Survival

Global Politics and Strategy

ISSN: 0039-6338 (Print) 1468-2699 (Online) Journal homepage: https://www.tandfonline.com/loi/tsur20

Populism or Embedded Plutocracy? The Emerging

World Order

Michael Lee

To cite this article: Michael Lee (2019) Populism or Embedded Plutocracy? The Emerging World
Order, Survival, 61:2, 53-82, DOI: 10.1080/00396338.2019.1589078

To link to this article: https://doi.org/10.1080/00396338.2019.1589078

Published online: 19 Mar 2019.

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Populism or Embedded
Plutocracy? The Emerging World
Order
Michael Lee

The liberal world order is in trouble. The system of moderately open

migration, free trade and free flows of capital that has existed since the
1970s is under attack. Liberal democracies around the world have seen
the rise of far-right political parties trading in xenophobia while attacking
traditional liberal institutions. Many political scientists, who are increas-
ingly focusing on country-specific studies or mid-level theories of small
phenomena, are detecting these developments while missing the common
threads between them.
After the collapse of the Bretton Woods system in 1971, the United States
and its allies in the G7 constructed a neoliberal world order characterised
by relatively open migration, free trade and free flows of capital.1 Today,
that order is collapsing under the weight of its internal contradictions. Free
flows of capital, combined with the privileged position of the American
dollar, saddled the global economy with recurrent financial crises. The
implementation of many neoliberal policies – and the creation of transna-
tional workarounds – undermined many of the civil-society groups vital
for broad-based democracy. Large-scale migration, necessary to prop up
entitlement spending, attracted the ire of far-right nationalists across the
democratic world. The openness of the neoliberal world order to authori-
tarian states, in turn, has enabled rapid growth in the world’s autocracies
– shifting the locus of global power towards authoritarian states like China.

Michael Lee is Assistant Professor of Political Science at CUNY–Hunter College. His work has been published
recently in the British Journal of Politics and International Relations, Political Studies and PS: Political Science & Politics.

Survival | vol. 61 no. 2 | April–May 2019 | pp. 53–82DOI 10.1080/00396338.2019.1589078

54 | Michael Lee

As the underlying power structures of the liberal world order give way, a
new world order of embedded plutocracy is emerging. The rise of so-called
‘populism’ represents the ascent of political coalitions advocating protection
against some of the dislocations (real and imagined, cultural and material)
caused by globalisation, while simultaneously attacking liberal institutions
and encouraging cronyism among business elites.2 Although the success of
right-wing populists varies from country to country, the nationalist right
has shifted the focus of political debate in its preferred direction in many
countries. Moreover, the growing power of authoritarian states will create
more opportunities for illiberal governance structures to proliferate. Some
transnational flows, such as migration and trade, are likely to be tight-
ened, while those most conducive to the interests of business elites, such as
capital flows, may remain open. The intermingling of capital flows between
companies headquartered in the democratic and authoritarian worlds, the
inviolability of offshore havens, and great-power concerts may yet enable
embedded plutocracy to address some global challenges (such as the need
to avoid great-power war and resolve north–south issues), even as this struc-
ture does little on other fronts (for example, human rights). There is a battle
between democracy and autocracy, but it is not being waged on the global
stage, as some posit.3 It is being waged inside the world’s democracies.

The death of the liberal world order

In the aftermath of the Second World War, the United States and its allies
enacted domestic policies and established international institutions aimed
at reconciling two goals: restarting world trade and, at the same time, pro-
tecting ordinary workers from the dislocations of economic fluctuations.
This economic orientation has been called one of ‘embedded liberalism’.4
One of the most venerable ideas in international political economy is the
trilemma (or impossible trinity) of having fixed exchange rates, the ability
to use monetary policy to fight recessions and free-flowing capital markets
at the same time. In practice, a country can only maintain two of the three
at any given moment.5 Embedded liberalism entailed fixed (but adjustable)
exchange rates and flexible monetary policies, while capital controls limited
capital movements between countries. The system enabled governments to
 Populism or Embedded Plutocracy? The Emerging World Order | 55

respond decisively to adverse shocks – for example, recessions. Although

the General Agreement on Tariffs and Trade facilitated the recovery of global
trade from Depression-era lows, world trade grew slowly, offering declin-
ing industries opportunities to adjust. Labour and industry maintained a
compact, whereby capital eschewed large dividends, instead recycling cor-
porate profits into expansion. Robust labour movements and a strong civil
society defended workers and encouraged an era of democratic expansion.
Yet embedded liberalism was fraught with limitations and internal con-
tradictions. The same political order that saw inequality plummet in the
wealthy countries of North America, Western Europe and parts of East Asia
produced rampant inequality between countries.6 Further, the trentes glo-
rieuses enjoyed by France, Germany, Japan and others required the United
States to absorb vast quantities of imports. Not only did the relative growth
of other economies limit the capacity of the US to uphold Bretton Woods,
but the very strength of labour and civil society made it politically difficult
for American leaders to pay domestic political costs to uphold the global
economy. When the United States experienced a current-account deficit in
1971, president Richard Nixon faced a choice: adopt deflationary policies
(likely triggering a recession in 1972, an election year) or abandon fixed
exchange rates.7 For Nixon – the consummate politician at a time when polit-
ical constraints mattered – the choice was obvious: close the gold window.
The president waited until 1974 to loosen capital controls, however.
What followed was an era of globalisation in which the movement of
goods, capital and people exceeded even the heights of the nineteenth
century. Under the ideological umbrella of Reaganism and Thatcherism, an
age of neoliberalism saw the protective welfare state give way to a competi-
tive state. Instead of protecting workers and providing basic necessities, the
role of the state was to maximise growth. Although competitiveness meant
eliminating some traditional protections against adjustment,8 it did not
imperil entitlement spending. Growth meant greater revenues, which could
be funnelled into entitlement programmes. The fluctuations of mobile capital
required states other than the US to hold American dollars in reserve.9 This
helped to transform the United States from a declining industrial power
into a mighty financial leader. By recycling the cheap capital provided by
56 | Michael Lee

other countries, American investors became the world’s venture capitalists,

profiting from the rise of others.10
The fluctuations of the new age also enhanced the role of intergovern-
mental organisations, such as the International Monetary Fund (IMF), of
which American prominence was a defining feature.11 Organisations such as
the G7 facilitated macroeconomic coordination, as in the 1985 Plaza and 1987
Louvre accords. Standards friendly to Anglo-American financial capitalism,
such as the Basel capital rules, were also promoted even if they did little to
foster stability.12 Europeans embraced regional political and economic inte-
gration with the creation of the European Union. The neoliberal world order
saw many successes: between-country inequality plummeted as access to
global markets facilitated the rapid growth of China and India; the share of
extremely poor people fell precipitously between 1990 and 2015;13 and pro-
grammes such as the ambitious Millennium Development Goals, as well as
growing global remittances, channelled funds to address some transnational
ills. For instance, global malaria deaths fell from 864,000 in 2000 to 429,000
in 2015.14 The share of democratic states expanded too, particularly as the
Soviet Union collapsed, though much of the fanfare surrounding democ-
racy’s ‘Third Wave’ may have been premature – democratisation efforts did
not always succeed, and many countries have remained trapped in a grey
zone between democracy and autocracy.15
Despite its successes, the neoliberal world order suffers from four inter-
nal contradictions. Firstly, the primacy of the American dollar exposes the
rest of the world to the fluctuations of American business cycles. Because of
the importance of the American dollar as a reserve currency, and the central-
ity of the United States in global financial networks, declines in the demand
for credit in the US can produce bubbles and crises abroad.16 Secondly,
the political change necessary to implement neoliberal policies has greatly
reduced the size of minimum winning coalitions, making parochial (and
often illiberal) programmes far more appealing. During the neoliberal era,
interest groups with broad-based membership, such as labour unions, often
grew weaker. Governments increasingly employed transnational work­
arounds – one example was implementing unpopular policies through the
European Council – to avoid civil-society opposition. Micro-targeting – now
 Populism or Embedded Plutocracy? The Emerging World Order | 57

aided by big data – helped political parties build more efficient coalitions
around more parochial interests. Large individual donors have also gained
increased strength relative to more broad-based business groups such as
the US Chamber of Commerce. In the United States, all of these trends have
been amplified by the increased use of institutional mechanisms like gerry-
mandering. Thirdly, the levels of migration necessary to sustain entitlement
programmes without tax hikes have triggered a xenophobic backlash.
Finally, opening the neoliberal order to authoritarian states has allowed
some of them to prosper immensely, raising the credibility of authoritarian
alternatives to the neoliberal order.

