
ative effect on voting for the AfD, a result that replicates similar research
in Austria.73 Research into support for the far-right Sweden Democrats
produces similar results. Sweden, like Germany, accepted far more refugees

than most other European states, and the anti-system Right appealed to anti-
migrant and anti-refugee sentiment quite directly, with apparent success.
But a careful analysis of voting patterns shows that voter exposure to welfare
cuts, declining wages, and increased job insecurity are a stronger predictor of
the right-wing anti-system vote than exposure to migrants.74
This offers a perhaps surprising explanation for patterns of left-and right-
wing anti-system voting across creditor and debtor countries. In southern
Europe, inequality is higher than in the North, but welfare states are very
“dualistic” or selective in their provision, disproportionately protecting
older, male workers at the expense of younger and especially female citi-
zens, who are denied full labor rights and access to welfare.75 The typically
most socially authoritarian parts of the electorate—older male workers or
pensioners with lower levels of education—are relatively well cared for in
these countries, enjoying stable employment with predictable wages and
generous pensions. They are therefore less inclined to vote against existing
arrangements. Whereas older blue-collar workers in the North are relatively
exposed compared to the past,76 and compared with younger and more edu-
cated citizens, in southern Europe it is the other way around: youth unem-
ployment, even among graduates, is very high, and welfare support for the
young unemployed is patchy. Economic risk is highest among demographic
groups—the young, women—likely to have more culturally liberal attitudes
and be more receptive to a left-wing anti-system appeal. As a result, parties
such as Podemos, Syriza, and the M5S are the primary beneficiaries of voter
discontent in southern Europe.
Table 2.2 maps out the ways in which creditor and debtor status, com-
bined with welfare state types, produces characteristic types of anti-system
politics. Creditor countries with strong welfare states have more limited
anti-system votes, skewed to the anti-immigrant and welfare chauvinist
Right. Debtor countries, meanwhile, are divided into two broad types ac-
cording to their welfare state structures. In the South of Europe, the anti-
system response has been skewed to the left, and right-wing anti-system
parties have been weaker. The far-right Golden Dawn in Greece polled only
7 percent at its peak, Portugal has not had a significant far-right party, and
in Spain the right-wing party Vox only appeared in 2018. The exception is
the Northern League in Italy, which experienced a dramatic rise in 2018 to
18 percent of the vote. The League, however, has much more in common
with the anti-system Right in northern Europe, since northern Italy is an
industrial powerhouse that has suffered a very similar deterioration in labor
market conditions and welfare protection. In the South of Italy, which has a
more typical southern European social structure, the left-leaning M5S is the

Table 2.2 Welfare States and Main Anti-System Forces
Creditors Debtors
Strong welfare state Dualistic welfare state Residual welfare state

(low inequality, less severe (high inequality, more (high inequality, more
crisis) severe crisis) severe crisis)
Right-wing anti- Northern Italy Right-wing anti-
immigrant, anti-bailout (League) immigrant movements
movements UK (Brexit)
Germany (AfD) US (Trump)
Sweden (SD)
Left-wing anti-austerity Left-wing anti-austerity
movements movements
Spain (Podemos) UK (Corbyn, Scottish
Greece (Syriza) Nationalists)
Italy (Five Stars) US (Sanders)
main anti-system force. The third broad type of anti-system politics corres-
ponds to the Anglo-American economic model, with weak welfare provi-
sion and high exposure to economic risks across the social spectrum. There
we see strong anti-system responses on both sides, with right-wing anti-
migrant forces pressurizing the established Center-Right, and anti-austerity
left forces assailing the established Center-Left.
These patterns fit the evidence far better than an explanation revolving
around immigration and cultural change. Anti-system voting is not highest
in the places most exposed to immigration, if anything the opposite is the
case. Support for the anti-immigrant Right is highest in “the places that
don’t matter”: in areas of economic decline, with few migrants but more “left
behind” voters, with poor economic prospects, lower levels of education, and
more culturally authoritarian attitudes.77 Examples of these areas are the US
Rust Belt, the post-industrial North of England, eastern Germany, or the
very North of France. Migration is concentrated in more dynamic regions
where voters are less likely to feel economically anxious, and there are higher
shares of younger and more educated citizens with more culturally liberal
attitudes. Large metropolitan areas such as London, Paris, Berlin, or Milan
are not a happy hunting ground for the anti-system Right. There, voters tend
to support the established parties, or if they vote against the establishment,
they support anti-system forces on the Left.

Conclusion
These cross-national patterns offer a useful starting point in analyzing anti-
system politics, and suggest a basic theory to explain political instability after
the financial crisis: the more societies are exposed to economic and financial
distress, the more likely it is that anti-system forces will win greater shares of
the vote. In extreme cases, where economic stresses have been the strongest,
anti-system politics can even supplant and replace the established party
system. In contrast, in countries where the economic and social institutions
cushion the population from economic risks and secure a more equal distri-
bution of economic benefits, anti-system politics has more limited success.
This explains why Trump was able to take over the American presidency, or
why the Greek Left was able to win power, while the anti-migrant Right in
northern Europe has not made sufficient gains to take over the government.
Parts Two and Three of this book take this theory and apply it to a series
of country studies that will show the mechanisms through which anti-system
political movements of different kinds can win support in different political,
social, and economic contexts. Part Two focuses on the two major cases of anti-
system politics in the English-speaking world, looking at the consequences
of decades of rising inequality and financial instability in the United States
and the United Kingdom. These two cases illustrate the long-run effects of
the market liberalization in the two countries that pioneered the neoliberal
turn: a turn to economic nationalism, represented by Trump and Brexit, and a
return of the radical Left, represented by Sanders and Corbyn. Part Three then
turns to the crisis of the Eurozone, and the successes of the anti-system Left in
the debtor countries of southern Europe. These cases show how the financial
crisis morphed into a debt crisis that stripped national governments of much
of their ability to cushion the population from economic threats, leading to a
powerful anti-system response that was for the most part directed against the
institutions imposing austerity measures rather than against migrants.

PART TWO CURBING
TRANSATLANTIC
NEOLIBERALISM
CHAPTER 3 American Nightmare: How
Neoliberalism Broke US
Democracy
I n 2016, the electorate of the United States delivered probably the

biggest political shock in its modern history, electing the unlikely figure
of Donald Trump to the presidency. Although not the first example of voters
overturning the established order, this event brought anti-system politics
to the heart of the world’s most powerful democracy. Barely taken seriously
when he launched his political career, Trump more or less single-handedly
blew apart the American party system with a mix of old-fashioned xeno-
phobia, economic protectionism, and a reality show persona. Perhaps the
least of the world’s worries, Trump also exposed the limitations of political
science: barely any serious scholarship contemplated the rise to power of a
man like Trump in an established, rich democracy. Trump’s election is to po-
litical science what the financial crash of 2008 was to economics.
Trump’s rise is deeply intertwined with the financial crisis and with the
longer term political shifts resulting from the market liberal turn of the
1980s. If Trump is the most spectacular example of anti-system politics,
the United States is the most extreme case of the subjection of society to
the brute force of the market. These two stylized facts are not unconnected.
The destabilization of US politics shows how an obsessive drive for market-
ization, high levels of income inequality, an unstable financial system, and
constraints on political choice provoke political revolt. The United States
took the lead in driving forward the neoliberal agenda in the 1980s under
the leadership of Ronald Reagan, with the result that what was already a
weak welfare state with high levels of economic inequality hit unprece-
dented levels for the rich democracies. The United States remains an outlier
on most measures of income distribution, to such an extent that although
average incomes are very high by global standards, many Americans face
greater material hardship than their counterparts in much poorer countries.
It is therefore hardly surprising that anti-system politics should have
exploded so powerfully. But although Trump has taken most of the headlines,
the United States also saw a revival of the Left, in the form of Bernie Sanders’s
unexpectedly strong bid for the Democratic nomination in 2016. If “lib-
eral” was a term of abuse used by conservatives disturbed by the progressive
ambitions of Democrats such as Barack Obama, Sanders self-identified as a
“democratic socialist,” a taboo label for which he was the sole representative
in the United States Senate. These developments are all the more striking
because until very recently, mainstream politics seemed to be completely
dominated by pro-market, pro-business forces in both parties, with the right
wing of the Republican Party pushing hard for further reductions in govern-
ment regulation and welfare provision, while the Democrats embraced glob-
alization and the expansion of a liberalized financial industry. In the space of
little more than two years, politics was turned on its head, with the return of
socialist ideas on the left and the growth of economic nationalism and pro-
tectionism on the right.
The events of 2016 also reveal that there are very different ways of
responding to the upheavals of economic inequality and financial instability,
and these different ways appeal to different social constituencies. Trump
responds to the anxieties of older, whiter, and generally less well-educated
Americans about the rapid changes in society and the economy, emphasizing
the dangers of globalization and advocating a combination of economic pro-
tectionism and social authoritarianism. Sanders and other leading personal-
ities on the left, such as Alexandria Ocasio-Cortez, appeal to a younger and
more progressive-minded electorate, offering an increased role of the gov-
ernment in protecting people from the destabilizing effects of market capi-
talism. Both reject the corporate-led “winner-take-all” politics centered on
the horse-trading in Washington, DC.1 The emergence of both kinds of anti-
system politics at the same time indicates that they are best seen as rooted in
a common rejection of economic injustice and the demand for politics to re-
spond to popular needs, rather than a somehow unrelated rise in xenophobia
and social authoritarianism.
88 P A R T TWO: CURBING TRANSATLANTIC NEOLIBERALISM

More Inequality and More Insecurity: The
Consequences of the Market Liberal Project
The first part of the puzzle is to understand how the United States found itself in
the socially fragile situation that provoked the upheavals of 2016. The American
economic model stands out among the rich democracies for its strong emphasis
on private property, the virtues of the price mechanism, and skepticism about
government interventionism to address inequalities.2 The US welfare state, de-
spite the expansions of the New Deal in the 1930s and the New Society in the
1960s has consistently lagged behind western Europe, trade unions are tradi-
tionally weak, and organized labor has never enjoyed the luxury of a strong po-
litical party that represented unambiguously left-wing values.
As a result, American living standards are more dependent on market
forces than elsewhere in the rich world. Liberalizing reforms from the 1980s
on implied what Jacob Hacker has called the “privatization of risk.”3 The de-
cline of trade unions raised wage inequality, as workers with valued skills and
exit options made gains and those with weaker bargaining power lost out. Jobs
with comprehensive healthcare benefits became more and more scarce. Access
to housing and income in retirement were increasingly left to the market,
making households’ basic economic security dependent on movements in finan-
cial markets, and the mortgage and housing markets in particular. This model
means that voters in the United States have been on average far more exposed to
the fluctuations of the market system over recent decades than in other advanced
economies. Wrong financial choices, sometimes driven by date of birth, ill
health, or random chance as much as smart decision-making, can bring disaster.
Uncertainty is compounded by inequality. Figure 3.1 charts the per-
centage growth in income of American households for each fifth of the
income distribution since the 1970s. We can see that before tax, income
growth was massively concentrated among the top 20 percent of households,
whose income doubled between 1980 and 2015, while the other groups grew
by around a third over the same period. This contrasted with the relatively
equal distribution of income growth in the postwar period, where all groups
made similar relative gains. Taxation and redistributive government transfers
compensated for a good part of this differential growth, as we can see from
the post-tax incomes reported in the right-hand graph in Figure 3.1. But
given the very large differences in absolute levels of income between the top
20 percent and the rest, this still allowed the gap to grow much wider: in
2015 the average yearly post-tax income in the top quintile was $215,000,
compared to just $33,000 among the bottom 20 percent (see Figure 3.2).
How Neoliberalism Broke US Democracy 89

Income Before Transfers and Taxes Income After Transfers and Taxes
125
Highest Quintile Highest Quintile
100 101 103
79
75
50 46
32
32
25 Middle Three
Middle Three Quintiles
Quintiles (21st to 80th Percentiles)
0 (21st to 80th Percentiles)
Lowest Quintile
Lowest Quintile
–25
1980 1985 1990 1995 2000 2005 2010 2015 1980 1985 1990 1995 2000 2005 2010 2015
Figure 3.1 Cumulative Income Growth (%) for Households at Different Points
in the Distribution, United States 1979–2015
Source: Congressional Budget Office, “The Distribution of Household Income,
2015,” November 8, 2018, Summary Figure 2 (https://www.cbo.gov/publication/
54646).
Clearly, higher income groups did better than most, but these numbers
obscure the huge divide inside the top income group. Figure 3.1 averages
out income gains across the whole of the top 20 percent of the income dis-
tribution, but Figure 3.2 reveals that most of these gains were taken by the
highest-earning one percent. The Congressional Budget Office data shows
that this group of 1.2 million households earned on average $1.9 million per
year before tax, putting them on a quite different scale than other Americans.
The very wealthiest earn a much larger share of pre-tax income than in other
rich democracies, and this share rose spectacularly from around 10 percent for
most of the postwar period to 23 percent in 2007, a return to the levels of the
1920s. That the wealthiest one percent of Americans should have taken al-
most a quarter of pre-tax income in the years before the two biggest financial
meltdowns in history is no coincidence, since the booms that preceded them
delivered spectacular gains to the capital-rich and those who service them in
the financial and other sectors. Figure 3.2 demonstrates starkly how the top
one percent stand out not only compared to low-income groups, but even
compared to those just below them.
These trends reflect a “decoupling” of wage growth from productivity
growth ever since the 1970s. The American economy has been producing
more output per worker over time, but the typical worker’s wages have risen

Top 1 Percent
Highest 96th to 99th Percentiles
Quintile 91st to 95th Percentiles
81st to 90th Percentiles
Average for
Fourth Entire Quintile
Quintile
Middle
Quintile
Second
Quintile
Lowest
Quintile
0 500 1,000 1,500 2,000

Thousands of Dollars
Figure 3.2 Average Post-Tax Yearly Income for Households at Different Points
in the Distribution, United States 2015
Source: Congressional Budget Office, “The Distribution of Household Income,
2015,” November 8, 2018, Figure 7 (https://www.cbo.gov/publication/54646).
much more slowly, if at all: between 1972 and 2010, US productivity grew
by 84 percent, while median wages lagged way behind, increasing only
21 percent.4 As a result, most Americans’ incomes increased by less than
the average for the whole economy.5 The gains, instead, were concentrated
among a relatively small slice of the population, which enjoyed spectacular
increases in income. Headline rates of economic growth therefore give a very
misleading picture of typical living standards in the United States.
The United States also stands out for the high level of instability of
incomes. Fluctuations in the business cycle have had a greater impact on
living standards over time because of the more limited cushioning of incomes
by the welfare state and labor market institutions.6 As well as very high ine-
quality of incomes between individuals, the United States also has very high
levels of income volatility (the variation in individual incomes across time),7
for a variety of reasons. Limited employment protection rules make hiring
and firing easier, hastening job losses during recessions. Most workers are not
covered by collective agreements, facilitating downward wage adjustments
during slumps, and increasing inequality as differences in workers’ market
value feed through more fully into the wage distribution. Limited income
transfers for unemployed or low-paid citizens mean that incomes are smoothed
less over the business cycle than in the other democracies with their more

generous welfare policies. Overall, the US economic model exposes citizens
to far greater degrees of economic and social risk than in other comparable
countries.8
On top of labor market risk, Americans have also had to cope with the
emergence of a financial system that has become increasingly unstable over
time, and that exposes households very directly to fluctuations in financial
markets. The process of “financialization” sparked by the deregulatory drive
of the 1970s, 1980s, and 1990s led to a loosening of restrictions on consumer
and mortgage lending, and a rapid expansion in household indebtedness. The
weakening of social protection and policies to encourage individuals to make
their own arrangements for managing economic risk, such as the promotion
of individual retirement accounts and efforts to expand home ownership, led
to most Americans having a direct stake in the vagaries of financial markets,
and very often incurring debt to pursue financial gains. Moreover, university
tuition rising eight times faster than wages has significantly increased the
burden of student debt: 44 million Americans owed $1.4 trillion in student
loans in 2015.9
The precarious existence facing many Americans has had a measurable
impact on public health. The United States has higher levels of mental illness
than other comparable countries,10 and economic stresses have been directly
linked to drug addiction and higher death rates for the sectors of the pop-
ulation most exposed to economic risk. African Americans and other non-
white groups have long been at higher risk of poverty than whites, but recent
studies show a striking increase in midlife mortality among white Americans,
an inversion of a secular downward trend.11 This rise, which did not affect
other demographic groups, has been directly attributed to economic distress,
and in particular the effects of deindustrialization and the loss of good manu-
facturing jobs in areas of the “Rust Belt.”12 At the start of the twenty-first
century, large swathes of American society had experienced decades of stag-
nant or even declining living standards, making them ill equipped to cope
with the dramatic economic shock that was about to hit them.
Captured: How the American Party System Locked

in Neoliberalism
Why did Americans vote for elected representatives who took decisions that
wrecked the economy and subjected them to acute economic distress? In a
democracy, policies that delivered an ever greater share of the pie to a small

wealthy minority would be expected to lead to some kind of electoral ret-
ribution. Yet these market liberal policies had the broad support of both
major parties, and although elections were frequent and fiercely fought and
party control of the key institutions fluctuated, the broad contours of eco-
nomic policy changed little over time. Americans have consistently voted for
candidates that celebrated the market system and showed little or no interest
in regulatory protections for American workers or increases in welfare pro-
tection. Unlike in other rich democracies, the United States has never had an
electorally significant party of the socialist Left.13
A common explanation for this historical weakness of the Left in the
United States is that Americans appear to be less concerned about inequality
than Europeans, and more ready to accept it as the price of a meritocratic
society where hard work is rewarded.14 This could lead to a lower degree of
support for “big government,” with Americans tending to prefer individual
responsibility over social safety nets, especially voters who oppose redistribu-
tion on racial grounds.15 But there is also evidence that Americans’ views on
equality and redistribution are less distinctive than is commonly believed.
A sizable majority of Americans believe that inequality is too high and that
income and wealth should be redistributed to reduce it.16 Majorities con-
sistently support more progressive taxation to pay for education, healthcare,
and retirement pensions, and most Americans are also more than happy to
contribute to food stamps and other forms of assistance for the poor.17 Yet
policy has for some time privileged tax cuts, especially for high earners, at the
expense of spending on Americans’ preferred social policies.
The US Constitution is part of the reason for this mismatch between voter
preferences and policy outcomes. The restrictions on the powers of the fed-
eral level of government and the incentives for states to compete by offering
lower taxes have contributed to a lack of financial resources to fund social pol-
icies.18 The separation of powers between executive, legislature, and judiciary
and frequent “gridlock” place obstacles in the path of major social reforms,
and the overrepresentation of sparsely populated rural states biases policy
in a conservative direction. Some historians argue that the US Constitution
was designed with this conservative bias in mind.19 But the constitutional
framework has remained broadly constant over time, and cannot explain why
inequality has grown so much in recent decades, when policy in the mid-
twentieth century was so much more progressive and egalitarian.
Recent research by political scientists suggests that voter ignorance and
cognitive inconsistency is to blame, leading voters to vote against their
interests on issues such as fiscal policy and healthcare.20 Others have argued
that the Right has successfully mobilized working-class anxieties about

issues such as race, gun control, and abortion to win support for regressive ec-
onomic and fiscal policies.21Put more crudely, for many scholars the problem
would be solved if only lower-income Americans voted in greater num-
bers for the Democratic Party. It is certainly true that there are important
differences between the parties, and, in particular, that the Republican Party
has moved heavily to the right on both economic and social/cultural issues in
recent decades. McCarty, Poole, and Rosenthal have shown that congressional
voting has become increasingly polarized and partisan since the 1970s, with
most legislation dividing representatives along party lines, and the average
position of Republican and Democratic legislators moving further apart.22
But it is also true that on key economic issues, the Democrats and
Republicans have tended to adopt similar positions, pushing voter preferences
out of the equation. Figure 3.3 presents a measure of the two parties’ positions
on economic policy issues since World War II, calculated from programmatic
documents: a centrist position would be represented by a zero on the vertical
axis, a left-wing position by a negative score, and a right-wing position by a
positive one. We can see that as the Republicans move to the right from the
early 1970s, the Democrats follow them, and apart from the 1996 election,
where the two parties are quite far apart, they are mostly quite close together.
The polarization is only clearly visible if we look at the parties’ positions on
30
20
10
0
–10
–20
–30
–40
–50
–60
–70
48
52
56
60
64
68
72
76
80
84
88
92
96
00
04
08
12
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
Democrats Republicans
Figure 3.3 US Party Positions, Economy, 1948–2012, Percentage of Right-

Wing Statements Minus Percentage of Left-Wing Statements
mpds.2018b).

sociocultural issues, where after 2008 in particular the Republicans moved
sharply to the right while the Democrats moved to the left, opening out a
significant gap, which can be seen in Figure 3.4.
The recent period of apparent polarization in American politics has
masked a clear convergence between the parties on some of the key policy
controversies relating to the economy and the distribution of income and
wealth. After the conflictual politics of the 1960s and 1970s, the 1980s saw
both parties adopt a broadly liberal, pro-market and pro-trade approach to
the economy. The key ideas of the postwar period, such as a government-led
demand that management to maintain full employment, careful regulation of
financial markets, and redistribution through progressive taxation and public
spending became deeply unfashionable on both sides of the partisan divide.
The policies that have driven an ever wider gap between rich and poor, and
indeed between the richest and the rest, enjoyed the active support of both
Republicans and Democrats. The Reagan administration may have been the
most aggressive promotor of neoliberal transformation, but the Democrats,
after three successive defeats in presidential elections, accepted this broadly
market liberal stance.
The Clinton presidency not only failed to reverse any substantial features
of the Reagan marketization agenda, but in many respects moved it still
further. Welfare reforms toughened eligibility and enforced labor market
flexibility, while budgetary policy was more orthodox than under Reagan,
30
20
10
–10
–20
–30
–40
48
52
56
60
64
68
72
76
80
84
88
92
96
00
04
08
12
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
Democrats Republicans
Figure 3.4 US Party Positions, Society/Culture, 1948–2012, Percentage of

Right-Wing Statements Minus Percentage of Left-Wing Statements
Source: Volkens et al., The Manifesto Data Collection (see Figure 3.3).

with significant budget surpluses being used to pay down government debt.
In the financial sector, the Clinton administration embraced deregulation,
with Treasury Secretary Robert Rubin— formerly a leading Wall Street
executive—aggressively pushing a deregulation agenda and protecting fiscal
privileges enjoyed by hedge funds.23 Finally, trade agreements, notably the
North American Free Trade Agreement (NAFTA) concluded by the Clinton
administration, and the entry of China into the World Trade Organization
exposed American manufacturing to much greater international competi-
tion, hastening the decline in the industrial workforce.24
The pro-market, pro-openness shift spawned a growth model centered
on the expansion of the financial sector at the expense of other parts of the
economy. The industrial sector shrank, shedding the unionized and relatively
well-paid and protected jobs typical of postwar manufacturing, while the
service sector grew, creating large numbers of poorly paid jobs with lim-
ited security. The parties differed in their response to declining job quality,
with Democrats favoring tax credits to supplement meager wages, while
Republicans preferred tax cuts, which magnify the divergence of market
incomes. But neither party was willing to embrace more active government
intervention to raise low-skilled wages, build or rebuild institutions of col-
lective bargaining, or restrict employer and investor freedoms to maximize
profit unhindered by regulation. As conventional measures of unemployment
fell, a growing share of the low-paid jobs created by the service economy was
taken by migrant workers, although low-skilled immigration declined after
the mid-2000s.25
The steady drift of the established parties toward pro-market positions
was not driven by a similar shift in public opinion. Even though support for
collectivism and welfare has historically been weaker than in most European
democracies, survey data showed a growing concern about inequality and
increasing support for policies that could deliver a more balanced distri-
bution of income and wealth.26 The neoliberal project may have had only
lukewarm support among voters, but it was greeted enthusiastically by the
wealthy business interests that funded politicians of both parties.27 The in-
creasingly loose regulation of political donations (notably the Citizens United
decision, which freed up corporate funding of politics) meant that monied
interests carried increasing weight in the American political process, leading
to a growing gap between the views of the median voter and the positions
adopted by congressional representatives.28 Although this outsized influence
of business is nothing new in American politics,29 the rising share of income
controlled by the top one percent since the 1970s meant that the wealthy
enjoyed significantly enhanced bargaining power over politicians.

Seen from this perspective, American voters’ apparent acquiescence
in pro-wealthy policies makes more sense. Lower-income Americans are
more likely to vote Democratic,30 but policies introduced by Democratic
administrations have in large part failed to compensate for the overall shift,
supported by both parties, toward a much more pro-business consensus on
financial regulation and fiscal and social policy. From the late 1980s, US pol-
itics exhibited a strong elite consensus around financialization, globalization,
and a more market-driven distribution of income and wealth. The traditional
party system was not able to protect Americans from the market, because the
political parties, tied as they were to the demands of wealthy donors, failed
to reflect the full range of policy preferences of American voters. Worse, close
to half the electorate regularly failed to cast a vote at all, meaning their pre-
ferred policies were entirely without representation.
The high barriers to entry for new political leaders protected the main-
stream parties and candidates from the consequences of growing voter dis-
satisfaction. From 1988 to 2008 the presidency was occupied by members of
two families, the Bushes and the Clintons. Obama defeated Hillary Clinton
in the Democratic primaries, and Jeb Bush failed to win the nomination in
2012, giving way to Mitt Romney, whose father had run for president in
1968. The 2016 primary season once again involved a Bush and a Clinton.
This kind of dynastic inertia was suggestive of a closed political elite, in
which insider candidates enjoyed considerable advantages in terms of fund-
raising, access to favorable media coverage, and support from the party ma-
chinery. To call these arrangements oligarchical31 may be controversial, but
this kind of endogamic recruitment of political leaders, alongside the incum-
bency advantages enjoyed by congressional leaders, ran the obvious risk of
entrenching a self-referential elite hostile to political alternatives.
By the beginning of the 2010s there were clear signs of the electorate
tiring of the choices available to them. Voter participation in the United
States was historically lower than in Europe, and both presidential and con-
gressional election turnout was on a downward trajectory since the early
1970s, although it recovered slightly in the 2000s. Survey data revealed
increased disaffection with political elites and indeed with the democratic
process more generally.32 In one 2010 poll only 11 percent of respondents
claimed to have high or very high confidence in Congress,33 an extraordinary
number considering that many of those polled must have given their vote to
at least one congressional representative. This was down from 30 percent in
2004, suggesting a marked deterioration as the economy declined. The last
thing American democracy needed was the worst economic crisis in almost
eighty years.

Too Big to Fail or Too Connected to Fail? The
Politics of the Financial Bailout
Not only did the neoliberal reforms described earlier expose US society to
greater degrees of economic risk but the same faith in lightly regulated
markets was also directly responsible for unleashing the financial turmoil of
the late 2000s. The removal of regulatory restraints on credit growth and the
relaxed regulatory approach to financial innovation brought the expansion
of finance and a dramatic increase in leverage across the economy. Although
the governing elites in the Federal Reserve and the US Treasury insisted
that market mechanisms could adequately price risk and secure financial
stability, the panicked deleveraging after the collapse of the US subprime
mortgage market suggested otherwise. US regulators failed to understand
the consequences of the loosening of credit standards inherent in the wide-
spread securitization of mortgage debt, or the risks implied by large numbers
of borrowers taking on unsustainable loans to speculate on a rising housing
market. The government turned a blind eye as financial institutions built
large and opaque exposures to credit derivatives that led to a complete break-
down of the financial system in late 2008.
Some economists have argued that inequality and financial instability are
in fact closely connected.34 As wages stagnate for the average worker, savings
rates become increasingly skewed as surpluses accumulate at the top of the
distribution. These savings are recycled through the financial system as cheap
credit for lower-income groups, who need to borrow to sustain consumption
and seek social mobility through leveraged bets on property markets. The
resulting growth in credit destabilizes the economy as a whole, resulting in
frequent financial crashes. First, by increasing leverage more generally in the
economy, financialization made the US economy exceptionally vulnerable to
financial shocks by encouraging speculative bubbles in housing and financial
assets. Second, the growth of the financial sector had dramatic effects at the
top of the income distribution, where successful leveraged bets could gen-
erate massive payouts to a select group of hedge fund managers and other
financial operators, spiking the income share of the top one percent. Finally,
by pushing down savings rates and facilitating high ratios of household debt
to household income, living standards for many began to be reliant on easy
credit conditions.35
Although most accounts of the crisis identify the US subprime mort-
gage markets as the key short-term trigger, its devastating effects were the
consequence of a significant growth in debt, both in terms of the global

imbalances that developed as some countries (including the United States)
became heavily dependent on capital flows from others, and in the domestic
economy as households and financial institutions became increasingly lever-
aged. The debt explosion was the direct consequence of deregulatory policies
promoted aggressively by the United States both globally and locally. The
collapse of the American, and then the global, financial system blew apart the
intellectual rationale and the political legitimacy of the pro-market program,
not only because such catastrophic events were not supposed to be possible
in a free market system, but also because the seizing up of the credit system
required the government to subvert the logic of free markets by staging a
massive government intervention to bail out financial institutions and their
creditors.
The bailout (the so-called Troubled Asset Relief Program [TARP], later
formalized in the Emergency Economic Stabilization Act) allocated $700 bil-
lion of public resources to buy toxic assets and prop up the market, directly
or indirectly rescuing the major US financial institutions from insolvency.
This amounted to a bailout of the financial industry worth around 5 percent
of US GDP, at a time when many Americans were facing serious hardship.
The bailout may well have been the only way to stabilize the financial system
and protect the wider economy, but the very close connections between the
key political actors and financial sector leaders—Treasury Secretary Henry
Paulson was a former CEO of Goldman Sachs, and many other leading fig-
ures in the administration and in the Democratic elite had financial sector
experience—created an indelible impression that the bailout was more about
protecting the interests of a close-knit political and business elite. Subsequent
research in fact showed that the personal financial interests of congressional
representatives were a statistically significant predictor of their legislative
support for the Emergency Economic Stabilization Act.36
The unprecedented bailout of the US financial system highlighted the dis-
tance separating American voters from their political and financial elites. The
passage of the act was hugely controversial. Most polls showed public oppo-
sition, and congressional representatives facing re-election came under heavy
pressure from constituents to oppose the bill.37 Protests underlined that the
bailout involved channeling huge quantities of government money directly
into the pockets of some of the wealthiest people in America, rewarding
them for making spectacularly wrong decisions. Interestingly, opposition to
the bailout spanned the political spectrum. Protests were organized by labor
unions and anti-corporate activists on the left, but there was also outrage on
the conservative right at the use of public money to protect bankers from the
consequences of their recklessness. In the aftermath of the bailout, protest

movements emerged on both left and right, constituting the founding mo-
ment for the anti-system politics that exploded in 2016.
The 2008 crisis came just weeks before the presidential election won by
Barack Obama, who successfully presented himself as a break with the past,
offering up slogans of “hope” and “change.” This turnover in the executive
did not, however, lead to dramatic changes in the policy approach to the
financial crisis and resulting recession. Instead, his nominations to key eco-
nomic policy positions suggested a high degree of continuity, with key finan-
cial sector insiders Timothy Geithner (New York Federal Reserve Chair) as
Treasury Secretary and Larry Summers (Treasury Secretary under Clinton) as
chair of the National Economic Council. These nominations suggested little
appetite for a radical reform of the financial sector, and the fiscal stimulus
adopted by the Obama administration came down on the conservative side of
the scale, reportedly after pressure from Summers to reduce its size and pri-
oritize tax cuts.38 Obama’s commitment to bipartisan, centrist policymaking
and close ties to financial interests ensured that policy would continue to
protect the banks and remain within the parameters of a broad market liberal
approach for the rest of the economy.
Normal electoral turnover between the Democratic and Republican
parties fell way short of any systemic transformation, and the Obama
administration’s policy response was oriented toward cushioning the effect of
the crash on the broader economy and attempting to shore up the faltering
financial system, rather than any root and branch reform. Alongside TARP
spending, the Federal Reserve loosened monetary policy to the zero lower
bound, and intervened heavily in markets by purchasing private sector assets
such as mortgage-backed securities, building up holdings worth $2 trillion,
around 15 percent of US GDP. Help was also extended to the auto industry,
with the government-backed rescues of General Motors and Chrysler. Some
provisions in the stimulus package (the American Recovery and Reinvestment
Act [ARRA]) extended unemployment benefits and offered boosts to var-
ious forms of social assistance, while measures taken in the Making Home
Affordable program offered help for underwater homeowners. But the assis-
tance for the corporate and banking sectors dwarfed the help for indebted
households, or those who face job losses as the recession deepened.
This policy response, although ambitious in comparison with previous
downturns, was not sufficient to prevent a recession unprecedented for the
postwar era in both its depth and reach, hitting the labor market, housing
market, and stock market simultaneously. Survey data showed that by April
2010 about 39 percent of households had experienced either unemployment,
negative equity, or mortgage arrears, which showed the extraordinary reach

of the recession beyond the most vulnerable groups into the middle class.39
Although unemployment did not reach record levels, peaking at around
10 percent, the rate of job loss in 2008–2009 was 6.1 percent of all employ-
ment, twice the level of the 1981 recession.40 Employment recovery was slow,
and underemployment high, with the labor force participation rate dropping
to and remaining at under 60 percent of the active population.41 Wages fell
back to the levels of the late 1990s, remaining below 2007 levels for sev-
eral years for the bottom 95 percent of the labor force.42 Real median in-
come for working-age households fell 10 percent between 2000 and 2009, a
fall that began before the financial crisis but was dramatically accelerated by
it.43 Beyond the labor market, the recession had a major impact on the asset
holdings of American families, lowering net wealth by 23 percent in 2007–
2009, with 60 percent of all households losing net wealth.44
Since government was preoccupied with restoring order to the financial
system by supporting the value of compromised assets, policy had a nat-
ural bias in favor of owners of capital and those in the financial industry
who managed their investments. After the TARP had doled out government
money to a handful of insolvent financial institutions, bailing out not only
the recipients but also their creditors, yet more money was thrown at the in-
dustry through quantitative easing, which had the direct effect of pushing up
asset prices, but was rather less effective at stimulating the broader economy,
as financial institutions hoarded the cash. Given the very unequal distribu-
tion of these assets, quantitative easing effectively subsidized the recovery of
the balance sheets of the wealthiest Americans. There is also evidence that
very expansionary monetary policy is good for employment and wages,45
but the majority of Americans who enjoyed little or even negative income
growth over the past decade could be forgiven for not appreciating this point.
The Obama stimulus may have been deemed insufficient by many,46 but
as panic over the financial system began to subside, so did the support for,
or tolerance of, expansionary policy among financial and policy elites. Early
signs of the wind changing were the creation of a bipartisan panel on fiscal
policy, the National Commission on Fiscal Responsibility and Reform (or
Simpson Bowles Commission) in early 2010, less than eighteen months
after the collapse of Lehman Brothers. Fiscal policy quickly turned contrac-
tionary as Republicans in Congress pushed through the Budget Control Act,
which imposed $1.2 trillion of automatic cuts on spending—the so-called
sequester—and most of the provisions in the ARRA expired. As a result gov-
ernment programs with important redistributive effects—such as programs
for the unemployed, aid for underwater homeowners, healthcare, education,
and other discretionary spending—were pared back.

As fiscal stimulus was reversed while quantitative easing was expanded
to take the strain, the nature of the new post-crisis settlement became clear.
The bailout of the financial sector would be protected and continued, but
the household sector would have to cope with less, for fear of an implausible
collapse in the credibility of the US Treasury. In short, the banks were too
big to fail, but the American public was too big to bail. Nor was there any
regulatory reckoning for the bankers to fear: the Dodd-Frank Act tinkered
with some of the egregious flaws of the financial system without addressing
the ways in which it generated instability.47 The bonus culture was alive and
well, and Wall Street’s highest earners were able to quickly return to making
outsized gains, thanks to the support of the US taxpayer and the Federal
Reserve. As the American economy returned to growth, the lion’s share of
income gains were still accruing to the highest earners: astonishingly, by
2013, 95 percent of income gains since the start of the recovery had gone to
the top one percent.48
It may be an oversimplification to claim that policy focused primarily on
restoring normal service for wealthy investors and financiers, while the vast
majority suffered stagnating incomes and declining economic security. But
as the richest one percent quickly got back to where they were on the eve of
the crisis, while the most Americans were left trailing behind, it was easy
to draw that conclusion. As the chaotic events of 2008 faded into the past
and attention shifted to the debt ceiling and the sequester, the crisis of an
overleveraged and greedy financial sector was skillfully spun as a crisis of an
overleveraged and greedy government; what Mark Blyth called “the greatest
bait and switch in human history.”49 This kind of distribution of economic
gains and losses is politically unsustainable in a democracy, especially in hard
times, and in 2016 it unraveled.
Too Big to Bail: American Voters and

the Financial Crisis
We have seen that the American system of government managed to rescue
its financial system and its wealthiest citizens but proved incapable of gen-
erating a policy mix that would offer the “99 percent” the same degree of
protection from the consequences of the downturn. Policy toward the finan-
cial sector reflected the outsized influence of financial interests in US politics,
and as a result exacerbated the disconnect between voters and the political
leadership. The American public was on the front line of the fallout from the

financial crisis, and faced a severe economic shock that the rudimentary US
welfare state was ill-equipped to weather.
The route to the political shocks of the 2016 electoral cycle was laid down
by the political choices made during the crisis and its immediate aftermath. But
the backlash was not a simple revolt of the groups most damaged by the crisis.
Instead, the first wave of protest came from relatively economically secure and
politically conservative voters, in the form of the Tea Party. This movement was
inspired by a televised rant by financial commentator Rick Santelli in February
2009 complaining about the Obama administration’s plans to help underwater
homeowners (or as he called them, “losers”).50 Tea Partiers, drawn primarily
from the older white middle-class suburban and rural population, mobilized
opposition to the Obama administration and the more moderate elements of
the Republican leadership, pressuring the GOP to adopt a harder line against
the Democrats’ liberal plans. Tea Party rhetoric emphasized the threat to “tra-
ditional” American values of small government that they saw as present in the
thinking of the Founding Fathers and embedded in the Constitution. The rise
of the Tea Party is also frequently attributed to a fearful reaction of American
whites to the election of the first black president.51
Tea Party supporters were mostly economically comfortable, albeit usually
not from the very high end of the wealth scale, and had retirement income
and asset values to protect. But the wealth of the middle class fell sharply
between 2007 and 2010, while that of the top decile increased,52 in part be-
cause the middle class had a greater share of capital tied up in the collapsing
housing market. This group feared being on the hook for any expansion of
social protection, because it was not wealthy enough to avail itself of the tax
“planning” resources used by one percenters.53 The perceived threat to their
healthcare rights from the Obama administration’s plans to extend help to
the uninsured was also a source of acute anxiety, given the likelihood of this
group of older Americans having much greater healthcare needs than the
younger population.54 Tea Partiers saw their rights threatened by bad gov-
ernment policies and redistribution to the poor and ethnic minorities. The
much lampooned slogan “Get Your Government Hands off My Medicare” re-
flected a belief that these programs consisted of rights built on contributions
through a long working life, and should therefore be distinguished from the
“handouts” to the unemployed or other younger or working-age groups.
There was also a powerful response on the left to the financial crisis and
the bailout, although it took longer to emerge. The Occupy movement,
which gained prominence with the occupation of Zuccotti Park in New York
in September 2011, fully three years after the peak of the financial crisis,
was very unambiguously a protest against the inequality and economic pain

inflicted by neoliberalism and the banking collapse.55 The Occupy move-
ment drew inspiration from the Arab Spring, and in turn sparked similar
mobilizations in other Western countries, notably in London in the United
Kingdom and in southern Europe. Initial sparks for the protest were educa-
tion budget cuts in California, leading to protests in various University of
California campuses in 2010–2011. Unlike the Tea Party, which used tradi-
tional media and territorially based grassroots organizing, the Occupy move-
ment used social media much more extensively.56
Where the Tea Party movement took its intellectual lead from shock-jock
radio commentators and the right-wing media, the Occupy movement drew on
the ideas of an older generation of left-wing scholars such as Judith Butler and
Naomi Klein, as well as younger organizers. Key slogans clarified that inequality
was a central concept for the Occupy movement: “We are the 99 percent” popu-
larized the academic work of Piketty and others documenting the concentration
of income around the top one percent. The location of the protests, at the heart
of the New York financial district, the use of the label “Occupy Wall Street,” and
a concern with abuses of power by corporations and the excessive debt burdens
of students and others identified the workings of the market system as a target.
The Occupy movement appealed particularly to young people, many of them
highly educated and carrying student debt but not in well paid jobs, and there-
fore hit hard by the weak economy and policy choices that protected creditors
over debtors. Unlike the Tea Party, Occupy sought to represent less economi-
cally protected groups and express a vigorous critique of the market system.
But much of the Occupy rhetoric was directed at the failings of politicians
and the flaws and limitations of American democracy, and here it shared
common ground with the Tea Party. One Occupy slogan was “banks got
bailed out, we got sold out,” highlighting how the crisis had led to a bailout
of wealthy financial institutions, at the expense of the general public. But
Wall Street was not the only target: Occupy also took aim at the politicians
responsible for the decision to side with the banks, condemning “a political
system rigged to serve only the very wealthy.”57 In fact, as well as a critique of
capitalism, the Occupy movement was also articulating a critique of American
democracy and attempting to develop an alternative form of participatory
politics. This emphasis on “bottom-up” action and a hostility to elitist and
oligarchical forms of decision-making were part of the reason the more ac-
tive phase of the movement largely petered out within a year. Alongside a
long-standing suspicion of hierarchy in leftist social movements, the Occupy
movement was one of the first attempts in a democracy to use the Internet
to bypass traditional forms of political organization. This “horizontalist” ap-
proach proved incapable of sustaining large-scale political action for long,

and the Occupy movement lacked the kind of economic and logistic assis-
tance that the Republican donor community offered the Tea Party.
The Tea Party and the Occupy movement both represented fundamental
challenges to the established party elites. Many Tea Partiers saw the Republican
leadership as too close to corporate interests and unconcerned with the interests
of grassroots conservatives. The Occupy movement was equally frustrated
with the slow pace of change under the Obama administration and its finance-
friendly appointments to key positions. Yet the 2012 presidential election pitted
the incumbent Obama against a wealthy financier, Mitt Romney, as a main-
stream Republican candidate, suggesting a return to “normal” politics after the
upheavals of the financial crisis. The Tea Party did make a significant impact on
the politics of the Republican Party, but it was also relatively easily co-opted
by wealthy elite groups who themselves had been pushing to roll back govern-
ment regulation and reduce taxes, especially on the very wealthy. The Occupy
movement suffered the fate of many such movements, failing to transform the
spontaneity and energy of a leaderless wave of agitation into a coherent organi-
zation that could pressure government into changing policy. The Democratic
Party had no primary season, and no credible independent candidate emerged to
represent the groups mobilized by Occupy.
The 2012 election entrenched the new policy equilibrium that had
emerged after the financial crisis. The Democratic administration and the
Federal Reserve were taking responsibility for holding the financial system
together, while Republicans were fighting to push back against the kinds of
fiscal policies that would protect the wider public and counteract the skewed
market income distribution. Below the surface of the apparently highly polar-
ized partisan politics in Washington, DC, politics continued to prioritize the
interests of the financial sector, while most Americans continued to struggle.
Real pre-tax income for the top one percent grew by 37 percent between
2009 and 2015, fully 52 percent of total US income growth for the period.
Logically, the remaining 48 percent of income gains had to be shared out over
the remaining 99 percent of the population, whose income had still not recov-
ered from the losses incurred during the crisis.58 Neither the Obama adminis-
tration nor the Republican leadership had a compelling story about how this
could be rectified. Any change would have to come from outside the system.
“The System Is Rigged”: Trump against the GOP

Donald Trump’s election to the presidency, like the financial crisis of 2008,
was a big surprise to the pundit class and to the academic community,

leading to frenetic attempts to make sense of it. The bewilderment gen-
erated by Trump’s victory is compounded by the fact that his personality
and much of his rhetoric is anathema to the high-income, highly educated
classes of Washington, DC-based political analysts and Ivy League university
professors that shape elite opinion. This plausibly explains the widespread
failure to anticipate Trumpism, and the grave difficulties many have faced in
understanding it after the fact. Trump represented a revolt not only against
the political elite but also against much of the media and the “experts” of
the academic and policy world. Leading figures in the Republican Party—
the “never Trumpers”—openly criticized Trump as unsuitable for office, and
refused to back his campaign. Their rejection of him, far from undermining
his chances, became one of his biggest selling points.
Trump’s rise is best explained as a broad-based rejection of the existing
political establishment and its failure to protect the living standards of the
majority. Trump offered a clear break with the conventional language and
practices of professional politicians. Unlike all the other primary candidates
he was facing, Trump had no experience of elected office or public adminis-
tration, nor even any stable partisan affiliation, having variously supported
Democratic, Republican, and Reform Party candidates. He could therefore
credibly offer something new to an electorate that had good reason to feel
poorly represented by the political establishment, presenting a fantasy of the
tough businessman coming into politics and cutting through the ambigui-
ties, compromises, and broken promises of professional politicians.
Trump’s crude rhetoric and use of threats and insults to his opponents
also broke with convention, and identified him as being different from the
mainstream elites that had brought so many disappointments. An eloquent
illustration of his outsider credentials was the heckling he faced at the Alfred
E. Smith Memorial Foundation Dinner, a charity event that presidential
candidates typically attend just a couple of weeks before polling day.59 What
appeared at the time to be a publicly humiliating experience, as assorted
billionaires and other Manhattan luminaries expressed their revulsion at
Trump’s off-color rhetoric, proved to be a harbinger of many Americans’ read-
iness to vote against the establishment. This aggressive language tapped into
the resentment and anger that many voters felt at the failures of politicians to
address the threats to their well-being. By taking a hard line on the purported
culprits, Trump signaled a possibility of dramatic change in how the country
was governed. In a context where Americans’ trust in political institutions
was at a historic low, this had considerable appeal, and the outrage it evoked
only served to confirm his apparent outsider status.

In a crowded primary field, Trump’s strategy was to belittle—sometimes
literally (he referred to fellow primary contender Marco Rubio as “little
Marco”)—his opponents as weak insiders. As well as confirming his appeal
to voters keen to see someone take on what many perceived as a self-serving
political elite, his high-intensity rhetoric also made great news copy, pro-
viding Trump with abundant media coverage and circumventing the usual
media channels. His Twitter use was also key to this strategy, with the con-
tinuous flow of simplistic critiques of President Obama and proposals of
easy solutions to various political problems winning him a huge audience
of millions of followers who accessed Trump’s views without intermediaries.
This media strategy, building on Trump’s carefully constructed notoriety as
a celebrity over the years, allowed him to bypass the usual channels of cam-
paign funding, which could have exercised some control over his message,
and aided his claims to represent a new departure able to shake up the en-
trenched Washington elite.60
Trump’s rhetoric has been the subject of much anguished commentary,
focusing not only on its racist and authoritarian overtones, but also its crude,
often incoherent and grammatically defective use of language, and a breezy
approach to factual accuracy. But leaving aside his frequent use of claims that
are either demonstrably false or at the very least dubious, it is misleading to
infer that he has no clear political message. The slogan of his presidential bid,
“Make America Great Again,” was a clear appeal to voters who felt that gov-
ernment had been insufficiently patriotic and had failed to protect American
citizens from global threats, both economically and in terms of security at
the border. His 2015 book Crippled America61 addressed “the bedrock of this
country—the middle class—and those 45 million Americans stuck in pov-
erty (who) have seen their incomes decline over the past 20 years.” Trump
claimed to share their “disenchantment and frustration” at a “deadlocked”
Congress and an executive branch guilty of “incompetence beyond belief.”62
A key element of Trump’s discourse was to propose a retreat from the elite
consensus of economic openness and the embrace of globalization through
free trade agreements. He made frequent reference to Chinese competition
and its effects on American jobs, and criticized agreements such as NAFTA
and the proposed Trans-Pacific Partnership (TPP) and practices of offshoring
that shifted production from the United States to cheaper countries. Avoiding
technocratic language, Trump made simple promises to bring back indus-
trial jobs from overseas by renegotiating trade deals in America’s favor.63 This
set him apart not only from the Democrats, who had been cheerleaders for
free trade ever since the early 1990s, but also from most Republicans. Trump

counterposed to this “globalist” consensus a form of economic nationalism
summarized in another slogan he revived, “America First.”
Trump’s economic nationalism dovetailed neatly with his other key mes-
sage, which was opposition to immigration.64His anti-immigration rhetoric
focused on illegal immigration (mostly from Mexico), but also the threat
of Islamist terrorism. By zooming in on two aspects of immigration that
evoked threats to physical security, Trump was leveraging increasing con-
cern at illegal immigration in some southern states, with the broad fears
many Americans had about global jihadism. The anti-immigration mes-
sage merged easily into dog-whistle politics relating to America’s history
of race politics, with Trump supporters proving to be predominantly white.
However, Trump avoided overtly racist remarks about African Americans,
directing his most offensive invective mainly to Mexicans and Muslims.
The dubious legality and impracticality of his two main policy ideas in this
regard—a border wall along the Mexico border and a ban on Muslims en-
tering the United States—provoked predictable outcry, which almost cer-
tainly assisted Trump in mobilizing support and entrenching him as the
outsider candidate, the only candidate serious enough about dealing with the
alleged problem to propose tough solutions.
The provocative nature of Trump’s rhetoric focused a great deal of media
attention on his various violations of Washington protocol and his ambitions
to run the presidency with an authoritarian and possibly racist governing
style. As well as firming up Trump’s support base, the nature of political
commentary and the mobilization of a variety of left-wing groups against
his ideas distracted attention from the reasons why his message could prove
attractive to many Americans in the middle and bottom of the economic hi-
erarchy. Trump’s aggressive style and promises of economic interventionism
were particularly powerful among middle-and working-class whites living
in areas that had suffered from deindustrialization. These groups were at the
front line of disruptive economic changes, as documented not only by the
income and employment statistics, but also by the dramatic data on public
health risks, most notably the recent apparent decline in life expectancy
among white non-Hispanic Americans.65 Trump’s promises to intervene to
stop American corporations moving jobs overseas, and claims that he could
reopen coalfields (by loosening environmental regulations) resonated in areas
that had been shedding industrial jobs for years.
Trump was the only Republican candidate offering a serious program
of economic interventionism to address the consequences of the finan-
cial crisis and the secular decline in living standards among middle-class
white Americans. The combination of trade and labor (through immigration

control) protectionism with promises of public infrastructure investment and
restrictions on outsourcing contrasted with the broadly neoliberal approach
adopted by other leading Republicans. In a context of economic insecurity
not only for poorer Americans but also for large sections of the middle class,
the success of a brash candidate promising to restrict and control market
mechanisms in the interests of middle America had an obvious appeal. His ap-
parent distance from the monied interests that typically financed Republican
candidates gave his promises credibility. Trump mobilized large numbers of
blue-collar voters in the primary campaign,66 reflecting his ability to offer
something different for some of the social groups that had suffered the most
from economic change and the shock of the financial crisis.
“Feel the Bern”: The Return of the American Left

While Trump was tearing up the rulebook in the Republican primaries, the
Democratic primary campaign also came under pressure from anti-system
forces, although this time with a different outcome. Hillary Clinton was a
consummate insider, having spent eight years in the White House already and
as a former Senator for New York, and was associated with the Democratic es-
tablishment both in terms of personal history and political positioning. Her
husband, Bill, brought not only his experience of running a campaign ma-
chine and an extensive network of supporters, but also a track record of cen-
trist, and mostly enthusiastically pro-market and pro-trade, policy positions.
The Clinton campaign enjoyed abundant financial backing, in part from the
same core group that had funded previous Clinton campaigns to the tune of
billions of dollars.67 After defeat by Obama in 2008, a frequent observation
made by political commentators was that 2016 was “her turn,” appearing to
confirm the worst features of insider politics in the United States.
Unlike in the fragmented Republican primary, the only opponent Clinton
faced was independent Senator Bernie Sanders, whose “socialist,” identity was
considered way beyond the pale of mainstream American politics. Sanders’s
campaign focused on economic issues, emphasizing inequality, the excessive
political influence of the wealthy and, particularly, the Wall Street banks, and
the damaging effects of trade agreements on working Americans.68 Sanders
campaigned for more progressive taxation, a financial transactions tax to pay
for social programs, reductions in student debt, universal healthcare through
a single-payer system, raising the minimum wage, and extending workers’
rights to organize in the workplace. Way to the left of most American
politicians, Sanders emphasized how such policies were standard in European

countries, citing the case of social democratic Denmark as a model to emu-
late. Sanders represented progressive positions on issues of sexual and race
equality, cannabis use, and foreign policy (he was a vocal opponent of the Iraq
War). These relatively radical positions contrasted with Clinton’s pragmatic
and strategic approach to politics, which was centrist in orientation and tech-
nocratic in presentation.
As well as having a clear left-wing identity, Sanders was able to claim
similar “outsider” status as Trump. Although he had extensive political ex-
perience on launching his bid, having been mayor of Burlington, Vermont,
then winning election to the House and ultimately the Senate, Sanders
had maintained formal independence from the Democratic Party, the only
Senator to do so. Alongside this formerly nonpartisan positioning, Sanders
also expressed an open rejection of established practices of political finance
in the United States and advocated campaign finance reform. Sanders opted
not to seek large donations or draw on Super PACs and other standard fund-
raising practices used by other candidates, and instead raised money through
small contributions.69 By identifying as an independent socialist and shun-
ning wealthy donors, Sanders was successfully able to present himself as free
of the ties and shady arrangements many Americans associated with their po-
litical representatives in Washington, DC, again in sharp contrast to Clinton,
whose lucrative speeches to Wall Street audiences gave the exact opposite
impression.70
Unlike Trump, Sanders did not win, facing as he did a single well-
organized and experienced candidate with extensive backing from the
Democratic Party machine, wealthy donors, and progressive media outlets.
But he did win unexpectedly high levels of support, both financially and in
terms of primary votes. The Sanders campaign raised well over $200 mil-
lion,71 and won 43.1 percent of the primary electorate, or well over 13 mil-
lion voters, taking several states, although the final result was never seriously
in doubt. Moreover, the Sanders campaign mobilized considerable atten-
tion on the left, particularly among many younger voters, and drew larger
crowds to his events than his rival, and indeed than Republican candidates.72
This apparent enthusiasm gap between the two Democratic candidates was
compounded by the strong impression, nourished in particular by the pub-
lication of leaked e-mails from the Democratic National Committee, that
Sanders represented change and an insurgency against the entrenched power
of machine politicians personified by the Clintons. The leaks revealed hos-
tility to Sanders among the Democratic leadership and attempts to bias
the primary process in favor of Clinton. The emergence of a vocal faction
of Sanders supporters refusing to back Clinton, the so-called Bernie or Bust

movement, further damaged the Democratic nominee by entrenching her
image as a ruthless insider.
Alongside Trump’s success in the Republican contest, the primary
season revealed that a very large proportion of the most politically engaged
Americans were prepared to contemplate nontraditional candidates and policy
positions, and were keen to reject the policy consensus and personnel of the
political establishment. Alongside Sanders’s 13 million votes and 43 percent
share, Trump received the support of 14 million Republican primary voters,
or 44 percent, the highest ever for a GOP candidate.73 These two purport-
edly outsider candidates, both of whom had shunned their party for long
periods, amassed not far away from half the votes of the most engaged party
supporters, a clear rejection of the political establishment on both sides.
Although there were very obvious differences between Trump and
Sanders, their policy positions had in common a rejection of the neoliberal
consensus. Both opposed aspects of trade liberalization, and, albeit in very
different ways, both proposed measures to protect American workers from
the harsh consequences of market forces, through social democratic meas-
ures for Sanders, and through potential trade barriers and immigration
controls for Trump. Again in different ways, both showed an ability to con-
nect with victims of economic change: Sanders appealing more to younger
voters struggling to build their careers in a period of crisis, Trump to the
“white working class” stricken by the decline of traditional industrial em-
ployment as well as the older, more prosperous “Tea Party” electorate. Both
presented a contrast with the broadly pro-market, pro-trade consensus of
both Hillary Clinton on the Democratic center-right and the myriad insider
neoliberals in the Republican primary field. And finally, Trump won his pri-
mary, turning the 2016 election into a battle between a Democratic insider
and a Republican outsider.
Trumped Up Voters? How Anti-System Politics

Took Over the White House
Trump’s victory in the 2016 presidential election was met with astonishment
and anguish among political scientists and pollsters,74 in part because most
thought it was inconceivable and predicted his defeat, in part because his style
and views were so far removed from the conventions of the American presi-
dency. Trump’s intemperate rhetoric, his lack of political experience, and the
accusations of corrupt and even sexually abusive behavior should have made

him an unappealing candidate for the median voter. The improving economy
should have benefited the incumbent Democrats, according to theories of ec-
onomic voting, although electoral history also suggests increasing likelihood
of the incumbent party losing the White House after two or more mandates.
Hillary Clinton’s carefully planned campaign used modern data science to
calculate which demographics had to be targeted to get her over the line.75
Political scientists have proposed two broad explanations for the result,
which have frequently been pitched as mutually exclusive alternatives. On
the one hand, Trump’s inflammatory rhetoric on immigration, race, and
gender issues, combined with the strong correlation between authoritarian,
misogynist, and racist attitudes and support for Trump, has underpinned an
explanation of the result in terms of race politics and a “white male” backlash
against the liberal cosmopolitan elitism purportedly represented by Hillary
Clinton. On the other, Trump’s success among lower-income white voters
in Rust Belt states such as Pennsylvania, Michigan, and Ohio drew atten-
tion to the role of economic grievance and opposition to trade liberalization
among some of the losers from globalization. The debate has become con-
fused as the normative implications of these two narratives become entangled
with the empirical evidence. For example, accounts of the troubles of the
“white working class” have been critiqued for appearing to justify illiberal
and authoritarian values,76 while analyses of the importance of race in voting
patterns among low-income whites have appeared to dismiss the importance
of the “legitimate concerns” of these voters.77
What emerges from the data is that both race and economic status matter
in American elections, and 2016 was no exception. Trump unsurprisingly
performed far better among whites than African Americans or Hispanics,
but he was not very different from previous Republican candidates in this
regard. The racist overtones of Trump’s campaign were reason to expect
that the 2016 vote would be more defined by racial divides than previous
elections, and survey data has strongly suggested this was the case. Trump
supporters in the Republican primaries scored higher on measures of racial
resentment than supporters of other candidates.78 But even before Trump’s
campaign began, race had begun to divide American voters into distinct
camps, as whites became increasingly likely to identify as Republicans, and
nonwhites as Democrats, in the course of the Obama presidency.79 As a re-
sult, analysis of the 2016 vote has tended to focus on race to the exclu-
sion of other factors such as economic grievances. According to this view,
Americans had simply become racially polarized, because of demographic
change and the trauma for many white Americans of an African American
president.80

However, a number of the areas that swung heavily to Trump had deliv-
ered comfortable victories for Obama in 2008 and 2012. The underlying
premise of the racial divide thesis is that white Americans voted for Trump
because of their anxieties about cultural change, triggered by the eight years
of the Obama presidency. But this fails to explain why the cultural anx-
iety was not present when Americans elected Obama—twice. Moreover,
the factors that allegedly motivated disgruntled white voters to support
Trump on the basis of his nativist appeal were not new: immigration had not
increased particularly sharply under Obama compared to previous presidents,
nor had Obama followed policies that favored African Americans over others
in any noticeable way. After a brief blip during the financial crisis, American
voters’ attitudes toward immigration became more, not less, favorable over
the decade prior to Trump’s election to the presidency.81 Race had long been
a strong predictor of the vote in American politics, but it is counterintuitive
to suggest that race mattered more in the 2016 election than it had in two
previous elections in which an African American candidate was actually on
the ballot.
One of the reasons that disentangling the effects of the Obama presidency
in polarizing racial attitudes from the effects of economic grievance is that
Obama was elected in the midst of the financial crisis. His presidency there-
fore coincides very closely with the period of the most acute economic distress
in recent American history, although, as we have seen, economic grievance
had far deeper roots than the financial crisis. Another reason the role of ec-
onomic factors fails to emerge clearly in the data is that, as a Republican
candidate, Trump was always likely to win disproportionate support higher
up the income scale: Republican voters on average had higher incomes than
Democrats in previous elections,82 so the positive correlation between income
and support for Trump is not surprising. The most sophisticated attempts
to demonstrate the relative weight of race over economics have used survey
data to analyze the characteristics of voters who shifted from the Democrats
to Trump between 2012 and 2016, and have found that these voters scored
particularly highly on a measure of racial resentment.83 But these same voters
were peculiarly unconcerned with race when they voted for Obama in the
first place, often twice, before supporting Trump in 2016.
Trump won the election, despite losing the popular vote to Clinton, be-
cause he carried, with very slim margins, three key Electoral College states
that had previously been solidly Democratic, and that had been hit hard by
the crisis and the decline of manufacturing industry: Michigan, Pennsylvania,
and Wisconsin. There is compelling evidence that Trump’s ability to reach
beyond the electorate that supported defeated Republican candidates

McCain and Romney, and in particular to mobilize support in Clinton’s
“blue wall” states, did involve middle-and lower-income voters in economi-
cally troubled areas. For example, exit poll data suggests a substantial swing
to Trump among lower-income voters (income <$50,000) and a swing to
Clinton among higher-income voters, and particularly those with incomes
higher than $100,000, while the swing to the Republicans was higher in
lower-income areas84. In other words, differences in economic performance
across different regions of the United States translated into changes in sup-
port for Democrats and Republicans, with Clinton winning by big margins
in the more dynamic states on the two coasts, and Trump outperforming pre-
vious Republican candidates in the areas of the Rust Belt that had suffered
most from industrial decline and were receptive to his promises to revive the
manufacturing heartlands.
Of course, this appeal was far more effective among white voters than
other groups, given Trump’s barely concealed nativism (expressed in partic-
ular through his championing of “birtherism”—the claim that Obama had
been born overseas) and attacks on illegal immigration. Combined with ec-
onomic protectionism and hostility to environmentalism, Trump’s rhetoric
offered a solution to the problems faced by lower-income whites, promising
jobs and a return to their status privileges over nonwhite Americans. Clinton,
in contrast, offered very few concrete promises of major change, lacking a
strong message beyond her own competence and experience, alongside the
chance of breaking through the glass ceiling of male presidencies.85 Her ec-
onomic stance was pro-globalization, and accommodating of the interests
of big corporations and financial institutions, and indeed her campaign was
the biggest beneficiary of Wall Street donations.86 If Obama was the change
candidate in 2008, and Romney’s tax-cutting agenda offered little promise of
economic improvement for struggling Americans in 2012, Trump’s promises
to “drain the swamp” and “make America great again” may have been vague
and lacking policy detail, but alongside his long-standing opposition to
trade liberalization, they represented the possibility of a break with the ex-
isting policies that had left many Americans still waiting for an upturn in
their fortunes.
Trump managed to combine economically comfortable, yet fearful, voters
and resentful economic losers together in one nihilistic package. The illiber-
alism of the Trump campaign was not just visible in its racism, but also in
its anti-globalism. Steve Bannon, a key intellectual inspiration of the Trump
campaign, made this very clear in a revealing interview in 2018, in which
he railed against the theory of shareholder maximization, the offshoring of
American capital, and the impact of deindustrialization on working-class

communities.87 As he crudely put it, “The elites save themselves. [ . . . ] If
you’re an asset holder, if you owned real estate, stocks, or intellectual pro-
perty, if you’re an owner, you had the best run in human history, okay? If
you’re a deplorable, you got ****ed. You know why the deplorables are
angry? Look, you have socialism in this country for the very wealthy and
for the very poor. And you have a brutal form of Darwinian capitalism for
everybody else. You’re one paycheck away from oblivion. [ . . .] Dude, this
is ****ed up.” The appeal of this kind of message for a society under severe
economic and financial strain that political leaders had done little to address
is obvious.
Conclusion
In sum, Trump’s election on an openly protectionist program against a liberal
free trader like Clinton is as much a backlash against neoliberal policies as
about America’s long history of race politics. Americans had been subjected
since the 1970s to extensive retrenchment of the protective and redistribu-
tive institutions of the welfare state, progressive deindustrialization in once
prosperous regions accentuated by trade policy, and finally to a spectacular
financial crisis, all of which increased poverty, income and wealth inequality,
and economic insecurity. Trump’s aggressive economic nationalism and re-
fusal to pay lip service to the screeds of the neoliberal consensus may have
been singularly unconvincing to economists and elite opinion leaders, but
that acted as a qualification for many of the lower-educated voters he was
appealing to. By offering trade barriers and an end to illegal immigration,
Trump had a story to tell about how America could be made “great again.”
Offering an alternative to the market liberal orthodoxy for the first time in
decades proved a winning move for key sectors of society exhausted by short-
term economic pressures and long-term relative decline.
On the center-left, Clinton’s failure to win the presidency can be adduced
to many specific, short-term factors, such as her own lack of clarity of message,
the underlying misogyny of many American voters, and her vulnerability
to scandals real or manufactured. But her defeat was also the consequence
of the resentment felt in some traditionally Democratic blue collar areas at
the economically and socially liberal culture she represented, which offered
them neither economic opportunity nor the comfort of a privileged cultural
status. The unexpected success of Bernie Sanders in firing up more radical
and younger elements of the Democratic base with a more aggressive critique
of Wall Street and deregulated markets confirms that the desire for change

was not limited to the Republican electorate. In 2016, a neoliberal, pro-trade
orthodoxy that had informed government policy for the best part of forty
years was attacked from both sides, and ultimately wound up defeated. And
as the next chapter shows, a similar story can be told about Britain’s vote to
leave the European Union just six months earlier.

CHAPTER 4 Taking Back Control: Britain
Turns against the Market
R arely can a political message have so swiftly turned against its au-
thor than British Prime Minister David Cameron’s pitch to voters on
the eve of the 2015 election: “Britain faces a simple choice—either stability
and strong government with me, or chaos with Ed Miliband.” Opinion polls
predicted Miliband’s Labour Party would win the election but fall short of
a majority in Parliament, meaning that it would need the help of the seces-
sionist Scottish National Party (SNP) to govern. In the event, Cameron’s
Conservative Party surprised everyone, including perhaps the prime minister
himself, by winning a narrow majority that kept him in office and allowed
him to dispense with his coalition partners, the pro- European Liberal
Democrats. The celebrations in Downing Street must have been tempered by
the realization that Cameron’s promised referendum on Britain’s member-
ship in the European Union would have to go ahead. Little over a year later,
having lost the “Brexit” vote, Cameron resigned, ushering in perhaps the
most unstable period in British politics since the 1930s.
Like Trump’s election in the United States, which it preceded by less
than six months, the Brexit vote was an anti-system vote, a vote of rejec-
tion of the existing political establishment and the economic policies it had
implemented since the 1980s. The EU referendum created a binary choice for
British voters, a choice between the political establishment and those outside
it. Remain was the status quo position, supported by the Bank of England,
business associations, the trade unions, and every major political party
represented in Parliament, although a significant faction of the Conservative
Party campaigned for a Leave vote. In other words, anyone seeking to cast a
protest vote had little reason to vote Remain, unless they were convinced by
the dire warnings delivered by the Treasury and the Bank of England that
leaving would make a bad economy even worse.
Just as Trump’s victory mobilized entrenched racial divides in the
United States, Brexit reflected a long-standing skepticism about European
integration in British society. But at the same time, enthusiasm for
Brexit was a minority interest, confined largely to the right wing of the
Conservative Party: Europe only became a salient issue for British voters
after the referendum had been called, and even more so in its aftermath.
How did what was a marginal concern for most voters come to dominate
the political agenda, making and destroying political careers, and desta-
bilizing the British economy? This chapter will argue that Brexit formed
part of a wider anti-system revolt in Britain, which replaced the centrist
politics of the 1990s and 2000s with a deeply polarized politics pitting
half the country against the other. The Conservative Party lurched to the
right to become the party of Brexit, Labour elected the most left-wing
leader in its history, and Scotland embraced a party committed to inde-
pendence from the United Kingdom.
Just as in the United States, the story I tell cuts through the politics of
identity and personality to home in on the underlying economic and so-
cial fractures driving the anti-system vote. Brexit is the consequence not of
Britain’s participation in an unpopular European project, but of the political
choices made by British governments in recent decades, and the inability of
the governing elites to respond to the consequences of these choices. Like the
United States, the United Kingdom adopted a markedly neoliberal economic
strategy after the 1970s, and again like in the United States, this led to rapid
increases in inequality, economic insecurity, and severe industrial decline in
many regions. As a pioneer in the liberalization of financial markets, Britain
found itself at the epicenter of the Global Financial Crisis of 2008. The in-
cumbent Labour government responded to the crisis by backing full bailouts
of the financial sector, before giving way to a Conservative-led administra-
tion that imposed harsh austerity measures on a fragile economy. The crisis
and subsequent slump left large parts of society exposed to economic threats.
The anti-system backlash took diverse forms, inspired by inclusive and egal-
itarian principles as well as nationalistic and xenophobic impulses, but had
in common a rejection of the political establishment and its long-standing
economic policy consensus.

