, Volume 93, Number 5

Jeffrey M. Chwieroth and Andrew Walter
Were the extensive policy responses of many governments to the financial crises of 2007–9 and the political events that have followed them exceptional? We show that over the course of nearly 150 years, severe banking crises have become more consequential for policy and politics in democracies than ever before. First, governments have become much more likely over time to opt for extensive bailouts and other policies aimed at wealth protection during crises. Second, the inclination of voters to punish governments that are in office when crises occur has also increased sharply over time. We argue that the main cause of both developments is the rise of ‘great expectations’ among large segments of society in modern democracies regarding public responsibility for the protection of wealth in the post-1945 era. Especially since the 1970s, severe banking crises returned and have posed a growing threat to this wealth and thus to the prospects of many households, including large segments of the ‘middle class’. This rising ‘mass pressure from below’ on governments to secure household wealth has provided an important source of pressure on policy-makers to respond with increasingly costly bailouts, with powerful and ongoing political consequences.

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