Rising Losers: The Middle Class, Electoral Politics and Deglobalisation Waves

• In Event: Lightning Round: Research Design

Abstract

In the aftermath of the 2008 financial crisis, international trade has continued to shrink, international investment has declined, the trend against globalization has become more pronounced, and right-wing populist political parties have emerged. In response to this phenomenon, the question posed in this paper is: In the face of the intensifying trend against globalization, why have some countries abandoned neo-liberalism and turned to protectionism, while the authorities in other countries are still struggling to defend policies that sustain the process of globalization? Existing political economy analyses of the distribution of gains in globalization, based on the Stolper-Samuelson theorem, show that in developed economies where capital factors are relatively abundant and labour factors are relatively scarce, the blue-collar working class, or middle class, characterized by generalized skills, suffers from globalization. However, this theory cannot explain why some countries have maintained stable pro-globalization policies in the face of growing domestic anti-globalization tides. This paper argues that different domestic electoral systems in different countries are decisive for different responses and policy formulation in the face of counter-globalization pressures. Particular domestic electoral systems shape or even partially counteract the pressures of anti-globalization. The more consistent a country's electoral system is with the principle of majoritarianism, the more likely it is that anti-globalization movements will occur or intensify within the country; conversely, the more consistent a country's electoral system is with the principle of proportional representation, the less likely it is that anti-globalization movements will occur within the country and the more moderate those that do occur will be. Based on cross-country panel data for OECD countries from 2007-2018, this paper corroborates this link through empirical analysis, showing that: as the size of the middle class continues to shrink, the degree of proportionality of the electoral system affects domestic support for globalization in democracies. These findings shed light on the significance of the political system for reversing anti-globalization trends and maintaining a free and open global economy.

Author

• Dancheng Li, Tsinghua University