The Neoliberal Project in the United
Kingdom: Freer Markets, Less Government,
and More Inequality
The upheavals in the British political system in recent years, as in the case of
the United States, can be traced back to the ways in which the financial col-
lapse of the late 2000s exposed large sections of society to economic distress
and uncertainty. It is no surprise that among the rich democracies these two
most market-oriented economies have suffered the greatest post-crisis po-
litical turbulence. Britain was a pioneer of social policy development in the
postwar years, establishing relatively generous state pensions and unemploy-
ment benefits as well as publicly funded health and education systems,1 while
strong trade unions secured relatively equal shares of income across the dis-
tribution. But poor economic performance in the 1970s provided neoliberals
in the Conservative Party with an opportunity to launch a successful assault
on the postwar economic model, inspired by the same ideas that fueled the
Reagan reforms across the Atlantic.
The Thatcher revolution in the 1980s “rolled back” the British welfare
state, marginalized trade unions, and deregulated labor and financial markets,
making household living standards more dependent on market forces than
in the rest of Europe. As a direct consequence of these reforms, inequality
exploded: in the 1970s the Gini coefficient of inequality for the United
Kingdom was comparable to Germany, and much lower than in France, but
by 1990 it had come close to converging with the United States (see Figure
4.1). The main drivers of this change were increased divergence in wages
between higher-and lower-paid workers,2 cuts to welfare benefits,3 and less
progressive taxation. What is most striking about the UK case is both the
extent and the suddenness of the change, most of which occurred in the space
of little more than a decade in the 1980s and the early 1990s. Most other
European countries showed only moderate changes in the income distribu-
tion in the same period.
The dramatic rise of inequality was halted in the 1990s and 2000s, as
Thatcher’s successors softened the hard edges of the neoliberal project, but
the longer-term impact of the Thatcher era was to transform Britain into
a market liberal economy along US lines, with lower levels of social pro-
tection than other western European countries and a growing tendency for
income to be channeled to the highest earners. Even during the period of
Labour government after 1997, the top of the distribution performed far
better than everyone else: the top 10 percent grew its share of pre-tax income
Britain Turns Against the Market 119

Gini Coefficient Disposable Income
40
35
30
25
20
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
UK US Germany France
Figure 4.1 Post-Tax Inequality, UK, US, Germany, and France, 1970–2015
Source: Frederik Solt, Standardized World Income Inequality Database (https://fsolt.
org/swiid/).
18
16
14
Income Share Before Tax (%)
12
10
0
1980 1985 1990 1995 2000 2005 2010
Top 1% Top 0.1% Top 10-5% Top 5-1%
Figure 4.2 Pre-Tax Top Income Shares in United Kingdom, 1980–2012

Source: World Wealth and Income Database, http://wid.world/country/
united-kingdom/
from 28.4 percent to 42.6 percent in 2007, before dropping back in the
wake of the financial crisis. But what is even more striking is that the top
one percent, whose share almost trebled to over 15 percent between1979 and
2007, accounted for most of this change; those just outside the top 5 percent

of earners actually saw a decline in their share.4 Figure 4.2 also shows that
the top 0.1 percent—the top thousandth of the distribution—trebled in the
same period, reaching over 6 percent.
Market forces increased inequality not only between households but also
between regions. Just as income growth was mostly concentrated among the
top tenth of earners, economic growth became geographically concentrated
in the areas where high value-added industries were located, particularly
London, the home of most financial services activity, and larger cities in ge-
neral. As manufacturing industry declined and financial and business services
expanded, a wide gap opened up between London and the South-East and the
declining industrial heartlands of Northern England, South Wales, and the
West of Scotland. These latter regions were kept afloat through the redistrib-
utive effects of public spending, which was highly vulnerable to the brutal
fiscal shortfall caused by the financial crisis.
As well as higher inequality, the shift toward a more market-oriented
economy also exposed households to greater uncertainty and insecurity. The
liberalization of the financial sector fueled a rapid expansion of credit to fi-
nance consumption and home loans, leading to a boom and bust cycle as
house prices fluctuated sharply. Personal debt skyrocketed, while the state
withdrew from supplementary pensions provision, encouraging workers to
invest in private pension plans subject to market volatility and predatory
management fees. Much of the country’s social housing was sold off, en-
couraging social tenants into private homeownership, where some made big
capital gains, while low-income groups without capital were increasingly
pushed into the private rental sector with more uncertain tenures. Increased
leverage made households more vulnerable to financial instability by encour-
aging participation in speculative bubbles, especially in housing assets. As
the savings rate declined, high ratios of household debt to household income
left households increasingly reliant on easy credit conditions.5
In short, the pro-market reforms of the 1980s led to greater economic in-
equality and unpredictability. The economic fortunes of the average Briton
became more dependent on market forces, market forces that were less and
less easily controlled by government, while the skewed income distribution
concentrated a larger share of income growth at the top. Median income did
grow consistently during the 1979–2007 period, but after the financial crisis
all groups suffered significant income losses, including the top decile: av-
erage wages actually fell in real terms between 2007 and 2015.6 The putative
trade-off between inequality and insecurity and higher-income growth may
have made some sense before the financial crisis, but in its aftermath ine-
quality and insecurity were all that was left.

Beyond Left and Right: How British Parties
Stopped Fighting over Economics
The kind of inequality and insecurity seen in Britain since the 1980s
is difficult to sustain in a democracy, since the winners at the top are far
outnumbered by those who are left behind by economic growth. Yet while
poverty rapidly increased, British governments reduced the tax burden on
upper-income groups and restricted spending on popular social policies.
What is even more remarkable is that this policy mix remained substantially
unaltered even after the Conservatives were defeated in 1997, and the Labour
government that replaced them presided over the spectacular rise in top in-
come shares charted in Figure 4.2. This is all the more paradoxical because
survey evidence shows that British voters remained extremely attached to
redistribution and the welfare state, even as their governments pushed the
market liberal agenda. Figure 4.3 reveals that for all the talk of “rolling back
the state,” support for reducing government spending among British voters
100
90
80
70
60
50
%
40
30
20
10
0
1983
1985
1987
1990
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Income gap is too large

Government should redistribute income
Increase taxes/spend more
Keep taxes/spend same
Reduce taxes/spend less
Figure 4.3 Attitudes on Income Redistribution, Taxation, and Spending in the

UK, 1983–2012 (% Supporting)
Source: Alison Park, Caroline Bryson, Elizabeth Clery, John Curtice, and Miranda
Phillips (eds.), British Social Attitudes: The 30th Report (London: NatCen Social
Research, 2013) (www.bsa-30.natcen.ac.uk).

was vanishingly small throughout this period, while the vast majority felt
that income inequality was too high.
The fundamental reason for this entrenching of a market liberal orthodoxy in
Britain is that by the 1990s the Labour Party had proved incapable of winning
power on a left-wing platform, and concluded that the centrist voters it needed
to attract would not tolerate any deviation from a pro-market, low-tax agenda.
Labour’s problems were tied up with the decline of the traditional class-based
battle lines of the British party system, in which Labour won support predomi-
nantly from manual workers, especially in industrial regions, while Conservatives
enjoyed solid support from middle-class households, especially in rural areas and
in southern England.7 The deindustrialization of the 1980s and 1990s decimated
the Labour Party’s traditional base, forcing it to seek votes among middle-income
voters in the more prosperous parts of the United Kingdom.8
Labour’s failure to win back power led to an internal shift as pragmatic
and centrist forces sought to recover ground by accepting much of the
Thatcherite settlement, and working within a broadly pro-market frame-
work. This process reached its height with the election of Tony Blair as party
leader in 1994. Blair immediately set about detaching Labour from its tradi-
tional roots, rewriting the party constitution to eliminate references to state
ownership of the economy, and distancing himself from the party’s tradi-
tional support base in the trade union movement.9 As Labour camped out in
the center of the political spectrum, the Conservatives under John Major also
adopted a more accommodating tone, stepping back from Thatcher’s unpop-
ular plans to outsource healthcare and education to private companies. The
resulting convergence around a central position of free markets combined
with modest welfare provision was described by one author as “Blaijorism.”10
To secure the votes of “middle England,” Blair’s Labour promised
fiscal restraint and a focus on preventing inflation. In an economy where
households had taken on high debt burdens and many voters had variable in-
terest mortgages on their homes, fears of financial instability under a Labour
government were central to the Conservatives’ electoral message. The Labour
response was to commit to strict fiscal rules, and delegate monetary policy to
the Bank of England, while loudly applauding the City of London’s contri-
bution to the UK economy.11 Labour’s decision to accept and work within the
constraints of a highly financialized economy closed off most avenues for fun-
damental change. Instead, Labour’s ambition was to draw on finance-related
tax revenues to pay for a limited expansion of the welfare state.
As a result, Labour’s victory in the 1997 election brought no dramatic
shift in fiscal policy; indeed, if anything, fiscal policy was initially tighter
than a Conservative government would have followed. The significance of

these policy choices was to effectively end the debate on macroeconomic
policy between the major political parties, since the Conservatives found little
to object to in either move. Not only was Labour’s policy stance perfectly
in line with the market liberal orthodoxy of the “Washington Consensus,”
but it was instrumental in seeking to align other parties of the “center-left”
with these positions, notably in the “Third Way” summit held in Florence
in 1999, with Bill Clinton and various European leaders in attendance.12
Moreover, under Blair the United Kingdom continued to champion liberal
market reforms in the European Union, and fatefully the Labour government
opened the UK labor market to workers from the new 2004 member states
with immediate effect. This led to a rapid influx of low-wage labor from
Poland and other eastern European countries that would prove a key driver of
support for Brexit in 2016.
This does not mean that no differences remained between the parties: the
Blair government made considerable efforts to address problems of poverty,
increasing public spending on healthcare and education, improving sup-
port for working households on low incomes, and raising state pensions.
Incomes for households in the bottom half of the income distribution grew
more quickly than for those in the top half, excepting the top decile, which
outstripped all other groups.13 This odd pattern of redistribution from the
middle to the bottom and the top reflected the awkward coalition between
lower-income groups and the financial elite that Labour had constructed.
The strategy was a Faustian pact in which the Blair government offered the
City of London a “light touch approach [to] financial regulation.”14 In the
celebrated words of Labour minister Peter Mandelson, the party became “in-
tensely relaxed about people getting filthy rich, as long as they pay their
taxes.”15
Labour’s newfound enthusiasm for open markets and light touch regula-
tion removed one of the main areas of political disagreement in British pol-
itics, such that by the 1990s the positions of the major parties on the most
important issues of economic and social policy appeared increasingly similar.
Figure 4.4 shows that the policy positions of the major parties, after diver-
ging dramatically in the 1970s and 1980s, began to converge in the 1990s.
Figure 4.5 shows that this convergence was particularly clear on economic
issues, with Labour moving toward a more pro-market position through the
1980s, 1990s, and 2000s, and the Conservatives becoming less hostile to
public spending after the departure of Margaret Thatcher. The main chal-
lenger to the two big parties, the Liberal Democrats, occupied the increas-
ingly tight space between them. British voters could have any government

40
30
20
Left-Right Position
10
–10
–20
–30
–40
–50
–60
45
50
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20
20
Conservative Labour Liberals/Lib Dems
Figure 4.4 Party Positions, UK, 1945–2015, Percentage of Right-Wing

Statements Minus Percentage of Left-Wing Statements
mpds.2018b).
0.5
Party Position
–0.5
–1
–1.5
45
50
51
55
59
64
66
70
74
74
79
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92
97
01
05
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20
20
Conservative Labour Liberals/Lib Dems
Figure 4.5 Party Positions on State/Economy UK, 1945–2015, Percentage of

Right-Wing Statements Minus Percentage of Left-Wing Statements
Source: Volkens et al., The Manifesto Data Collection (see Figure 4.4).
they liked, as long as it subscribed to the attenuated market liberal positions
the major parties were committed to.
This pattern of convergence was aided by Britain’s “majoritarian” elec-
toral system, based on single-member districts, which places a premium on
parties’ ability to win “marginal constituencies” where seats can be won from
rival parties. For Labour, this meant that a vote in these districts was far more
valuable than in their traditional heartlands, where Conservative support was
limited, so the party’s strategy was focused disproportionately on the needs
of “floating” voters in around 100 constituencies that could be won from
the Conservatives. These tended to be small towns and suburbs, particularly
in the Midlands and the South of England, which had often done relatively
well out of the economic changes of the 1980s. The 1992 election, Labour
strategists concluded, had been lost among precisely those voters, and for
those reasons;16 the party therefore needed to eliminate voters’ fear of tax
rises and excessive spending on welfare, competing with the Conservatives by
adopting many of their policies.
As Labour entrenched its grip on power in the 2000s, the Conservatives
opted for a similar strategy to attempt to claw back power. David Cameron,
elected party leader in 2005, attempted to ditch the party’s socially conser-
vative image and committed to matching Labour spending plans, in a fasci-
nating flip-side of the pattern in the 1990s. The Conservatives aligned with
the Labour government’s macroeconomic positioning and had little reason to
object to its enthusiasm for financial market deregulation. The main rival to
the two-party cartel, the Liberal Democrats, barely diverged from this con-
sensus themselves, focusing on opposition to Blair’s support for American
military intervention in Iraq. This lack of ideological diversity among elected
politicians was matched by an increasingly narrow social and professional in-
take. The Labour parliamentary party in particular had fewer members with
a working-class or trade union background, and a growing share of London-
based, university-educated political professionals, who had served as political
advisors before standing for election.17 In the run-up to the financial crisis,
British party politics was easily characterized as a complacent clique.18
Not only did voters appear to have little choice at election time, but the
parties themselves became increasingly distant from their grassroots. The
Labour Party was founded as the political arm of the trade union movement
in 1900, and historically relied on the unions for funding and mobilizing the
working-class vote. But in the Blair years, the unions were seen as a liability
for Labour’s image, and the party sought alternative means of funding, often
in the form of individual donations from wealthy individuals, which by 2001
constituted 45 percent of its income.19 Not only did this anchor Labour to

a pro-business position but it was also a source of embarrassment, as private
donations were sometimes linked to sleazy favors, such as the exemption of
the Formula One competition from a ban on tobacco advertising after a mil-
lion pound donation to Labour from Bernie Ecclestone, CEO of the racing
group.20
Partisan convergence may have been useful for attracting flows of capital
into the United Kingdom, financing consumption and raising asset prices,
but it was bad news for democratic legitimacy. The Blairite commitment to
neoliberal economics, albeit with a modicum of anti-poverty measures, dra-
matically reduced the degree of choice on offer in UK general elections. The
broad similarity between the parties’ economic policy positions meant that
elections were no longer very decisive in shaping policy. Voters dissatisfied
with economic conditions would be hard pressed to find a way of expressing
a preference for change without moving outside the established party system.
Breaking the Cartel: The Threats to the British

Two-Party System
The costs of cross-party consensus for the legitimacy of the British system of
government were reflected in a dramatic fall in voter participation during the
1990s, with turnout dropping to less than 60 percent in 2001, the lowest on
record in the United Kingdom, and one of the lowest in western Europe.21
Low turnout alone would not necessarily imply any particular democratic
malaise, though the drop in voter participation did occur after Labour’s shift
to centrist positions under Tony Blair. Turnout was lowest among younger
voters: less than 40 percent of 18–24-year-olds, and less than half of25–34-
year-olds, voted in the 2001 and 2005 elections.22 As the party system and
conversation between political leaders became less representative of society,
voters either dropped out of political participation or looked for different
ways of expressing their demands.
Although turnout fell across the United Kingdom, there were significant
variations across regions: it was highest in the prosperous South, and lower
in the areas furthest from London. The twenty constituencies with lowest
turnouts in the 2017 election were all low-income areas, in Scotland or
Northern England, which had been Labour strongholds for decades. This was
a clear sign that working-class voters were losing enthusiasm for a party that
was increasingly rooted in London and less and less representative of their
social and cultural traditions.23 The constituencies with the highest turnout,

in contrast, were high-income areas, all of them marginal constituencies,
mostly in the South of England, contested between Labour, Conservatives,
and the Liberal Democrats.24 Economic decline combined with political ne-
glect to alienate large swathes of voters in nonmetropolitan Britain. It is hard
not to conclude that this rising abstention rate reflected dissatisfaction with
the lack of available alternatives, and a feeling of low voter efficacy. Many
voters appeared to wonder, “What is the point?”
Figure 4.6 gives a longer-term picture of the structural shifts in voting
and nonvoting since World War II (the chart presents shares of the total reg-
istered electorate to capture turnout as well as party support). The decline
of the two main governing parties, Labour and Conservative, is clearly vis-
ible: at their peak in the 1950s, they commanded the votes of 80 percent of
the electorate, and well over 90 percent of votes cast. By the early 1990s, the
number of voters actively supporting the party of government, or indeed ei-
ther of the two parties that have provided every prime minister since the war,
fell to embarrassingly low levels. In 2005, Tony Blair’s Labour Party won a
comfortable parliamentary majority with only 35 percent of the vote, on a
turnout of little over 60 percent: Labour was able to govern with the active
support of less than a fifth of the electorate. Average turnout in local council
elections in the United Kingdom was only around 33 percent in 2016, and
below 50 percent in local and metropolitan mayoral elections.25 In European
90
80
70
60
50
40
30
20
10
0
45
50
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20
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20
Labour Conservative Lib Dem

Labour + Conservative UKIP* Nonvoters
Figure 4.6 UK-Vote Shares (% of Registered Voters)

Parliament elections, turnout was also low at 35.4 percent (for 2014), the
second lowest in the EU15, after Portugal.26
Those voters who did cast a vote were more and more likely to desert
Labour and the Conservatives for anti-system parties, as Figure 4.7 shows.
In 1997 the Referendum Party, a campaign for a referendum on EU mem-
bership bankrolled by James Goldsmith, won 2.6 percent of the vote as the
Conservative vote collapsed. The UK Independence Party (UKIP), which
advocated withdrawal from the European Union, also contested Westminster
elections for the first time in the same year, and saw its vote share climb
steadily through the 2000s, before leaping to a spectacular 12 percent in
2015, electing just one MP (a defector from the Conservatives). In European
Parliament elections, where proportional representation increased the oppor-
tunities for small parties after 1999, it performed even better, growing its
vote steadily to finish second in 2009 and first in 2014, with 26 percent of
the vote, pushing the governing Conservatives into third place.
The Green Party also made steady gains, winning representation in the
European Parliament and in the devolved assemblies in Wales, Scotland, and
London, and finally a parliamentary seat (Brighton, a south coast city with
two universities within easy reach of London). Respect, a party founded by
renegade Labour MP George Galloway and drawing on support from leftist
fringe group the Socialist Workers’ Party, mobilized in mainly Muslim areas
around opposition to the Iraq War, twice winning election to Parliament, in
2005 and 2012. The far-right British National Party (BNP) picked up al-
most 2 percent of the vote in 2010, focusing on low-income white voters in
declining industrial towns, especially those with some presence of migrants
14
12
10
Vote Share (%)
0
1979 1983 1987 1992 1997 2001 2005 2010 2015 2017
UKIP Green SNP PC BNP Respect
Figure 4.7 Anti-System Party Support, 1979–2017

from Muslim countries. Even more unusually, a family doctor managed to
be elected MP for the constituency of Wyre Forest in 2001 on a single-issue
campaign to save a local hospital from closure (he was re-elected in 2005).
These successes for minor parties marked a departure in British politics,
which had no tradition of independent candidates in the postwar period.
These parties articulated political identities and ideas that were effectively
locked out of the system by the ruling duopoly. The Conservatives and Labour
were both committed to continued membership in the European Union,
supported the contentious Iraq War, and shared a basic belief in the virtues
of the market system mitigated by an adequate welfare state. They supported
trade openness and free-flowing global capital, enthusiastically lobbied for
the City of London, and encouraged foreign investors to buy up British as-
sets, including in key strategic sectors, and even to run public services. There
were important differences of emphasis and over preferred beneficiaries of so-
cial policy, but neither contested the basic features of the post-1979 growth
model of the United Kingdom.
The challenger parties, in contrast, all contested aspects of this consensus.
This was most evident on the Far Right. The BNP was an exemplar of far-
right racist nationalism, with strong authoritarian tendencies and a heavy
focus on immigration and other purported threats to British identity.27 UKIP
shared some of these characteristics, but lacked the BNP’s appeal to violent
youth, representing instead authoritarian social values and opposition to im-
migration, and of course exiting from the European Union.28 The market lib-
eral consensus, in particular its focus on frictionless trade and free movement
of labor, was unambiguously rejected by these parties, which attacked the
governing parties as a closed elite of established politicians, contemptuous of
popular opinion.29 Right-wing anti-system forces grew from around 2–3 per-
cent of the vote in the late 1990s to 13 percent in 2015.
The anti-system Left in Britain rejected market liberalism and advocated
greater state involvement in the economy and the protection or expansion of
the welfare state. Initially this achieved only limited support. The Respect
Party represented left-wing positions on economic issues, but its main focus
was campaigning against Western foreign policy, notably in the Middle East.30
By the 2000s the Greens had moved beyond their environmentalist origins
and also adopted a strong anti-war and anti-capitalist message,31 typical of
left-libertarian parties. As on the anti-system Right, pejorative references to
the “Westminster parties”32 and similar anti-establishment rhetoric33 were a
central part of the discourse on the anti-system Left.
Even though the foundations of the two-party system were steadily
eroding, Labour and Conservative parties continued to form governments

with parliamentary majorities, leaning on the distortions of the electoral
system. But as economic conditions turned toxic after 2007, their lack of
popular backing placed the system under unsustainable pressure. With im-
peccable timing, Tony Blair resigned in spring 2007, handing the baton to
his deputy, Gordon Brown, after a prolonged dispute over the leadership.
Brown therefore had the misfortune of taking over just as Britain’s bloated
financial sector, which had sustained economic growth during Blair’s period
in office, began to collapse. Gordon Brown had barely moved the furniture
into Number 10 Downing Street when reports came in of anxious savers
queuing outside branches of Northern Rock, a bank based in the North-East
of England: the first bank run in the United Kingdom since the nineteenth
century.
Gordon Brown Saves the World . . . Well, Just

the Banks: The United Kingdom and the Global
Financial Crisis
The financial crisis in the United Kingdom followed similar dynamics as
those in the United States—unsurprisingly, given the tight connections be-
tween financial markets in the two countries. Although most accounts iden-
tify the US subprime mortgage markets as the key trigger of the global crisis,
Northern Rock was an early victim when debt markets ran into trouble in
2007. The bank had expanded rapidly into the mortgage market by of-
fering loans to customers without down payments, operating on thin capital
buffers, and dependent on short-term financing. The government quickly
acted to stem contagion by first extending liquidity support, then guaran-
teeing all deposits, and finally nationalizing the bank in early 2008. This
established a pattern repeated throughout the financial crisis of attempts to
find a market-based solution, with the help of emergency central bank li-
quidity, then adopting government guarantees to shield institutions from the
consequences of their exposure, and finally surrendering to the need for overt
government rescues of struggling banks.
For several months it appeared that Northern Rock could be dealt with
as an isolated problem, and Labour attempted to maintain its broad lax ap-
proach to financial regulation, resisting a full government takeover until it
became unavoidable.34 But as the American financial markets began to col-
lapse in late summer 2007, other institutions were dragged into the front line.
After the Lehman Brothers’ bankruptcy, fears about the solvency of financial
institutions spread worldwide, seizing up London’s interbank markets and

drying up liquidity for its institutions. The most troubled banks, the Royal
Bank of Scotland (RBS) and Halifax-Bank of Scotland (HBOS), along with
the smaller Bradford and Bingley, all of which were heavily reliant on whole-
sale funding, failed and had to be bailed out and mostly nationalized, with
the government guaranteeing their liabilities and taking majority stakes,
while the Bank of England provided easy access to liquidity.35
The UK Parliament was in midterm when the crisis hit, so the in-
cumbent Labour government, which still had a majority in Parliament,
had the opportunity to develop its own policy response to kick-start the
economy and cushion households from the effects of the recession that
would inevitably follow. In line with the incoming Obama administration
and most governments in Europe, the United Kingdom adopted a stim-
ulus package worth around 1.5 percent of GDP to buoy domestic demand
as consumers retreated to contemplate their tattered balance sheets.36 But
the sheer magnitude of the crisis quickly translated into a collapse in tax
revenues and a spike in government borrowing, with the deficit reaching
10.3 percent of GDP by 2010.37 Even this level of deficit spending could
not cushion the economy from a significant GDP contraction of 6.3 per-
cent, declining real wages (as the pound depreciated), and falls in house
prices.38
The amounts of money involved in bailing out the banks were mind-
boggling to an electorate accustomed to politicians arguing over the cost
of small changes to health or education spending: saving Northern Rock
alone involved government loans and guarantees of upward of £55 billion,39 a
figure equivalent to around half the government’s annual spending on health-
care. The total cost of Britain’s intervention in the financial system was eye-
watering: the United Kingdom spent 26.8 percent of GDP on assistance to
banks between 2007 and 2011.40 The Bank of England itself described the
bailouts as “the largest UK government intervention in financial markets
since the outbreak of the First World War.”41 Meanwhile, even with govern-
ment stimulus measures, households were facing real hardship, with frozen
or falling wages, collapsing asset values (especially house prices), and in some
cases job losses. In this context, Prime Minister Gordon Brown’s skilled man-
agement of the crisis won little praise outside elite circles: he was widely
derided for a slip of the tongue during a parliamentary debate, where he
boasted “not only did we save the world” before correcting himself to the
embarrassing “we saved the banks.”42
The opposition Conservatives were quick to exploit popular outrage,
dropping their previous commitments to match Labour’s spending plans and
abandoning their initial bipartisan approach to dealing with the banking

crisis. Seeing an opportunity to skewer Labour for the downturn and exploit
the explosion of national debt to roll back welfare spending, David Cameron
began to blame the crash on Labour’s “profligate” behavior in government.
Familiar tropes of austerity made their appearance, with the Conservatives ac-
cusing Labour of “failing to fix the roof while the sun was shining,” “ ‘maxing
out’ the national credit card,” and insisting on a period of “belt-tightening”
to “balance the books.”43 This was successful in defeating Labour in the 2010
election, but the Conservatives fell short of a majority and had to form a co-
alition government with the Liberal Democrats.
Labour’s defeat marked a significant shift in policy, with the Cameron
government committing to a stringent program of austerity in an optimistic
attempt to eliminate the United Kingdom’s structural budget deficit in five
years. This plan fell in line with the abrupt end to Keynesian responses to
the crisis in Europe and the United States around the same time, dismissing
concerns by most economists that contractionary fiscal policy would depress
demand at a time when heavily indebted British households were busily de-
leveraging their stretched balance sheets.44 Not only did this mean an end
to any attempt to use fiscal stimulus to promote growth, it also shifted the
burden of adjustment very heavily onto recipients of government spending.
Unlike other European countries that balanced deficit reduction between tax
increases and spending cuts, the British austerity plan prioritized cuts to wel-
fare and discretionary government spending.45
Predictably, this change of government failed to offer much relief to hard-
pressed British voters. Although employment recovered to a degree that
surprised most economists, growth and wages stagnated, leading to a re-
laxation of the pace of fiscal tightening in 2012 and an abandonment of the
initial five-year deficit reduction plan. Productivity growth after the crisis
dropped to zero, and domestic demand was constrained by the attempts of
both households and the government sector to deleverage at the same time.
Wages were frozen, by deliberate government policy, in the public sector, but
also barely grew in the private sector. Uniquely among the advanced dem-
ocracies, in the United Kingdom experienced declining wages even though
the economy expanded between 2007 and 2015:46 wages fell by more than
in any OECD country except Greece (see Figure 4.8). This was facilitated by
the United Kingdom’s flexible labor market rules and the depreciation of the
pound, which meant that nominal wage stagnation meant real wage cuts.
Ominously, this wage stagnation coincided with a sharp rise in migration
from the troubled countries of southern and eastern Europe.
Not only was the United Kingdom’s overall economic performance com-
paratively poor in the post-crisis period, but the pain was also far from evenly

25
20
15
10
–5
–10
–15
OECD
HUN
DNK
EA19
CAN
GRC
GBR
NLD
AUT
SWE
DEU
LUX
CHE
SVN
PRT
LTU
USA
LVA
AUS
FRA
SVK
JPN
CZE
POL
BEL
ITA
FIN
EST
ESP
IRL
ISR
Figure 4.8 Cumulative Real Wage Growth, 2007–2015 (%)
Source: OECD, “Employment Outlook 2016” (https://www.oecd-ilibrary.org/
employment/oecd-employment-outlook-2016_empl_outlook-2016-en).
distributed. Britain’s growth model already generated high levels of ine-

quality before the crisis, with economic growth concentrated in a handful
of sectors located predominantly in the South-East of England, where house
price and income growth outstripped the rest of the country. As the economy
began to recover from the crash, the same imbalances were reproduced. The
South-East quickly recovered, and by 2016 London was producing almost
double the UK average Gross Value Added (GVA) per capita, while all UK
regions apart from London, the South-East, and the West had lower GVA
than their pre-crisis peak.47 Although the United Kingdom’s aggregate
economic performance was poor, the lived experience of most parts of the
country was even worse.
It is therefore unsurprising that the United Kingdom entered a pe-
riod of political turbulence in the mid-2010s. The government that pre-
sided over the financial crisis had been dismissed, but its successor proved
unable to generate a strong recovery, instead subjecting the households
to harsh austerity in a failed attempt to eliminate the government def-
icit within one legislature. However the form the turbulence took was
less predictable, and indeed more or less completely unexpected. After a
long period of relative quiescence, in which dissatisfaction with the party
system had been expressed largely through passive abstentionism rather
than activism, political elites were taken aback by the scale of the rejection
of the status quo. It is an indication of the degree of disconnect between
voters and establishment politicians that this outcome should have come
as a surprise.

I’m a Voter, Get Me Out of Here: How Britain
Turned against Its Political System, Even
before Brexit
Labour’s predictable electoral defeat in 2010 was a spectacular one: the party
lost around a million votes and ninety-one seats, polling just 29 percent of the
vote, its second lowest share since World War II. But the unpopularity of the
major parties was reflected in the Conservatives’ failure to win outright, even
after thirteen years in opposition. In contrast, the centrist Liberal Democrats
won their highest-ever vote share, dominating the election campaign to such
an extent that both Cameron and Brown fell over themselves to “agree with
Nick” (Nick Clegg, the Liberal Democrat leader) during a televised debate.48
The decline of the two main parties was reflected in a joint vote share of only
65 percent, the lowest since 1910. Turnout was just 65.1 percent, the third
lowest in the history of universal suffrage in the United Kingdom. This col-
lapse of the two-party system meant that Britain faced a coalition govern-
ment for the first time since World War II.
The success of the Liberal Democrats did not, however, usher in a new
centrist politics in the United Kingdom. In the 2015 election the Liberal
Democrats paid a price for their involvement in the coalition, losing two-
thirds of their vote share. The big winners from this shift were not the es-
tablished parties, but antisystem forces such as UKIP and the Greens, which
quadrupled their vote to 12.6 and 3.9 percent, respectively, and the SNP,
which almost tripled its share (taking 50 percent in Scotland, and winning
all but three MPs there). The losses suffered by the Liberal Democrats were
the deepest of any party in postwar Britain, while the UKIP’s rise was the
second largest in the same period. The year 2015 saw the largest net change
in the vote of any election since 1931, while the election held just two years
later in 2017 produced the second-highest volatility score for the same pe-
riod. Not only were elections increasingly unpredictable, they were also
producing fundamental changes in political alignments and shifting power
toward anti-system forces.
As the established political parties lost their grip on power, British poli-
tics took a plebiscitary turn. Before 2010 there had been only one UK-wide
referendum—the vote to confirm Britain’s membership in the then European
Economic Community in 1975—and a handful of referendums over devolu-
tion reforms in Scotland, Wales, and Northern Ireland. In 2011 a UK-wide
referendum was held over electoral reform, and in 2014 a referendum over
independence, negotiated between the Scottish Executive and the Cameron

government, was held in Scotland. The Scottish referendum may not have
brought the breakup of the United Kingdom, but it indirectly set off a chain
of events that led to the rapid polarization of British politics and the vote to
leave the European Union. Scotland had been a bastion of the Labour Party
for decades, but Labour had steadily lost ground in devolved elections to
the Scottish Parliament,49 and in 2011 the SNP won control of the Scottish
government. The SNP’s appeal combined a “civic” form of nationalism with
promises of generous public spending and progressive values on social issues,
outbidding Labour on its left.
The Scottish referendum may have produced a clear win for the Unionist
position of remaining within the United Kingdom, but the pro-independence
campaign mobilized large numbers of especially younger voters, leading to
a rapid narrowing of the expected pro-Union advantage.50 The coalescing of
anti-system sentiment around the pro-independence position fed on itself, as
it forced the Westminster establishment parties to set aside partisan advan-
tage and form a united front in favor of the Union. Some 1,617,989 Scottish
voters supported independence (44.7 percent of a historically high turnout
of 84.6 percent), especially younger voters, and voters in low-income areas
in particular, including a high proportion of Labour voters who defied the
party’s pro-Union position.51 Labour was placed in the awkward position of
campaigning on the message that Scotland and the United Kingdom were
“better together,” alongside a Conservative government that was deeply un-
popular north of the border.
The political cost of keeping Scotland within the United Kingdom fell
heavily on Labour. The SNP quadrupled its membership in the year fol-
lowing the referendum and was able to run an energetic campaign in the
general election of 2015, winning half of the vote in Scotland.52 Due to the
workings of Britain’s First-Past-the-Post electoral system, this vote share
converted into the SNP winning fifty-six out of the fifty-nine Scottish elec-
toral districts, effectively wiping out not just Labour, which lost all but one
of its Scottish MPs, but also the Liberal Democrats, who lost ten of their
eleven seats. The SNP produced the unusual result that, for the first time,
a different party had won in each of the United Kingdom’s constituent na-
tions: the Conservatives in England, Labour in Wales, the SNP in Scotland,
and the Democratic Unionists in Northern Ireland. This political fragmen-
tation was compounded by the success of UKIP, which won almost four mil-
lion votes (mainly in England) but just one parliamentary seat; the Greens,
who won more than a million votes, held onto their one MP.
The quirks of the electoral system delivered a very slim parliamentary
majority for the Conservatives, despite their winning little more than a

third of the vote across the United Kingdom. Labour’s collapse in Scotland
destroyed any hope of its winning power, and brought the resignation of its
leader, Ed Miliband, leading to a sharp shift in the party’s leadership and
direction toward an anti-austerity stance. Under the new rules established
in 2014, the new leader would be elected by a free vote among all party
members, with candidates requiring the support of at least 15 percent of
Labour MPs.53 This reform, aimed at enhancing membership influence
over the leadership and reducing the weight of party office-holders, led
to the election of long-standing left-wing dissident Jeremy Corbyn. This
outcome had previously appeared so unlikely that some Labour MPs lent
Corbyn their nominations simply to allow him into the contest, despite
not supporting his campaign.54 There could be no clearer indication of the
stark disconnect between the party leadership and the party members that
Corbyn’s victory appeared so unthinkable. In the event, Corbyn not only
won, but won comfortably, with a large majority of almost 60 percent of
the vote, in a four-way contest.
In case there were any doubts that this represented a clear rejection of
Labour’s incumbent leadership, Corbyn’s rhetoric during the campaign was
witheringly critical of the largely pro-market, centrist strategy that Labour
had followed during the Blair-Brown years, and of the inability of the party
membership to influence policy. Corbyn stood on a “clear anti-austerity plat-
form,” promising “to give Labour Party members a voice in this debate.”55
The main themes of Corbyn’s discourse were unambiguous opposition to the
Conservative government’s program of cuts to welfare benefits and public
services, rejection of recent British foreign policy, especially in the Middle
East, and a change in economic policy to promote state-led investment
through monetary expansion, described as “people’s quantitative easing,” and
more progressive taxation.56 He also advocated renationalization of privatized
utilities such as the railways, the abolition of university student tuition fees,
and a substantial rise in the minimum wage. Although Ed Miliband had
pushed for a more left-oriented stance in his five years as leader, he was re-
luctant to push Labour all the way to a fiscally expansionary position, instead
adopting a cautious commitment to reducing the deficit through “sensible
reductions in public spending.”57 Corbyn cut through all that and promised
“an end to austerity.”
By late 2015, Britain was in the sixth year of a program of fiscal retrench-
ment that was originally scheduled to clear its budget deficit one year before.
Yet at the end of the 2014–2015 financial year, the government was still
borrowing 5 percent of GDP, or £92 billion, while total public debt had hit
87.5 percent of GDP, more than double the level prior to the financial crisis.58

Painful spending cuts, especially for local governments, and drastic meas-
ures to curb welfare spending had caused severe hardship for wide sectors
of British society. Among the measures introduced were cuts to housing
benefits for tenants living in properties with spare rooms (the so-called “bed-
room tax”), a household-level cap on benefits that affected families with large
numbers of dependents, cuts to council tax allowances for low-income fam-
ilies, more restrictive tests to qualify for disability allowances, cuts to tax
credit entitlements, and the freezing of child benefits, as well as the exclusion
of higher-rate taxpayers from child benefits. All told, it was estimated that
these measures amounted to cuts of £19 billion per year, or around £470 for
each working age adult in the United Kingdom.59
This squeeze was accompanied by increases in taxation, which reduced
disposable income, especially for the top 10 percent of households. The
impact of austerity was quite selective, and targeted in such a way as to
protect key support bases of the Conservative Party, notably the retired,
who were exempted from most of the welfare cuts, and whose state pensions
were not only protected from inflation but also indexed in line with wage
increases or 2.5 percent, whichever was highest (the so-called triple lock).
The working-age population bore the brunt of austerity, and the cuts to
welfare were compounded by the collapse in wage growth: in 2016, UK
workers were still on average paid less in real terms than before the finan-
cial crisis, leaving them around 20 percent worse off than if wages had
maintained their pre-crisis growth pattern.60 It was this austerity-fatigued
society that was to be asked, in June 2016, whether it wished to remain in
the European Union.
It’s Not Europe, Stupid: How the European Union

Took the Blame for British Austerity
By 2016, the British public was heartily sick of its political class and the
grim economic situation that had existed since the financial crisis. Even so,
most observers expected that voters would follow the recommendation of the
prime minister, most of the Cabinet and the ruling Conservative Party, all the
other political parties represented in Parliament except UKIP (one seat) and
the Democratic Unionists in Northern Ireland (eight seats), the trade unions,
business groups, the Bank of England, and the major international economic
institutions such as the IMF and the OECD. But the “establishment” was
not only weaker, but also more divided than it might have appeared. Over
one hundred Conservative MPs joined the Leave campaign,61 and the bulk

of the right-wing media, including Rupert Murdoch’s Sun, the best-selling
tabloid newspaper, were vociferous advocates of Brexit. Moreover, the various
Leave campaigns were not short of money or marketing expertise, enjoying
substantial financial backing (in part of dubious provenance) and skillfully
deploying targeted social media messaging.62
The result of the Brexit referendum took British politics by surprise in
part because it appeared to make little logical sense. Economic forecasts,
with barely any exception, pointed to serious economic costs if the United
Kingdom voted to leave. Moreover, Brexit was predicted to be most dam-
aging to the regions that voted for it—the agricultural East and postindus-
trial North and Midlands of England—because they were the most exposed
to the costs of reduced access to the European single market,63 and they were
the most dependent on EU structural funds.64 Much of the campaign fo-
cused on the alleged costs of EU migration to local communities and public
services, yet the areas that voted most strongly to leave were those with the
lowest levels of migration,65 while studies showed clearly that migrants are
net contributors to government finances, and provided essential staff for
public sector organizations such as the National Health Service rather than
burdening it.66 In sum, one could be forgiven for concluding that British so-
ciety had simply lost its mind and voted for its own demise.
This would be to take the Leave vote too literally. The evidence points
toward the EU referendum acting as a lightning rod for a range of social
tensions in post-crisis Britain, many of which had little to do with the
European Union itself, whose workings have long been poorly understood by
the British public. The United Kingdom was certainly one of the member
states where support for the European Union had been historically lowest,
and British voters were mostly unsympathetic to the European project. But
EU membership was a low salience issue, and only a minority of voters held
firm opinions on European integration.67 While nationalist sentiment was
clearly present in the Leave vote, with Leave voters identifying most strongly
with British, and especially English, nationalism,68 this sentiment had to be
mobilized and connected to the question of EU membership to produce the
Leave vote. The ways in which this was achieved drew heavily on the drivers
of anti-system politics that we have observed across the rich democracies.
Although there was a small faction of left-wing advocates of Brexit—
so-called “Lexit”—and one major Labour donor (John Mills) was involved
in funding the campaign, the Leave message was pitched at the electorate
most receptive to right-wing anti-system parties in other countries: older,
less-educated voters in declining regions. The slogan of the official Leave
campaign headed by former mayor of London Boris Johnson was “Take Back

Control,” which appealed to voters disoriented by the apparent inability of
governments to manage social and economic changes. To this extent Brexit
can be seen as part of the broad family of anti-system right-wing politics,
combining Euroskepticism, anti-globalism, and hostility to immigration
and the cultural change it implies. Immigration was a key theme of the unof-
ficial Leave campaign, Leave.EU, headed by UKIP leader Nigel Farage. Most
notoriously, Farage launched a poster campaign depicting a “caravan” of
thousands of refugees with the slogan “Breaking Point,” and also suggested
that Turkey’s application to join the European Union could lead to millions
of Muslim migrants to the United Kingdom.69
So did anxiety about immigration cause Brexit? Certainly numerous
surveys showed that immigration was high on the list of voter concerns in the
years preceding the referendum, and immigration control and the impact of
immigration on public provision of healthcare and welfare benefits were key
reasons for voter concern about EU membership.70 Survey data showed that
Leave voters were far more likely than Remain voters (47 percent compared
with 16 percent) to consider immigration the top priority for government
action, and immigration was the top issue in the referendum decision for
20 percent of voters.71 Goodwin and Milazzo found that changes in migration
were correlated with the Brexit vote at the local level, with rapid increases
in the migration population a better predictor of Leave voting than overall
levels of migration.72 Alongside the growing support for the anti-migrant
Far Right in Europe, the Brexit vote appeared to fit in with a broad pattern
of mass migration and rapid cultural change fueling anti-system voting.73
Any political project attracting the support of over half the electorate will
contain voters with diverse characteristics, and undoubtedly some propor-
tion of Leave voters were motivated by a broad cultural anxiety that mixed
hostility or fear of immigration with a feeling that European Union mem-
bership undermined British identity and sovereignty. For example, it has
been pointed out that the lion’s share of support for Leave came from socially
conservative voters in prosperous rural and suburban parts of England who
were—or at least felt—relatively unaffected by economic problems.74 Much
like Republican identifiers in the United States who supported Trump out
of partisan commitment, these voters could have been expected to support
Brexit even if the vote had been held in a context of economic optimism.
Rather than economic distress, many of these voters were animated by their
rejection of high levels of inward migration, which reached a net figure of
over 200,000 at the height of the Euro crisis as unemployed workers from the
Eurozone periphery sought work in the United Kingdom’s open and flexible
labor market.

But the actual patterns of migration, and the available evidence on their
impact, suggests that migration was not a sufficient, and maybe not even
a necessary, condition for the victory of the Leave campaign. First of all,
migrants gravitate to the areas where a growing economy generates the best
employment opportunities, which were also the places where voters were
least likely to support Brexit. In the central boroughs of London, the most
ethnically diverse area in the whole of the United Kingdom and a magnet for
migrant workers, support for remaining in the European Union approached
80 percent. In strongly Brexit-voting areas such as the North-East of England
and the West Midlands, the former mining communities in South Wales
and Yorkshire, or the agricultural heartlands of East Anglia, the migrant
share of the population was a fraction of that in the large cities or university
towns where the Remain vote won. Leave voters may have cited immigra-
tion preferences more than economic preferences in survey research,75 but the
Leave vote was higher in areas with lower immigration.
The referendum result makes a lot more sense if we observe the objective
economic characteristics associated with the Leave vote. The Leave vote pros-
pered most among low-income and less-educated voters. Of voters with no
more than secondary education, 78 percent voted Leave, as opposed to just
26 percent of university graduates; and 66 percent of those with monthly
earnings below £1200 voted Leave, compared with 38 percent of those
earning over £3800.76 Age, which is strongly correlated with education and
partly with income, was also a strong predictor of Leave voting, with 61 per-
cent of over-65s supporting Brexit, compared with just 40 percent among the
under-30s.77 Older, less-educated, and lower-income voters had the highest
propensity to support Brexit, and were also the groups most likely to hold
socially authoritarian and nationalistic attitudes: an anti-migrant appeal was
always likely to appeal to these voters, not because they were particularly
exposed to migration, but rather because they were hostile to migration in
principle, a pattern we observe across the rich democracies.
The Brexit vote was able to leverage anti-immigrant sentiment into an
anti-establishment vote with the help of the very real economic distress that
these voters had faced ever since the financial crisis. Leave voters perceived
significantly more threats to their future standard of living than Remain
voters, and were far more likely to take the view that life in Britain was worse
than in the past.78 The most Brexit-supporting demographic types were con-
centrated in economically declining “left behind” areas, which were those
most exposed to economic threat. One indicator of this was the price of real
estate: Ben Ansell of Oxford University has shown that the level of house
prices was a powerful predictor of the level of support for remaining in the

European Union, not only at the regional level, but also down to the level
of local council wards (the smallest administrative unit, usually containing
just a few thousand voters).79 House prices reflect the attractiveness of an
area and the number of people seeking to live there, and is therefore an ap-
propriate proxy not only for economic opportunity, but also for the kind
of demographic pressure associated with immigration. The richer and more
popular an area, the more likely it was that its residents voted to stay in the
European Union.
Voters in Leave areas may have expressed grievances about immigration,
but they were not in fact particularly affected by it. In any case, the available
evidence suggests very strongly that migration has been broadly of benefit
to the United Kingdom: not only were migrants, and especially migrants
from the European Union, net fiscal contributors, actually alleviating pres-
sure on UK public services, but there was no strong evidence of downward
pressure on wages or increased native unemployment resulting from EU im-
migration.80 The United Kingdom did not have a higher share of foreign-
born than other comparable countries, nor did immigration increase more
than in similar countries, and in any case most of the United Kingdom’s
increase was down to non-EU, rather than EU, immigration.81 Further, the
United Kingdom had the highest share of highly skilled migrants of any
comparable country. Yet there was a consistently higher level of concern in
the United Kingdom about migration than elsewhere in Europe. The UK
government responded to public concern by commissioning a committee of
experts (the Migration Advisory Committee [MAC], chaired by the London
School of Economics Professor Alan Manning) to assess the impact of immi-
gration, but the only clearly negative effect it found was an increase in house
prices.82 And as we have seen, this affected Remain-voting areas more than
Leave-voting areas.
The Leave vote is therefore best understood as a protest vote, not against
unbearable pressure from immigration, but from the precise opposite: eco-
nomic, and demographic, decline. The neoliberal reform agenda followed by
British governments since the 1980s had the effect of increasing inequality
not only between different occupational groups, but also between different
areas and regions. The destruction of manufacturing industry in the United
Kingdom, which began under Thatcher in the early 1980s and accelerated
under Tony Blair’s government in the 1990s and 2000s, left vast swathes of
the United Kingdom with little productive infrastructure, reliant on gov-
ernment transfers for support. These “left behind” areas declined further as
younger, more educated citizens left to build careers elsewhere, leaving a
population of older, less–educated, and generally poorer voters who were

disproportionately inclined to vote to leave the European Union. Figure
4.9 presents some basic patterns of voter types in the EU referendum, and
provides a clear picture of a Leave vote driven by economic neglect.
Figure 4.9 shows that age was a strong predictor of voting Leave in the
referendum, probably because many older voters fondly remember Britain
Female
Male
18–34
35–44
45–54
55–64
65+
Income less than £1,200 p.m.
£1,201–2,200 p.m.
£2,201–3,700 p.m.
£3,701 or more p.m.
Subjective Financial Living Comfortably
Doing alright
Just about getting by
Finding it quite/very difficult
Semi routine & routine occupations
Lower supervisory & technical occupations
Employers in small org.; self-employed
Intermediate occupations
Managerial & professional occupations
No qualification
O level or equiv/CSE
Higher educ. below degree/A level
Degree
Other
Black
Asian
Mixed
Any other white background
White British
Scotland
Northern Ireland
England and Wales (excluding London)
London
Britain in last ten years got a lot worse
A little worse
The same
A little better
A lot better
–60 –40 –20 0 20 40 60
Figure 4.9 Determinants of Leave/Remain Vote

Note: A positive value denotes more Leave voters than Remain voters displaying
the relevant characteristic/attitude.
Source: Data from Kirby Swales, Understanding the Leave Vote (London: NatCen
Social Research, 2016), data annex (http://natcen.ac.uk/media/1319221/
understanding-the-leave-vote-formatted-table-annex-final.xlsx).

as it was before it joined the European Economic Community, and because
discomfort with immigration tends to be higher among older voters, but
also because there were more of these voters in economically declining areas.
Similarly, voters of white British ethnicity (who themselves are more likely to
be older) were also more likely to vote Leave, as were those living in England
and Wales, but outside London, rather than in Scotland and Northern
Ireland. But Figure 4.9 also presents a clear pattern of economic disadvantage
and pessimism present in the Leave vote. The lower the income, the lower
the subjective financial well-being, and the more pessimistic the view of the
way Britain had changed in the preceding decade, the higher the support
for Leave. Moreover, this mapped onto the kinds of individual-level char-
acteristics that we know are good predictors of economic disadvantage: the
higher the level of qualifications, the more likely a voter was to have voted to
remain in the European Union, with Remain winning 74–26 among univer-
sity graduates, and Leave enjoying an even bigger advantage (78–22) among
voters with only secondary education. This is reflected in the strong support
for Remain in London, where average incomes and levels of education are
highest, and the victory of Leave in every other region of England and Wales.
If Brexit was all about immigration, then we are left with the puzzle of
explaining why voters most affected by immigration were least moved to
leave the European Union. Subjective concern about immigration may pre-
dict the Leave vote, but objective factors point instead to Brexit responding
to the ways in which the United Kingdom’s deep economic crisis affected
different groups, and different areas, to differing degrees. Statistical analyses
of the vote have shown that support for Leave is regionally strongly associated
with the impact of foreign trade on manufacturing industries,83 and with the
impact of government austerity measures.84 Economic change was mostly
likely to be detrimental to lower-skilled workers in these regions, and wel-
fare cuts were most likely to hit voters with lower incomes. The data shows
that these regions, and these types of voters, produced the strongest support
for Leave.85
Although Britain’s economy did recover more quickly from the financial
crisis than some European countries, this recovery was not felt in all parts of
the country: the South Yorkshire region suffered an economic contraction
similar to Greece.86 Stern warnings from the Bank of England that Brexit
could damage the economy had little credibility among voters reeling from
years of recession. The political scientist Anand Menon discovered this at a
public debate in Newcastle, in the North-East of England, during the refer-
endum campaign, when his suggestion that the United Kingdom could face
a decline in GDP after Brexit met the response, “That’s your bloody GDP, not

ours!”87 Many voters had lost trust in economists and civil servants after their
failure to anticipate the financial crisis or indeed the depth of the subsequent
recession, a distrust skillfully exploited by the Leave campaigner Michael
Gove, who famously claimed that “people have had enough of experts.”88
The Leave campaign successfully connected austerity fatigue with immi-
gration and the United Kingdom’s financial contributions to the European
Union to mobilize these lower-income voters in hard-up regions. Although
the strain on Britain’s public services was the direct consequence of the fi-
nancial crisis and the Conservative Party’s insistence on closing the deficit
through cuts to government spending, the Leave campaign deflected the
blame onto migrants and the European Union, claiming that the health
service was a victim of “health tourism” and that Brexit would free up
£350 million per week to spend on the NHS. The real impact of health
tourism was trivial,89 and the £350 million figure swiftly debunked, but
both claims were politically effective. In the post-crisis context of stagnation
or decline in living standards and severe constraints on public spending, this
illusory “Brexit dividend” was a powerful appeal. The counterargument from
the Remain side, notably from the Treasury and the Bank of England, failed
to hit home. The policy “establishment,” and the party elites that had pro-
vided it with political cover, were no longer able to hold together a failing
economic model.
The Aftermath: Brexiting Is Hard to Do

Brexit is unusual in the panorama of anti-system politics in that the refer-
endum vote mandated a clear course of action on a visibly binary matter: mem-
bership in the European Union. While Trump could finesse his building of
the border wall, the ban on Muslims, or his vague commitments to bring
jobs back to America, the vote to leave the European Union presented an
inescapable instruction to formally exit from a set of institutions, rules,
and contractual commitments that were deeply embedded in the everyday
life of the United Kingdom’s government, economy, and society. The com-
plexity and risk involved in such an operation may well have been the cause
of the shocked expression on the faces of key Leave campaigners such as Boris
Johnson on the morning after the vote, when it dawned on them that their
victory brought with it a responsibility to unravel over forty years of polit-
ical, economic, and legal development.90
The immediate consequence of the referendum result was the resignation of
David Cameron, followed by a leadership election in the Conservative Party to

choose a new prime minister. The leadership campaign pitted Brexiters against
Remainers, and although all the candidates publicly committed to respecting
the mandate to leave the European Union, the pathway for leaving and the ex-
tent to which Britain would maintain strong ties with the continent were up for
grabs. Theresa May’s victory in the contest came despite her having campaigned
for Remain in the referendum; however, her credentials as a hardliner on mi-
gration stood her in good stead to stand as a compromise candidate to maintain
party unity, particularly in the absence of a high-profile Brexiter candidate.
May’s political strategy was slow to take shape: her repetition of the mean-
ingless slogan “Brexit means Brexit, and we are going to make a success of
it” was a gift to satirists. However, her first conference speech as party leader
hinted at a recognition of the limits to Britain’s neoliberal growth model
and the need to build a more cohesive society, insulated from the pressures of
globalization. She described the Brexit vote as a “quiet revolution,” resulting
from the “division and unfairness . . . between a more prosperous older gen-
eration and a struggling younger generation. Between the wealth of London
and the rest of the country. But perhaps most of all, between the rich, the suc-
cessful and the powerful and their fellow citizens.”91 Her promised response
to these injustices involved not only Brexit, but also government action to
promote strategic British industries, invest in regional development, regu-
late markets to protect the most vulnerable, and even secure worker represen-
tation on company boards.
Media attention around the speech focused on May’s provocative claim that
the cosmopolitan idea of being a “citizen of the world” actually meant being
a “citizen of nowhere,” which chimed with her reputation as a closed-border
nationalist. But what was extraordinary about May’s speech was its recanting
of decades of free-market thinking in the Conservative Party, dating back to
the mid-1970s. This shift owed much to her close advisor Nick Timothy, a
steelworker’s son from the Midlands with a suspicion of globalization and a
determination to win over the working class to Conservatism.92 Shortly af-
terward, May laid out her approach to Brexit, which clearly ruled out full
membership in the Single Market and EU Customs Union by drawing two
“red lines”: that Britain should be free of the jurisdiction of the European
Court of Justice, and should no longer be subject to the principle of “freedom
of movement,” which outlawed restrictions on migration from EU coun-
tries.93 This strategy appeared designed to placate the hard Brexiters within
the Conservative Party, at the expense of alienating centrists and much of the
business community.
Having laid down her markers, May sent the European Union a formal
letter notifying it of Britain’s intention to leave, and set off a process that,

according to Article 50 of the European Union Treaties, would conclude
with “Brexit” two years later. She then called an early election in the hope
of extending the Conservatives’ thin majority, and winning valuable room
for parliamentary maneuver. Opinion polls put the Conservatives way ahead
of the Labour Party, which was still recovering from post-referendum in-
ternal strife, and whose leader, Jeremy Corbyn, was considered an electoral
liability. The 2017 election, far from delivering May a comfortable majority,
instead left the Conservatives with thirteen fewer seats than before, and re-
liant on the Democratic Unionist Party from Northern Ireland in the House
of Commons. The 2017 election confirmed British voters’ capacity to sur-
prise their political leaders. Although the election result was a disaster for
Theresa May, she did actually increase the Conservatives’ vote share by over
two million votes, the party’s best performance since 1992. Unfortunately
for her, Jeremy Corbyn’s Labour Party won nearly 13 million votes, just over
40 percent of those cast—the party’s best performance since Tony Blair’s in-
augural election victory in 1997.
Considering the background to the election, this was all the more extraor-
dinary: after the EU referendum, twenty-three of the thirty-one members of
Labour’s Shadow Cabinet resigned, and a motion of no confidence in Corbyn’s
leadership was placed by Labour MPs in July 2016, which he lost by 172
votes to 40. But instead of resigning, Corbyn held on, and forced a leadership
challenge, which, with the help of a dramatic expansion of Labour’s member-
ship, he won comfortably. A clear gap had opened up between Labour’s grass-
roots, strongly supportive of Corbyn, and the party elite and most of the news
media, deeply opposed to him and his left-wing identity. Most observers—
and many Labour MPs—predicted that Corbyn could only be dislodged by a
crushing electoral defeat, and fully expected this to be the outcome of May’s
snap election. Instead, Corbyn outperformed not only his critics but also
apparently his own team’s expectations: the party ran a defensive campaign,
focused on retaining supposedly vulnerable Labour seats, rather than seeking
gains at the Conservatives’ expense.
With Corbyn’s Labour winning 40 percent of the vote, and 42 percent
of the vote won by the now pro-Brexit Conservatives under May, the over-
whelming majority of British voters had backed parties that in differing
ways rejected the open-economy market-liberal consensus of the pre-Brexit
era. The sole remaining representative of this consensus, the centrist, pro-
European Liberal Democrats, won a paltry eight seats. The message of the
2017 election was clearly that Britain needed to change, but the nature of
the desired change was harder to fathom. The Conservatives were becoming
more clearly identified with Brexit, and their increased vote share was in

large part the consequence of hoovering up much of the electorate of the now
redundant UKIP. But Labour, whose official position was also that the ref-
erendum result should be respected, had mostly mobilized younger voters,
attracted by Labour’s promises of cheaper housing, an end to austerity, and
the abolition of university tuition fees, voters mostly hostile to Brexit. This
so-called youthquake created a Brexit dilemma for Labour, whose heartlands
had mostly voted Leave in the 2016 referendum.94
Labour’s difficulties paled into insignificance compared to Theresa May’s
political strategy, which was left in tatters by the loss of her parliamentary
majority. Worse, she now needed the votes of the Democratic Unionist Party
(DUP), whose core demand that Northern Ireland should leave the European
Union on exactly the same terms as the rest of the United Kingdom not
only was a minority view in the province, but also was inconsistent with the
Irish government and the European Union’s insistence that Brexit should
not lead to border controls in Ireland. May’s own “red line” of leaving the
EU Customs Union, in order to placate Brexiters who imagined the United
Kingdom free to run its own independent trade policy, was also inconsistent
with maintaining an open border in Ireland. The solution she negotiated with
the European Union—the so-called backstop tying the United Kingdom to
an open border—ultimately broke the government’s majority apart, with
the DUP and many right-wing Brexiters in the Conservative Party (organ-
ized around the European Research Group faction) rejecting the proposed
Withdrawal Agreement in late 2018.
The failure of May’s strategy culminated in her resignation in May 2019,
after four unsuccessful attempts to win parliamentary approval for her plan,
and a humiliating postponement of Britain’s exit date to October 2019. Her
failure could certainly be adduced to personal limitations, the poor election
result, and the machinations within her own party, but the Brexit saga also
reflected more fundamental divisions within British society and politics.
Brexit split both the Conservative and Labour parties, with around 42 per-
cent of Tory identifiers voting Remain in the referendum, while 36 percent
of Labour identifiers voted Leave. As the Conservative government took re-
sponsibility for delivering Brexit, it not only alienated some of its tradi-
tional voter base, but also much of the business community; in one symbolic
moment, Boris Johnson was reported to have dismissed concerns about the
economic impact of Brexit with the words “**** business!”95 Meanwhile,
Labour faced a different problem—the young, left-leaning voters underpin-
ning Corbyn’s Labour project were in their vast majority opposed to Brexit.96
In these circumstances the normal working of party and parliamentary poli-
tics broke down.

Brexit was always going to be difficult to deliver, requiring as it did a
fundamental rewiring of the British legal and economic order, which would
likely cause significant economic disruption. It was made all the more com-
plex by the way it laid bare the weaknesses of the major political parties.
Labour and the Conservatives both formally committed themselves to the
Leave position, but their party elites were in their majority skeptical about
Brexit, particularly in the Labour Party. The attempt by Theresa May to
conduct negotiations with the European Union secretively and with little
input from the rest of the Conservative Party, let alone the opposition parties
represented in Parliament, brought an unprecedented divide between the
House of Commons and the government. In Spring 2019, Parliament effec-
tively took control of the Brexit process by rejecting May’s proposed Brexit
deal, while simultaneously rejecting a series of alternative plans in succes-
sive parliamentary votes. The result was paralysis and a postponement of the
Brexit date that May’s government had previously set in law.
The European elections of 2019 delivered the electorate’s response to these
failures: the Brexit Party, a new party founded by former UKIP leader Nigel
Farage, polled a spectacular 30 percent of the vote, mostly at the expense of
the Conservatives, who finished fifth with just 8.8 percent, their lowest ever
vote share in any election in modern history. Labour was also punished for its
ambivalence over Brexit, finishing third behind the Brexit Party and the pro-
European Liberal Democrats, and also losing significant numbers of votes to
the Greens, another a pro-Remain party. The European elections reflected a
country that was increasingly fragmented but also polarized between a “hard
Brexit” position, on the one hand, and a complete rejection of Brexit, on the
other, with the compromise positions of the Labour and Conservative leaders
supported by barely a quarter of voters. The 2016 referendum had created
two new political identities—Leave and Remain—which were more strongly
felt than the traditional partisan identities of Conservative and Labour. The
anti-system revolt seemed to have created a new and perhaps lasting realign-
ment of British politics.
Conclusion
Britain’s anti-system turn shows the limitations of the neoliberal project: the
exposure of society to the volatility and inequality generated by markets
creates its own backlash, as different social groups turn against the market
system in their different ways. Not only was Britain as exposed as any country
to the wreckage of the financial crisis, it also responded to the downturn by

imposing harsh austerity, exacerbating its social costs. It was perhaps not to
be anticipated that the outcome would be a vote to leave the European Union,
but Brexit falls into the typical pattern of right-wing anti-system voting else-
where, focusing on immigration and targeting older, socially authoritarian
voters in declining regions. Labour’s leftward turn under Corbyn reflected an
anti-system turn fueled in particular by the economic grievances of a progres-
sive generation of younger voters, and a broader public rejection of austerity.
Britain’s anti-system politics is similar to that in the United States, with
extreme inequality and high levels of financial market openness spreading ec-
onomic anxiety across large sectors of society, and pitting younger, progressive
voters against older, more socially authoritarian ones. In the Eurozone, in con-
trast, anti-system politics followed a different pattern, as Europe’s debt crisis
pitted not only social sectors but also member states against each other, produ-
cing distinct patterns of anti-system politics: more left-wing in debtor coun-
tries, more right-wing in creditor countries. The next section explains why.