Economies in crisis
Much like financial mobility of the nineteenth century, neoliberalism has
been characterised by frequent, severe financial crises. These crises have
undermined support for globalisation, which replaced containment after
1989 as the linchpin of the liberal world order.17 Vast amounts of capital
could pour into developing countries seeking profit and pour out just as
rapidly. Moreover, America’s exorbitant privilege as the core of the system
presented leaders with a constant temptation. With deficit-financed tax cuts
and military spending, a government could produce a temporary economic
boom at will.18 As the United States drew on the world’s savings, capital
scarcity abroad triggered yet more financial crises. The spread of financial
deregulation, too, meant that these capital bonanzas were not always trans-
formed into productive long-term investments. Abandoned theme parks in
Japan and low-quality McMansions in the US are testament to humanity’s
continuing vulnerability to animal spirits.

The death of civil society

The implementation of neoliberal policies required the political defeat of
‘special interests’ – labour unions, civil servants, regional interests, workers
in import-competing industries and others who relied on the state for pro-
tection. The goals of such groups may have been economically inefficient,
but they were capable of forming broad regional or sectoral political coa-
litions. Scholars as diverse as Alexis de Tocqueville, Samuel Huntington,
58 | Michael Lee

Robert Putnam and Wendy Brown have pointed to the necessity of a vital
civil society for democracy.19 Labour unions, for instance, are one of the few
interest groups capable of mobilising middle- and working-class people. In
place of the grassroots, there is an increased tendency (particularly in the
United States) towards ‘Astroturf politics’, wherein donor money funds the
appearance of genuine civil-society activity.20
The dislocations caused by intensifying globalisation are often debated
in intergovernmental arenas that lack organic civil-society organisations
around them, with the effect of weakening democracy. For instance, turnout
in European Parliament elections is typically low, and few Europeans engage
in regular political discourse with those outside their country. Technocratic
agencies such as the European Council and regulators like central banks
have further distanced policymaking from the public by enhancing their
own role within it.21
The ways in which capital mobilises itself politically are shifting, par-
ticularly in the United States. Whereas large financial firms once formed
the basis for broad-based business coalitions, today a few highly motivated
billionaires can contribute as much as entire economic sectors once did.
Although big business might collectively prefer liberal rules, individual
corporate actors can benefit far more from particularism and cronyism.
In a world where politicians do not need to craft broad coalitions, corrupt
bargains can prevail. Billionaire gadflies may amplify polarisation as well,
by establishing litmus tests around their favoured positions. Moreover,
complex financial instruments and hedging insure wealthy individuals
against risks in ways that ordinary people cannot duplicate.
Economic shifts since 2008 have limited the scope for organised civil society
to act. Despite the tech industry’s invocation of new-age imagery, Silicon
Valley has become the land of would-be cartels. The smartphone is an inferior
computer that facilitates the corporate harvest of consumer data and under-
mines the 40-hour work week. Uber may want to overthrow taxi-licensing
guilds, but only to replace them with a monopoly employing driverless cars.
TaskRabbit is a platform that enables employers to use monopsony power
to undermine wages. The political economy of Facebook and Google resem-
bles that of resource-rich rentier states, with firms monopolising control over
 Populism or Embedded Plutocracy? The Emerging World Order | 59

the electronic structures containing our collective data. Their ability to sell
privileged access to parts of this commons is not only a source of great profit,
but also of political power. Big data makes it easier than ever to find those
voters most susceptible to manipulation and to turn them out. As automation
supplants vast proportions of the workforce, Silicon Valley will have an even
greater incentive to redirect voter anger away from itself. Facebook managed
to lose the data of millions of individuals, sell ads to Russian actors aiming to
influence the US presidential election, and even served as an instrument for
Burmese genocidaires to incite violence against the Rohingya people, before
regulators began to discuss regulating Facebook.22

Migration and xenophobia

Migration benefits the liberal world order while posing a political challenge.
Neoliberalism requires young workers to maintain entitlement programmes
without raising taxes, and brilliant ones are necessary to maintain the tech-
nological prowess of the developed world. As more and more of the world’s
seven billion people receive good educations, the United States, with only
326 million people, will need to draw in the brightest workers from abroad
to retain its edge. Indeed, 45.3% of American science, technology, engineer-
ing and mathematics (STEM) workers in positions requiring a PhD are
foreign-born.23
Yet immigration has produced an intense political backlash. Beginning
around 2014, nationalist anti-immigrant parties saw gains across Europe
and North America.24 The current US president won office by promising
mass deportations, denigrating minorities and immigrants, fetishising the
torture of Muslims and promising to rip up the cornerstones of the liberal
global order. In Europe, right-wing populists have been able to reap politi-
cal hay by twinning xenophobic fears of migrants (such as refugees from
the Syrian civil war) with opposition to the EU. Hungary, Italy and Poland
are all led by parties that rely on this kind of politics, while Austria and the
United Kingdom are led by centre-right parties – the latter having voted
to leave the EU. Demagogues such as President Rodrigo Duterte in the
Philippines and Jair Bolsonaro in Brazil have achieved office while attack-
ing drug addicts and LGBTQ people, respectively.
60 | Michael Lee

Most opposition to immigration bears little relationship to the facts.

Xenophobes systematically overestimate the number of immigrants,25 fume
over immigrant crime rates that are lower than the national average,26 and
imagine immigrants as spongers when their presence is necessary for the
vitality of the tax base.27 At times, politicians might portray opposition to
immigration as a means to combat intolerance. For instance, Pim Fortuyn
won support in the Netherlands by attacking Muslims as being insufficiently
liberal for Dutch society. Darker ruminations have emerged too, as nativ-
ists have contemplated the prospect that the political power of immigrants
and minorities will overtake their own. In the United States and Western
Europe, defenders of inequality have been effective at using the ignorance
and xenophobia of voters to build political coalitions capable of withstand-
ing the dislocations of a crisis-ridden age.
The world’s various populist movements share common themes while
focusing on different agendas informed by unique domestic circumstances.
The Brexit vote and the victory of Donald Trump in the 2016 US presiden-
tial election were connected in both time and ideology, but, as Lawrence
Freedman has noted, the former was a referendum on a single question with
unclear implications, while the latter was an election on a range of questions
with fairly evident ones.28 Still, they have much in common. They all draw
strength by exploiting a political vulnerability of liberal democracy. By
protecting individual rights against the tyranny of the majority, all liberal
democracies are vulnerable to populist attacks. Assaults on the judiciary
or pardons for civil-rights violators in the United States, Poland, Hungary
and the Philippines can be presented as actions reflecting the popular will.
Liberal democrats may end up being forced to defend unpopular targets. To
use the words of Hungarian Prime Minister Viktor Orbán, ‘illiberal democ-
racy’ is a politically viable alternative to liberal democracy.29
Moreover, right-wing populists all harness out-group hostility as a core
part of their campaigns. Indeed, the best predictor of support for ‘Leave’
in the Brexit referendum, as well as for Trump in the US presidential elec-
tion, was out-group hostility.30 When Nigel Farage campaigned for Leave,
he stood in front of a sign reading ‘breaking point’ and depicting an endless
stream of Syrian refugees. The implication was egregiously dishonest,
 Populism or Embedded Plutocracy? The Emerging World Order | 61

since the UK was not included in the Schengen Area, and had considerable
control over how many refugees it would admit, subject to the constraints
of the Dublin Regulation.

