Perhaps the most compelling aspect of the tale of the two liberalisms is that it sidesteps a sterile controversy in the explanation of contemporary populism, with one strand arguing in favor of an economic, and another in favor of a cultural explanation, as if the two were not connected or complementary. An influential opinion survey of Inglehart and Norris (2016), for instance, slices up the field this way—and then argues in favor of a “cultural backlash” over an “economic have-not” explanation of populism. In reality, both economics and culture matter as explanatory factors. This sounds trivial but needs to be underscored. And, of course, politics matters, too, as a third, and perhaps crucial dimension for any account of “populism” stricto sensu. This is because populism, underneath its variegated expressions, left or right, socialist or nationalist, is always a response to a presumed democracy deficit, juxtaposing an unaccountable and corrupt “elite” and a homogenous and pristine “people” who notionally should rule in a “democracy” but are heinously deprived of their constitutive power by unresponsive and rent-seeking elites (the centrality of politics for any explanation of populism is the important message of Pappas 2019).
With respect to the controversial economics v. culture distinction, both factors matter but they matter in different ways. Growing economic inequality, which is a signature feature of societies undergoing neoliberal globalization, functions more as an objective background factor, operating a tergo by feeding a sense of stagnation and fear of the future among large portions of the Western lower middle classes. By contrast, as scores of analyses of the programs of populist radical right parties and of their supporters` views have demonstrated, culture and way of life issues, the resurrection of a denigrated “majority” against the onslaught by uppity “minorities”, tend to be foregrounded. “(C)ulture has trumped economics as the singular feature of the radical right”, argued one of the first (and still best) analyses of the fast-growing new family of radical right parties in Europe (Art 2011:11). In his analysis of the “coming of age” of populism, in terms of Brexit and Trump, David Goodhart (2017:2) agrees. He interprets both as the result of “unhappy white working class voters (plagued) more by cultural loss, related to immigration and ethnic change, than by economic calculation.” Note that in the above quoted auto-analysis of German populist Gauland, the one word that appears most often is “Heimat” (home), which is claimed by “ordinary people” as a “value in itself”, above all against “immigrants” who “stream into their neighborhoods”: “They cannot just move away and play golf somewhere else”Footnote 18 (unlike The Donald, he might have added).
While the relationship between populism and democracy is contested, some finding populism an expression of democracy (Canovan 1999 or Mény and Surel 2002) while others see it as threat to democracy (Müller 2016), no single analysis has ever questioned that populism is gutturally opposed to liberalism. “Democratic illiberalism” thus is appositely the politics-centered “minimal definition” of populism proposed by Takis Pappas (2019:35): “Populism is always democratic but never liberal”. Cas Mudde (2004:561) concurs in a near-identical and widely influential description of populism as “illiberal democracy”, which “rejects all limitations on the expression of the general will, most notably the constitutional protection of minorities and the independence…of key state institutions.”
However, how neoliberalism fits into this picture is much less clear. At the level of theory and of policy alike, there is a compelling case for neoliberalism to be distinct from liberalism. Certainly, both share the centrality of the individual and her liberties in the constitution of social and political order. However, neoliberalism parts ways with liberalism in its categorical denial of social justice. “Social justice”, as neoliberalism’s chief theorist Friedrich Hayek (1982:99) put it dismissively, is “dislike of people who are better off than oneself, or simply envy”. Hayek’s denial of social justice as task for public policy is not part of the classical “liberal idea”, as masterfully retold by Stephen Holmes, according to which there is a “fundamental continuity between liberal rights and welfare rights” (1995:266). In lieu of social justice, neoliberalism advocates a harshly individualistic understanding of “responsibility” and “responsibilization”, which shows in post-welfarist “responsibility-tracking” social policies, like workfare programs (see Mounk 2017: ch.2). In the terms of the canonic late-twentieth century version of liberalism, by John Rawls (1971), neoliberalism condones “equal liberty”, Rawls` first principle of justice, yes; but neoliberalism emphatically denies Rawls` second justice principle, the “difference principle”, which tolerates inequality only to the degree that it helps the worst-off in society, and thus is a case for redistribution to further social justice.