PART THREE THE BREAKING
OF EUROPE
CHAPTER 5 The New North-South Divide:
Bailout Politics and the Return of
the Left in Southern Europe
T he Euro area might seem an unlikely case of neoliberal overreach

sparking an anti-system backlash. Western Europe is the home of the
social market economy, that hybrid of capitalism and social protection which
has delivered not only some of the highest living standards in the world but
also relatively equal distributions of income and wealth. What is more, the
European banking system had appeared to be quite cautious in its approach
toward the kinds of financial innovation that sparked the meltdown of Wall
Street and the City of London. When the crisis hit, most European countries
could count on generous social shock absorbers to cushion society from the
worst effects of the downturn. Confident in the robustness of the European
social model, European leaders responded to the crisis with Schadenfreude: in
September 2008, German Finance Minister Peer Steinbruck claimed that
“the financial crisis is above all an American problem,”1 while French
President Nicolas Sarkozy declared the demise of “the unconstrained Anglo-
Saxon market model.”2
Within weeks of Steinbruck’s dismissive comment, governments across
continental Europe were bailing out their own banks, shelling out sums
just as unprecedented as those mobilized in Washington, DC, and London.3
Europe was also caught up in the inevitable slump following the crisis, with
an even worse hit to GDP than in the Anglo-Saxon world: Germany suffered
a drop in output of almost 7 percent, compared to just under 4 percent in the
United States. But far worse was to come as jittery financial markets began to
lose confidence in the stability of the euro currency itself, pulling money out
of the weaker economies of the Eurozone and necessitating a massive bailout
of sovereigns costing, on one estimate, 1.6 trillion euros. This sovereign debt
crisis stopped Europe’s post-crisis recovery in its tracks, and the fiscal aus-
terity imposed as a condition of the bailouts pushed the weaker countries into
a double-dip recession whose effects lasted most of the decade of the 2010s.
This economic disaster predictably wreaked havoc on the political sys-
tems of the countries most exposed to the debt crisis, but it also destabilized
the economically stronger countries who felt compelled to bail them out.
Anti-system politicians made hay in this environment. The countries that
suffered the most from the crisis—Greece, Italy, Spain, and Portugal—also
experienced the deepest political crises, with anti-system movements chal-
lenging the political establishment, and in the case of Greece and Italy,
winning control of the government. These countries were all exposed to a
collapse in financial market perceptions of their creditworthiness, and had to
request financial assistance from their neighbors, which was conceded only
on condition that they cut back on their social programs and raised taxes.
This not only piled the pain onto more vulnerable parts of the population,
but also likely aggravated the economic crisis by depressing demand.4
It may not be surprising that anti-system politics prospered in the southern
Eurozone in the midst of the worst slump since the 1930s. However, despite
the financial bailouts very visibly and painfully subjecting the southern coun-
tries to harsh austerity decided by supranational institutions at the urging of
foreign governments, right-wing nationalism was not the prime beneficiary
(with the partial exception of Italy). Instead, movements of the anti-system
Left, mobilizing the discontent of the younger, mostly highly educated,
and politically progressive parts of the population, made the biggest gains,
taking over the government in Greece, and sustaining coalition governments
in Portugal, Spain, and Italy. The anti-system Right, in contrast, was the
big winner in the northern Eurozone, where outrage at the costs of bailouts
mobilized a nationalist, socially authoritarian vote.
The conflict between creditor and debtor countries drove a wedge into
the Eurozone, but anti-system politics mainly played itself out within the
individual member states, as different social interests fought over the distri-
bution of the burdens of economic adjustment. A key feature of these internal
battles was the way in which the crisis and its effects were filtered and cush-
ioned by systems of social protection at the national level. Creditor countries
had strong welfare states and less acute economic problems, but they were
154 P A R T THREE: THE BREAKING OF EUROPE

still affected by rising inequality, slow wage growth, and cuts to welfare
entitlements that particularly affected the kinds of older, less-educated voters
sympathetic to the anti-system Right. Debtor countries suffered worse crises,
but their systems of social protection had a major bearing on the ways the
costs of the crisis were distributed: southern European welfare states tended
to protect pensioners and older male workers more than younger citizens,
who were more inclined to protest by supporting the anti-system Left.
The depth of the crisis and the effects of welfare state design offer a com-
pelling explanation of the rise of anti-system politics in the Eurozone. This
focus on post-crisis economics fits the facts rather better than the conventional
wisdom that immigration and the refugee crisis of the mid-2010s fueled
anti-system politics. The European citizens on the front line of the human-
itarian crisis in the Mediterranean—especially Greece, Spain, and southern
Italy—did not support the xenophobic politics of the anti-system Right.
Instead, the anti-system vote in the southern countries has mostly tended to
the left, reflecting the economic concerns of younger disenfranchised voters,
rather than the cultural panic of the older generation. Part Three will show
how the euro crisis fueled anti-system politics in Greece, Portugal, Spain,
and Italy.
Catching Up with Europe: The Euro and

the Short-Lived Southern Success Story
Southern Europeans were historically among the most enthusiastic supporters
of European integration, equating Europe with a process of economic, social,
cultural, and political improvement that had few serious political opponents
until the euro crisis.5 The acceleration of integration in the 1990s was
embraced by political elites with the apparent acquiescence of most of the
population in southern Europe, and full participation in the euro became a
shared objective of all mainstream political parties, with only the communist
Left—a group with a long tradition across the South—opposing European
Monetary Union (EMU).6 This convergence around the European single
market project defused the deep ideological divides that had run through
southern European politics for most of the twentieth century, pitting Left
against Right in often violent conflict. The Right accepted democratic rule
and the welfare state, while the Left abandoned previous commitments to
overturn capitalism and embraced the Western democratic order, in the form
of NATO and the European Union.7
The New North-South Divide 155

The European project initially appeared as a free lunch to the new southern
member states. Inward investment rose, and sales to European markets ex-
panded.8 As the economy grew, governments had a great deal of scope to
improve their limited social programs and expand public employment, an
opportunity that the political parties seized to distribute jobs, social benefits,
and infrastructure investment to their supporters. Extending pensions rights,
rolling out new benefits for disabled and unemployed workers, and increasing
public spending of services such as healthcare not only addressed a genuine
social deficit but also established lasting relationships between voters and
parties. Governing parties also exploited the opportunity to fill the growing
public payroll with supporters, many of them party members.9 While the
Left was most enthusiastic about public spending, the Right also curried
favor with voters by exempting certain groups or economic sectors from some
of the resulting fiscal burden, at times openly facilitating tax evasion.
This rapid growth of the welfare state, as southern Europe sought to catch
up with the highly developed social policies of northern Europe, collided
with the increasingly market liberal ethos driving European integration, re-
flected in the completion of the single market and the move toward monetary
union. The market liberal agenda was being driven not only by the European
institutions but also by central bankers and business elites in southern
Europe looking to liberalize domestic markets, rein in public deficits, and
discipline labor. These groups saw the Euro project as a useful lever: unsus-
tainable spending promises would be curtailed by the fiscal restraints implied
by monetary union, while the abandonment of national currencies would rule
out resort to devaluation and curb wage-driven inflation.10
The fiscal, monetary, and regulatory reforms required by EMU enjoyed
wide support among the major southern European political leaders and was
largely accepted by voters, too. However, EMU set in chain a process of de-
tachment of political parties from their electorates, and especially on the left.
EMU meant giving up any prospect of independent macroeconomic policy,
sounding the death knell for leftist parties’ traditional ideological ambitions.
The need for fiscal restraint also put a brake on the kinds of partisan govern-
ment spending that could compensate for these ideological compromises.
The structural funds agreed to as part of the discussions around monetary
union at Maastricht softened the blow to some degree,11 but the inability of
parties to offer either grand transformational visions or even more prosaic
forms of electorally profitable welfare spending fundamentally changed their
relationship with voters.
In this more austere environment, exacerbated by the recession of the
early 1990s, political parties in southern Europe found themselves in a

legitimacy crisis12. In Italy, the entire party system collapsed, as I will ex-
plain in chapter 7. In Spain, Felipe González’s Socialist party, and in Portugal
the center-right Social Democrats, were both mired in corruption after years
in government.13 In Greece, both the major parties—the conservative New
Democracy (ND) and the socialist PASOK—were hit by a regular flow of
scandals. At the same time, parties were converging around the need for fiscal
prudence, welcoming the Maastricht Treaty as an opportunity to tie their
hands in the face of domestic pressures for deficit spending and inflationary
wage rises.14 Paradoxically, the weakness of southern Europe’s national polit-
ical elites facilitated the push toward EMU, because public trust in national
political institutions was significantly lower than trust in the European
Union.15 The euro was seen by many voters as a means to entrench northern
European living standards and resolve long-standing governance problems.
As a result, the sacrifices necessary for euro entry were broadly accepted,
and the Maastricht criteria proved a valuable external constraint, empowering
national governments to take unpopular decisions by invoking outside
pressures. But the flipside of this external constraint was a disempowering
of the electorate to influence government choices, and an increasing role in
policymaking for unelected officials, at both the domestic and supranational
levels.16 In the short term, the convergence criteria were met and euro entry
was achieved, with Greece and Spain in particular enjoying spectacular eco-
nomic growth, which smoothed over any political misgivings over the pro-
cess. But this insulation of policy from popular influence would prove to be
unpalatable in harsher economic conditions.
Spain, Italy, and Portugal entered the first wave of monetary union in
1999, while Greece entered just two years later. The principal effect of euro
membership was to dramatically reduce borrowing costs for the southern
countries, as markets perceived lower risks of default, pushing down in-
terest rates. But even these much lower rates were still higher than in the
strong economies of northern Europe, leading financial institutions and, to
some extent, households in the North to invest heavily in higher-yielding
southern assets.17 The resulting boom conditions brought easy financing
of government debt, presenting politicians with new opportunities to
reward their supporters. Greece was the most enthusiastic in exploiting
these new tailwinds, running growing deficits after euro entry to finance
spending such as an increase in public sector employment (which grew
as a share of employment from 19.3 to 20.7 percent between 2000 and
2008)18 and lavish infrastructure spending such as the Athens Olympics,
while falsifying government accounting to hide the true extent of govern-
ment borrowing.

15
14
13
Net Government Borrowing (%/GDP) 12
11
10
9
8
7
6
5
4
3
2
1
0
–1
–2
–3
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Germany Italy Portugal Spain Greece
Figure 5.1 Government Borrowing in Germany and Southern Europe,

1990–2008 (%GDP)
Source: International Monetary Fund, “World Economic Outlook Database,”
October 2013 (https://www.imf.org/external/pubs/ft/weo/2013/02/weodata/index.
aspx).
Figure 5.1 shows that although Greece clearly ran excessive fiscal deficits,
the rest of southern Europe was not obviously out of line with the virtuous
Germany, and markets and policymakers were relaxed about the buildup of
debt in a context of strong economic growth. What became apparent after
the crisis was that policymakers had been targeting the wrong things. Fiscal
deficits were not a good measure of the South’s increasing financial vulnera-
bility, because vast flows of capital from northern Europe were encouraging
private households and businesses to build up debt. These capital inflows,
attracted by the higher yields and apparent safety of euro-dominated assets,
led to booming real estate markets, which provided many opportunities for
politicians to extract bribes and political donations through their control of
regulations and the planning process. This resulted in a dramatic increase in
household debt, which far outweighed the more frequently discussed fiscal
vulnerabilities of the southern Eurozone. Spain was particularly exposed to
any downturn in the housing market, as households leveraged up to fund real
estate speculation.
As became clear after the Global Financial Crisis in 2007–2008, the
South’s credit-fueled growth model was vulnerable to a sudden stop in very

similar ways to the highly financialized economies of the Anglosphere. This
dynamic of indebtedness can be seen clearly in the evolution of the current
account balance of Eurozone member states after Greece joined the single
currency in 2002 (Figure 5.2). The current account is a measure of whether
countries are net savers or net borrowers: a current account deficit means
that a country imports more than it exports, and invests more than it saves,
with the difference necessarily being made up by capital inflows. The cur-
rent accounts of Greece, Spain, and Portugal reached extraordinarily high
negative levels in the period prior to the financial crisis, meaning that they
were financing their consumption by borrowing from foreigners who were
buying assets from them. Greece’s current account reached 16 percent of
GDP, meaning that if anything happened to undermine foreign investors’
appetite for Greek assets, Greek households would suddenly find themselves
having to cut their spending by an equivalent amount.
Figure 5.2 also shows that Germany, in contrast, was consistently run-
ning large current account surpluses, corresponding to capital flowing out
of Germany, as German households and companies spent less than they
earned. To simplify, Germans and other northern Europeans were saving
large amounts, and investing their savings in, for example, Spanish real estate
or Greek government bonds. Northern Europeans were creditors, southern
Europeans were debtors. When the financial crisis hit, creditors sought to
pull their money out, while debtors came to the realization that they could
not meet their liabilities out of their falling incomes. The resulting sudden
stop to investment, and the rapid reining in of spending, dragged the whole
Eurozone economy into recession and exposed the fragility of European banks
20
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Germany Greece Italy

Portugal Spain Ireland
Figure 5.2 Current Account Balance, 2002–2017 (%GDP)

Source: OECD Data (https://data.oecd.org/trade/current-account-balance.htm)
(retrieved June 29, 2018).

in both North and South. But the banking crisis and recession were expe-
rienced less as a shared problem, and more as a conflict between northern
countries anxious to protect their assets, with southern countries fearful of
falling into debt bondage. Anti-system politics played out very differently in
these different contexts.
Debt, Austerity, and the Great Recession

in Southern Europe
The sudden stop materialized once the credit boom in the United States and
Europe ended in 2007. As in the United States and the United Kingdom, the
very high current account deficits the southern countries had been running
meant a very painful adjustment in consumption was necessary once capital
inflows slowed. But unlike in the United States and the United Kingdom,
southern Europe faced a further constraint: as Eurozone members they had no
monetary autonomy, and limited fiscal autonomy. While the United States
and the United Kingdom could both float their currencies and intervene
through central bank quantitative easing to facilitate adjustment and rescue
financial institutions, the debtor countries of the Eurozone could do neither
while they remained in the euro. Moreover, their ability to use fiscal policy
to counteract the debt deflationary dynamics unleashed by the financial crisis
was constrained, first by European Union rules, but more importantly by the
unwillingness of investors to lend money to governments whose fiscal posi-
tion was deteriorating rapidly.
Figures 5.2 and 5.3 shows the extent and speed of the adjustment the
debtor countries were subject to. Greece’s current account deficit peaked in
early 2007 at an extraordinary 16.5 percent of GDP (a GDP that was about
to shrink dramatically). But Portugal and Spain were not far behind, with
peaks of 13.5 and 10.5 percent, respectively, in late 2007 and early 2008. As
the crisis began to bite, domestic consumption collapsed, reducing spending
on imports as the capital flows sustaining these deficits came to a “sudden
stop.” The current account adjustment was huge in absolute terms: Greece’s
deficit amounted to $53 billion in 2008, but had been closed to just a tenth
of that figure by 2013; in other words, Greece reduced its external borrowing
by around $40 billion in just 5 years, a reduction achieved almost entirely by
cutting consumption, as Greek GDP fell by 30 percent. The other southern
countries also made dramatic adjustments, with Portugal reducing its $31
billion deficit tenfold by 2013. These adjustments dwarfed in relative terms

8
6
GDP Annual % Growth
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1995
1996
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2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
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2016
Spain Greece UK
Germany Portugal Italy
Figure 5.3 Europe’s Double Dip Recession (%GDP)

Source: OECD, “Gross Domestic Product (GDP)” (https://data.oecd.org/gdp/gross-
domestic-product-gdp.htm) (retrieved June 7, 2019).
those of the other big debtor countries, the United States and the United
Kingdom, who benefited from borrowing in their own money, and who were
able to deploy quantitative easing in order to ease the debt burden.
Although a financial crisis of such size and scope would inevitably affect
all the advanced economies, the nature of EMU, and the policy choices made
by its governing institutions, not only magnified its effects but also distrib-
uted them in a way that was catastrophic for southern Europe. First, a cur-
rency union meant that there was no possibility of the exchange rate bearing
any of the strain of adjustment, meaning that domestic prices and wages
would have to do all of the work, a process otherwise known as “internal de-
valuation.” Second, the European Central Bank’s particularly hawkish view
of inflation meant that there was little possibility of allowing any of the ad-
justment to be accommodated by inflation. As well as having an asymmetric
inflation target that biased toward tighter policy, the European Central Bank
was much more institutionally and politically constrained than the other
major central banks, so that it took far longer than the Federal Reserve or
the Bank of England to adopt unconventional measures to loosen mone-
tary conditions. As a result, Eurozone inflation remained very low, which
meant that nominal wages and prices were the only route to adjustment.
To make this even more difficult, the creditor countries of northern Europe,
the southern countries’ main trading partners, were also retrenching, albeit
on a smaller scale, at the exact same time, making it almost impossible for

the southerners’ devaluation to deliver the kind of export-led growth that
might have preserved living standards. Third, the high levels of debt, both
public and private, that the South had built up during the boom years were
all the harder to reduce given the low inflation rate and stagnant or falling
real incomes.
As if this was not enough, the low interest rates that resulted from the policy
response to the crisis did not benefit the South for very long, as doubts about
sovereign solvency brought a financial panic and a fire sale of southern debt.
European Central Bank President Jean-Claude Trichet’s anxiety to quickly
restore policy rates to more normal levels brought a premature rate hike in
spring 2011, which had the predictable effect of exacerbating the panic. As
spreads returned to pre-euro levels and beyond, southern governments had
no defense against rising borrowing costs, and Greece and Portugal, along
with Ireland, had to be bailed out by the Troika of the European Central
Bank, European Commission, and International Monetary Fund (IMF). In ex-
change for financial assistance, the governments of the troubled states agreed
to implement detailed reforms of taxation, public spending, public admin-
istration, and market regulation, and they accepted close monitoring from
the Troika to ensure reform commitments were upheld. Although Spain was
spared a formal Economic Assistance Program (EAP), by mid-2012 it was
forced to request up to €100 billion of financial assistance from the European
Union’s European Stability Mechanism (ESM) to allow the Spanish govern-
ment to recapitalize its banking sector.
4.0
2.0
0.0
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–6.0
–8.0
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Greece Ireland Spain Italy Portugal United United Germany
Kingdom States
Bottom 10 % Median Top 10%
Figure 5.4 Annual Percentage Change in Household Disposable Income

between 2007 and 2013, by Income Group
Source: OECD, “Income Distribution Database” (http://www.oecd.org/social/
income-distribution-database.htm) (retrieved June 7, 2019).

The Eurozone’s sovereign debt crisis brought to an abrupt end the South’s
fleeting recovery from the 2008 crash, as Figure 5.4 illustrates. While the
United Kingdom and the United States returned at least to anemic growth
after the end of fiscal stimulus, the Eurozone fell into a double-dip reces-
sion. Even in the main creditor country, Germany, economic growth fell back
close to zero, but in southern Europe GDP shrank once again, returning to
growth only in 2014. This was the consequence of the restrictive fiscal poli-
cies imposed as a condition of financial aid, which forced southern European
governments to target primary budget surpluses even at a time when the
private sector economy was shrinking rapidly. As well as coping with falling
income and deleveraging, households also faced higher taxes and cuts in
government transfer payments. Not surprisingly, investment and consumer
spending fell sharply, and in the absence of any offsetting increase in demand
in export markets, the economy as a whole shrank, making households poorer
than before the crisis.
Although at the time of the bailouts Troika officials claimed that these
policies could be consistent with economic growth, the IMF subsequently
admitted that the recessionary consequences of the measures were massively
underestimated.19 In the case of Greece, the degree of austerity demanded
could only result in a deep recession, and given Greece’s untenable level of
external debt, a deep economic slump was perhaps inevitable. However,
the extent of the squeeze Greece was exposed to was ultimately counter-
productive, since by shrinking the size of GDP it increased the relative size
of Greece’s debt and made investors even more wary of the risk of default.
US Treasury Secretary Tim Geithner afterward claimed that the devastating
effects on Greece’s economy were intended as a strategy to force it out of the
Eurozone,20 while Yanis Varoufakis, briefly Greece’s finance minister in 2015,
wrote that European leaders were well aware that austerity would make it
impossible for Greece to pay off its debts.21
Greece was an extreme case, but even in the other debtor countries there
is legitimate suspicion that the painful consequences of the conditions of
financial assistance were a feature rather than a bug. If the Eurozone pe-
riphery were to return to competitiveness, they would have to reduce their
unit labor costs, and with a fixed exchange rate and low inflation, the only
way to do that was through a deep recession, which would force down wages.
Protective institutions such as collective bargaining rights, unemployment
benefits, and restrictive regulations on firing workers stood in the way of this
“internal devaluation,” and would have to be dismantled. Europe bailed out
troubled Eurozone sovereigns, but at the price of a deep recession and the
loss of workplace and social rights that had been hard fought. In other words,

the recession in southern Europe was the consequence of a deliberate strategy
designed to enforce a neoliberal policy agenda of fiscal restraint, welfare re-
trenchment, and flexible labor markets.22
This painful economic adjustment was the result of political choices made
by institutions that did not respond to any direct electoral mandate: the
European Central Bank, the European Commission, and the European
Council. These choices had important distributional consequences, pit-
ting European Union member states against each other, while also dividing
the populations of member states. Northern European politicians placed
the blame for the crisis squarely with the southern Europeans; a notorious
example had a former Eurogroup head, the Dutch social democrat Jeroen
Dijsselbloem, justifying the tough austerity in moral terms, claiming, “You
can not spend all the money on drinks and women and then ask for help.”23
Whether or not he believed this was a valid metaphor, the reality was that
northern European electorates were sending a very clear signal to their own
politicians to “keep their boots on Greece’s neck,” and ensure the profligate
South did not escape punishment for its irresponsibility.24 The result was a
destructive austerity program that at best was badly designed and based on
completely wrong estimates of its economic effects,25 and at worst could be
seen as a punitive attempt to defeat moral hazard and show that bailouts were
not a free lunch.
On top of contraction and austerity, southern Europe also had to come
to terms with a dramatic loss of political autonomy. The EAPs agreed
with Greece, Portugal, and Ireland, and the Financial Assistance Facility
Agreement with Spain consisted of hundreds of detailed and specific meas-
ures of fiscal, regulatory, and administrative policy required of the recipients,
alongside detailed provision for surveillance and monitoring of progress.26
These measures had harsh distributional consequences and were bound to
provoke political opposition. Yet, faced with the choice of government insol-
vency or a financial bailout with strings attached, elected politicians opted
for the bailout, thereby giving up their policymaking autonomy and their
ability to respond to voter preferences. Instead of taking their cue from the
electorate, policymakers had no choice but to respond to the price signals
coming from the bond markets and to the political demands of the foreign
governments and international organizations that could protect them from
these markets.
The extreme nature of Greece’s funding problems led to a unique de-
gree of intervention from the EU-IMF “Troika,” which stripped the govern-
ment of key aspects of national sovereignty. Strict and detailed budgetary
targets not only eliminated much of the discretionary power of the Greek

government to decide how to raise revenue and how to spend it, but also set
very detailed requirements for the structure of the public administration.
Moreover, the budgetary demands made of the Greeks by Troika officials
were so draconian as to drive the Greek economy into a deep depression, with
dramatic economic and social consequences. Once the Greek authorities had
made the decision to accept financial assistance, the process of determining
how and when the money should be paid back was effectively decided unilat-
erally, and in a way that shifted the pain mostly onto the Greek population.
The bailouts may have been presented as financial assistance to the stressed
southern Europeans, but they were just as much about helping European
banks, whose balance sheets were not ready to cope with further losses, and
northern European governments, anxious to shift the blame for their do-
mestic financial ailments onto the “irresponsible” debtors.27
The socialist PASOK government in Greece, which had initially trig-
gered the crisis by revealing the full extent of the fiscal tricks played by its
predecessor conservative (ND) administration, quickly found itself deeply
unpopular as it attempted to fend off market pressure by forcing through
austerity measures. As the economy entered into steep decline, the impossi-
bility of securing market funding at sustainable rates became apparent, and
the prime minister, George Papandreou, sought outside help, thus becoming
the executor of the Troika’s demands for even more harsh austerity. The lack
of any formal channel of accountability for the Troika institutions meant that
Greek voters had no obvious route for expressing their feelings directly to
those responsible, although a wave of street protests and strikes made them
clear. As the situation deteriorated and further financial assistance became
necessary, Papandreou attempted a last-ditch appeal to the Greek electorate
by promising a referendum on a second round of financial assistance, which
involved a private sector “haircut” on Greek debt. Papandreou’s move was
condemned as “irresponsible” by key EU political leaders, outraged that the
delicate negotiations to keep Greece afloat should be conditioned by appeals
to democratic consent.
In the event, Papandreou was forced out and a caretaker administration
led by a former central banker, Lucas Papademos, saw the negotiation of the
second bailout through to its conclusion. The new program involved further
stringent fiscal demands, and the Eurogroup of Eurozone finance ministers
also insisted that the leaders of the major Greek parties commit to the pro-
gram, so as to avoid further political upheavals. Immediately after the agree-
ment was reached, elections were held, in which PASOK not only lost but
was electorally obliterated. Yet the alternation of power and the arrival of a
new conservative government could not change the essential facts: Greece

remained unable to stick to its fiscal targets, the economy was in freefall, and
within three years a further bailout was required. The economic collapse and
the evident inability of Greece’s elected politicians to do anything but imple-
ment harsh austerity decided by outsiders had a devastating effect on public
confidence in the main governing parties.
Portugal faced a similar dilemma shortly afterward, though its fiscal sit-
uation was less desperate than Greece’s and the political stakes were lower,
given the low political salience of the small Iberian state. Again, stringent
detailed budgetary targets were imposed. The Portuguese program already
incorporated some of the lessons of the failed Greek bailouts, but still set un-
realistic targets for deficit reduction and underestimated the contractionary
effect of austerity on GDP, which dropped by 6.1 percent in the first two years
of the program.28 By 2012 GDP had contracted by almost 10 percent from
its 2008 peak, and despite growth returning, it remained almost 6 percent
lower in autumn 2015. The third country to need a formal bailout, Ireland,
also suffered a dramatic contraction of output after the government rescue of
its banking sector in turn provoked a run on government debt. Ireland had
the deepest recession in the industrialized world between 2007 and 2010,
with a GDP decline of 21 percent and fiscal deficits of up to 12 percent.29
Eurozone bailouts were anything but a free lunch.
Who Got Bailed Out? Inequality and Precarity

in the Mediterranean Social Model
The impact of this economic shock to households and businesses in the
Eurozone periphery was unprecedented in the history of postwar Europe,
and far exceeded that faced by debtor countries outside the Eurozone. Figure
5.4 shows that for all four southern European countries and Ireland, house-
hold disposable income fell all the way across the income distribution in the
half-decade following the crisis. Median income fell by over 8 percent in
Greece, 3 percent in Ireland and Spain, 2 percent in Italy, and 1.5 percent in
Portugal; the bottom decile took a 10 percent hit in Greece, almost 8 per-
cent in Spain, nearly 6 percent in Italy, and 4 percent in Portugal. There are
simply no comparable income losses anywhere in the advanced democratic
countries since World War II.
One of the most powerful indicators of the extent of the crisis is the rise
in unemployment. Figure 5.5 shows the extent of the damage in southern
Europe. By 2013, 27 percent of the Greek workforce were unemployed, and

60
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Greece Greece Youth Portugal Youth
Portugal Spain Youth Spain
Figure 5.5 Unemployment and Youth Unemployment in Southern Europe,

1999–2016 (%)
Source: OECD, “Jobs” (https://data.oecd.org/jobs.htm#profile-Unemployment)
(retrieved 7 June 2019).
joblessness reached 26 percent in Spain, and 16 percent in Portugal; among

those under twenty-five years old, the unemployment rate reached 58 per-
cent and 55 percent in Greece and Spain, respectively, and 38 percent in
Portugal. These levels were far higher than the European average, and much
higher than in the Anglo countries that also faced harsh adjustment. Wages
for those able to stay in work, on the other hand, held up well in comparison,
at least in Portugal and Spain.
12000
Social Spending in US$ per capita
10000
8000
6000
4000
2000
0
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
Germany Greece Italy
Portugal Spain Ireland
Figure 5.6 Social Spending in Germany and the Eurozone Periphery,

1989–2015
Source: OECD, “Social Spending” (https://data.oecd.org/socialexp/social-spending.
htm) (retrieved June 7, 2019).

Unlike the British and American cases, where welfare states had been
pared back as early as the 1980s, southern Europe had experienced an ex-
pansion of social protection through the 1990s and 2000s as their econo-
mies integrated more deeply into European markets (see Figure 5.6). Ireland
stood out, briefly converging with levels of spending on social protection in
Germany, while Greece, Spain, and Portugal steadily narrowed the gap. The
result of these developments was a very distinctive social and economic model
in which overall inequality was relatively high, but with a differently struc-
tured income distribution than the Anglo countries, where economic inse-
curity affected large sectors of society. In southern Europe inequality reflects
a “dualization” of the economy: highly polarized exposure to market forces,
in which some groups, usually older citizens, enjoy generous protections,
while others, especially the young, are highly vulnerable.30 This has impor-
tant implications for the way in which anti-market sentiment is expressed
politically, and it explains why the dominant form of anti-system politics in
the South has been the anti-capitalist Left rather than the nationalist Right.
The type of capitalism that emerged as the southern countries democra-
tized reflected the imprint of the authoritarian conservatism31 that informed
policy over much of the postwar period, and even the fascist legacy that was
strongest in Italy, but also had some influence on its southern neighbors.
Markets were carefully controlled, and the state was actively involved in ei-
ther regulating production or directly managing it through government own-
ership, a legacy of the corporatism popular in the prewar period. Economic
governance sought to entrench existing hierarchies in order to protect the
privileges of dominant social groups: namely the church, the machinery
of the state (particularly the armed forces), and the financial and business
classes. State interventionism and welfare state development reflected the
interests of this dominant social bloc, but also aimed at pacifying social
conflict and containing worker militancy, one of the main threats to social
stability. This legacy dovetailed counterintuitively with a strong commu-
nist tradition on the left, leaving little space for liberal or social democratic
ideas. When transitions to democracy began in Greece, Spain, and Portugal,
pressures from the communist Left pushed for the same tools of state inter-
ventionism to be used in favor of the interests of the occupational group most
supportive of the Left: industrial manual workers.32
Social protection in southern Europe developed along Bismarckian33
lines, providing unemployment coverage and pensions mainly to state
employees and workers in large firms able to bear the high social insurance
contributions that financed the system. These were therefore occupational
welfare systems: the families of these largely male welfare beneficiaries were

covered indirectly, as nonwaged women and young people not yet integrated
into formal employment had few social rights of their own. Moreover, welfare
provision tended to vary considerably with occupational status, creating sig-
nificant inequalities of provision that often reinforced rather than mitigated
existing market inequalities. These inequalities mirrored similar discrimi-
nation in the regulation of labor markets, where some core workers enjoyed
very strong protection against dismissal compared to others. Finally, social
spending was low in relative terms compared to other Western democracies,
especially in the southern European dictatorships.
The patterns of party competition that became established as democ-
racy was consolidated left their mark on the emerging system of social
protection. From the 1970s, welfare provision expanded rapidly as democ-
racy brought new political pressures for public spending and regulation—
pressures that were exacerbated by the consequences of the recession of
the late 1970s and early 1980s, and of the structural adjustments of the
1980s that led to rises in unemployment. The decline of authoritarianism
and the growing influence of trained economists socialized into liberal
market thinking34 influenced policy in a liberalizing direction, but at the
same time the presence of significant communist and socialist parties and
trade unions pushed for a continued role for government in redistributing
income and protecting employment. Parties used government budgets to
design welfare and other spending policies to direct resources to favored
groups and localities, on clientelistic lines. As a result, social protection
became tied to political allegiances, and responded to electoral pressures
as well as to social and economic needs. The arrangements that emerged
out of this process of institutional development have been described as a
“southern” or “Mediterranean” model.35
These social, economic, and institutional conditions determined how the
crisis of the late 2000s affected different social groups and therefore condi-
tioned the type of political reaction that resulted from it. Greece and Spain
in particular had a serious long-standing structural unemployment problem,
which was particularly acutely felt among the young. Labor market regula-
tion in southern Europe has been highly dualized, in that labor rights vary
across different occupational groups to a much greater degree than in most
other Western democracies.36 This dualism favored “insiders”—workers who
enjoyed stable employment contracts in large firms or the public sector,
and who were very expensive and sometime legally impossible to fire. The
high regulatory barriers and high nonwage costs of employment in southern
Europe have combined to endow a large cohort of older, usually male workers
with high job security, welfare, and pension rights, rights whose defense are a

priority for trade unions. In contrast, the “outsiders”—younger workers and,
in particular, women and migrants—face much higher risk of unemploy-
ment, less job security, and less (sometimes no) welfare protection than their
peers in other European countries.37
This dualism distributes economic security in starkly different ways at the
individual level, although the social consequences are mitigated somewhat by
the survival of a very familistic culture in which a high degree of economic
protection and redistribution takes places within households and extended kin-
ship, and sometimes friendship, networks.38 For example, women’s lower labor
participation, and usually lower employment status, is in part also a reflection
of a traditionally patriarchal culture in which women were expected to rely on
the men within their families (fathers, then husbands) for not only income but
also welfare rights. The sustainability of these arrangements depended not only
on women’s willingness to accept the economically subordinate position they
implied, but also the availability of a sufficient number of stable, well-paid
jobs for male workers. The persistence of high levels of unemployment since
the 1980s, and the resort on the part of governments to a series of labor reforms
that facilitated the creation of flexible, short-term contracts with lower social
contributions and therefore welfare rights,39 has meant that family reproduc-
tion has ground to a halt, with a collapsing birth rate and high numbers of
young people remaining in the parental home well into adulthood.40
These institutional peculiarities mean that despite a high level of income
inequality at the household level, large parts of the population of southern
Europe enjoy quite high levels of social protection, in contrast to the Anglo-
Saxon democracies with similarly high headline figures for inequality.41 On
top of this, most southern European households are insulated from economic
shocks by relatively high levels of financial and housing wealth—wealth that
is also distributed more equally than in most other advanced democracies.42
In Greece, Italy, and Spain, the bottom 60 percent owns 17–18 percent of net
wealth, and 12 percent in Portugal, compared with just 2.4 percent in the
United States and 6.5 percent in Germany.43 The very high levels of home
ownership, and a historically rather high household savings rate, mean that
the average family unit in southern Europe is an owner-occupier and often
has some other forms of capital (often real estate). This acts as a buffer against
the failings of a labor market that has struggled to provide sufficient num-
bers of well-paid jobs to sustain the population. Unemployed youth are saved
from indigence by the availability of free accommodation in the parental
home, and by financial support from family members who belong to the
more protected groups. The dualization of social risks is therefore absorbed
to a large extent within the family.

The southern European countries enjoyed a rapid expansion of the public
sector after democratization, but this proved difficult to sustain over the
longer term. In the immediate aftermath of dictatorship, the social protec-
tion gap relative to the rest of Europe provided governments with room to
increase public spending, and they exploited the opportunity to provide key
support groups with public sector jobs and generous pensions. But by the
1990s, government spending had come close to converging with European
standards, and opportunities to increase public resources by addressing the
most glaring failings of their tax revenue systems were exhausted. Public
sector employment growth therefore slowed, and as demographic changes
fed through, the growth in pension spending baked into unfavorable dem-
ographic trends began to erode the space for other forms of social policy.44
Figure 5.7 shows that in southern Europe, pensions accounted for a larger
proportion of social spending than in the rest of Europe.
When the crisis hit, this pattern of welfare spending, skewed heavily to-
ward the old, determined a distribution of economic pain that fell primarily
on the young. Younger workers were disproportionately likely to be em-
ployed on temporary contracts, and were therefore the first to be fired when
companies had to shed staff. Moreover, welfare systems that rewarded sen-
iority and years of service in stable employment provided little in the way of
income support for the young unemployed, many of whom were not entitled
to unemployment benefits. Although the austerity measures and structural
reforms imposed by the Troika were not necessarily regressive themselves,
the overall pattern of cutting social spending, which actually fell in real
30
25
20
15
10
0
USA IRL OECD GBR GRC ESP PRT FIN DEU ITA SWE FRA
Figure 5.7 Total Social Spending and Pensions Spending, 2007 (%GDP)
Source: OECD, “Social Spending” (see Figure 5.6). The dark columns represent
pensions spending, the lighter columns represent overall social spending.

terms in the bailout countries (see Figure 5.6), affected the young far more
than the old. This proved to have important political consequences, since
these younger citizens were at the forefront of the opposition to the manage-
ment of the crisis.
Backlash: The Turn to the Anti-System Left

If the size of the economic shock that hit southern Europe made some kind of
political backlash almost inevitable, the form that backlash took was less pre-
dictable. Among the different kinds of economic protectionism available in
the anti-system menu, nationalist Euroskepticism would have seemed a log-
ical response. The European Monetary Union exposed the periphery countries
to financial volatility, while at the same time depriving their governments of
the kinds of monetary, fiscal, and regulatory powers that might have offered
some protection against them. When the financial crisis blew a hole in
governments’ budgets, the European authorities were slow to develop a coor-
dinated response, and ultimately provided financial assistance too late and on
harsh terms that increased the economic costs and distributed them in rather
regressive ways.45 That Europe had thrown the South overboard was an easy
argument to make. As Adam Tooze put it, “if one wanted to write a script
to bolster the claims of anti-system politics in Europe, it would look like the
policy position of the [European] commission.”46
Yet while nationalism and authoritarianism were on the rise in the
Anglosphere and in eastern and northern Europe, southern Europe took a
turn to the left. The political beneficiaries of the crisis in Greece, Portugal,
and Spain, and to some extent in Italy, were more pro-European, cultur-
ally liberal, and economically progressive than the anti-system movements
elsewhere. Northern European voters proved very receptive to the narrative
presented by right-wing populists complaining about the costs of bailing
out badly behaved southerners, but southern Europeans for the most part
shunned nationalist resentment (the main exception to this, Italy, is discussed
later). Instead, the Euro crisis proved an opportunity for the Left to break up
the existing party cartels in the South and challenge their unquestioning ad-
herence to the pro-market logic of European integration.
Unlike in the United States or most of the rest of Europe, immigration
was marginal to the political debate in Greece, Portugal, and Spain, even
though all had experienced quite dramatic increases in immigration in the
period preceding the crisis. Neither was the refugee crisis resulting from the
conflict in Syria central to the surge of anti-system voting, even though all

were on the front line of the refugee crisis, because of Spain’s proximity to
North Africa and Greece’s location close to the Middle East. Instead, polit-
ical upheavals in the 2010s were clearly connected to the financial crisis and
the frustrations resulting from national governments’ inability or refusal to
intervene to ease economic distress. This is clear from the timing of the elec-
toral shocks, the kinds of political discourses of the anti-system parties that
gained at the expense of incumbents, and the characteristics of the voters who
opted to vote against the system. The peculiar characteristics of the southern
European welfare systems are key to understanding why the post-crisis back-
lash benefited the anti-system Left far more than the anti-system Right.
Greece: From Troika to Pasokification

The political transformation unleashed in Greece in the early 2010s could be
the most overdetermined event in the history of European electoral politics.
The depth of Greece’s crisis, the evident complicity of a corrupt national
political establishment in allowing it to happen, and the brutal and puni-
tive conditions of the successive European bailouts made some kind of back-
lash unavoidable. Not surprisingly, the deepest economic crisis in Europe
produced a period of unprecedented instability, with five general elections
and six prime ministers in the decade after the financial crisis began. Out
of the fourteen most volatile elections in post-crisis Europe, three were in
Greece: in the May 2012 election the net change in party vote share reached
33 percent, the fifth most volatile election in any western European country
since World War II.
This panorama of instability was in fact highly unusual in contemporary
Greek history. Since the restoration of Greek democracy after the rule of the
military junta in 1967–1974, Greece had settled into a relatively stable two-
party system underpinned by two rival political dynasties: the Papandreou
and Karamanlis families. After 1981 the combined vote share of the socialist
PASOK founded by Andreas Papandreou, and the conservative ND party,
founded by Konstantinos Karamanlis, barely fell below 80 percent, and
aided by an electoral system that reinforced this bipartism, they dominated
government formation. Members of the Karamanlis and Papandreou fami-
lies held the prime minister’s office for a total twenty-five years in the post-
1974 period, and even Costas Samaras, ND prime minister in 2012–2015,
had roomed at Harvard with George Papandreou, Andreas’s successor.47 The
tight-knit nature of the governing elite perhaps contributed to attenuating

political conflict, but had the consequence of highlighting the cartel-like dy-
namics of Greek politics.
This apparently sclerotic pattern of political control was blown apart by
the economic collapse and the series of humiliating bailouts successive Greek
prime ministers could do little to avoid. Despite power having been shared
between PASOK and ND during the boom years when Greek public finances
went out of control, PASOK, in office from 2009, bore most of the political
cost. Prime Minister George Papandreou not only came clean on the trickery
behind Greece’s official budget figures, but was also in charge during the
key period of the first two bailouts, a moment of national humiliation as
well as economic collapse. The 2012 election, coming on the heels of the
second bailout and a brief period of technocratic government under former
central banker Papademos, saw the third-biggest electoral collapse of any
major political party in postwar western Europe—the PASOK, which had
governed Greece for a total of twenty-one years since 1974, dropped from
nearly 44 percent of the vote in 2009 to just under 14 percent three years
later. By 2018 it had just eighteen members in the Greek parliament, and
merged into an alliance with half a dozen other small parties on the center
and left.
The main beneficiary of PASOK’s demise was a political group on the
radical left, Syriza. Figure 5.8 shows the transformation of the Greek party
system over the successive post-crisis elections, and leaves little doubt that the
most important material shift in Greek politics was the effective replacement
50
45
40
35
Vote Share (%)
30
25
20
15
10
5
0
KKE SYRIZA PASOK ND ANEL LAOS/XA
2007 2009 2012M 2012J 2015J 2015S
Figure 5.8 Patterns of Party Support, Greece, 2007–2015

1960–2014 (Bern: Institute of Political Science, University of Berne, 2017).

of PASOK by Syriza. This shift was spectacular enough to merit its own
neologism, “Pasokification,” meaning the cannibalization of a mainstream
center-left party by the radical Left. The main party of the Right, ND, also
suffered important losses after the crisis, losing almost half its vote share, but
it recovered ground in the second election of 2012 and was able to maintain
its status as the main potential governing party, despite some defections such
as the creation of a small hard-line nationalist party, Independent Greeks
(Anexartitoi Ellines –ANEL), and the emergence of a violent extreme-right
party in Golden Dawn (Chrysí Avgí – XA).
The post-crisis period saw a rapid fragmentation of the political space in
Greece, with not only the decline of both components of the post-Junta two-
party system, but also a growth in the vote share of small parties, many of
them new, and an increased turnover as a succession of new alliances emerged
to seek parliamentary representation. In the May 2012 election the joint
vote share of the two largest parties, at that point ND and Syriza, amounted
to just 35 percent, less than half the post-junta norm. This meant an in-
creasingly coalitional dynamic to government formation, as it became much
harder for any single party to achieve a parliamentary majority. A further
indicator of political crisis is the dramatic collapse in electoral participa-
tion: from an average of above 80 percent until 2009, voter turnout dropped
to 65 percent in May 2012, and to just 56 percent in the September 2015
vote. Throughout the period, strikes and street protests, often violent, clearly
expressed the anger Greek citizens felt about the economic losses they were
suffering.48 The signs of popular disillusionment and alienation from the po-
litical system after the crisis were unmistakable.
There is a consistent logic to this pattern of political change. As in other
cases, the immediate impact of the crisis was to bring a change of government,
but in the form of an orderly turnover within the established parameters
of the political system. Prime Minister Kostas Karamanlis (nephew of the
founder of his party, ND) was forced into an early election in autumn 2009,
suffered a heavy defeat, and George Papandreou (son of the founder of his
party, PASOK), took over. In the space of three years, Greece suffered a
25 percent drop in GDP, while financial assistance implying harsh austerity
was negotiated by the existing political elite. Papandreou’s appeal to pop-
ular consent by suggesting a referendum on the Troika bailout arrangements
was slapped down by European leaders. In the run-up to the 2012 election,
Greece was governed by a grand coalition of PASOK and ND under the stew-
ardship of Papademos, a former European Central Bank vice president. The
position of the established political class was that Greece’s euro membership
was to be preserved at all costs, and that they had little option but to accept

the conditions being offered. Any voter wishing to oppose the bailout would
have no choice but to support political forces from outside the established
party system.
Part of the fragmentation of the Greek party system took the form of
splinter groups—usually based on defections of parliamentary representa-
tives elected with PASOK or ND—who still occupied positions within
the broad mainstream of European politics, such as DIMAR (Dimocratiki
Aristera –Democratic Left), a social democrat group, or Potami (The River)
and EK (Enosi Kentroon –Centrist Union), both centrist liberal parties. But
the big winners were anti-system parties that not only adopted more radical
positions on the economy and society, but also expressed vehement opposition
to the European bailouts and their implications. The total anti-system vote
share in May 2012—summing the votes of Syriza, the Greek Communist
Party (KKE), Golden Dawn, the far-right LAOS (Popular Orthodox Rally),
and the nationalist Independent Greeks, amounted to 45.6 percent, far sur-
passing other elections in Europe. The anti-system parties all occupied rel-
atively radical positions on the social-cultural dimension but were center or
center-left on the economy: Golden Dawn and ANEL were less right-wing
than ND on economics but further to the right on social-cultural issues,
while Syriza was way to the left on both compared to PASOK, and the KKE
is the most radical party on the left of the economic dimension.49
The effect of the post-crisis electoral shake-up was to move the average
position of the Greek parliament substantially to the left on economic is-
sues, while it became increasingly polarized on the social-cultural dimension.
This is entirely in keeping with the predicted response of a society facing a
dramatic loss of economic security: parties that promised to address these
economic challenges were able to win votes from the established parties,
whose corruption and incompetence were ultimately responsible for Greece’s
problems, and who were also the material executors of the austerity meas-
ures that had created such discontent. The anti-system parties all rejected
the existing approach to the debt crisis with varying degrees of realism and
coherence.
The emergence of the far-right Golden Dawn, from almost zero to nearly
7 percent of the vote, was the most disturbing development of the Greek
crisis. Emerging out of a violent neo-Nazi street movement, Golden Dawn
used aggressive xenophobic language to condemn the European Union,
the Troika, and the euro, and to demand the full exercise of Greek sover-
eignty by leaving the Eurozone.50 Its use of extremist language to condemn
its opponents and what it viewed as Greece’s enemies, and its violent street
activism, often directed at migrants, put it outside even the normal range

of right-wing anti-system parties. Golden Dawn won support particularly
in districts of Athens with a high immigrant population, and its typical
voter was young and unemployed with an intermediate level of education,51
while it also recruited better than the average among farmers and business
owners.52 Its vote share, however, at just under 7 percent, was low and failed
to rise in subsequent elections.
The other main anti- system response on the nationalist right, the
Independent Greeks party, was a more typical European-style populist party,
drawn mainly from the mainstream conservative right but rejecting the
European bailouts, presenting itself as a “patriotic trench” to protect Greeks
from the financial threats they faced.53 Independent Greeks was born out of
the conservative wing of the protest movement against the Troika, railing
against the way the bailout had stripped Greece of its national sovereignty.54
Voters for the Independent Greeks were often former supporters of ND, but
were hostile to ND’s support for European financial assistance and particu-
larly likely to blame the European Union for Greece’s economic problems.55
Like Golden Dawn, Independent Greeks drew on long-standing far-right
rhetoric about Greek national identity and articulated opposition to the
bailout as an affront to the Greek nation, using often demagogical language
such as equating Troika interventions to the German occupation in World
War II.56 The party also emphasized its own connection to the grassroots and
associated itself visibly with the anti-austerity street protests, while dissoci-
ating itself from the left values of the rest of the anti-austerity movement.
While Golden Dawn and Independent Greeks together polled between
10 and 15 percent of the vote after 2012, the anti-system Left, comprising
chiefly Syriza and the communist KKE, was much more significant elector-
ally. The KKE peaked at just over 8 percent in January 2012, before reverting
to its typical vote share of around 5 percent subsequently. The KKE has
long been the most consistently Euroskeptic party in Greece, opposing euro
entry and depicting the European Union as representative of the Western
pro-capitalist values that the Greek Communists had long fiercely opposed.57
It was therefore predictably opposed to the European bailouts.
The big winner in the anti-system wave in Greece was the leftist coalition
Syriza. Syriza emerged out of SYN (Coalition of the Left, Ecology, and Social
Movements), a loose coalition of former KKE modernizers, feminist and ecol-
ogist groups, and other groups on the new (non-Communist) left. Typical of
such groups, it won support mainly from the highly educated, often public
sector workers58 attracted by its emphasis on “postmaterialism”: issues such
as the environment, multiculturalism, and enhancing citizen participation in
democracy.59 In 2001 SYN incorporated a varied range of small leftist groups

into a new formation, Syriza, which was more open to social movements.60
After the financial crisis began, Syriza unequivocally opposed austerity meas-
ures and backed popular protests, strikes, and civil disobedience, and with
the formation of a grand coalition between ND and PASOK after 2012 to
push through the bailout it found itself perfectly placed to exploit popular
fury at the economic pain implied by the measures.
The failure of the ND-PASOK government to prevent yet a third bailout
with onerous conditions brought its collapse and early elections in the
worst possible conditions, sealing the fate of the post-junta party system.
Syriza, led by Alexis Tsipras, went into the election campaign on a firmly
anti-austerity ticket, promising to renegotiate the terms of the impending
bailout and to secure a writedown of most of Greece’s public debt, as well as
a stimulus program led by the European Investment Bank—demands that
the Troika and key EU governments were unwilling to contemplate.61 At the
same time Syriza maintained a tolerant stance on immigration and a broadly
pro-European outlook, insisting that Greece’s problems could be resolved
within the EU framework by a shift in EU-wide policy toward greater sol-
idarity with the debtor nations. Finally, it emphasized the need to “trans-
form the political system to deepen democracy” by decentralizing power and
enhancing popular participation in the decision-making institutions. This
proved a winning message: Syriza’s vote grew from under 5 percent in the
immediate aftermath of the crisis to over 26 percent in January 2015, with
the big breakthrough coming in the two 2012 elections. Syriza dominated
particularly among civil servants (winning an estimated 43 percent of their
vote), and among younger voters, housewives, and students.
Syriza’s electoral victory in 2015 did not deliver a comfortable parliamen-
tary majority, so it went into a coalition with the nationalist Independent
Greeks, the other main anti- bailout party, rather than the pro- bailout
center-left parties such as PASOK and DIMAR. The appointment of Yanis
Varoufakis, a well-known critic of the bailouts, as finance minister suggested
the intent to confront the European Union over Greece’s financial needs and
reject the existing terms for the third Greek bailout.62 The Independent
Greeks had an even more aggressive attitude toward the bailouts: their leader,
Panos Kammenos, claimed that “Europe is being governed by German neo-
Nazis.”63 The government’s hope was that European leaders could be per-
suaded to ease the fiscal pressure on Greece, with a positive message on
solidarity, backed up by the implicit threat of a chaotic “Grexit,” which
could destabilize Europe’s fragile financial markets.
The Tsipras government, having predictably failed to move opinion in the
key capitals of the European Union, was presented with the stark option of

accepting the conditions on offer, or foregoing the proposed financial assis-
tance, which would have left Greece close to financial meltdown. Consistent
with Syriza’s closeness to the popular mobilization against austerity and its
rejection of the cartel politics of the pro-bailout parties, Tsipras attempted to
overcome the impasse by inviting the Greeks to vote in a referendum on the
bailout measures, which the government recommended rejecting. A deci-
sive victory for the “No” vote in the referendum failed to sway the European
Union, and Syriza opted to accept the bailout on terms that were if any-
thing worse than before, calling yet another parliamentary election to ob-
tain retrospective citizen consent for the retreat. Syriza’s position on the euro
was a pragmatic compromise between the need to do something to alleviate
Greece’s economic suffering and the surprisingly robust level of support in
Greece for continued euro membership, as well as a realistic assessment of
the dangers of any financial confrontation with Greece’s creditors. Whether
or not this political strategy made sense as a way of addressing Greece’s ec-
onomic crisis, it proved a very effective political strategy, as Syriza won re-
election and was able to entrench itself in office.
Although Greece was also hit by the refugee crisis of 2014 on, with many
Greek islands being located geographically on the front line of the refugee
route from Syria, the timeline of economic collapse and electoral reaction
points unequivocally toward its politics being driven by the nature and ex-
tent of the financial crisis, bailouts, and subsequent austerity. Greece’s eco-
nomic crisis was such that few groups were insulated from serious hardship,
opening up opportunities for anti-system parties to make spectacular gains.
Although the anti-system Right profited from the crisis, the Left made the
biggest gains, appealing to the vast army of unemployed or underemployed
youth and the public sector workers most affected by budget cuts. The
main victim of this shift was PASOK, reduced to a rump of especially older
voters and farmers. Adherence to the harsh austerity and liberalizing reforms
imposed by the Troika appealed to a smaller and smaller share of the elec-
torate: mainly ND’s core vote of older voters, especially pensioners, farmers,
small business owners, and the self-employed.64 A political offering of eco-
nomic protectionism, either of a nationalist or of a social democratic kind,
was the most likely to prosper in the midst of a deep depression. The fact
that the costs of adjustment were falling particularly on younger “outsider”
voters, explains the greater success of the left narrative.
Spectacular though Greece’s economic and political collapse may be, it is
best seen as an extreme example of the patterns seen in other Western dem-
ocracies since the late 2000s, rather than as a unique event. “Pasokification”
may have been avoided elsewhere, but social democrats across Europe were

hemorrhaging votes. Mainstream parties were colluding to protect the ex-
isting economic arrangements, and losing vote share, in most other democ-
racies. Citizens have expressed increasing signs of resentment and mistrust
of their political elites almost everywhere. The Greek case is simply off the
scale in terms of the economic and social catastrophe wrought by the fi-
nancial crisis, and, not surprisingly, its political consequences were far more
powerful.
Portugal: A Quiet Revolution

Shortly after Greece’s sovereign debt crisis began, Portugal also hit trouble
and signed up to an Economic Adjustment Program (EAP) with the Troika
in 2011. The slide toward the bailout coincided with the collapse of the
Socialist-led government of José Socrates and the dissolution of parliament
for new elections. The election campaign was dominated by the financial
crisis and the ongoing bailout negotiations, yet the bailout was negotiated
by a lame-duck Socialist government supported by the mainstream parties
on the center and right: the Social Democrats (PSD), despite the name a
mainstream party of the Center-Right, and the conservative Right (known
as Centro Democrático e Social-Partido Popular, or CDS-PP). Finnish EU
Commissioner Olli Rehn, with an eye on the concurrent election campaign
in his home country, publicly stated that Socrates’s original austerity plans
had not been harsh enough, and that the bailout could not go ahead without
Finnish support.65 This interaction between elections in creditor and debtor
countries reflected the weak position of the latter, with Portugal facing de-
fault if a rescue was not negotiated within weeks.
The bailout agreement was negotiated under the Socrates administration
but came into effect under the new center-right government of Pedro Passos
Coelho. However, only the parties of the anti-system Left—the Communist-
Green alliance Unitary Democratic Coalitions (CDU), and the radical Left
Bloc (Bloco Esquerda –BE)—opposed the agreement, and their parliamen-
tary representation was not large enough for this to affect the prospects of
the program coming into force. As in Greece, the electoral response to the
financial crisis initially took the form of government turnover from within
the established party system that had signed up to harsh austerity dictated by
the Troika. The Socialists (PS) suffered a historic electoral defeat, losing over
8 percent of the vote compared to the previous election, and hemorrhaging
twice that amount since winning power in 2005. The PSD gained most from
the PS’s losses, and the anti-system Left saw no immediate benefit from its

opposition to austerity, but a warning sign was that the 2011 election saw
the lowest turnout since the first democratic elections after the Portuguese
revolution, at 58 percent.
Not only did the measures mandated by the Troika cause significant pain,
but the Passos Coelho government also exploited the bailout to push its ne-
oliberal agenda even further.66 As the effects of the austerity measures fed
through, the center-right government quickly began to suffer the political
consequences, too, dropping precipitously in the polls to below 30 percent
within a year of taking office as the economy declined.67 After exiting the
bailout program in 2014, Passos Coelho sought to hang on to power by
forming an electoral coalition with the CDS-PP—called Portugal à Frente,
or PàF—which would maximize the joint seat share of the two parties. This
strategy failed dismally, with the PàF polling just 38 percent—12 percent
less than its combined vote share in 2011, falling 13 seats short of a par-
liamentary majority (see Figure 5.9). The PS recovered to 32 percent, but
the big winners were the anti-system Left, with the Bloco Esquerda dou-
bling its vote to 10 percent, while the communist CDU also marginally
increased its vote. The combined anti-system Left amounted to 18.5 per-
cent and thirty-six parliamentary seats. This opened up the opportunity of a
forming a center-left coalition with the PS, and after a doomed attempt by
Passos Coelho to remain in office, a Socialist minority government, led by
António Costa and supported in parliament by the radical left parties, was
formed in November 2015.
50
45
40
35
Vote Share (%)
30
25
20
15
10
5
0
BE CDU PS PSD CDS-PP
2005 2009 2011 2015
Figure 5.9 Patterns of Party Support, Portugal 2005–2015

Source: Ministério da Administracão Interna do Portugal (https://www.eleicoes.
mai.gov.pt/legislativas2015).

This marked a sharp shift to the left in Portuguese politics, and the new
government was the most clearly anchored on the left since the revolution.
The main message represented by the anti-system Left, and more cautiously
by the Socialists, was that austerity needed to be stopped and the state could
and should help economic recovery through redistributive spending. Both
anti-system left-wing parties demanded a restructuring of Portugal’s public
debt and a renegotiation of the EAP. The losses of the center-right were con-
sistent with an anti-austerity wave in the election: the voters most likely to
desert the PSD were those on low incomes or who had lost their jobs in the
crisis, whereas higher-income groups were more likely to remain loyal.68 It is
difficult to interpret these results other than as a backlash against the harsh
policies implemented by the Passos Coelho government under the tutelage
of the Troika. At the time of the 2015 election, the Socialists and the Social
Democrats (the main party of the center-right) had between them presided
over the worst period for the Portuguese economy in decades.
Within the anti-system Left there were marked differences between the
two main parties. The CDU alliance between the Portuguese Communist
Party (PCP) and the Ecology Greens Party (PEV) drew on the historic tra-
dition of the communist Left, a key player in the Portuguese revolution
of the 1970s, and combined it with a Green agenda. The party symbol—
a hammer and sickle and a sunflower—neatly illustrates the awkward
juxtaposition of these two parties, one formally still a Marxist-Leninist
movement, the other emerging out of the postmaterialist turn of the late
twentieth century. The PCP articulated a long-standing anti-system po-
sition, opposed to European integration and to the capitalist system in
general, bitterly criticizing the Troika, and at times adopting a national-
istic, Euroskeptic discourse, as seen in its slogan: “for a patriotic and left
politics.”69 It played a role in the anti-austerity protest movement through
its tight connection with the largest Portuguese trade union, the CGTP
(Confederacão Geral dos Trabalhadores Portugueses), which was heavily in-
volved in organizing resistance to the Troika measures through strike ac-
tion and demonstrations.
The BE, formed as an alliance of various socialist and other radical left
parties in 1999, located itself politically in the space between the CDU and
the Socialists, combining anti-austerity discourse with a more left-libertarian
politics, reflecting its younger activist base. While the PCP is a traditional
mass-based left party, the Left Bloc has a looser and more decentralized orga-
nization, and has proved more open to social movements,70 which is key to its
growth in the period of Troika austerity. It has been close to youth-oriented
street protest movements such as Geração à Rasca (“Desperate Generation”)

and Que se Lixe a Troika (“**** the Troika”).71 It has focused on opposing
government cuts and privatizations and defending worker rights, especially
“precarious” workers on short-term contracts, and protecting families from
eviction. Compared to the Communists, the BE has particularly targeted the
youth vote, playing up the perceived nonresponsiveness of the mainstream
parties.72 While the Communists have been open to the idea of leaving the
European Union, the Left Bloc’s position is analogous to Syriza in Greece,
advocating reform of, rather than exit from, the Union, although euro exit
has been discussed by some BE exponents.
As in the other southern European countries, the pattern of electoral sup-
port for the anti-system Left reflected the harsh consequences of austerity
measures, particularly for vulnerable groups such as the young, dispropor-
tionately likely to suffer unemployment, and for public servants subjected
to nominal wage cuts. Portugal stood out in southern Europe for the extent
to which public opinion turned against the European Union as a result of
the bailout and its accompanying austerity measures.73 Clear majorities of
voters rejected austerity: even a majority of center-right voters disagreed that
“austerity was necessary to balance the government books,” while among
radical left voters, 93–94 percent disagreed with the statement.74 The anti-
austerity position of the radical left parties was clearly communicated over
the period preceding the 2015 election, and clearly marked them out against
the mainstream PS, PSD, and CDS-PP, which in varying degrees identified
with the need for the Troika program.75 However, there were also marked
differences in social support: while the communist CDU had the highest
share of pensioners among its electorate, BE had the lowest, reflecting the
latter’s closer connection to the new social movements that mobilized against
the Troika.76
The extreme Right made no electoral inroads after the crisis in Portugal.77
A small group, the Party of National Renovation (PRN) attempted to mo-
bilize around the themes of immigration and national sovereignty, but
performed dismally, winning 0.3 percent of the vote in 2011 and 0.5 percent
in 2015. Despite a severe economic downturn and the humiliating experi-
ence of a financial bailout with harsh austerity measures attached, Portuguese
voters remained unmoved by right-wing nationalist appeals. Immigration
was not as prominent an issue in Portugal as in other southern European
countries, since the refugee routes generally avoided Portugal, and net immi-
gration was lower in Portugal than in most of the rest of western Europe.78
The kinds of older voters typically supportive of right-wing populists in
northern Europe tended to stay loyal to the mainstream, cartel parties: the
PS and PSD in particular.

Opposition to austerity and the Troika instead came almost entirely from
the left, since the population most affected tended to be younger, labor market,
and welfare “outsiders.” As a result, Portugal joined Greece in responding
to the crisis by electing a left-anchored government that aspired to reverse
austerity, within the European Union. Favored by an incipient recovery of
exports and strong capital inflows,79 the Costa government was able to halt
some privatization plans, pensions cuts, and other austerity measures, and
raise the minimum wage; to counterbalance this increased spending, public
investment was cut back.80 Although budgetary policy actually remained in
line with European targets, Costa was able to claim that austerity had been
abandoned, with the result of a booming economy.81 Unlike in Greece, these
favorable winds vindicated the critical discourse of the anti-austerity parties,
and Portugal’s leftist government found itself the poster child of the anti-
austerity movement in Europe.82
Whatever It Takes: The Political Costs

of Eurozone Austerity
The Eurozone crisis placed the European Union under extraordinary strain,
as markets panicked, leaving the weaker, more indebted member states
struggling to avoid financial collapse. The European institutions reacted to
save the euro currency, offering “monetary solidarity,”83 but failing to protect
the weaker members from severe economic distress. The bailouts of Greece,
Ireland, and Portugal may have saved them from crashing out of the single
currency, but the price was harsh austerity for their citizens, and an accu-
mulation of debt comparable to wartime. The effects of austerity were made
worse by the refusal of European policymakers to act when it became clear
that the debt crisis had derailed the recovery. While the US Federal Reserve
and the Bank of England eased the pressure on their economies by slashing
interest rates and printing trillions of dollars of new money to buy up finan-
cial assets, the European Central Bank continued to be more preoccupied
with the threat of inflation, raising interest rates briefly in 2011 before cut-
ting them again, and delaying quantitative easing until 2015.
The political costs of the Euro crisis can be seen in the destabilization
of European party systems. Not only did Greece embrace anti-system poli-
tics, electing a government opposed to the bailout regime, but the northern
European countries who had put up much of the money for the rescues also
saw their own political backlash. Hard-pressed voters in the North may have

been spared the fate of Greece, but still faced far from buoyant economic
conditions: Germany’s relative success in the post-crisis period was won on
the back of a stoic degree of wage restraint, and an increase in wage ine-
quality, which by the late 2010s was higher than in Britain.84 Economic
growth in the creditor countries, such as Netherlands, Austria, and Belgium,
was weak, and Finland suffered lower growth than even Spain and Portugal
in the decade after the crisis. The strong economies of northern Europe may
have been accumulating trade surpluses, but the living standards of their cit-
izens barely saw the benefit. Policy mistakes subjected the whole Eurozone to
lower growth than it could have enjoyed.
At times of scarcity, distributional conflict becomes more difficult
to manage, and political polarization is a predictable result. As Greece
protested against the onerous conditions of European financial assistance,
hard-up Germans and Finns could be forgiven for wondering why they
should be paying to bail them out. Northern European politicians were un-
derstandably reluctant to come clean about the importance of bailing out
the South for their own banks, which had lent recklessly during the boom
years and risked collapse in the event of a Greek government default.85 But
by shifting the blame for the financial crisis entirely onto the debtors, they
presented an opening to the nationalist Right, long opposed to Europe-wide
burden-sharing. Parties such as The Finns or Alternative for Germany (AfD)
exploited the southern European crisis to challenge European solidarity, de-
manding priority for their own citizens. This discourse was all the more ef-
fective when mainstream politicians such as Angela Merkel were themselves
implying that southerners were guilty of ignoring the wisdom of “living
within one’s means.”
What is more surprising is the relative weakness of the anti-system Right
in the countries subject to bailouts with their attendant austerity measures
and loss of sovereignty. Notwithstanding occasional tantrums, such as the
Greek president greeting Merkel on a visit to Athens with a demand for war
reparations,86 nationalist revanchism was surprisingly muted in the South.
Not only did the anti-system Right prosper far less than the Left in Greece,
but in Portugal (as well as Ireland) no right-wing anti-system party appeared
at all. This was all the more surprising, since the whole of Mediterranean
Europe had to bear the lion’s share of the burden of dealing with the Syrian
refugee crisis of the mid-1990s, which outside Italy failed to ignite far-right
sentiment. Instead, the backlash mainly benefited the Left, as in Ireland,
where the mainstream political parties Fine Gael and Fianna Fail held on to
power, despite some electoral turbulence and gains for the left-wing Irish
Republican party Sinn Fein.

Here I have argued that the failure of the southern European anti-system
Right to exploit the financial bailouts is the product of the way in which
welfare states distributed the costs of the economic crisis. Young people are
far more likely to espouse socially liberal views and tolerate immigration and
diversity, and they were also the main victims of the crisis. Youth was the
driving force behind mass movements protesting against austerity in Greece
and Portugal, which grew into political parties capable of winning substan-
tial vote shares and ultimately winning political power. The mainstream
parties of the third bailout country, Ireland, held off the anti-system threat
more successfully, in part because of the more generous welfare arrangements
that the country’s rapid growth had financed, and in part because of the high
mobility of the Irish labor force, which responded to the crisis through mass
migration. The other main victims of the Euro crisis, Spain and Italy, did not
get off so lightly, as the next two chapters explain.