The rise of authoritarianism

Neoliberalism produced wealth in part by opening up the world economy
to fundamentally illiberal regimes such as China, Russia and Saudi Arabia.
Even though there are more democracies today than during the Cold
War, the relative economic power of authoritarian states is rising. Instead
of a global power structure dominated by a uniformly liberal G7, global
governance increasingly takes place through a G20 that includes many
authoritarian, hybrid or flawed democratic regimes. If the projections of
PricewaterhouseCoopers hold true, by 2030 authoritarian and democratic
regimes will represent equal shares of global GDP (see Figure 1).
During the Third Wave of democratisation running from the mid-1970s
to the 1990s, many countries democratised as the Soviet Union declined as a
viable global contender.31 What began as superficial democratisation aimed
at limiting international criticism in some cases created openings for those

Figure 1: Distribution of global GDP by regime type

0.8

0.7 Authoritarian Mixed Democratic

0.6

0.5

0.4

0.3

0.2

0.1

0
1990 2014 2030

Sources: Angus Maddison, ‘Statistics on World Population, GDP and Per Capita GDP, 1–2000 AD’, University of Groningen
Faculty of Economics, http://www.ggdc.net/madison; and PricewaterhouseCoopers, ‘The World in 2050: Will the Shift
in Economic Power Continue?’, February 2015, https://www.pwc.com/gx/en/issues/the-economy/assets/world-in-
2050-february-2015.pdf.
62 | Michael Lee

desiring genuine democracy. Today, however, the benefits of democratisa-

tion must compete with those apparently offered by the Chinese economic
and political model.32 As recently as a decade ago, global capital predomi-
nantly flowed from rich countries to other rich countries. By 2014, the global
south surpassed the north as an investment destination, growing rapidly as a
source of capital, too. Homeowners (though not renters) in global cities have
been the beneficiaries of this source of largesse, as low US interest rates saw a
turn from US bonds to real estate as a safe store of value. As a result, Beijing
is exerting more influence in transnational institutions while creating its
own.33 For countries inclined towards clientelistic relationships between busi-
ness and government, Beijing’s rules are proving preferable to Washington’s.
Further, states trying to attract capital in an authoritarian world may adopt
institutions that are complementary to large, authoritarian capital exporters.
Finally, many of the institutions undergirding the liberal world order
reflect a different geopolitical reality than the one emerging today. NATO,
as well as comparable security arrangements in East Asia, were built in
response to a genuine fear of Soviet expansionism.34 Today, the rise of China
is shifting the front lines of potential superpower confrontation. Unlike the
Soviet Union, China is a potential source of capital and trade for a variety of
states. Meanwhile, Russia’s election meddling and land-grabs may actually
be serving to reinforce the rivalry that long nurtured the liberal order. There
is no enemy like an old enemy.

Making space for authoritarianism

All these developments have been reinforcing one another. Financial crises
and the responses to crises (whether austerity or stimulus) are major distri-
butional events that rejig power structures and challenge ideas about ‘the
way the world works’.35 When voters are uncertain about how the aggregate
economy works, they may instead push for policies that favour groups with
which they identify. Indeed, in the United States, Republican assessments
of the state of the economy have been almost entirely given over to partisan
assertion.36 At the level of elites, wealthy interests may be more willing to
throw their vast resources behind illiberal xenophobes if the alternative is
redistribution and regulation.37
 Populism or Embedded Plutocracy? The Emerging World Order | 63

As minimum winning coalitions shrink, opportunities arise for actors

in authoritarian countries to influence the politics of democratic ones.
The role of Russian spying and hacking in the 2016 US presidential elec-
tion has received a great deal of attention, but there are subtler ways to
exert influence over political coalitions that are little more than networks
of contradictory, parochial interests. Since the 2016 election, a number of
foreign interests have sought to influence American policy by establishing
direct links with the Trump Organization. For instance, the Chinese gov-
ernment loaned $500m to Indonesia for a development plan that included
construction of a Trump golf course, just as the US president announced
the end of restrictions on ZTE, a Chinese telecoms company criticised for
exporting US technology to North Korea and Iran.38 One Italian deputy at
the Council of Europe was found to have been on the payroll of the gov-
ernment of Azerbaijan.39 The use of offshore accounts to evade taxes can
link the interests of oligarchs and democratic politicians alike. The release
of the Panama Papers embarrassed figures as diverse as Russian President
Vladimir Putin and Sigmundur Davíð Gunnlaugsson, then Iceland’s prime
minister. Conversely, corporations headquartered in democratic states are
becoming increasingly active in authoritarian ones – requiring them to
adapt themselves to local conditions.
The ‘boomerang effect’40 once touted as a means to promote human
rights can have the opposite effect in the face of networks of nationalist
and authoritarian actors.41 Authoritarian infiltration of democratic polities
can create constituencies that will push back against any move to reproach
governments for human-rights violations, and authoritarian governments
themselves can impose costs on governments that push too hard. For
instance, after Liu Xiaobo won the Nobel Peace Prize in 2010, the Chinese
government retaliated against Norway by cancelling planned meetings and
sidelining trade talks. When the Canadian government criticised the arrest
of civil-rights activists in Saudi Arabia, the Saudi government retaliated by
pulling Saudi students out of Canada. The democratic world might once
have been expected to stand together at such moments, but no governments
came to the assistance of Norway or Canada. Indeed, not long after Riyadh’s
spat with Ottawa, Jamal Khashoggi, a Saudi journalist resident in the United
64 | Michael Lee

States, disappeared after visiting the Saudi consulate in Turkey. Despite

indications that he was murdered on the orders of Saudi Crown Prince
Muhammad bin Salman Al Saud, President Trump was conspicuously def-
erential, aiming to grant cover to Saudi actions in defence of petrodollar
recycling and arms deals.
While not the first time a democratic state had traded its highest values
for material gain, the episode is illustrative of how a changing global power
structure is moving the goalposts. What is more, the global normalisation of
authoritarian values works in reverse too, creating space for illiberal demo-
crats and nationalists to push against human rights at home. Three case
studies – Hungary under Orbán, post-Brexit Britain and the United States
under Trump – demonstrate how transnational networks of dark money
and polarised political systems can promote nationalist outbidding. All
three countries have seen the emergence of governments that have enacted
policies to enrich wealthy insiders while sustaining mass support by invok-
ing hostility towards out-groups.

Hungary
Since it emerged from the Cold War, both of Hungary’s main parties have
been to a significant degree populist, so it has not had a fully mature gov-
ernment. Once a long-haired, pro-democracy dissident, Prime Minister
Orbán has evolved from a centre-right politician during his first pre-
miership (1998–2002) into a champion of ‘illiberal democracy’ today.
Together with its junior partner, the Christian Democratic People’s Party
(KDNP), Orbán’s Fidesz party won a two-thirds majority in Hungary’s
2010 election, which played out in the wake of the 2008 financial crisis.
Since gaining power, Fidesz has used both heterodox and orthodox tools
to slash large budget deficits and reward regime insiders. It implemented
a 16% flat tax (coupled with the highest VAT tax in Europe), imposed a
tax on foreign companies in some sectors (including media and banking)
and nationalised public pensions.42 The government has increasingly used
public institutions to disburse funds to a network of business leaders tied
to Fidesz that has long been cultivated by Orbán and businessman Lajos
Simicska. Public contracts represent 26% of all spending on print media
 Populism or Embedded Plutocracy? The Emerging World Order | 65

in Hungary, benefiting regime insiders and also extending the govern-

ment’s control. For instance, loans from Hungary’s Exim Bank were used
to support the takeover of the country’s second-largest TV station by Andy
Vajna, a wealthy, pro-Fidesz businessman and film producer. András
Lánczi, the rector of Budapest’s Corvinus University and a Fidesz sup-
porter, has described the party’s aim as the creation of a ‘patriotic cohort
of entrepreneurs’.43
In the 2014 Hungarian election, Fidesz won re-election, but lost support
to Jobbik, another far-right party, and a unity coalition of liberal, green
and pro-European parties. However, Orbán has developed numerous tools
to enhance his popularity, while continuing to favour insider firms.44 He
took advantage of the Syrian refugee crisis to stoke nationalist fears, pledg-
ing to build a fence to cut off access to migrants. He has aimed criticisms
laced with anti-Semitism at George Soros, a wealthy Hungarian-American
financier, and moved to shut down the Soros-backed Central European
University.45 In seeking to broaden his economic agenda, Orbán has opted
for welfare chauvinism (that is, welfare for ‘deserving’, in-group members
only), recently proposing to exempt women with four or more children
from paying taxes.46 In a climate defined by hostility to migration, he has
used the cloak of nationalism to justify increasing democratic backsliding.
Today, Freedom House rates Hungary as only ‘partly free’.47

