It might seem incredible that American voters elected as their president a twice-impeached convicted felon, adjudged rapist, and indicted insurrectionist bent on revenge against his opponents. Donald Trump’s victory, and what it portends for US democracy, has left those opponents scrambling for an explanation – and a strategy.

Nobel laureate economist Joseph E. Stiglitz thinks the fundamental problem is obvious: “40 years of neoliberalism have left the US with unprecedented inequality,” income stagnation, and “declining average life expectancy,” and workers are desperate for an alternative. To become that alternative, the Democratic Party must abandon neoliberalism and return to its “progressive roots in the presidencies of Franklin D. Roosevelt and Lyndon B. Johnson.” This does not mean offering “tweaks” to the existing system, as Vice President Kamala Harris’s campaign did, but rather articulating a robust vision of a “new economy,” including “new rules and new roles for government.”

Not so fast, warns Andrés Velasco, Dean of the School of Public Policy at the London School of Economics and Political Science. In his view, calls to abandon neoliberalism not only tread on “empirically shaky ground,” but also ignore that US President Joe Biden did exactly that during his term. The Biden administration protected domestic industry behind tariff barriers, increased government spending on social services, and launched massive investments in green infrastructure, and it “didn’t work.”

MIT’s Daron Acemoglu, another Nobel laureate, advocates a worker-focused approach. US voters were “largely unmoved” by the Democrats’ warnings that Trump “poses a grave threat to American institutions,” because US democracy has failed to deliver on four key promises: “shared prosperity, a voice for the citizenry, expertise-driven governance, and effective public services.” The good news, he writes, is that “democracy can be rebuilt and made more robust,” but this task “falls to center-left forces,” which must “weaken their ties to Big Business and Big Tech and reclaim their working-class roots.”

Christy Hoffman, General Secretary of UNI Global Union, points to one big business in particular: Amazon. The retail giant’s efforts to undermine labor organizing amount to “attacks on the fundamental rights of workers to organize, bargain collectively with their employers, and fight for safer, fairer workplaces.” If the company is allowed to succeed, she warns, “its strategy will serve as a globally applicable playbook” for other multinational corporations seeking to subordinate human rights and democratic institutions to their own interests.

This suggests why Trump’s American opponents would do well to place his victory in context. As Bartosz M. Rydliński of Cardinal Stefan Wyszyński University explains, the embrace by workers of populist right-wing parties is not confined to the US. Unless center-left parties in France, Germany, and elsewhere “ensure that blue-collar voters can find a home under their tent” – a process that starts with “taking their concerns seriously and meeting them where they are” – the far right will “continue to exploit workers’ anger to fuel their anti-democratic agenda.”

Columbia Law School’s Katharina Pistor takes a similarly global perspective – and names the “elephant in the room”: capitalism. “Financial globalization,” she argues, “has placed the fate of entire societies in the hands of investors who care only about price signals and are oblivious to human needs.” With democracy subject to a “socioeconomic regime that pits everyone against everyone else,” we should not be surprised that it is in a “death spiral.”

NEW YORK – As the shock of Donald Trump’s victory sinks in, pundits and politicians are mulling what it means for the future of the United States and global politics. Understanding why such a divisive, unqualified figure won again is crucial for the Democrats. Did they go too far left and lose the moderate Americans who make up a majority? Or did centrist neoliberalism – pursued by Democratic presidents since Bill Clinton – fail to deliver, thus creating a demand for change?

To me, the answer is clear: 40 years of neoliberalism have left the US with unprecedented inequality, stagnation in the middle of the income spectrum (and worse for those below), and declining average life expectancy (highlighted by mounting “deaths of despair”). The American Dream is being killed, and although President Joe Biden and Vice President Kamala Harris distanced themselves from neoliberalism with their embrace of industrial policies, as representatives of the mainstream establishment, they remained associated with its legacy.

The economics of the moment mattered, but monthly employment and inflation indicators need to be understood in a broader historical context. As the Biden administration stressed on the eve of the election, the economy looks strong, especially compared to others in the G7. But this wasn’t good enough. Americans haven’t forgotten that the Democrats let loose the financial sector (Clinton), then bailed out the banks while homeowners and workers who lost their jobs in the Great Recession carried the cost (Barack Obama). Moreover, it was Clinton who unleashed globalization, tacitly believing in a trickle-down economics that would ultimately benefit everyone. The only real difference between Democrats and Republicans on this score is that Democrats claimed to feel the pain of those who were losing out.