CHAPTER 6 Spain: Boom, Bust, and Breakup
Introduction
By spring 2011, Greece, Portugal, and Ireland had all resorted to financial
bailouts, and the “bond vigilantes”—investors betting against the bonds of
heavily indebted countries1—turned their fire on Spain and Italy. Spain’s
beleaguered Socialist government under José Luis Zapatero responded with
austerity measures that did little to stave off the market pressures but did
hurt a population already reeling from a collapsing property market and
an unemployment rate of 20 percent. On May 15, 2011, protestors filled
Madrid’s central square, the Puerta del Sol, and refused to leave for weeks, de-
spite attempts by the police to clear the area. In Barcelona, a similar protest
occupied the Plaça de Catalunya for a whole month, punctuated by violent
clashes with the Mossos d’Esquadra, the Catalan region’s police force.
As well as opposition to austerity measures, what became known as the
indignados movement (or “15-M,” after the date it began) protested the use
of bankruptcy rules to evict underwater mortgage-holders from their houses.
Spain had experienced a spectacular real estate boom in the late 1990s and
2000s, which turned into a bust after 2007. Unlike in the United States,
where insolvent homeowners could simply “walk away” from their loans,
Spanish borrowers could be evicted for missed payments and still be left
on the hook for the remaining debt, with interest and charges. One of the
leaders of a group protesting this plight, Ada Colau, rode the wave of protests
to become mayor of Barcelona, Spain’s second biggest city, at the head of
a left-wing anti-austerity coalition. A similar coalition won control of the
City Council of Madrid, and the leaders of the indignados movement also
founded a left-wing anti-system party, Podemos, that won dozens of seats in
the Spanish parliament on an anti-austerity platform.
So far this is a familiar story: a debt-crippled southern European country
forced into austerity, whose victims of unemployment, eviction, and spending
cuts mobilized a left-wing protest movement that challenged the system, and
where the anti-migrant Right made little impact. But here Spain diverges
from the pattern in ways that shed light on the complexities of anti-system
reactions. Little more than a year after the 15-M protest, a second front of
anti-system politics was opened as a million protestors marched through
Barcelona, demanding independence for Catalonia. Ada Colau’s administra-
tion found itself pulled this way and that as the anti-austerity front divided
along national identity lines, part of her coalition sympathizing with the ide-
ologically hybrid Catalan nationalist movement, the rest aligning with the
Spain-wide left project of Podemos.
Ada Colau’s dilemma illustrates how group identities shape anti-system
politics, and offers insights into the different ways in which the tensions
arising from economic crises can be mobilized. The cultural and political
roots of Catalan nationalism, relating to linguistic rights and the demand
for self-determination, were long-standing, but the crisis turbo-charged
these grievances. The Catalan independence campaign articulated the aus-
terity fatigue of one of Spain’s richer regions, resentful of what many Catalans
regarded as an excessive fiscal burden imposed by an illegitimate state. In
most of the rest of Spain, Catalonia’s demands were given short shrift, and
a polarizing dynamic was unleashed between competing nationalisms. In
Spain, austerity politics pitted older, economically comfortable voters against
younger, more precarious voters who suffered most of the economic cost of
the crisis, but it also pitted one of the richer regions against the central state
in a fight over the territorial distribution of the fiscal burden, and ultimately
over the existence of the state itself. An economic conflict intersected with a
conflict over identities, but, as this chapter will show, the issue of immigra-
tion barely registered.
Spain in the Euro: A Mediterranean

Bubble Economy
This crisis hardly came out of nowhere, yet the prevailing view of Spain
prior to the upheavals of the 2010s was one of political, economic, and social

progress. Spain’s relatively peaceful transition to democracy had been hailed
as a model for others,2 and its economy grew strongly through the 1980s and
the 1990s, achieving a smooth entry into the euro. As late as November 2008
commentators were still describing Spain as a “success story.”3 Although the
slow pace of structural reforms came under criticism from the European
authorities, the key indicators policymakers focused on were flashing
green. The debt-to-GDP ratio had dropped from 73 percent before euro
entry to just 41 percent by 2007, and Spain was running budget surpluses.
Unemployment, always Spain’s Achilles heel, had fallen from 22 percent in
1995 to just 8.2 percent in 2007. From euro entry in 1999 until the eve of
the crisis in 2007, economic growth averaged a healthy 3.4 percent.4
Unfortunately these healthy numbers masked the fact that Spain had
been experiencing its own variant of the housing bubble that wrecked the
economy of the United States. The convergence of interest rates after the
completion of European Monetary Union (EMU) meant that borrowing
costs in Spain plummeted: from a peak of over 13 percent at the height
of the currency crisis of 1992 down to just 2.5 percent by 2005.5 Spanish
banks began to lend at historically low rates, generating an unprecedented
credit boom. As late as the early 1990s, buying a home in Spain meant
finding a down payment of around half the property value, then taking out a
mortgage at double-digit interest rates and repayment over very short terms
(ten years was typical). A decade later, banks were falling over themselves
to offer home loans of over 100 percent of the purchase price with repay-
ment terms of up to 50 years. The result was the biggest housing boom in
western Europe, surpassing even Ireland, Greece, and the United Kingdom.
Compound annual house price growth in Spain was over 8 percent between
2000 and 2008.6
Economic fundamentals could explain some of this increase, as income
growth had been healthy and high levels of migration added around 3 mil-
lion people to the Spanish population between the mid-1990s and the mid-
2000s, one of the highest rates in the European Union.7 However, there was
also a heavy speculative component: in 2008 Spain had the highest price-
to-income and price-to-rent ratios in western Europe,8 meaning that house
prices reflected neither citizens’ capacity to service mortgages nor to pay rent.
Instead, the financial system was directing speculative capital into a rising
market in the expectation of continued asset growth, which brought a dan-
gerous degree of dependence on overseas borrowing. Classic bubble behavior
resulted, with households leveraging up to cash in on rising prices by buying
multiple properties, and high loan-to-value mortgages being offered to
people with low incomes and uncertain employment prospects reminiscent
Spain: Boom, Bust, and BreakUp 189

of the American-style “Ninja” loans. Household debt almost doubled be-
tween 1999 and 2007, from 80 percent to 154 percent of GDP.9
Although buoyant tax revenues resulting from the housing bubble
brought public debt down as private indebtedness was rising, this only
encouraged politicians to fuel the boom, embarking on “white elephant”
projects, such as economically unviable airports in small remote cities such
as Ciudad Real,10 or the construction of the spectacular City of Sciences in
Valencia, designed by fashionable architect Santiago Calatrava, at a cost of
well over one billion euros, four times its planned budget.11 By leveraging
low interest rates to raise cash for such adventures, politicians could both
impress voters and create jobs, and also rake in money through bribes and
political donations from real estate and construction interests.12 Reforms lib-
eralizing local savings banks in the 1980s and 1990s allowed politicians to
control the allocation of credit to specific firms and development projects.13
This meant that political parties’ financial and electoral viability was tied up
with the housing boom.
This had a baleful impact on the behavior of politicians. One extraordi-
nary example of this was the so-called Tamayazo scandal in Madrid, where
two politicians elected to the Madrid regional assembly on the Socialist14 list
failed to show up to the investiture vote, sinking an attempt to form a center-
left administration and paving the way for the center-right Popular Party
(PP) to take power. The bizarre no-show was rumored to be connected to a
corrupt deal with property developers. Even more remarkably, the two main
parties colluded to bury the case: the Socialists, after initially accusing the
two of taking bribes from developers, eventually let the issue drop and the
two defectors disappeared from politics, although one of them, Tamayo, sub-
sequently reappeared as a director of a construction company. This extreme
example of the entangling of business interests and political representation
revealed not only a pattern of deeply corrupt behavior, but also collusion be-
tween the major political parties keeping their exploitation of the housing
bubble off the political agenda.15
Although the political parties had every reason to throw caution to the
wind in the pursuit of money and votes, there was less of an excuse for the
failure of banking authorities to foresee the likely consequences of the biggest
housing boom in Europe. While by 2007 total private debt in Spain had dou-
bled from 91 percent of GDP on euro entry to 191 percent, and total capital
inflows were worth 10 percent of GDP, the Bank of Spain reported reassur-
ingly that “the central scenario will continue to be a mild and progressive
change of business model from the real estate segment to others, . . . to the
benefit of investment in capital goods and exports.”16 Yet just a few weeks

later, real estate investment in Spain ground to a halt, with high-profile
Valencian developer Llanera going bankrupt in October 2007 as construc-
tion sites across the country began laying off workers. As global financial
conditions changed, the tap of credit for Spanish banks was abruptly turned
off. As bankruptcies and layoffs followed, house prices went into free fall,
undermining the balance sheets of banks, companies, and households.
From Bubble to Austerity: Spain’s Sovereign

Debt Crisis
The collapse of the real estate bubble in Spain led to a dramatic increase in
unemployment as the construction industry, which accounted for a quarter
of Spanish jobs at the height of the boom, ran out of cash, leaving many
buildings half-finished. GDP contracted by almost 5 percent in 2008–2009,
recovered slightly in 2010, and then declined still further as the Eurozone
double dip recession took hold. The budget surplus quickly turned into a
deficit of 11 percent of GDP as tax revenues dropped and laid-off workers
claimed unemployment benefits. As government borrowing shot up, investors
shunned Spanish government bonds and an initial round of austerity meas-
ures was introduced by the Zapatero government, with tax rises, pay cuts
in the public sector, and cuts in transfers to the regional governments that
were responsible for much of Spain’s social service provision. This contrac-
tionary policy predictably depressed economic activity still further, reducing
the denominator of the deficit-to-GDP ratio and canceling out the effect of
austerity.17 Public austerity was all the more devastating because the private
sector was attempting to deleverage at the exact same time: Spain reduced
its external borrowing from $151 billion in 2008 to a $20 billion surplus in
2013, an adjustment worth around 12 percent of GDP in just five years.18
This herculean effort was not enough to convince the bond vigilantes
that Spain could repay its debts, and spreads continued to widen even after
Greece, Portugal, and Ireland had been bailed out by the Troika. It was be-
coming clear that Spain would not be able to exit the crisis without help,
and in the summer of 2011 Zapatero (alongside his Italian counterpart
Berlusconi), received a letter from the European Central Bank (ECB) gov-
ernor Trichet urging the immediate implementation of structural reforms
and budget cuts, which was widely seen as a quid pro quo for ECB sup-
port in the bond markets.19 The letter was relatively detailed, identifying
specific measures, particularly in the labor market, that were required, such

as dismantling Spain’s long-established collective bargaining arrangements,
loosening rules on temporary employment, and easing restrictions on firing
workers.20 Moreover, the letter implied action was urgent, with the need to
supply “credible evidence” of intent to address fiscal sustainability and struc-
tural reforms within the month.
The purchase of billions of euros worth of Spanish bonds by the ECB in
subsequent months—ECB holdings by December 2012 stood at €44 billion,
almost 5 percent of Spanish GDP21—relieved the pressure, but by the fol-
lowing summer Spain was again in trouble as it missed its deficit target and
the economy was back in recession, implying even more austerity if future
targets were to be met.22 The final straw that pushed Spain to seek European
financial assistance was the weakness of much of the banking sector, which
by spring 2012 was on life support in the form of ECB funding. By this
time Zapatero’s Socialist Party had been thrashed in the November 2011
elections, to be replaced by Mariano Rajoy’s PP, which had fewer political
qualms about following through with labor market reform and cuts to wel-
fare spending. Yet although Spain was spared a formal Economic Assistance
Program (EAP), by mid-2012 the Rajoy government was forced to request up
to €100 billion of financial assistance from the European Union’s European
Stability Mechanism (ESM) to recapitalize the Spanish banking sector.
The eagerness of the new administration to carry out what its finance
minister Luis de Guindos proudly announced to European Commissioner
Olli Rehn as a “very aggressive” labor reform23 may have influenced the de-
cision to allow Spain to avoid a full sovereign bailout, with all the associated
stigma. Spain introduced several liberalizing reforms in the labor market
after the crisis. The most important of these, introduced by the Rajoy gov-
ernment in 2012 was in part designed to assuage European policymakers,
but also responded to partisan preferences and pleased the Spanish business
community.24 Its main objectives were to weaken union workplace power,
undermine collective bargaining, and loosen legal restrictions on dismissal.25
European policymakers had insisted that Spain’s collective bargaining
arrangements, by legally imposing extensions of agreements in cases where
bargaining broke down, hindered the real wage cuts required for Spain to
restore competitiveness. The reforms achieved their goal, as wage growth
was slower in Spain than in any other European country except Greece and
Portugal, and some groups, particularly younger workers and women, saw
their real wages fall.26
Even though the Spanish government embraced this “internal devalua-
tion” route out of the crisis, the banking bailout still involved a degree of
intrusive monitoring comparable to the Greek and Portuguese programs, but

through different institutional mechanisms.27 However, the fiscal measures
demanded of Spain were not tied to disbursements for the banking sector,
and so the government was able to miss deficit targets without sanction,
easing the return to growth. Even so, the social and economic consequences
of the crisis were severe. By the time Spain finally returned to growth, in the
fourth quarter of 2013, the economy had shrunk almost 10 percent from its
pre-crisis peak. Unemployment had soared to almost 27 percent by 2013,
with youth unemployment at 55 percent.28 Median income fell by 3.3 per-
cent in real terms in 2007–2013, and the lowest 10 percent of earners lost
7.6 percent, the worst figures in the Eurozone after Greece.29
As in the American real estate crash, Spaniards also suffered acute fi-
nancial stress, with many losing their homes as properties with underwater
mortgages were repossessed by banks. Spain’s restrictive bankruptcy laws
allowed banks to sell off repossessed properties at firesale prices, landing
some homeowners on the street but still owing the banks tens of thousands
of euros. In early 2018 it was estimated that there had been 745,000 mort-
gage defaults since the crisis began, of which just over half a million resulted
in foreclosure, and almost half of these involved families losing their pri-
mary residence (236,000 families).30 Like unemployment and negative wage
growth, these losses disproportionately affected the younger working-age
population, who were most likely to have high levels of housing debt.
Work and Welfare in Spain: Youth Takes

the Strain
In the midst of a devastating financial crisis, many families could not sur-
vive without help from the government. Spain’s welfare model was in some
ways more egalitarian, demographically balanced, and sustainable than its
southern neighbors. While maintaining many of the typical features of the
Mediterranean model, with its heavy reliance on social insurance funding
and generous provision for pensioners, long periods of Socialist government
had layered redistributive social policies onto the edifice inherited from the
Franco dictatorship. As well as a comprehensive unemployment benefit, the
state social security system provided contributory and noncontributory re-
tirement and invalidity pensions, and by the 2000s public spending on so-
cial programs amounted to 20 percent of Spanish GDP, just a few percentage
points lower than the most advanced welfare states of western Europe. Unlike
Italy or Greece, Spain lacked very stark differences in the social security

rights of different occupational groups, and pension spending was relatively
redistributive.31
Where Spain’s social model clearly failed was in the organization of
the labor market. The Franco dictatorship had sought to curb labor mili-
tancy by establishing very strong employment protections, so that public
servants and workers in manufacturing industries were almost impossible
to dismiss without paying extensive compensation. These restrictions hin-
dered job creation, contributing to soaring unemployment of over 20 per-
cent, the worst in Europe, which the Socialist government of Felipe González
addressed by introducing temporary contracts with lower dismissal costs.
By the late 1980s, Spain had more temporary employees than any other
country in Europe, and these mainly younger workers were the first to be
fired in downturns.32 Yet unemployment remained the highest in Europe
after Greece, peaking at above 25 percent in the recession of the early 1990s.
Youth unemployment (under-25s) peaked at 45 percent in the mid-1980s
and mid-1990s.33
These dramatic figures obscure the numerous ways in which the strong
family structure in Spain cushioned young people from the full consequences
of their economic disenfranchisement. As in other Mediterranean countries,
patterns of interfamily solidarity often fill in the gaps left by the welfare
state, with older, usually male breadwinners able to financially support
younger family members, and sometimes intergenerational transfers from
retirees in the extended family. The whole structure rested on a typically
Mediterranean pattern of widespread home ownership, which in Spain was
even higher than in neighboring countries, with close to 80 percent of the
population in owner-occupancy.34 In the mid-2010s, 73.6 percent of Spanish
youth (15–29) lived in the parental home.35
The pension system, although more sustainable than in Greece and Italy,
accounted for around 9 percent of GDP at the time of the financial crisis, and
grew to over 11 percent afterward. Pension spending expanded markedly
during the 1980s with the introduction of noncontributory means-tested
minimum pensions, while defined-benefit contributory pensions based on
payments into the Social Security fund became increasingly generous,
resulting in relatively higher contribution rates for the working-age pop-
ulation. A wave of early retirements to facilitate industrial restructuring in
the 1980s also contributed to higher social spending on the elderly. As a
result, in 2014 over-65s in Spain had average incomes of almost 99 percent
of the population average, the fourth highest in the OECD,36 while the pov-
erty rate for the elderly was considerably lower than for the general popula-
tion. The roughly nine million pensioners in Spain constituted a formidable

voting bloc, which acted as a severe deterrent to attempts to rebalance wel-
fare spending in favor of the young.
Policy developments in the 1990s and 2000s addressed this lopsided pat-
tern of welfare provision in a piecemeal fashion without changing its basic
logic. The devolution of many welfare policy areas to subnational authorities
(the Autonomous Communities) allowed some regions to expand provision.37
However, the bulk of social spending revolved around Social Security, which
was an exclusive competence of the central state and enabled a degree of in-
come redistribution between poorer and richer regions. This constraint was
particularly salient in Catalonia, which became a heavy net contributor to
the Spanish welfare state, an issue on which Catalan nationalist parties were
able to mobilize electoral support. Interterritorial redistribution also took
place through public investment and transfers to the regional governments
in poorer regions, notably the Socialists’ power base in the South.38
Spain’s pre-crisis welfare system primed the anti-system politics of the
2010s. Social spending and labor market regulation favored the old over the
young, exposing the latter to job insecurity, low pay, and unemployment.
Regional imbalances placed the onus on the more economically dynamic re-
gions to fiscally sustain the low activity rates and bad demographics of poorer
regions. Finally, politicians manipulated spending decisions for political
gain, and often appeared to connive in obscuring corruption from the public
gaze. In good times, voters seemed to relax their scrutiny of politicians’ be-
havior, but in hard times, economic grievance and political mistrust would
prove a potent mix.39
The Political Backlash: From the Streets to the Vote

The immediate response to the crisis in Spain was a wave of demonstrations
by the so-called indignados as austerity measures began to hit home. The
movement combined political and economic grievances: the main targets
of its ire were banks and the mainstream political establishment, and an
early slogan was No somos mercancías en manos de políticos y banqueros (“We are
not commodities in the hands of politicians and bankers”).40 The movement
shunned ideological identities and focused on what united protesters: rejec-
tion of the existing system and a shared feeling of outrage, reflected in the
label indignados to describe its participants. The protests were coordinated by
established activist networks of environmentalists, anti-globalization groups,
anti-war protesters, gay rights groups, students opposed to higher education
reforms, and groups involved in protests against foreclosures and evictions.41

The protestors occupying the squares were mostly young, especially students
and the unemployed or insecure workers: one of the core groups was named
Juventud sin futuro (“Youth with No Future”). The protests made frequent
allusions to the lack of choice between the major parties, perceived as equally
culpable for the crisis, and demands for an overhaul of the party system.42
Alongside these mass protests, direct action groups sprang up around
the foreclosure crisis.43 The PAH (Plataforma Afectados por las Hipotecas),
founded in Barcelona in 2009, emerged as a protest group lobbying for better
treatment of underwater mortgage holders and helping victims with legal
advice. Housing became the front line of the impact of financial instability
on Spanish households, and unlike broad issues of unemployment and job
insecurity, foreclosures pitted debtors against their creditors in a very direct
and tangible way. The PAH movement challenged the mainstream polit-
ical parties—both the PP and the Socialists, especially the former—for their
failure to intervene in defense of those losing their homes, and organized a
popular petition to demand legislative changes to wipe out foreclosure debts.
As in Greece and Portugal, it was the groups most affected by the eco-
nomic consequences of the crisis that mobilized to challenge existing pol-
icies, principally younger citizens lacking job prospects and those caught
up in Spain’s housing crash. But party politics was pushing in the opposite
direction. The first post-crisis election brought the defeat of the Socialist
Party, which shed over four million votes, dropping to just over 28 percent
of the vote—its worst performance since the restoration of democracy in
1977. Although the far-left Izquierda Unida (United Left) doubled its vote
to almost 7 percent, the real winner was the conservative PP, which won its
highest ever vote share, 44.6 percent, winning an absolute majority in the
Congress, albeit on a historically low turnout of under 70 percent. There was
a sharp increase in the fragmentation of the vote, as the joint vote share of the
two main parties dropped from 84 to 73 percent.44
The blanket rejection of the political establishment expressed by the
indignados likely discouraged disillusioned voters on the left from casting a
vote or pushed them toward anti-system candidates, most of them nationalist
parties in the Basque Country and Catalonia. The pattern emerging from the
2011 election was of increasing polarization around the territorial divide,
with big gains for Catalan and Basque nationalist parties at the expense of
the Socialists, who defended Spain’s existing territorial settlement. On the
other side of the divide, a new party, Union, Progress and Democracy (Unión,
Progreso y Democracia, or UPyD), with centrist economic and social policies
but fiercely critical of Catalan and Basque nationalism, grew to nearly 5 per-
cent of the vote. This incipient polarization around the national-territorial

dimension was almost guaranteed to be fueled by a PP government with
an absolute majority. The PP’s position on the territorial issue was of quite
aggressive opposition to Basque and Catalan claims, reflecting both its long-
standing identification with conservative Spanish nationalism and a strategic
calculation: the PP was historically weak in those two regions and had few
votes to lose, while a hard-line approach played well in other parts of Spain.
The PP’s victory ushered in a program of austerity measures and structural
reforms consistent with the policy priorities of the European Commission
and the ECB. In particular, the Rajoy government’s labor reform—imposed
in the face of the outright opposition of the trade unions—created a tense
industrial relations climate, leading to two general strikes in 2012. A round
of spending cuts, with a cut to public sector pay and a freeze on recruitment,
higher retirement ages, and increased income tax and VAT, satisfied Spain’s
European creditors but were predictably deeply unpopular with Spanish
voters. In less than a year, the Rajoy government’s approval rating fell to the
levels of the previous Zapatero administration shortly before its crushing
electoral defeat. In a measure of the discredit of the entire political establish-
ment, 85 percent of those polled had no confidence in Rajoy as a leader, yet
the Socialist opposition leader (now Alfredo Pérez Rubalcaba) had equally
low ratings.45
The financial crisis was not only economically painful, but it also threw
the complicity of the main political parties in the mismanagement of the
banks into sharp relief. The highest profile example of this was Bankia, cre-
ated out of a merger of Caja Madrid with several other smaller savings banks
in 2010 to become the third-largest bank in the country. As Spain’s housing
market collapsed, Bankia found itself with large numbers of bad loans on its
books and needed recapitalizing, but international investors refused to bite,
and instead around €3 billion in shares were offloaded to small local investors,
mostly Bankia depositors. As the financial slide continued, an injection of
government money of around €22 billion was needed to save Bankia from
collapse, and trading in Bankia equity was suspended, leaving thousands of
small shareholders facing massive losses. The director of Bankia in this period
was Rodrigo Rato, a former finance minister and a leading figure in the PP;
it subsequently transpired that he and others had maintained a slush fund for
private expenses, for which he received a prison sentence in 2017.46
The PP’s weak moral authority to impose austerity was exacerbated by a
series of corruption scandals that reached uncomfortably close to the party
leadership. The “Gurtel” case, which had been the object of a judicial inves-
tigation since 2009, involved a long-running and systematic arrangement
whereby PP officials took bribes from businesses in exchange for favors in

assigning public contracts or planning permissions, which in turn were used
by the party as a slush fund for political and campaigning expenses.47 In
early 2013, at the height of the Rajoy government’s austerity drive, secret
party documents were published showing regular payments from the slush
fund to various party leaders, including (again) Rodrigo Rato, as well as sev-
eral other former ministers. The findings of these investigations and their
political ramifications formed the mood music of the Rajoy administration,
exacerbating the salience of corruption as a major political issue for Spanish
voters.48
By the time of the 2015 election, the Rajoy government was deeply un-
popular, yet the main opposition party, the Socialists, were discredited by
their own scandals and in no position to capitalize. While the PP lost more
than three and a half million votes and their parliamentary majority, the
Socialists not only failed to recover, but lost a further 7 percent of the vote
(see Figure 7.1). The joint vote share of the two major parties, which had
averaged over 70 percent since the early 1990s, dropped to only 51 percent,
and their joint share of parliamentary seats, at 60 percent,49 was the lowest
since the first democratic elections in 1977. The main beneficiaries of this
collapse of the established parties were two new parties contesting an election
to the Congress of Deputies for the first time: Podemos on the left, which
won just under 21 percent of the vote, and Ciudadanos (Citizens—C’s), on
the center-right, which won 13 percent.
50
45
40
Vote Share (%)
35
30
25
20
15
10
5
0
)
rty
U
os
ist
Vo
os
ER
Ci
em
Pa
ial
an
ad
od
lar
So
ud
/P
pu
(IU
Ci
Po
ft
Le
2008 2011 2015 2016 2019
Figure 6.1 Patterns of Party Support, Spain, 2008–2019

1960–2014 (Bern: Institute of Political Science, University of Bern, 2017).
* For 2008, Unión de Progreso y Democracia.

Figure 6.1 shows that elections after the crisis represented a shift to the
left in the Spanish political panorama. The PP lost out to Ciudadanos, which
represented more socially liberal positions combined with a liberal economic
stance, while the Socialists lost out to Podemos, which was clearly located
further to the left on both dimensions. The other significant shift took place
in Catalonia, where the left-wing nationalist party, the Catalan Republican
Left (Esquerra Republicana de Catalunya, or ERC) defeated the center-right
Catalan nationalist parties (Convergència i Unió, or CiU) for the first time,
pointing to a radicalization of Catalan nationalism at the expense of the mod-
erate centrists. Party competition in Spain was permeated by the intense
territorial conflict between the demands for self-government of nationalist
parties in Catalonia and the Basque Country, and parties advocating a more
centralized state.
These electoral trends follow a clear pattern of decline for the established
parties and growth for new, mostly anti-system, parties. The source of these
changes was the disenchantment of the younger voters most affected by the
crisis and least attached to the established parties. Supporters of Podemos
and Ciudadanos had a more negative view of the economic situation, and this
was especially the case for the young.50 In contrast, age was positively cor-
related with voting for the established parties, the PP and the Socialists, as
the data in Figure 6.2. demonstrate starkly. On the left, the PSOE became a
party of older, and usually less-educated, voters, and was especially strong in
40
35
30
Vote Share (%)
25
20
15
10
5
0
18–24 25–34 35–44 45–54 55–64 65+
Age
PP PSOE Podemos C’s Convergencia ERC
Figure 6.2 Party Support by Age in Spain, 2015

Source: Centro de Investigaciones Sociológicas (CIS), Post Electoral Survey, 2015
Election (Postelectoral Elecciones Generales 2015. Panel [2ª Fase], Estudio 3126.
Madrid: CIS) (http://www.analisis.cis.es/cisdb.jsp).

the South, where the party used distributional politics to build an electoral
stronghold. The PP had an even greater age skew: in the 2015 election, the
PP’s support among the over-65s was twice the average for all age groups. In
contrast, support for Podemos and Ciudadanos declined with age. Figure 6.2
shows that this pattern also prevailed in Catalonia, where the center-right
Catalan nationalist Convergència i Unió (CiU), like the PP, won twice as
much support among the retired as among the electorate as a whole, whereas
the Republican Left(ERC) was more evenly represented across age groups.
Anti-system voting was stronger among the young because they were
the group most exposed to the effects of the financial crisis and the longer-
term patterns of inequality and job insecurity in Spain. Data for 2014
showed that among 30-to 39-year-olds, around half were either unem-
ployed or in temporary work, a figure that reached around a third even for
university graduates. This group constituted a rich reservoir of support for
anti-system parties such as Podemos and the left Catalan nationalists. In
contrast, the Spanish welfare state was more successful in protecting the
incomes of the old: retirees in the 66–75 age bracket had higher incomes
than the average Spaniard, thanks to a relatively generous state-provided
pension system.51 These groups tended to stick with the established
parties.
This age gap shaped the divide between established parties and anti-
system parties, but other divides complicated the picture. Anti-austerity
politics dragged the party system to the left, while the intensification of the
center-periphery conflict pushed Catalan nationalism toward a more radical,
secessionist position, provoking a hardening of attitudes among parties on
the center and right opposed to any breakup of Spain. Unlike in most western
European countries, the anti-system Right was slow to emerge. The rest of
the chapter shows how this complex pattern of political competition shaped
different forms of anti-system politics in the post-crisis period.
Podemos: The Political Wing of the Indignados

Podemos was formed in early 2014 after the publication of a manifesto signed
by left-wing intellectuals arguing for the creation of a list for the European
Parliament elections representing the ideas of the indignados. A Madrid uni-
versity professor, Pablo Iglesias, emerged as leader of the new party, which
after just a few months of existence won almost 8 percent of the vote, electing
five members of the European Parliament. The party name, Podemos (We
Can), evoked the Obama campaign of 2008, but its message was more

radical: it demanded the reversal of austerity and the ousting of the political
and financial elites responsible for economic hardship. By forming a party,
Iglesias formalized and cemented the political structure that coordinated the
various 15-M movements.52
Podemos’s political message reflected its roots in the protest movements
and its clear anti-system identity. It revolved around two familiar themes: op-
position to the existing political order, and rejection of the current economic
arrangements. Podemos initially dismissed the Spanish political system as
fundamentally broken and in need of a new constitution that would dis-
mantle the existing two-party system and its systematic corruption. This
anti-elite discourse described the established party leaderships as la casta
(the caste, after a popular book of the same name detailing political corrup-
tion53) and conflated the acronyms of the two main established parties (the
PP and the PSOE) as “PPSOE,” implying that they were indistinguishable,
united in their neglect of the people. The concept of la casta extended beyond
politicians to include bankers and corrupt business interests,54 dovetailing
with the party’s critique of the economic order.
The economic discourse of Podemos placed it firmly on the anti-capitalist
left, emphasizing the importance of protecting welfare rights, public edu-
cation, and social services,55 and advocating a greater role for the state in
investment and the organization of the economy. Specific measures in the
party’s first electoral program in 2014 included the reduction of the working
week to thirty-five hours, the reduction of the retirement age to sixty, and the
revoking of all of the labor reforms implemented in Spain since the crisis.56
Most of the party’s main leadership figures had backgrounds in leftist poli-
tics, and Spanish voters certainly perceived to party to be located on the left.57
At the same time, party rhetoric sought to deny the relevance of the tra-
ditional left-right divide in politics, instead blaming political and business
elites for society’s problems.58 Podemos did not shy away from its “anti-
system” status, aspiring to be a “lever for political change in this country
[ . . . ] so that citizens can take back democratic control of our institutions
and destiny.”59 At the same time, Iglesias, when pointedly asked if he was
“antisistema,” replied, “We defend the health system, the education system,
a system that defends social rights, the system that we live in, the product of
many hard-working people.”60 Similarly, the party’s position on the territo-
rial divide in Spain reflected a neat triangulation: Podemos’s official position
was that they preferred Spain to remain intact, but that Catalonia should be
entitled to hold a referendum on independence if a majority there wished.
The issue of the euro was also an awkward one for Podemos. On the one
hand, its very existence was owed to the impressive wave of protests against

the austerity measures whose ostensible purpose was to keep Spain in the
euro. Yet reversing austerity while remaining in the Eurozone was impossible
without a commitment from the European authorities, and in particular the
ECB, to sustain Spain in the bond markets and commit to bailing out its
banks or public institutions should they run out of funds. In a very similar
approach to Syriza in Greece, Podemos proposed changes at the European
level to relax the fiscal restrictions of the Stability and Growth Pact; develop
greater coordination of fiscal policy at the European level, implicitly to fa-
cilitate redistribution from richer to poorer EU member states; and move
toward the “democratization” of the European Central Bank, which should
be required to hit targets for employment as well as inflation, and to permit
the direct purchase of government debt to alleviate funding pressures on
struggling states.61
Although Podemos resisted identifying itself as an ideological party
and had ambitions to govern on behalf of the “people” as a whole, it was
strongest among the same groups that typically supported the anti-system
Left elsewhere: younger, more educated voters in urban areas, just like
the activists that had launched the 15-M movement.62 These voters had
often previously voted for the Socialists, who lost disproportionately more
younger voters in the 2011 election than those over 60.63 Podemos voters,
while they belonged to the generation most affected by the crisis, were
not individually more likely to have suffered economic losses than other
citizens. Instead, the party attracted the voters that were most politically
engaged, rather than the most economically vulnerable groups, who tended
not to vote at all.64 But Podemos voters were more likely to have a neg-
ative view of their own personal economic situation and of the economy
as a whole than those who remained loyal to the established parties, and
they were also more likely to see political corruption as a cause of these
problems.65
After its shocking burst onto the scene in 2014, Podemos continued to
expand its support in subsequent elections. The local and regional elections
of May 2015 presented major organizational and strategic challenges to the
party, since it still lacked an entrenched territorial presence and was unable
to monopolize the political space to the left of the Socialists, which consisted
of fragmented and uncoordinated social movements in a number of Spanish
cities. As a result, a decision was taken to present formal candidates for the
regional but not the local elections, where instead Podemos offered support
to like-minded candidates, mostly under the banner Ganemos (Let’s Win).66
This delivered some striking results, with radical left candidates winning the
mayor’s office in both Madrid and Barcelona (Ada Colau). After the regional

elections held in most of Spain’s Autonomous Communities in 2015 (with
the exception of the Basque Country, Catalonia, Andalusia, and Galicia),
Podemos contributed to the election of center-left administrations in five re-
gions previously governed by the PP.
The November 2015 general election confirmed Podemos’s momentum,
as it won 5.2 million votes (a 20.7 percent vote share), only 300,000 less
than the PSOE. This growth was facilitated by deliberate efforts by Iglesias
to soften the party’s image and adopt a catch-all approach, diluting some of
its more radical messages, especially on economic policy and the euro.67 The
logic of this strategy was not only to maximize vote share, but also to make
Podemos a possible coalition partner of the fading Socialists, paving the way
to a governing role. This catch-all approach was easier to sustain on economic
and social policy, where Spanish voters had a well-established preference
for improved social protection, than on the other key cleavage in Spanish
politics: the national/regional question. Here the polarization around the
Catalan nationalists’ increasingly radical stance threatened Podemos’s elec-
toral strategy and complicated the formation of a broad coalition of the left
to combat austerity.
Against the System, Against the State: Territorial

Politics and the Crisis in Catalonia
The battle over austerity interacted with Spain’s territorial conflict, which
has shaped post- Franco party politics, with regionalist and nationalist
parties taking substantial vote shares in several of Spain’s regions, known
as “Autonomous Communities.”68 The political and identity dimensions of
the center-periphery cleavage cross-cut the economic dimensions. Political
centralization and Spanish nationalism have been associated with the polit-
ical Right, while decentralization and support for nationalist claims in the
periphery have been supported more by the Left. But in economic terms,
Spain’s fiscal arrangements imply substantial redistribution from the richer
regions, such as Catalonia, but also Madrid, toward poorer parts of Spain.
Claims to greater self-government for the wealthy regions have been opposed
by the large southern regions that formed the bedrock of the Socialist elec-
torate: Andalusia, Estremadura, and Castile-La Mancha.
A further layer of political complexity is that large numbers of citizens
from these poorer regions of southern Spain migrated to the North, and
particularly Catalonia, in the postwar period of economic expansion. This
group and its descendants, mostly Castilian speakers, were less sympathetic

to Basque and Catalan nationalism and tended to prefer state-wide polit-
ical parties, especially the Socialists,69 over the nationalist parties, creating
an identitarian dimension of political competition and conflict. The PSOE
has therefore historically adopted a pragmatic acceptance of a decentralized
state, due to its large vote shares in the periphery regions and historic ties to
Basque and Catalan nationalists in the opposition to the Franco regime. But
this has placed the Socialists in an uncomfortable position, caught between
the PP’s hardline centralism and Spanish nationalism, on the one hand, and
the national claims of Basques and Catalans, on the other.
In contrast to this, Spain’s main conservative party, the PP, has benefited
from adopting intransigent positions on territorial issues, with the main na-
tionalist parties of Basque Country and Catalonia and the PP feeding off
each others’ hostility. Despite the polarized rhetoric, Spain’s experience of fre-
quent minority governments defused tensions, as Catalan and Basque nation-
alist parties often offered legislative support to Socialist or PP governments
in exchange for a greater devolution of powers, and, conversely, the state-
wide parties on occasion cooperated with nationalist parties in their respec-
tive autonomous regions.70 But the election of a PP government with an
absolute majority in 2011, at the height of post-crisis austerity, upset this
equilibrium.
The PP’s previous period in office with an absolute majority, in 2000–
2004, had been marked by an escalation of tensions in the Basque Country,
with the Aznar government passing a law banning political parties close to
terrorist organizations, which directly excluded the Basque left nationalists
from elections. But in the period following the financial crisis, it was
Catalonia that took a radical turn. The traditional celebration of the national
day of Catalonia (diada) on September 11, 2012, saw the biggest march in
recent Catalan history, with banners demanding independence.71 This im-
pressive show of strength brought a seismic shift to the Catalan party system,
as the main Catalan nationalist party, Convergència, dropped its traditional
position of greater autonomy for Catalonia within Spain, and instead adopted
secession as its formal policy. With this move, a pragmatic center-right party
rooted in the Catalan business community, which had been the lynchpin of
the region’s governance, became an anti-system party.
This dramatic shift reflected the progressive loss of faith among Catalans
in the institutions of Spain’s semifederal arrangements, which devolved a
wide range of powers to the regional governments but retained sovereignty,
and the key fiscal and constitutional powers, in the hands of the central gov-
ernment.72 The Catalan autonomous government (Generalitat) had voted
through a revision to the region’s statutory powers in 2006, only to find

after a painstaking negotiation with the Zapatero government that the
Constitutional Court quashed several articles and restated the doctrine of the
unity of the Spanish state. The Court’s decision, published in 2010, unleashed
an angry reaction in Catalonia, including a major protest in Barcelona, where
around a million people marched under the slogan, “We are a nation. We
decide.”
Survey data shows that popular support for independence, though
growing, remained very much in the minority up until 2012. As Figure
6.3 reveals, the share of Catalans favoring independence rose in spectacular
fashion, from 29 to 44 percent, in the year prior to the 2012 diada protest.
The success of the pro-independence mobilization occurred at exactly the
same time that Catalonia was also experiencing its own version of the Spain-
wide anti-austerity protests of the indignados. These protests, often met with
a brutal response by the police, reached their height in June 2011 with a
mass protest blockading the Parliament building in Barcelona, leading to
members of the Catalan government being helicoptered in to cast their votes
for the spending cuts.73
The economic crisis created a particularly fraught situation in Catalonia,
whose government was running a budget deficit of around €9 billion in 2010
and had the highest stock of debt of any Spanish region, putting it squarely
in the sights of the Spanish government, the European Commission, and
the financial markets.74 Convergència appointed former Harvard economist
60
50
% of respondents
40
30
20
10
0
M 06
O 07
Ja 07
Ju 08
Ja 08
Ju 09
Ja 09
Ju 10
Ja 10
O 11
Ju 11
Fe 12
N 13
O 13
Ju 14
Fe 15
O 16
Ju 16
Ap 17
18
.
.
.
n.
n
n.
n
n.
n
n.
.
n
b.
.
.
n
b.
.
n
r.
ct
ar
ct
ct
ov
ct
ct
O
Autonomous Community of Spain State within Federal Spain

Independent State
Figure 6.3 Preferred Relationship of Catalonia to Spain, 2006–2018

(Catalonia only)
Source: Centre d’Estudis Opinió, 2018, EvoluCEO: Valors Polítics, Question
30 “Relació entre Catalunya i Espanya”(http://evoluceo.ceo.gencat.cat/ceo/inici/
evoluceo.html#/main/evolucio) (author’s translation to English).

Andreu Mas-Colell to stabilize the finances of the Generalitat through a
front-loaded adjustment that lopped almost 10 percent off the budget in
2011. This involved politically toxic measures such as a 5 percent salary cut
for functionaries, cuts of more a billion euros to health spending and edu-
cation, and fare increases on public transport. The Catalan administration
came close to default in July 2012, requiring an emergency cash transfer
from the central government to pay debts to Italian and German financial
institutions.75 As part of the austerity drive, the Generalitat also delayed
payments to suppliers, including third-sector organizations delivering social
services, as well as private companies.
The political consequences of these difficult economic conditions are
clearly reflected in survey data on Catalans’ political priorities, as we can
see in Figure 6.4: from 2009 until 2015, unemployment and job insecurity
was consistently the top issue cited as the most important problem facing
Catalonia (with around 40–60 percent), with economic performance the
second most important. In contrast, the problem of “Catalonia’s relations
with Spain” was way down the list of concerns at the height of the economic
crisis; even in October 2012, when the massive march for independence took
place on the diada, less than 8 percent of Catalans thought the national ques-
tion was a priority. However, party politicians set about driving the issue to
the top of the agenda. In response to the diada, the head of the Catalan gov-
ernment, Artur Mas, called a snap election only two years into his term, and
promised to hold a referendum on independence if re-elected.
60
50
% of respondents
40
30
20
10
M . 06
O 07
Ja 7
Ju 8
Ja 8
Ju 9
Ja 9
Ju 0
Ja 0
O 1
Ju 1
Fe 2
N 13
O 3
Ju 4
Fe 5
O 6
Ju 6
Ap 17
8
.0
0
0
0
0
1
1
1
.1
1
.1
.1
1
1
.1
r.1
n.
n-
n.
n-
n.
n-
n.
n-
b.
n-
b.
n-
c
ct
ov
ct
ct
ct
ct
ar
O
Unemployment/Job Security Catalonia-Spain Relations

Economic Performance
Figure 6.4 Issue Salience,* Catalonia, 2007–2018

* Response to question “Which do you think is the most important problem in
Catalonia?”
Source: Centre d’Estudis Opinió, 2018 (see Figure 6.3).

This shift in strategy was a gamble on the Convergència’s newfound sup-
port for independence restoring the dominant position of the conservative
Catalan nationalism, close to business interests and pragmatic in orienta-
tion, which had controlled the Generalitat from 1980 until 2003, but had
declined after the departure of its historic leader Jordi Pujol and a wave of
corruption scandals.76 Convergència had found itself increasingly challenged
by the ERC, which had always been committed to independence, and by the
even more radical pro-independence CUP (Candidatura de Unitat Popular,
Popular Unity Candidacy). Catalan nationalism was hurtling toward the
left: away from an essentially conservative movement based on business
interests and rural voters, and toward a younger, more urban, and progressive
nationalism.
Mas’s gambit of promising a referendum on self-determination, was
aimed at deflecting demands for radical social and economic change onto
the more manageable terrain of identity politics. In this way the popular in-
dignation over austerity, which had been as strong in Catalonia as in the rest
of Spain, could be redirected onto the central government in Madrid. The
2012 election campaign focused heavily on the independence issue, evoking
the Scottish success in winning agreement for a referendum to attract pro-
independence voters to Convergència, and blaming the Spanish central gov-
ernment for the cuts.77 This message fell on fertile ground, since Catalonia’s
status as a major net contributor to Spain’s central government budget had
provoked resentment for some time.78 The Spanish government, rather than
the Generalitat or the broader global and European financial crisis, could be
blamed for unpopular austerity.
The election unleashed a polarizing dynamic that dominated Catalan pol-
itics and pushed nationalist politicians toward open disobedience of the law
of the Spanish state. The election produced a hung parliament, leading Mas
to form a parliamentary majority with the ERC, which left little room to
row back on his promises of self-determination. This commitment clashed
with the Spanish constitution of 1978, which not only sanctified the unity of
Spain, but also retained the power to revise the constitution or hold referen-
dums in the hands of the Congress of Deputies in Madrid. The new Catalan
parliament, with a bare majority of seats for the nationalist parties first passed
a motion in early 2013, declaring Catalonia to be a sovereign people and ini-
tiating a so-called sovereignty process (procés), then called a referendum on
independence for 2014. Both these decisions were overturned by the Spanish
Constitutional Court. Finally, a nonbinding vote on independence was held
in November 2014, which remained, albeit ambiguously, within the law, and
was largely boycotted by nonnationalist voters.

Having set in train the independence procés, the Catalan government lost
control of it, with intense popular mobilization pushing the politicians to-
ward ever more confrontational positions. Organizations such as the Catalan
National Assembly (Assemblea Nacional de Catalunya, ANC) and Omnium
Cultural organized frequent, almost daily demonstrations and other initiatives
to intensify the push for independence, getting close to a million people onto
the streets on several occasions. The failure to achieve any institutional prog-
ress and the refusal of the Rajoy government in Madrid to negotiate produced
another snap election, in September 2015, which Mas pitched as a “plebi-
scite” on independence, promising secession within eighteen months if he
were delivered a parliamentary majority. This time a broad pro-independence
electoral alliance—Junts pel Sí (Together for Yes)—was negotiated between
Convergència and the ERC, but again it fell short of an absolute majority,
and was forced to rely on the radical anti-capitalist CUP for votes in the
Parliament.
This pushed the nationalist coalition into an increasingly radical stance.
Mas was forced out as the price of winning the support of the CUP for a
new nationalist government, and was replaced by Carles Puigdemont, a
long-standing supporter of the independence cause. The Puigdemont gov-
ernment pressed ahead with the independence agenda, this time pushing
through a “self-determination referendum,” with a bare majority of the
Catalan Parliament, as the nonnationalist parties abandoned the chamber
in protest. The referendum was declared unconstitutional by the Spanish
Constitutional Court, but it went ahead anyway, though largely boycotted by
nonnationalist voters, and affected by police repression.79 In a final act of defi-
ance, Puigdemont announced a unilateral declaration of independence, albeit
suspended in effect, leading to the Spanish central government temporarily
dissolving Catalonia’s autonomous institutions and calling new elections,
while Puigdemont and many other independence leaders were indicted on
charges of “rebellion” and “sedition” by the Spanish judiciary.
These extraordinary developments represent in some ways the most ex-
treme example of anti-system politics in this book. But the broad and het-
erogeneous nature of the pro-independence coalition, which ranged from
the conservative, business-friendly center-right to the radical Trotskyite
left, meant that anti-system politics in Catalonia was hard to fit into fa-
miliar categories of right or left. Pro-independence voters broadly came from
two socially rather different, origins: on the one hand, younger, higher in-
come, and more educated voters in the economically dynamic urban coastal
areas of Catalonia, and on the other, conservative voters in the largely rural
provinces inland.80 What bound these voters together was a strong sense of

Catalan, rather than Spanish, identity, usually accompanied by habitual use
of the Catalan language and disproportionately Catalan heritage (Catalan
surnames are distinctive compared to those common in Castilian-speaking
Spain). Survey data shows a strong linear relationship between family ties
to Catalonia and support for independence: 75 percent of Catalans whose
parents and grandparents were all born in Catalonia supported independence,
while those born in Spain but outside Catalonia were the least supportive
(12 percent).81
Many Catalans of non-Catalan origin descended from those that migrated
from the poorest regions of Spain—especially Andalusia in the South—and
Catalan heritage was therefore correlated with income and other social char-
acteristics. Because of this, support for independence was positively cor-
related with economic status, with the unemployed and those with lower
family incomes least supportive of independence. Higher-income Catalans
were likely to feel most affected by Catalonia’s status as a large net contrib-
utor to the Spanish state budget, a situation described as espoli (plunder) in
radical nationalist discourse, captured more crudely by the slogan Espanya ens
roba (“Spain steals from us”). A group of US-based nationalist academics, in-
cluding Columbia University economist Xavier Sala-i-Martín, claimed that
independence would bring a “fiscal dividend” from the prospect that “money
that now goes to Spain, after independence would stay in Catalonia.”82 These
claims were enthusiastically picked up by nationalist politicians.
The left wing of the independence coalition had much more in common
with the anti-austerity movement of the indignados, and appealed in partic-
ular to younger voters, especially students and the precariously employed.
The ERC, Catalonia’s historic nationalist party, founded in 1931, occupied
the space to the left of Convergència, attracting a younger, more urban, and
more highly educated sector of the Catalan-speaking electorate.83 Long be-
fore secession became the stated goal of the broader Catalan nationalist com-
munity, the ERC adopted an anti-system position, arguing for independence
and the principle of Catalan popular sovereignty, even at the cost of breaking
with the Spanish constitutional order.84 The CUP also adopted a left pro-
independence position, alongside a more radical participatory vision of po-
litical action, based on principles of direct democracy, representing a more
fundamental challenge to the capitalist order and advocating a “socialist and
ecologist” economic model.85
The opening of the procés served a useful purpose for all these parties by
obscuring the deep divisions between the left and right wings of Catalan
nationalism on social and economic issues and protecting Convergència
from the political fallout of the austerity measures it had imposed after the

crisis. This was reflected to a surprisingly transparent extent in the speeches
of key Convergència leaders. Francesc Homs claimed “the left-right debate
subordinates us to Spain,” while Mas argued that “independence is not a
right or left issue.”86 As Figure 7.3 shows, the procés shifted public concern
away from the economic situation and toward the issue of Catalonia’s consti-
tutional status.
In terms of street protest, during the procés, part of the anti-austerity
movement was subsumed into the independence movement. Once the in-
tensity of the procés subsided after the 2018 elections, voters’ focus on the
independence question declined, and a new wave of anti-austerity mobiliza-
tion directed at the Generalitat, once more under the control of the Catalan
nationalist center-right, kicked off.87 This highlighted the conflictual rela-
tionship between the nationalist Left and the nonnationalist Left, represented
in Catalonia by a loose federation of groups aligned with Podemos, whose
most prominent leader was Mayor Colau of Barcelona. Colau’s position, like
the Podemos line nationally, was that Catalans should be allowed to vote on
independence but that she would campaign against it. Faced with the insti-
tutional conflict between Madrid and the Generalitat, Podemos was forced
into an uncomfortable position, appealing for dialogue and condemning the
repressive response of the Spanish central government, while simultaneously
accusing the nationalists of irresponsibility.
The politics of Catalonia demonstrate the ways in which political contes-
tation can be mobilized across different dimensions, and the interaction of
political competition at different institutional levels. The established parties,
particularly the PP and the Socialists, suffered the electoral costs of being
associated with the failures of Spanish government policy in the euro era.
But opposition to austerity could be framed in different ways. For the anti-
system Left, represented by the movements aligned with the indignados, the
problem was austerity and a corrupt political system that privileged financial
interests. But in Catalonia anti-austerity politics cross-cut with the ques-
tion of Catalan relations with the rest of Spain, allowing mainstream Catalan
nationalists to shift the blame onto the central government88 and the unfair
fiscal burden placed on Catalonia to subsidize poorer regions of Spain. By
turning austerity into a question of identity, the Catalan nationalist Right
avoided the fate of the Spain-wide political establishment, but at the cost of
adopting an unsustainable project of unilateral secession.
Whether the secession crisis would have arisen in the absence of the
Constitutional Court’s dilution of Catalan autonomy, or under a less hostile
governing party than the PP, is hard to settle, but at the very least austerity
and crisis had an escalating effect and economic grievances were central to the

discourse of the pro-independence movement. Catalonia’s debt problems and
status as a net contributor to Spanish public spending greatly exacerbated the
tensions over its constitutional status within Spain. The Basque Country, in
contrast, did not see any significant rise in support for secession in the same
period, even though the Basque nationalist movement has historically been
far less comfortable within Spain. Basque nationalists attempted their own
push for independence in the 2000s, which met with a similarly obstruc-
tive response from the central government. But one significant difference
between the two cases is that the Basque Country and neighboring Navarre
enjoy special fiscal arrangements, which are extremely favorable89 and allow
their respective governments to provide social services more generously than
in Catalonia. Unlike Catalonia, which has seen Madrid and other regions
overtake it in economic growth in recent years, the Basque Country is an
economic success story, and its strategy for promoting innovation is seen as
a model across Europe.90 The crisis did not trigger any radicalization in the
Basque Country, nor were Basque nationalists especially supportive of the
Catalan procés.91
Franco’s Revenge? Identity Politics and the Return

of the Spanish Far Right
Given the high degree of salience of migration in most advanced democracies
in recent years, Spain, alongside the other bailed-out states of the Eurozone
(Portugal, Ireland, and Greece), stands out for the limited success of political
parties mobilizing around nativist, anti-migrant positions. This is puzzling,
since there are many features that would have predicted some kind of xeno-
phobic backlash in these cases. The crisis hit these countries harder than any
other in the Eurozone in terms of GDP and real income losses. Moreover,
by resorting to financial assistance under onerous conditions, the four coun-
tries also very visibly gave up much of their national autonomy in terms of
economic and social policy, as well as undergoing intrusive and humiliating
monitoring of government business from external actors. Finally, all four
countries had experienced substantial inward migration during the boom
years, and in the case of the three Mediterranean countries, were on the front
line of the refugee crisis of the mid-2010s.
Spain was a net exporter of labor for most of its recent history, but from the
1990s, the country experienced quite a dramatic demographic shift with sub-
stantial migratory inflows, chiefly from North Africa, parts of Latin America,

and eastern Europe. At the onset of the financial crisis, around a tenth of the
Spanish population were foreign nationals, a tenfold increase since the be-
ginning of the century.92 On top of this, Spain is just a few kilometers from
Africa across the narrowest Mediterranean crossing, and has two enclaves—
Ceuta and Melilla—embedded inside North Africa. Finally, Spain suffered
in 2004 what remains the single deadliest jihadist terror attack in Europe.
The potential for immigration to become a source of resentment in a country
where over a quarter of the active population were unemployed at the height
of the recession was obvious.
Instead, the major post-crisis development on the right was the growth
of a political party, Ciudadanos, which barely mentioned migration in its
messaging, focusing instead on overturning corrupt politicians and pushing
back against secessionism. Ciudadanos was founded in 2006 in Catalonia in
response to the growing radicalization of the Catalan nationalist movement,
pitching its message at largely Spanish-speaking voters tired of the nation-
alist hegemony of the Catalan political system. The party mobilized opposi-
tion to policies promoting the use of Catalan language in the public services
and autonomous institutions, and particularly in education, where Catalan
was required to be the primary language in all public schools.93
Ciudadanos initially stood for election only in Catalonia, polling vote
shares under 4 percent, but the radicalization of the Catalan nationalists in
2012 created an opportunity for growth. The party doubled its vote in the
2012 Catalan elections, exploiting the increasing salience of its signature
issue—the rise of Catalan secessionism—and the inability of the weakened
Socialist Party to hold on to its base of nonnationalist voters. As the economic
crisis continued and austerity measures were imposed by both the Spanish
central government and the Generalitat, Ciudadanos joined Podemos in ri-
ding the wave of resentment toward the established parties. The Ciudadanos
leader, Albert Rivera, like Pablo Iglesias significantly younger than the other
party leaders, quickly won a high media profile across Spain, offering a mix
of commitment to the unity of Spain, strong rhetoric against the corruption
of the established politicians, and liberal economic reforms.94 This political
positioning earned the party the label “the Podemos of the right.”95
Ciudadanos aimed at different kinds of voters in different arenas. In
Catalonia, its main target was the electorate of the Spain-wide parties, espe-
cially the Catalan Socialists, who had long straddled a difficult tension be-
tween the strong Spanish identity of a part of the party’s voters, and the more
Catalan nationalist sympathies of its party leadership. By offering a more
uncompromising rejection of Catalan nationalism coupled with a more cen-
trist position on other issues, Ciudadanos won over a broad range of voters on

the left and right who were opposed to secessionism, while in the Spain-wide
political arena, Ciudadanos directed its fire mainly at the PP and attracted
mostly younger voters from the center and right.96 This flexible strategy
allowed Ciudadanos to rapidly expand its electorate, winning 3.5 million
votes (13.9 percent) in the 2015 general election, and becoming the biggest
single party in Catalonia after the 2017 Catalan elections, with 25 percent.
This strategy rested on an increasingly uncompromising Spanish nation-
alist discourse, which raised the stakes of the territorial conflict. But rather
than succeeding in monopolizing the center-right political space, Ciudadanos
found itself with a new competitor to the right in the far-right party Vox,
which burst onto the scene in the autumn of 2018, winning 11 percent of the
vote in Andalusian regional elections. This electoral breakthrough ended the
anomaly of Spain lacking a significant far-right party,97 and in the general elec-
tion held in Spring 2019, Vox won 10 percent of the vote nationally, making
it the first far-right party to enter the Spanish Congress since 1982. But un-
like the experience of the anti-system Right in northern Europe, Vox’s success
was not built on a sudden shift in Spanish attitudes toward migrants, nor did
it appeal to “left behind” voters. Instead, it mobilized especially around the
territorial issue and the threat of “separatism” in Catalonia and elsewhere.98
The leader of Vox, Santiago Abascal, was a former activist in the PP,
and most of its voters were conservatives disillusioned with the PP, a party
hemorrhaging votes after a succession of corruption scandals. Vox combined
a traditional social authoritarian message with an aggressive Spanish nation-
alism and an intense hostility to Catalan and Basque nationalism and Spain’s
decentralized political arrangements more broadly.99 Vox came to promi-
nence by ably exploiting a quirk of Spanish law whereby a private individual
or organization can file a charge of criminal offense in the courts and take
part in the court proceedings alongside the public prosecutor (the so-called
acusación popular).100 When the Catalan crisis hit the courts, with the main
Catalan independence activists being charged with sedition and rebellion,
Vox filed as a plaintiff and won the right to take part in the high-profile trial,
allowing its leaders to promote the party’s ideas to a wide audience.
Vox is unusual among parties of the anti-system Right in having relatively
little to say about immigration, although references to the Reconquest—the
historical battle against the Muslim presence in Spain in Medieval times—
permeated its discourse. Instead, the unity of Spain and the purging of corrup-
tion from the political institutions were its main themes. Its launch document
emphasized four principles: opposition to abortion, family, the unity of Spain,
and opposition to ETA (the Basque terrorist organization).101 The party’s three-
thousand-word Founding Manifesto did not mention immigration once, but

instead made repeated references to the need to resolve Spain’s territorial is-
sues, as well as combating corruption and promoting “moral values” and “na-
tional cohesion.”102 Specific party commitments ranged from the promotion
of the Spanish language in education to easing restrictions on hunting licenses
and protecting bullfighting from the challenge of animal rights activists.
Unlike many parties of the anti-system Right, Vox appeared to perform better
in high-income areas in cities, and its strength correlated with that of the PP
and Ciudadanos in past elections. In other words, Vox reflected a splintering
of Spanish conservatism, attracting a hardline section of the most socially and
culturally conservative voters.103
With the emergence of Vox to the right of the PP, the stretching out of the
political space in Spain after the crisis took a further step. The main estab-
lishment parties of the center-left and center-right saw their space curtailed
by anti-system forces attacking them from more radical positions. Cutting
across the left-right divide, the center-periphery dimension of Spanish pol-
itics has also stretched out, with more voters advocating either secession on
the one side or recentralization on the other. Not only do we observe a chal-
lenge to the established party system, but we can also see how the anti-
system challenges feed off each other, with the rise of Podemos and Catalan
secessionism provoking the emergence of a new anti-system Right.
Immigration was a lesser concern for Spanish voters than in most other
European countries, but the resurgence of nationalism and the mobilization
around cultural identities was very strong. Unlike elsewhere, however, iden-
tity politics in Spain was directed more toward internal rivalries and disputes
about the unity of the state than toward migrants or the European Union.
The high salience of national and regional identities is a persistent feature
of Spanish history, and predictably distributional tensions in a period of ec-
onomic crisis ran along an identitarian axis as well as the more conventional
economic one. The Spanish case shows that a powerful economic crisis hit-
ting a political system suffering from elite collusion and public mistrust in-
evitably produces major anti-system challenges. However, it also shows that
anti-system reactions are shaped by existing institutions, particularly the
economic and social arrangements that determine how economic losses are
distributed among different groups.
Conclusion
Spain provides an eloquent illustration of the direct impact of economic dis-
tress on anti-system politics. The country suffered one of the deepest financial

crises, with some of the most severe effects on wealth and incomes , of all the
Western democracies. This was followed by a surge of political instability,
voter volatility, and electoral shifts away from the establishment parties to
anti-system forces. The political discourses of the anti-system parties, and
the kinds of voters they appealed to, confirm that economic factors were the
driving force behind this transformation. As in Greece and Portugal, anti-
austerity movements reflected the ways in which patterns of social spending
and labor market policies shifted the costs of the crisis onto younger voters,
leading to mainly socially liberal forms of anti-system politics prevailing.
In contrast, migration was mostly a marginal issue in political debates fol-
lowing the financial crisis.
But Spain also reveals the complexity of anti-system politics, with anti-
austerity politics contributing to the intensification of the conflict between
Catalan nationalism and its opponents, both within Catalonia and across the
rest of Spain. The crisis forced moderate Catalan nationalists to radicalize
their position in response to the growth of more left-leaning anti-system
forces that threatened their hegemony within Catalonia. This lurch toward
an anti-system position accelerated the polarization of Catalan politics be-
tween nationalists and nonnationalists, but also exacerbated long-standing
tensions between different territories of Spain. The fragmentation of the
Spanish center-right into three parties—Ciudadanos, the PP, and Vox—each
attempting to outbid the others over the territorial issue, diverted cultural or
identitarian conflict toward constitutional issues, and away from migration.
The lower salience of migration in southern Europe had one notable ex-
ception: Italy. The refugee crisis in the Mediterranean provided an opportu-
nity in 2018 for Spain’s Socialist prime minister, Pedro Sánchez, to burnish
his left-wing credentials by offering a haven to the Aquarius, a ship carrying
migrants rescued off the Libyan coast. The ship had been denied entry to
Italy, whose interior minister, Matteo Salvini, had made opposition to mi-
gration the main focus of his successful election campaign in March 2018.
The next chapter explains how Italy’s anti-system parties won power, and
why migration politics was more salient there than in neighboring countries.

CHAPTER 7 Basta!: Anti-System Politics
in Italy
I n September 2007, just as the first tremors of the Global Financial

Crisis were felt across Europe, Italian comedian Beppe Grillo organized
a bizarre rally in Piazza Maggiore, Bologna, as part of the quirkily titled V-
Day (Vaffanculo-day: “**** you day”). The aim was to gather signatures for
a referendum banning anyone with a criminal record from standing for elec-
tion to the Italian parliament. The initiative achieved a spectacular 336,000
signatures, far more than the 50,000 necessary to hold a vote. The campaign
was the parting shot of what became the Five Stars Movement (Movimento
Cinque Stelle, M5S), perhaps the most innovative and unpredictable exem-
plar of contemporary anti-system politics, and the big winner of the 2018
Italian election.
Italy is an unusual case in our panorama of anti-system politics, having
already experienced a thorough clear-out of its political establishment back
in the early 1990s. After a financial crisis and a wave of corruption scandals
swept away the main political parties, the 1994 election ushered in the “busi-
ness politician” Silvio Berlusconi, allied with anti-system forces on the Far
Right, and promising “a new Italian miracle.” Yet despite these upheavals,
Italy embarked on a period of austerity and reform to ensure entry into the
first wave of European Monetary Union in 1999. It did not enjoy the pre-
crisis boom seen in Spain or Greece, but neither did it suffer a similar finan-
cial collapse, managing to survive the sovereign debt crisis of early 2010s
without a formal bailout. But in 2016, Italian GDP per capita was lower
than in 1999,1 and public debt had grown to beyond 130 percent of GDP,
despite yet further doses of austerity.
The depth and duration of the economic crisis made Italy fertile ground
for anti-system politics, but the nature of the reaction was less predictable.
Alongside the M5S, the other main beneficiary was the Northern League,
which began life as a regionalist party campaigning for the breakup of Italy,
but then smartly reinvented itself as an Italian nationalist party, hostile
to Europe, and especially to immigration. In 2018 these two parties came
together in an unlikely coalition, making Italy the second country in the
European Union to form a government completely dominated by anti-system
parties. This chapter explains why anti-system politics was so successful in
Italy, and why the anti-system Right was so much stronger than in the rest
of southern Europe.
The Dress Rehearsal: The 1992 Financial Crisis

and the End of the “First Republic”
For most of the period after World War II, Italy followed a very different
path than the rest of southern Europe. After the collapse of Mussolini’s fas-
cist regime, Communists, Socialists, and Christian Democrats came together
to write a democratic constitution, paving the way for Italy to become a
founding member of the European Economic Community, and one of the
fastest-growing economies in Europe, with GDP per head quadrupling be-
tween 1950 and 1992.2 Italian democracy gave an appearance of instability
and permanent crisis, yet survived grave threats from the mafia and terrorist
movements on the right and the left to deliver some of the highest living
standards in the world.
Key to this achievement was a complex system of horse-trading between
political parties, and patterns of distributional politics that won the consent
of disparate social interests to the democratic political order. Governments
were coalitions of several parties, dominated by the Christian Democrat
party, itself divided into organized factions, all of which used their political
power to channel public resources and regulatory favors to their supporters.
The postwar economic boom delivered a bonanza of tax revenues, which were
used to build a fragmented and complex welfare system that redistributed
income, eased social and geographical divisions, and constructed reliable
reservoirs of political support for the main political parties. The develop-
ment of the Italian welfare state in the boom years of what became the “First
Anti-System Politics in Italy 217

Republic” (roughly, 1948-1992) shaped the subsequent politics of economic
decline over the next quarter century.
As in the rest of southern Europe, the Italian welfare state was strongly
biased toward the elderly, with pensions dominating social spending. By
2013, public spending on pensions amounted to over 16 percent of GDP, the
highest in the OECD.3 Some occupational categories, such as civil servants,
the military, teachers, and the self-employed, enjoyed benefits far exceeding
contributions and could retire on reduced pensions well before the normal
retirement age, the so-called baby pensions.4 Italy also handed out large
numbers of invalidity pensions, especially in areas of high unemployment
in Italy’s less economically developed South. Needless to say, many supposed
invalids were in decent health: one case saw a 58-year-old pensioner who, de-
spite being registered blind, worked on weekends as a football referee.5
Over time Italy developed into what Julia Lynch describes as “a welfare state
that rewarded older male breadwinners handsomely but crowded out spending
on benefits for families and young adults.”6 Pensions accounted for well over
half of social spending, the highest in western Europe, and contributed to the
Italian public sector spending over half of GDP, almost as much as the more ad-
vanced welfare states of northern Europe, but with markedly poorer coverage of
social risks and patchy public services. This high level of spending was in part
the product of widespread corruption and clientelism (the trading of political
favors for votes), which grew alongside a modern welfare state.7 The central role
of political parties in this system became known as partitocrazia, and was widely
tolerated for a long time, especially since Italy’s healthy economic growth pro-
vided a steady flow of tax revenues to pay for clientelistic redistribution.
The inefficiencies and inequities of Italy’s system of government were well
understood, but despite frequent scandals that revealed the sordid hidden
workings of the political system, there was little appetite for change. This
suddenly ended in spring 1992, after the arrest of a minor Socialist politi-
cian in Milan, Mario Chiesa, who was caught taking a bribe of 7 million
lire (around 3,500 euros). Chiesa agreed to tell magistrates everything he
knew after his estranged wife revealed he kept billions of lire in Swiss bank
accounts. He testified to delivering envelopes of cash to the Socialist leader
Bettino Craxi’s offices in Piazza Duomo, Milan, and subsequent investigations
in the so-called Mani pulite (“clean hands”) inquiry revealed a vast network of
corrupt dealings involving bribes worth the equivalent of millions of dollars,
popularly known as “tangentopoli” (“bribesville”).8
The tangentopoli system was in any case on its last legs, because the Italian
economy was no longer able to sustain the costs of a corrupt political system.9
Public spending was growing faster than tax revenues, in part because of

corruption, but also in part because of political pressure from the left to
increase welfare provision. At the same time, governments tolerated wide-
spread tax evasion by Italy’s large and politically powerful small business
sector.10 These conflicting pressures meant that budget deficits grew steadily,
peaking at 11 percent of GDP in the early 1990s, while total government
debt hit 100 percent of GDP. Politicians’ inability to balance the books was
initially absorbed by monetary policy, as the Bank of Italy was subordinate to
the Treasury and forced to buy any government bonds not picked up by the
market. But the central bank lobbied successfully for greater independence
in the hope that politicians would be forced to face the fiscal consequences of
deficit spending without the monetary safety valve.11
Attempts to raise more revenue ran up against a tax revolt in the wealthy
North of the country, spearheaded by a new anti-system political move-
ment: the Northern League (Lega Nord). .12 The League was an alliance of
regionalist movements across the North, chiefly in Veneto and Lombardy, and
expressed, in truculent and earthy language, the anger of the small business
class at the iniquities of the tax system, the demands for bribes from politicians
and bureaucrats, and the wasteful spending of Roma ladrona (“thieving Rome”).
Its electoral breakthrough in spring 1992 coincided with the opening of the
Mani pulite investigations, and with the acceleration of Italy’s financial difficul-
ties, as currency speculators attacked the lira, ultimately forcing it out of the
European Monetary System, alongside the pound sterling, in September 1992.
This combination of political, judicial, and financial pressures blew apart
the political establishment, which no longer had the votes or the money to
sustain the tangentopoli system. A third of the members of the Italian parlia-
ment, including former prime ministers Bettino Craxi and Giulio Andreotti,
found themselves arraigned on charges of corruption, embezzlement, illegal
financing of political parties, tax evasion, and complicity with organized
crime.13 This led to a redrawing of the political map and the emergence of
a completely new party system, but it also brought about a fundamental
change to Italy’s economic governance, which progressively marginalized
these parties from the conduct of economic policy.
Italy’s “Second Republic”: Vote Berlusconi, Get

the Bank of Italy
Italy’s financial and political crisis produced the most transformative election
in western Europe since World War II. By spring 1994, when parliament was
dissolved, the Italian political map had become unrecognizable. The main
governing parties fell apart, their leaders discredited or in some cases under
arrest. Bettino Craxi escaped to Tunisia on a vacation that turned into per-
manent exile, while others gave up on politics to focus on their legal battles.
The disintegration of the “First Republic” parties not only left many voters
orphaned, it also threatened a variety of political and business interests that
had benefited from their political protection.
Silvio Berlusconi, an entrepreneur in the construction and media sectors,
was particularly exposed, both economically and legally. Berlusconi had built
an effective monopoly of the private television market and the related adver-
tising market, thanks to the Craxi government’s acquiescence in his bending
broadcasting law. In return, Berlusconi’s channels offered Craxi political sup-
port. The political demise of Berlusconi’s political backers at a time when
his Fininvest corporation faced financial pressures was bad enough, but there
were also judicial threats: Berlusconi’s lawyer, Cesare Previti, had bribed
Roman magistrates to deliver a sentence he himself had written, which
allowed Berlusconi to take control of Mondadori, a major Italian publisher.14
The Mani pulite investigations risked bringing down Berlusconi’s business
empire and miring him in charges of corruption.
So Berlusconi entered politics—or “took the field” as he put it—creating
a new political party called Forza Italia to contest the 1994 elections, at
the head of a broad-ranging electoral alliance with the Northern League and
Alleanza Nazionale (National Alliance, or AN), a new formation with roots
in the postwar Italian fascist movement (the Italian Social Movement –MSI).
These parties were united by their hostility to the Left, but had little else in
common: the Northern League wanted the secession of northern Italy into an
independent Republic, while National Alliance was strongest in Rome and
the South. Berlusconi’s party bound these disparate groups of voters together
with a catch-all message of optimism, anti-communism, and vague promises
of economic reforms to unleash a “new Italian miracle.” This unlikely coali-
tion won a majority of seats, defeating a broad left-wing alliance led by the
Democratic Party of the Left (PDS), composed of former members of the
Italian Communist Party. Berlusconi, despite never having held elective of-
fice, was appointed prime minister.
The Berlusconi government, deeply divided from the start, lasted little
more than six months before the Northern League brought it down. The
motive was a pensions reform that would raise the retirement age, a measure
that particularly affected the League’s electorate of older northern Italians.
But throughout the convulsions unleashed by Mani pulite, apparent polit-
ical chaos masked an underlying policy stability as technocrats took over the
key offices. In 1993 a caretaker government was formed under Carlo Azeglio

Ciampi, the governor of the Bank of Italy, imposing harsh austerity to con-
front Italy’s precarious financial and economic situation. Automatic wage
indexation (the so-called scala mobile) was abolished, public spending and
public sector salaries were frozen, some pension benefits were deferred, and a
raft of privatizations and tax increases came in to boost revenues.15
This stabilized the public finances and initiated a long period of fiscal
rectitude, in which the government consistently ran a primary budget sur-
plus (net of interest payments). After the brief interlude of the Berlusconi
government in 1994, the president of the Republic called on Lamberto Dini,
a former Bank of Italy director general, to form a nonpartisan administra-
tion composed entirely of “experts”: mostly bankers, economists, and lawyers
without party affiliations. The all-important Treasury portfolio went to Carlo
Azeglio Ciampi, while Foreign Affairs was handed to Susanna Agnelli, from
the family that owned FIAT, Italy’s largest private company. The government,
sustained by the parties of the left, the remaining Christian Democrats, and
the Northern League, set about making further fiscal adjustments, including
a politically sensitive pension reform. In twelve months, budgetary meas-
ures were passed to cut the deficit by over 50 trillion lire, around 3 percent
of GDP.16
Even after further elections, in 1996, delivered a majority for the center-
left Olive Tree (Ulivo) coalition led by Romano Prodi, policy followed a
similar path, with Ciampi not only remaining in his post at the Treasury but
also adding the Budget and Economic Planning to his portfolio. The fiscal
squeeze continued, with ad hoc measures such as the “Eurotax,” a supple-
mentary income tax of up to 3.5 percent, sold as a temporary measure to meet
the criteria for entry into the euro. The sell-off of state-owned entreprises and
other assets worth more than 164 trillion lire (85,000 million euros) between
1993 and 200117 was the most extensive and rapid process of privatization
of any Western country.18 The Prodi government also introduced significant
structural reforms, such as the “Treu package” of labor reform measures,
which eased the requirements for temporary work contracts and legalized
private employment agencies, with the aim of lowering unemployment by
facilitating the creation of low-paid short-term jobs.
This program of fiscal stabilization and reform reflected faithfully the
recommendations of orthodox liberal economists, and was justified by the
demands of European Monetary Union, a key objective of Italy’s policymaking
and business elite in this period. These measures had long been demanded by
the most influential economists in Italian universities and institutions, such
as the Bank of Italy. An eloquent expression of this view is the report of a
team of economists from the National Research Council (CNR) published in

1993, which was “unanimous . . . that the time has now come in Italy for a
shift in the weight assigned to the long hand of the state by comparison with
the invisible hand of the market, with the former receding and improving.”19
The same report confessed some puzzlement over the failure of Italy’s “strong
tendency towards egalitarianism” to produce the “expected outcome . . . of
a homogeneous, non-selective, non-competitive country,” but still expressed
confidence that “the Italian economy would grow even more strongly and
rapidly if it were not hampered by the present policy-induced rigidities.”20
The CNR team was building on a long-standing tradition of pro-market
and anti-state thinking in the Italian economics profession. Italy’s history
of an often oppressive and inefficient state had engendered a deep-rooted
skepticism of government interventionism, promoted by Luigi Einaudi in
the postwar era, and still influential through the “Bocconi school” of the pre-
sent day.21 Driven to despair by the venality of the “First Republic” cartel of
parties, neoliberal economists saw Europe as a useful pretext to limit corrupt
politicians’ ability to manipulate economic policy and interfere with market
forces for electoral advantage. By sharing a currency with the more rigorous
countries of northern Europe, Italy would be “tying its hands,”22 insulating
policy from short-term political pressures. The apparently virtuous circle of
liberal reforms, fiscal adjustment, and monetary stability that allowed Italy
to qualify for euro entry in 1998 led many observers to conclude that Italy
had been “rescued by Europe.”23 But this was achieved by cutting off govern-
ment policy from the demands of voters, a strategy with obvious risks should
the promised economic pay-off of euro membership not materialize.
Italy in the Euro: Slouching toward Crisis

As in other southern Eurozone countries, the introduction of the euro marked
a pause in the drive for reform and fiscal stabilization in Italy. Berlusconi won
power once again in 2001, on a promise of “less tax for everyone.” The long
period of austerity—tax revenues had increased from just over 36 percent
of GDP in 1990 to over 42 percent in 199724—made this a politically ap-
pealing message, but Berlusconi’s government was not the fiscal free-for-all
some expected. The promised income tax cuts were watered down and largely
offset by increases in a variety of other levies,25 and Italy continued running
primary surpluses. Figure 7.1 shows that the budget deficit, which had been
cut dramatically as a share of GDP in the 1990s, increased slightly, but Italy
continued to run a budget surplus before debt interest payments through the
Berlusconi years. With the exception of the crisis year of 2007, the Italian

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Primary Balance (% GDP) Fiscal Balance (% GDP) Interest Payments (% GDP)
Figure 7.1 Italy, Fiscal Position, 1988–2017

Source: FRED database, Federal Reserve Bank of St. Louis, Economic Research
Division (https://fred.stlouisfed.org).
government raised more money in taxes than it spent every year after 1993.
This steadily reduced the public debt, which dipped briefly below 100 per-
cent of GDP just before the financial crisis.
Not only did Italy run a tight ship fiscally, it also avoided the private sector
credit boom seen in Greece, Spain, and Portugal. Italy was running a trade
surplus before euro entry, and although it slipped into trade deficit in the
2000s, it had far less exposure to external creditors than the other southern
European countries.26 The flipside of this was a low growth rate: lacking the
credit-fueled boom enjoyed by Greece and Spain, the Italian economy failed
to take off once the objective of euro entry had been achieved. As Figure 7.2
shows, Italy’s growth performance in the euro era managed to achieve the worst
of both worlds: it had the same sluggish growth as Germany before the crisis,
and a contraction just as deep, but instead of recovering strongly its post-crisis
growth was the weakest of any Eurozone economy except Greece. Almost two
decades of austerity failed to protect Italy from the contractionary effects of the
crisis.
Fearful of spooking the markets, the Berlusconi government refrained
from significant fiscal stimulus, depressing demand without achieving any
compensatory boost to investment. Government borrowing bottomed out
at just over 5 percent in 2009, less than half of the post-crisis deficits in fi-
nancially distressed countries such as the United Kingdom, Greece, Ireland,
or Spain. Moreover, Italy’s banking sector was far less affected by the global
financial meltdown than the other southern countries. Italian banks had
maintained highly conservative lending practices throughout the early years
of the euro while other southern countries engaged in a borrowing binge.