United Kingdom
Unlike in Hungary, right-populists have influenced British politics primar-
ily through their role in the Brexit referendum rather than through elections.
The promise of a Brexit referendum emerged as part of an attempt by prime
minister David Cameron to stem rising support for the populist United
Kingdom Independence Party and quiet backbench Tories opposed to any
coalition by continuing his own austerity drive. Most of the financing for the
Leave campaign came from just 100 individual donors.48 One of the largest
donors was Arron Banks, the CEO of an insurance company, who single-
handedly gave more than £8m to pro-Brexit organisations, particularly
Leave.EU, a campaign group he co-founded. Shortly after doing so, Banks
was offered the opportunity to invest in the consolidation of six Russian
66 | Michael Lee

gold mines, raising questions about his motives in promoting Britain’s

departure from the EU.49
The role of Cambridge Analytica, a political consultancy founded by
hedge-fund manager Robert Mercer, in the Brexit campaign has also raised
questions. The company used data derived from millions of Facebook pro-
files to construct detailed psychographic profiles of British and American
voters – including those susceptible to believing falsehoods. According to
Chris Wylie, a Cambridge Analytica whistle-blower, the firm was linked
to the same parent company as AggregateIQ,50 a Canadian political consul-
tancy hired by four pro-Brexit organisations, Vote Leave, BeLeave, Veterans
for Britain and Northern Ireland’s Democratic Unionist Party.51 Wylie
also claimed that Cambridge Analytica employees shared details of their
employer’s technology with the sanctioned Russian oil company Lukoil.
While the actions of this particular network may not have been decisive in
the Leave campaign’s victory, subsequent Russian efforts to influence elec-
tions in the UK and US demonstrate the potential of such networks to play
a powerful role in future campaigns.
Pro-Remain Conservatives, including Prime Minister Theresa May, have
pushed for a negotiated ‘soft’ Brexit, in which the United Kingdom would
accept most EU rules and pay billions of pounds in exchange for concessions
to ease the transition, such as continued access to the European common
market. However, a number of pro-Brexit hardliners have pushed instead
for a ‘hard’ Brexit, in which Britain would abruptly cease its membership in
the EU, leaving the country in a state of regulatory uncertainty and impos-
ing steep transitional costs. Bank of England stress tests indicate that this
could cause as much as an 8% fall in GDP.52 Yet many pro-Brexit hardliners
are themselves insured against the potential of post-Brexit chaos by their
diversified business holdings and ownership of mobile assets. One Tory
MP, Sir John Redwood, has urged a no-deal Brexit while shifting his own
personal investment assets out of the United Kingdom.53 Another no-deal
Brexiteer, Jacob Rees-Mogg, is the owner of a London- and Singapore-based
investment-fund management firm, Somerset Capital Management, which
established a fund in Ireland after the Brexit vote. One wonders whether he
has taken a leaf from his father’s books, Blood in the Streets: Investment Profits
 Populism or Embedded Plutocracy? The Emerging World Order | 67

in a World Gone Mad and The Sovereign Individual: Mastering the Transition to
the Information Age, which promoted the idea that ‘sovereign individuals’
can profit even in the midst of disorder.

United States
The United States has long incubated key elements of embedded plutoc-
racy. Since the 1990s, a media ecosystem including far-right radio stations,
Fox News and online right-wing activists has cheered the rightward drift
of the Republican Party.54 Rising income inequality and Supreme Court
rulings favourable to unlimited campaign donations have enabled wealthy,
highly motivated individuals to intervene in politics to an unprecedented
degree. Indeed, some billionaires have become famous for their political
activism. Charles and David Koch, scions of Koch Industries, have a long
history of supporting libertarian and conservative think tanks, as well as
the anti-stimulus Tea Party movement.55 Las Vegas casino-owner Sheldon
Adelson donates large sums of money to candidates that endorse a foreign
policy consistent with the goals of Israel’s Likud party.56 According to one
study on the role played by billionaires in American politics, the bulk of
billionaire activism takes place in opposition to higher taxes, though some
liberal billionaires, such as Thomas Steyer, have an opposing agenda, thus
deepening the country’s political polarisation.57 Meanwhile, analysis by
political scientists has demonstrated that the preferences of median voters
do not influence policy outcomes.58
Although donors have extensive agenda-setting power, they cannot
always determine political outcomes. In the 2016 Republican primary,
Trump used his celebrity status to hijack the right-wing infosphere and
effectively outbid other candidates, particularly by appealing to the racial
animus and xenophobia of primary voters.59 Once Trump won the nomina-
tion, he too benefited from the activities of Cambridge Analytica and the
Russian government.60 The Trump campaign was able to send targeted mes-
sages to different kinds of voters, presenting their candidate to some as a
president who would implement a traditional Republican agenda, and to
others as their champion against immigration and demographic change. At
times, Trump made appeals to economic populism as well, promising to
68 | Michael Lee

go after ‘hedge fund guys’, criticising free trade and pledging to create jobs
with large infrastructure programmes.
In office, Trump promptly filled his cabinet with titans of big busi-
ness. His first secretary of state, Rex Tillerson, was the former CEO of
ExxonMobil; Treasury Secretary Steven Mnuchin is a Goldman Sachs
alumnus; Commerce Secretary Wilbur Ross is a billionaire investor; and
Education Secretary Betsy DeVos is a billionaire whose husband was CEO
of Amway. Other key appointments also have clear ties to wealthy interests.
Prior to serving as Trump’s third national security advisor, John Bolton ran
a hawkish super PAC financed by billionaire Robert Mercer.61 Trump’s son-
in-law, the wealthy real-estate investor Jared Kushner, has also played an
important advisory role within the administration.
The signature economic policy of the Trump administration has been
major cuts to income and corporate taxes, the latter of which were slashed
from 35% to 21%.62 The primary beneficiaries of the income-tax cut have been
wealthy individuals. On smaller issues too, the Trump agenda has looked
more plutocratic than populist. At the urging of billionaire investor Carl
Icahn, an early Trump backer who also started a super PAC, Trump lowered
the corporate-repatriation tax.63 Congress has also weakened the provisions
of the Dodd–Frank Act with support from the administration, raising the
cut-off for ‘systemically important’ financial institutions to $250bn. Trump’s
appointee to the Federal Communications Commission, Ajit Pai, voted to
repeal net-neutrality rules, allowing internet service providers to charge dif-
ferent rates to different consumers.64
While Trump has enthusiastically pursued the social elements of his
populist agenda, he has eschewed actions that might alienate his plutocratic
allies. As president, he has pushed for a ban on immigration from a number
of predominantly Muslim countries (though the list excludes countries
where his company has properties); for zero-tolerance border policies that
have resulted in family separation; and for a wall on the US–Mexico border
(even at the cost of triggering a government shutdown). He has banned
transgender people from serving in the military and expressed support for
the traditional policy objectives of social conservatives, often in polarising
outbursts on Twitter.65 On the other hand, promises to increase infrastruc-
 Populism or Embedded Plutocracy? The Emerging World Order | 69

ture spending and to close the carried-interest provision in the tax code
appear unlikely to be fulfilled.
The Trump administration has deviated from traditional Republican
support for free trade. In office, Trump levied tariffs on China, coupled
with targeted tariffs on Canadian and Mexican steel. This is an important
reminder that embedded plutocracy differs from a broadly pro-business
agenda. Although economic theory predicts that protectionism is welfare-
reducing overall, the winners of trade tend to be diffuse groups (such as
consumers), while the losers often represent concentrated interests (such
as import-competing firms).66 Trump’s inner circle consists largely of busi-
ness interests that are import-competing (Ross has interests in steel) or not
strongly affected by tariffs (such as the Trump family’s real-estate interests).
Although a trade war would be harmful for some pro-Trump groups, such
as farmers, side payments can soften the blow.67 In an environment char-
acterised by increasingly fragmented interests, even a signature populist
policy like protectionism can become a vehicle for corporate welfare.

