As mentioned, this paper understands populism as a response to the distributional consequences of two elements of hyperglobalization: (1) international trade and financial flows; and (2) migration. As will be shown, this alternative analytical framework can account for populism’s apparent variation in strength and ideology against the background of Europe’s very different political economies.
Following a well-established approach in comparative political economy, a useful starting point is to identify four distinct models of political economy in Europe: social democratic/Scandinavian; conservative/continental; southern European; and liberal/Anglo-Saxon.
Scandinavia and northern continental Europe
For the purposes of understanding populism, the Scandinavian and continental types effectively constitute a single ‘northern European’ model. As export-oriented, highly competitive economies with generous and relatively universal welfare states, the countries that correspond to this combined model all face similar challenges from hyperglobalization.
During the past 20 years, the political economies of Scandinavian and other northern European countries have converged. The Scandinavian countries have given up their previous guarantees of full employment, as well as their sovereignty over monetary policy (which was a precondition for the promise of full employment). They have achieved this through full membership of the eurozone (as in the case of Finland), by pegging their currencies to the euro (as in the case of Denmark), or by setting inflation targets synchronized with those of the eurozone (as in the case of Norway). Conversely, some continental European countries such as Germany have shifted away from their earlier emphasis on providing secure industrial jobs, and instead have allowed the service sector to account for an increasing share of employment. The welfare states of the Scandinavian and continental groups have also become more similar, as Scandinavian countries have strengthened elements of social insurance while continental countries have strengthened tax-financed, universalist elements of welfare provision.
In terms of explaining the rise of populism, the most important feature of the northern European model of political economy is its openness to economic globalization, in particular trade. Indeed, northern European economies critically depend upon the presence of liberal trading regimes for export-led growth. At the same time, generous welfare states buffer the shocks associated with trade liberalization and thus compensate those who ‘lose’ from this process. Yet it is precisely because of their generous welfare states that northern European countries have become vulnerable to shocks from another element of globalization: the cross-border movement of people.
Southern Europe
The economic model of southern European countries is very different. It is based on domestic demand, not export-led growth. This has meant dependence on public or private debt (or both), an arrangement that until 1999 was mainly characterized by soft-currency regimes and a marked tendency for wage inflation. As in northern Europe, social protection in this region is very generous. But unlike northern European welfare states, which are oriented to the needs of the industrial workforce and compensate for the shocks that occur in an open economy, southern European welfare states remain less open to international markets yet offer very strong employment protection for the system’s ‘insiders’.
What this means in the context of hyperglobalization is that, unlike the northern European model, the southern political economy is particularly vulnerable to the free movement of goods and capital. Southern European countries suffered massive economic shocks from the 2008–09 global financial crisis and subsequent euro crisis. Conversely, even though countries such as Greece and Italy were the among the primary ‘entry points’ into Europe for asylum seekers during the refugee crisis of 2015–16, they have actually proven to be less vulnerable to migration shocks than northern European countries. In southern Europe’s particularistic welfare states, transfers of income largely take the form of pension payments (benefiting male labour market insiders), while minimum-income protection schemes are either entirely lacking or incomplete. These characteristics render such systems relatively immune politically to immigration shocks.
Central and eastern Europe
In central and eastern Europe, the situation is different again. Countries in this region benefited from integration into the western European economic space after 1990, and especially from the effects of EU accession from 2004. For numerous states, this meant integration into the German economy’s orbit, with the result that the region’s political economies in certain respects came to resemble the continental model. Yet the welfare state in such countries has remained much less generous than that associated with the continental model. Partly as a result, central and eastern Europe has been affected by emigration more than immigration. Nonetheless, the ‘losers’ from the region’s post-Cold War economic transformation, in particular in the agricultural sector and old industries, constitute a natural reservoir of support for populist parties such as PiS or Fidesz.
That said, there remains significant variation between political economies within this region: the Visegrad countries (Poland, Hungary, Slovakia and the Czech Republic) have certain similarities with Germany, the Balkan countries with western Europe’s south, and the Baltic states tend to resemble the liberal/Anglo-Saxon model.
Liberal/Anglo-Saxon economies
The latter, represented in the European context above all by the UK, is of course fully compatible with an open global economy. A very liberalized labour market (in which a large share of employment is in low-productivity services) makes migration a contentious issue among labour market ‘outsiders’ or those in fear of becoming such. Yet functioning control of labour migration was something which the EU was not willing to offer the David Cameron government in negotiations before the 2016 Brexit referendum. This is a large part of the story of Brexit. Liberal political economies outside Europe, such as Australia and Canada, maintained highly restrictive immigration policies while at the same time benefiting from specificities of geography (such as having no direct border with any other country, in the case of Australia; or being able to benefit from the restrictive immigration policy of the only country with which it has a direct border, in the case of Canada). In the US, Donald Trump’s electoral success in former Democratic Party strongholds in 2016 was based on the twin political promises of protectionism and migration control.
Ireland is another European country that fits into the liberal/Anglo-Saxon category. Its political economy was strongly affected by the global financial crisis of 2008–09, which morphed into the eurozone crisis in 2009–10. The success of Sinn Fein in the 2016 general election, reflecting a significant ideological left turn by the electorate, may be explained in this context. In matters of labour migration, both emigration and immigration have been at high levels in Ireland for a long time.
Based on these differences between distinct types of political economy, it is possible to begin to explain the heterogeneity of populism in Europe – and by extension much of what has happened in European politics during the last decade. Depending on how globalization turns problematic in a given political economy – in particular, whether shocks are primarily trade-related or primarily consist of sudden increases in immigration – different types of protest tend to emerge.
Depending on how globalization turns problematic in a given political economy – in particular, whether shocks are primarily trade-related or primarily consist of sudden increases in immigration – different types of protest tend to emerge.
In addition to explaining geographical variation, this typology can account for changes in a political economy over time: in other words, why a populist surge takes place at a particular moment and how it can take different forms over time. It can also account for ideological change, or why a shift between left and right takes place in a given country. This is significant because explanations based on the longue durée – whether in terms of the changing nature of work or in terms of a shift towards more progressive social values since the 1960s – cannot account for the quite rapid political shifts that have taken place over the past 10 to 15 years, and which were exactly what led to the idea of a populist ‘surge’.
