Surveying the end of the Cold War in 1989, political scientist Francis Fukuyama famously argued in an essay titled The End of History? that Western liberal democracy was the culminating form of government. That’s not quite how things have played out. History, you might say, has returned.
Consider the Group of 20. Establishment political parties in those countries, the avatars of Western democracy, have seen their share of the G-20’s total economic output shrink in recent years. The most striking countertrend has been the rise of populism. Populist parties—claiming to defend the common man against corrupt elites, valuing national unity above cosmopolitan inclusion, and offering simplistic solutions against complex policy debate—have been gaining strength since the global financial crisis a decade ago. President Donald Trump in the U.S. is one prominent example. Italy is another. The Northern League and Five Star Movement swept into power there this year. Populists, according to our classification, now manage the largest bloc of the G-20 economies. =
Here’s how we broke it down: Each year from 1980, we sorted the governments of the G-20 countries plus Spain into four categories—establishment democracy, populist democracy, weak democracy, and authoritarian—and tracked what portion of the G-20’s total gross domestic product they oversaw.
A couple of things emerge from this analysis. First, the populist category jumped in 2016. That reflects our decision to characterize the U.S. as “populist” after Trump’s election and to shift the world’s largest economy into the category.
Second, the rise of China means that authoritarian regimes, with strong central power and limited political freedom, play an expanded role. That’s a significant shift in how the world economy is run. So far it hasn’t had a major negative impact on growth and financial stability. Is it only a matter of time? A deeper look at the relationship of governance to growth reveals some nuance about what’s likely to be important in that regard.
To put some numbers to it: When you add up the nominal output of the G-20 states plus Spain, their combined GDP is about $64 trillion. Populist governments now control 41 percent of that. By contrast, in 2007, before the crisis roiled the world, the figure was only 4 percent.
Mainstream democratic parties, which typically occupy the center of the political spectrum, have gone from dominance to minority. They preside over only 32 percent of the G-20 output. In 2007 they accounted for 83 percent.
Authoritarian regimes—China, Russia, Saudi Arabia, and Turkey are all classified as “not free,” according to Freedom House, a Washington-based think tank whose founders included Eleanor Roosevelt—manage 24 percent of G-20 GDP. China accounts for almost 19 percent, up from 8 percent a decade ago.
There are, of course, issues of judgment. Should the U.S. under Trump fall in the populist or mainstream democratic category? Probably somewhere in between.
So is there another way to tease out a populist trend? One is to examine the share of popular vote garnered by the top two parties, which typically represent mainstream political sentiment. Among major democracies, that share has fallen to 63 percent from 74 percent in 2007. What that misses is the way mainstream parties—particularly the U.S. Republican Party and U.K. politicians after the Brexit vote—have adopted populist agendas to hold on to votes. Even so, the same pattern stands out: The mainstream is losing influence.