Embedded plutocracy: the new world order

The emergence of right-populist rule in numerous countries, combined
with the restructuring of global institutions to accommodate the interests
of autocratic regimes, could replace the current neoliberal world order with
embedded plutocracy (see Table 1). As during the Bretton Woods era, states
within the new system will act to limit aspects of globalisation that might
cause dislocation, but unlike under Bretton Woods, the primary beneficiar-
ies of state intervention will be large, incumbent firms and regime insiders,
allied to coalitions of single-issue voters, such as nativists. In an era of big
data, such voters are easy to identify – and manipulate. For instance, one
study pointed to pathogen sensitivity – one of many personal traits that
can be detected through the analysis of a subject’s online behaviour – as a
consistent predictor of nativism. Politicians might refer to ‘infestation’ by
immigrants, arousing the fears of such voters.68 Courting nativist voters may
also enable the transformation of the welfare state into a kind of welfare
chauvinism.69 Such programmes can be implemented with less political
capital than universal programmes.
70 | Michael Lee

Table 1: A comparison of the last three world orders

Embedded liberalism Neoliberalism Embedded plutocracy
(1945–71*) (1974–2015) (2016–)
Minimum winning coalitions
Large Shrinking Small
(in democracies)
Nature of political coalitions Broad, often class-based Sectional or regional Particularist
Migration Restricted Open Restricted
Trade Somewhat open Open Targeted protection
Free flows of capital Restricted Open Open
US hegemony US+G7 collective
Global governance Great-power concert
(in the West) hegemony
*It is worth noting that prior to the opening up of the West in the 1970s, the communist world was excluded from the
‘world’ order.

Meanwhile, there seem to be few voters who could successfully stand

against nativism and immigration restrictions. Immigrants themselves
might favour open borders, but as non-citizens, they usually lack the
right to vote until they have completed lengthy processes of naturalisa-
tion. The children of immigrants, in turn, may lack the same identification
with immigrants as their parents. In the early twentieth century, plenty of
Americans with Swedish, German, Irish and Italian names happily sup-
ported restrictions on immigration. Capital taxation is typically a far more
urgent issue for big business than expanding the labour market through
immigration, and while some individuals or civil-rights organisations
might find common cause with pro-immigration groups, their voices are
likely to be drowned out by groups whose commitment to other outcomes
is more concentrated.70
Some aspects of economic globalisation will remain politically untouch-
able. The implementation of capital controls runs counter to the interests
of the large corporations that are needed to bankroll political victory. For
capital, mobility is a vital safeguard against expropriation. The main cost of
mobility is that it limits the ability of governments to use monetary policy to
combat financial crises. However, by relying on political coalitions of highly
mobilised single-issue voters and business elites, democratic governments
will be increasingly able to weather recessions and financial crises – much
as the limited franchise helped many countries maintain the gold standard
in the face of nineteenth-century crises.
 Populism or Embedded Plutocracy? The Emerging World Order | 71

As before, the potential recipients of foreign investment will need to

signal that they are likely to protect the property rights of investors.71 Yet the
emergence of autocratic regimes, particularly China, as sources of capital
means that transparent institutions and strong rules will not be the only
way of doing so. For instance, the Philippines, which is likely to welcome
Chinese investment for geographic reasons, might choose to join the net-
works of relationships that characterise China’s brand of crony capitalism.
Taking bribes and maintaining patronage relationships can credibly signal
good intentions just as well as strong property rights.72
In order to protect their far-flung investments, Chinese investors will
also press the Chinese government to expand its capacity for power projec-
tion. The development of a blue-water navy and the requisite naval bases
is already a Chinese priority – a string of pearls to accompany the Belt and
Road Initiative. Greater Chinese capabilities will, in turn, allow China to
expand its own bloc of dependent states.
As American high-technology exports decline due to a mixture of tech-
nological diffusion, the distortionary effects of cronyism and the loss of
highly skilled immigrants, the US might use access to its domestic market
to its advantage.73 Such moves could benefit import-competing firms, while
privileged access to some American markets might benefit certain export-­
oriented firms. Trump’s trade wars with China, Europe and Canada represent
early examples of this strategy in action. In time, the states most depend-
ent on access to US markets may opt for negotiated settlements offering
American goods a privileged position in a bid to prevent ad hoc trade wars.
States powerful enough to have their own dependents are likely to baulk
at such propositions and instead form their own rival trade blocs. Even if
this approach is bad for their aggregate welfare, it offers rising powers the
prospect of appeasing exporters while assuaging import-competing firms.
Doubtless, some domestic and global actors will push back against pro-
tectionism. But while some export-oriented sectors might defend the old
order, others will prefer having privileged roles inside trading blocs. Any
beneficiaries from trade that have difficulty mobilising, such as consumers,
are not likely to do much in a world where minimum winning coalitions are
shrinking. International organisations such as the World Trade Organisation
 72 | Michael Lee

(WTO) might allow some states to resist protectionism, but the primary
WTO enforcement mechanism – reciprocal tariffs – is fundamentally a
weapon of the strong. Small states are more trade-dependent than large
ones, and can do very little damage to larger economies by responding to
tariffs with counter-tariffs.74
As the global power structure shifts, international institutions will reflect
the powerful states that dominate them. On some issues – including human
rights and governance standards – there will be much less cooperation. For
instance, it is difficult to imagine a solution to climate change arising from
a great-power concert, particularly if the companies that emit much of the
world’s carbon dioxide are among those who
select the parties at the table. On the other hand,
WTO enforcement it is possible to imagine a great-power concert
to avoid a Sino-American war. Ambitions of
is a weapon of the robust global governance delivered by suprana-
strong tional institutions are likely to be dashed, and the
promotion of universal human rights curtailed.
Offshore accounts, mingling monies deposited by oligarchs in authoritarian
states and large corporations in democratic ones, could promote a form of
elite interdependence. War, insofar as it would risk the assets of the selector-
ate, would be increasingly unlikely.
Some might argue that liberal democratic institutions remain strong in
most democracies, and that the current trend towards populism is likely to
die down once Trump leaves office or the Syrian refugee crisis diminishes.
Coalitions of single-issue voters may become more difficult to construct as
their initial concerns are addressed. Big business might be expected to push
back against serious efforts to alter the status quo, and big data might lose
some of its utility as citizens adapt their behaviour. In addition, big data
offers the same opportunities to users across the political spectrum: left,
right, pro-globalisation and anti-globalisation activists can all use the same
tools to mobilise supporters. Non-populist parties might co-opt the posi-
tions of populists to some degree.
Yet even if populist politicians vanish, partisans of many right-wing parties
will remain committed to immigration restriction. Politicians courting them
 Populism or Embedded Plutocracy? The Emerging World Order | 73

are likely to fare well. Big business has not stopped the US–China trade war,
the Brexit vote or the formation of populist governments in Western democra-
cies such as Italy. Big data inherently benefits those seeking to build coalitions
around intensely held values and identities. Individual rights and free trade
appeal to diffuse coalitions, while upsetting concentrated ones.
Some might suggest that Chinese growth will plateau as democratic
India soars, or that China and others might take steps towards democra-
tisation. Even if Chinese power continues to grow, it may be difficult for a
‘Beijing consensus’ to take shape. Liberal great powers, on the other hand,
have a good record of crafting international coalitions during major wars.
American hegemony may outlive American power – after all, America’s
GDP surpassed Britain’s in 1872, yet the United States did not take over
from the British Empire until 1941. Perhaps the rules that define the interna-
tional order are strong enough to outlast global power transitions, and the
liberal order need only reconfigure its mission.75
There is reason to be sceptical, however. India has yet to emerge as a
democratic superpower, and although Chinese growth is slowing, India is
not clearly growing faster. Moreover, India is undergoing modest demo-
cratic backsliding itself. In 2014, it elected Narendra Modi as prime minister,
a Hindu nationalist whose tenure as chief minister of Gujarat was tainted by
accusations of complicity in anti-Muslim riots. According to the Varieties of
Democracy Project, as many countries are undergoing democratic backslid-
ing as are becoming more democratic.76 The only region where democracy
and free trade are advancing, sub-Saharan Africa, lacks great powers.
As for the power of rules-based international orders, rules change. The
Concert of Vienna fell apart after Napoleon III split Russia off from Prussia
and Austria. The League of Nations collapsed when the Second World War
broke out. The Bretton Woods system died when the costs of maintaining it
grew too high for the United States. Rules-based order is often the exercise
of power by some participants over others. Such orders rarely outlive the
power structures that gave them life.
Embedded plutocracy will not take root everywhere. Those countries
with vibrant civil societies and organisations capable of mobilising broad
swathes of the public to defend democracy and individual rights may defeat
74 | Michael Lee