The tragedy is that Americans seem to have voted for mere disruption more than anything else. Stalked by economic precarity and the specter of downward social mobility, tens of millions of Americans voted for Trump as a way of “sticking it to the establishment,” and because many seem to believe that he has their back.

He doesn’t. Trump’s first term and his 2024 election campaign made it abundantly clear that he has no intention of enacting the types of policies that ordinary Americans need. He favors tax cuts for billionaires and corporations; an end to the Affordable Care Act (Obamacare); and sweeping tariffs, which are effectively a tax on US consumers and businesses. Most likely, the tariffs will be riddled with corrupt exceptions bought by campaign contributions; and in any case, they are sure to provoke retaliatory measures and a loss of American jobs.

Trump will also generate massive budget deficits, which will lead to high interest rates and less investment in America’s future. If he and congressional Republicans follow through on repealing the Inflation Reduction Act (which includes provisions to reduce prescription-drug prices) and Obamacare, Americans will find themselves with less access to medical care and higher costs.

This is all worse than neoliberalism, which at least purported to promote competitive, undistorted markets. Trumponomics is ersatz capitalism, run for and by the powerful, and according to the principle that money matters above all else. Americans, it seems, have lost trust in their institutions and the belief that government will deliver for them. It is the predictable result of 45 years of Republican (and neoliberal Democratic) campaigning, starting with Ronald Reagan’s famous quip that “the nine most terrifying words in the English language are: ‘I’m from the government, and I’m here to help.’”

The culture wars also played a big role in Trump’s victory. His campaign successfully pushed the message that Democrats are obsessed with gender, race, and other social issues at a time when most Americans are just trying to get by. Many voters concluded that Trump would reverse or at least slow the pace of disorienting changes that have challenged long-established social hierarchies and roles.

Like nationalists everywhere, Trump blames America’s problems on outside forces, from immigration to “unfair” trade. But while it is true that neither issue has been managed very well, his proposed solutions would be disastrous for the US economy and the world. The extent to which his voters understood this is unclear. Most seem to have been drawn to the political theater. They wanted to send a message of dissatisfaction, and now they have done so.

For the Democrats, that message should be clear: abandon neoliberalism and return to your progressive roots in the presidencies of Franklin D. Roosevelt and Lyndon B. Johnson. The party needs to provide a new vision of a society that offers education and opportunity to all; where markets compete to produce better products that enhance living standards, rather than to devise better ways of exploiting workers, customers, and the environment; where we recognize that we have moved on from the industrial age to an economy oriented around services, knowledge, innovation, and care. A new economy needs new rules and new roles for government.

There is a big difference between this new vision and the tweaks offered by the Harris campaign (a little more education funding here, and a few dollars to help first-time homebuyers there). Articulating a robust program will not be easy, and implementing it would be harder still. But the future of America depends on it being done.

LONDON – Faced with Donald Trump’s frightening victory, many progressives have reacted in one of two ways. It is hard to decide which one is worse.

The first is pure spite. The day after the election, I met with a liberal American friend, unshaven and bleary-eyed. “This election proves Americans are not very nice people,” he said.

The second is denial. Consider a recent commentary by the Nobel Laureate economist Joseph E. Stiglitz. Democrats must abandon neoliberalism, he proclaims, as if Joe Biden and team had not spent the last four years trying to do exactly that.

Both responses tread on empirically shaky ground. Worse, they are sure to be politically self-defeating.

Telling voters they are stupid or heartless is seldom a good idea. Hillary Clinton tried it in 2016, famously calling Trump’s supporters “a basket of deplorables,” and it may have cost her the election. Biden did not help Kamala Harris’s prospects when he appeared to call Trump supporters “garbage.”