GDP Per Capita in current $, 1999 = 100
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France Germany
Greece Italy
Spain Eurozone 19
Figure 7.2 Cumulative GDP Per Capita Growth, Eurozone, 1999–2016

Source: OECD (2019), “Gross Domestic Product (GDP) (indicator),” doi: 10.1787/
dc2f7aec-en (accessed January 4, 2019).
House prices increased, but there was only moderate growth in mortgage
credit and household borrowing for consumption.27 Italian banks did not
suffer any short-term panic in the immediate aftermath of the global credit
crunch.
Notwithstanding this cautious approach, Italy soon found itself dragged
into the eurozone’s sovereign debt crisis. As GDP shrank, the ratio of debt
to GDP deteriorated, and nervousness in bond markets pushed up interest
rates, leading to higher debt-servicing costs. The Berlusconi government
responded to these pressures by raising taxes and cutting spending. With
such a high stock of debt, interest rates higher than GDP growth rates
spelled high default risk in the future, leading to the risk premium on Italian
debt spiking through 2010–2011.28 An austerity budget of tax increases
and spending cuts, supported by all the major parties, not only failed to
stave off the market pressure, but also depressed demand further, in a fa-
miliar self-defeating spiral. To avert a bailout, Berlusconi was forced out and
replaced by a technocratic administration under former European commis-
sioner Mario Monti.
The Monti government did manage to avert the impending financial col-
lapse of the Italian state, but at the price of illustrating with great clarity the
near irrelevance of the Italian electorate to policymaking in crisis conditions.

The European institutions, in particular the European Central Bank (ECB),
effectively forced a change in the Italian government, thanks to their ability
to manage access to liquidity for Italian banks and protect Italy from bond
market pressure.29 Like Spain, Italy was on the receiving end of a missive
from ECB presidents Trichet and Draghi, stipulating the need for more aus-
terity and outlining specific policy measures such as labor market and public
administration reforms, and even constitutional amendments to enshrine
balanced budgets in Italy’s basic law.30 As in Spain, it was widely interpreted
that ECB support for Italian government debt (under the Securities Market
Program) could be withdrawn in the event of noncompliance.31 According to
some accounts, the German chancellor, Angela Merkel, was directly involved
in forcing Berlusconi out when he failed to follow through quickly enough
on his commitments to the ECB.32
The Monti government took office just a few days after the Papademos
technocratic government in Greece, reflecting a concerted Europe- wide
strategy to deal with the sovereign debt crisis by intervening actively in
member state politics at the highest levels. As Stefano Sacchi describes, “the
government led by Monti quickly adopted the ECB letter—and the struc-
tural reforms it prescribed—as its roadmap.”33 This extraordinary suspension
of normal democratic politics was deemed necessary in order to implement
the kinds of drastic austerity measures that elected politicians would have
balked at, in the hope of calming the bond markets. The Monti govern-
ment went ahead and imposed a brutal fiscal adjustment worth 3 percent
of GDP,34 through measures such as a VAT increase, cuts in local and re-
gional government funding, and pension changes. It also brought in a labor
market reform, known as the Fornero Law after the minister responsible,
which proved extremely controversial for its changes to rules on dismissals
(the iconic “Article 18” of the Italian labor statute) and its replacement of
some existing unemployment compensation schemes. The Fornero reform
was signed into law on June 27, 2012, and just a month later the ECB pres-
ident, Mario Draghi, made his speech at the Global Investment Conference
in London, in which he assured his audience that “within our mandate, the
ECB is ready to do whatever it takes to preserve the euro. And believe me, it
will be enough.”35
Whether or not the Monti government’s labor reform was a condition
for the ECB to make such an open-ended commitment, market pressure on
periphery debt certainly did abate from summer 2012.36 More generally, the
Monti government’s fiscal squeeze pushed Italy once again into deep reces-
sion, with GDP shrinking by 2.8 percent in 2012, and a further 1.7 percent
the following year. Ironically, one result of this drop in GDP was that the

public debt to GDP ratio, the headline measure that investors paid most
attention to, rose significantly, hitting 129 percent in 2013 and more than
eroding all the debt reduction achieved since the early 1990s.37 By 2013,
Italy had been running primary budget surpluses for twenty straight years,
meaning that Italians were paying out more in tax than the government was
spending on pensions, welfare, and other public services. Yet not only was
the national debt higher than ever, by the middle of the 2010s, household
incomes in Italy had fallen back to the levels of the late 1980s, a stagnation of
living standards unique among the major advanced economies.38 The efforts
to join the euro had resulted in stagnant living standards, higher debt, and a
system of governments increasingly in thrall to the demands of the European
institutions and other external creditors.
Who Pays? The Distributional Consequences

of Crisis
This context of decline provides the broad backdrop to the political upheavals
Italy experienced, but the distributional consequences of decline are also a
key factor in determining which forms of anti-system politics have prevailed.
Italy is a high inequality country by the standards of the advanced democ-
racies, and it has also seen one of the biggest increases in inequality since
the 1980s: the Gini coefficient for household disposable income stood at
0.29 in 1985, but had risen to 0.33 by 2013, among the highest levels in
western Europe, surpassed only by Spain, Portugal, Greece, and the United
Kingdom.39 This meant that for the middle and lower income groups in
Italy, life got harder from the early 1990s, with the bottom 60 percent worse
off in real terms in 2010 than in 1991 (see Figure 7.3), with the bottom tenth
of Italians suffering particularly large losses.
The income distribution itself reflects other sociodemographic divides
that are relevant in shaping the political response to economic distress. As
across the rest of southern Europe, age is an important social dividing line,
with older citizens generally enjoying much better protection from the
welfare system, and often holding significant capital assets. The pension
system is a key source of inequality, since the very generous arrangements
of the late twentieth century have been reformed for future generations,
but the principle of protecting acquired rights means that current retirees
continue to enjoy incomes far in excess of past contributions, funded on a
pay-as-you-go basis through the contributions of a shrinking working-age

Income Gain/Loss (real 2011 $)
4000
3000
2000
1000
–1000
1 2 3 4 5 6 7 8 9
Income Decile (Low to High)
1991–2008 1991–2010
Figure 7.3 Real Income Changes for Decile Groups, Italy, 1991–2010
Source: Stefan Thewissen, Brian Nolan, and Max Roser (2016),
“Incomes across the Distribution Database” (https://ourworldindata.org/
incomes-across-the-distribution).
population.40 Older households enjoyed a degree of social protection shared

by no other category in Italy: in the 2007–2012 period, poverty rates
increased in every category of households except those headed by someone
over sixty-five.41
Older households were also better off because of their disproportionate
access to financial assets. In a context of low or negligible real wage growth,
household incomes in Italy were held up by returns on capital or running
down savings, resources available only to those who held some kind of
wealth.42 This meant mainly older households, particularly in North and
Central Italy, where wealth holdings averaged two or three times those of the
typical household in the South.43 Due to the tenacity of familial ties, pen-
sion and financial wealth was redistributed across the generations, but very
unevenly across social classes and regions, with lower-income households,
especially in the South and the islands of Sardinia and Sicily, benefiting
least.44
But even the middle classes of the comparatively wealthy North were
exposed to significant economic threats in this period. Large northern indus-
trial firms such as the FIAT auto manufacturer shifted much of their produc-
tion overseas, while small and medium-sized manufacturing firms in areas
such as textiles were particularly exposed to Chinese competition. Lacking
the resources to invest in innovation45 and locked into wage bargaining
structures that raised unit labor costs,46 many of these firms responded by
hiring more workers on low-paid temporary contracts, or by outsourcing to
eastern Europe. Large numbers of northern Italian workers were exposed to

greater economic insecurity, losing their jobs or having to accept a deteriora-
tion of working conditions to hold onto them. Italy shed a million manufac-
turing jobs in the first two decades of the twentieth century.47 On top of this,
cuts to welfare provision meant income loss and a greater risk of poverty for
many northern Italians.
Pension cuts were also a big issue in the North. Internal migration
from the South was especially intense during the postwar years of rapid
industrialization, so very large numbers of Italians at or close to retire-
ment age lived in northern Italy. The protection of pension rights became
especially salient after Monti’s government imposed a hasty increase in re-
tirement ages combined with the abolition of an unemployment benefits
system known as the “mobility allowance,” leaving thousands of redundant
Italian workers stranded without state support, in some cases for several
years. The numbers of these so-called esodati (the “exiled”), initially esti-
mated at just 65,000, grew to over 300,000, provoking predictable outrage
and demands for the reversal of the reform from the trade unions and the
opposition parties. The Northern League was especially vocal in protesting
these changes.
Overall, labor market conditions worsened significantly in Italy after
the reforms of the 1990s, with wages for new entrants to the labor market
falling and subsequent earnings growth failing to compensate.48 Italy has
ended up with one of the most flexible labor markets in Europe,49 with
younger workers, women, and migrants, the classic “outsiders,” partic-
ularly affected. This entrenched an insidious generational divide, as the
younger population faced significantly worse labor market conditions and
was paradoxically increasingly dependent on its better-protected parents
and grandparents.50 As job losses after the crisis were concentrated among
younger workers with insecure employment, this family “shock absorber”
played an important role in cushioning them from poverty.51 Immigrants,
usually lacking this safety net, were in consequence the group most affected
by the crisis.52
Italy’s familistic traditions compensated for the gaps in welfare coverage
and protected most of the population from the worst effects of economic de-
cline, but also entrenched a lack of opportunity for the younger generations.
In turn, the growing political veto power of older Italians made reforms to
equalize welfare and labor market protections across age groups more and
more difficult, a problem further accentuated by the state’s declining public
finances. This political economy trap goes a long way to explaining Italy’s
lurch toward anti-system politics in the 2010s, and indicates which groups
were most susceptible to anti-system appeals.

The Political Backlash: From Crisis to Comedy?
It is difficult to imagine a scenario more damaging to the established parties
than a grand coalition to vote through painful cuts, designed by EU officials
and implemented by unelected technocrats, at the urging of the German
government. The elections of spring 2013 provided a stark illustration of this
point. As Figure 7.4 shows, the joint vote share of the two main parties fell
from a peak of 70.6 percent of the vote in 2008 to just 47 percent five years
later, with the center-right Party of Freedoms (PDL) losing over six million
votes and the main opposition party, the center-left Democratic Party (PD),
losing three and a half million. In 2013 voter loyalty hit its lowest level in
the history of Italian democracy: almost 40 percent of voters failed to cast a
vote for the same party or coalition as in the previous election.53 In a further
indication of voter malaise, turnout also fell, to 75 percent, again the lowest
in postwar history.54
This collapse of the established party system—the second in Italy in less
than two decades—mostly benefited a completely new party, Beppe Grillo’s
Five Stars Movement (M5S), which won just over a quarter of the vote in its
first general election, the best performance ever for a new party in postwar
western Europe. Grillo’s transition from comedian to blogger and political
agitator, launched with the quirky “V-Day” campaign, had in less than a
decade put him in charge of the most voted political party in Italy.
What kind of party was the M5S? First of all, the word “party” was
used only pejoratively in the M5S lexicon, and one of its main slogans was
“no more parties” (Basta partiti!). Born out of Grillo’s blog (http://www.
40
35
30
Vote Share (%)
25
20
15
10
5
0
SA/SEL/LEU PDS/PD M5S FI/PDL Lega MSI/AN/FdI
2006 2008 2013 2018
Figure 7.4 Patterns of Party Support, Italy, 2006–2018

beppegrillo.it), which he used to promote his ideas about political regenera-
tion and environmental policy, the M5S was a forum that brought together
social movements and ordinary citizens who shared his concerns. The M5S
resisted both the label and the typical structure of a political party, insisting
that the traditional party form was at the root of Italy’s political problems.
Instead, the Movement shunned the conventional role of political parties
as intermediaries between the state and civil society, by limiting itself to
coordinating spontaneous citizen participation and advocating Web-based
solutions to the failings of representative democracy. From his blog, Grillo
encouraged his followers to use the Meetup platform (used by Howard Dean
in his ill-fated presidential run of 2004) to build local networks and act on
issues of local concern. These “Friends of Beppe Grillo” groups grew up in all
the major cities and numbered over a hundred in early 2007.55
The Movement initially focused on local, particularly environmental, is-
sues, for example opposing large infrastructure projects such as the high-
speed trainline (TAV) from Turin to Lyon and the new motorway bypass in
Genoa (Grillo’s home town), and campaigning against the privatization of
the water supply. With the “V-day” demonstrations of 2007, Grillo made
the leap to mobilizing on a national scale, connecting local action to the
sweeping critique of the entire Italian political class he had developed in
his comedy act. Grillo’s speech at the V-Day event in Bologna condemned
the corruption, collusion, and mafia connections of the political establish-
ment, and also took aim at the media, attacking the mainstream press and
promoting new social media as an alternative. A key theme was to attack la
casta: the corrupt “caste” of politicians, journalists, and well-connected busi-
ness people whose abuses were documented in a best-selling book published
that same year.56
The event gave the Movement a national profile and accelerated the de-
velopment of the “Friends” network, as well as signaling a shift away from
the local focus of its origins. The next major move was Grillo’s bid to stand
as a candidate in the primaries for the leadership of the PD in 2009, which
was predictably rejected, leading to the formal creation of the M5S in 2009.
Although the Movement’s formal program revolved mostly around the more
practical, concrete, and often local issues of clean energy, water, Internet
connectivity, garbage collection, and social services (the “five stars” in the
Movement’s name representing these five themes), Grillo’s discourse was
more ambitious and took aim at the whole political system. The denunci-
ation of a corrupt political class became the leitmotif of the M5S, and spe-
cific policy objectives took second place to the aim of cleaning up politics,
overturning the party system, and replacing it with a new form of Web-based

participatory politics. This anti-elitist message was expressed in aggressive
tones of a “war against the parties,”57 with frequent use of earthy language
and crude personal insults toward his political adversaries,58 which has clear
parallels with Trump’s discourse.
The Movement’s critique of existing arrangements was far more developed
than its proposed alternative—a system of Web-based political decision-
making that would allow ordinary citizens to take direct control, bypassing
the corrupt elite. This idea came from the M5S’s cofounder, Gianroberto
Casaleggio, a tech entrepreneur and publisher who had also dabbled in pol-
itics. As well as inchoate ideas about how the Internet could transform de-
mocracy,59 Casaleggio contributed technological expertise and corporate
resources to the Movement, most notably by developing a platform for online
political participation called Rousseau.60 Rousseau was to provide a structure
through which the Movement could mobilize supporters and develop poli-
cies through grassroots initiatives and online voting, fulfilling Grillo’s ambi-
tion to “let the citizens decide.”
This almost exclusive focus on the structures of political decision-making
made M5S a very unusual political party, in that it lacked any consistent
ideological identity, or even discernible positions on many key policy issues.
The emphasis on mass participation, and the emergence of the Movement
as an electoral force in the early 2010s, points toward a similar strategy
of mobilization to the anti-system left parties we have analyzed in Spain,
Greece, and the United Kingdom. For example, the M5S had similarities
with Podemos: both claimed that the traditional left-right conceptualization
of politics was exhausted, condemned the corruption of the existing political
class, and advocated participatory democracy through the use of new tech-
nologies.61 Like other parties on the anti-system left in southern Europe, the
M5S was also critical of the euro and related austerity measures.62
The official program on which the M5S fought the general election of
2013 was heavily skewed toward reforms to the political system, media
policy, energy, transport, and health, while the “economy” section was little
over a page long and consisted of a mix of extremely vague ambitions such as
“favoring local production” and “the abolition of monopolies,” alongside very
specific commitments such as “the abolition of stock options.”63 The heavy
attention to energy and transport issues spoke to the environmental concerns
that animated many grassroots campaigners involved in the Movement, and
the program included commitments to reducing private car use in urban areas
and expanding cycle networks and public transit. But Grillo’s blistering cri-
tique of the Italian political system was at the heart of the Movement’s mes-
sage. The party program declared that “Parliament no longer represents the

citizens” and promised to abolish Italy’s provincial tier of government, limit
parliamentarians to two terms in office, ban anyone with a criminal convic-
tion from standing for parliament, and drastically reduce parliamentarians’
salaries and pensions.
While not falling into any conventional position on the left-right scale,
the Movement’s approach to the economy did reflect a consistent skepticism
toward the motives and behavior of big business and finance, and an aspi-
ration to reduce their power through institutional reforms. Beppe Grillo’s
shows and blog had consistently attacked the actions of large corporations
and banks, and these attacks were especially directed at businesses leveraging
political connections to exploit consumers. The M5S program cited several
areas of corporate governance legislation to reform, such as cross-ownership
of corporations, and specifically those involving banks, multiple board
memberships, leveraged buyouts, monopoly positions, shareholder rights,
and executive pay. It also argued for a drastic reduction in Italy’s public debt
through the elimination of “waste” and the use of technology to reduce the
costs of citizens’ interactions with the state. Together with the Movement’s
denunciation of the political parties, this constituted a broad assault on both
the political and economic elites of Italy, seen as jointly responsible for the
country’s dire situation.
This generic anti-system stance was not entirely devoid of ideological
content. For instance, perhaps with an eye on the most available sectors of
the electorate, the M5S was quite specific in its promise to reverse the lib-
eralizing labor market reforms introduced since the early 1990s by both
center-left and center-right. Beppe Grillo’s Bologna speech in 2007 included
a vaffanculo personally to Pietro Ichino, a labor law professor and PD leader,
blaming his ideas for the precarious conditions and low wages suffered by
millions of temporary workers.64 The Five Stars program also promised sup-
port for guaranteed unemployment benefits and commitment to equality of
access in education and healthcare, policies that place the Movement clearly
to the left of center.
Key features of the Movement’s discourse were strangely absent from the
program. Immigration was not mentioned at all in the document, although
Grillo had on various occasions expressed opposition to migration and nat-
uralization of the Italian-born children of migrants.65 The M5S program
remained vague on issues of market governance, beyond a vague promise to
promote domestic food and industrial production and prevent the breakup
of Italian industrial groups (a promise that sat awkwardly alongside the
promise on the same page to attack large monopolists). However, Grillo’s
discourse had become increasingly skeptical toward the euro, going as far

as to advocate, albeit inconsistently, a referendum on Italy’s exit from the
European Monetary Union.66 Here the M5S parted company with Podemos
and Syriza, expressing a deep skepticism about European integration as a po-
litical project.
The lack of economic policy clarity is unsurprising given the party’s
origins. Grillo himself and many of his supporters were drawn to conspiracy
theories about money and banking that saw the euro as a plot to extract un-
warranted interest from citizens through the national debt, views generally
associated with outsider groups on the Far Left and Right.67 However, the
Movement did develop specific policies to reverse labor market and welfare
reforms, and spend public money to provide a minimum income to the un-
employed and the retired. In 2013 the party adopted the policy of a reddito
di cittadinanza (citizens’ income), a universal minimum income guarantee
(worth €600 a month) for all Italians, which became its best-known policy
commitment.68
Although the M5S’s ambiguous ideological moorings and unusual organ-
izational form mark it out as distinct from other southern European anti-
austerity movements, its pattern of electoral support was rather more similar.
The M5S’s origins in the mobilization around environmental issues at the
local level and the emphasis on networked political participation attracted
a younger, more urban, and generally highly educated electorate, mostly
former voters for center-left parties. Polling data from early 2012 showed
that around 75 percent of M5S voters had some form of further education (as
against an average of less than half of the population at large), around 60 per-
cent were between twenty-five and forty-five years old (twice their share in
the population), around 40 percent lived in cities of more than 100,000
inhabitants, and their interest in politics was twice the population average.69
This pattern is similar to other new left-wing anti-system parties, such as
Podemos in Spain, although what marks the M5S as distinct is the absence
of a sustained anti-austerity mass movement in post-crisis Italy on which
the party could build. Instead, it sought to mobilize a more fragmented and
inchoate range of activists, on the basis of a more generic discourse focused
less on specific austerity measures and more on the structural failings of the
political and economic system.
As the M5S expanded beyond its initial activist base, it became more
ideologically and sociologically heterogeneous. In 2011 the vast majority
(almost two-thirds) of M5S supporters identified with the Left or Center-
Left, and less than 10 percent identified with the Right or Center-Right,
but as the Movement grew in strength it attracted increasing numbers of
voters from the Right.70 As well as being a natural evolution as it fished in

a bigger pool of voters, this was also by design, as under Casaleggio’s tute-
lage the Movement used the data gathered from the Rousseau platform to
analyze and hone supporters’ responses to different aspects of its message.71
One example was the Movement’s position on immigration: the progressive
left origin of many of its activists pushed it toward supporting changing the
law to naturalize second-generation migrants born in Italy, but Grillo swiftly
shut down any such policy on the grounds that it would cost votes.72 This
catch-all strategy was all the more effective because the M5S had little in
the way of formal policy documents or ideological symbols to constrain it,
and its largely Web-based form of communication with activists and voters
allowed distinct customized messages to be targeted at different groups, max-
imizing the Movement’s reach while hiding from view some of the resulting
contradictions.
This approach brought spectacular success with the electoral breakthrough
in February 2013. Although the center-left and center-right coalitions re-
ceived more votes, the M5S became the largest single political party, with
more than eight and a half million votes and a share of 25.6 percent in the
election for the Chamber of Deputies.73 The M5S grew by winning votes from
both the PD and the PDL in almost equal measure,74 reflecting the success of
Grillo’s catch-all strategy of proclaiming that “left and right no longer exist.”
However this did not mean that the M5S voters resembled Italian society as
a whole: over half of them (52 percent) self-identified as left-wing, just under
a third (31 percent) as “centrist,” and only a small minority (17 percent)
placed themselves on the right of the political spectrum.75 Sociologically, the
Movement’s support followed a consistent pattern: the younger the voter, the
more likely they would vote for the M5S, which was the most popular party
in every age group under 55, but failed to clear 12 percent of the vote among
the over-65s.76 The M5S was by far the most successful in attracting new
voters and those that had not voted in the previous election,77 a pattern that
fits with its appeal to voters disillusioned with the incumbent political class.
The M5S was unusual, almost unique, in its origins as the spinoff of a
comedy show and its vague ideological profile. However, its electoral foot-
print was similar to that of other similar parties that mobilized the discontents
of the “outsider” generation hit hardest by austerity, and the most affected
by unemployment and job insecurity. The M5S was the most voted party
among those with educational qualifications, but received only 13 percent
support among those who had failed to complete high school.78 In occupa-
tional terms, pensioners were the group least likely to vote M5S (11 percent),
but it was by some distance the most popular party among the unemployed
(34 percent), homemakers (38 percent), students (44 percent), and those in

temporary employment (52 percent).79 As in the rest of southern Europe, the
bill for the crisis was passed on disproportionately to the younger generation,
many of whom voted for the party most hostile to the political establishment.
Saving the System? Renzi’s Reform Project

The M5S’s spectacular success in 2013 not only blew open the Italian party
system once more, but also undermined the logic of alternation in gov-
ernment between the two main parties. The main party of opposition, the
center-left PD, was unable to exploit Berlusconi’s crushing defeat, falling
well short of a parliamentary majority. The PD’s lackluster electoral per-
formance marked the failure of a political project to unite the opposition
to Berlusconi under one banner. Why was the Italian Center-Left unable to
articulate an alternative to the Center-Right’s mishandling of the economic
crisis? The answer to this question lies in the PD’s detachment from the ide-
ological traditions of the Italian Left.
The PD was founded in 2007, merging the Democratic Left (formerly
the PDS), the heir to the Italian Communist tradition, with a collection of
centrist factions whose origins were mostly in the now defunct Christian
Democratic Party. The PD’s political identity was therefore a hybrid, and the
logic of the merger was to build a broad coalition capable of monopolizing
the political space to the left of Berlusconi. But by maximizing its electoral
reach, the PD also dropped the last vestiges of communist and Christian
democratic ideological identities, converging around a broadly market lib-
eral position, with a focus on economic reform and commitment to Europe.
The PD stressed the need for Italy to undertake a “liberal revolution” of in-
stitutional reforms aimed at dismantling opportunities for corruption and
rent-seeking, and expanding market competition.80 Much of the intellectual
impetus behind the PD’s agenda came from neoliberal economists associated
with Bocconi University in Milan, most of them convinced that Italy’s diffi-
culties inside the euro were due to institutional weaknesses rather than any
demand shortfall caused by austerity measures.81
After the 2013 elections, it fell to the PD, as the largest party in the
Chamber of Deputies, to attempt to form a governing coalition. Its first move
was to approach the M5S, whose leaders insisted that any talks between the
parties should be held in public, so the PD’s dour veteran leader Pierluigi
Bersani was persuaded to meet the Movement’s inexperienced parliamen-
tary leaders on live streaming. This meeting, opened by Bersani with a dry

thirteen-minute monologue, which served mainly to confirm the staleness of
the political establishment, failed to even discuss the basis on which an agree-
ment could be negotiated.82 The aim of the M5S was to replace the ruling
elite rather than compromise with them: Beppe Grillo christened the PD
the “pdmenoelle”—the PD without the “L”—to drive home the Movement’s
message that the two main parties were fundamentally the same. The PD
was forced into yet another “grand coalition” government (under the PD’s
Enrico Letta) supported by most of the Center-Right, and with nonpartisan
technocrats in key positions, notably Economy Minister Saccomani, a veteran
of the Bank of Italy and the IMF.
The Letta government lasted less than a year before an internal shift within
the PD brought a new leader and a new prime minister. Matteo Renzi, the
young mayor of Florence, saw an opportunity to latch on to the demand for
political renewal represented by the M5S, launching a leadership campaign
based on the slogan of “scrapping” (rottamazione) the political system as one
would an old car. Renzi initially enjoyed some electoral success, with the
PD winning 41 percent of the vote in the 2014 European elections. His
strategy was to make ostentatious gestures of change and novelty, calling
for the “destruction” of the old PD and bringing a younger generation into
government, including an unprecedented number of women (half of the min-
isters).83 The M5S’s relatively poor performance in the 2014 election, where
it lost around three million votes compared with the year before, mostly to
abstention but around 13 percent to the PD,84 suggests that Renzi enjoyed at
least a short-term success in selling his PD as a new political force capable of
responding to demands for change.
But Renzi’s energetic style embellished what was actually a high de-
gree of continuity in the fundamentals of economic and social policy. He
maintained existing commitments to Italy, fulfilling the demands of the
European institutions to reduce budget deficits and set about pursuing yet
another liberalizing labor reform, this time labeled the Jobs Act (a name
borrowed from a law of the Obama administration in the United States).
The reform sought to overcome some of the rigidities in Italian employ-
ment law by introducing contracts that could transition over time into be-
coming open-ended, overcoming the sharp dualism between temporary and
permanent contracts.85 As a result, the controversial Article 18 of the Italian
labor statute, which gave workers the right to be rehired in the event of a
successful claim for unfair dismissal, was finally abolished. To compensate
for this loss of job security, the reform incentivized employers to hire on
open-ended contracts rather than temporary ones with social security con-
tribution discounts.86

The other plank of Renzi’s agenda was a plan for constitutional reform to
concentrate power around the executive and downgrade the role of the Italian
Senate. The proposed reform would have replaced the elected Senate, whose
approval is required not only for all legislation, but also for all votes of confi-
dence, with a nonelected body nominated by regional councilors that would
no longer have the power to install or overturn the government.87 The reform
would have undermined the broadly consensual policymaking traditions
of postwar Italy, ostensibly to facilitate the liberalizing reforms favored by
Renzi and his supporters in the business world. Renzi’s plan got through
parliament but failed to get past the hurdle of winning popular approval in a
referendum. Supporters of the League and the M5S voted against Renzi’s plan
in large numbers: attitudes to the reform correlated strongly with unemploy-
ment levels, suggesting that the No vote was interpreted by many voters as a
vote against the incumbent government and the economic situation.88
Renzi’s reformist zeal failed to achieve much in the way of improving
living standards, with the economy emerging very slowly from its double-
dip recession and the underlying fiscal position of the government remaining
contractionary. Although his political style emphasized his youth and energy
and sought to deliver reforms at breakneck speed, the policy practice was one
of continuity, with Europe’s fiscal straitjacket establishing the parameters of
taxation and spending, and a further venture down the path of labor market
deregulation. Moreover, Renzi’s government relied for its survival on a broad
coalition of center-left and center-right parties, playing into the hands of
anti-system politicians who decried the political establishment. This favored
the M5S, which hoped to pick up disenchanted voters from the PD. But it
also opened up a space to the right of the established parties.
“Italy First”: The Rise of the Right and the End

of the Center
The weakness of the PD was mirrored on the right by the decline of
Berlusconi, the dominant figure on the center-right since the early 1990s,
who was personally discredited by various scandals and increasingly seen as a
representative of the old political establishment. The M5S’s ideological am-
bivalence allowed it to fish in this pool of newly available center-right voters,
but the main beneficiary was the Northern League, a long-standing ally of
Berlusconi, but now under a new leader, Matteo Salvini, who seized the op-
portunity to expand beyond his party’s core base of northern voters. The

League had initially found itself exposed to the anti-system backlash itself,
as the clique around party founder Umberto Bossi was implicated in a series
of corruption scandals,89 dropping from over three million votes in 2008 to
less than half that number in 2013 (see Figure 7.4). After this defeat, Salvini
was able to win control of the party, clear out the old guard, and adopt a new
political strategy similar to the xenophobic and Euroskeptic message typical
of anti-system right parties across continental western Europe.
Salvini’s move represented a dramatic departure from the League’s long-
standing identity as the defender of the North against the inefficiency and
corruption of the Italian central state, and the fiscal burden of the country’s
economically underdeveloped South in particular. In the early 1990s, the
League had a broadly positive view of the European project, seeing it as an
opportunity to free the North’s vibrant economy from the dead hand of a cor-
rupt and fiscally onerous Italian state.90 This confident approach to the North’s
economic prospects informed a broadly neoliberal and anti-statist view of
the economy, in which the European Union and the euro would protect free
market values from Italy’s inefficient institutions. But after euro entry, the
northern electorate became much more pessimistic about its economic future
and more receptive to a protectionist appeal.91 This position reflected the
increasing economic strain on the industrial system of the League’s strong-
hold regions of Lombardy and Veneto from emerging Chinese and eastern
European competition. Growing migration from eastern Europe completed a
picture of economic threats associated with the European project.92
The League had briefly won support from exasperated northern busi-
ness leaders in the early 1990s, but as the party institutionalized it fo-
cused increasingly on building mass support with an anti-European and
anti-globalization message, entrenching itself as the strongest party among
working-class voters in the North.93 Concerns that the euro favored the core
European countries over the periphery, and large firms over small ones, res-
onated particularly among the League’s core electorate of workers, artisans,
and small businesspeople in the smaller northern cities and towns. The
League therefore began to make (largely symbolic) demands for tariff barriers
to protect northern production from foreign competition. The party message
was less appreciated in the more dynamic and prosperous metropolitan area
around Milan, where a more service-based economy enjoyed strong growth.94
In other words, the League began to occupy a similar kind of political space
to radical right-wing nativist parties in the wealthy countries of continental
and northern Europe.
The journey to becoming a party of the radical nationalist Right was
complicated by tensions between the League’s anti-system roots and the

opportunities to exercise political power presented by its electoral successes.
After radicalizing its territorial claims to the extent of advocating secession
from Italy in the late 1990s, Bossi’s pact with Berlusconi to join a broad
center-right coalition government from 2001 on brought access to polit-
ical power and a shift toward working within the system rather than simply
railing against it, especially as it also won control over regional governments
in Lombardy and Veneto.95 The party’s response was to seize the trappings
of power but maintain a fiery anti-system rhetoric that was increasingly
directed toward “external” threats such as migrants and the European Union,
rather than the internal adversaries with which the League was now allied.96
Xenophobic outbursts against migrants, Islamophobia, and hostility to-
ward the euro featured heavily in this new discourse, although the party
maintained its distinctive northern identity.97
Salvini built on this tradition but saw an opportunity to expand beyond
northern Italy by abandoning regionalist claims and seeking support in
parts of the country the League had previously ignored. Salvini’s discourse
was a potent mix of anti-migrant, anti-euro, and anti-establishment rhet-
oric. He deployed the imagery of the excavator (ruspa), to evoke not only
sweeping away the rotten political elite, but also the idea of forcibly clearing
out Roma camps.98 Xenophobia was not a new theme for the party—its
founder, Umberto Bossi, had once advocated firing cannon shots at refugee
boats in the Mediterranean99—but under Salvini hostility to migration no
longer coexisted with the League’s message of preservation of regional iden-
tity, but instead supplanted it. Where Bossi had sought out other regionalist
and secessionist parties as European partners, Salvini courted Marine Le Pen’s
National Front and other right-wing nativists, consciously adopting a sim-
ilar discourse and advertising their support for his cause.100
Instead of invoking the specific interests of “Padania” (a vague neologism
for northern Italy), Salvini’s League took aim at alleged threats to the Italian
nation as a whole, going so far as to organize an anti-immigration rally with
Casapound, a small but well-known far-right group with a history of vio-
lent activism, and allying with the Brothers of Italy (Fratelli d’Italia, FDI),
a nationalist party of fascist inspiration.101 Salvini also echoed the language
of Donald Trump, going so far as to adopt the slogan of “Italy First” (prima
gli Italiani), an extraordinary step for a leader whose party had advocated the
outright secession of “Padania” from Italy less than twenty years earlier. This
shift from regionalism to nationalism was undertaken without any attempt
to rationalize the contradiction between the League’s identity as a party of
the North and its new push into the poorer regions it had previously wanted
to secede from.

To finesse this contradiction, Salvini identified foreigners—migrants
and the European Union—as common enemies to unite against.102 The
sharp increase in arrivals of refugees by sea after 2013, which peaked at
180,000 in 2016,103 provided an opportunity to mobilize opposition to
the Renzi government and expand the League’s vote beyond its northern
core. The party set out to establish an organized presence even in southern
Italy, under the label Noi con Salvini (Us with Salvini), studiously avoiding
the terms “Northern” and even “League.” With popular concern about
immigration spiking between 2014 and 2016—the numbers citing im-
migration as one of the main problems facing Italy jumped from 5 to over
40 percent104—Salvini’s strategy offered huge potential for growth. His
discourse revolved not only around stoking resentment against the refugees
and migrants in general, but also specifically targeted the European Union
and its failure to relieve the pressure on Mediterranean member states by
redistributing refugees around the Union. Since the South of Italy was
particularly affected by refugee arrivals, anti-migrant rhetoric had the po-
tential to win support there, too.
Salvini’s discourse on migration dovetailed with a similarly Euroskeptic
position on the economy. Like the M5S, the League had moved toward a very
critical position on the euro and the pressures from European institutions to
curb Italy’s budget deficit and debt levels. Salvini began to campaign under
the slogan “basta euro,”105 promising that if the League won power it would
take Italy out of the European Monetary Union.106 The League also adopted
an anti-austerity line, promising to slash taxation by establishing a “flat tax,”
while also abolishing the Fornero reform and lowering the retirement age.
These redistributive promises reflected the preferences of the League’s core
electorate of older workers and small businesses, and stood to favor the North
overall, given its higher average earnings and large share of pensioners.107 The
League’s electoral program also revived Bossi’s promise of protective tariffs
for Italian manufacturing, which appealed mostly to hard-pressed small com-
panies in the North. However, the focus on immigration and the euro proved
an effective way of mobilizing voters across the Italian territory, winning
substantial support where the party previously had no presence and eliding
the interregional tensions the League had historically fed off.
A Third Republic? The Election of March 2018

The election of March 2018 confirmed Italy’s turn away from its estab-
lished parties and delivered the majority of votes and seats to anti-system

movements (see Figure 7.4). The M5S made further gains, establishing it-
self as the biggest party by a large margin, with almost a third of the vote
(32.7 percent), more than ten and a half million votes. Salvini’s League also
enjoyed unprecedented success, winning a record 17.4 percent of the vote,
almost quadrupling its 2013 performance. To complete the anti-system pic-
ture, the far-right Brothers of Italy won over 4 percent, double its 2013
share. The mainstays of the pre-crisis party system—the PD and Forza
Italia—won barely a third of the vote between them (18.8 and 14 percent,
respectively). The cartel of established parties that guaranteed Italy’s adher-
ence to the rules and ethos of the European Union and the single currency
was roundly defeated.
Italy’s tale of economic decline, debt, and austerity, combined with tech-
nocratic governance that downgraded the role of elections, presents the ideal
conditions for the growth of the anti-system vote. We have also seen that
the political and electoral beneficiaries of this climate challenged the eco-
nomic status quo and argued for changes to Italy’s macroeconomic frame-
work and enhancements to its system of social protection. This mirrors
developments in the other crisis-stricken countries studied in this book, all
of which found themselves at the epicenter of the debt crisis and the Great
Recession. Italy also reflects the distinctive pattern of the southern European
model of anti-system reaction, with the electoral response to establishment
failures disproportionately favoring the mobilization of younger, more edu-
cated voters around progressive and liberal rather than reactionary and xeno-
phobic options. However the peculiarities of the M5S, and the extraordinary
transformation and electoral success of the League under Salvini, do require
some further discussion.
Italy was, along with Greece, one of the countries most affected by the
refugee crisis of the mid-2010s, and the surge in support for the League
took place after the spike in arrivals in 2013–2014, and after Salvini had
taken over the party and adopted an aggressive anti-refugee discourse, fo-
cusing on domestic security issues ahead of economic concerns. Opinion
polling confirms that most of the rise in League support took place during
2014, which was the year in which the arrivals of refugees on the Italian
coast dramatically increased (around fourfold).108 Studies of the League’s so-
cial media strategy show a marked increase in posts about immigration and
security in the same period, at the expense of those about the economic sit-
uation or the European Union.109 However, opinion data also suggests that
public concern about migration lagged behind the rate of refugee arrivals.
The numbers expressing fear about migration increased by around 10 per-
cent (to just under 40 percent), but this simply returned it to the average

level over the pre-crisis period (the peak of negative attitudes was in 2007, at
60 percent).110 It is therefore unclear whether immigration attitudes were the
driver of the League’s electoral rise, or were instead a consequence of Salvini’s
discourse and his growing political profile over this period.
Voting patterns in 2018 also suggest that economic factors were an im-
portant part of the League’s electoral success. Although the League enjoyed a
spectacular rise in vote share across the Italian regions, one marked tendency
was its relative weakness in the larger towns and cities: in its heartland region
of Lombardy, the League polled 28 percent of the vote, but only 17 percent
in the capital, Milan, while it polled 10 percent less in Venice (22 percent)
than in the Veneto region (32 percent).111 This is a typical pattern of support
for the anti-immigration Right, which in other countries has also tended to
perform better in smaller and more rural communities than in the econom-
ically more successful cities. Even within the major cities, the League and
the M5S enjoyed much stronger growth in the most economically vulner-
able districts, while the mainstream parties, the PD and Forza Italia, instead
performed better in the generally more prosperous city centers.112 The Italian
case confirms the trend toward anti-system politics prospering in the more
peripheral and declining areas, but Italy’s much more profound economic
problems meant a larger reservoir of potential support than in most of the
other advanced democracies.
The geographical pattern of anti-system support in Italy reflects the
differing ways in which economic vulnerability could be mobilized in dif-
ferent areas. In the South and Islands, where average living standards were
lowest and unemployment highest, the M5S was by far the strongest party,
winning the support of almost half of all voters (47.3 percent). The League,
despite making an unprecedented breakthrough in regions where it had
never previously stood candidates, polled on average just over 5 percent in
the South, where the direct impact of the refugee problem was felt. The anti-
system vote in the South was therefore much more oriented to the kinds of re-
distributive demands represented by the M5S, and in particular its proposal
for a minimum income, than toward immigration and law and order issues.
Polling showed that M5S voters gave highest priority to employment and
the integrity of the political system, and lower priority to migration and se-
curity issues than the average across all Italian voters.113 This is exactly what
we would expect if the anti-system vote was driven by mainly economic inse-
curity and resentment toward the failures of the political system, rather than
by the cultural and security concerns associated with migration.
The League, on the other hand, still won the majority of its votes in its
northern heartlands (reaching close to 30 percent in the North-East and over

25 percent in the North-West), but expanded significantly in the central
regions, notably the “Red Belt” of Tuscany and Emilia-Romagna, tradition-
ally dominated by the Left, where the League won just under 19 percent of
the vote. The anti-migrant message was central to this success, with League
supporters giving far greater priority to migration and security issues than
other voters (see Figure 7.5).114 But League voters were also the most likely
voters to cite unemployment, taxes and living standards, and pensions as
their main concern, far more so than M5S voters. The League may have been
strongest in Italy’s most prosperous regions, but it was also appealing in par-
ticular to economically vulnerable parts of the population in those regions. In
terms of socioeconomic profile, the League won its highest vote share among
workers, artisans, and the self-employed, and its lowest among public sector
workers and professionals.115 League voters, despite mostly hailing from
Italy’s richest regions, displayed by far the most pessimistic outlook on the
economy—close to half of them agreed that the worst of the crisis was yet to
come (46 percent, as opposed to 33 percent for the whole electorate). This is
exactly the pattern of voting for far-right and nativist parties that the com-
parative analysis in chapter 2 would lead us to expect.
60
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Figure 7.5 Sociodemographic and Attitudinal Characteristics of Party

Vote, 2018
Source: Ipsos Mori survey, reported in Luca Comodo and Mattia Forni, “Chi vota
cosa e perché: Il profilo elettorale dei partiti,” in Marco Valbruzzi and Rinaldo
Vignati (eds.), Il vicolo cieco: Le elezioni del 4 marzo 2018 (Bologna: Il Mulino, 2018),
pp.213–234, (Table 4, p.226).

Why did poorer and more economically insecure voters opt for anti-
system parties like the League and the M5S, instead of voting for parties of
the left that stood for redistribution and equality? The clue to this lies in
the transformation of the Italian Left since the end of the Cold War. The PD
under Renzi presented a liberal, modernizing image, in line with European
Union priorities of fiscal austerity and market openness. The PD had become
perceived as the party of the “winners” from globalization, and the party of
well-protected “insiders.” While the League won twice the share of worker
votes than the PD, the PD won its largest share among professionals and the
managerial class (22 percent), voters with university degrees (22 percent),
and the over-65s (28 percent). Of the established parties, the PD was the one
whose voters were most economically secure, leaving more vulnerable voters
with little option but to support anti-system forces promising protection
against economic threats. The M5S was the largest party in every occupa-
tional category, but was particularly strong among workers, winning three
times the vote share of the PD.
It made perfect sense for these vulnerable voters to opt for anti-system
forces if they wished to see policy changes that might improve their eco-
nomic situation. The M5S promised an unconditional basic citizens’ income,
the abolition of the Fornero pensions reform, increased health spending, and
cuts in taxation.116 The League was also committed to reversing the Fornero
reform and easing retirement rules. Other issues, such as the abolition of
public funding for political parties or a pushback against illegal immigra-
tion, were also important, but the underlying patterns of voter support for
the Italian anti-system parties reflected the country’s deep-seated economic
problems.
The Yellow-Green Government: When Anti-System

Becomes the System
The collapse of the mainstream parties and the surge of the M5S and the
League implied a profound change in the Italian party system and a very
awkward dilemma for the party leaders. The PD’s weak performance made
any hope of staying in power contingent on an agreement with other parties,
but the equally poor performance of Berlusconi’s Forza Italia (what was left
of the PDL had returned to its original name), which polled just 14 per-
cent of the vote, losing more than two million votes, made even a grand
coalition difficult. On the other hand, the League and the M5S, which did

enjoy a majority of parliamentary seats between them, were deeply divided
in terms of geographical representation, ideology, and discourse. Moreover,
the League had stood in the election as part of a broad center-right alliance
with Berlusconi, on a shared program, with the implied aspiration to govern
together in coalition. These two parties were also working in coalition in sev-
eral regional governments in the North of Italy, so breaking the pact at the
national level would have broader ramifications.
The impasse produced by this fragmented parliament led to an attempt,
yet again, to form a “government of experts” with cross-party support,
invoking the urgency of responding to pressure from the bond markets. Carlo
Cottarelli, another economist with the Bank of Italy and the IMF on his CV,
attempted to form a government with a view to at least passing a budget
law before holding new elections. However, only the PD, long resigned to
propping up unpopular technocratic governments, could bring itself to back
Cottarelli. The parliamentary arithmetic ultimately imposed itself as the
M5S and the League, alongside the far-right Brothers of Italy, voted together
to back a coalition government, once a compromise candidate for prime min-
ister, Giuseppe Conte, had been agreed to. The long process of government
formation was punctuated with controversy, as the president of the Republic
vetoed attempts by the League to nominate Paolo Savona, a long-standing
advocate of Italy leaving the euro, to the Treasury. These events served to
reinforce the impression that the political cartel of mainstream political
parties, business interests, and senior government officials were determined
to obstruct the implementation of the anti-system mandate.
The first months of the new “yellow-green” administration,117 the first
government in Europe to be backed solely by anti-system parties, offered
some clues as to the likely consequences of the rise of anti-system politics.
Given the size of Italy’s debt burden and its poor growth prospects, the elec-
tion of a Euroskeptic government, led by parties that had both at various
points advocated euro exit, disconcerted markets. The spread of Italy’s ten
year bond (BTP) to the German Bund stood at 136 basis points prior to the
election, leapt to 303 when Cottarelli stepped down, and then hit a new
peak of 311 in November 2018 prior to approval of the government budget.
Markets were unsettled by the new government’s decision to pick a fight
with the European Commission over the projected budget deficit, a fight in
which the Italians backed down (embarrassingly settling for a deficit target
of 2.07 percent, which had the merit of sounding almost identical to their
original proposal of 2.7 percent). After first dropping plans for a euro ref-
erendum, the anti-system parties’ surrender on the fiscal rules suggested
a reluctance to go beyond the aggressive rhetoric and formulate a serious

challenge to the policy orthodoxy. The removal of a huge basta euro (“no more
euro”) banner from the League’s headquarters in Milan the day after the co-
alition agreement was reached indicated a hasty recognition of the political
risks of this policy reversal.118
The failed attempt to break with EU fiscal rules was not only a conse-
quence of the League and the M5S’s Euroskeptic rhetoric, but also reflected
the difficulties of resolving the distributional battles within the govern-
ment coalition. The two parties agreed on the abolition of the Fornero re-
form and reduction of the retirement age, but differed over the direction of
fiscal policy: the M5S and its mostly southern electorate favored further social
spending through a new minimum income scheme, while the League and its
more prosperous northern voters preferred tax cuts through an ill-defined
flat tax. Implementing all these measures together while remaining within
the fiscal rules, at the same time that the ECB was exiting its bond-buying
scheme, appeared to be an “impossible trinity.” Other divisions within the co-
alition included migration, where Salvini’s unwavering hostility to refugees
conflicted with the much more ambivalent line of the left-leaning factions of
the Five Stars, and infrastructure, where the League favored continuing the
TAV high-speed train project while the M5S minister of transport, Toninelli,
insisted it would be halted. Anti-system politics in Italy collided with the
harsh realities of constraints that were easier to remove in opposition than in
government.
Conclusion
The Italian case has all the familiar ingredients of an anti-system revolt: a
severe economic crisis, high levels of inequality, and an unresponsive and
discredited political system. It also follows to some extent the pattern typ-
ical of the rest of the southern Eurozone: a sovereign debt crisis that forced
governments into harsh austerity, the imposition of policies from outside,
and an economic crisis that hit “outsider” groups of younger people espe-
cially hard. However, the form anti-system politics took differed from the
rest of the South in intriguing ways.
The M5S, which was most successful in tapping into the frustration of
younger Italians, was less clearly anchored on the left than parties such as
Podemos, Syriza, or the Bloco Esquerda. The Left has been markedly ab-
sent from post-crisis politics in Italy, with the post-communist left parties
almost disappearing from the scene, and the main center-left party, the PD,
adopting an increasingly neoliberal stance. Italy differed from Greece, Spain,

and Portugal in lacking a strong anti-austerity movement, which could
have acted as a focal point for a left alternative. M5S’s ideological ambiguity
allowed it to expand its support beyond the younger, politically progressive
voters that typically support the anti-system Left, but meant it also lacked
a clear agenda for government. Its electoral success in 2018 propelled the
Movement into government, but without having clarified to its 10 million
voters what it stood for, apart from being against the system it now had to
govern.
The other exception of the Italian case is the strength of the anti-system
Right. Italy experienced a sharp rise in migration, as well as having to manage
the refugee crisis in the Mediterranean, though Greece and Spain were equally
exposed. But the sharp rise in support for Salvini’s League was not solely down
to migration. Italy’s long economic stagnation left the League’s heartlands in
the small cities and countryside of northern Italy facing deindustrialization
and declining support from the state. League voters look very much like the
“left behind” voters of post-industrial Britain, northern France, or eastern
Germany, who also supported the anti-system Right. Migration may have
mobilized some voters, but the failings of the established parties to address a
serious economic crisis offers a powerful explanation of the collapse of Italy’s
party system, just as it did in the early 1990s.

Conclusions
T his book has presented an explanation of anti-system politics in rich

