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The Upside of Populism
The same impulse that brought Trump to power could save U.S. democracy.
Picture an era of rapid technological change, economic growth, and globalization that benefits only some. With inequality mounting, social anxiety is high. A severe recession starting with a financial panic spreads to the whole economy. A movement blaming immigrants and pining for a return to an old, idyllic age gathers steam. Trust in institutions is decimated, and the leaders of the new movement blame politicians for scheming against common people. “From the same prolific womb of governmental injustice,” a new party says, “we breed the two great classes—tramps and millionaires.” The scene is set for a combustible mix of social resentment and economic discontent that could bring down the country’s institutional edifice.
We are describing the United States, of course, just not in the 2010s. In the 1890s, the scheming elites were the railway, steel, petroleum, and finance tycoons—the “robber barons,” who had enriched themselves partly thanks to their political connections. The financial crisis is not that of 2007-2008 but the panic of 1893. The political betrayal is not by lobbyists and super PACs but the “treason of the Senate,” as a series of articles in Cosmopolitan magazine called it, which is controlled by the robber barons. Anti-immigrant rhetoric isn’t coming from the Republican establishment but from the People’s Party, a left-wing populist outfit whose Omaha Platform of 1892 fretted about tramps and millionaires and condemned “the fallacy of protecting American labor under the present system, which opens our ports to the pauper and criminal classes of the world and crowds out our wage-earners.”
Many feared that these grievances and the social movements they fueled would upend U.S. democracy and liberty. But something quite different happened. As it turned out, populism, rather than paving the way to institutional collapse, had an upside. As a broad-based reaction to mounting economic and political inequalities, it was helpful—perhaps even necessary—for setting the country back on a more sustainable course. The same might be true today.
Back in the 1800s, the People’s Party gradually declined and merged with the urban middle classes under the umbrella of the progressive movement. Although the progressives had their own share of anti-immigrant activists, religious bigots, racists, and even eugenicists among them, the movement managed to build a broad coalition and articulate demands not just for dismantling existing institutions but also for building new ones. So broad was the coalition that it even managed to win over some Republicans and shift the agenda of that party toward trustbusting and other political reforms.
And so, progressive Presidents Theodore Roosevelt, William Howard Taft, and Woodrow Wilson were able to rejuvenate U.S. democracy and liberty by reforming political and economic institutions rather than tearing them down. Senators started being directly elected, undercutting the ability of wealthy tycoons to control the political process as blatantly as before. In 1913, progressives beat an obstructive Supreme Court and ratified the 16th Amendment, which introduced a federal income tax—something progressives believed would help redistribute income away from the wealthiest. All of these goals had been part of the Omaha Platform, and these reforms made the country stronger and spread prosperity much more broadly than it had been during the Gilded Age.
To achieve its objectives, progressivism had to compromise to build a big enough coalition to reform the system. It embraced racist Jim Crow practices in the South and advocated imperialism on the world stage. Progressivism made life better for most Americans, but it restricted whom it counted as full citizens. African Americans were largely left out, and the country became much less welcoming to immigrants.
The struggles of the progressive era and today are not unusual. Democracy and liberty don’t emerge or survive easily. When they do, it is through a constant conflict between different interests and social forces.
Although the particulars differ in each case, on one side of the fight are typically those who are economically, socially, and politically privileged and who control state institutions. Against them are nonelites who do not enjoy such special privileges and don’t have access to the same resources. Liberty doesn’t result when one group wins this tussle. On the contrary, whenever one side becomes too strong, it spells the extinction of liberty.
For example, when the state and elites become too powerful, it paves the way to a kind of despotism that silences or coerces the others to go along with it (think China). But nonelites can mobilize, contest power, and fight back too—not just with their numbers but also with their norms and sometimes organizations. When they become too powerful, the result is not liberty but the disabling of the state. As they disobey and dismantle state institutions, those institutions atrophy, laws become ineffective, liberty gets eroded, and the key functions of government fall by the wayside (think Mexico today, where President Andrés Manuel López Obrador was swept to power by a populist wave and is working to personalize power, increase presidential discretion, and weaken institutions).
Squeezed between the despotic state and the impaired one, however, we find a narrow corridor, a small path on which liberty can rise.
It is a corridor because life there is never stationary. The struggle between state and society is constant. Sometimes the elites will further enrich themselves, and state institutions will become more domineering, requiring society to become more assertive. Sometimes state institutions will decay as nonelites push too hard, and elites and nonelites will have to work together for their rebuilding. In the best-case scenario, when society believes that it can rein in state institutions if necessary, it becomes willing to trust them and let them do more to regulate the economy, provide public services, and enact and enforce more effective laws. But the corridor is narrow because this balance is precarious.
What threatened U.S. democracy and liberty during the Gilded Age were conflicts, grievances, and mistrust between elites and society. Elites became more and more adept at using the law and state institutions for their own benefit (reportedly in the words of one of the more notorious ones, Cornelius Vanderbilt, “What do I care about the law? Hain’t I got the power?”). And as society’s grievances built up, populists decided to fight back. They might have taken a torch to the whole system, but they didn’t have to. Because the progressive movement was so large and incorporated elements from the two major parties, it could instead work to strengthen existing institutions with new laws and legislations to claw power back from the likes of Vanderbilt.