Doubling down on a failed electoral strategy is no good, either. After losing an election, the Pavlovian reaction of both right- and left-wing parties is to argue that if they had been “truer to their principles,” “credibly conservative,” or “properly progressive,” they would have surely won. In 2015, after Labour’s Ed Miliband was drubbed by Tory David Cameron, Britain’s Labour Party turned to the far-left haranguer Jeremy Corbyn, who in 2019 led the party to its biggest electoral defeat since the Great Depression. It wasn’t until Britain’s progressives turned to the moderate Keir Starmer that they could beat the Tories and return to power.

For over a decade, the rise of authoritarian right-wing populists like Trump, Viktor Orbán in Hungary, Jair Bolsonaro in Brazil, or Narendra Modi in India has been explained away more or less like this: so-called neoliberal economic policies destroyed industrial jobs, worsened income distribution, and hollowed out the middle class, causing voters who felt left behind to turn to demagogues peddling easy prosperity and cheap nationalism. The political corollary is supposed to be crystal-clear: protect domestic industry behind tariff barriers, increase government spending on social services and green infrastructure (and thereby create good jobs), transfer cash to poor households, and watch as voters soon return to the fold of progressive parties.

Well, Biden tried that. It didn’t work.

Biden kept in place the tariffs Trump had levied on China. He signed into law a humungous $1.9 trillion fiscal stimulus, consisting precisely of health expenditures to fight the pandemic, checks to households in need, and transfers to state and local governments. And he then enacted the misnamed Inflation Reduction Act, which provided even more of the same, plus massive green subsidies, funds to lower the price of prescription drugs and strengthen the Affordable Care Act (“Obamacare”), and “build back better” infrastructure projects.

Workers in Wisconsin, Michigan, and Pennsylvania pocketed the subsidies, took the jobs (US unemployment was a very low 4.1% at the time of the election), and then voted for Trump.

The problem with the Biden package was not its economics. Yes, the 2021 fiscal stimulus, coming as it did on the heels of a very large Trump stimulus, caused inflation. And no amount of tariff-raising will restore Midwestern factory jobs to their former glory, because the share of industrial employment has been falling everywhere in the developed world, including in manufacturing powerhouse Germany. But the health and infrastructure expenditures and the subsidies to accelerate the green transition were much needed and swiftly applied.

The problem lay elsewhere: in the political diagnosis. The theory that support for populists reflected only pocketbook issues proved completely wrong. And the technocratic fantasy that you could beat the Trumps and Bolsonaros of this world with a subsidy here and a tariff there turned out to be exactly that: a fantasy.

This is not a crisis of incomes, but a crisis of identity and respect. New York Times columnist David Brooks put it well the day after the election: “That great sucking sound you heard was the redistribution of respect.” There are voters who feel disrespected by elites of all kinds, including both left-leaning and right-leaning political elites. That is why they turn on incumbents, regardless of the incumbents’ political preferences. Disrespected voters turned on progressive Kamala Harris, and they are likely to turn against progressive Justin Trudeau in Canada. But in opinion polls or elections, they also decisively rejected conservatives Boris Johnson in the United Kingdom and Sebastián Piñera in Chile, as well as Xóchitl Gálvez in Mexico, who was not an incumbent but was perceived to represent traditional elites.

Don’t take me wrong: this is not about “wokeness.” An obsession with pronouns and political correctness may well have driven more than a few voters away from the Democrats in more than a few states. The same phenomenon pushed Evangelical voters into the arms of Bolsonaro in Brazil. But the backlash against traditional political elites has also happened in places like Turkey and India, where the question of whether one should say he, she, or they is not a hot-button issue.

Liberalism – the idea, expressed via political democracy and reasonably open markets, that people are born equal and have the right to equal dignity and respect – has built the freest, happiest, and most prosperous societies in human history. Yet voters in today’s liberal democracies (both new and long-established) are wondering not only whether liberal institutions can deliver for them, but whether liberal values still represent who they are and how they feel, and whether liberal politicians truly “have their back.”

Populists like Trump succeed not simply by promising to defend local industry and local jobs. They appeal to voters’ deep-seated values and sensibilities by connecting to people’s identities (and the perceived threats to those identities), and by understanding much better than liberals the tribal nature of contemporary politics.

This all calls for serious thinking by liberals and progressives – far more serious than a Pavlovian call to “abandon neoliberalism” can ever accomplish.