democracies rooted in fundamental changes to the political economy.
This group of highly successful societies, which had all, to varying degrees,
achieved economic prosperity and social cohesion in the second half of the
twentieth century, came under strain as market economies could no longer
deliver consistent and equitably shared improvements in living standards.
Politicians not only failed to regulate an increasingly unstable global
economy, but also withdrew many of the social protections that had cush-
ioned society from market fluctuations. Faced with growing inequality and
instability, established political parties farmed out key areas of policymaking
to nonpartisan experts, and retreated from articulating competing visions of
society. This “neoliberal democracy” could be sustained while economies con-
tinued to grow, but it was not strong enough to withstand a policy failure on
the scale of the Global Financial Crisis of the late 2000s.
It is tempting to explain anti-system revolts in terms of the short-term
events that precede them, the quirks of the individual political leaders in-
volved, and the specificities of each country’s institutional and political con-
text. Donald Trump’s campaign mobilized long-standing racial divides in the
United States and exploited weak leadership within the Republican Party.
Brexit leveraged the long-standing Euroskepticism in the United Kingdom,
especially inside the Conservative Party, and connected the failings of the
European Union to a variety of grievances, many of which had little to do
with Europe. In Italy, the Berlusconi experience paved the way for Beppe
Grillo’s incursion into politics, while the Catalan conflict had its origins in
the early modern period. But if one steps back and places these anti-system
movements in a comparative and historical perspective, it is clear that they
share many common features, quite apart from having come about at almost
exactly the same time.
All these movements appealed to a widely shared sense among citizens
that the existing political order had failed. Elections failed to deliver sig-
nificant changes in the most important policy areas, while political parties
retreated from ideological appeals and abandoned their traditional grassroots
constituencies. Party politicians seemed far more interested in listening to
corporate interests and super-wealthy individuals, who caught their atten-
tion by offering money, support in the media, or simply by leveraging the
outsized influence enjoyed by the owners of mobile capital in an intercon-
nected world. As the structures of collective action through which citizens
had been able to shape policy withered, a growing number of people simply
turned away from conventional politics, either focusing on the private sphere
or involving themselves in other forms of political action.
This slow deterioration of democratic health was sharply accelerated by
the Global Financial Crisis. Suddenly, discontent at a perceived lack of voice
escalated into a sense of serious threat to social well-being, as economic losses
hit home, and any certainties about the future dissolved. Yet politics in a
sense continued as usual. The firefighting of 2007–2009, where politicians
and technocrats ripped up the copybook to avoid financial catastrophe, gave
way to a doomed attempt to restore the prior political and economic order
by curbing the state’s capacity to protect the nonwealthy and tightening the
constraints on governments’ ability to protect the “real economy.” Rather
than an opportunity to rethink the market liberal orthodoxy, the collapse
in government finances following the crisis was exploited as an opportunity
to double down on this orthodoxy. In the Eurozone, the process of emp-
tying out the sovereignty of the indebted nations was accelerated, as finan-
cial assistance was made conditional on locking in harsh fiscal austerity and
pushing through further market liberalizing reforms. Outside the Eurozone,
debtor countries enjoyed much greater freedom to relax fiscal and monetary
constraints to ease the costs of adjustment, but dominant interests aggres-
sively moved to shift those costs onto the most economically exposed groups.
This attempt to offload the costs of a crisis caused by the unchecked be-
havior of a wealthy elite onto ordinary voters could hardly have failed to
provoke a political reaction—not only because political science tells us that
voters punish governments who preside over economic failure, but also be-
cause the crisis lasted well beyond the usual electoral cycle. Normal patterns
Conclusions 249
of partisan turnover did not suffice to exorcise public rage: elections threw
the “rascals out,” only to produce no real relief. The discrediting of governing
parties became the discrediting of an entire system. The French presidency
transferring from the Gaullist Sarkozy to the Socialist Hollande had no ap-
preciable policy impact. In Britain, the defeat of the Labour Party brought
in a Conservative-led government that pushed through a recovery-killing
austerity program. In Spain, the Socialist Zapatero was thrown out to be
replaced by the conservative Rajoy, who imposed harsh austerity and an “ag-
gressive” labor reform. In Italy, Berlusconi came and went, to be replaced first
by a technocrat, then by a series of center-left prime ministers, none of whom
was willing to challenge a failed policy of austerity.
What was challenged by the political turbulence of the mid-2010s was
not just a ruling elite, or the political parties that underpinned it. The anti-
system forces besieging the “establishment” were all, with varying degrees of
coherence and clarity, challenging a specific way of doing politics. If the era
of market liberalism and centrist politics was an era of political impotence
in the face of public demands, the anti-system wave was characterized by
demands for action. Anti-system parties on both the left and right challenged
the notion that financial markets and nonelected supranational authorities
should dictate policy. The guiding logic of the market liberal form of democ-
racy, although rarely openly expressed, was that politics could, and should,
do as little as possible to avoid disturbing the smooth functioning of the
capitalist system, and should certainly not be involved in distorting the dis-
tributional consequences of the market to satisfy political demands.
These arrangements made political parties’ ability to respond to voter
demands conditional on markets accepting the relevant policies. Faced with
this market blackmail power, the resort to delegation of key policy choices
to nonelected technocrats sympathetic to financial actors made perfect sense
for fragile political parties struggling to win over an increasingly demanding
electorate. The similarity between the basic macroeconomic stances adopted
by whichever of the mainstream parties was elected to office was difficult
to explain away to the large number of voters suffering declining living
standards after the financial crisis. If voting for mainstream political options
meant continuity, the logical response to a desperate situation was to vote for
someone who promised to break the system and replace it with something
better.
This book has shown how the upheavals of the second decade of the
twenty-first century stem from the failure of neoliberalism to deliver widely
shared economic prosperity and democratic accountability. The much
discussed “cultural backlash” thesis is superficially plausible, in that many
250 C o n c l u s i o n s
of the anti-system parties that exploited the failures of neoliberalism advo-
cated a return to conservative values and a reversal of the social and cultural
changes resulting from migration. Undoubtedly some anti-system votes were
motivated primarily by anger at the emerging multicultural society and per-
ceived cultural and economic threats from outside. But there is also substan-
tial disconfirming evidence. Voter attitudes toward migration have tended to
soften over time, particularly in countries such as the United States and the
United Kingdom, where the cultural backlash appears to be most powerful.1
Yet at the same time, some countries where attitudes to migration were less
tolerant had little or no support for right-wing anti-system parties. Within
most countries, the areas with the smallest migrant presence had the highest
support for right-wing anti-system parties.
Instead, the role of migration in the crisis is best seen as one of many pos-
sible focal points for a range of political and economic grievances. In Greece,
Portugal, and Spain, right-wing xenophobic nationalism was a marginal po-
litical force in the post-crisis years. There, political opposition was mostly
inspired by left-wing anti-capitalist ideas, in some cases accompanied by se-
cessionist opposition to the nation-state itself. Even in the United States
and the United Kingdom, the noise generated by Trump and the Brexiters
distracts from the clear evidence that left-wing anti-system forces were a
powerful driver of political change, too. It is also misleading to reduce the
anti-system Right to a racist, authoritarian appeal. Most anti-system right-
wingers addressed economic grievances head-on, identifying migration as
an economic threat as much as a cultural one, and advocating trade protec-
tionism and welfare chauvinism (the preferential treatment of “natives” in
social policy). The anti-system forces on the left and right may differ in ideo-
logical positioning and philosophy, but they shared a rejection of the primacy
of markets over politics inherent in contemporary neoliberal democracy.
In this sense the events of the 2010s bear a striking, and deeply troubling,
resemblance to the 1930s. Faced with the socially destabilizing consequences
of an inadequately regulated market economy and a spiraling debt crisis,
democratic rule and the international order collapsed under the weight of fas-
cist and communist pressures. Once again, Western countries are faced with
existential choices between fascism, socialism, and liberalism as guiding
principles of the political economy. The failure of democracies to adequately
protect citizens from the potential of markets to overturn the social and ec-
onomic order unleashed opposition to neoliberalism on both the left and the
right. In their different ways they advocate what Sheri Berman called “the
primacy of politics”2—the empowering of society to control the economy,
rather than the other way around. Whether by closing borders or regulating
Conclusions 251
capitalists, the anti-system impulse is always to “take back control” (one of
the key slogans of the Brexit campaign), while neoliberalism implies letting
the market take its course.3
The neoliberal utopia of the “self-regulating market” failed in the 1930s
and in the 2000s. In both cases, recognition of the failure preceded a correct
diagnosis and the design of solutions by some years. Karl Polanyi explained
the catastrophic descent into Nazism, world war, and genocide in the 1930s
as the result of the impasse resulting from the inability of politics to lib-
erate societies from the strictures of the Gold Standard. Politics in the 2010s
presented a similar scenario. The neoliberal regime lost all legitimacy and
the politicians representing its values and policies were unable to keep their
grip on power. Yet this time the anti-system forces struggled to do much
more than remove the neoliberal elites, lacking credible programs of reform
or strategies for fundamental institutional change.
Perhaps the most obvious example of this was Brexit. The extraor-
dinary and unexpected victory of the Leave campaign in 2016 gave way
to exactly the kind of impasse that Polanyi described for the 1930s. The
British economic model rested on a very open economy in which the
United Kingdom’s most competitive sectors—finance and business serv-
ices, pharmaceuticals, the auto industry, research and universities—had
full access to overseas markets, labor forces, and supply chains. This model
generated huge imbalances, with high levels of inequality between regions
and social classes and weak redistributive policies, with only a minority of
voters unambiguously benefiting. But the EU referendum was only won by
cobbling together a coalition of quite incompatible interests and ideolo-
gies: the Leave vote combined wealthy rural and suburban Conservative-
leaning voters together with the Labour-voting urban poor. These groups
may have agreed on the need for Britain to recover political independence
and reduce migration, but there was no Leave consensus on the economic
model that the United Kingdom should pursue outside the European
Union. Not surprisingly, attempting to actually deliver Brexit proved ex-
traordinarily complex and costly.
The Trump presidency displayed many of the same symptoms. Trump
acted in a decisive and aggressive way on some issues, exploiting the unique
global power the United States enjoys. The trade war with China and ag-
gressive harassment of migrants reflected the right-wing authoritarian and
protectionist values Trump promoted in the 2016 election campaign. Such
moves made good headlines and kept his base riled up, but the underlying
challenge to the neoliberal order in the United States Trump appeared to ar-
ticulate, thanks to his initial reliance on Steve Bannon, made far less progress.
The US trade deficit with China and Europe remained stubbornly high de-
spite tariffs levied on some politically symbolic products, and nothing was
done by the Trump administration to alleviate the adverse distributional
consequences of the “China shock” that were evoked so powerfully in the
2016 election campaign.
Instead, the signal economic policy of the Trump administration was
the 2017 Tax Cuts and Jobs Act, worth $1.5 trillion, which one ob-
server described as “largely focused on reducing taxes for rich business
owners.”4 Not only did this measure benefit Wall Street far more than the
“white working-class Americans” that Trump mobilized so successfully,
but also, by increasing the federal budget deficit, it likely increased the
trade deficit that Trump saw as America’s main economic problem. By
introducing debt-financed redistribution to the wealthy, while cutting so-
cial provision and undermining the Obamacare health reforms and other
progressive measures, Trump followed a well-trodden path of Republican
administrations since Reagan. The rhetoric and international alliances
may have changed in fundamental ways, but in terms of domestic poli-
tics and the conflict between the wealthy and the struggling middle class,
Trump failed to genuinely challenge what he consistently described as a
“rigged system.”
Similar tales can be told about Europe. The European episode of the
Global Financial Crisis, which crippled the most indebted countries in-
side the euro area, brought much political instability, but far less in the
way of substantial reform to the workings of the political and financial
system of the European Union. The first major challenge to the EU re-
sponse to the crisis was the election of the Syriza government in Greece,
a left coalition that began by sending a maverick economics professor,
Yanis Varoufakis, to Brussels to renegotiate the terms of Greece’s financial
bailout. This attempt failed spectacularly, with Greece’s creditors refusing
to relax the austerity and reform conditions for financial aid, which Syriza
correctly identified as having provoked an economic and even a humani-
tarian disaster in Greece. The Syriza government even held a referendum
in which Greek voters decisively rejected the financial bailout package it
had been offered, only for the European Union to respond by putting an
even harsher offer on the table, which Greek Prime Minister Alexis Tsipras
felt compelled to accept. The Syriza government’s diplomatic ineptitude
may have played an important role in this failure, but it also suggested
that in a collision between the democratic demands of an electorate and
the financial rules of the European Monetary Union, there could only be
one winner.
Conclusions 253
Greece was in many respects the European member state least likely to
be able to disturb the financial, economic, and political order established
after the Maastricht Treaty of 1991. Not only were Greece’s economy and its
public finances in a parlous state, which made a “Grexit” an extraordinarily
risky and painful step to take, but Greece was also diplomatically isolated
and too small to be able to threaten to unleash financial catastrophe on its
neighbors. Greece was not “too big to fail,” especially once the initial market
panic had been stemmed by the first Troika bailout, which stabilized the po-
sition of the northern European banks that were on the hook for hundreds of
billions of euros of Greek debt.
The other “sick man” of the Eurozone, Italy, was quite a different story.
With the fourth-largest national debt (by volume, after the United States,
Japan, and Germany) in the world, Italy was too big to bail, but also too big
to fail. Were Italy to exit the euro, over €2 trillion of Tier One assets held by
financial institutions over the European Union would be in default, a finan-
cial shock of a magnitude comparable to the crisis of 2008. Worse, Italy, in
decline since joining the euro, had one of the most Euroskeptic electorates
in the Eurozone.
Italy elected an anti-system coalition to government in an environment
quite different from Greece, with the Eurozone enjoying some economic
growth and international financial conditions being relatively stable.
Unlike Greece, though, the left-wing anti-system impulse was weak in
Italy, and the largest parties in the 2018 elections had little to say about
reforming capitalism. The government coalition between the Five Stars
Movement and the revamped League under Salvini brought together two
movements representing very different economic and social interests: the
Five Stars entrenched especially in the South and among younger voters,
while the League represented the wealthy North and an older and less-
educated electorate. Addressing Italy’s economic decline from such dif-
ferent standpoints, and with very underdeveloped policy proposals, was
unlikely to bring radical change, yet the “yellow-green” government did
have sufficient Euroskeptic credentials to spook financial markets and irri-
tate European policymakers.
The Italian, Greek, and British cases illustrate the difficulties of breaking
with a model of neoliberal politics that provokes demands for govern-
ment intervention while closing off many of the channels through which
such intervention has traditionally taken place. Anti-system parties can
take over the machinery of government, but during the period since the
1980s, Western democracies reformed their institutions in such a way as
to give prominence to market over nonmarket relations, and to constrain
governments from recalibrating the balance in favor of collective over indi-
vidual decision-making. The neoliberal project not only involved privatizing
government-run industries and agencies, cutting taxes and welfare spending
and removing some kinds of regulation, but also more fundamentally altered
the capacity of the government and civil society to intervene in economic life.
This placed severe obstacles in the way of anti-system forces seeking to win
power and use it to change the way the political economy works.
This is most obvious in the case of money and finance. After the
breakdown of the postwar Bretton Woods arrangements in the 1970s,
capital controls were removed by Western governments, and open cap-
ital accounts became the standard for the developed economies. The high
level of mobility of capital, with few legal and progressively fewer prac-
tical constraints, significantly diminished the room for maneuver among
democratic governments, which were exposed to volatile movements of
large amounts of money into and out of their economies. In response
to this volatility, democratic governments all converged around similar
institutions: independent central banks that could provide credibility
against the risk of inflation, fiscal rules to commit governments to limited
borrowing, and regulatory authorities to oversee markets at arm’s length
from elected politicians. In the case of the European Monetary Union, this
went much further, with national governments renouncing any control
over monetary policy whatsoever.
Some of these policies were potentially reversible, but others, especially
euro membership, were extremely costly to exit. This was by design, since
the underlying thinking behind these institutions was to “tie the hands” of
democratic authorities to prevent them from undermining market competi-
tion, threatening property rights, and exploiting the opportunity to use fiscal
or monetary policy for partisan benefit. Public choice theory, a key theoretical
inspiration for redesigning economic institutions from the 1970s on, was
quite explicit about its goal to strip elected politicians of the power to regu-
late, control, or suppress markets, often seeing government as an unfortunate
necessity that needed to be constrained at all costs. But by denying elected
politicians the tools to undermine markets through rent-seeking, fiscal prof-
ligacy, or inflation, these institutions robbed government of the ability to
intervene in the public interest when markets failed, which is precisely the
scenario that unfolded after 2007. As a result, the burden for fixing the
market meltdown fell on central bankers not directly accountable to voters,
with the consequence that policy prioritized stabilizing the banking system
rather than addressing the broader social and economic damage caused by
the crisis.5
Conclusions 255
Governments’ ability to manage the economy was also limited by an-
other, perhaps less obvious, consequence of neoliberal reforms. One of the
main sources of anxiety among free market thinkers and their allies in the
business community was organized labor, and in some countries the failure
of collective bargaining to curb inflationary pressures in the 1970s turned
neoliberal reformers against trade unions. The decline of unions was al-
most universal in the rich democracies, although they hung onto some of
their functions in continental Europe, and this decline was facilitated by the
strong pressure from the policy community and international organizations
to dismantle collective bargaining and deregulate labor markets. The loss of
political influence and organizational capacity of trade unions undermined
progressive politics by isolating workers from each other and limiting the
ability of broad social interests to mobilize and pressure business and govern-
ment. Strikes became a rarity, and governments in many countries abandoned
systematic consultation with unions over social and economic policy, while
business interests maintained a direct line to decision-makers.
As a result of these deep structural changes to the political economy, devi-
ating from the neoliberal playbook became increasingly difficult for elected
politicians, lacking as they do the political and economic clout to resist market
pressure and business lobbying. The experiences of anti-system politicians
reaching government demonstrated in a short time just how difficult it is
to implement serious change, when so many of the policy instruments that
would be needed are lacking. The situation was not helped by the inco-
herent, oversimplified, and amateurish approach of anti-system politicians to
policy development and implementation. The opportunistic nature of many
anti-system movements, their lack of experience, their limited organization
and grassroots presence, and the lack of any serious intellectual grounding
for their rhetoric made successful policymaking unlikely. But even in cases
where anti-system politicians could draw on deeper thinking and more plau-
sible policy ideas, the impediments to realizing them were severe.
The social and economic forces underpinning anti-system politics will
remain powerful as long as the rich democracies continue to be trapped in a
low growth equilibrium with unbalanced demographics, high levels of debt,
and weak government institutions. The collapse of the neoliberal economic
model and the political actors that sustained it make continued mass oppo-
sition to the status quo the most likely scenario, especially in the countries
worst hit by the financial crisis. Anti-system politics will not go away while
the “system” is perceived by a growing share of the population to have failed.
The job of politicians is to develop a diagnosis of this failure, and a set of
proposals for fundamental change, that make sense and resonate with voters.
The idea that markets can resolve most social problems, and that government
should simply provide the basic institutions to allow this to happen, has
run out of political capital. Whatever new paradigm emerges must facilitate
meaningful mass participation in political decision-making over whatever
matters society thinks are important. In other words, what most people un-
derstand by the word “democracy.”
Conclusions 257
N O TES
Introduction
1. Giovanni Sartori, Parties and Party Systems: A Framework for Analysis
(New York: Cambridge University Press, 1976), p.117.
2. Richard Katz and Peter Mair (1995), “Changing Models of Party
Organization and Party Democracy: The Emergence of the Cartel Party,”
Party Politics 1(1): 5–28.
3. Colin Leys, Market-Driven Politics: Neoliberal Democracy and the Public Interest
(London: Verso, 2003).
4. See the work of Roberto Foa and Yascha Mounk, who argue that current
trends in electoral behavior and public opinion point to a process of
“democratic deconsolidation”: Roberto Foa and Yascha Mounk (2017), “The
Signs of Deconsolidation,” Journal of Democracy 28(1): 5–15. For a critique,
see Paul Howe (2017), “Eroding Norms and Democratic Deconsolidation,”
Journal of Democracy 28(4): 15–29.
5. Amy Alexander and Christian Welzel (2017), “The Myth of
Deconsolidation: Rising Liberalism and the Populist Reaction,” ILE
Working Paper No. 10 (Hamburg: University of Hamburg, Institute of Law
and Economics [ILE]).
6. See, for example, Cas Mudde (2004), “The Populist Zeitgeist,” Government
and Opposition 39(4): 541–563, and Populist Radical Right Parties in Europe
(New York: Cambridge University Press, 2007); Cristóbal Rovira Kaltwasser,
Paul Taggart, Paulina Ochoa Espejo, and Pierre Ostiguy, “Populism: An
Overview of the Concept and the State of the Art,” in Cristóbal Rovira
Kaltwasser, Paul Taggart, Paulina Ochoa Espejo, and Pierre Ostiguy (eds.)
The Oxford Handbook of Populism (Oxford: Oxford University Press, 2017),
pp.1-24.
7. Rovira Kaltwasser et al., “Populism: An Overview of the Concept and the
State of the Art,” p.5.
8. Jan Werner Mueller, What Is Populism? (Philadelphia: University of
Pennsylvania Press, 2016).
9. Usually by economists suspicious of policies inimical to market liberal
orthodoxy: see, for example, Rudiger Dornbusch and Sebastian Edwards
(1989), “Macroeconomic Populism in Latin America,” NBER Working
Paper No. 2986; Luigi Guiso, Helios Herrera, Massimo Morelli, and
Tommaso Sonno (2017), “Populism: Demand and Supply,” Center for
Economic Policy Research Discussion Paper No. 11871.
10. For a classic statement of this distinction, see William Riker, Liberalism
against Populism: A Confrontation between the Theory of Democracy and the Theory
of Social Choice (San Francisco: W. H. Freeman, 1982). For a positive view
of populism as a progressive force, see Chantal Mouffe, For a Left Populism
(London: Verso Books, 2018).
11. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations
(Edinburgh: T. Nelson and Sons, 1887).
12. Mark Blyth and Richard Katz (2005), “From Catch-All Politics to
Cartelisation: The Political Economy of the Cartel Party,” West European
Politics 28(1): 33–60.
13. Data from World Inequality Database, https://wid.world.
14. Richard Wilkinson and Kate Pickett, The Spirit Level: Why Equality Is Better
for Everyone (London: Penguin UK, 2010).
15. For an optimistic view of the policy response to the crisis, see Daniel
Drezner, The System Worked: How the World Stopped Another Great Depression
(New York: Oxford University Press, 2014).
16. Mark Blyth, Austerity: The History of a Dangerous Idea (New York: Oxford
University Press, 2013).
17. For example, Roger Eatwell and Matthew Goodwin, National Populism: The
Revolt against Liberal Democracy (London: Penguin, 2018).
18. Pippa Norris and Ronald Inglehart, Cultural Backlash: Trump, Brexit, and
Authoritarian Populism (New York: Cambridge University Press, 2019).
19. Eatwell and Goodwin, National Populism.
20. Norris and Inglehart, Cultural Backlash, ch.4.
21. Philip Manow, Die Politische Ökonomie des Populismus (Berlin: Suhrkamp
Verlag, 2018).
22. Norris and Inglehart, Cultural Backlash, chs. 2, 4.
23. Andrés Rodríguez-Pose (2018), “The Revenge of the Places That Don’t
Matter (and What to Do about It),” Cambridge Journal of Regions, Economy and
Society 11(1): 189–209.
260 N o t e s
24. Mark Blyth (2003), “Structures Do Not Come with an Instruction
Sheet: Interests, Ideas, and Progress in Political Science,” Perspectives on
Politics 1(4): 695–706.
25. Perhaps the most important contributions to this debate come from
Harvard’s Dani Rodrik; see his paper “Populism and the Economics of
Globalization,” Harvard University, 2018 (copy at http://tinyurl.com/
y5djhn5f); and previous books such as The Globalization Paradox: Democracy
and the Future of the World Economy (New York: W. W. Norton 2011).
26. Christoph Lakner and Branko Milanovic (2016), “Global Income
Distribution: From the Fall of the Berlin Wall to the Great Recession,” World
Bank Economic Review 30(2): 203–232.
27. Karl Polanyi, The Great Transformation (Boston: Beacon Press, 1944).
28. See, for example, Barry Eichengreen, Hall of Mirrors: The Great Depression,
the Great Recession, and the Uses—and Misuses—of History (New York: Oxford
29. Joseph Stiglitz, The Roaring Nineties: Paying the Price for the Greediest Decade in
History (New York: Penguin, 2003).
30. Paul Krugman, The Return of Depression Economics and the Crisis of 2008
(New York: Penguin, 2009); Blyth, Austerity.
31. Sheri Berman, The Primacy of Politics: Social Democracy and the Making of
Europe’s Twentieth Century (New York: Cambridge University Press, 2006).
32. To paraphrase political economist Paul Pierson (1998), “Irresistible Forces,
Immovable Objects: Post-Industrial Welfare States Confront Permanent
Austerity,” Journal of European Public Policy 5(4): 539–560.
Chapter 1
1. Most notoriously by Francis Fukuyama, The End of History and the Last Man
(New York: The Free Press, 1992).
2. Karl Polanyi, The Great Transformation (Boston: Beacon Press, 1944).
3. Elmer E. Schattschneider, Party Government (Westport, CT: Greenwood,
1942), p.1.
4. Maurice Duverger, Political Parties: Their Organization and Activity in the
Modern State (London: Methuen, 1954).
5. Richard Katz and Peter Mair (1995), “Changing Models of Party
Organization and Party Democracy: The Emergence of the Cartel Party,”
Party Politics 1(1): 5–28.
6. Thomas Piketty, Capital in the Twenty-First Century (Cambridge,
MA: Harvard University Press, 2014).
7. See Charles Beard, An Economic Interpretation of the Constitution of the United
States (New York: Macmillan, 1913).
8. John Stuart Mill, Considerations on Representative Government (London: Parker,
Son, and Bourn, 1861), ch.8.
Notes 261
9. Giovanni Sartori, Parties and Party Systems: A Framework for Analysis
(New York: Cambridge University Press, 1976).
10. Barry Eichengreen, Golden Fetters: The Gold Standard and the Great Depression
1919–39 (New York: Oxford University Press, 1992).
11. Ruth Berins Collier, Paths towards Democracy (New York: Cambridge
12. Barry Eichengreen, Hall of Mirrors: The Great Depression, the Great Recession
and the Uses—and Misuses—of History (New York: Oxford University Press,
2014), ch.1.
13. For compelling accounts of the period, see Gregory Luebbert, Liberalism,
Fascism or Social Democracy: Social Classes and the Political Origins of Regimes in
Interwar Europe (New York: Oxford University Press, 1991); Sheri Berman,
The Primacy of Politics: Social Democracy and the Making of Europe’s Twentieth
Century (New York: Cambridge University Press, 2006).
14. Piketty, Capital, p.147.
15. On the shifts in the international financial system after Bretton Woods, see
Eric Helleiner, States and the Reemergence of Global Finance: From Bretton Woods
to the 1990s (Ithaca: Cornell University Press, 1996). For an analysis of the
challenges for postwar managed capitalism and the labor movement, see
Fritz Scharpf, Crisis and Choice in European Social Democracy (Ithaca: Cornell
16. John Gerard Ruggie (1982), “International Regimes, Transactions, and
Change: Embedded Liberalism in the Postwar Economic Order,” International
Organization 36(2): 379–415.
17. Tony Judt, Postwar: A History of Europe since 1945 (London: Pimlico, 2005);
Peter Hall, “The Political Origins of Our Economic Discontents,” in Miles
Kahler and David Lake (eds.), Politics in the New Hard Times: The Great
Recession in Comparative Perspective (Ithaca: Cornell University Press, 2013),
pp.129–149.
18. This concept, used by Wolfgang Streeck, among others, captures the
very general sense in which the postwar order sought to reconcile the
market economy with popular demands for social protection and stability.
Other terms from the literature (“managed capitalism” or “embedded
liberalism,” for example) could be used, but have more specific meanings. See
Wolfgang Streeck, Buying Time: The Delayed Crisis of Democratic Capitalism
19. For a classic overview of this postwar system, see Andrew Shonfeld, Modern
Capitalism (Oxford: Oxford University Press, 1965).
20. Stefano Bartolini, The Political Mobilization of the European Left, 1860–1980
(Cambridge: Cambridge University Press, 2000).
21. Douglas Hibbs (1977), “Political Parties and Macroeconomic Policy,”
American Political Science Review 71(4): 1467–1487; later research posited
that parties on the left achieved systematically better outcomes on both
262 N o t e s
variables: David Cameron, “Social Democracy, Corporatism, Labour
Quiescence, and the Representation of Economic Interest in Advanced
Capitalist Society,” in John H. Goldthorpe (ed.), Order and Conflict
in Contemporary Capitalism (Oxford: Oxford University Press, 1984),
pp.143–178.
22. Goesta Esping-Andersen, Politics against Markets: The Social Democratic Road to
Power (Princeton: Princeton University Press, 1985).
23. Vito Tanzi and Ludger Schuknecht, Public Spending in the Twentieth Century
(Cambridge: Cambridge University Press, 2000).
24. See Peter Mair, “Party Organizations: From Civil Society to the State,”
in Richard Katz and Peter Mair (eds.), How Parties Organize: Change and
Adaptation in Party Organizations in Western Democracies (London: Sage, 1994),
pp.1–22.
25. Angus Campbell, Philip Converse, Warren Miller, and Donald Stokes, The
American Voter (Chicago: University of Chicago Press, 1960); Sartori, Parties
and Party Systems, pp.293–297.
26. Stein Rokkan, Citizens, Elections, Parties: Approaches to the Comparative Study of
the Processes of Development (Oslo: Universitetsforlaget, 1970).
27. Bartolini, The Political Mobilization of the European Left, fig.6.3, p.279.
28. Goesta Esping-Andersen, The Three Worlds of Welfare Capitalism
(Cambridge: Polity Press, 1990).
29. Julia Lynch, Age in the Welfare State (New York: Cambridge University
Press, 2006).
30. The model originated in Bismarck’s reforms in late nineteenth-century
Germany. The term “Bismarckian” refers to welfare arrangements that
are tied to employment status and funded by worker and employer
contributions; for more, see Giuliano Bonoli (1997), “Classifying Welfare
States: A Two-Dimension Approach,” Journal of Social Policy 26(3): 351–372.
31. Torben Iversen and David Soskice (2006), “Electoral Institutions and the
Politics of Coalitions: Why Some Democracies Redistribute More Than
Others,” American Political Science Review 100(2): 165–181.
32. Sven Steinmo, Taxation and Democracy: Swedish, British and American
Approaches to Financing the Modern State (New Haven: Yale University Press,
1996); Alberto Alesina, Edward Glaeser, and Bruce Sacerdote (2001), “Why
Doesn’t the United States Have a European-Style Welfare State?,” Brookings
Papers on Economic Activity 2: 187–278.
33. See Peter Lindert, Growing Public, vol. 1, The Story: Social Spending and
Economic Growth since the Eighteenth Century (New York: Cambridge University
Press, 2004).
34. Mark Blyth, Great Transformations: Economic Ideas and Institutional Change in
the Twentieth Century (New York: Cambridge University Press, 2002).
35. Andrew Glyn, Capitalism Unleashed: Finance, Globalization, and Welfare
(Oxford: Oxford University Press, 2007).
Notes 263
36. Milton Friedman, Capitalism and Freedom (Chicago: University of Chicago
Press, 1962).
37. Friedman himself went as far as to state: “I don’t believe in democracy.”
See Edward Nik-Khah and Robert Van Horn, “The Ascendancy of Chicago
Neoliberalism,” in Damien Cahill, Melinda Cooper, Martijn Konings, David
Primrose (eds.), The Handbook of Neoliberalism (London: Sage, 2016), pp.100–
112 (p.105).
38. See, for example, Russell Hardin, Liberalism, Constitutionalism and Democracy
39. See Nancy McLean, Democracy in Chains: The Deep History of the Radical
Right’s Stealth Plan for America (New York: Penguin/Random House, 2017).
McLean writes an intellectual history of neoliberalism in the United States,
detailing the connection between conservative business leaders and public
choice theorists in academia, and their shared hostility to organized labor and
collective action more generally.
40. For an academic discussion of this argument, see Richard Rose, Challenge to
Governance: Studies in Overloaded Polities, vol. 1 (Beverly Hills: Sage, 1980).
41. Michel Crozier, Samuel P. Huntington, and Joji Watanuki, The Crisis of
Democracy (New York: New York University Press, 1975), p.8.
42. Kathleen McNamara (2002), “Rational Fictions: Central Bank Independence
and the Social Logic of Delegation,” West European Politics 25(1): 47–76.
43. Mark Thatcher and Alec Stone Sweet (2002), “Theory and Practice of
Delegation to Non-Majoritarian Institutions,” West European Politics
25(1): 1–22.
44. Peter Mair, Ruling the Void: The Hollowing Out of Western Democracies
45. Carles Boix, Political Parties, Growth and Equality: Conservative and Social
Democratic Economic Strategies in the World Economy (New York: Cambridge
University Press, 1998); Geoffrey Garrett, Partisan Politics in the Global
Economy (New York: Cambridge University Press, 1998).
46. See Goesta Esping Andersen (ed.), Why Deregulate Labour Markets?
(Oxford: Oxford University Press, 2000); Lucio Baccaro and Chris Howell,
Trajectories of Neoliberal Transformation: European Industrial Relations since the
1970s (New York: Cambridge University Press, 2017).
47. Recently released documents show that Thatcher and her advisors were quite
explicit about this aim: Alan Travis, “National Archives: Margaret Thatcher
Wanted to Crush Power of Trade Unions,” Guardian, August 1, 2013,
https://www.theguardian.com/uk-news/2013/aug/01/margaret-thatcher-
trade-union-reform-national-archives (retrieved May 18, 2019).
48. Russell Dalton and Martin Wattenberg (eds.), Parties without
Partisans: Political Change in Advanced Industrial Democracies
(New York: Oxford University Press, 2002), fig.2.1, p.27.
264 N o t e s
49. Otto Kirchheimer, “The Transformation of the Western European Party
Systems,” in Joseph La Palombara and Myron Weiner (eds.), Political Parties
and Political Development (Princeton: Princeton University Press, 1966),
pp.177–200.
50. This combination of a “catch-all” approach to electoral mobilization and
an increasing focus on modern technology and marketing was described by
Angelo Panebianco as the “electoral-professional party”: Angelo Panebianco,
Political Parties: Organization and Power (New York: Cambridge University
Press, 1988).
51. Katz and Mair, “Changing Models of Party Organization and Party
Democracy.”
52. Jonathan Hopkin (2004), “The Problem with Party Finance: Theoretical
Perspectives on the Funding of Party Politics,” Party Politics 10(6): 627–651.
53. Donatella della Porta, Corrupt Exchanges: Actors, Resources, and Mechanisms of
Political Corruption (London: Routledge, 2017).
54. Seymour Martin Lipset and Stein Rokkan, “Cleavage Structures, Party
Systems, and Voter Alignments: An Introduction,” in Seymour Martin Lipset
and Stein Rokkan (eds.), Party Systems and Voter Alignments: Cross National
Perspectives (New York: Free Press, 1967), pp.1–64 (p.50).
55. Labour in the United Kingdom, the Parti Socialiste in France, the SPD in
Germany, and the SAP in Sweden.
56. This measure of volatility is known as the Pedersen index: Mogens Pedersen
(1979), “The Dynamics of European Party Systems: Changing Patterns of
Electoral Volatility,” European Journal of Political Research 7(1): 1–26.
57. Mair, Ruling the Void.
58. Susan Pharr and Robert Putnam (eds.), Disaffected Democracies: What's
Troubling the Trilateral Countries? (Princeton: Princeton University
Press, 2000); Mariano Torcal and José Ramón Montero (eds.), Political
Disaffection in Contemporary Democracies: Social Capital, Institutions and
Politics (London: Routledge, 2006); Colin Hay, Why We Hate Politics
(Cambridge: Polity, 2007).
59. Katz and Mair, “Changing Models of Party Organization and Party
Democracy.”
60. Mark Blyth and Richard Katz (2005), “From Catch-All Politics to
Cartelisation: The Political Economy of the Cartel Party,” West European
Politics 28(1): 33–60.
61. See, for example, the British Election Studies of the early twenty-first
century, which adopted the “valence” model of electoral competition, arguing
that there was fundamental consensus about the values and goals of politics,
and that parties simply competed over the best way of fulfilling them: Paul
Whiteley, Harold Clarke, David Sanders, and Marianne Stewart, Affluence,
Austerity and Electoral Change in Britain (Cambridge: Cambridge University
Notes 265
Press, 2013); Jane Green and Will Jennings, The Politics of Competence: Parties,
Public Opinion and Voters (Cambridge: Cambridge University Press, 2017).
62. For a discussion of the methodology, see Ian Budge and Hans-Dieter
Klingemann, Mapping Policy Preferences: Estimates for Parties, Electors and
Governments, 1945–1998, vol. 1 (New York: Oxford University Press, 2001).
63. Geoffrey Evans and James Tilley, The New Politics of Class: The Political
Exclusion of the British Working Class (Oxford: Oxford University Press, 2017).
64. Richard Rose and Ian McAllister, Voters Begin to Choose: From Closed Class to
Open Elections in Britain (London: Sage, 1986).
65. Ibid.
66. Leys, Market-Driven Politics. See also Fred Block and Margaret Somers,
The Power of Market Fundamentalism (Cambridge, MA: Harvard University
Press, 2014).
67. Piketty, Capital.
68. Piketty, Capital, fig.6.5, p.222.
69. Citigroup, “Plutonomy: Buying Luxury, Explaining Global Imbalances,”
Industry Note, October 16, 2005, https://delong.typepad.com/plutonomy-
1.pdf (retrieved February 15, 2019).
70. Quoted in Ben Stein, “In Class Warfare, Guess Which Class Is Winning,”
New York Times, November 26, 2006, https://www.nytimes.com/2006/11/26/
business/yourmoney/26every.html (retrieved February 14, 2019).
71. On war and taxation, see Kenneth Scheve and David Stasavage, Taxing the
Rich: A History of Fiscal Fairness in the United States and Europe (Princeton;
Princeton University Press, 2016).
72. For a classic statement of the labor market rigidities thesis, see Horst
Siebert (1997), “Labor Market Rigidities: At the Root of Unemployment in
Europe,” Journal of Economic Perspectives 11(3): 37–54.
73. See Ernesto Dal Bó (2006), “Regulatory Capture: A Review,” Oxford Review of
Economic Policy 22(2): 203–225.
74. Even critics of the neoliberal project embraced trade liberalization; see,
for example, Paul Krugman, Pop Internationalism (Cambridge, MA: MIT
Press, 1996).
75. See, among many others, Susan Strange, Casino Capitalism
(Manchester: Manchester University Press, 1998); Greta Krippner,
Capitalizing on Crisis (Cambridge, MA: Harvard University Press, 2011).
76. “Profile: EU’s Jean-Claude Juncker,” BBC News, July 15, 2014, https://www.
bbc.co.uk/news/world-europe-27679170 (retrieved February 14, 2019).
77. John Quiggin, Zombie Economics: How Dead Ideas Still Walk among Us
(Princeton: Princeton University Press, 2012).
78. See David Howell, Dean Baker, Andrew Glyn, and John Schmitt (2007),
“Are Protective Labor Market Institutions at the Root of Unemployment?
A Critical Review of the Evidence,” Capitalism and Society 2(1): 1–71.
79. Ibid.
266 N o t e s
80. Paolo Barbieri and Giorgio Cutuli (2015), “Employment Protection
Legislation, Labour Market Dualism, and Inequality in Europe,” European
Sociological Review 32(4): 501–516.
81. Baccaro and Howell, Trajectories of Neoliberal Transformation.
82. See, for example, Paul Pierson, Dismantling the Welfare State? Reagan,
Thatcher, and the Politics of Retrenchment (New York: Cambridge University
Press, 1994); Monica Prasad, The Politics of Free Markets: The Rise of
Neoliberal Economic Policies in Britain, France, Germany and the United States
(Chicago: University of Chicago Press 2006).
83. This was especially the case in the English-speaking countries, but moves in
this direction could also be observed in some of the northern European social
democracies. See Klaus Armingeon and Giuliano Bonoli (eds.), The Politics
of Post-Industrial Welfare States: Adapting Post-War Social Policies to New Social
Risks (London: Routledge, 2007).
84. Herman Mark Schwartz and Leonard Seabrooke, “Varieties of Residential
Capitalism in the International Political Economy: Old Welfare
States and the New Politics of Housing,” in Herman Mark Schwartz
and Leonard Seabrooke (eds.), The Politics of Housing Booms and Busts
(Basingstoke: Palgrave Macmillan, 2009), pp.1–27.
85. Paul Pierson (1998), “Irresistible Forces, Immovable Objects: Post-Industrial
Welfare States Confront Permanent Austerity,” Journal of European Public
Policy 5(4): 539–560.
86. Perhaps the best account of the crisis and its global ramifications is by
Adam Tooze, Crashed: How a Decade of Financial Crises Changed the World
(London: Allen Lane, 2018).
87. See Naseem Nicholas Taleb, The Black Swan: The Impact of the Highly
Improbable (New York: Random House, 2001).
88. For a Keynesian interpretation of the crisis, see Robert Skidelsky, Keynes: The
Return of the Master (London: Penguin, 2010); see also Hyman Minsky,
Stabilizing an Unstable Economy (New Haven: Yale University Press, 1986);
Charles Kindleberger and Robert Aliber, Manias, Panics and Crashes.
A History of Financial Crises (Basingstoke: Palgrave, 2005, 5th edition).
89. For example, Robert Shiller’s work on bubbles in the stock and housing
markets (Robert Shiller, Irrational Exuberance [Princeton: Princeton
University, 2000]), or Susan Strange’s analysis of financial deregulation,
including a prescient outline of a future crisis of the euro (Susan Strange,
Mad Money: When Markets Outgrew Governments [Ann Arbor: University of
Michigan Press, 1998]).
90. For a critical discussion of theories of financial market efficiency, see Quiggin,
Zombie Economics, ch.2.
91. “Greenspan ‘Shocked’ That Free Markets Are Flawed,” New York Times,
October 23, 2008, https://www.nytimes.com/2008/10/23/business/
worldbusiness/23iht-gspan.4.17206624.html (retrieved February 15, 2019).
Notes 267
92. Jacob Hacker and Paul Pierson, Winner-Take-All Politics: How
Washington Made the Rich Richer—And Turned Its Back on the Middle Class
(New York: Simon & Schuster, 2010).
93. OECD, “Income Inequality Remains High in the Face of Weak Recovery,”
OECD Income Inequality Update, November 2016, http://www.oecd.org/
social/OECD2016-Income-Inequality-Update.pdf(retrieved October
4, 2019.
94. Mark Blyth, Austerity: A History of a Dangerous Idea (New York: Oxford
95. The chart presents Gini coefficients of disposable household income
inequality for selected OECD countries. Unlike the World Inequality
Database data for pre-tax incomes shares cited earlier, these data present
inequality between households rather than individuals, and of income after
taxes have been paid and government transfers have been received. See OECD
Income Distribution Database (IDD), http://www.oecd.org/social/income-
distribution-database.htm.
96. See, for example, Michael Kumhof, Romain Rancière, and Pablo Winant
(2015), “Inequality, Leverage, and Crises,” American Economic Review
105(3): 1217–1245.
97. Torben Iversen and David Soskice, “Modern Capitalism and the
Advanced Nation State: Understanding the Causes of the Crisis,” in
Nancy Bermeo and Jonas Pontusson (eds.), Coping with Crisis: Government
Reactions to the Great Recession (New York: Russell Sage Foundation,
2012), pp.35–64.
98. See, for example, Raghuram Rajan, Fault Lines: How Hidden Fractures
Still Threaten the World Economy (Princeton: Princeton University
Press, 2011).
99. See Anat Admati and Martin Hellwig, The Bankers’ New Clothes: What’s
Wrong with Banking and What to Do about It (Princeton: Princeton University
Press, 2014).
100. Alberto Alesina, “Fiscal Adjustments: Lessons from Recent History,”
presentation to ECOFIN meeting, Madrid, April 2010. For a recent defense
of the austerity doctrine, see Alberto Alesina, Carlo Favero, and Francesco
Giavazzi, Austerity: When It Works and When It Doesn’t (Princeton: Princeton
101. Carmen Reinhart and Kenneth Rogoff (2010), “Growth in a Time of Debt,”
American Economic Review 100(2): 573–578.
102. This was particularly the case in the southern Eurozone. See Sotiria
Theodoropoulou (ed.), Labour Market Policies in the Era of Pervasive Austerity: A
European Perspective (Bristol: Policy Press, 2018).
103. Vivien Schmidt and Mark Thatcher (eds.), Resilient Liberalism in Europe’s
Political Economy (New York: Cambridge University Press, 2013).
268 N o t e s
Chapter 2
1. For a typical example of the genre, see Eric Kaufmann, “Trump and
Brexit: Why It’s Again NOT the Economy, Stupid,” British Politics and Policy
at LSE Blog, November 9, 2016. Also Larry Bartels (2017), “The ‘Wave’ of
Right-Wing Populist Sentiment Is a Myth,” Monkey Cage, June 21, https://
www.washingtonpost.com/news/monkey-cage/wp/2017/06/21/the-wave-of-
right-wing-populist-sentiment-is-a-myth/?utm_term=.03cdb7ee201d.
2. Mattia Zulianello (2017), “Anti-System Parties Revisited: Concept
Formation and Guidelines for Empirical Research,” Government and Opposition
53(4): 653–681.
3. Hanspeter Kriesi (2014), “The Populist Challenge,” West European Politics
37(2): 361–378.
4. See the discussion of Riker, Liberalism against Populism, in the Introduction to
this book.
5. See Catherine de Vries and Sara Hobolt, The Rise of Challenger Parties
6. This two-dimensional approach was popularized by Ronald Inglehart, The
Silent Revolution: Changing Values and Political Styles among Western Publics
7. See Pippa Norris and Ronald Inglehart, Cultural Backlash: Trump, Brexit, and
Authoritarian Populism (New York: Cambridge University Press, 2019), ch.2.
8. Klaus von Beyme, Political Parties in Western Democracies
(Aldershot: Gower, 1985).
9. The Chapel Hill Expert Survey, https://www.chesdata.eu/our-surveys. See
Jonathan Polk, Jan Rovny, Ryan Bakker, Erica Edwards, Liesbet Hooghe,
Seth Jolly, Jelle Koedam, Filip Kostelka, Gary Marks, Gijs Schumacher,
Marco Steenbergen, Milada Vachudova, and Marko Zilovic (2017),
“Explaining the Salience of Anti-Elitism and Reducing Political Corruption
for Political Parties in Europe with the 2014 Chapel Hill Expert Survey
Data,” Research and Politics (January–March): 1–9.
10. Andrea Volkens, Werner Krause, Pola Lehmann, Theres Matthieß,
Nicolas Merz, Sven Regel, and Bernhard Weßels, The Manifesto Data
Collection: Manifesto Project (MRG /CMP /MARPOR), version 2018b
(Berlin: Wissenschaftszentrum Berlin für Sozialforschung, 2018), https://doi.
org/10.25522/manifesto.mpds.2018b.
11. The Socialist International, the International Democrat Union (for
conservative and center-right parties), the Liberal International, and the
Christian Democrat International.
12. The European People’s Party, the Alliance of Liberals and Democrats for
Europe, Progressive Alliance of European Socialists and Democrats, and the
European Green Party. Green parties in the European United Left–Nordic
Green Left are coded as anti-system.
Notes 269
13. The dataset with parties coded as established or anti-system is available at
https://www.jonathanhopkin.com.
14. In Europe these parties are mostly affiliated with the Movement for a Europe
of Nations and Freedom party group.
15. The main European party group for the radical Left is the Party of the
European Left and the Nordic Green Left.
16. Ronald Inglehart, Cultural Evolution: People’s Motivations Are Changing and
Reshaping the World (New York: Cambridge University Press, 2018).
17. Devin Caughey, Tom O’Grady, and Christopher Warshaw (2019), “Policy
Ideology in European Mass Publics, 1981–2016,” American Political Science
Review 113(3): 674–693
19. Morris Fiorina, Culture War? The Myth of a Polarized America
(New York: Pearson/Longman, 2005).
20. Jane Gingrich and Silja Häusermann (2015), “The Decline of the Working-
Class Vote, the Reconfiguration of the Welfare Support Coalition and
Consequences for the Welfare State,” Journal of European Social Policy
25(1): 50–75.
21. Mark Blyth, Jonathan Hopkin, and Riccardo Pelizzo, “Liberalization and
Cartel Politics in Europe: Why Do Centre-Left Parties Adopt Market
Liberal Reforms?,” paper presented to 16th Conference of Europeanists,
Montreal, 2010.
22. Caughey et al., “Policy Ideology in European Mass Publics.” Compare
with Hee Min Kim and Richard Fording (1998), “Voter Ideology in
Western Democracies, 1946–1989,” European Journal of Political Research 33
(1): 73–97.
23. Silja Hausermann and Hanspeter Kriesi, “What Do Voters Want?
Dimensions and Configurations in Individual-Level Preferences and
Party Choice,” in Pablo Beramendi, Silja Hausermann, Herbert
Kitschelt, and Hanspieter Kriesi (eds.), The Politics of Advanced Capitalism
(New York: Cambridge University Press, 2015), pp.202–230.
24. Nick Pierce and Eleonor Taylor, “Government Spending and
Welfare: Changing Attitudes towards the Role of the State,” in Alison Park,
Caroline Bryson, Elizabeth Clery, John Curtice, and Miranda Phillips (eds.),
British Social Attitudes: The 30th Report (London: NatCen Social Research,
2013), pp.33–59.
25. See Larry Bartels (2005), “Homer Gets a Tax Cut: Inequality and Public
Policy in the American Mind,” Perspectives on Politics 3(1): 15–31.
26. Thomas Piketty, “Brahmin Left vs Merchant Right: Rising Inequality and
the Changing Structure of Political Conflict (Evidence from France, Britain
and the US, 1948–2017),” WID World Working Paper No. 2018/7, March
2018, http://piketty.pse.ens.fr/files/Piketty2018.pdf.
270 N o t e s
Exclusion of the British Working Class (Oxford: Oxford University Press, 2017).
28. Jacob Hacker and Paul Pierson, Winner-Take-All Politics: How
Washington Made the Rich Richer—and Turned Its Back on the Middle
Class (New York: Simon & Schuster, 2010); Martin Gilens, Affluence
and Influence: Economic Inequality and Political Power in America
29. Riccardo Pelizzo, Cartel Parties and Cartel Party Systems, PhD dissertation,
Johns Hopkins University, Baltimore, Maryland, November 2003.
30. See Gregory Luebbert, Liberalism, Fascism, or Social Democracy: Social Classes
and the Political Origins of Regimes in Interwar Europe (New York: Oxford
University Press, 1991); Sheri Berman, The Primacy of Politics: Social
Democracy and the Making of Europe’s Twentieth Century (New York: Cambridge
31. Adam Smith was well aware of this revolutionary power of liberal markets
and their ability to undermine the traditional hierarchies and privileges of
the preindustrial social order: see Goesta Esping-Andersen, Three Worlds of
Welfare Capitalism (Cambridge: Polity, 1990), p.9.
32. See, for example, Herbert Kitschelt and Anthony McGann, The Radical Right
in Western Europe: A Comparative Analysis (Ann Arbor: University of Michigan
Press, 1995).
33. Hans-Georg Betz, Radical Right-Wing Populism in Western Europe
(Basingstoke: Macmillan, 1994); Piero Ignazi, Extreme Right Parties in Western
Europe (Oxford: Oxford University Press, 2003).
34. David Autor, David Dorn, and Gordon Hanson (2016), “Importing Political
Polarization? The Electoral Consequences of Rising Trade Exposure,”
NBER Working Paper No. w22637 (Washington, DC: National Bureau of
Economic Research); Italo Colantone, and Piero Stanig (2018), “The Trade
Origins of Economic Nationalism: Import Competition and Voting Behavior
in Western Europe,” American Journal of Political Science 62(4): 936–953.
35. Alexandre Afonso, “Social Class and the Changing Welfare State Agenda of
Radical Right Parties in Europe,” in Philip Manow, Bruno Palier, and Hanna
Schwander (eds.), Welfare Democracies and Party Politics: Explaining Electoral
Dynamics in Times of Changing Welfare Capitalism (Oxford: Oxford University
Press, 2018), pp.171–194.
36. Hanspeter Kriesi, Edgar Grande, Romain Lachat, Martin Dolezal,
Simon Bornschier, and Timotheos Frey (2006), “Globalization and the
Transformation of the National Political Space: Six European Countries
Compared,” European Journal of Political Research 45(6): 921–956. On the
blurring of party positions, see Jan Rovny (2013), “Where Do Radical
Right Parties Stand? Position Blurring in Multidimensional Competition,”
European Political Science Review 5(1): 1–26.
Notes 271
37. Menno Fenger (2018), “The Social Policy Agendas of Populist Radical Right
Parties in Comparative Perspective,” Journal of International and Comparative
Social Policy 34(3): 188–209; Laurenz Ennser‐Jedenastik (2018), “Welfare
Chauvinism in Populist Radical Right Platforms: The Role of Redistributive
Justice Principles,” Social Policy and Administration 52(1): 293–314.
38. Ernesto Dal Bó, Frederico Finan, Olle Folke, Torsten Persson, and Johanna
Rickne (2018), “Economic Losers and Political Winners: Sweden’s Radical
Right,” unpublished paper, University of Stockholm, http://perseus.iies.
su.se/~tpers/papers/CompleteDraft190301.pdf.
39. Which in practice is the actually existing state of affairs, but Salvini appeals
to an underlying resentment that migrants should access any forms of
welfare. Marco Valbruzzi (2018), “L’immigrazione in Italia tra realtà, retorica
e percezione,” Il Mulino 5 (September–October): 789–795.
40. See Vanessa Williamson, Theda Skocpol, and John Coggin (2011), “The Tea
Party and the Remaking of Republican Conservatism,” Perspectives on Politics
9(1): 25–43.
41. “Trump Railed against Wall Street. His Victory Is Going to Be Great for Big
Banks,” Washington Post, November 9, 2016, https://www.washingtonpost.
com/news/wonk/wp/2016/11/09/trump-railed-against-wall-street-his-
victory-is-going-to-be-great-for-big-banks/?utm_term=.a6ab6a14181f
(retrieved April 25, 2019).
42. “Pledges Made by Italy’s Populist Government Come Up against Economic
Reality,” Wall Street Journal, January 8, 2019, https://www.wsj.com/articles/
italy-offers-bank-bailout-despite-past-pledges-11546954204 (retrieved April
25, 2019).
43. Zsolt Enyedi (2016), “Paternalist Populism and Illiberal Elitism in Central
Europe,” Journal of Political Ideologies 21(1): 9–25 (p.11).
44. Akos Valentinyi, “The Hungarian Crisis,” VOX: CEPR Policy Portal, March
19, 2012, https://voxeu.org/article/hungarian-crisis.
45. Alen Toplišek (2019), “The Political Economy of Populist Rule in Post-Crisis
Europe: Hungary and Poland,” New Political Economy, online first, March 29.
46. Cas Mudde, Populist Radical Right Parties in Europe (Cambridge: Cambridge
47. Matthijs Rooduijn, Brian Burgoon, Erika Van Elsas, and Herman Van de
Werfhorst (2017), “Radical Distinction: Support for Radical Left and Radical
Right Parties in Europe,” European Union Politics 18(4): 536–559.
48. Takis Pappas and Paris Aslanidis, “Greek Populism: A Political Drama in
Five Acts,” in Hanspeter Kriesi and Takis Pappas (eds.), European Populism in
the Shadow of the Great Recession (Colchester: ECPR Press, 2015), pp.181–196
(p.193).
49. Hilde Coffé and Rebecca Plassa (2010), “Party Policy Position of Die
Linke: A Continuation of the PDS?” Party Politics 16(6): 721–735.
272 N o t e s
50. See David Hanley (2017), “Left and Centre-Left in France—Endgame or
Renewal?” Parliamentary Affairs 71(3): 521–537.
51. Herbert Kitschelt (1988), “Left-Libertarian Parties: Explaining Innovation in
Competitive Party Systems,” World Politics 40(2): 194–234 (p.197).
52. Pablo Iglesias (2015), “Understanding Podemos,” New Left Review
93: 7–22.
53. Christopher Bickerton and Carlo Invernizzi Accetti (2018), “ ‘Techno-
Populism’ as a New Party Family: The Case of the Five Star Movement and
Podemos,” Contemporary Italian Politics 10(2): 132–150.
54. Kate Hudson, The New European Left: A Socialism for the Twenty-First Century?
(Basingstoke: Palgrave Macmillan, 2012).
55. On economic voting, see Michael Lewis-Beck and Martin Paldam (2000),
“Economic Voting: An Introduction,” Electoral Studies 19(2–3): 113–121.
56. Benjamin Friedman (2006), “The Moral Consequences of Economic
Growth,” Society 43(2): 15–22.
57. Jeffrey Chwieroth and Andrew Walter, The Wealth Effect: How the Great
Expectations of the Middle Class Have Changed the Politics of Banking Crises
(New York: Cambridge University Press, 2019).
59. This measure of volatility—which simply sums the gains and losses of all
the parties in the system and halves the number to get the total net vote
change—is also called the Pedersen index: see Mogens Pedersen (1979),
“The Dynamics of European Party Systems: Changing Patterns of Electoral
Volatility,” European Journal of Political Research 7(1): 1–26.
60. Arend Lijphart, Patterns of Democracy: Government Forms and Performance in
Thirty-Six Countries (New Haven: Yale University Press, 2012); Torben
Iversen and David Soskice (2006), “Electoral Institutions and the Politics
of Coalitions: Why Some Democracies Redistribute More Than Others,”
American Political Science Review 100(2): 165–181.
61. See, for example, the account of the Greek crisis in Yanis Varoufakis, Adults
in the Room: My Battle with Europe’s Deep Establishment (London: Random
House, 2017).
62. See Dani Rodrik, “Populism and the Economics of Globalization,” NBER
Working Paper No. 23559 (Washington, DC: National Bureau of Economic
Research), http://www.nber.org/papers/w23559.
63. Philip Manow, Die Politische Ökonomie des Populismus (Berlin: Suhrkamp
Verlag, 2018).
64. Hans-Georg Betz and Susi Meret, “Right-Wing Populist Parties and
the Working Class Vote: What Have You Done for Us Lately?,” in Jens
Rydgren (ed.), Class Politics and the Radical Right (London: Routledge, 2012),
pp.107–121.
Notes 273
65. Noam Gidron and Peter Hall (2017), “The Politics of Social
Status: Economic and Cultural Roots of the Populist Right,” British Journal
of Sociology 68: S57–S84.
66. Dominik Hangartner, Elias Dinas, Moritz Marbach, Konstantinos Matakos,
and Dimitrios Xefteris (2019), “Does Exposure to the Refugee Crisis Make
Natives More Hostile?” American Political Science Review 113(2): 442–455.
Matter (And What to Do about It),” Cambridge Journal of Regions, Economy and
Society 11(1): 189–209.
68. For evidence on the US case, see Judith Goldstein and Margaret Peters
(2014), “Nativism or Economic Threat: Attitudes toward Immigrants during
the Great Recession,” International Interactions 40(3): 376–401.
70. Christian Dustmann, Bernd Fitzenberger, Uta Schönberg, and
Alexandra Spitz-Oener (2014), “From Sick Man of Europe to Economic
Superstar: Germany’s Resurgent Economy,” Journal of Economic Perspectives
28(1): 167–188.
71. Michael Burda (2016), “The German Labor Market Miracle, 2003–
2015: An Assessment,” SFB 649 Discussion Paper No. 2016-005
(Berlin: Sonderforschungsbereich 649, Humboldt University); Philip Manow
and Hanna Schwander link this deterioration directly to the rise of the
AfD: “A Labor Market Explanation for Right‐Wing Populism—Explaining
the Electoral Success of the AfD In Germany,” paper presented at the London
School of Economics, March 2019.
72. Christian Franz, Marcel Fratzscher, and Alexander Kritikos (2018), “German
Right-Wing Party AfD Finds More Support in Rural Areas with Aging
Populations,” DIW Weekly Report 8(7/8): 69–79.
73. Markus Gehrsitz and Martin Ungerer (2017), “Jobs, Crime, and
Votes: A Short-Run Evaluation of the Refugee Crisis in Germany,” ZEW
Discussion Paper No. 16-086 (Mannheim: Zentrum für Europäische
Wirtschaftsforschung [ZEW]).
74. Dal Bó et al, “Economic Losers and Political Winners: Sweden’s Radical
Right,”.
75. See David Rueda, Social Democracy Inside Out: Partisanship and Labor Market
Policy in Advanced Industrialized Democracies (Oxford: Oxford University
Press, 2007).
76. Manow and Schwander, “A Labor Market Explanation for Right‐Wing
Populism.”
77. For example, David Goodhart, The Road to Somewhere: The Populist Revolt
and the Future of Politics (Oxford: Oxford University Press, 2017); Eric
Kaufmann (2018), “Go Back to Where You Came From: The Backlash
against Immigration and the Fate of Western Democracy,” Foreign Affairs
97(5): 224–231.
274 N o t e s
Chapter 3
1. Jacob Hacker and Paul Pierson (2010), “Winner-Take-All Politics: Public
Policy, Political Organization, and the Precipitous Rise of Top Incomes in
the United States,” Politics and Society 38(2): 152–204.
2. Goesta Esping-Andersen, The Three Worlds of Welfare Capitalism
(Cambridge: Polity Press, 1990)., ch.2; Peter A. Hall and David W. Soskice
(eds.), Varieties of Capitalism: The Institutional Foundations of Comparative
Advantage (Oxford: Oxford University Press, 2001), ch.1.
3. Jacob Hacker, The Great Risk Shift: The New Economic Insecurity and the Decline
of the American Dream (New York: Oxford University Press, 2019).
4. João Paulo Pessoa and John Van Reenen (2013), “Decoupling of Wage
Growth and Productivity Growth?: Myth and Reality,” CEP Discussion
Paper No. 1246 (London: Centre for Economic Performance, London School
of Economics and Political Science), p.1, http://cep.lse.ac.uk/pubs/download/
dp1246.pdf.
5. Eighty-five percent of Americans had income growth lower than the
mean: see Thomas Piketty, Emmanuel Saez, and Gabriel Zucman
(2017)http://users.ox.ac.uk/~polf0487/papers/Ansell%20Brexit%20Memo.
pdf, “Distributional National Accounts: Methods and Estimates for the
United States,” Quarterly Journal of Economics 133(2): 553–609.
6. Fated Guvenen (2017), “Understanding Income Risk: New
Insights from Big Data” (Federal Reserve Bank of Minneapolis,
June 26), https://www.minneapolisfed.org/publications/the-region/
understanding-income-risk-new-insights-from-big-data.
7. Austin Nichols and Philipp Rehm (2014), “Income Risk in 30 Countries,”
Review of Income and Wealth 60 (Supplement Issue): S98–S116.
8. Jacob Hacker, The Great Risk Shift.
9. Kavya Vaghul and Marshall Steinbaum (2015), “An Introduction to the
Geography of Student Debt,” (Washington, DC: Washington Center
for Equitable Growth, December 1), https://equitablegrowth.org/an-
introduction-to-the-geography-of-student-debt/.
10. See Richard Wilkinson and Kate Pickett, The Inner Level: How More
Equal Societies Reduce Stress, Restore Sanity and Improve Everyone’s Well-Being
(London: Penguin, 2018).
11. Anne Case and Angus Deaton (2015), “Rising Morbidity and Mortality
in Midlife among White Non-Hispanic Americans in the 21st Century,”
Proceedings of the National Academy of Sciences 112(49): 15078–15083.
12. Anne Case and Angus Deaton (2017), “Mortality and Morbidity in the 21st
Century,” Brookings Papers on Economic Activity (Spring): 397–476.
13. See, for example, Seymour Martin Lipset and Gary Marks, It Didn’t
Happen Here: Why Socialism Failed in the United States (New York: W.
W. Norton, 2000).
Notes 275
14. See, for instance, Alberto Alesina, Edward Glaeser, and Bruce Sacerdote
(2001), “Why Doesn’t the US Have a European-Style Welfare System?,”
NBER Working Paper No. 8524, (Washington, DC: National Bureau of
Economic Research), http://www.nber.org/papers/w8524.
15. See Martin Gilens, Why Americans Hate Welfare: Race, Media and the Politics of
Antipoverty Policy (Chicago: University of Chicago Press, 1999).
16. Benjamin Page and Lawrence Jacobs, Class War? What Americans Really
Think about Economic Inequality (Chicago: University of Chicago Press,
2009), ch.2.
17. Ibid., chs.3–4.
18. See Sven Steinmo, Taxation and Democracy: Swedish, British and American
Approaches to Funding the Welfare State (New Haven: Yale University
Press, 1993).
19. Most famously Charles Beard, An Economic Interpretation of the Constitution of
the United States (New York: Macmillan, 1913).
20. Larry Bartels, Unequal Democracy: The Political Economy of the New Gilded
Age (Princeton: Princeton University Press, 2008); Christopher Achen and
Larry Bartels, Democracy for Realists: Why Elections Do Not Produce Responsive
Government (Princeton: Princeton University Press, 2017).
21. Thomas Frank, What’s the Matter with Kansas? How Conservatives Won the
Heart of America (New York: Henry Holt, 2007).
22. Nolan McCarty, Keith Poole, and Howard Rosenthal, Polarized America: The
Dance of Ideology and Unequal Riches (Cambridge, MA: MIT Press, 2016).
23. Hacker and Pierson, “Winner-Take-All Politics,” pp.189–196.
24. David Autor, David Dorn, and Gordon Hanson (2016), “The China
Shock: Learning from Labor-Market Adjustment to Large Changes in Trade,”
Annual Review of Economics 8: 205–240.
25. Andrés Villareal, “Explaining the Decline in Mexico-U.S. Migration: The
Effect of the Great Recession,” Demography 51(6): 2203–2228.
26. Larry Bartels (2005), “Homer Gets a Tax Cut: Inequality and Public Policy
in the American Mind,” Perspectives on Politics 3(1): 15–31.
27. Hacker and Pierson, “Winner-Take-All Politics,” p.178.
28. Martin Gilens and Benjamin Page found that where the policy preferences of
elites and average citizens diverged, Congress tended to adopt the preferences
of the elites: Martin Gilens and Benjamin Page (2014), “Testing Theories of
American Politics: Elites, Interest Groups, and Average Citizens,” Perspectives
on Politics 12(3): 564–581.
29. For a historical account of the influence of business on party politics, see
Thomas Ferguson, Golden Rule: The Investment Theory of Party Competition and
the Logic of Money-Driven Political Systems (Chicago: University of Chicago
Press, 1995).
30. Andrew Gelman, Red State, Blue State, Rich State, Poor State: Why Americans
Vote the Way They Do (Princeton: Princeton University Press, 2009).
276 N o t e s
31. Jeff Winters and Benjamin Page (2009), “Oligarchy in the United States?,”
Perspectives on Politics 7(4): 731–751.
32. Roberto Stefan Foa and Yascha Mounk (2016), “The Democratic
Disconnect,” Journal of Democracy 27(3): 5–17.
33. Lydia Saad, “Congress Ranks Last in Confidence in Institutions,”
Gallup: Politics, July 22, 2010, http://www.gallup.com/poll/141512/
congress-ranks-last-confidence-institutions.aspx, cited in Lawrence
Lessig, Republic, Lost: How Money Corrupts Congress—and a Plan to Stop It
(Boston: Twelve, 2011), p.2.
34. For example, Joseph Stiglitz, The Price of Inequality: How Today’s Divided
Society Endangers Our Future (New York: W. W. Norton, 2012).
35. British sociologist Colin Crouch described this arrangement as “privatized
Keynesianism”: Colin Crouch (2009), “Privatised Keynesianism: An
Unacknowledged Policy Regime,” British Journal of Politics and International
Relations 11: 382–399.
36. Ahmed Tahoun and Laurence van Lent (2016), “The Personal Wealth
Interests of Politicians and the Stabilization of Financial Markets,” Working
Paper No. 52 (New York: Institute for New Economic Thinking), https://
www.ineteconomics.org/uploads/papers/WP_52-Tahoun_final.pdf (retrieved
October 14, 2018).
37. Ken Bensinger, “Masses Aren’t Buying Bailout: Indignant Americans
Stage Protests, Deluge Congressional Offices,” Los Angeles Times, September
26, 2008, http://articles.latimes.com/2008/sep/26/business/fi-voxpop26
(retrieved August 14, 2017).
38. Ryan Lizza, “The Summers Memo,” New Yorker, January 23, 2012, http://
www.newyorker.com/news/news-desk/the-summers-memo (retrieved August
14, 2017).
39. Michael D. Hurd and Susann Rohwedder (2010), “Effects of the Financial
Crisis and Great Recession on American Households,” NBER Working
Paper No. 16407, (Washington, DC: National Bureau of Economic
Research), http://www.nber.org/papers/w16407.
40. Employment Policy Institute (2010), “State of Working America: The Great
Recession,” http://stateofworkingamerica.org/great-recession/ (retrieved
August 16, 2017).
41. Arne L. Kalleberg and Till M. von Wachter (2017), “The U.S. Labor Market
during and after the Great Recession: Continuities and Transformations,”
RSF: The Russell Sage Foundation Journal of the Social Sciences 3(3): 1–19.
42. Elise Gould (2015), “2014 Continues a 35-Year Trend of Broad-Based Wage
Stagnation,” Issue Brief #393 (Washington, DC: Economic Policy Institute),
http://www.epi.org/publication/stagnant-wages-in-2014/ (retrieved August
16, 2017).
43. Employment Policy Institute, “State of Working America: The Great
Recession.”
Notes 277
44. Jesse Bricker, Brian Bucks, Arthur Kennickell, Traci Mach, and Kevin Moore
(2011), “Surveying the Aftermath of the Storm: Changes in Family Finances
from 2007 to 2009,” Finance and Economics Discussion Series (Washington,
DC: Division of Research and Statistics and Monetary Affairs, Federal
Reserve Board).
45. Olivier Coibion, Yuriy Gorodnichenko, Lorenz Kueng, and John Silvia
(2012), “Innocent Bystanders? Monetary Policy and Inequality in the U.S.,”
NBER Working Paper No. 18170 (Washington, DC: National Bureau of
Economic Research).
46. For example, Paul Krugman, “The Stimulus Tragedy,” New York Times,
February 20, 2014, https://www.nytimes.com/2014/02/21/opinion/krugman-
the-stimulus-tragedy.html (retrieved May 25, 2019).
47. Robert Prasch (2012), “The Dodd-Frank Act: Financial Reform or Business
as Usual?” Journal of Economic Issues 46(2): 549–556.
48. Emmanuel Saez (2013), “Striking It Richer: The Evolution of Top Incomes
in the United States (Updated with 2012 Preliminary Estimates),”
University of California, Berkeley, https://eml.berkeley.edu//~saez/saez-
UStopincomes-2012.pdf.
University Press, 2013), p.5.
50. Eric Etheridge, “Rick Santelli: Tea Party Time,” New York Times, February
20, 2009, https://opinionator.blogs.nytimes.com/2009/02/20/rick-santelli-
tea-party-time/ (retrieved August 17, 2017).
51. Theda Skocpol and Vanessa Williamson, The Tea Party and the Remaking of
Republican Conservatism (New York: Oxford University Press, 2012).
52. Robert Frank, “Why the Rich Recovered and the Rest Didn’t,” CNBC.com,
June 13, 2012, https://www.cnbc.com/id/47802283 (retrieved September
1, 2017).
53. Jeff Winters, Oligarchy (New York: Cambridge University Press, 2011), ch.5.
54. Skocpol and Williamson, The Tea Party and the Remaking of Republican
Conservatism, p.53.
55. Michael A. Gould-Wartofsky, The Occupiers: The Making of the 99 Percent
Movement (New York: Oxford University Press, 2015).
56. William Gamson and Micah Sifry (2013), “The #Occupy Movement: An
Introduction,” Sociological Quarterly 54: 159–228.
57. Jonathan Matthew Smucker (2013), “Occupy: A Name Fixed to a
Flashpoint” Sociological Quarterly 54: 219–225.
58. Emmanuel Saez (2016), “U.S. Top One Percent of Income Earners Hit
New High in 2015 amid Strong Economic Growth” (Washington,
DC: Washington Center for Equitable Growth, July 1), http://
equitablegrowth.org/research-analysis/u-s-top-one-percent-of-income-
earners-hit-new-high-in-2015-amid-strong-economic-growth/ (retrieved
August 25, 2017).
278 N o t e s
59. “Donald Trump Heckled by New York Elite at Charity Dinner,” New York
Times, October 20, 2016, https://www.nytimes.com/2016/10/21/us/politics/
al-smith-dinner-clinton-trump.html (retrieved May 26, 2019).
60. “$2 Billion Worth of Free Media for Donald Trump,” New York Times, March
15, 2016, https://www.nytimes.com/2016/03/16/upshot/measuring-donald-
trumps-mammoth-advantage-in-free-media.html (retrieved April 3, 2019).
61. Donald Trump, Crippled America: How to Make American Great Again
(New York: Threshold Editions, 2015).
62. Trump, Crippled America, p. x.
63. Robert Costa, “Donald Trump and a GOP Primary Campaign Like
No Other,” in Larry Sabato, Kyle Kondik, and Geoffrey Skelley (eds.),
Trumped: The 2016 Election That Broke All the Rules (Boulder, CO: Rowman
and Littlefield, 2017), pp.97–111 (p.98).
64. Chris Haynes and Jessica Sattler, “The Twitter Effect: How Trump Used
Social Media to Stamp His Brand and Shape the Media Narrative on
Immigration,” in Jeanine Kraybill (ed.), Unconventional, Partisan, and
Polarizing Rhetoric: How the 2016 Election Shaped the Way Candidates Strategize,
Engage, and Communicate (Lanham, MD: Rowman and Littlefield, 2017),
pp. 135–171.
65. Case and Deaton, “Rising Morbidity and Mortality.”
66. Rhodes Cook, “Presidential Primaries: A Hit at the Ballot Box,” in Larry
Sabato et al., Trumped, p.90.
67. Matea Gold, Tom Hamburger, and Anu Narayanswamy, “Two Clintons,
41 Years, $3 Billion,” Washington Post, November 19, 2015, https://www.
washingtonpost.com/graphics/politics/clinton-money/.
68. Bernie Sanders, Our Revolution: A Future to Believe In (New York: Macmillan,
2016), pt.2, ch.3.
69. Robin Kolodny, “The Presidential Nominating Process, Campaign Money,
and Popular Love,” Society 53(5): 487–492.
70. “WikiLeaks Release Reveals Hillary Clinton’s Sympathy for Wall Street,”
Wall Street Journal, October 15, 2016, https://www.wsj.com/articles/
wikileaks-release-reveals-hillary-clintons-sympathy-for-wall-street-
1476581312 (retrieved May 26, 2019).
71. Center for Responsive Politics, “Sen. Bernie Sanders—Vermont,” https://
www.opensecrets.org/members-of-congress/summary?cid=N00000528&cycl
e=CAREER (retrieved April 2, 2019).
72. Greg Sargent, “ ‘Feel the Bern’: Hillary’s Agonizing Loss and the Future of
the Democratic Party,” in Sabato et al., Trumped, pp.112–122.
73. Cook, “Presidential Primaries,” p.87.
74. See Andrew Gelman, “19 Lessons for Political Scientists from the 2016
Presidential Election,” Slate, December 8, 2016, http://www.slate.com/
articles/news_and_politics/politics/2016/12/_19_lessons_for_political_
scientists_from_the_2016_election.html (retrieved September 8, 2017).
Notes 279
75. See Amie Parnes and Jonathan Allen, Shattered: Inside Hillary Clinton’s Doomed
Campaign (New York: Crown Publishing, 2017).
76. See for example, Joan Williams, White Working Class: Overcoming
Class Cluelessness in America (Cambridge MA: Harvard Business Press, 2017).
77. See Gurminder Bhambra (2017), “Brexit, Trump, and ‘Methodological
Whiteness’: On the Misrecognition of Race and Class,” British Journal of
Sociology 68 (2017): S214–S232.
78. Michael Tesler, “Trump Is the First Modern Republican to Win the
Nomination Based on Racial Prejudice,” Monkey Cage, August 1, 2016,
https://www.washingtonpost.com/news/monkey-cage/wp/2016/08/01/trump-
is-the-first-republican-in-modern-times-to-win-the-partys-nomination-on-
anti-minority-sentiments/?utm_term=.104aa47b7e6d.
79. John Sides, Michael Tesler, and Lynn Vavreck (2017), “The 2016 US
Election: How Trump Lost and Won,” Journal of Democracy 28(2): 34–44 (p.38).
80. For example, Eric Kaufman, “Trump and Brexit: Why It’s Again NOT the
Economy, Stupid,” LSE British Politics and Policy Blog, November 9, 2016.
https://blogs.lse.ac.uk/politicsandpolicy/trump-and-brexit-why-its-again-
not-the-economy-stupid/; Daniel Cox and Rachel Lienesch (2017), “Beyond
Economics: Fears of Cultural Displacement Pushed the White Working Class
to Trump,” PRRI/The Atlantic Report (Washington, DC: Public Religion
Research Institute, May 9); German Lopez, “The Past Year of Research
Has Made It Very Clear: Trump Won Because of Racial Resentment,” Vox,
December 15, 2017, https://www.vox.com/identities/2017/12/15/16781222/
trump-racism-economic-anxiety-study.
81. Judith Goldstein and Margaret Peters (2014), “Nativism or Economic
Threat: Attitudes toward Immigrants during the Great Recession,”
International Interactions 40(3): 376–401, p.382, fig.1.
82. Andrew Gelman, Red State Blue State Rich State Poor State: Why Americans Vote
the Way They Do (Princeton: Princeton University Press, 2008).
83. Diana Mutz (2018), “Status Threat, Not Economic Hardship, Explains
the 2016 Presidential Vote,” Proceedings of the National Academy of Sciences
115(19): E4330–E4339.
84. Daniel Tomlinson and Stephen Clarke, “In the Swing of Things: What does
Donald Trump’s Victory Tell Us about America?”, Resolution Foundation
Blog, November 2016. https://www.resolutionfoundation.org/app/uploads/
2016/11/In-the-swing-of-things-FINAL.pdf.
85. An ambiguity that appeared to be a deliberate choice. Parnes and Allen,
Shattered.
86. “Trump Spent Far Less Than Clinton, but Paid His Companies Well,”
New York Times, December 9, 2016, https://www.nytimes.com/2016/12/09/
us/politics/campaign-spending-donald-trump-hillary-clinton.html (retrieved
April 2, 2019).
280 N o t e s
87. “Steve Bannon on How 2008 Planted the Seed for the Trump Presidency,”
New York Magazine, August 10, 2008, http://nymag.com/intelligencer/2018/
08/steve-bannon-on-how-2008-planted-the-seed-for-the-trump-presidency.
html.
Chapter 4
1. Peter Lindert (2017), “The Rise and Future of Progressive Redistribution,”
Commitment to Equity (CEQ) Working Paper No. 73 (New Orleans: Tulane
University, Department of Economics).
2. In the mid-1970s, earnings at the threshold of the top 10 percent of earners
(the 90th percentile) were 3 times higher than those at the threshold of
the bottom 10 percent (10th percentile), but by the mid-1990s this had
grown to 3.5 times higher (OECD Stat Extracts on income distribution and
inequality).
3. Martin Rhodes, “Restructuring the British Welfare State: Between
Domestic Constraints and Global Imperatives,” in Fritz W. Scharpf and
Vivien A. Schmidt (eds.), Welfare and Work in the Open Economy, Vol. 2,
Diverse Responses to Common Challenges in Twelve Countries (New York: Oxford
University Press, 2000), pp.19–68.
4. Data from World Wealth and Income Database, http://wid.world/country/
united-kingdom/ (retrieved August 10, 2017).
5. Colin Hay, The Failure of Anglo-Liberal Capitalism
(Basingstoke: Palgrave, 2013).
6. Rui Costa and Stephen Machin (2017), “Real Wages and Living Standards
in the UK,” Paper EA036 (London: Centre for Economic Performance,
London School of Economics and Political Science), http://cep.lse.ac.uk/pubs/
download/ea036.pdf.
7. David Butler and Donald Stokes, Political Change in Britain (New York: St.
Martin’s Press, 1969).
8. See Anthony Heath, Roger Jowell, and John Curtice, How Britain Votes
(Oxford: Pergamon Press, 1985).
9. The intellectual inspiration for this shift was the sociologist Anthony
Giddens, whose book The Third Way (Cambridge: Polity, 1994) articulated
the case for a politics “beyond left and right.”
10. Colin Hay (1997), “Blaijorism: Towards a One‐Vision Polity?” Political
Quarterly 68(4): 372–378.
11. Jonathan Hopkin and Kate Alexander Shaw (2016), “Organized Combat or
Structural Advantage? The Politics of Inequality and the Winner-Take-All
Economy in the United Kingdom,” Politics and Society 44(3): 345–371.
12. Giuliano Bonoli and Martin Powell (2002), “Third Ways in Europe?,” Social
Policy and Society 1(1): 59–66.
Notes 281
13. Robert Joyce and Luke Sibieta (2013), “An Assessment of Labour’s Record
on Inequality and Poverty,” Oxford Review of Economic Policy 29(4): 178–202
(fig. 3, p.185).
14. Hopkin and Alexander Shaw, “Organized Combat or Structural
Advantage?,” p.357.
15. William Keegan, The Prudence of Mr Gordon Brown (London: Wiley,
2004), p.139.
16. Philip Gould, The Unfinished Revolution: How the Modernizers Saved the Labour
Party (London: Little, Brown, 1998), pp.117–130.
Exclusion of the British Working Class (Oxford: Oxford University Press, 2016),
ch.6; Tom O’Grady (2016), “Careerists versus Coal-Miners: How British
MPs’ Social Backgrounds Affect Their Support for Welfare Reform,” MIT
Political Science Department Research Paper No. 2016-17.
18. See, for example, Peter Oborne, The Triumph of the Political Class
(London: Simon & Schuster, 2007).
19. Alan Grant (2005), “The Reform of Party Funding in Britain,” Political
Quarterly 76(3): 381–392.
20. “How the Ecclestone Affair Unfolded,” BBC News, September 22, 2000,
http://news.bbc.co.uk/1/hi/uk_politics/937232.stm (retrieved May
27, 2019).
21. Colin Hay, Why We Hate Politics (Cambridge: Polity, 2007), ch.1.
22. https://www.ft.com/content/6734cdde-550b-11e7-9fed-c19e2700005f.
23. Evans and Tilley, The New Politics of Class, ch.8.
24. House of Commons Library (2017), “General Election 2017: Results
and Analysis,” House of Commons Library: Briefing Paper, CBP 7979
(September 8), p.57.
25. House of Commons Library (2017), “Turnout at Elections,” Briefing Paper,
CBP 8060 (July), http://researchbriefings.parliament.uk/ResearchBriefing/
Summary/CBP-8060#fullreport (retrieved January 10, 2018).
26. Ibid.
27. Matthew Goodwin, New British Fascism: Rise of the British National Party
(London: Routledge, 2011).
28. Robert Ford and Matthew Goodwin, Revolt on the Right: Explaining Support for
the Radical Right in Britain (London: Routledge, 2014).
29. Alistair Clark, Karin Bottom, and Colin Copus (2008), “More Similar Than
They’d Like to Admit? Ideology, Policy and Populism in the Trajectories of
the British National Party and Respect,” British Politics 3(4): 511–534.
30. Rachel Briggs (2007), “Who’s Afraid of the Respect Party?,” Renewal: A
Journal of Labour Politics 15(2/3): 89–97.
31. See, for example, the party’s 2005 manifesto: The Green Party of England
and Wales, Green Party Real Progress: The Real Choice for Real Change
(London: Green Party, 2005).
282 N o t e s
32. Ibid.
33. Andrew S. Crines and Stuart McAnulla (2017), “The Rhetorical Personas of
George Galloway and Tommy Sheridan,” in Judi Atkins and John Gaffney
(eds.), Voices of the UK Left: Rhetoric, Ideology and the Performance of Politics
(Basingstoke: Palgrave), pp.189–209.
34. Kate Alexander Shaw, Narrating Boom and Bust: The life-cycle of Ideas and
Narrative in New Labour’s Political Economy, 1997–2010. PhD dissertation,
London School of Economics, 2018.
35. See Cornelia Woll, The Power of Inaction: Bank Bailouts in Comparison
(Ithaca: Cornell University Press, 2014); Ray Barrell and Philip Davies
(2008), “The Evolution of the Financial Crisis of 2007–8,” National Institute
Economic Review 206(1): 5–14.
36. Pontusson and Reiss estimate the “discretionary” stimulus at 1.45 percent of
GDP, smaller than in the United States (at 1.81) but larger than in the large
European economies; Jonas Pontusson and Damian Reiss (2012), “How (and
Why) Is This Time Different? The Politics of Economic Crisis in Western
Europe and the United States,” Annual Review of Political Science 15:13–33
(p.19, Table 3).
37. Office of National Statistics (2016), “Statistical Bulletin: UK Government
Debt and Deficit as Reported to the European Commission: April
to June 2016,” October 20, https://www.ons.gov.uk/economy/
governmentpublicsectorandtaxes/publicspending/bulletins/ukgovernmentde
btanddeficitforeurostatmaast/aprtojune2016 (accessed January 8, 2018).
38. Office of National Statistics (2013), “Economic Review May 2013,” May 1,
http://webarchive.nationalarchives.gov.uk/20160108222452/http://www.ons.
gov.uk/ons/dcp171766_308566.pdf (accessed January 8, 2018).
39. “Timeline: Northern Rock Bank Crisis,” BBC News, August 5, 2008, http://
news.bbc.co.uk/1/hi/business/7007076.stm (retrieved August 14, 2017).
40. Emiliano Grossman and Cornelia Woll (2014), “Saving the Banks: The
Political Economy of Bailouts,” Comparative Political Studies 47(4): 574–600
(p.581).
41. Bank of England (2008), Financial Stability Report, No. 24 (October)
(London: Bank of England), p.31, cited in Julie Froud, Adriana Nilsson,
Michael Moran, and Karel Williams (2012), “Stories and Interests in
Finance: Agendas of Governance before and after the Financial Crisis,”
Governance 25(1): 35–59 (p.35).
42. “Gordon Brown Mocked over ‘Save the World’ Slip-Up in Commons,” The
Telegraph, December 10, 2008, https://www.telegraph.co.uk/news/politics/
3701712/Gordon-Brown-mocked-over-save-the-world-slip-up-in-Commons.
html (retrieved June 4, 2019). Perhaps Brown had read Paul Krugman’s
praise in the New York Times, “Gordon Does Good,” October12, 2008,
https://www.nytimes.com/2008/10/13/opinion/13krugman.html (retrieved
June 4, 2019).
Notes 283
43. Jonathan Hopkin and Ben Rosamond (2018), “Post-Truth Politics, Bullshit
and Bad Ideas: ‘Deficit Fetishism’ in the UK,” New Political Economy
23(6): 641–655.
44. Joseph Stiglitz, “The Dangers of Deficit-Cut Fetishism,” Guardian, March
7, 2010, http://www.theguardian.com/commentisfree/2010/mar/07/deficit-
fetishism-government-spending (accessed May 18, 2019).
45. Craig Berry, Austerity Politics and UK Economic Policy
(Basingstoke: Palgrave, 2016).
46. Valentina Romei, “How Wages Fell in the UK While the Economy
Grew: Britain Stands Out among Big Economies with More People in Work
but in Lower-Paid Jobs,” Financial Times, March 2, 2017.
47. Stephen Clarke (2017), “Whose Recovery Is This?,” Resolution Foundation, May
11, http://www.resolutionfoundation.org/media/blog/whose-recovery-is-this/.
48. Jonathan Freedland, “Leaders’ TV debate: ‘I Agree with Nick’ Was the
Night’s Real Catchphrase,” Guardian April 16, 2010, https://www.
theguardian.com/commentisfree/2010/apr/16/leaders-tv-debates-jonathan-
freedland (retrieved January 14, 2018).
49. See Gerry Hassan and Eric Shaw, The Strange Death of Labour Scotland
(Edinburgh: Edinburgh University Press, 2012).
50. “Scottish Independence: Vote ‘Will Go to the Wire,’ ” BBC News, September
7, 2014, http://www.bbc.co.uk/news/uk-scotland-29096458 (retrieved
January 20, 2018).
51. John Curtice, “So Who Voted Yes and Who Voted No?,” What Scotland
Thinks blog, September 26, 2014, http://blog.whatscotlandthinks.org/2014/
09/voted-yes-voted/.
52. James Mitchell (2015), “Sea Change in Scotland,” Parliamentary Affairs,
68(Issue suppl. 1): 88–100 (p.90).
53. Ray Collins, Building a One Nation Labour Party: The Collins Review into Labour
Party Reform (London: Labour Party, 2014).
54. Matt Dathan, “So, Who Are the ‘Moronic MPs’ Who Nominated Jeremy
Corbyn for the Labour Leadership Contest?,” The Independent, July 22, 2015,
http://www.independent.co.uk/news/uk/politics/who-are-the-morons-who-
nominated-jeremy-corbyn-for-the-labour-leadership-contest-10406527.html.
55. Koos Couvée, “Corbyn Set to Run for Labour Leadership,” Islington Tribune,
June 4, 2015, http://archive.islingtontribune.com/news/2015/jun/corbyn-set-
run-labour-leadership-long-serving-islington-mp-stand-clear-anti-austerity-
(retrieved January 24, 2018).
56. Jeremy Corbyn, “The Economy in 2020,” Jeremy for Labour Campaign,
July 22, 2015, https://web.archive.org/web/20150918143200/https://
d3n8a8pro7vhmx.cloudfront.net/jeremyforlabour/pages/70/attachments/
original/1437556345/TheEconomyIn2020_JeremyCorbyn-220715.pdf
(retrieved January 24, 2018).
284 N o t e s
57. “Ed Miliband: We’ll Tackle Deficit with ‘Sensible’ Cuts,” BBC News,
December 11, 2014, http://www.bbc.co.uk/news/uk-politics-30417955.
58. Office of National Statistics (2015), “EU Government Deficit
and Debt Return Including Maastricht Supplementary Data
Tables: Quarter 3 (July to Sep) 2015,” https://www.ons.gov.uk/economy/
governmentpublicsectorandtaxes/publicspending/bulletins/eugovernm
entdeficitanddebtreturnincludingmaastrichtsupplementarydatatables/
quarter3julytosep2015.
59. Christina Beatty and Stephen Fothergill, “Hitting the Poorest Places
Hardest: The Local and Regional Impact of Welfare Reform,” Centre for
Regional Economic and Social Research, Sheffield Hallam University, 2013,
p.9, https://www4.shu.ac.uk/research/cresr/sites/shu.ac.uk/files/hitting-
poorest-places-hardest_0.pdf.
60. Rui Costa and Stephen Machin (2017), “Real Wages and Living Standards
in the UK,” Paper EA036 (London: Centre for Economic Performance,
London School of Economics and Political Science), http://cep.lse.ac.uk/pubs/
download/ea036.pdf.
61. 140 Conservative MPs (out of 330) endorsed the Leave campaign; just 10
Labour MPs (out of 232) did so: Wikipedia, “Endorsements in the United
Kingdom European Union Membership Referendum, 2016,” https://
en.wikipedia.org/wiki/Endorsements_in_the_United_Kingdom_European_
Union_membership_referendum,_2016#Conservative_Party (retrieved
January 24, 2018).
62. On the campaign, see Tim Shipman, All Out War: The Full Story
of Brexit (London: HarperCollins, 2017). On finance, see Robert
Wright, “Arron Banks and the Mystery Brexit Campaign Funds,”
Financial Times, November 5, 2018, https://w ww.ft.com/c ontent/
4610a4be-d de2-1 1e8-9 f04-3 8d397e6661c (retrieved June 2, 2019);
Adam Ramsey (2018), “Dark Money Investigations: What We’ve
Found Out, and Why We’re Looking,” Open Democracy, December 3,
https://www.opendemocracy.net/e n/d ark-m oney-i nvestigations/d ark-
money-investigations-w hat-w e-v e-f ound-o ut-a nd-w hy-w e-r e-l ooking/
63. Wen Chen, Bart Los, Philip McCann, Raquel Ortega-Argilés, Mark Thissen,
and Frank van Oort (2017), “The Continental Divide? Economic Exposure
to Brexit in Regions and Countries on Both Sides of the Channel,” Papers in
Regional Science, December.
64. Marco di Cataldo (2016), “Gaining and Losing EU Objective 1
Funds: Regional Development in Britain and the Prospect of Brexit,”
LEQS Paper No. 120/2 016, (London: London School of Economics and
Political Science, November), http://w ww.lse.ac.uk/e uropeanInstitute/
LEQS%20Discussion%20Paper%20Series/LEQSPaper120.pdf.
Notes 285
65. Sascha Becker, Thiemo Fetzer, and Dennis Novy (2017), “Who Voted
for Brexit? A Comprehensive District-Level Analysis,” Economic Policy
32(92): 601–650.
66. Christian Dustmann and Tommaso Frattini (2014), “The Fiscal Effects of
Immigration to the UK,” Economic Journal 124(580): F593–F643.
67. Sofia Vasilopoulou (2016), “UK Euroscepticism and the Brexit referendum,”
Political Quarterly 87(2): 219–227.
68. Sara Hobolt (2016), “The Brexit Vote: A Divided Nation, a Divided
Continent,” Journal of European Public Policy 23(9): 1259–1277 (p.1269).
69. Robert Ford and Matthew Goodwin (2017), “Britain after Brexit: A Nation
Divided,” Journal of Democracy 28 (January): 17–30 (p.19).
70. Harold Clarke, Matthew Goodwin, and Paul Whiteley, Brexit: Why Britain
Voted to Leave the European Union (Cambridge: Cambridge University Press,
2017), p.22.
71. Kirby Swales, Understanding the Leave Vote (London: NatCen Social Research,
2016), p.13.
72. Matthew Goodwin and Caitlin Milazzo (2017), “Taking Back Control?
Investigating the Role of Immigration in the 2016 Vote for Brexit,” British
Journal of Politics and International Relations 19(3): 450–464.
73. See David Goodhart, The Road to Somewhere: The Populist Revolt and the Future
of Politics (New York: Oxford University Press, 2017).
74. Danny Dorling (2016), “Brexit: The Decision of a Divided Country,”
BMJ: British Medical Journal 354: i3697.
75. Goodwin and Milazzo, “Taking Back Control?”
76. Swales, Understanding the Leave Vote, p.8.
77. Ibid.
78. Data from Lord Ashcroft polls, cited in Noam Gidron and Peter Hall (2017),
“The Politics of Social Status: Economic and Cultural Roots of the Populist
Right,” British Journal of Sociology 68: S57–S84 (p.S59).
79. Ben Ansell, “Housing, Credit and Brexit,” Oxford University, 2017, http://
users.ox.ac.uk/~polf0487/papers/Ansell%20Brexit%20Memo.pdf.
80. Jonathan Portes (2016), “Immigration, Free Movement and the EU
Referendum,” National Institute Economic Review 236(1): 14–22.
81. Marco Alfano, Christian Dustmann, and Tommaso Frattini, “Immigration
and the UK: Reflections after Brexit,” in Francesco Fasani (ed.), Refugees and
Economic Migrants: Facts, Policies, and Challenges, VoxEU.org ebook, October
2016, http://giovanniperi.ucdavis.edu/uploads/5/6/8/2/56826033/refugees_
and_economic_migrants.pdf#page=65.
82. See, for example, Migration Advisory Committee, “Migration Advisory
Committee (MAC) Report on the Impact of EEA Migration in the UK,”
September 18, 2018, https://www.gov.uk/government/publications/
migration-advisory-committee-mac-report-eea-migration.
286 N o t e s
83. Italo Colantone and Piero Stanig (2018), “Global Competition and Brexit,”
American Political Science Review 112(2): 201–218.
84. Thiemo Fetzer “Did Austerity Cause Brexit?” University of
Warwick, 2018.
Matter (And What to Do about It),” Cambridge Journal of Regions, Economy and
Society 11(1): 189–209.
86. Thomas Forth (2017), “To Bring Back Trust in Politics,
Britain Needs a Local Measure of GDP,” City Metric,
October 30, https://www.citymetric.com/business/
bring-back-trust-politics-britain-needs-local-measure-gdp-3440.
87. Aditya Chakraborty, “One Blunt Heckler Has Revealed Just How
Much the UK Economy Is Failing Us,” Guardian, January 10,
2017, https://www.theguardian.com/commentisfree/2017/jan/10/
blunt-heckler-economists-failing-us-booming-britain-gdp-london.
88. “Britain Has Had Enough of Experts, Says Gove,” Financial Times,
June 3, 2016, https://www.ft.com/content/3be49734-29cb-11e6-83e4-
abc22d5d108c (retrieved June 3, 2019).
89. See Portes, “Immigration, Free Movement and the EU Referendum.”
90. “A Pyrrhic Victory? Boris Johnson Wakes Up to the Costs of Brexit,”
Guardian, June 24, 2016, https://www.theguardian.com/politics/2016/jun/
24/a-pyrrhic-victory-boris-johnson-wakes-up-to-the-costs-of-brexit (retrieved
June 4, 2019).
91. “Theresa May’s Conference Speech in Full,” The Telegraph, October 5, 2016,
https://www.telegraph.co.uk/news/2016/10/05/theresa-mays-conference-
speech-in-full/ (retrieved June 4, 2019).
92. Andrew Gimson, “Profile: Nick Timothy, May’s Thinker-in-Chief
and co-Chief of Staff,” ConservativeHome, July 15, 2016, http://www.
conservativehome.com/highlights/2016/07/profile-nick-timothy-mays-
thinker-in-chief-and-co-chief-of-staff.html (retrieved June 4, 2019).
93. “Brexit: Picking Apart Theresa May’s Red Lines on Leaving the European
Union: Britain Has Voted to Leave the EU,” Sky News, January 18, 2017,
https://news.sky.com/story/brexit-picking-apart-theresa-mays-red-lines-on-
leaving-the-european-union-10732511 (retrieved June 4, 2019).
94. Chris Hanretty (2017), “Areal Interpolation and the UK’s Referendum on
EU Membership,” Journal of Elections, Public Opinion and Parties 27(4): 466–
483, Table Two, p.477.