In plain terms, neoliberalism advocates unfettered market freedoms, “market fundamentalism” as Block and Somers (2014) have called it, not in the words but in the spirit of Karl Polanyi. Neoliberalism thus understood is not just an economic policy prevailing in the “Anglos”, for a while, and not much elsewhere, as argued by Michal Mann (2013: ch.6). Instead, it flags a comprehensive restructuring of the social and political order throughout the West, even shaping the way we look at the individual, not primarily as a carrier of rights, as in the liberal tradition, but as an economically fungible carrier of “human capital” (first observed by Michel Foucault , and brilliantly updated by Wendy Brown ).
Because neoliberalism is the main ideology undergirding contemporary globalization, it must be involved in the making of its opposition, which is populism. However, with the exception of left-wing populism in southern Europe, which has opposed the post-financial-crisis austerity policy dictated by the European Union and the IMF, “neoliberalism” is generally not found as adversary or something to rally against in the programs of populist parties in Europe. Nor can it be found in the tweets of the one-time chief-populist in power, Donald Trump, unless it could be turned into nationalist resentment, against “China” or other predators. American populism, in terms of Trump and the Tea Party movement that has supported him, is even neoliberal itself, viscerally rejecting the idea of the state as an instrument of social justice (see Hochschild 2016). In Europe, populist radical right parties also often have neoliberal roots, as does the French Front National (originating in old middle-class Poujadisme), the Freiheitliche (sic!) Partei Österreichs (FPÖ), or most recently the German AfD (which had started as a professorial anti-Euro platform)—and the most successful Western European populist party of all, the Swiss People`s Party (SVP), which is Switzerland’s most-voted party for over 20 years now, even continues to be stoutly neoliberal, being pro-market and anti-state.
The tale of the two liberalisms is thus wrong in depicting populism, at least in its predominant right-wing version, as self-conscious opposition to “economic liberalism”, aka neoliberalism. Certainly, most of these parties and movements (with the exception of the American Tea Party and the Swiss SVP) have in the meantime adopted a pro-welfare agenda, advocating an ethnically exclusive “welfare chauvinism”.Footnote 19 They thus fill in their role as the new working-class parties after the “Third Way” demise of the left. This turn has been particularly marked in the French Front National (now Rassemblement National), under the leadership of Marine Le Pen. But in none of the radical right party programs, including the French, does one find a detailed socioeconomic alternative to the neoliberal hegemony, as astutely observed by Claus Offe (2019:376). This is much in contrast to these parties` detailed positioning on the “multicultural” issues of immigration, Islam, or sexual morals.
Even though contemporary right-wing populism may not self-consciously address and foreground its economic background factors, they are nevertheless operative. Reviewing a century of “populist revolts” in America and Europe, economic historian Barry Eichengreen noted that these revolts “rarely arise in good economic times” (2018:x). Tellingly, at the height of postwar prosperity, the period fondly remembered in France as the Trentes Glorieuses, there was no populism in Europe and America. Its rise coincides with the breakup of the postwar class consensus and the rise of neoliberalism, first, and globalization, a decade later, the two becoming intricately linked as the liberation of markets, especially for finance, from territorial state controls. The sociodemographic basis of Western populism is located between the 75th and 90th income percentile on economist Branko Milanovic’s famous “elephant curve” (2012), which shows relative per capita income gains between 1988 and 2008 at all points of the global income distribution. The people in this bracket, though globally rich, have seen their net incomes stagnate or even fall in this period, which is the period of globalization. This global income bracket is mostly filled by the Western lower middle classes, who are thus the proverbial losers of globalization.
Importantly, the Western lower middle classes are relative losers of globalization, particularly in comparison with the richest 1% who have seen their income and wealth explode like perhaps never before in human history. Opponents of an economic explanation of the rise of right-wing populism in the West point out that it is not the very poor or the unemployed who typically support such parties or movements, and instead they point to their strong middle-class support and its cultural anguish. However, this is beside the point, because—as Tocqueville was the first to notice and Karl Polanyi also was acutely aware of—a relative loss may be even more painfully experienced than an absolute loss.