BOSTON – It should not have come as such a surprise that US voters were largely unmoved by the Democrats’ warnings that Donald Trump poses a grave threat to American institutions. In a January 2024 Gallup poll, only 28% of Americans (a record low) said that they were satisfied with “the way US democracy is working.”

American democracy has long promised four things: shared prosperity, a voice for the citizenry, expertise-driven governance, and effective public services. But US democracy – like democracy in other wealthy (and even middle-income) countries – has failed to fulfill these aspirations.

It wasn’t always so. For three decades following World War II, democracy delivered the goods, especially shared prosperity. Real (inflation-adjusted) wages increased rapidly for all demographic groups, and inequality declined. But this trend came to an end sometime in the late 1970s and early 1980s. Since then, inequality has skyrocketed, and wages for workers without a college degree have barely increased. About half of the American workforce has watched incomes among the other half soar.

While the past ten years were somewhat better (the almost 40-year increase in inequality appears to have stopped sometime around 2015), the pandemic-induced surge in inflation took a big toll on working families, especially in cities. That is why so many Americans listed economic conditions as their main concern, ahead of democracy.

Equally important was the belief that democracy would give voice to all citizens. If something wasn’t right, you could let your elected representatives know. While this principle was never fully upheld – many minorities remained disenfranchised for much of American history – voter disempowerment has become an even more generalized problem over the past four decades. As the sociologist Arlie Russell Hochschild puts it, many Americans, especially those without a college degree, living in the Midwest and the South, came to feel like “strangers in their own land.”

Worse, as this was happening, the Democrats moved from being the party of working people to becoming a coalition of tech entrepreneurs, bankers, professionals, and postgraduates who share very few priorities with the working class. Yes, right-wing media also stoked working-class discontent. But it could do so because mainstream media sources and intellectual elites ignored the economic and cultural grievances of a significant share of the public. This trend has also accelerated over the last four years, with highly educated segments of the population and the media ecosystem constantly emphasizing identity issues that further alienated many voters.

If this was simply a case of technocrats and intellectual elites setting the agenda, one could tell oneself that at least the experts were at work. But the promise of expertise-driven governance has rung hollow at least since the 2008 financial crisis. It was experts who had designed the financial system, supposedly for the common good, and made huge fortunes on Wall Street because they knew how to manage risk. Yet not only did this turn out to be untrue; politicians and regulators rushed to rescue the culprits, while doing almost nothing for the millions of Americans who lost their homes and livelihoods.

The public’s distrust of expertise has only grown, especially during the COVID-19 crisis, when issues such as lockdowns and vaccines became litmus tests for belief in science. Those who disagreed were duly silenced in the mainstream media and driven to alternative outlets with rapidly growing audiences.

That brings us to the promise of public services. The British poet John Betjeman once wrote that “Our nation stands for democracy and proper drains,” but democracy’s provision of reliable drains is increasingly in doubt. In some ways, the system is a victim of its own success. Starting in the nineteenth century, the United States and many European countries enacted legislation to ensure meritocratic selection and limit corruption in public services, followed by regulations to protect the public from new products, ranging from cars to pharmaceuticals.

But as regulations and safety procedures have multiplied, public services have become less efficient. For example, government spending per mile of highway in the US increased more than threefold from the 1960s to the 1980s, owing to the addition of new safety regulations and procedures. Similar declines in the productivity of the construction sector have been attributed to onerous land-use regulations. Not only have costs risen, but procedures designed to ensure safe, transparent, citizen-responsive practices have led to lengthy delays in all sorts of infrastructure projects, as well as deterioration in the quality of other services, including education.

In sum, all four pillars of democracy’s promise seem broken to many Americans. But this doesn’t mean that Americans now prefer an alternative political arrangement. Americans still take pride in their country and recognize its democratic character as an important part of their identity.

The good news is that democracy can be rebuilt and made more robust. The process must start by focusing on shared prosperity and citizen voice, which means reducing the role of big money in politics. Similarly, while democracy cannot be separated from technocratic expertise, expertise can certainly be less politicized. Government experts should be drawn from a broader range of social backgrounds, and it would also help if more were deployed at the local-government level.