95. “Boris Johnson’s Brexit Explosion Ruins Tory Business Credentials,”
Financial Times, June 25, 2018, https://www.ft.com/content/8075e68c-7857-
11e8-8e67-1e1a0846c475 (retrieved June 4, 2019).
96. See James Sloam and Matt Henn, Youthquake: Young People and the 2017
General Election (Basingstoke: Palgrave, 2018).
Notes 287
Chapter 5
1. Ambrose Evans-Pritchard, “Financial Crisis: US will Lose Superpower Status,
Claims German Minister,” The Telegraph, September 25, 2008, https://
www.telegraph.co.uk/finance/financialcrisis/3081909/Financial-Crisis-US-
will-lose-superpower-status-claims-German-minister.html (retrieved June
5, 2019).
2. “The City of London and Mr Sarkozy: A Clash of Arms,” The Economist,
December 2, 2009, https://www.economist.com/charlemagne/2009/12/02/
the-city-of-london-and-mr-sarkozy-a-clash-of-arms (retrieved June 5, 2019).
3. For details of these banking bailouts, see Cornelia Woll, The Power of
Inaction: Bank Bailouts in Comparison (Ithaca: Cornell University Press, 2014).
4. See Mark Blyth, Austerity: The History of a Dangerous Idea (New York: Oxford
University Press, 2013), ch.3.
5. Ignacio Sánchez-Cuenca (2000), “The Political Basis of Support for European
Integration,” European Union Politics 1(2): 147–171; Iván Llamazares and
Wladimir Gramacho (2007), “Eurosceptics among Euroenthusiasts: An
Analysis of Southern European Public Opinions,” Acta Politica
42(2–3): 211–232.
6. Susannah Verney (2011), “Euroscepticism in Southern Europe: A Diachronic
Perspective,” South European Society and Politics 16(1): 1–29 (p.8).
7. NATO proved more controversial than European integration, with Spanish
and Greek Socialists both having to juggle commitments to the Atlantic
alliance with a strong current of anti-Americanism in their core electorates.
8. Nauro Campos, Fabrizio Coricelli, and Luigi Moretti (2014), “How
Much Do Countries Benefit from Membership in the European
Union?,” Vox: CEPR Policy Portal, April 9, https://voxeu.org/article/
how-poorer-nations-benefit-eu-membership.
9. In his study of Greece, Christos Lyrintzis describes this as “bureaucratic
clientelism.” Christos Lyrintzis (1984), “Political Parties in Post‐Junta
Greece: A Case of ‘Bureaucratic Clientelism’?,” West European Politics
7(2): 99–118. For cross-national evidence, see Petr Kopecký, Peter Mair,
and Maria Spirova (eds.), Party Patronage and Party Government in European
Democracies (Oxford: Oxford University Press, 2012).
10. Jesús Fernández-Villaverde, Luis Garicano, and Tano Santos (2013), “Political
Credit Cycles: The Case of the Eurozone,” Journal of Economic Perspectives
27(3): 145–166.
11. Thomas Farole, Andrés Rodríguez‐Pose, and Michael Storper (2011),
“Cohesion Policy in the European Union: Growth, Geography, Institutions,”
JCMS: Journal of Common Market Studies 49(5): 1089–1111.
12. See, for example, Mariano Torcal, Richard Gunther, and José Ramón
Montero, “Anti-Party Sentiments in Southern Europe,” in Richard Gunther,
José Ramón Montero, and Juan Linz (eds.), Political Parties: Old Concepts and
288 N o t e s
New Challenges (New York: Oxford University Press, 2002), pp.257–290.
Their data showed increasing hostility to parties through the 1990s, as well
as a growing perception among voters that parties were increasingly similar
to each other.
13. Luis de Sousa (2001), “Political Parties and Corruption in Portugal,” West
European Politics 24(1): 157–180. Despite the party’s misleading label,
the Portuguese Social Democrat Party (PSD) is in fact a typical moderate
conservative party, affiliated with the European People’s Party in the
European Parliament.
14. See Kevin Featherstone (2003), “Greece and EMU: Between External
Empowerment and Domestic Vulnerability,” JCMS: Journal of Common
Market Studies 41(5): 923–940.
15. Sánchez-Cuenca, “The Political Basis of Support for European
Integration.”
16. Kenneth Dyson and Kevin Featherstone (1996), “Italy and EMU as a
‘Vincolo Esterno’: Empowering the Technocrats, Transforming the State,”
South European Society and Politics 1(2): 272–299.
17. Fernández-Villaverde et al., “Political Credit Cycles: The Case of the
Eurozone.”
18. OECD (2011), “Employment in General Government and Public
Corporations as a Percentage of the Labor Force,”, OECD, Government at a
Glance (Paris: OECD) https://stats.oecd.org/Index.aspx?DataSetCode=GOV_
2011.
19. Independent Evaluation Office of the IMF (2016), “The IMF and the Crises
in Greece, Ireland, and Portugal” (New York: International Monetary
Fund), http://www.ieo-imf.org/ieo/files/completedevaluations/EAC%20-
%20Full%20Report.pdf (retrieved July 18, 2018).
20. Geithner even revealed in his memoirs that he was told by German Finance
Minister Schauble that “there were many in Europe who still thought
kicking the Greeks out of the eurozone was a plausible—even desirable—
strategy.” Timothy Geithner, Stress Test: Reflections on Financial Crises
(London: Penguin/Random House, 2014), p.483.
21. Yanis Varoufakis, Adults in the Room: My Battle with Europe’s Deep Establishment
(New York: Random House, 2017).
22. C. Randall Henning, Tangled Governance (Oxford: Oxford University Press,
2017), p.4.
23. “Dijsselbloem will die Troika auflösen,” Frankfurter Allgemeine, March 19,
2017, http://www.faz.net/aktuell/wirtschaft/eurokrise/chef-der-eurogruppe-
dijsselbloem-will-die-troika-aufloesen-14932856.html.
24. Geithner, Stress Test, p.443.
25. See Adam Tooze, “Output Gap Nonsense,” Social Europe, April 30, 2019.
https://www.socialeurope.eu/output-gap-nonsense.
26. See Henning, Tangled Governance.
Notes 289
27. Adam Tooze, Crashed: How a Decade of Financial Crises Changed the World
(London: Allen Lane, 2018), ch.14.
28. Henning, Tangled Governance, p.127.
29. Stephen Kinsella (2012), “Is Ireland Really the Role Model for Austerity?,”
Cambridge Journal of Economics 36(1), 223–235 (p.224).
30. For an overview of the recent research on dualism, see Patrick Emmenegger,
Silja Hausermann, Bruno Palier, and Martin Seeleib-Kaiser (eds.), The Age
of Dualization: The Changing Face of Inequality in Deindustrializing Societies
(Oxford: Oxford University Press, 2012).
31. Juan Linz defined the southern European dictatorships as “authoritarian”
rather than “totalitarian” regimes, emphasizing their lack of clear ideology
and the limited pluralism they tolerated: Juan Linz, Totalitarian and
Authoritarian Regimes (Boulder: Lynne Rienner, 2000).
32. Sara Watson, The Left Divided: The Development and Transformation of Advanced
Welfare States (Oxford: Oxford University Press, 2015).
33. A “Bismarckian” welfare state is one based on occupational status, where
employees and employers pay contributions into a fund that finances
pensions and other benefits. The early German welfare system took this form.
See Bruno Palier and Claude Martin (eds.), Reforming the Bismarckian Welfare
Systems (Chichester: John Wiley & Sons, 2009).
34. Cornel Ban, Ruling Ideas: How Global Neoliberalism Goes Local (Oxford: Oxford
35. Maurizio Ferrera (1996), “The ‘Southern Model’ of Welfare in Social Europe,”
Journal of European Social Policy 6(1): 17–37.
36. See David Rueda, Social Democracy Inside Out: Partisanship and Labor Market Policy
in Advanced Industrialized Democracies (Oxford: Oxford University Press, 2007).
37. Julia Lynch, Age in the Welfare State: The Origins of Social Spending on Pensioners,
Workers, and Children (Cambridge: Cambridge University Press, 2006).
38. Manuela Naldini, The Family in the Mediterranean Welfare States
39. Bas ter Weel (2018), “The Rise of Temporary Work in Europe,” De Economist
166: 397–401.
40. While the average age of leaving the family home in the EU15 western
European countries is around twenty-six, for southern Europe it is almost
thirty, a number that has increased since the crisis (Eurostat, “Estimated
Average Age of Young People Leaving the Parental Household by Sex,” April
26, 2018, http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=yth_
demo_030&lang=en).
41. Ferrera, “The ‘Southern Model’ of Welfare in Social Europe,” p.21.
42. Salvatore Morelli, Brian Nolan, and Philippe van Kerm, “Wealth Inequality,”
in Brian Nolan (ed.), Generating Prosperity for Working Families in Affluent
Countries (Oxford: Oxford University Press, 2018), pp.312–334.
290 N o t e s
43. Carlotta Balestra and Richard Tonkin (2018), “Inequalities in Household
Wealth across OECD Countries: Evidence from the OECD Wealth
Distribution Database,” OECD Statistics Working Papers, 2018/01
(Paris: OECD Publishing), Table 2.1, p.15, http://dx.doi.org/10.1787/
7e1bf673-en.
44. OECD (2018), “Pension Spending” (indicator), doi: 10.1787/a041f4ef-en
(accessed October 30, 2018).
45. Matthias Matthijs (2016), “The Euro’s ‘Winner-Take-All’ Political
Economy: Institutional Choices, Policy Drift, and Diverging Patterns of
Inequality,” Politics and Society 44(3): 393–422.
46. Tooze, “Output Gap Nonsense.”
47. “As Good as It Gets,” ekathimerini, December 4, 2009. http://www.
ekathimerini.com/66438/article/ekathimerini/comment/as-good-as-it-gets
(retrieved November 5, 2018).
48. Georgios Karyotis and Wolfgang Rüdig (2018), “The Three Waves of
Anti-Austerity Protest in Greece, 2010–2015,” Political Studies Review
16(2): 158–169.
49. See Ioannis Andreadis and Yiannis Stavrakakis (2017), “European Populist
Parties in Government: How Well Are Voters Represented? Evidence from
Greece,” Swiss Political Science Review 23(4): 485–508.
50. Antonis Ellinas (2013), “The Rise of Golden Dawn: The New Face of the
Far Right in Greece,” South European Society and Politics 18(4): 543–565
(pp.550–552).
51. Ellinas, “The Rise of Golden Dawn,” p.555.
52. Kapa Research, “September 2015 Exit Poll Data,” https://kaparesearch.com/
en/september-2015-exit-poll-data/.
53. Panos Koliastasis (2015), “The Greek Parliamentary Elections of 25 January,
2015,” Representation 51(3): 359–372 (p.364).
54. Maik Fielitz (2017), “From Indignation to Power: The Genesis of the
Independent Greeks,” paper presented to ECPR General Conference
Universität Hamburg, Hamburg, August 22–2 5, 2018, https://e cpr.
eu/F ilestore/P aperProposal/f d58216e-8 27d-4 791-9 dc0-2 91b972f29a0.
pdf.
55. Ioannis Andreadis, Monica Poletti, Eftichia Teperoglou, and Cristiano
Vezzoni (2014), “Economic Crisis and Attitudes Towards the European
Union: Are Italians and Greeks Becoming Eurosceptic Because of the
Crisis?,” paper presented to Political Studies Association annual conference,
Manchester, http://www.gpsg.org.uk/wp-content/uploads/2014/10/
Andreadis-Poletti-Teperoglou-and-Vezzoni-2014.pdf.
56. Fielitz, “From Indignation to Power.”
57. See Stathis Kalyvas and Niko Marantzidis (2002), “Greek Communism,
1968–2001,” East European Politics and Societies 16(3): 665–690.
Notes 291
58. Myrto Tsakatika and Costas Eleftheriou (2013), “The Radical Left’s Turn
towards Civil Society in Greece: One Strategy, Two Paths,” South European
Society and Politics 18(1): 81–99 (p.89).
59. Kostas Gemenis and Elias Dinas (2010), “Confrontation Still? Examining
Parties’ Policy Positions in Greece,” Comparative European Politics 8(2): 179–
201 (p.189).
60. Tsakatika and Eleftheriou, “The Radical Left’s Turn towards Civil Society in
Greece,” pp.90–93.
61. Syriza (2014), “Salonica programme,” https://www.Syriza.gr/article/SYRIZA-
--THE-THESSALONIKI-PROGRAMME.html.
62. See his account of his brief period in office: Varoufakis, Adults in the Room.
63. “How Greece’s Left-Wing Election Win Could Reverberate around Europe,”
Vice, January 27, 2015, https://www.vice.com/en_us/article/xd5jm7/
what-Syrizas-win-means-for-greece-and-europe-876.
64. Kapa Research, “September 2015 Exit Poll Data.”
65. “Ajuda a Portugal só é possível com apoio da Finlândia,” Diário de Noticias,
April 26, 2011, https://www.dn.pt/dossiers/economia/portugal-pede-ajuda-
externa/noticias/interior/ajuda-a-portugal-so-e-possivel-com-apoio-da-
finlandia-1838131.html.
66. Catherine Moury and Adam Standring (2017), “ ‘Going beyond the
Troika’: Power and Discourse in Portuguese Austerity Politics,” European
Journal of Political Research 56: 660–679.
67. Marktest (2018), “Todas as sondagems desde 2009,” https://www.marktest.
com/wap/a/p/id~112.aspx (retrieved November 9, 2018).
68. Pedro Magalhães (2016), “A ‘austeridade’ nas eleições de 2015,”
Pedro Magalhães Political Scientist Blog, January 18, http://www.pedro-
magalhaes.org/a-austeridade-nas-eleicoes-de-2015/?fbclid=IwAR1iT-
bi61AfKUECOb9FXfU8WIyfZpx3drnuetwZeEg_UFUS_Z8p4N3aq7I
69. Partido Comunista Português (2017). “Uma política patriótica e de
esquerda,” PCP webpage, May 7, http://www.pcp.pt/politica-patriotica-
esquerda (retrieved November 12, 2018).
70. Marco Lisi (2013), “Rediscovering Civil Society? Renewal and Continuity in
the Portuguese Radical Left,” South European Society and Politics 18(1): 21–39
(pp.24–25).
71. Guya Accornero and Pedro Ramos Pinto (2015), “ ‘Mild Mannered’? Protest
and Mobilisation in Portugal Under Austerity, 2010–2013,” West European
Politics 38(3): 491–515.
72. Lisi, “Rediscovering Civil Society?,” pp.35–36.
73. André Freire, Marco Lisi, Ioannis Andreadis, and José Manuel Leite Viegas
(2014), “Political Representation in Bailed-Out Southern Europe: Greece
and Portugal Compared,” South European Society and Politics 19(4): 413–433
(p.424).
292 N o t e s
74. Marina Costa Lobo, José Santana Pereira, and Edalina Sanches (2015),
“Relatório Síntese da Bússola Eleitoral, 2 A política económica vista pelos
Eleitores” (Lisbon: Instituto de Ciâncias Sociais da Universidade de Lisboa),
http://marinacostalobo.pt/webwp/wp-content/uploads/2014/11/relatório-02-
da-Bussola-Eleitoral1.pdf.
75. Elisabetta De Giorgi and José Santana-Pereira (2016), “The 2015 Portuguese
Legislative Election: Widening the Coalitional Space and Bringing
the Extreme Left in,” South European Society and Politics 21(4): 451–468
(pp.456–457).
76. Pedro Magalhães (2013), “Os pensionistas nos eleitorados,” Pedro Magalhães
Political Scientist Blog, May 8, http://www.pedro-magalhaes.org/os-
pensionistas-nos-eleitorados/ (retrieved November 11, 2018).
77. Rodrigo Quintas da Silva (2018), “A Portuguese Exception to Right-Wing
Populism,” Palgrave Communications 4(1): 1–5.
78. Indeed, Portugal had the second lowest share of non-national citizens in
the whole of the European Union in 2016. https://ec.europa.eu/eurostat/
statistics-explained/index.php/Migration_and_migrant_population_
statistics.
79. Olivier Blanchard and Pedro Portugal (2017), “Boom, Slump, Sudden Stops,
Recovery, and Policy Options: Portugal and the Euro,” Portuguese Economic
Journal 16(3): 149–168.
80. Jorge M. Fernandes, Pedro C. Magalhães, and José Santana-Pereira (2018),
“Portugal’s Leftist Government: From Sick Man to Poster Boy?,” South
European Society and Politics 23(4): 503–524.
81. Joana Almeida (2018), “António Costa: ‘Alternativa à política de austeridade
resultou no maior crescimento económico do século,’ ” Jornal Económico,
March 14, https://jornaleconomico.sapo.pt/noticias/antonio-costa-alternativa-
a-politica-de-austeridade-resultou-no-maior-crescimento-economico-do-
seculo-280579.
82. See, for example, Liz Alderman (2018), “Portugal Dared to Cast Aside
Austerity: It’s Having a Major Revival,” New York Times, July 22, https://
www.nytimes.com/2018/07/22/business/portugal-economy-austerity.html.
83. Waltraud Schelkle, The Political Economy of Monetary Solidarity
84. Christian Dustmann, Bernd Fitzenberger, Uta Schönberg, and
Alexandra Spitz-Oener (2014), “From Sick Man of Europe to Economic
Superstar: Germany’s Resurgent Economy,” Journal of Economic Perspectives
28(1): 167–188.
85. See Varoufakis, Adults in the Room, where the former Greek minister claims
that northern Eurozone leaders were quite open in admitting that the real
bailout was of the French and German banking systems.
86. “Germany, Greece Put Tension in Rearview Mirror during Angela
Merkel’s Visit,” dw.com, January 10, 2019, https://www.dw.com/en/
Notes 293
germany-greece-put-tension-in-rearview-mirror-during-angela-merkels-visit/
a-47033131 (retrieved June 6, 2019).
Chapter 6
1. See “Return of the Bond Market Vigilantes,” Wall Street Journal, May 29,
2008, https://blogs.wsj.com/marketbeat/2008/05/29/return-of-the-bond-
market-vigilantes/ (retrieved June 8, 2019).
2. See for example, Josep María Colomer, Game Theory and the Transition to
Democracy: The Spanish Model (Aldershot: Edward Elgar, 1995), pp.1–2.
3. “Spain: After the Fiesta,” The Economist November 6, 2008, https://www.
economist.com/leaders/2008/11/06/after-the-fiesta.
4. OECD (2018), “Net National Income (Indicator).” doi: 10.1787/af9be38a-en
5. Guillermo de la Dehesa, “Spain and the Euro Area Sovereign Debt Crisis,”
paper prepared for conference on Resolving the European Debt Crisis,
Chantilly, France, September 13–14, 2011, p.2.
6. Eurostat (2018), “House Price Index,” https://ec.europa.eu/eurostat/web/
housing-price-statistics/overview (retrieved June 7, 2019).
7. See Eurostat, “Migration and Migrant Population Statistics, 2017,” https://
ec.europa.eu/eurostat/statistics-explained/index.php/Migration_and_
migrant_population_statistics (retrieved June 8, 2019).
8. European Commission (2018), European Semester Thematic Factsheet: Housing
Market Developments (Brussels: European Commission), https://ec.europa.
eu/info/sites/info/files/file_import/european-semester_thematic-factsheet_
housing-market-developments_en.pdf (retrieved November 18, 2018).
9. OECD (2018), “Household Debt (Indicator).” doi: 10.1787/f03b6469-en
10. The airport, ironically named Don Quixote Airport on opening, went
into receivership after less than three years. Costing almost half a billion
euros, it was eventually sold for just 56 million: “El aeropuerto de Ciudad
Real, vendido por 56,2 millones,” El Mundo, April 15, 2016, https://www.
elmundo.es/economia/2016/04/15/5710dc3846163f9f0d8b45c0.html
11. “La Ciudad de las Artes ha costado cuatro veces lo que se presupuestó,”
El País Comunidad Valenciana, March 16, 2011, https://elpais.com/diario/
2011/03/16/cvalenciana/1300306679_850215.html (retrieved November
18, 2018).
12. Jesús Fernández-Villaverde, Luis Garicano, and Tano Santos (2013), “Political
Credit Cycles: The Case of the Eurozone,” Journal of Economic Perspectives
27(3): 145–166.
13. Vicente Cuñat and Luis Garicano (2009), “Did Good Cajas Extend Bad
Loans? The Role of Governance and Human Capital in Cajas’ Portfolio
294 N o t e s
Decisions,” FEDEA Annual Conference at Bank of Spain, http://www.
crisis09.es/mono grafia2009/cajas.html.
14. The Socialist Party’s full name was Partido Socialista Obrero Espanol (PSOE).
15. “Nuevos datos en el escándalo de la Asamblea dejan sin aclarar el
‘tamayazo,’ ” El País, June 9, 2013, https://elpais.com/ccaa/2013/06/08/
madrid/1370722686_003798.html (retrieved November 10, 2018).
16. Banco de España, Financial Stability Report, May 2007 (Madrid: Banco de
España), p.12.
18. OECD Data, “Current Account Balance,” https://data.oecd.org/trade/current-
account-balance.htm (retrieved June 29, 2018).
2017), p.133.
20. Letter from https://www.ecb.europa.eu/pub/pdf/other/2011-08-05-letter-
from-trichet-and-fernandez-ordonez-to-zapateroen.pdf.
21. European Central Bank (2013), “Press Release: Details on Securities
Holdings Acquired under the Securities Markets Programme,” February 21,
https://www.ecb.europa.eu/press/pr/date/2013/html/pr130221_1.en.html.
23. “De Guindos le dice a Rehn que la reforma laboral será
‘extremadamente agresiva,’ ” https://www.youtube.com/watch?time_
continue=3&v=ej8P4jPfsnY.
24. Kenneth Dubin and Jonathan Hopkin (2013), “A Crucial Case for
Flexicurity: The Politics of Welfare and Employment in Spain,” unpublished
paper, London School of Economics, http://personal.lse.ac.uk/hopkin/
DubinHopkinFinal2013.pdf.
25. See Samuel Bentolila, Juan José Dolado, and Juan F. Jimeno (2012),
“Reforming an Insider-Outsider Labor Market: The Spanish Experience,”
IZA Journal of European Labour Studies 1: 1–29.
26. “Despite Economic Growth, Spain’s Younger Workers See Their Salaries
Fall,” El País in English, June 29, 2017, https://elpais.com/elpais/2017/06/
29/inenglish/1498725322_738039.html (retrieved November 19, 2018).
28. Statista (2018), “Unemployment Rate in Spain 2005–2018,” https://www.
statista.com/statistics/453410/unemployment-rate-in-spain/ (retrieved June
30, 2018).
29. See chapter 5, Figure 5.4: OECD Data, “Income Distribution Database,”
http://www.oecd.org/social/income-distribution-database.htm (retrieved June
29, 2018).>
30. “¿Cuántas familias perdieron su casa por la ‘leyenda urbana’ de los
desahucios?,” Cinco Días: El País Economía, January 31, 2018, https://
Notes 295
cincodias.elpais.com/cincodias/2018/01/30/midinero/1517339842_922977.
html (retrieved November 19, 2018).
31. For an overview, see Ana Guillén and Margarita León (eds.), The Spanish
Welfare State in European Context (Farnham: Ashgate, 2011).
32. Juan J. Dolado, Carlos García‐Serrano, and Juan F. Jimeno (2002), “Drawing
Lessons from the Boom of Temporary Jobs in Spain,” Economic Journal
112(480): F270–F295.
33. Juan García López (2011), “Youth Unemployment in Spain: Causes and
Solutions,” Working Paper No. 1131 (Madrid: BBVA Bank, Economic
Research Department), p.4.
34. Anna Cabré Pla and Juan Antonio Módenes Cabrerizo, “Home Ownership
and Social Inequality in Spain,” in Karin Kurz and Hans-Peter Blossfeld
(eds.), Home Ownership and Social Inequality in Comparative Perspective
(Stanford: Stanford University Press, 2004), pp.233–254 (p.236).
35. Compared with an OECD average of just under 60 percent. OECD (2016),
“Most Youth Live with Their Parents and Patterns Have Changed since the
Recession,” in General Context Indicators (Paris: OECD Publishing), https://
doi.org/10.1787/soc_glance-2016-graph41-en.
36. In contrast, seniors’ incomes in the United Kingdom were only 82 percent of
the average. OECD, “Pensions at a Glance 2017” (Paris: OECD, 2017), p.20,
https://www.oecd-ilibrary.org/docserver/pension_glance-2017-en.pdf?expires
=1542377539&id=id&accname=guest&checksum=1D876AE69A81FFB71
0EC39B53CF62717.
37. See Davide Vampa, The Regional Politics of Welfare in Italy, Spain and Great
Britain (Basingstoke: Palgrave, 2016), ch.7.
38. Jonathan Hopkin (2001), “A ‘Southern Model’ of Electoral Mobilisation?
Clientelism and Electoral Politics in Spain,” West European Politics
24(1): 115–136.
39. Fernández-Villaverde et al., “Political Credit Cycles: The Case of the
Eurozone.”
40. ¡Democracia Real Ya!, “Manfiesto,” http://www.democraciarealya.es/
manifiesto-comun/ (retrieved November 19, 2018).
41. See Cristina Flesher Fominaya (2015), “Debunking Spontaneity: Spain’s
15-M/Indignados as Autonomous Movement,” Social Movement Studies
14(2): 142–163.
42. For example, one group was called No les votes (“Don’t Vote for Them,” http://
www.nolesvotes.com/(retrieved November 19, 2018).
43. Eduardo Romanos (2014), “Evictions, Petitions and Escraches: Contentious
Housing in Austerity Spain,” Social Movement Studies 13(2): 296–302.
44. Irene Martín and Ignacio Urquizu-Sancho (2012), “The 2011 General
Election in Spain: The Collapse of the Socialist Party,” South European Society
and Politics 17(2): 347–363 (p.347).
296 N o t e s
45. Data from the Centro de Investigaciones Sociológicas, analyzed in Araceli
Mateos and Alberto Penadés, “España: Crisis y Recortes,” Revista de Ciencia
Política (Santiago) 33(1): 161–183 (p.174).
46. “Ex-IMF Chief Sentenced over Bankia Card Scandal,” Financial Times,
February 23, 2017, https://www.ft.com/content/7f93082e-f9ed-11e6-bd4e-
68d53499ed71 (retrieved November 20, 2018).
47. “Governing Popular Party and Its Ex-Treasurer, Sentenced in Massive
Corruption Case,” El País in English, May 24, 2018, https://elpais.com/elpais/
2018/05/24/inenglish/1527154734_539755.html (retrieved November
21, 2018).
48. Pablo Fernández-Vázquez, Pablo Barberá, and Gonzalo Rivero (2016),
“Rooting out Corruption or Rooting for Corruption? The Heterogeneous
Electoral Consequences of Scandals,” Political Science Research and Methods
4(2): 379–397 (p.384).
49. The Spanish Congress of Deputies consists of 350 seats. A government can
be formed with only an absolute majority of votes in the first round of the
investiture motion, or a simple majority after the first vote.
50. Guillem Vidal (2018), “Challenging Business as Usual? The Rise of New
Parties in Spain in Times of Crisis,” West European Politics 41(2): 261–286
(p.278).
51. “Retired Spaniards Earn More than the National Average,” El País in
English, 29 January 2018. https://elpais.com/elpais/2018/01/29/inenglish/
1517221833_150575.html.
52. See Irene Martín (2015), “Podemos y otros modelos de partido-movimiento,”
Revista Española de Sociología 24: 107–114; Juan Rodríguez-Teruel,
Astrid Barrio, and Oscar Barberà (2016), “Fast and Furious: Podemos’
Quest for Power in Multi-Level Spain,” South European Society and Politics
21(4): 561–585.
53. Daniel Montero, La casta: El increíble chollo de ser político en España (Madrid: La
esfera de los libros, 2009). Montero was in turn inspired by the Italian book
on political corruption, La casta. Sergio Rizzo and Gian Antonio Stella, La
casta: Così i politici italiani sono diventati intoccabili (Milan: Rizzoli, 2007).
54. Samuele Mazzolini and Arthur Borriello, “ Southern European Populisms
as Counter-Hegemonic Discourses: A Comparative Perspective of Podemos
and M5S,” in Óscar García Agustín and Marco Briziarelli (eds.), Podemos
and the New Political Cycle: Left-Wing Populism and Anti-Establishment Politics
(Basingstoke: Palgrave, 2016), pp.227–254 (pp.237–238).
55. “Entrevista A Pablo Iglesias, Líder De Podemos: ‘Defendemos lo bueno del
sistema,’ ” El País, June 17, 2014, https://elpais.com/politica/2014/06/16/
actualidad/1402946493_140110.html?fbclid=IwAR07SqUm3RmHlN-
mNg4nmxaaxIoFDju-do7PYAf3prELmdYDyi0h_dyuc6Q (retrieved
November 12, 2018).
Notes 297
56. Podemos (2014), “Documento final del programa colaborativo,” p.2, https://
www.eldiario.es/campaña/Programa-electoral-Podemos-Europeas_6_
258334180.html (retrieved November 24, 2018).
57. Pablo Cabrera Álvarez (2014), “¿Qué supone la irrupción de Podemos en la
izquierda?,” Politikon, June 30, https://politikon.es/2014/06/30/que-supone-
la-irrupcion-de-podemos-en-la-izquierda/ (retrieved November 24, 2018).
58. Karen Sanders, María Jesús Molina Hurtado, and Jessica Zoragastua (2017),
“Populism and Exclusionary Narratives: The ‘Other’ in Podemos’ 2014
European Union Election Campaign,” European Journal of Communication
32(6): 552–567 (p.559).
59. “(Podemos) pretende ser la palanca del cambio político en este país, [ . . .
] para que los ciudadanos y las ciudadanas recuperemos de modo efectivo
el control democrático sobre nuestras instituciones y nuestros destinos”
(Podemos, “Documento final,” p.6).
60. “Entrevista a Pablo Iglesias, líder de Podemos: ‘Defendemos lo bueno del
sistema.’ ”
61. Vicenç Navarro and Juan Torres López, “Un proyecto económico para la
gente” (Podemos, November 2014), pp.10–11, http://www.vnavarro.org/wp-
content/uploads/2014/12/DocumentoEconomicoNavarroTorres.pdf (retrieved
November 20, 2018).
62. José Fernández-Albertos, Los votantes de Podemos: Del partido de los indignados
al partido de los excluidos (Madrid: Los libros de la Catarata, 2015), pp.45–46;
Albert Julià Cano and Pau Marí-Klose (2014), “El socialista enfurecido: No solo
jóvenes, aunque sobradamente preparados,” Agenda Pública, June 26, https://
www.eldiario.es/agendapublica/nueva-politica/socialista-enfurecido-jovenes-
sobradamente-preparados_0_275072787.html (retrieved November 25, 2018).
63. Oriol Bartomeus (2014), “¿Como es el votante que ha cambiado al PSOE por
Podemos?,” Agenda Pública, June 13, https://www.eldiario.es/agendapublica/
nueva-politica/votante-cambiado-PSOE-Podemos_0_270523171.html
64. Fernández-Albertos, Los votantes de Podemos, pp.51–52.
65. Agusti Bosch and Iván M. Durán (2017), “How Does Economic Crisis
Impel Emerging Parties on the Road to Elections? The Case of the Spanish
Podemos and Ciudadanos,” Party Politics 25(2): 257–267 (pp.263–264,
https://doi.org/10.1177/1354068817710223.
66. Toni Rodon and María José Hierro (2016), “Podemos and Ciudadanos Shake
Up the Spanish Party System: The 2015 Local and Regional Elections,” South
European Society and Politics 21(3): 339–357 (p.346).
67. José Fernández-Albertos (2018), “Ideología y voto, septiembre de 2018
edition,” Piedras de papel.Eldiario.es, September 26, https://www.eldiario.
es/piedrasdepapel/Ideologia-voto-Septiembre-edition_6_818278193.html
298 N o t e s
68. The 1978 Constitution established seventeen Autonomous
Communities within Spain, each of which has its own representative
institutions with a range of policy responsibilities and some tax-
raising powers. The Basque Country and Navarre have special status,
which gives them high degrees of fiscal autonomy. I refer to the
Autonomous Communities as regions for ease of understanding in
English, although the use of the Spanish term “región” is controversial
in Spain. For an overview, see Luis Moreno, The Federalization of Spain
69. The Socialists are represented in Catalonia by the Catalan Socialist Party
(Partit dels Socialistes de Catalunya, PSC), which is formally an independent
party but federated with the PSOE and to all intents and purposes part of the
same parliamentary bloc in the Congress of Deputies.
70. See Bonnie Field, Why Minority Governments Work: Multilevel Territorial Politics
in Spain (Basingstoke: Palgrave, 2016).
71. “Masiva manifestación por la independencia de Catalunya,” LaVanguardia,
September 11, 2012, https://www.lavanguardia.com/politica/20120911/
54349943522/diada-manifestacion-independencia-catalunya.html (retrieved
November 15, 2018).
72. See for instance, Xavier Cuadras-Morató and Toni Rodon (2019), “The Dog
That Didn’t Bark: On the Effect of the Great Recession on the Surge of
Secessionism,” Ethnic and Racial Studies 42(12): 2189–2208.
73. “Diez viajes en helicóptero para esquivar el Movimiento 15M en el
Parlament,” RTVE Informaciones 24 horas, June 15, 2011, http://www.rtve.
es/noticias/20110615/ocho-helicopteros-trastaladan-presidente-varios-
diputados-parlament-para-evitar-movimiento-15m/440256.shtml (retrieved
November 25, 2018).
74. “Update 1—Spain Struggles to Meet Regions’ 36 Bln-Euro Debts,”
Reuters, May 23, 2012, http://www.reuters.com/article/spain-regions-
idUSL5E8GNEXO20120523 (retrieved December 5, 2018).
75. The episode is vividly described in Mas-Colell’s memoirs: Andreu
Mas-Colell, Albert Carreras, and Ivan Planas, Turbulències i tribulacions
(Barcelona: Edicions 62, 2018), Ch. 2.
76. Prior to 2016, CDC was in a stable electoral coalition, Convergència i Unió
(CiU), with the Christian Democratic Unió Democratica de Catalunya.
Unió opposed the turn to independence and left the coalition, after which
CDC changed its name to the Catalan European Democratic Party (Partit
Demòcrata Europeu Català, PDeCAT).
77. “Mas: ‘Con la mitad del déficit fiscal, Cataluña no necesitaría los recortes,’ ” El
Periódico (Extremadura), July 25, 2012, http://www.elperiodicoextremadura.
com/noticias/espana/mas-con-mitad-deficit-fiscal-cataluna-no-necesitaria-
recortes_669765.html (retrieved December 5, 2018).
Notes 299
78. See Astrid Barrio, Oscar Barberà, and Juan Rodríguez-Teruel (2018), “ ‘Spain
Steals from Us!’ The ‘Populist Drift’ of Catalan Regionalism,” Comparative
European Politics 16(6): 993–1011.
79. Joan Barceló (2018), “Batons and Ballots: The Effectiveness of State Violence
in Fighting against Catalan Separatism,” Research and Politics 5(2): 1–9.
80. Kiko Llaneras, “El apoyo a la independencia tiene raíces económicas y de
origen social,” El País, September 28, 2017, https://elpais.com/politica/2017/
09/28/ratio/1506601198_808440.html (retrieved June 15, 2018).
81. Ibid.
82. Xavier Sala i Martín, “El dividend fiscal de la independència,” Col-lectiu
Wilson blog, November 21, 2012, http://www.wilson.cat/en/mitjans-escrits/
articles-dels-membres/item/210-el-dividend-fiscal-de-la-independencia.html
83. See data in Jordi Argelaguet and Joan Marcet, “Nationalist Parties
in Catalonia: Convergencia Democratica de Catalunya and Esquerra
Republicana,” in Lieven de Winter and Huri Tursan (eds), Regionalist Parties
in Western Europe (London: Routledge, 2003), pp.88–104.
84. Barrio et al., “The ‘Populist Drift’ of Catalan Regionalism,” p.1002.
85. Candidaturas de Unitat Popular (CUP), CUP—Alternativa
d’Esquerres: Candidatura al Parlament de Catalunya a les eleccions del 25
de novembre del 2012, Electoral Programme for 2012 Catalan Elections,
September 5, 2012, https://www.vilaweb.cat/media/continguts/000/052/905/
905.pdf (retrieved November 30, 2018).
86. Barrio et al., “The ‘Populist Drift’ of Catalan Regionalism,” p.1003.
87. “La semana en que el Govern de Torra tuvo que contener a la calle,” eldiario.
es, November 29, 2018, https://www.eldiario.es/catalunya/politica/semana-
Govern-Torra-contener-calle_0_840966849.html (retrieved December
1, 2018).
88. The difficulty of attributing responsibility for policy outcomes in Spain’s
complex system of decentralization makes it more difficult for voters to
penalize regional incumbents for economic problems, facilitating blame-
shifting toward the central government; see Sandra Leon and Lluis Orriols
(2016), “Asymmetric Federalism and Economic Voting,” European Journal of
Political Research 55(4): 847–865.
89. Caroline Gray (2015), “A Fiscal Path to Sovereignty? The Basque Economic
Agreement and Nationalist Politics,” Nationalism and Ethnic Politics
21(1): 63–82.
90. OECD (2011), OECD Reviews of Regional Innovation: Basque Country
(Paris: OECD).
91. “Cataluña y Euskadi, en las antípodas,” El País, September 5, 2017, https://
elpais.com/politica/2017/09/03/actualidad/1504461950_517938.html?id_
externo_rsoc=TW_CC (retrieved November 10, 2018).
300 N o t e s
92. David Reher and Miguel Requena (2009), “The National Immigrant Survey
of Spain: A New Data Source for Migration Studies in Europe,” Demographic
Research 20: 253–278 (p.253).
93. Juan Rodríguez Teruel and Astrid Barrio (2016), “Going
National: Ciudadanos from Catalonia to Spain,” South European Society and
Politics 21(4): 587–607 (p.590).
94. The party’s position on economic issues is strongly influenced by the pro-
market thinking of its economy spokesman, Luis Garicano, a Chicago-trained
academic. See his book El dilema de España (Madrid: Península, 2014).
95. Ignacio Escolar, “¿Puede ser Ciudadanos el Podemos de la derecha?,” eldiario.
es, January 15, 2015, https://www.eldiario.es/escolar/Puede-Ciudadanos-
Podemos-derecha_6_346175409.html (retrieved December 5, 2018).
96. Rodríguez Teruel and Barrio, “Going National,” pp.599–600.
97. Sonia Alonso and Cristóbal Rovira Kaltwasser (2015), “Spain: No Country
for the Populist Radical Right?,” South European Society and Politics
20(1): 21–45.
98. Belén Barreiro, “Vox y la identidad vulnerable,” El País, December 9, 2018,
https://elpais.com/elpais/2018/12/08/opinion/1544286928_310121.html
99. Beatriz Gallardo Paúls, “Vox: El Discurso Enmascarado,” Agenda Pública,
April 12, 2019, http://agendapublica.elpais.com/vox-el-discurso-
enmascarado/(retrieved June 9, 2019).
100. “Cómo ha llegado Vox a ser acusación en el juicio del ‘procés,’ ” Diario Sur,
February 13, 2019, https://www.diariosur.es/nacional/acusacion-popular-
proces-vox-20190213114150-ntrc.html.
101. “Los cuatro pilares de Vox: No al aborto, la familia, la unidad de España y
no a ETA,” El Confidencial, January 16, 2014, https://www.elconfidencial.
com/espana/2014-01-16/los-cuatro-pilares-de-vox-no-al-aborto-la-familia-la-
unidad-de-espana-y-no-a-eta_76858/ (retrieved June 10, 2019).
102. Vox, Manifiesto Fundacional, https://www.voxespana.es/espana/manifiesto-
fundacional-vox (retrieved June 10, 2019).
103. Héctor Meleiro, “Vox: Nueva derecha populista o escisión radical del PP,”
Piedras de Papel, December 26, 2018, https://www.eldiario.es/piedrasdepapel/
Vox-derecha-populista-escision-PP_6_850474947.html (retrieved June 9,
2019); Juan Rodríguez Teruel, “El difuso malestar de las derechas españolas,”
Agenda Pública, January 31, 2019, http://agendapublica.elpais.com/el-
malestar-difuso-de-las-derechas-espanolas/ (retrieved June 9, 2019).
Chapter 7
1. FRED (Federal Reserve of St Louis Economic Data) (2018), “Constant GDP
Per Capita of Italy.” https://fred.stlouisfed.org/graph/?g=mk5k. (retrieved
December 10, 2018).
Notes 301
2. See Nick Crafts (1994), “The Golden Age of Economic Growth in Europe,”
Warwick Economics Research Paper No. 427 (Coventry: University of
Warwick Department of Economics, August), https://warwick.ac.uk/fac/soc/
economics/research/workingpapers/1989-1994/twerp_427.pdf.
3. OECD (2018), “Pension Spending (Indicator),” https://data.oecd.org/
socialexp/pension-spending.htm (retrieved December 9, 2018).
4. See Julia Lynch, Age in the Welfare State: The Origins of Social Spending
on Pensioners, Workers, and Children (New York: Cambridge University
Press, 2006).
5. “Falsi invalidi, cieco per l’Inps ma faceva il guardalinee,” RaiNews, May 26,
2017, http://www.rainews.it/dl/rainews/articoli/falsi-invalidi-cieco-inps-
faceva-guardalinee-11e0180a-a8f0-419a-915d-e75eab50f6e0.html (retrieved
December 18, 2018).
6. Julia Lynch, “Italy: A Christian Democratic or Clientelist Welfare State?,” in
Kees van Kersbergen and Philip Manow (eds.), Religion, Class Coalitions, and
Welfare States (Cambridge: Cambridge University Press, 2009), pp.91–118
(p.93).
7. For a classic account of these practices, see Sidney Tarrow, Between Center
and Periphery: Grassroots Politicians in Italy and France (New Haven: Yale
8. See, for example, Donatella della Porta and Alberto Vannucci, Corrupt
Exchanges: Actors, Resources, and Mechanisms of Political Corruption
9. See Stefano Guzzini (1995), “The ‘Long Night of the First Republic’: Years
of Clientelistic Implosion in Italy,” Review of International Political Economy
2(1): 27–61.
10. Marcello de Cecco (1996), “Italy and the International Economy,” The
International Spectator 31(2): 37–50.
11. See John Goodman, Monetary Sovereignty: The Politics of Central Banking in
Europe (Ithaca: Cornell University Press, 1992), pp.169–179.
12. On the origins and early development of the Northern League, see (in
English) Anna Cento Bull and Mark Gilbert, The Lega Nord and the Northern
Question in Italian Politics (Basingstoke: Palgrave, 2001), and (in Italian)
Roberto Biorcio, La Padania promessa (Milan: il Saggiatore, 1997).
13. Eric Chang, Miriam Golden, and Seth Hill (2010), “Legislative
Malfeasance and Political Accountability,” World Politics 62(2): 177–220
(p.178).
14. Marco Travaglio, “Lodo Mondadori: La storia vera,” L’Espresso, July 15, 2011,
http://espresso.repubblica.it/palazzo/2011/07/15/news/lodo-mondadori-la-
storia-vera-1.33970 (retrieved December 8, 2018)
15. For a summary of fiscal measures, see OECD, OECD Economic Surveys: Italy
1997 (Paris: OECD, 1997), p.77.
16. OECD, OECD Economic Surveys: Italy 1996 (Paris: OECD, 1996), pp.54–57.
302 N o t e s
17. Ugo Pagano and Sandro Trento (2002), “Continuity and Change in Italian
Corporate Governance: The Institutional Stability of One Variety of
Capitalism,” Università degli Studi di Siena Dipartimento di Economia
Politica Working Paper No. 366 (Siena: Dipartimento di Economia Politica).
18. Marcello de Cecco (1998), “The Euro and the Italian Economy,” The
International Spectator 33(2): 33–42 (p.40).
19. Fiorella Padoa Schioppa Kostoris, Italy: The Sheltered Economy: Structural
Problems in the Italian Economy (Oxford: Clarendon Press, 1993), p.4.
20. Ibid., pp.229–230.
22. Francesco Giavazzi and Marco Pagano (1988), “The Advantage of Tying
One’s Hands: EMS Discipline and Central Bank Credibility,” European
Economic Review 32(5): 1055–1075. See also Kenneth Dyson and Kevin
Featherstone (1996), “Italy and EMU as ‘Vincolo Esterno’: Empowering
the Technocrats, Transforming the State,” South European Society and Politics
1(2): 272–299.
23. See Maurizio Ferrera and Elisabetta Gualmini, Rescued by Europe?
Social and Labour Market Reforms in Italy from Maastricht to Berlusconi
(Amsterdam: Amsterdam University Press, 2004).
24. OECD (2018), “Tax Revenue (indicator),” doi: 10.1787/d98b8cf5-en
(retrieved December 31, 2018).
25. Roberto Petrini, L’imbroglio fiscale (Rome: Laterza, 2005), pp.111–116.
26. Erik Jones (2012), “The Berlusconi Government and the Sovereign Debt
Crisis,” Italian Politics 27(1): 172–190.
27. Andrea Brandolini, Romina Gambacorta, and Alfonso Rosolia, “Inequality
amid Stagnation: Italy over the Last Quarter of a Century,” in Brian Nolan
(ed.), Inequality and Inclusive Growth in Rich Countries: Shared Challenges and
Contrasting Fortunes (Oxford: Oxford University Press, 2018), pp.190–220
(p.190).
28. Klaus Armingeon and Lucio Baccaro, “The Sorrows of Young Euro: The
Sovereign Debt Crises of Ireland and Southern Europe,” in Nancy Bermeo
and Jonas Pontusson (eds.), Coping with Crisis: Government Reactions to the
Great Recession (New York: Russell Sage Foundation, 2012), pp.162–197
(p.188).
29. See Andrea Benvenuti (2017), “Between Myth and Reality: The Euro Crisis
and the Downfall of Silvio Berlusconi,” Journal of Modern Italian Studies
22(4): 512–529 (p.511).
30. The letter was published in Italian in “C’è l’esigenza di misure significative
per accrescere il potenziale di crescita,” Corriere della Sera, September 29,
2011, https://www.corriere.it/economia/11_settembre_29/trichet_draghi_
italiano_405e2be2-ea59-11e0-ae06-4da866778017.shtml (retrieved
January 7, 2019). For a summary in English, see “Trichet’s Letter to Rome
Notes 303
Published, Urged Cuts,” Reuters, September 29, 2011, https://www.reuters.
com/article/us-italy-ecb/trichets-letter-to-rome-published-urged-cuts-
idUSTRE78S4MK20110929 (retrieved January 7, 2019).
2017), pp.133–134.
32. Timothy Geithner, Stress Test: Reflections on Financial Crises (London: Penguin/
Random House, 2014), p.476.
33. Stefano Sacchi (2015), “Conditionality by Other Means: EU Involvement in
Italy’s Structural Reforms in the Sovereign Debt Crisis,” Comparative European
Politics 13(1): 77–92 (p.85).
34. For details on fiscal and other measures taken, see Daniela Giannetti
(2013), “Mario Monti’s Technocratic Government,” Italian Politics
28(1): 133–152.
35. “Verbatim of the remarks made by Mario Draghi. Speech by Mario Draghi,
President of the European Central Bank at the Global Investment Conference
in London, 26 July 2012” (Frankfurt: European Central Bank), https://
www.ecb.europa.eu/press/key/date/2012/html/sp120726.en.html (retrieved
January 7, 2019).
36. Paolo Manasse, Giulio Trigilia, and Luca Zavalloni (2013), “Professor Monti
and the Bubble,” Vox: CEPR Policy Portal, March 19, https://voxeu.org/
article/professor-monti-and-bubble.
37. OECD (2018), “General Government Debt (indicator),” doi: 10.1787/
a0528cc2-en (retrieved December 31, 2018).
38. Brandolini et al, “Inequality amid Stagnation,” p.191.
39. OECD, In It Together: Why Less Inequality Benefits All (Paris: OECD,
2015), p.24.
40. See, for example, David Natali, Vincitori e perdenti: Come cambiano le pensioni in
Italia e in Europa (Bologna: Il Mulino, 2007), ch.6.
41. Andrea Brandolini (2014), “The Big Chill: Italian Family Budgets after the
Great Recession,” Italian Politics 29(1): 233–256 (fig.6, p.245).
42. See Brandolini et al., “Inequality amid Stagnation,” p.190.
43. Luigi Cannari and Giovanni d’Alessio, La richezza degli italiani (Bologna: Il
Mulino, 2006), pp.62–63.
44. Gabriele Ballarino, Michela Braga, Massimiliano Bratti, Daniele Checchi,
Antonio Filippin, Carlo Fiorio, Marco Leonardi, Elena Meschi, and
Francesco Scervini, “Italy: How Labour Market Policies Can Foster Earnings
Inequality,” in Brian Nolan, Wiemer Salverda, Daniele Checchi, Ive Marx,
Abigail McKnight, István György Tóth, and Herman van de Werfhorst
(eds.), Changing Inequalities and Societal Impacts in Rich Countries: Thirty
Countries’ Experiences (Oxford: Oxford University Press, 2014), pp.369–391
(p.372).
45. Marco Simoni, Senza alibi: Perché il capitalismo italiano non cresce più
(Venice: Marsilio, 2012); Bruno Pellegrino and Luigi Zingales (2017),
304 N o t e s
“Diagnosing the Italian Disease,” NBER Working Paper No. w23964
(Washington, DC: National Bureau of Economic Research).
46. See Alison Johnston and Bob Hancké (2009), “Wage Inflation and Labour
Unions in EMU,” Journal of European Public Policy 16(4): 601–622.
47. OECD, “Employment by Activity,” https://data.oecd.org/emp/employment-
by-activity.htm (retrieved June 10, 2019).
48. Alfonso Rosolia and Roberto Torrini (2016), “The Generation Gap: A Cohort
Analysis of Earnings Levels, Dispersion and Initial Labor Market Conditions
in Italy, 1974–2014,” Questioni di Economia e Finanza (Occasional Papers),
No. 366 (Rome: Banca d’Italia, November).
49. Piergiorgio Corbetta and Pasquale Colloca (2013), “Job Precariousness and
Political Orientations: The Case of Italy,” South European Society and Politics
18(3): 333–354 (p.335).
50. Brandolini et al., “Inequality amid Stagnation,” p.206.
51. Sauro Mocetti, Elisabetta Olivieri, and Eliana Viviano (2011), “Italian
Households and Labour Market: Structural Characteristics and Effects of the
Crisis,” Stato e mercato 31(2): 223–243.
52. Brandolini et al., “Inequality amid Stagnation,” p.215.
53. Lorenzo di Sio and Hans Schadee, “I flussi del voto e lo spazio politico,”
in ITANES, Voto amaro: Disincanto e crisi economica nelle elezioni del 2013
(Bologna: Il Mulino, 2013), pp.45–55 (p.47).
54. Gianluca Passarelli and Dario Tuorto (2014), “Not with My Vote: Turnout
and the Economic Crisis in Italy,” Contemporary Italian Politics 6(2): 147–158.
55. Roberto Biorcio, Il populismo nella politica italiana: Da Bossi a Berlusconi, da
Grillo a Renzi (Milan: Mimesis, 2015), pp.98–99.
56. Sergio Rizzo and Gian Antonio Stella, La casta: Così i politici italiani sono
diventati intoccabili (Milan: Rizzoli, 2007).
57. Giancarlo Casaleggio and Beppe Grillo, Siamo in guerra per una nuova
politica: La rete contro i partiti (Milan: Chiarelettere, 2011).
58. See Giovanna Cosenza (2014), “Grillo’s Communication Style: From Swear
Words to Body Language,” Contemporary Italian Politics 6(1): 89–101.
59. See the discussion in Antonio Floridia and Rinaldo Vignati (2014),
“Deliberativa, diretta o partecipativa? Le sfide del Movimento 5 stelle alla
democrazia rappresentativa,” Quaderni di Sociologia 65: 51–74.
60. See Marco Deseriis (2017), “Direct Parliamentarianism: An Analysis of
the Political Values Embedded in Rousseau, the ‘Operating System’ of the
Five Star Movement,” JeDEM-eJournal of eDemocracy and Open Government
9(2): 47–67.
61. Some scholars have claimed this makes them exemplars of a new party
type, the “techno-populist party”: see Christopher Bickerton and Carlo
Invernizzi Accetti (2018), “ ‘Techno-Populism’ as a New Party Family: The
Case of the Five Star Movement and Podemos,” Contemporary Italian Politics
10(2): 132–150.
Notes 305
62. Piergiorgio Corbetta and Rinaldo Vignati (2014), “Direct Democracy and
Scapegoats: The Five Star Movement and Europe,” The International Spectator
49(1): 53–64 (pp.57–58).
63. “Programma a 5 Stelle,” Il blog di Beppe Grillo, April 22, 2012, http://www.
beppegrillo.it/programma-a-5-stelle/ (retrieved January 18, 2019).
64. A transcript in Italian can be found on Grillo’s blog: “Piazza Maggiore,
Bologna, otto settembre 2007,” September 9, 2007, http://www.beppegrillo.
it/piazza-maggiore-bologna-otto-settembre-2007/ (retrieved January
11, 2019).
65. Fabio Bordignon and Luigi Ceccarini (2013), “Five Stars and a
Cricket: Beppe Grillo Shakes Italian Politics,” South European Society and
Politics 18(4): 427–449 (p.433).
66. Corbetta and Vignati, “Direct Democracy and Scapegoats,” pp.57–58.
67. Salvatore Merlo, “Bilancio degli economisti di Grillo,” Il Foglio, October
1, 2016, https://www.ilfoglio.it/politica/2016/10/01/news/bilancio-degli-
economisti-di-grillo-104778/ (retrieved June 11, 2019).
68. Movimento Cinque Stelle (2014), “#Reddito di cittadinanza—
Movimento 5 Stelle,” https://www.movimento5stelle.it/parlamento/
REDDITOCITTADINANZA.pdf (retrieved January 11, 2019).
69. Roberto Biorcio and Paolo Natale, Politica a 5 stelle: Idee, storia e strategie del
movimento di Grillo (Milan: Feltrinelli Editore, 2013), pp.55–56.
70. Paolo Natale (2014), “The Birth, Early History and Explosive Growth of the
Five Star Movement,” Contemporary Italian Politics 6(1): 16–36, pp.20–21.
71. Giuliano da Empoli, La rabbia e l’algoritmo: Il grillismo preso sul serio
(Venice: Marsilio, 2017), pp.18–19.
72. Ilvo Diamanti (2014), “The 5 Star Movement: A Political Laboratory,”
Contemporary Italian Politics 6(1): 4–15, p.13.
73. In the vote for the Senate, which is limited to voters aged twenty-five or
above, the M5S polled slightly less: 23.6 percent.
74. See the data in di Sio and Schadee, “I flussi del voto e lo spazio politico,”
Table 3.2, p.49.
75. Delia Baldassarri, “Sinistra e destra: Un’italia di moderati e conservatori,”
in ITANES, Voto amaro: Disincanto e crisi economica nelle elezioni del 2013
(Bologna: Il Mulino, 2013), pp.133–146 (p.137).
76. See data in Marco Maraffi, Andrea Pedrazzani, and Luca Pinto, “Le
basi sociali del voto,” in ITANES, Voto amaro: Disincanto e crisi economica
nelle elezioni del 2013 (Bologna: Il Mulino, 2013), pp.57–70 (Table.4.1,
pp.58–59).
77. Di Sio and Schadee, “I flussi del voto e lo spazio politico,” Table 3.2, p.49.
78. Maraffi, Pedrazzani, and Pinto, “Le basi sociali del voto,” Table.4.1,
pp.58–59.
79. Ibid.
306 N o t e s
80. See the manifesto published by one of the party’s founders, political
economist Michele Salvati: Il partito democratico: Per la rivoluzione liberale
(Milan: Feltrinelli, 2007).
81. Bocconi economists close to the PD have published a number of books
advocating liberalizing reforms on progressive grounds: see, for example,
Alberto Alesina and Francesco Giavazzi, Il liberismo è di sinistra (Rome: Il
Saggiatore, 2007); Tito Boeri and Pietro Garibaldi, Le riforme a costo zero: Dieci
proposte per tornare a crescere (Milan: Chiare Lettere, 2011).
82. The video of this meeting can be viewed at https://www.youtube.com/
watch?v=kTaPo4l8Alw (retrieved January 24, 2019).
83. Paolo Segatti, Monica Poletti, and Cristiano Vezzoni (2014), “Renzi’s
Honeymoon Effect: The 2014 European Election in Italy,” South European
Society and Politics 20(3): 311–331 (p.313).
84. Ibid., Table 2, p.321.
85. Patrik Vesan (2016), “Young Workers and the Labor Market Policies of
Renzi’s Government,” Italian Politics 31(1): 191–208 (p.193).
86. Valeria Cirillo, Marta Fana, and Dario Guarascio (2017), “Labour Market
Reforms in Italy: Evaluating the Effects of the Jobs Act,” Economia Politica
34(2): 211–232.
87. See the analysis by Gianfranco Pasquino and Marco Valbruzzi (2017), “Italy
Says No: The 2016 Constitutional Referendum and Its Consequences,”
Journal of Modern Italian Studies 22(2): 145–162.
88. Ibid., pp.154–156.
89. Anna Cento Bull (2013), “When the Magic Wears Off: Bossi Loses His Grip
and the League Its Appeal,” Italian Politics 28(1): 95–111.
90. Dwayne Woods (1995), “The Crisis of Center-Periphery Integration in Italy
and the Rise of Regional Populism: The Lombard League,” Comparative
Politics 27(2): 187–203 (p.188).
91. Anna Cento Bull (2009), “Lega Nord: A Case of Simulative Politics?,” South
European Society and Politics, 14(2): 129–146 (pp.136–139).
92. See Michel Huysseune (2010), “Defending National Identity and
Interests: The Lega Nord’s Asymmetric Model of Globalisation,” Studies in
Ethnicity and Nationalism 10(2): 221–233.
93. Heidi Beirich and Dwayne Woods (2000), “Globalisation, Workers
and the Northern League,” West European Politics 23(1): 130–143
(pp.131–132).
94. John Agnew, Michael Shin, and Giuseppe Bettoni (2002), “City versus
Metropolis: The Northern League in the Milan Metropolitan Area,”
International Journal of Urban and Regional Research 26(2): 266–283.
95. See John Agnew (1995), “The Rhetoric of Regionalism: The Northern
League in Italian Politics, 1983–94,” Transactions of the Institute of British
Geographers 20(2): 156–172.
Notes 307
96. Raj Chari, Suvi Iltanen, and Sylvia Kritzinger (2004), “Examining and
Explaining the Northern League’s ‘U-Turn’ from Europe,” Government and
Opposition 39(3): 423–450.
97. Benito Giordano (2004), “The Politics of the Northern League and Italy’s
Changing Attitude towards Europe,” Perspectives on European Politics and
Society 5(1): 61–79 (especially pp.70–73).
98. See Valerio Renzi, La politica della ruspa: La Lega di Salvini e le nuove destre
europee (Rome: Edizioni Alegre, 2015), esp. pp.9–10.
99. “Bossi: Abbordaggio alle navi dei clandestine,” Corriere della Sera, June 16,
2003, https://www.corriere.it/Primo_Piano/Politica/2003/06_Giugno/16/
bossi.shtml (retrieved January 27, 2019).
100. Biorcio, Il populismo nella politica italiana, pp.63–67.
101. Davide Vampa (2017), “Matteo Salvini’s Northern League in 2016: Between
Stasis and New Opportunities,” Italian Politics 32: 32–50 (p.35).
102. Daniele Albertazzi, Arianna Giovannini, and Antonella Seddone (2018),
“ ‘No Regionalism Please, We Are Leghisti!’: The Transformation of the
Italian Lega Nord under the Leadership of Matteo Salvini,” Regional and
Federal Studies 28(5): 645–671.
103. Pietro Castelli Gattinara (2017), “The ‘Refugee Crisis’ in Italy as a Crisis of
Legitimacy,” Contemporary Italian Politics 9(3): 318–331 (p.324).
104. Ibid., p.323.
105. See Lega Nord, “Basta euro tour,” https://www.leganord.org/basta-euro-
tourm (retrieved January 31, 2019).
106. Even in interviews to the international financial press, “Brexit Inspires
Salvini Dream of Italy Ditching the Euro,” Financial Times, October
13, 2016, https://www.ft.com/content/8a24cc84-907d-11e6-a72e-
b428cb934b78 (retrieved January 31, 2019).
107. Marco Valbruzzi and Rinaldo Vignati, “Introduzione: Un’elezione storica in
tempi staordinari: Tutto cambia?,” in Marco Valbruzzi and Rinaldo Vignati
(eds.), Il vicolo cieco: Le elezioni del 4 marzo 2018 (Bologna: Il Mulino, 2018),
pp.7–18, (pp.23, 28).
108. See the data in Castelli Gattinara, “The ‘Refugee Crisis’ in Italy as a Crisis of
Legitimacy,” fig.2, p.324.
109. Albertazzi et al., “ ‘No Regionalism Please, We Are Leghisti!,’ ” pp.653–656.
110. Castelli Gattinara, “The ‘Refugee Crisis’ in Italy as a Crisis of Legitimacy,”
fig.2, p.324.
111. Davide Vampa, “Il centrodestra a guida Leghista,” in Valbruzzi and Vignati,
Il vicolo cieco, pp. 57–78 (p.73).
112. Marco Valbruzzi, “Analisi elettorale di un cambiamento ‘radicale’: Chi ha
vinto e chi ha perso,” in Valbruzzi and Vignati, Il vicolo cieco, pp.147–184
(pp. 175–176).
113. Voters were asked to cite the two most important problems. M5S voters were
the most likely to prioritize corruption and the “functioning of the political
308 N o t e s
system,” and the least likely to cite law and order: Luca Comodo and Mattia
Forni, “Chi vota cosa e perché: Il profilo elettorale dei partiti,” in Valbruzzi
and Vignati, Il vicolo cieco, pp. 213–234 (Table 4, p.226).
114. 48 percent of League voters cited immigration and 32 percent cited law and
order as the most important issues, compared to 28 percent and 23 percent,
respectively, on average: Comodo and Forni, “Chi vota cosa e perché.”
Table 4, p.226.
115. Comodo and Forni, “Chi vota cosa e perché,” Table 1, p.215.
116. Cecilia Biancalana and Pasquale Colloca, “Il Movimento 5 stelle alla prova
dell’istituzionalizzazione: Una metamorfosi incompiuta?,” in Valbruzzi and
Vignati, Il vicolo cieco, pp. 79–98 (p.86).
117. Yellow being the favored color of the M5S, green that of the Northern
League.
118. “Milano, cancellata la scritta ‘Basta euro’ dal muro della Lega di via Bellerio,”
LaRepubblica Milano, May 31, 2018, https://milano.repubblica.it/cronaca/
2018/05/31/news/milano_cancellata_la_scritta_basta_euro_dal_muro_della_
lega_di_via_bellerio-197806594/. (retrieved January 17, 2019).
Conclusions
1. Pippa Norris and Ronald Inglehart, Cultural Backlash: Trump, Brexit, and
Authoritarian Populism (New York: Cambridge University Press, 2019).
2. Sheri Berman, The Primacy of Politics: Social Democracy and the Making of
Europe’s Twentieth Century (New York: Cambridge University Press, 2006).
3. Of course, neoliberalism also implies action, not only to “free” markets but
also to shape them for political ends. See Quinn Slobodian, Globalists: The
End of Empire and the Birth of Neoliberalism (Cambridge, MA: Harvard
4. Matthew Yglesias, “Why Millions of People Are Getting Hit with a Surprise
Tax Bill This Year,” Vox, February 6, 2019, https://www.vox.com/policy-and-
politics/2019/2/6/18214039/irs-tax-refund-withholding-trump.
5. David Woodruff (2016), “Governing by Panic: The Politics of the Eurozone
Crisis,” Politics and Society 44(1): 81–116.
Notes 309
INDEX
For the benefit of digital users, indexed terms that span two pages (e.g., 52–53) may, on
occasion, appear on only one of those pages.
Notes: Figures are indicated by f and tables by t, respectively, following the page
number.
1%. See one percent vote shares, creditor and debtor
15-M, 187–88, 195–97, 200–1, 205, countries, 77–78, 78f
209, 210 anti-system parties, 50–8 3, 55f,
99%, 104, 105 57t See also specific countries and
parties
Abascal, Santiago, 213 anti-system politics, defined, 51
Agnelli, Susanna, 221 vs. cultural backlash
Alesina, Alberto, 48–49 thesis, 250–5 1
Alleanza Nationale (AN), 1–2, 220, 227f economy, 73, 75f
Alternative for Germany (AfD), 77, 80– electoral market gap, 57t, 58
81, 82t, 185 Global Financial Crisis, 67, 69f,
American Recovery and Reinvestment 71f, 72f
Act (ARRA), 100 mid-2010s, 250–51
Andreotti, Giulio, 219 neoliberalism, critiques, 61, 67f
Ansell, Ben, 141–42 populism, 51–52, 60
anti-capitalist Left, 3 UK (1979-2019), 129f, 129
anti-system Far Right, 61, 77. See also welfare states and labor markets, 76,
specific parties 78f, 82t
anti-system Left, 64–66. See also specific anti-system parties, Italy. See also Italy
parties Alleanza Nationale (AN), 1–2,
southern Europe, post Great 220, 227f
Recession, 172 Northern League, 1–2, 62–63, 82t
anti-system parties, Spain. See also Spain from economic crises, 50–51
Catalan nationalists, 2–3 Italy, 227f, 229
Podemos (See Podemos) priming, 8
anti-system politics. See also specific topics Spain, 195, 198f, 199f
definition, 4, 51, 54f, 55f bailouts, Global Financial Crisis. See also
existing political class/establishment, specific countries
opposition, 51 banks, 45–46
future, 256–57 debtor countries, anti-system Right
Global Financial Crisis, 67, 69f, opposition, 63
71f, 72f Obama on, 100
vs. populism, 51–52, 60 politics, 98
roots, 4 southern Europe, inequality and
terminology origins, 4 precarity from, 166, 167f, 171f
anti-system Right, 61–64. See also southern Europe, unemployment
specific parties and topics after, 166–67, 167f
vote shares, creditor and debtor bank, central
countries, 77–78, 78f credit system, government, 42
Assemblea Nacional de Catalunya independence, 31–32
(ANC), 208 price stability policy, 31–32
austerity measures banks
creditor countries, after financial 2008 financial crisis, bailouts, 45–46
crisis, 80 2008 financial crisis, reckless
Eurozone North-South divide, lending, 44–45
political costs, 184 deregulation, 42
austerity measures, Britain Gordon Brown bailouts, 125f, 131
debt load and tax increases, Bannon, Steve, 114–15
2014-2015, 137–38 Basque Country
EU blamed for, 138, 143f ETA (terrorist group), 213–14
austerity measures, southern Europe, indignados, 196–97
160, 161f, 162f territorial politics, 203, 205f, 206f
European Monetary Union Berlusconi, Silvio, 216–17. See
entry, 156–57 also Italy
Great Recession, 160, 161f, 162f 2001 election, 222–25, 223f, 224f
Italy and Berlusconi, 220–22 Bank of Italy austerity
Spain and indignados (15-M) measures, 220–22
opposition movement, 187–88, Forza Italia and government,
195–97, 200–1, 205, 209, 210 1–2, 219–21, 229f, 240–41,
Austrian Freedom Party, 62 242, 244–46
Global Financial Crisis, 2
backlash, cultural, 10–11, 250–51 Berman, Sheri, 251–52
backlash, political Birmingham “caucus,” 23
anti-system Left, North-South Bismarckian occupation-based welfare,
divide, 153, 172 28, 263n30
312 I n d e x
southern Europe Great Britain, Brexit, lead up to, 117–50
Recession, 168–69 austerity measures, debt
Blair, Tony load and tax increases,
on Labour Party positions, 123 2014-2015, 137–38
progressive center, 31–32 austerity measures, EU blamed for,
resignation, 130–31 138, 143f
Bloco Esquerda (BE, Left Bloc), 65, Cameron’s Conservative Party
180–81, 181f, 182–83 vs. Scottish National Party
Blyth, Mark, 12, 102 (2015), 117
Bocconi University economists, 222, cartel breaking, two-party system
235, 307n81 threats, 127, 128f, 129f
Bolsonaro, Jair, 61 economics, ruling parties’
Bossi, Umberto, 237–38, 239 convergence, 122f, 122, 125f
Bretton Woods conference and system, geography, income
24–26, 44 imbalances, 133–34
breakdown, 62–63 geography, wealth
on international financial concentration, 121
system, 262n15 Global Financial Crisis, Gordon
Brexit, 2–3, 252 Brown and, 125f, 131
anti-system forces, 82t implementation difficulties, 145
as anti-system vote, 117–18 inequality, neoliberalism and
Cameron resignation, 117, 145–46 Thatcher, 119–21, 120f
campaign issues mobilized, 248–49 market-oriented economy,
election result, on British uncertainty and insecurity, 121
politics, 139 neoliberal project, effects,
immigration anxiety on, 119, 120f
140–42, 144 political system, turn against, 135
Left-wing advocates, 139–40 political turbulence,
May election and failed strategy mid-2010s, 134
after, 145–49 Scottish referendum, 135–36
refugee crisis, 2010s, 139–40 social policy postwar, 119
vote, age on, 141, 142–44, 143f wage declines and stagnation, post
vote, economy on, 73 financial crisis, 133, 134f
vote, education level on, 141, welfare state, 119, 122f,
142–44, 143f 122–23, 124
vote, gender on, 143f British Election Studies, early 21st
vote, geography and jobs on, century, 37, 265–66n61
141–43, 143f British National Party (BNP), UK
vote, income on, 141, 143f, 143–44 support, 129f, 129–30
Britain. See also specific parties and topics Brothers of Italy, 239, 240–41, 245
Great Recession, double-dip, Brown, Gordon, 125f, 130–31
160–61, 161f Buffet, Warren, 40–41
Liberals, early 1900s, 23 Butler, Judith, 104
Index 313
cadre parties, 22 nationalists and independence,
Cameron, David, 58 2–3, 188
Conservative Party and 2015 Partit dels Socialistes de Catalunya
election, 117 (PSC), 306n69
Conservative Party reorientation, Socialists, 299n69
122, 125f welfare state contributions,
resignation, after Brexit vote, Spain, 195
117, 145–46 catch-all approach, electoral
Candidatura de Unitat Popular (CUP, mobilization, 29–34, 265n50
Popular Unity Candidacy), 209, Catalan nationalists, 2–3
235–36, 237 “center-left,” 7, 37
capitalism banking system interventions, 42
vs. democracy, 14, 21 creditor vs. debtor status, welfare
democratic, rise and fall, 21–49 (see states, 82, 82t
also democratic capitalism) Europe, 15–16
democratization, 24, 27f, 28f Greece, 73, 174–75, 176, 178
“double movement,” 14–15 Ireland, 73
managed, 262n18 Italy, 63, 81–82, 229, 232, 233–34,
Capitalism and Freedom 235, 237, 246–47, 249–50
(Friedman), 30–31 liberalizing reforms, 58
cartel parties, 37 Portugal, 73, 181
neoliberal democracy, 39 Spain, 202–3, 214
UK, two-party system, 127, support basis, shift, 58–59
128f, 129f US, 15–16
cartel politics US, Democratic Party, 115–16, 158
democratic disaffection, 35, “center-right,” 37
36f, 38f Britain, 123–24
disenfranchisement, 35–37, 36f Europe (1990s), 2
on income distribution, 39–40, 40f Greece, 73
Casaleggio, Gianroberto, 231 Hillary Clinton election
Case del Popolo, 26 failure, 115–16
Catalonia Ireland, 73
Candidatura de Unitat Popular (CUP, Italy, 229, 232, 233–34, 235–36,
Popular Unity Candidacy), 209, 237–38, 246–47, 250
235–36, 237 Italy, Berlusconi, 68–70,
Convergència i Unió (CiU), 204, 237–39, 244–45
205–6, 207, 208, 209–10, 299n76 Portugal, 73, 156–57,
crisis and territorial politics, 203, 180–82, 183
205f, 206f Spain, 190, 198, 208–9, 210,
Esquerra Republicana de Catalunya 213, 215
(ERC, Catalan Republican Left), welfare states, 82, 82t
198f, 199f, 199–200, 207–8, 209 central bank
indignados, 196–97 credit system, government, 42
314 I n d e x
independence, 31–32 conservatives. See also specific parties and
price stability policy, 31–32 countries
Centro Democrático e Social-Partido position in party system, 53–55, 54f
Popular (CDS-PP), 180, 181f, goals, 4
181, 182–83 social conservative attitudes, 58
Chamberlain, Joseph, Birmingham Constitution, US, on voter preferences
“caucus,” 23 vs. policy outcomes, 93
Chiesa, Mario, 218 Conte, Giuseppe, 245
Christian Democrats Convergència i Unió (CiU), 198f,
position in party system, 53–55, 54f 199f, 199–200, 204, 205–6, 207,
goals, 1960s, 4 208, 209–10
Christian Democrats, Italy, 28, 217–18, coordinated market economies, 74
221, 235 Corbyn, Jeremy
Ciampi, Carlo Azeglio, 220–21 anti-system Left, 2–3, 66, 82t
Citizens United, 96 electoral system reform and election
Ciudadanos (Citizens), 53, 55–56, of, 5–6, 136–37
198f, 198–200, 199f, 212–14, post-Brexit, 147–48
215, 301n94 socialism, 65
Clinton, Bill Cottarelli, Carlo, 245–46
on American workers, 95–96 Craxi, Bettino, 219–20
financial deregulation, 95–96 creditor countries. See also specific
political dynasty, 97 countries
progressive center, 31–32 after financial crisis, austerity
Reagan marketization measures, 80
agenda, 95–96 after financial crisis, welfare states, 80
Clinton, Hillary anti-system Right and Left vote
Obama defeat of, 97 shares, 77–78, 78f, 79–80,
vs. Sanders, Bernie, 109–12 81–82, 82t
Trump defeat of, 113–14 in Europe, vs. debtor
Colau, Ada, 187–88 countries, 154–55
collective bargaining, reductions, 41 creditor countries, post financial
Communist parties. See also specific crisis, 47–48
parties creditors, 13
France and Italy (1960s), 4–5 restrictions, postwar, 44
Greece, KKE, 174f, 177–78 credit system. See also banks; specific topics
Portuguese Communist Party deregulation, 42
(PCP), 182–83 government, central bank and, 42 (see
Conservative Party (Britain) also bank, central)
Cameron’s loss (2015), 117 Crisis of Democracy, The (Trilateral
Cameron’s reorientation, 126 Commission), 31
on postwar economic model, 119 cultural backlash, 10–11, 250–51
rightward move, Brexit, 118 culture, 10
Conservative Primrose League, 23 culture wars, 60
Index 315
Dalton, Russell, 32–34 market liberalism, 30, 33f
debt, 13. See also specific countries and market liberalism, Global Financial
regions Crisis, 44, 46f
growth, Global Financial neoliberal democracy, 39, 40f
Crisis, 98–99 origins, post World War II, 24
southern Europe, Great Recession, party democracy, origins, 22
160, 161f, 162f as populist, 30–31
UK, personal debt, 121 democratic deconsolidation, 259n4
debtor countries, 13. See also southern Democratic Party (PD), Italy,
Europe; specific countries 220, 227f, 229f, 229, 230–
anti-system Left, 17, 83 31, 232, 234, 235, 237–3 8,
bailouts, anti-system Right 240–4 1, 242, 244, 245,
opposition, 63 246–4 7, 307n81
credit-fueled growth, southern Democratic Unionist Party (DUP), 57t,
Europe (2002-2007), 136, 138–39, 146–47, 148
158–60, 159f Die Linke, 65
Europe, vs. creditor Dijsselbloem, Jeroen, 164
countries, 154–55 DIMAR, 176
left policies, 66–67 Dini, Lamberto, 221
post financial crisis disaffection, democratic, cartel politics
adjustments, 47–48 and, 35, 36f, 38f
vote shares, anti-system Right and disenfranchisement, party cartel model,
Left, 75–76, 77–78, 78f 35–37, 36f
de Guindos, Luis, 192 distribution, income
democracy, 256–57 cartel politics on, 39–40, 40f
vs. capitalism, 14, 21 democracies, 20th century,
egalitarian principles, 23 39–40, 40f
Friedman on, 264n37 UK, 1997+, 117–18, 119–21,
parties, 22 120f, 122–23
parties, origins, 22 (see also party US political parties’ polarization
democracy) on, 94–95
popular, majority will, 30–31 distributional consequences
on ruling elites, 23 of crisis, 226, 227f
Democracy in Chains: The Deep History of winner, losers, and, 13
the Radical Right’s Stealth Plan for Dodd-Frank Act, 102
America (McLean), 264n39 “double movement,” 14–15
democratic capitalism, 21–49, 262n18 Dutch. See the Netherlands
background, 21 Dutch Labour party (PvdA), 70
cartel politics and disaffection, 35, Duverger, Maurice, 22–23
36f, 38f
definition, 25 Ecology Greens Party (PEV), 182
democratization of capitalism, 24, Economic Assistance Program (EAP),
27f, 28f 162–65, 192
316 I n d e x
economic (financial) crises. See also families, Presidents, 97
specific countries and topics financialization and, US, 97
1970s, 29–30 political, 97
2000s, 44–45 (See also Global ruling, democracy on, 23
Financial Crisis; Great Recession) embedded liberalism, 262n18
political backlash, 50–51 Emergency Economic Stabilization
upheaval from, 50 Act, 99. See also bailouts, Global
economics. See also neoliberalism; specific Financial Crisis
countries and topics employment. See labor markets
American model, 89 employment protection
economic interventionism, post legislation, reduced, 41, 43
World War II, 25–26 US, limited, 91–92
fissures, neoliberal democracy, 8 enfranchisement
liberalism, 51–52 party cartel model, 35–37, 36f
policy positions, political parties of poor, Federalists and John Stuart
(1945-2017), 37–38, 38f Mill on, 23
economy. See also specific countries En Marche (Macron’s party),
and topics 53, 55–56
anti-system parties’ rise, 73, 75f Esquerra Republicana de Catalunya
Brexit vote, 73 (ERC, Catalan Republican Left),
market-oriented, uncertainty and 198f, 199f, 199–200, 207–8, 209
insecurity, 121 establishment. See also specific topics
political parties and, US, 94f, anti-system parties and
94–95 politicians on, 8
education, publicly funded, parties opposing, 51, 53
Britain, 119 politicians (See specific politicians)
education level ETA (Basque terrorists), 213–14
on Brexit vote, 141, 142–44, 143f Europe. See also specific countries and topics
on voting behavior, 11 new North-South divide, 153–86
on xenophobia, 12 (see also North-South divide, new
Einaudi, Luigi, 222 European)
EK (Union of Centrists), Greece, 176 southern (See southern Europe)
electoral competition, valence model, European Central Bank (ECB)
265–66n61 Italy, 225–26, 246
electoral market gap, anti-system Spain, 191–92, 197, 201–2
parties and, 57t, 58 European Green Party, 55–56, 65–66
electoral mobilization, catch-all European Monetary Union (EMU), on
approach, 29–34, 265n50 southern Europe 156 on southern
electoral-professional party, 265n50 Europe, welfare state expansion
electoral volatility, 35–36, 265n56 ideological divides, 155
elites reforms required, 156
Congress favoring policy preferences European Stability Mechanism (ESM),
of, 96, 271n28 162, 192
Index 317
exogenous shock France
black swan, 44–45 Communist parties, 1960s, 4–5
crises, absence, 44 En Marche, 53, 55–56
crises, after 1970s liberalization, 44 Socialist Hollande, 68–70, 73, 249–50
Socialist Left, 65
Fail, Fianna, 70 France Insoumise, 65
Farage, Nigel, 149 Friedman, Milton
Far Right. See also specific countries and Capitalism and Freedom, 30–31
parties on democracy, 264n37
anti-system, 61, 77
xenophobic, 5–6 Galloway, George, 129–30
Federalists, American, on GDP per capita
enfranchisement of poor, 23 European Economic Community
Fidesz, 63 (1950-1992), 217
financial crises. See economic (financial) Eurozone countries growth (1999-
crises; specific crises 2016), 223, 224f
financialization, US Italy, 216–17
from deregulation, 92 General Theory (Keynes), 15
elites, 97 Germany
shocks, 98 Alternative for Germany (AfD), 77,
Fine Gael, 70 80–81, 82t, 185
Finns, The, 55–56, 185 current account balance (2002-2017),
fiscal rules, 31–32 159f, 159–60
Five Stars Movement (M5S), Die Linke, 65
82t, 227f government borrowing (1990-2008),
2018 election, 229f, 240 158f, 158
as anti-system party, 56 Great Recession, double-dip,
campaign issues mobilized, 248–49 160–61, 161f
as economic crisis reaction, 217 Green parties, 65–66
on globalization, 66 labor movement, early 1900s, 23–24
growth, after economic crisis, 2–3 refugee crisis, 2010s, 80–81
origins, 216 social spending (1989-2015), 128f
origins through 2013 election, 229 Gini coefficient
progressive democratic values, 5–6 anti-system vote, post-tax income on
Renzi’s reform project, 235 (2010), 75f, 75–76
success, 76–77 inequality, disposable household
as techno-populist party, 66 income, 46f, 46, 268n95
yellow-green government, 244 inequality, UK vs. Germany and
“flaw in the model,” 44 France (1970s), 119
Foa, Roberto, 259n4 Italy, 1985 vs. 2013, 98–99
Fornero reform, 225, 240, 244, 246 Global Financial Crisis, 2, 5, 9–10, 41.
Forza Italia, 1–2, 219–21, 229f, 240– See also specific countries
41, 242, 244–45 anti-system politics, 67, 69f, 71f, 72f
318 I n d e x
bailouts, 45–46 southern Europe, 160, 161f, 162f
bailouts, Britain, 125f, 131 unemployment, 100–1
bailouts, debtor countries and anti- Great Transformation, The (Polanyi),
system Right opposition, 63 14–15, 16
bailouts, politics, 98 Greece. See also southern Europe
Brown, Gordon, 125f, 130–31 anti-system Left turn, 172
economic crisis, 2 Communist KKE, 174f, 177–78
electoral volatility after, 68, 69f current account balance (2002–
on Europe, 153–54 2017), 158–59, 159f
interwar period, 15 Economic Assistance
market liberalism, 44, 46f Program, 162–65
neoliberal democracy, 5, 248 EK (Union of Centrists), 176
political backlash from, 50–51 European Monetary Union
subprime mortgage market, entry, 157
98–99, 100 Golden Dawn (XA), 174f,
vote switching after, 68, 69f 174–75, 176–77
globalization, economic, 13 government borrowing (1990-2008),
immigration, 13 158f, 158
UK as driver of, 13 Great Recession, double-dip,
US as driver of, 13 160–61, 161f
winners, losers, and distributional Greek Socialist Party (PASOK), 2–3,
consequences, 13 70–71, 76–77, 165, 173, 174f
golden age (1950s and 1960s), mass immigration, 172–73
parties, 26–27, 27f Independent Greeks (ANEL), 174f,
Golden Dawn (XA), 174f, 174–75, 176, 177
174–75, 176–77 LAOS (Popular Orthodox Rally), 82t,
Goldsmith, James, 129 174f, 176
González, Felipe, 194 ND-PASOK government, 178
Gove, Michael, 144–45 New Democracy (ND), 70–71,
government spending. See also welfare 156–57, 165, 173–76, 174f,
state; specific areas 177–78, 179
postwar golden age, 26 Papandreou and bailouts, 173–74
Great Recession, 10. See also specific Potami (The River), 176
countries and topics refugee crisis, 2010s, 79, 179
Bismarckian occupation-based ruling families, Papandreous and
welfare, 168–69 Karamanlis, 173–74
deficit countries, high current social spending (1989-2015),
account, 45–46, 46f 128f, 168
economic crisis, 2 SYN, 177–78
Europe’s double-dip recession, Syriza, 65, 76–77, 82t, 174f, 174–
160–61, 161f 75, 177–79, 253
interwar period, 15 Troika to Pasokification, 173, 174f
neoliberal democracy, 5, 10 wealth, financial and housing, 170
Index 319
Greek Socialist Party (PASOK), 2–3, geographic differences, 133–34
70–71, 76–77, 165, 173, 174f neoliberalism and Thatcher,
Green parties, Europe, 55–56, 65–66 119–21, 120f
Green Party, UK support, 129f, income change
129–30, 135 on incumbent vote loss, 70, 71f
Greenspan, Alan, 45 Italy (1991-2010), 94f, 226
Grillo, Beppe, 227f, 229 southern Europe (2007-2013),
campaign issues mobilized, 248–49 162f, 163
early political actions, 216, 217 income distribution
Five Stars Movement (M5S), 216, cartel politics on, 39–40, 40f
217, 227f, 229f, 229–40 (see also democracies, 20th century,
Five Stars Movement (M5S)) 39–40, 40f
UK, 1997+, 117–18, 119–21,
Hacker, Jacob, 89 120f, 122–23
Haider, Jorg, 62 US, political parties’ polarization
health care, publicly funded on, 94–95
Britain, postwar, 119 income growth
precarious existence on, 92 median, negative
Holland. See the Netherlands (2007-2014), 45–46
Hollande, François, 68–70, 73, 249–50 US (1979-2015), 89–91, 90f
Homs, Francesc, 209–10 US, top income group, 90, 91f
Independent Greeks (ANEL), 174f,
Ichino, Pietro, 232 174–75, 176, 177
identity politics indignados (15-M), 187–88, 195–97,
Catalonia, 83 200–1, 205, 209, 210. See also
social liberalism, 51–52 Podemos
Spanish nationalism, 211 inequality, income and wealth
immigration, 250–51 Americans vs. Europeans on, 93
on Brexit vote, 140–42, 144 anti-system voting, peak, 75f, 75–76
economic globalization, 13 Britain, neoliberalism and Thatcher,
rhetoric against, 61 119–21, 120f
right-wing parties, Europe, 2 democracies, 20th century,
southern Europe political 39–40, 40f
debate, 172–73 disposable household income, 46f,
Trump opposition, 108 46, 268n95
western democracies, 11 exposure to financial crises, 46–47
income, UK financial instability, 98
1970s vs. 1990s, 119, 281n2 industrial age, 23
1997+, distribution and inequality, Mediterranean social model,
117–18, 119–21, 120f, 122–23 166, 167f
1997 Labour victory, inequality and negative median income growth,
fiscal policy, 123–26 (2007-2014), 144
on Brexit vote, 141, 143f, 143–44 neoliberalism and markets, 8–9
320 I n d e x
union membership, 27–28, 28f Christian Democratic Party, 28, 217–
US, 87–88 18, 221, 235
US, market liberal project, 89, Ciampi, Carlo Azeglio, 220–21
90f, 91f Communist parties, 1960s, 4–5
voters on, 59 Conte, Giuseppe, 245
Inglehart, Ronald, 10–11, 60 Cottarelli, Carlo, 245–46
insecurity Craxi, Bettino, 219–20
market-oriented economy, 21, 121 crisis, distributional consequences,
US market liberal project, 89, 90f, 226, 227f
91f, 91–92 current account balance (2002–
Western democracies, issues, 11 2017), 158–59, 159f
interwar period Democratic Party (PD), 220, 227f,
Global Financial Crisis and Great 229f, 229, 230–31, 232, 234,
Recession, 15 235, 237–38, 240–41, 242, 244,
mass politics and market 245, 246–47, 307n81
capitalism, 24 Dini, Lamberto, 221
Ireland Euro and lead up to financial crisis,
current account balance (2002-2017), 222, 223f, 224f
158–59, 159f European Central Bank (ECB),
Economic Assistance Program, 225–26, 246
162–63, 164 European Monetary Union entry, 157
Fainna Fail, 70 Eurozone sovereign debt crisis, 224
Labour Party and Fine Gael, 70 fiscal position (1988-2017),
social spending (1989-2015), 222–23, 223f
128f, 168 Five Stars Movement (M5S) (see
Italy, 216–47. See also Berlusconi, Five Stars Movement (M5S);
Silvio; southern Europe Grillo, Beppe)
1992 financial crisis and “First Forza Italia, 1–2, 219–21, 229f,
Republic” end, 217 240–41, 242, 244–45
2018 election, 229f, 240 GDP per capita growth (1999-2016),
Agnelli, Susanna, 221 223, 224f
Alleanza Nationale (AN), 1–2, Gini coefficient, 1985 vs.
220, 227f 2013, 98–99
Andreotti, Giulio, 219 government borrowing (1990-2008),
anti-system Left turn, 172 158f, 158
Berlusconi, Silvio, 216–17, 219, Great Recession, double-dip,
222–25, 223f, 224f (see also 160–61, 161f
Berlusconi, Silvio) income changes (1991-2010),
Bocconi University economists, 222, 94f, 226
235, 307n81 “Italy First,” rise of Right, 237
Bossi, Umberto, 237–38, 239 labor movement, early 1900s, 23–24
Brothers of Italy, 239, 240–41, 245 Letta, Enrico, 235–36
Chiesa, Mario, 218 Monti, Mario, 224–26
Index 321
Italy (cont.) neoliberalism, 32
Northern League (see Northern risk, US, 91–92
League) unemployment, Great
Party of Freedoms (PDL), 229f, Recession, 100–1
229, 234 in voting, anti-system, 76, 78f, 82t
pensions, inequality, 226–28 welfare reforms on, US, 95–96
political backlash, 227f, 229 labor parties. See also specific parties
Prodi, Romano, 221 1970s economic crisis, 29–30
refugee crisis, 2010s, 239–40, 241– postwar golden age, Britain,
42, 246, 247 Australia, and New
Renzi’s reform project, 235 Zealand, 28–29
Salvini, Matteo, 62–63, 237, Labour Party (UK)
240–41, 254 1980s and 1990s, electability
Savona, Paolo, 245 problems, deindustrialization
social spending (1989-2015), on, 123
128f, 168 1990s, move to left, 118
tangentopoli (bribes system), 218–19 1997+, income distribution and
wealth, financial and housing, 170 inequality, 117–18, 119–21,
yellow-green government, anti- 120f, 122–23
system as system, 244 1997 victory, fiscal policy and income
inequality, 123–26
Johnson, Boris, 145, 148 2010 defeat, 132–33
Juncker, Jean-Claude, 42 bailout support, 118
Junts pel Sí (Together for Yes), 208 Blair on, 123
centrist move and neoliberal
Kammenos, Panos, 178 economics, Tony Blair,
Karamanlis, Konstantinos, 173–74. 123–27, 125f
See also Greek Socialist Party origins, 23
(PASOK); New Democracy (ND) postwar golden age, 26
Katz, Richard, 37 Labour Party, Ireland, 70
Keynes, John Maynard, 24–25, 44–45 LAOS, 82t, 174f, 176
General Theory, 15 Law and Justice party (PiS), 63
Keynesianism, privatized, 98, 271n35 Left, US. See also specific groups and parties
Kindelberger, Charles, 44–45 Bernie Sanders and return of, 109
Klein, Naomi, 104 Sanders and revival, 109
weakness of, historical, 92–93
labor markets left-libertarianism, 65–66
in anti-system voting, 76 on market system, 65–66
deregulation, 64–65 social-cultural values, 60
immigration controls, 61 Letta, Enrico, 235–36
inward migration and anti-system liberal democracy, xenophobic Far
forces, 11 Right threat, 5–6
market liberalization on, 41, 48–49 Liberal Democrats, 2010 success, 135
322 I n d e x
liberalism mass parties, 22–23
21st century politics, early, 60 decline, 35, 36f, 38f
position in party system, 53–55, 54f decline, democracies (1960-2015),
definition and mis-use of 35–36, 36f
term, 51–52 financial crisis, public money vs.
economic, 51–52 private donations, 34–35
embedded, 262n18 membership decline (1950-2008),
goals, 1960s, 4 32–34, 33f
social, 51–52 postwar golden age, 26–27, 27f
Liberals, Britain, early 1900s, 23 May, Theresa, 145–49
liberal social-cultural values, 60 McCarty, Nolan, 93–94
Lipset, Seymour Martin, 35 McLean, Nancy, Democracy in
Lynch, Julia, 218 Chains: The Deep History of the
Radical Right’s Stealth Plan for
M5S. See Five Stars Movement (M5S) America, 264n39
Macron, Emmanuel, En Marche, Mediterranean social model
53, 55–56 definition, 169
Mair, Peter, 37 inequality and precarity, 166
Ruling the Void, 39 Mélenchon, Jean-Luc, 66
Major, John, 123 Menon, Anand, 144–45
Mas-Colell, Andreu, 188 migration. See immigration;
managed capitalism, 262n18 refugee crisis
market governance, 42–44 Miliband, Ed, 117, 136–37
market liberalism, 42–44. See also Mill, John Stuart, on enfranchisement
neoliberalism of poor, 23
cartel politics on income minimalist government,
distribution, 39–40, 40f Friedman’s, 30–31
democracy and, 30, 33f Minsky, Hyman, 44–45
Global Financial Crisis and, 44, 46f Monti, Mario, 224–26
inequalities from, 43–44 mortgage market, US subprime,
markets 98–99, 100
inequality and insecurity from, 21 Mounk, Yascha, 259n4
liberal, revolutionary power, 271n31
neoliberalism and inequality, 8–9 National Commission on Fiscal
against people, 61, 67f (see also Responsibility and Reform, 101
neoliberalism) nationalism, 60, 64. See also specific
pro-market positions, American parties and countries
political system, 95–96 neoliberal democracy, 5
prosperity from, 21 anti-system politics rejection of, 52
regulation, reduced, 41–42 economic effects, 8–9
skepticism of, European right, 63–64 economic fissures, 8
structural reforms, 41 Global Financial Crisis, 9–10, 248
Mas, Artur, 206–8 Great Recession, 5, 10
Index 323
neoliberal democracy (cont.) New Democracy (ND), 70–71, 156–57,
inequality, 9, 39–41, 40f 165, 173–76, 174f, 177–78, 179
inequality, plutonomy, and market ninety-nine percent, 104, 105
governance, 39 Nordic Green Left, 65–66
plutonomies, 40–41 Norris, Pippa, 10–11, 60
“sink or swim,” 9–10 Northern League, 82t, 229f, 237–44
neoliberalism 2018 election, 240
anti-system critiques, 61, 67f Bossi, Umberto, 237–38, 239
central bank independence, 31–32 as economic crisis reaction, 217
democracy and, 30, 33f economic protectionism, 62
fiscal rules, government, 31–32 fiscal policy, government, 220–21
intellectual history, 264n39 Forza Italia, bringing down, 220–21
party membership decline (1950- Forza Italia, initial alliance, 220
2008), 32–34, 33f Italy first, 62–63
Reagan, Ronald, 87–88 origins and reinvention, 217
self-regulating market, 14–15, 252 on pension changes, 228
on trade union power and strikes, on Renzi’s constitutional reform, 237
32, 33f Salvini, Matteo, 211–12, 237, 254
Trilateral Commission, The Crisis of separatist position, 1–2
Democracy, 31 tax revolt, 219
Trump challenge, 252–53 yellow-green government, 244
UK, in Brexit, 118 (see also Brexit) Northern Rock bank, 130–32
neoliberalism, on US North-South divide, new
democracy, 87–116 European, 153–86
American Left, Bernie Sanders and anti-system Left backlash, 153, 172
return of, 109 bailout recipients, Mediterranean
American party system, 92, 94f, 95f social model inequality and
anti-system politics and Trump’s precarity, 166, 167f, 171f
win, 111 Eurozone austerity, political
financial bailout politics, 98 costs, 184
inequality, 87–88 Greece, Troika to Pasokification,
inequality and insecurity, from 173, 174f
market liberal project, 89, 90f, 91f Portugal, quiet revolution, 180, 181f
Trump election, 87–88 southern Europe, debt, austerity, and
Trump vs. GOP, 105 Great Recession, 160, 161f, 162f
voters and financial crisis, 102 southern Europe, Euro and short-
neoliberal project lived success, 155, 158f, 159f
in Britain, 119, 120f
in US, 89, 90f, 91f Obama, Barack
Netanyahu, Benjamin, 61 on 1%rs, 105
the Netherlands 2008 crisis response and stimulus
Dutch Labour party (PvdA), 70 program, 100, 101
PVV (Dutch Freedom Party), 62 Clinton defeat, 2008, 109
324 I n d e x
elections, financial crisis, 113 Pasokification, 76–77, 174–75, 179–80
on financial bailout policy, 100 Passos Coelho, Pedro, 181
as liberal, 88 Paulson, Henry, 99
Occupy movement on, 105 Pederson index, 35–36, 68,
Tea Party opposition, 103 265n56, 273n50
Trump critiques, 107, 114 pensions, state
Ocasio-Cortez, Alexandria, anti-system Britain, postwar, 119
politics, 88 Fornero reform, 225, 240, 244, 246
Occupy movement, 103–4, 105 inequality, 226–28
Occupy Wall Street, 104 southern Europe, spending,
Omnium Cultural (Catalonia), 208 171f, 171–72
one percent, 3 Spain, 194–95
economic crisis, 64–65 Piketty, Thomas, 24, 39–40
income growth (2009-2015), 105 Occupy movement, 104
Obama on, 105 Plataforma Afectados por las Hipotecas
Occupy Wall Street, 104 (PAH), 196
UK (1979-2007), 119–21, 120f plutonomies, 40–41
US, financial sector growth, 98 Podemos, 82t, 199f, 200, 212
US, income growth (1979-2015), as anti-system party, 187–88
90f, 90, 96 Catalonia nationalists and, 210
US, post Great Recession European burden-sharing, 77
(2013+), 102 on globalization, 66
Orban, Viktor, 63 growth, after crisis, 2–3, 198f, 198–
overload thesis, 31 200, 203, 214
progressive democratic values, 5–6
Panebianco, Angelo, 265n50 success, 76–77
Papandreou, Andreas, 165–66, 173– as techno-populist party, 66
74. See also Greek Socialist Party Polanyi, Karl
(PASOK) 1930s impasse, 252
Papandreou, George, 173–74 The Great Transformation, 14–15, 16
Partido Socialista Obrero Español political parties. See also specific parties
(PSOE), 196, 199f, 199–200, anti-system, 54–56, 55f, 57t
201, 203–4 “center-left” and “center-right,” 37
Partit dels Socialistes de Catalunya decline, democracies (1960-2015),
(PSC), 306n69 35–36, 36f
party democracy economic policy positions,
cadre parties, 22 democracies (1945-2017),
origins, 22 37–38, 38f
party in democracy, 22 established, 54–56, 55f
Party of Freedoms (PDL), 229f, established system, competition
229, 234 dimensions, 53–54, 54f
Party of National Renovation membership decline (1950-2008),
(PRN), 183 32–34, 33f
Index 325
political parties, UK left-wing anti-system party
economic attitude convergence success, 76–77
(1945-2015), 122, 125f Party of National Renovation
fight over economics, end of, 122f, (PRN), 183
122, 125f Portugal à Frente (PàF), 181
political parties, US, 94–95 Portuguese Communist Party
economy and, 94f, 94–95 (PCP), 182–83
financial crisis, public money vs. Partido Socialista (PS), 180–81,
private donations, 34–35 181f, 183
neoliberalism and US democracy, 92, quiet revolution, 180, 181f
94f, 95f refugee crisis, 183
polarization, income Social Democrats (PSD), 180–81,
distribution, 94–95 181f, 182, 183
polarization, sociocultural issues, social spending (1989-2015),
94–95, 95f 128f, 168
politicians. See also specific politicians Unitary Democratic Coalition
establishment, anti-system parties (CDU), 65, 180–81, 181f, 182–83
and politicians on, 8 wealth, financial and housing, 170
Poole, Keith, 93–94 Portugal à Frente (PàF), 181
Popular Party (PP), Spain, 68–70, Portuguese Communist Party
190, 192, 196–200, 198f, 199f, (PCP), 182–83
201, 202–3, 204, 210–11, postmaterialism, 60, 65–66
212–14, 215 Potami, Greece, 176
populism, vs. anti-system politics, “PPSOE”, 201
51–52, 60 privatized Keynesianism, 98, 271n35
Portugal. See also southern Europe Prodi, Romano, 221
anti-system Left turn, 172 proportional representation, 74
Bloco Esquerda (BE, Left bloc), 65, Partido Socialista (Portugal), 180–81,
180–81, 181f, 182–83 181f, 183
Centro Democrático e Social-Partido public choice theory, 59
Popular (CDS-PP), 180, 181f, public funding, of political parties, 34–35
181, 182–83 public health
current account balance (2002-2017), Britain, postwar, 119
158–59, 159f precarious existence on, 92
Ecology Greens Party (PEV), 182 Puigdemont, Carles, 208
Economic Assistance Program, Pujol, Jordi, 207
162–63, 164 PVV, Netherlands, 62
European Monetary Union entry, 157
government borrowing (1990-2008), quantitative easing, 101–2
158f, 158
Great Recession, double-dip, race
160–61, 161f anxieties on, right
immigration, 172–73 mobilization, 93–94
326 I n d e x
Sanders position, 109–10 Sarkozy, Nicolas, 68–71, 153
Trump rhetoric and politics, 108, 112 Sartori, Giovanni, 4–5, 23–24
on voting, 112 Savona, Paolo, 245
on voting, 2016, 113, 115 Schattschneider, Elmer E., 21
Rajoy, Mariano, 192, 197–98 Scottish Nationalists, 2–3, 82t
Reagan, Ronald, neoliberalism, 87–88 Scottish National Party (SNP), 117,
Referendum Party, 129 129f, 135–36
refugee crisis secessionist movements, 64
anti-system Right, 64–65 security
Brexit, 139–40 market-oriented economy, 21, 121
Germany, 80–81 US market liberal project, 89, 90f,
Greece, 2014+, 79, 179 91f, 91–92
Italy, 239–40, 241–42, 246, 247 Western democracies, issues, 11
Portugal, 183 self-regulating market, neoliberalism,
southern Europe, 2010s, 10–11, 79, 14–15, 252
155, 172–73 Simpson-Bowles Commission, 101
Spain, 211, 215 Smith, Adam, revolutionary power of
Sweden, 62–63, 80–81 liberal markets, 271n31
Reinhart, Carmen, 48–49 social authoritarianism, Trump
Renzi, Matteo, 236–37 supporter appeal, 61, 88
Respect Party, 129f, 130 social democracy, 60
retirement, private market vs. state Social Democratic Party,
funded, 43, 267n83 Sweden, 27–28
retrospective voting, 72–73 social democrats
right-wing parties. See also anti-system competition, dimensions,
Right; specific countries and parties 53–55, 54f
Europe, late 1980s and 1990s, 2 goals, 1960s, 4
Italy, 1990s, 1–2 postwar golden age, 27–28, 28f
Riker, William, 30 Social Democrats (PSD, Portugal), 180–
Rodrik, Dani, 13 81, 181f, 182, 183
Rogoff, Kenneth, 48–49 socialism
Rokkan, Stein, 35 goals, 1960s, 4
Rosenthal, Howard, 93–94 Sanders and US revival, 88, 109
Ruling the Void (Mair), 39 Soviet-style, 25
Socialist Left, 65
Sacchi, Stefano, 225 Socialist parties
Salvini, Matteo, 62–63, 237, 19th century, late, 22–23
240–41, 254 social liberalism, 51–52
Samaras, Costas, 173–74 social programs, government. See also
Sanders, Bernie, 65 welfare; welfare state; specific
anti-system politics, 82t, 88 programs
Left, revival, 88, 109 postwar golden age, 29
Santelli, Rick, 103 Socrates, José, 180
Index 327
southern Europe. See also specific countries Candidatura de Unitat Popular
anti-system Left turn, 172 (CUP), 209, 235–36, 237
bailout effects, inequality and Catalan nationalists and
precarity, 166, 167f, 171f independence, 2–3, 188
bailout effects, unemployment, Ciudadanos (Citizens), 53, 55–56,
166–67, 167f 198f, 198–200, 199f, 212–14,
vs. creditor countries, 154–55 215, 301n94
debt, austerity, and Great Recession, Colau, Ada, 187–88
160, 161f, 162f Convergència i Unió (CiU), 198f,
EMU entry, ideological divides, 155 199f, 199–200, 204, 205–6, 207,
EMU entry, reforms required, 156 208, 209–10
EMU entry, welfare state current account balance (2002–
expansion, 156 2017), 158–59, 159f
Euro and short-lived success, 155, decentralization, policy outcomes
158f, 159f and, 210, 300n88
Global Financial Crisis on, 154 Esquerra Republicana de Catalunya
government borrowing (1990-2008), (ERC, Catalan Republican Left),
158f, 158 198f, 199f, 199–200, 207–8, 209
growth, credit-fueled, 158f, 158–59 ETA (Basque terrorist
Left, return after financial crisis, group), 213–14
153–86 (see also Europe, new European Central Bank (ECB), 191–
North-South divide) 92, 197, 201–2
pension spending, 171f, 171–72 European Monetary Union entry, 157
refugee crisis, 2010s, 10–11, 79, European Union Stability Mechanism
155, 172–73 loan, 162, 192
wealth, financial and housing, 170 Financial Assistance Facility
welfare state, spending (1989-2015), Agreement, political autonomy
132–72, 167f, 171f loss, 164
Soviet-style socialism, 25 government borrowing (1990-2008),
Spain, 187–215. See also 158f, 158
southern Europe government spending and building,
anti-system Left party success, 76–77 excess, 190, 294n10
anti-system Left turn, 172 Great Recession, double-dip,
Assemblea Nacional de Catalunya 160–61, 161f
(ANC), 208 housing/real estate bubble,
austerity measures and indignados collapse, 191
(15-M) opposition movement, housing/real estate bubble,
187–88, 195–97, 200–1, 205, credit boom and housing
209, 210 speculation, 189–90
Autonomous Communities, 203, identity politics and Spanish
299n68 (see also Basque Country; nationalism, 211
Catalonia) immigration, 172–73
backlash, political, 195, 198f, 199f Junts pel Sí (Together for Yes), 208
328 I n d e x
labor movement, early 1900s, 23–24 Summers, Larry, 45
Omnium Cultural, 208 Sweden
Partido Socialista Obrero Español refugee crisis, 2010s, 62–63, 80–81
(PSOE), 196, 199f, 199–200, Social Democratic Party, 27–28
201, 203–4 Sweden Democrats (SD), 62–63,
Partit dels Socialistes de Catalunya 77, 82t
(PSC), 306n69 Switzerland, Swiss People’s Party, 62
Plataforma Afectados por las SYN, 177–78
Hipotecas (PAH), 196 Syriza, 65, 76–77, 82t, 174f, 174–75,
Podemos (See Podemos) 177–79, 253
Popular Party (PP), 190, 192, 196–
200, 198f, 199f, 201, 202–3, 204, Tax Cuts and Jobs Act, 2017, 252–53
210–11, 212–14, 215 Tea Party movement, 63
Rajoy, Mariano, 192, 197–98 as challenge to party elite, 105
refugee crisis, 2010s, 211, 215 financial crisis response, 103
social spending (1989-2015), inspiration, 104
128f, 168 rhetoric, 104–5
sovereign debt crisis, 191 technopopulist party, 66
Spanish Congress of Deputies, terrorist movements. See also specific
198, 297n49 movements
success story (1980s & Europe, 4–5
1990s), 188–89 Thatcher, Margaret
territorial politics and Catalonia manufacturing industry
crisis, 203, 205f, 206f destruction, 142–43
Union, Progress and Democracy pro-market, 123
(UPyD), 196–97 on welfare state and trade unions,
Vox, 198f, 213–14, 215 32, 119
wealth, financial and housing, 170 theory, 6. See also specific theories
youth, work and welfare, 193 Timothy, Nick, 146
Zapatero Socialist government, 187, Tooze, Adam, 172
191–92, 197, 204–5 trade agreements
Zapatero Socialist Party, 187, 191– effects on American workers, 95–96
92, 197, 204–5 Sanders on, 109–10
state. See also specific topics and types Trump retreat from, 107–8
Friedman’s minimalist, 30–31 trade imbalances, post financial crisis
Steinbruck, Peer, 153–54 asymmetries from, 47
Streeck, Wolfgang, 262n18 Trilateral Commission, The Crisis of
strikes, union Democracy, 31
neoliberalism on, 32, 33f trilemma, 13
postwar peak, 29–30, 33f triple lock, 138
reduced, 256 Troubled Asset Relief Program (TARP),
subprime mortgage market, US, 99, 101. See also bailouts, Global
98–99, 100 Financial Crisis
Index 329
Trump, Donald volatility, electoral
billionaire tax avoider, 10–11 2008, economic crisis depth on,
cultural backlash, 10–11 68–71, 71f
neoliberalism, challenge, 252–53 after Global Financial Crisis, 68, 69f
Tax Cuts and Jobs Act, 2017, 252–53 definition, 68
Trump, Donald, election, 2–3, 87 Pederson index, 68, 273n50
anti-system politics, 82t, 111 voter turnout
belittling opponents, 107 postwar golden age, 26–27
campaign issues mobilized, 248–49 UK (2001-2005), 127–28
economic nationalism, 107–8 UK, anti-system party support
vs. GOP, 105 (1979-2017), 129f, 129
immigration opposition, 108 UK, by party (1945-2017),
on political science, 87–88 128f, 128–29
rhetoric, 107, 108 US, 2010s, 97
white working class vote, 112 voting
Tsipras, Alexis, 178–79, 253 education level on, 11
inequality on, 59
UK Independence Party (UKIP), 129f, race on, 112
129, 135, 136, 138–39, 149 US, financial crisis and, 102
unemployment. See also labor markets vote switching after Global Financial
benefits, reduced, 43 Crisis, 68, 69f
Great Recession, 100–1 voting, anti-system
southern Europe, post bailout, income change and incumbent vote
166–67, 167f loss, 70, 71f, 72
Union, Progress and Democracy peak, inequality and, 75f, 75–76
(Unión, Progreso y Democracia, retrospective voting, 72–73
UPyD), 196–97 welfare states and labor markets, 76,
unions, trade 78f, 82t
Britain, 119 Western Europe (1994-2018),
decline, 60, 89 71–72, 72f
membership, 26–28, 27f, 28f Vox, 198f, 213–14, 215
strikes, neoliberalism on, 32, 33f
Unitary Democratic Coalition wage growth
(CDU), Portugal, 65, 180–81, UK, declines and stagnation, post
181f, 182–83 financial crisis, 133, 134f
United Kingdom. See Brexit; Britain; US, productivity growth decoupling,
specific parties and topics 90f, 90–91
United States. See also specific topics Wattenberg, Martin, 32–34
market forces in living standards, 89 welfare, Bismarckian occupation-based,
28, 263n30
valence model, electoral competition, southern Europe Great
265–66n61 Recession, 168–69
Varoufakis, Yanis, 178 welfare chauvinism, 62–63
330 I n d e x
welfare state White, Harry Dexter, 24–25
cuts, post 2008 crisis, 48–49 white working class vote, for Trump,
Italy, 218 111, 112
policies, 41 (See also specific countries
and topics) xenophobia. See also immigration;
postwar, 24–25, 27f, 27–29, 62–63 refugee crisis
southern Europe, European Monetary age, education, and gender, 12
Union, 156 Far Right, as liberal democracy
southern Europe, spending threat, 5–6
(1989-2015), 132–72, immigrants, contact, 11, 12
167f, 171f labor markets, 11
strain and youth, 193 right-wing parties, Europe, 2
welfare state, Britain, 119 Trump supporter appeal, 61
in anti-system voting, 76, 78f, 82t
Blair’s Labour Party on, 124 yellow-green government, 244
postwar, 62–63, 119, 122–23
vs. US, 89 Zapatero, José Luis Rodríguez, 187,
voter attachment to, 122f, 122–23 191–92, 197, 204–5
Index 331