creeping autocracy. Strict campaign-finance laws and rules protecting the

privacy of data might head off the shrinking of the democratic selector-
ate (although these are difficult issues to mobilise voters around, and it is
difficult to regulate increasingly transnational campaigns). Sensible rules
governing financial institutions, and robust responses to financial crises
when they occur, can protect citizens from the destabilisation of recurrent
crises to some degree. Clear overreach and abuses by monopolist or monop-
sonist firms might trigger a backlash, leading to the largest firms being
regulated like utilities, or even broken up.77 Liberal grand coalitions may
yet form both at the domestic and international levels to offer a compelling
rebuttal to xenophobes.
Some believe that the worst outcomes might be avoided with a return
to something like embedded liberalism. Following the tradition of Karl
Polanyi’s The Great Transformation, one argument posits that extreme market
societies are unnatural and inevitably produce counter-movements.78 Thus,
some combination of social democracy and limits to globalisation might help
to prevent the rise of authoritarianism. Yet it is not clear that robust welfare
states are a remedy for xenophobia. Some of the states that have avoided
the rise of a powerful far right are fairly market-oriented (such as Australia),
while others with extensive welfare states (such as France and Denmark)
have seen an intensification of xenophobic politics.79 Moreover, the closure
of states to global flows will not end hostility to immigration. Much of the
western hemisphere went from being extremely open to immigration in
the late nineteenth century to being extremely closed by the 1920s.80 These
policy shifts did little to eliminate opportunities for nativist politics.
Perhaps a liberal world that is moderately closed to illiberal regimes
might be a stronger one. Orbán happily accepts financial transfers from the
EU, even as he shreds Hungarian democracy. Oligarchs are quite willing to
store their ill-gotten gains in liberal democratic countries that can protect
their property. Openness to closed regimes might once have been justified
on the grounds that trade and economic progress lead to democratisation,81
but we now know that modernisation can shore up the legitimacy of author-
itarian regimes, as in China. Elsewhere, economic modernisation has often
triggered social disruption and internal conflict. In Brazil, the Philippines
 Populism or Embedded Plutocracy? The Emerging World Order | 75

and India, recent periods of rapid growth have been capped with the rise of
Bolsonaro, Duterte and Modi respectively. This is hardly a ringing endorse-
ment of the democratising effects of economic progress.
The age of democracy – and particularly liberal democracy with universal
suffrage – represents a tiny blip in the scope of human history.82 Institutions
and practices that Americans in particular imagine to be timeless and per-
manent are recent, contingent developments. The post-Bretton Woods
neoliberal order served the goals of a particular time and place. In the process,
it facilitated its own transformation into something new, and very much at
cross-purposes to its initial ideas. Embedded plutocracy is the result.

Notes
1 By the liberal world order, I mean Economic Order’, International
the set of institutions tying liberal Organizations, vol. 36, no. 2, 1982, pp.
democracies together, such as the 379–415.
Bretton Woods institutions, NATO, 5 The trilemma is best explained with

the G7 and so on. I see the liberal an example. Imagine that a country
world order as consisting of two had fixed exchange rates, free-flowing
phases – an embedded-liberal phase capital markets and high levels of
(1945–71) and a subsequent neolib- monetary autonomy. In response to a
eral phase (1974–2015). When I refer recession, central banks would lower
to the neoliberal world order, I mean interest rates to stimulate the econ-
only the second phase. omy. Portfolio investors, seeking high
2 There are also left-wing political interest rates, would move abroad,
leaders who have been referred to triggering a capital outflow. That
as populist, such Alexis Tsipras in capital outflow would put downward
Greece, Bernie Sanders in the United pressure on the currency, threatening
States and Pablo Iglesias Turrión the fixed exchange rate. See Robert
in Spain. Thus far, none of the left- Mundell, ‘Capital Mobility and
populist parties have made significant Stabilization Policy Under Fixed and
moves to reverse liberal democracy. Flexible Exchange Rates’, Canadian
3 See, for example, Hal Brands, Journal of Economics and Political
‘Democracy vs Authoritarianism: Science, no. 29, 1963, pp. 475–85.
How Ideology Shapes Great-Power 6 See Jeffrey Williamson, ‘Globalization

Conflict’, Survival, vol. 60, no. 5, and Inequality, Past and Present’,
October–November 2018, pp. 61–114. World Bank Observer, vol. 12, no. 2,
4 See John Ruggie, ‘International 1997, pp. 117–35.
Regimes, Transactions and Change: 7 On the transformation of the world

Embedded Liberalism in the Postwar order in the 1970s, see Erik Helleiner,
76 | Michael Lee

States and the Reemergence of Global and the Basle Accord’, International
Finance: From Bretton Woods to the Organization, vol. 52, no. 1, 1998, pp.
1990s (Ithaca, NY: Cornell University 35–54.
Press, 1996); and Judith Stein, Pivotal 13 See World Bank, Global Monitoring
Decade: How the United States Traded Report 2015/2016: Development Goals
Factories for Finance in the Seventies in an Era of Demographic Change
(New Haven, CT: Yale University (Washington DC: World Bank, 2015),
Press, 2010). p. 3.
8 The most dramatic policy shifts 14 World Health Organization, World
underlying the neoliberal era have Malaria Report (Geneva: World Health
involved the abolition of capital con- Organization, 2016), p. 42.
trols, financial regulations, tariffs 15 See Thomas Carothers, ‘The End of
and the privatisation of state-owned the Transitions Paradigm’, Journal of
enterprises. Overall taxation has not Democracy, vol. 13, no. 1, 2002, pp.
fallen broadly across the Organisation 5–21.
for Economic Co-operation and 16 See Sarah Bauerle Danzman, William
Development – in fact, tax revenue Winecoff and Thomas Oatley, ‘All
as a percentage of GDP in the US Crises Are Global: Capital Cycles in
is exactly the same as it was in an Imbalanced International Political
1981. Organisation for Economic Economy’, International Studies
Co-operation and Development, Quarterly, vol. 61, no. 4, 2017, pp.
OECD.Stat, https://stats.oecd.org/. 907–23.
9 See Helleiner, States and the 17 See Brian Burgoon, Tim Oliver and
Reemergence of Global Finance. Peter Trubowitz, ‘Globalization,
10 See Barry Eichengreen, Exorbitant Domestic Politics, and Transatlantic
Privilege: The Rise and Fall of the Dollar Relations’, International Politics, vol. 54,
and the Future of the International no. 4, 2017, pp. 420–33.
Monetary System (New York: Oxford 18 See Thomas Oatley, A Political
University Press, 2012); and Pierre- Economy of American Hegemony:
Olivier Gourinchas and Helene Rey, Buildups, Booms and Busts (Cambridge:
‘From World Banker to World Venture Cambridge University Press, 2015).
Capitalist: U.S. External Adjustment 19 See Alexis de Tocqueville, Democracy
and the Exorbitant Privilege’, in R. in America (New York: Signet Classics,
Clarida (ed.), G-7 Current Account 1835 [2010]); Samuel Huntington,
Imbalances: Sustainability and Political Order in Changing Societies
Adjustment (Chicago, IL: University of (New Haven, CT: Yale University
Chicago Press, 2007), pp. 11–55. Press, 1968); Robert Putnam, Bowling
11 For instance, the United States has a Alone: The Collapse and Revival of
sufficient voting share (>15%) to veto American Community (New York: Simon
structural changes to the IMF. & Schuster, 2007); and Wendy Brown,
12 See Thomas Oatley and Robert Undoing the Demos: Neoliberalism’s
Nabors, ‘Redistributive Cooperation: Stealth Revolution (Cambridge, MA:
Market Failures, Wealth Transfers MIT Press, 2015).
 Populism or Embedded Plutocracy? The Emerging World Order | 77

