European Central Bank (ECB) President Mario Draghi and Vice President Vitor Constancio at a press conference in ECB HQ in Frankfurt, Germany, on Dec.14, 2017. Xinhua/ Press Association. All rights reserved.Ten years after the inception of the ‘Great Recession’ we can clearly see some of its political effects. The economic woes of the developed world have enhanced the chances of leaders like Donald Trump, contributed to Brexit and its unfolding, and boosted ‘populism’ in the West and beyond. How far have economic problems influenced the rise of populism? Is there any kind of long-term dynamic?

We claim that one of the causes of the dissatisfaction with democracy’s current state is the existence of two or more labour markets or, to use a more ‘technical’ term, labour market segmentation.

The idea that there would be many labour markets, each of them being structured as a separate segment, gained popularity in US universities in the 1960s-70s. Economists noticed the existence of a primary market with competitive, high-skills jobs for highly-educated professionals, and a secondary market of jobs requiring lower skills, that are less competitive and often occupied by women or marginalised groups – minorities, the youth, migrants. This tendency has gradually expanded from the US to the rest of the west, Europe, and now potentially the global world. Globalising competition has reproduced dualism and segmentation all over the world.

Globalising competition has reproduced dualism and segmentation all over the world. A few industries (mainly in high technology and the services) increasingly employ highly-paid and cosmopolitan ‘innovators’ or ‘creatives’, people who often attended the best colleges and universities; meanwhile, hundreds of millions of workers fight for ‘McJobs’, with long working hours, poor training, high turnover, and limited possibilities to ‘climb the career ladder’. In more peripheral countries (think about Southern or Eastern Europe) this translates into high unemployment (especially for the youth), precarious working conditions, and sometimes the emergence of informal sectors bordering on organised crime and mafias. In a country such as Poland, which has experienced sustained economic growth, the share of wage-workers in fixed-term employment is as high as 25%.

Unfortunately, labour market dualisms have been strengthened by entrenched social and political hierarchies: in Italy, Greece, to a lesser extent Spain, clientelistic state apparatuses have defended their privileged positions in the public sector, while temporary contracts and informality proliferate in the private economy, and mainly affect the younger generations. Clientelistic state apparatuses have defended their privileged positions in the public sector, while temporary contracts and informality proliferate in the private economy.

In countries like Britain or the USA privilege coincides with wealth or ‘educational capital’ (and is embodied by the ‘Oxbridge’ or ‘Ivy League’ elites) and social mobility has stagnated or even declined. Armies of new proletarians, usually without children (how to support them financially?), often qualified (though not in the so-called ‘top-ranking’ institutions or universities), usually propertyless, are emerging as new social and economic actors, and have now entered the political arena. Some authors have called them ‘the precariat’, and highlighted the risk that they could become a source of votes for populist (especially far-right) parties.

How severe is the risk? How far-right oriented are the ‘new proletarians’ or – to coin a new word – ‘precarians’?

What kind of catalyst?

There is no single or simple answer. For example, data on German elections show that the far-right, anti-immigration AfD (Alternative fuer Deutschland) enjoys popularity also among the middle and upper classes. Yet in the recent (2017) polls, when AfD obtained 94 Bundestag seats, its best achievement was in Germany’s poorer Eastern Laender (e.g. 27% in Saxony; 22.7% in Thuringia), where job insecurity is high, and there is widespread disaffection with the policies of traditional parties such as the CDU (Christian Democratic Union) or the SPD (Social Democratic Party). It is well-known that both Marine Le Pen and Trump gained votes in areas of France and the USA with strong and impoverished working classes, while high education levels tended to be more associated with Clinton’s and especially Macron’s supporters. Brexit was mainly popular among the less affluent and educated, while lower educational levels were generally associated with UKIP supporters in its ‘golden age’ (basically, until 2016).

In other words, data show some variety; far-right populism tends to be popular among poorer or less educated strata, even if there are exceptions. A more qualitative vision, however, suggests that trends, especially in crisis times, are rather fluid; and that far-right populism, with its emphasis on nationalism, cultural ‘purity’, anti-immigration, and security, might become a much stronger catalyser of the votes of the disaffected, marginalised, and ‘left-behind’, even where this has not yet happened and where labour markets pit against each other an ‘elite’ in the primary job market and ‘masses’ of disappointed in the secondary. 

Weak democracies and lose-lose games

Such a disillusionment is also rooted in the weakness of western politics in the global age. A quick glance at Europe’s largest democracies is very telling. Three months after the federal elections Germany is still without a government, and the most likely solution seems to be a return to the CDU-SPD Grand Coalition. Grand coalitions tend to compact the ruling elites and can thus be a way to boost populist rhetoric. Grand coalitions tend to compact the ruling elites and can thus be a way to boost populist rhetoric.

Another large EU country, Italy, might fall in the same trap in 2018, when elections will take place and neither a resurgent Berlusconi nor an unconvincing Renzi nor the Five Star Movement seem to be able to gain a stable majority. France’s Macron ‘experiment’, after a glittering start, has been challenged by low approval ratings. Britain is embattled in Brexit limbo and might soon go for elections, too. Spain has had minority governments for about two years, and has handled the Catalan issue as a kind of lose-lose game. The EU itself has assigned two crucial Authorities (on banking and medicine) by lottery, as if they were the objects of football competition drawings. Who is ready to take responsibility for their choices?

Last but certainly not least we cannot forget that the European Central Bank is holding Europe together with its Quantitative Easing policy. What will happen after  the end of Mario Draghi’s mandate? The ‘old continent’’s 2018 promises to be highly challenging.