In an important analysis of the US case, Daniel Markovits (2019) correctly notes that, considering a dramatically declined income-poverty rate over the past half-century, from over 40% in 1945 to just under 5 %, economic inequality today is “driven overwhelmingly not by poverty but by concentrated wealth” (ibid. 102). Previously, the rupture in American society was between a broad middle to upper class with no clear distinction between the two (dubbed the “great compression”), on the one hand, and a great number of poor people, on the other. By contrast, the “new rupture” is between the “rich” running away from the rest and a middle class whose income gap separating them from the poor has narrowed: “(T)he poor/middle-class income gap has narrowed by about a quarter since midcentury, while the middle-class/rich income gap has nearly doubled” (ibid. 105). In this sense, “rising high-end and falling low-end inequality occur together” (ibid. 98).
However, Markovits` (2019) main point is not this. Rather, it is that the major generator and transmitter of growing economic inequality is meritocracy. This helps explain why neoliberalism is so difficult to oppose, by populists and others, because meritocratic inequality is ipso facto “just” or “deserved”. In a counterpoint to Thomas Piketty’s famous claim that the main source of economic inequality today are fast-growing gains from capital (2014), Markovits argues that the rich are rich because they work and exploit their own human capital, typically boosted by a degree from an elite university. In his calculation, “perhaps two-thirds or even three-quarters” of the total income of the top 1 % of earners in the US is drawn from “their labor and therefore…their education” (2019:13). However, unlike in Michael Young’s famous fable that had invented the very word “meritocracy” (1959), this is not a natural meritocracy, based on inborn talent, in Young’s dystopian scenario identified and separated from the rest shortly after birth. Instead, it is a social meritocracy based on “more and more intense cultivation of nurtured talent, extending longer and longer” (Markovits 2019:259). It is a “sham” meritocracy that launders pre-existing economic inequality through the “feedback loops”, on the one side, of dual-career families having become breeding sites of human capital and, on the other side, of technological workplace innovations being made by and mainly for the “superordinate working class”; as a result of the latter, there are only “gloomy” or “glossy” jobs, while middle-tier jobs are about to disappear (for the new “gig” or “platform” economy that shows exactly this dual and polarized job profile, see also Crouch 2019).
The middle class, this is Markovits` (2019) somber message, is categorically excluded from the self-reproductive and closed meritocracy of the rich, in which money is converted into skills and skills are converted back into more money. For Markovits, the meritocratic regime is a variant of the “resource curse” breeding autocratic elite rule, which previously had been associated with the oil-rich “rentier states” of the Middle East. The resource curse works much the same with human capital: “The feedback loops between exclusive education and skill-based innovation entrench and expand the elite’s privilege and shrink and marginalize the middle class” (ibid. 257).