20 For instance, Martin Gilens and Checkbook Elections? Political Finance

Benjamin Page found that policy­ in Comparative Perspective (New York:
makers are no longer responsive to the Oxford University Press, 2016).
median voter. Larry Bartels similarly 21 See Michael Goodhart, ‘Europe’s
argues that the wealthy have systemic Democratic Deficits Through the
advantages in influencing American Looking Glass: The European Union
politics. Cross-national studies also as a Challenge for Democracy’,
cast doubt on the idea that average Perspectives on Politics, vol. 5, no. 3,
voters drive politics. For instance, 2007, pp. 567–84.
Stefanie Walter has noted that the 22 See Paul Mozur, ‘A Genocide Incited
increasing complexity of global on Facebook, with Posts from
finance similarly undermines the for- Myanmar’s Military’, New York Times,
mation of clear economic coalitions. 15 October 2018.
The most significant cross-country 23 National Science Foundation,
comparison of campaign-finance rules ‘Science and Engineering Labor
came out fairly recently, making it Force: Immigration and the Science
difficult to explore changes over time. and Engineering Workforce’, 2018,
However, works on cross-national https://www.nsf.gov/statistics/2018/
party finance point to evidence that nsb20181/report/sections/science-
the United States is in the middle and-engineering-labor-force/
of the pack in terms of quality of immigration-and-the-s-e-workforce.
regulation, and secondly that regu- 24 The causes of the rise of right-wing
lations really do affect important populism are hotly debated, although
variables like state intervention. See some contributing factors are becom-
Martin Gilens and Benjamin Page, ing relatively clear. For instance,
‘Testing Theories of American Politics: individual-voter surveys reveal strong
Elites, Interest Groups, and Average links between voter hostility to immi-
Citizens’, Perspectives on Politics, vol. grants or out-groups and support for
12, no. 3, 2014, pp. 564–81; Larry right-populist candidates. See Cas
Bartels, Unequal Democracy: The Mudde, On Extremism and Democracy
Political Economy of the New Gilded in Europe (New York: Routledge,
Age, 2nd edition (Princeton, NJ: 2016); Matthew Goodwin and Caitlin
Princeton University Press, 2016); Milazzo, ‘Taking Back Control?
Stefanie Walter, Financial Crises and the Investigating the Role of Immigration
Politics of Macroeconomic Adjustments in the 2016 Vote for Brexit’, British
(Cambridge: Cambridge University Journal of Politics and International
Press, 2013); International IDEA, Relations, vol. 19, no. 3, 2017, pp.
‘Political Finance Database’, 2012, 450–64; John Sides, Michael Tesler and
https://www.idea.int/es/data-tools/ Lynn Vavreck, Identity Crisis: The 2016
data/political-finance-database; and Campaign and the Battle for the Meaning
Pippa Norris and Andrea Abel van of America (Princeton, NJ: Princeton
Es, ‘Does Regulation Work?’, in Pippa University Press, 2018); Florent
Norris and Andrea Abel van Es (eds), Gougou and Simon Persico, ‘A New
78 | Michael Lee

Party System in the Making? The 2017 30 See Goodwin and Milazzo, ‘Taking
French Presidential Election’, French Back Control?’.
Politics, vol. 15, no. 3, 2017, pp. 303–21; 31 Samuel Huntington, The Third Wave:
and Achim Gorres, Dennis Spies Democratization in the Late 20th
and Staffan Kumlin, ‘The Electoral Century (Norman, OK: University of
Supporter Base of the Alternative Oklahoma Press, 1993).
for Germany’, Swiss Political Science 32 It could be argued that China is only
Review, vol. 24, no. 3, 2018, pp. 246–69. just beginning to translate its immense
Voter attitudes appear to be relatively economic bulk into global influence.
sensitive to framing effects. For an For instance, China still mostly lacks
excellent overview, see J. Hainmueller power-projection capabilities, spends
and Daniel Hopkins, ‘Public Attitudes relatively little on its military, and
Toward Immigration’, Annual Reviews has yet to fully liberalise its financial
of Political Science, no. 17, 2014, pp. system.
225–49. Those stressing globalisation 33 See Cynthia Roberts, Leslie Armijo
or long-term economic decline can and Saori Katada, The BRICS and
explain some of the regional variation Collective Financial Statecraft (New
of populist support, but not variations York: Oxford University Press, 2017).
at the individual level. 34 See G. John Ikenberry, ‘The End of
25 See John Sides and Jack Citrin, the Liberal International Order?’,
‘European Opinion About International Affairs, vol. 94, no. 1, 2018,
Immigration: The Role of Identities, pp. 7–23.
Interests and Information’, British 35 See Mark Blyth, Great Transformations:
Journal of Political Science, vol. 37, no. 3, Economic Ideas and Institutional Change
2007, pp. 477–504. in the Twentieth Century (Cambridge:
26 See Anna Flagg, ‘The Myth of the Cambridge University Press, 2002);
Criminal Immigrant’, New York Times, and Mark Blyth, Austerity: The History
30 March 2018. of a Dangerous Idea (New York: Oxford
27 Even undocumented immigrants University Press, 2013).
may be net contributors to govern- 36 See Alan Gerber and Gregory Huber,
ment revenues. See Lisa Christensen ‘Partisanship, Political Control, and
Gee et al., Undocumented Immigrants’ Economic Assessments’, American
State and Local Tax Contributions Journal of Political Science, vol. 54, no. 1,
(Washington DC: The Institute on Tax 2010, pp. 153–73.
and Economic Policy, 2017). 37 In that sense, the popular debate
28 Lawrence Freedman, ‘Trump and over whether economic anxiety led
Brexit’, Survival, vol. 60, no. 6, voters to support the populist far right
December 2018–January 2019, misses the mark. Economic anxiety led
pp. 7–16. to Keynesianism and financial regula-
29 Viktor Orbán, ‘Speech at the XXV tion. The response to the 2008 crisis
Bálványos Free Summer University may have generated anxiety among
and Youth Camp’, Băile Tuşnad, 26 economic elites, leading some to sup-
July 2014. port more polarising candidates (on
 Populism or Embedded Plutocracy? The Emerging World Order | 79

cultural or social issues) in order to Welfare in Hard Times: The Social

reduce the salience of economic issues. Policy of the Orbán Government in
38 Ana Swanson, ‘Trump’s Trade War Hungary Between 2010 and 2014’,
Spooks Markets as White House Waits Journal of European Social Policy, vol.
for China to Blink’, New York Times, 19 24, no. 5, 2014, pp. 486–500.
June 2018. 43 Neil Buckley and Andrew Byrne,
39 See Francesco Galietti, ‘Foreign ‘Viktor Orban’s Oligarchs: A New
Funding Could (Legally) Tip Italy’s Elite Emerges in Hungary’, Financial
Upcoming Election’, National Interest, Times, 21 December 2017; and István
28 February 2018; and Francesco János Tóth and Miklós Hajdu,
Galietti, Sovranità in vendita: Il finan- ‘Intensity of Corruption Risks and
ziamento dei partiti italiani e l’influenza Price Distortion in the Hungarian
straniera (Milano: Guerini, 2018). Public Procurement – 2009 to 2016’,
40 The idea of the boomerang effect is Corruption Research Center Budapest,
that civil-society actors in authoritar- 2017.
ian countries can respond to domestic 44 Péter Kréko and Zsolt Enyedi,
obstacles preventing them from press- ‘Explaining Eastern Europe: Orbán’s
ing their concerns by appealing to Laboratory of Illiberalism’, Journal
transnational networks that, in turn, of Democracy, vol. 29, no. 3, 2018, pp.
could press third-party states and 39–51.
non-governmental organisations to 45 Ira Forman, ‘Viktor Orbán Is
influence their repressive states. See Exploiting Anti-semitism’, Atlantic, 14
Margaret Keck and Kathryn Sikkink, December 2018.
‘Transnational Advocacy Networks in 46 Shaun Walker, ‘Viktor Orbán: No
International and Regional Politics’, Tax for Hungarian Women with
International Social Science Journal, vol. Four or More Children’, Guardian,
51, no. 159, 1999, pp. 89–101. 10 February 2019, https://www.
41 For instance, Naná de Graaff and theguardian.com/world/2019/feb/10/
Bastiaan van Apeldoorn discuss the viktor-orban-no-tax-for-hungarian-
possibility of ‘transnationalizing cor- women-with-four-or-more-children.
porate elite networks with Chinese 47 Freedom House, ‘Hungary’,
characteristics’. See Naná de Graaff https://freedomhouse.org/report/
and Bastiaan van Apeldoorn, ‘US freedom-world/2019/hungary.
Elite Power and the Rise of “Statist” 48 Peter Hobson, ‘Handful of Wealthy
Chinese Elites in Global Markets’, Donors Dominated Brexit Campaign
International Politics, vol. 54, no. 3, Funding’, Reuters, 2 October 2016.
2017, pp. 338–55; and Naná de Graaff 49 David Kirkpatrick and Matthew
and Bastiaan van Apeldoorn, ‘US– Rosenberg, ‘Russians Offered Business
China Relations and the Liberal World Deals to Brexit Backer’, New York
Order: Contending Elites, Colliding Times, 29 June 2018.
Visions?’, International Affairs, vol. 94, 50 Carol Cadwalladr and Mark
no. 1, 2018, pp. 113–31. Townsend, ‘Revealed: The Ties that
42 Dorottya Szrika, ‘Democracy and Bound Vote Leave’s Data Firm to
80 | Michael Lee