None of this is likely to happen under the incoming Trump administration, of course. As an obvious threat to US democracy, he will erode many critical institutional norms over the next four years. The task of remaking democracy thus falls to center-left forces. It is they who must weaken their ties to Big Business and Big Tech and reclaim their working-class roots. If Trump’s victory serves as a wake-up call for the Democrats, then he may have inadvertently set in motion a rejuvenation of American democracy.

GENEVA – Black Friday has become more than a shopping spree. Relabeled Make Amazon Pay Day by labor advocates, it increasingly marks an annual season of resistance. As millions of consumers flood to Amazon’s digital aisles, a growing force of workers and their allies are taking to the streets to challenge the e-commerce behemoth’s efforts to reshape the world in its own image.

Our message is clear: Amazon needs to be held accountable not just for its union busting, but for the broader threat the company poses to democratic values. In the United States, where Donald Trump is now on his way back to the Oval Office, Amazon founder Jeff Bezos recently made a choice that speaks volumes. By blockingThe Washington Post, the paper he owns, from endorsing Kamala Harris, he showed that his priority is to safeguard his businesses’ lucrative federal contracts, rather than to use his influence to defend democracy.

Bezos claims that “Americans don’t trust the media.” But his decision only deepens that mistrust, lending credence to the idea that even respected institutions are up for sale to the highest bidder. We now know that even when democracy is on the line, Bezos will put his financial interests first.

Nor does this disregard for democratic norms stop in the halls of power. The International Trade Union Confederation lists Amazon among the world’s top “corporate underminers of democracy,” citing its support of far-right causes, its anti-competitive practices, and its disdain for its employees’ rights. Amazon lobbyists were recently banned from the European Parliament after repeatedly dodging public hearings, and we now know that the tech giant underreported its EU lobbying efforts by millions of euros. The pattern of abuse also extends to Amazon’s warehouses, where the company has spent $14 million on efforts to prevent workers from unionizing.

This is a worldwide practice for Amazon. A spokesperson for the UNIFOR union in Canada says that “the sheer scale of [Amazon’s] brazen attempts to intimidate employees” sets its union-busting efforts apart from other employers. Germany’s ver.di union has spent a decade pushing Amazon to honor the country’s standard collective-bargaining agreement. In the United Kingdom, Coventry workers face intense anti-union pressure, with the GMB union describing Amazon’s interference as “out of control.” And in Alabama, federal authorities invalidated a vote by Amazon employees against unionization on the grounds that they had been subjected to a campaign of disinformation and intimidation.

Rather than addressing serious issues and respecting their workers’ right to collective bargaining, Amazon has tried to undermine labor-protection laws more broadly. In response to a Teamster organizing drive, the company is arguing in court that union-busting is a constitutional right. It is also challenging the constitutionality of the National Labor Relations Board, which has overseen US labor laws for almost 90 years.

These audacious efforts are not just legal maneuvers. They are attacks on the fundamental rights of workers to organize, bargain collectively with their employers, and fight for safer, fairer workplaces. If Amazon’s strategy succeeds, it will serve as a globally applicable playbook for the company’s assault on organized labor.

Amazon’s hostility toward unions is part of the company’s DNA. Amazon has always exerted obsessive control over its workforce and wielded political influence to weaken labor protections for all. Its multibillion-dollar hoard of cash allows it to influence policies at all levels, effectively establishing a political economy of, by, and for corporate giants, rather than the people.

Workers around the world have been organizing to resist these abuses of corporate power, with more Amazon warehouse workers and drivers joining the fight daily. In India, they are organizing against inhumane working conditions in extreme heat, with support from the Amazon India Workers Association and UNI Global Union. As a result, Amazon has had to address management and safety failures. Similarly, workers at Amazon Web Services in Belgium, and at Amazon’s European headquarters in Luxembourg, are demanding better working conditions and job security; and European regulators are scrutinizing the company’s safety practices.

In the UK, Parliament is debating an employee rights bill that would, among other things, make union recognition easier and retaliation against union leaders more difficult. And in the US, several states – including California, Minnesota, Oregon, Washington, and New York – have passed warehouse protection laws aimed directly at Amazon’s brutal productivity requirements.

