Economic Instability Endangers Democracy

A women holds an American flag while protesting outside Trump Tower during a demonstration organized by the New York Immigration Coalition against President-elect Donald Trump in the Manhattan borough of New York

The world’s leading consolidated democracies have seen rates of economic growth consistently and persistently decline over the past forty years.

A lot of what leads some scholars and studies astray on this topic is an overly short-term evaluation. The effects of economic hard times can vary in their immediate aftermath; shocks can give way to recoveries and ruin time-bounded correlations. It’s not always the first election after the shock that unseats an incumbent. But when you scratch an example of drastic political volatility in a developed country, you often find a period of extended poor economic performance within the past ten to fifteen years. France’s second election after the financial crisis represented higher political disruption than its first, which itself was three years into recession; Boris Yeltsin won reelection in 1996 despite terrible economic malfeasance. It is over multiple electoral cycles that a long-run period of economic hardship disrupts and discredits old political orders.

Once it is established that economic decline creates political instability, it can then mutate into a dozen malign effects on domestic and international orders. High rates of political volatility are negatively correlated with international cooperation in such areas as respect for trade agreements and declining support for peacekeeping operations. Changes in the institutional structure of a state’s political system, which can emerge in periods of volatile political conditions, correlate with the collapse of alliances. Declining economic growth is associated with increased hostility to immigrants, and an increase in civic violence towards them. In more severe cases, political instability and civic violence are associated with an increase in state repression.

It is difficult to discern which of these problems will manifest in any particular national history, but in the same way that climate change makes many different physical disasters broadly more likely, economic stagnation makes most of these bad things more likely to occur.

If these general linkages hold up, then we might expect to see negative economic trends correlated with one of most unfavorable outcomes of all: the reversion of democracies to autocratic regimes. And indeed, this link is already anchored in the scholarly literature. It is a widely accepted and important tenet among scholars of democratic transitions in low and middle-income democracies, with some authors finding it to be the only strong correlate to authoritarian reversion. This is already a problem for the order, because autocratic nations are more likely to violate international norms, break alliances, and initiate military conflicts.