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Anti-​System Politics

JONATHAN Anti-​System Politics

Published in the United States of America by Oxford University Press

© Oxford University Press 2020

All rights reserved. No part of this publication may be reproduced, stored in

You must not circulate this work in any other form

Library of Congress Cataloging-​in-​Publication Data

PART ONE Capitalism, Democracy, and Crisis

PART TWO Curbing Transatlantic Neoliberalism

PART THREE The Breaking of Europe

T his book started life, awkwardly, as a paper about the surprisingly

A billionaire decides to enter politics, after a successful business ca-

A Quick History of the Present 3

The Roots of “Anti-​System” Politics

A Quick History of the Present 5

Thinking Theoretically about Anti-​System Politics

A Quick History of the Present 7

Priming the Backlash: Economic Fissures and

A Quick History of the Present 9

But What about Culture?

A Quick History of the Present 11

A Quick History of the Present 13

Capitalism against Democracy: It’s Not a

A Quick History of the Present 15

Where We Go from Here: The Structure of the Book

A Quick History of the Present 17

The Origins of Party Democracy

22 P A R T ONE: CAPITALISM, DEMOCRACY, AND CRISIS

Parties Against Markets 23

The Democratization of Capitalism: Political

24 P A R T ONE: CAPITALISM, DEMOCRACY, AND CRISIS

Parties Against Markets 25

26 P A R T ONE: CAPITALISM, DEMOCRACY, AND CRISIS

Figure 1.1 Mass Mobilization in the “Golden Age”: Indicators of Strength of

Parties Against Markets 27

Gini coefficient, Disposable Income

Figure 1.2 Union Membership and Inequality, 1970s

before peaking at 90 percent in the 1990s.27 Norway, Denmark, Austria, and

28 P A R T ONE: CAPITALISM, DEMOCRACY, AND CRISIS

Parties Against Markets 29

Market Liberalism and Democracy: Shrinking

30 P A R T ONE: CAPITALISM, DEMOCRACY, AND CRISIS

Parties Against Markets 31

32 P A R T ONE: CAPITALISM, DEMOCRACY, AND CRISIS

Figure 1.3 Industrial Disputes, 19 Democracies, 1960–​2015

Figure 1.4 Party Membership in Selected Democracies, 1950–​2008

34 P A R T ONE: CAPITALISM, DEMOCRACY, AND CRISIS

After the Party: Cartel Politics and

Parties Against Markets 35

Figure 1.5 Indicators of Party Decline, 21 Democracies, 1960–​2015

36 P A R T ONE: CAPITALISM, DEMOCRACY, AND CRISIS

Parties Against Markets 37

38 P A R T ONE: CAPITALISM, DEMOCRACY, AND CRISIS

Neoliberal Democracy: Inequality, Plutonomy, and

Parties Against Markets 39

Top 10 % Share of Pre-Tax Income

Figure 1.7 Top Income Shares in 11 Democracies, 20th Century

40 P A R T ONE: CAPITALISM, DEMOCRACY, AND CRISIS

Parties Against Markets 41

42 P A R T ONE: CAPITALISM, DEMOCRACY, AND CRISIS

Anti-System Politics

JONATHAN Anti-System Politics

Library of Congress Cataloging-in-Publication Data

The Roots of “Anti-System” Politics

Thinking Theoretically about Anti-System Politics

Figure 1.3 Industrial Disputes, 19 Democracies, 1960–2015

Figure 1.4 Party Membership in Selected Democracies, 1950–2008

Figure 1.5 Indicators of Party Decline, 21 Democracies, 1960–2015

What Is Anti-System Politics?

pro-market positions on the economic dimension, and more socially conser-

Anti-System Parties and the Gap in the

Figure 2.3 Dimensions of Anti-System Politics

Exposing the Flaws: Anti-System Politics Meets

Figure 2.4 Electoral Volatility in 21 Democracies, 1950–2018

Figure 2.5 Incumbent Vote Change, 16 European Democracies, 1989–2018

Figure 2.7 Anti-System Vote Share, Western Europe, 1994–2018