In Young’s fable (1959), meritocracy falls in a bloody upheaval by “populists”—what remarkable foresight! However, it is not quite clear how this upheaval is possible because, by Young’s own argument, the devious power of meritocracy, where social position mirrors individual desert, is to deprive the lower classes of “a distinctive ideology in conflict with the ethos of society” (ibid. 124): “For the first time in human history the inferior man has no ready buttress for his self-regard” (ibid. 108). The same paradox permeates Markovits` real-world account (2019: ch.3). According to it, meritocracy does breed a new “class war”, as is to be expected in a situation of “comprehensively isolated social classes”, coexisting on the same territory like Disraeli’s “two nations” in Victorian England. But it is a “class war” that does not dare to speak its name, because the very class nature of meritocracy is systematically concealed. Those who lose out, as Markovits sharply observes, are “victims without a language of victimhood” (ibid. 63). Accordingly, while sparing the meritocracy principle itself, the losers get high on meritocracy’s rejection of ascriptive discrimination. A meritocracy, one must know, is naturally inclusive of immigrants and other minorities—they, more than any other group, prove that you can make it against the odds. Accordingly, a meritocracy is “excessively sensitive to…prejudice that has no meritocratic gloss—based on race, ethnicity, gender, or sexuality” (ibid. 60); this is a “cardinal and unforgivable sin that must be suppressed absolutely and without regard for the cost” (ibid.). In a nutshell, “the meritocratic fixation on diversity and inclusion channels the anger into nativist, sexist identity politics” (ibid. 64). The losing “majority” copies the language of the “minorities” who are courted by meritocracy: “Rising nativist assertions of white, male, heterosexual, or Christian identities…follow inexorably from meritocratic inequality’s economic structure and ideological limitation” (ibid. 63). But then we are in the domain of culture and identity politics, away from the economic inequalities that are still the root cause of the underlying resentment. Factoring in meritocracy allows us to explain how and why economic grievance becomes articulated in cultural terms, which is a central feature of right-wing populism in the West. This realistically supplants an earlier version of cultural backlash politics by or on behalf of disadvantaged whites, which had rallied around the claim of “reverse discrimination” constituted by minority-privileging affirmative action (the main claim by Allan Bakke, a white male, in the famous 1978 Supreme Court named after him). This earlier backlash had still, if only implicitly, defended classic meritocratic principles like standardized admissions tests for college and universities, also as more adequate path for minority “assimilation”.Footnote 20
When fleshing out the “selective moralism” of meritocracy’s disdain for discrimination, Markovits (2019:61) further observes that “(p)olitical correctness does not denounce calling rural communities `backward`, southerners `rednecks`, Appalachians `white trash`, and the bulk of the United States `flyover country`”.Footnote 21 Importantly, the disparaging signifiers all point to place-based identities. This is yet another reason why the economic bases of populism often go misrecognized: the economic inequalities generated by globalization are inherently connected to place. Globalization privileges cities, because human capital only flourishes when put to work in proximity to its own kind (see Florida 2003). In turn, human capital is being serviced by a predominantly immigrant underclass, which yields the “sand hour” stratification typical of “global cities” (see Sassen 1991). The combined effect of globalization is to disadvantage the countryside, so that resentment against it must be concentrated there (see Cramer 2016).
In a global survey of populist revolts in developing and developed countries, from Thailand to France, economic geographer Andrés Rodriguez-Pose (2017) has pointed out that not “interpersonal inequality”, as highlighted in the celebrated work of Thomas Piketty (2014), but “territorial inequality” has been key to all of these revolts. Populism is “revenge of the `places that don’t matter`” (Rodriguez-Pose 2017:5): “Populist votes have been heavily concentrated in territories that have suffered long-term declines and reflect an increasing urban/regional divide” (ibid. 18). The evidence for this abounds. The Brexit vote was concentrated in industrial and disadvantaged rural areas of the North and East of England; Lincolnshire, the county with the highest share of the Brexit vote, has been among the areas with the lowest GDP growth over the past quarter century.Footnote 22 And Trump won due to tiny margins in traditionally Democrat “rustbelt states” like Ohio and Pennsylvania. But even here, big cities, like Pittsburgh and Cleveland, all went for his Democratic opponent. It is thus the combination of “rustbelt and flyover country” that breeds populism. In France, it is much the same story. In none of its big cities did Le Pen win the largest share of the presidential votes in 2017. Instead, she prevailed in medium-sized and small cities and rural areas of the French rustbelt in the North and North-East, like Champagne-Ardenne, Franche-Comté, Lorraine, Nord-Pas-de-Calais (now including the Picardie). And also here the larger cities, like Metz, Nancy, Reims, and Lille (in the second election round) went for her non-populist contender, Emmanuel Macron’s En Marche. Again, the combination of “rustbelt and flyover country” is decisive. Hence the strong middle-class component in populist parties and movements, which consists of the provincial bourgeoisies that have not yet actually lost out but are in fear of losing out under globalization.Footnote 23 In sum, an increasingly place-based inequality under contemporary globalization is yet another factor that hides from view the economic underpinnings of populism.