The same fault lines are visible today. Inequality has skyrocketed over the last three decades. A familiar statistic summarizes the trend: The richest 1 percent of Americans, who used to receive around 9 percent of national income in the 1970s, now capture more than 22 percent of it. Just like during the Gilded Age, this inequality is partly a consequence of technological changes and globalization. New technologies have automated work previously performed by low- and middle-skilled workers, damaging both their employment prospects and earnings growth. Globalization, by enabling imports from low-wage countries and facilitating the offshoring of tasks previously performed by these workers to other countries, has powerfully contributed to the same trends.
But it’s not just globalization and automation. As in the Gilded Age, people suspect that institutions have turned against them or at the very least have ignored their plight. There is no explaining the enormous riches that financiers made over the last several decades without acknowledging the helping hand of the government and its agencies—think Wall Street.
The last three decades have not just been a time of economic turmoil. They have also witnessed rapid social change and disorientation. Although many of these social changes have furthered liberty by removing deep-rooted social inequities and discrimination (against African Americans, immigrants, LGBT people, religious minorities, and women), they have also added to the insecurity and resentment of those who have seen the erosion of their privilege.
The toxic mix is completed by a sweeping collapse of trust in institutions, largely triggered by the financial crisis and its aftermath. Experts, who were empowered by their superior knowledge and claims that they could skillfully manage the economy, were seen to be at first powerless and later highly compromised in their willingness to support bankers while letting regular citizens go under. Another populist surge was nearly inevitable.
Today’s populism, like its predecessor, has gotten its fair share of bad press coverage. But it, too, could have an upside. The populist instinct, even coalescing around such a flawed, opportunistic, and divisive figure as U.S. President Donald Trump, is a legitimate reaction of society to hyperpowered elites and experts, and it is perhaps a necessary corrective. To be sure, like in the 1890s, it is fused with nationalism and xenophobia, now under the banner of “Make America Great Again.” Even so, the bottom-up mobilization it represents could potentially pull the United States back from the edge if it brings together a wide range of people more bent on reforming existing institutions than undermining them.
A key difference between the progressive era and the Trump era is that this time populism started with the one step back instead of the two steps forward.
For one, that’s because the ugly side of populism is more visible today than ever before. But more importantly, it is because what ultimately led to successful change during the progressive era was that the populist impulse led to the creation of a broad coalition. The tussle between this coalition and powerful elites turned into a positive-sum affair, strengthening the mobilization of the nonelites while also building new and stronger institutions.
By contrast, the battle today appears to be a much more zero-sum game, with society fragmented and turned against itself and each side seeing the other as its mortal enemy to be destroyed for the sake of survival. Why? Trump’s polarizing rhetoric, intent on weakening institutions, and exploitation of identity issues are part of the answer—but only part. He was offered ample ammunition to divide society because social and economic tensions were already high and trust in institutions had sunk to a nadir.
In this light, it should be no surprise that this one big step back has worsened fundamental problems afflicting U.S. society. Trump and the Republican Party’s focus on identity issues will continue to polarize. Trade wars will further fan nationalism without bringing economic relief to those who have already seen their jobs disappear over the last three decades. Tax cuts will only exacerbate inequality and further enrich politically powerful elites. The dismantling of the federal bureaucracy will reduce rather than build the state’s capacity at a time when the United States sorely needs a government capable of delivering a stronger social safety net; better education, health care, and infrastructure; more robust environmental policies; and a vision for shared prosperity.
The situation looks dire, but the two steps forward may still be possible. After all, U.S. history is replete with distasteful compromises paving the way to meaningful reforms and state actions. The Constitution, which enshrined slavery as the law of the land, nevertheless not only enabled the foundation of a new nation with aspirations to protect the liberties of some of its people but also ushered in an era of positive-sum evolution of both state and society. And the U.S. government had to appease racists, bigots, and vested interests to combat the Great Depression, but the new regulations, aid for farmers, and spending for job creation worked—they eased the fallout from the Depression and put the country on firmer footing for decades.
In each of these cases, questionable compromises allowed broad coalitions, which ultimately returned the country from the brink of collapse. The same is possible today. There are in fact many shared priorities of the two ends of the political spectrum. Both sides are intent on clawing back power from elites. Both sides want to generate shared prosperity.
Both sides agree that access to health care, higher-quality education, and better infrastructure have to be priorities.
Differences between the two sides are of course formidable, but there is much to learn from past successful populist movements here. And it isn’t only the progressives we can turn to but also the civil rights movement. The leaders of that movement did not paint the struggle as zero-sum, necessitating the decimation of white elites for black empowerment. They did not call for reparations or radical redistribution that would have alienated many in the North and the South alike. They did not seek the dismantlement of U.S. institutions (even though these had been systematically used for discriminating against and repressing African Americans). They were, rather, at least willing to work with Southern politicians who had recently defended Jim Crow.
Today, too, compromises are necessary for forging an effective reform movement. Democrats for one need to formulate policies that can build bridges to their erstwhile supporters in the Midwest, who now feel abandoned by the party. Immigration is one obvious area, not because of its major economic effects (for which there is not much evidence) but because of the social discontent that it generates among many voters. The recent elections in Denmark, where the Social Democrats adopted more restrictive controls and managed to reduce the vote share of the populist Danish People’s Party by more than half, show that this can work.
The activists of the civil rights movement were able to voice their plight and organize in a way that brought broad sections of society—even a former Texas senator with a questionable record on race, Lyndon Johnson—to their side, proclaiming, “We shall overcome.” If they overcame, so can we.
This piece is adapted from the authors’ recently published book, The Narrow Corridor: States, Societies, and the Fate of Liberty.
This story appears in the Fall 2019 print issue.
Daron Acemoglu is an economics professor at the Massachusetts Institute of Technology. Twitter: @DrDaronAcemoglu