Controversial Cambridge Analytica’, org, https://www.opensecrets.org/

Guardian, 24 March 2018. outsidespending/summ.php?cycle=20
51 Carole Cadwalladr, ‘Facebook 16&disp=D&type=V&superonly=N.
Suspends Data Firm Hired by Vote 58 Martin Gilens and Benjamin Page,
Leave over Alleged Cambridge ‘Testing Theories of American Politics:
Analytica Ties’, Guardian, 6 April 2018. Elites, Interest Groups, and Average
52 Richard Partington, ‘Bank of England Citizens’, Perspectives on Politics, vol.
Says No-deal Brexit Would Be 12, no. 3, 2014, pp. 564–81.
Worse than 2008 Crisis’, Guardian, 28 59 See Sides, Tesler and Vavreck,
November 2018. Identity Crisis.
53 Jessica Elgot, ‘John Redwood 60 Matthew Rosenberg, Nicholas
Criticised over Advice to Pull Confessore and Carole Cadwalladr,
Money Out of the UK’, Guardian, 13 ‘How Trump Consultants Exploited
November 2018. the Facebook Data of Millions’, New
54 One analysis of the linkages between York Times, 17 March 2018.
news stories on immigration found 61 Center for Responsive Politics, ‘John
clear evidence of a right-wing media Bolton Super PAC’, OpenSecrets.org,
ecosystem that was divorced from 2018, https://www.opensecrets.org/
mainstream sources. See Yochai pacs/lookup2.php?strID=C00542464.
Benkler, Robert Faris and Hal Roberts, 62 US Congress, ‘Tax Cuts and Jobs Act
Network Propaganda: Manipulation, of 2017’, 115th Congress, Session 1,
Disinformation, and Radicalization in H.R. 1, available at https://rules.house.
American Politics (New York: Oxford gov/conference-report/hr-1.
University Press, 2018), p. 111. 63 Rebecca Ballhaus, ‘Carl Icahn to Invest
55 Theda Skocpol and Alexander Hertel- $150 Million in Super Pac’, Wall Street
Fernandez, ‘The Koch Network Journal, 21 October 2015.
and Republican Party Extremism’, 64 Cecilia Kang, ‘F.C.C. Repeals Net
Perspectives on Politics, vol. 14, no. 3, Neutrality Rules’, New York Times, 14
2016, pp. 681–99. December 2017.
56 Jason Zengerle, ‘Sheldon Adelson Is 65 See Holly Warfield, ‘Mapping
Ready to Buy the Presidency’, New President Trump’s Travel Ban vs.
Yorker, 9 September 2015. His Business Interests in Muslim
57 See Benjamin Page, Jason Seawright Countries’, Forbes, 1 February 2017;
and Matthew Lacombe, Billionaires Ron Nixon, ‘“Zero Tolerance”
and Stealth Politics (Chicago, IL: Immigration Policy Surprised
University of Chicago Press, 2019). Agencies, Report Finds’, New York
The donation patterns of the biggest Times, 24 October 2018; and Julie
individual donors demonstrate a Hirschfield Davis and Helene Cooper,
strong tendency to favour either ‘Trump Says Transgender People Will
liberals or conservatives, rather than Not Be Allowed in the Military’, New
both. See Center for Responsive York Times, 26 July 2017.
Politics, ‘2016 Top Donors to Outside 66 See Marc Busch and Eric Reinhardt,
Spending Groups’, OpenSecrets. ‘Geography, International Trade,
 Populism or Embedded Plutocracy? The Emerging World Order | 81

and Political Mobilization in U.S. 75 See Ikenberry, ‘The End of the Liberal
Industries’, American Journal of Political International Order?’.
Science, vol. 44, no. 4, 2000, pp. 703–19. 76 See the Varieties of Democracy V-Dem
67 Alan Rappeport, ‘A $12 Billion Dataset at https://doi.org/10.23696/
Program to Help Farmers Stung by vdemcy18.
Trump’s Trade War Has Aided Few’, 77 Blockchain technology represents one
New York Times, 19 November 2018. potential way to store data in systems
68 See Lene Arøe, Michael Petersen and that are decentralised.
Kevin Arceneaux, ‘The Behavioral 78 Karl Polanyi, The Great Transformation
Immune System Shapes Political (Boston, MA: Beacon Press, 1944 [2014]).
Intuitions’, American Political Science 79 Organisation for Economic
Review, vol. 111, no. 2, 2017, pp. 277–94. Co-operation and Development,
69 See Eric Kaufmann, ‘Good Fences ‘General Government Spending’,
Make Good Politics: Immigration and https://data.oecd.org/gga/general-
the Future of the West’, Foreign Affairs, government-spending.htm.
vol. 97, no. 5, September/October 2018. 80 See Ashley Timmer and Jeffrey
70 See Mancur Olson, The Logic of Williams, ‘Immigration Policy Prior
Collective Action (Cambridge, MA: to the 1930s: Labor Markets, Policy
Harvard University Press, 1965). Interactions, and Globalization
71 See Nathan Jensen et al., Politics and Backlash’, Policy and Development
Foreign Direct Investment (Ann Arbor, Review, vol. 24, no. 4, 1998, pp. 739–71;
MI: University of Michigan Press, 2012). and Adam McKeown, Melancholy
72 Armando Razo examined social net- Order: Asian Migration and the
works of prominent figures in politics Globalization of Borders (New York:
and business in Mexico under the Columbia University Press, 2008).
Díaz dictatorship, finding that cen- 81 Ronald Inglehart and Christian
trality in social networks provided a Welzel, ‘How Development Leads to
credible guarantee against expropria- Democracy: What We Know About
tion. Armando Razo, Social Foundations Modernization’, Foreign Affairs, vol. 88,
of Limited Dictatorship: Networks and no. 2, 2009, pp. 33–48.
Private Protection During Mexico’s 82 During the 1970s, one strand of
Early Industrialization (Stanford, CA: thought in political science held that
Stanford University Press, 2008). the bureaucratisation necessary for
73 A British analogue to this approach modernisation helped nurture author-
would be Joseph Chamberlain’s (and itarian states in the developing world.
later Lord Beaverbrook’s) efforts to Guillermo O’Donnell, ‘Reflections
create an imperial economic zone, pro- on the Pattern of Change in the
tected from the rest of the world. Bureaucratic-Authoritarian State’,
74 The Canada–US softwood-lumber dis- Latin American Research Review, vol. 13,
pute stands as one case in point. no. 1, 1978, pp. 3–38.
82 | Michael Lee