Such regulatory responses are crucial; but without strong unions to enforce existing protections and serve as watchdogs, Amazon’s model of control will persist. As Amazon workers use the occasion of Black Friday to demand fair treatment, we should recognize what is at stake for democracy itself. If Amazon’s unchecked power and tactics become the norm, we will be ushering in a world where multinational corporations’ interests take precedence over our rights and freedoms – and over the institutions that are supposed to protect them.

WARSAW – Donald Trump shocked the world in 2016 when he was elected US president, winning swing states in America’s Rust Belt, including Michigan, Pennsylvania, and Wisconsin, that have traditionally backed Democrats. Much the same story played out in November. The country’s former industrial heartland overwhelmingly voted for Trump and his promised to “make America great again.” According to exit polls, a majority of working-class people in key states – those who did not attend college and earn between $30,000 and $99,999 per year – backed Trump. That was true of white, Latino, and Black voters.

This trend is not confined to the United States. In June, 57% of workers voted for the far-right National Rally (Rassemblement National) in the first round of the French parliamentary election. And in September, 50% of workers supported the populist Freedom Party of Austria (FPÖ) in the country’s general election, while the Alternative for Germany (AfD) won 46% of workers’ votes in the Brandenburg state election.

Poland’s right-wing party, Law and Justice (PiS), which governed between 2015 and 2023, offers a useful case study of why populist and authoritarian parties are increasingly attractive to workers in Europe and the US, and how the center left can win them back. PiS had a string of legislative wins, including lowering the retirement age, sharply increasing the minimum wage, and providing direct cash transfers to parents with children under the age of 18. By embracing the causes normally championed by social democrats, PiS promoted the economic interests of Polish workers. As a result, nearly half of this group voted for PiS during last year’s parliamentary election (in the end, a coalition of opposition parties won enough seats to form a majority government).

My research on the less-educated and lower-income voters in Poland’s small towns and rural areas, conducted on behalf of the Foundation for European Progressive Studies and the Friedrich-Ebert-Stiftung, found an almost total disconnect between this group and the center left. Working-class participants in my focus groups associated social-democratic parties with the LGBTQ+ agenda, the sexualization of children, openness to migrants, and efforts to undermine state sovereignty. Instead of consuming traditional media, they get their news from niche groups on social-media platforms. These voters are proud of their anti-establishment stance, and see themselves as engaged in a fight for their livelihoods and access to “objective” information.

These findings match those of a systematic review of 51 studies examining declining support for center-left parties in the West. The Democratic Party in the US, social democrats in Western Europe, and progressive forces in post-communist countries have all lost traction with the working class. To reverse this trend, they must implement worker-friendly policies and change the way they communicate with this crucial segment of voters.

Progressives on both sides of the Atlantic have campaigned for years on increasing support for working families, including by spending more on public services, health care, education, and infrastructure. This has even helped them win elections (although often against unpopular conservative governments). Consider the 2008 and 2020 US presidential elections, when Democrats Barack Obama and Joe Biden, respectively, won, as well as the Labour Party’s resounding victory over the Tories in the United Kingdom’s general election earlier this year.

Once in office, however, these parties often fail to deliver on their campaign promises. Talking about creating good jobs in the industries of the future is not the same as actually doing it. Workers want bold, effective leaders who will take concrete action.

The center left must accept that it cannot communicate with blue-collar voters in the same way that it does with wealthy urban elites. Instead of dismissing workers’ concerns about migration, globalization, and the green transition, the Democrats in the US and social-democratic parties in Europe should address these fears on the channels and platforms that this segment of the population already uses. In that sense, they could learn a thing or two from the far right, which has become a dominant force on TikTok and X. Creating videos that put a more positive and pro-democratic spin on populism is less a matter of taste than of necessity.

The working class has played an essential role in building liberal democracies over the past two centuries, pushing for universal voting rights, the creation of social programs, and other policies expanding economic well-being and underpinning political stability. In times of turmoil, like now, center-left parties must ensure that blue-collar voters can find a home under their tent. That means making a concerted effort to court them, which starts by taking their concerns seriously and meeting them where they are. If they fail, the far right will continue to exploit workers’ anger to fuel their anti-democratic agenda.

NEW YORK – This US election marks what Germans call a Zeitenwende (“turning point”). Voters are signaling clearly that they want change, preferring a second Donald Trump administration to another caretaker government presiding over a regime that they reject.

True, political parties that promised to protect the status quo have lost elections in country after country this year. But the significance of voters in the world’s oldest democracy rejecting their country’s constitutional foundations – the rule of law, an independent and impartial judiciary, due process, and an orderly transfer of power – can hardly be overestimated.

The blame game started before the election results had sunk in, with a predictable focus on elitism, identity, and the losing candidate herself. This cycle of recrimination will tear apart the Democratic Party and render it even less fit for governing in the future. It also will distract from the elephant in the room: capitalism. Democracy is in a death spiral because it is subject to a socioeconomic regime that pits everyone against everyone else, undermining the capacity for consensus and collective decision-making.

It is not the first time that capitalism has upended democracy. A century ago, the effects of rapid industrialization at the expense of individuals and their communities fueled communism and fascism in Europe. Writing during World War II, the economic historian Karl Polanyi traced the root cause of his era’s political upheavals to an economic system that subordinated society to the market principle.

The problem, according to Polanyi, started with the abolition of the “poor laws” in England in the early nineteenth century. Uprooted, landless masses had no choice but to migrate to cities, where they were exploited as cheap labor in factories that consumed their lives and those of their children. While this system undoubtedly generated prosperity, it came at enormous costs to too many people. Without the devastation brought by World War I, the backlash against it by the masses might have taken much longer.

The United States, which fought in WWI but not on its own territory, largely avoided the backlash despite the economic depression of the 1930s. Importantly, President Franklin D. Roosevelt’s administration accomplished something that other countries did not: It gave the American people enough economic security that they could begin to envision a better future for themselves and their families.

This time is different, and not only in the US. We live in a system that most politicians have declared to be without alternative. In fact, they themselves have long surrendered control of the system and lack the capacity or will to imagine a different one. The late Fredric Jameson’s aphorism that “it is easier to imagine the end of the world than the end of capitalism” has gained renewed currency, and it is not hard to see why. Governments have very little room for maneuver, lest they be punished by (utterly amoral) financial markets. Long celebrated as a tool for disciplining policymakers, financial globalization has placed the fate of entire societies in the hands of investors who care only about price signals and are oblivious to human needs.  

Governments tied their own hands in the hope that markets would deliver capital, goods, and jobs. Buying into the belief that they should get out of the market’s way, they opened their countries to free capital flows, even as they supported the selective legal coding of assets and intermediaries to benefit the well-heeled. Later, they encouraged their central banks to bail out intermediaries who threatened to bring down the entire financial system in yet another crisis.

Countries also adopted international treaties that gave multinational corporations the power to sue host states for harming the profitability of their investments, or for “unfair and inequitable” treatment. With these cases overseen by an arbitral tribunal located elsewhere, governments effectively disarmed their own courts and undermined their own constitutions (whose provisions cannot be used as a defense against violations of international treaties).

Some countries (Germany most prominently) went so far as to deny future elected governments the option of raising additional debt finance, by enshrining balanced-budget requirements in their constitutions. Others held their people on a short leash by pursuing fiscal austerity, even as the rich thrived on yet another asset boom supported by easy monetary policies. Like Odysseus, who had his hands bound to the ship’s mast to withstand the call of the sirens, governments found ways to escape the call of the voters who had elected them. Democratic self-governance lost credibility long before the rise of the anti-democratic parties that now openly deride it.

For his part, Polanyi expected the war to be followed by another transformation that would put society, and not markets, in control. The legal and institutional mechanisms adopted to advance this goal did work initially, but powerful private actors and their lawyers soon found ways to arbitrage around them.

Two decades after the war, what the University of Michigan’s Greta Krippner describes as the financialization of the American economy had already taken off. Financial returns became the end to which all other needs and aspirations were subordinated. While the collateral damage of this process was widespread, the biggest blow was dealt to our capacity for collective decision-making.

Had communism and socialism not collapsed at the very moment when financialization unleashed its full force, many might have noticed its corrosive effects on democracy much earlier. Instead, capitalism was celebrated as the only game in town. As a result, we did not witness the “end of history” that Francis Fukuyama proclaimed when the Cold War wound down. We are condemned to relive it, but whether as tragedy or farce remains to be seen.