Dis-Embedded Markets and Embedded Politics: The Erosion of National Democracy in the Periphery

This paper theorizes that the steady narrowing of political choice between economic policy alternatives observed between major political parties in the West since the 1990s has caused the gradual weakening of democracy in advanced industrial states. Two mechanisms stand out. First, by increasingly delegating policy decisions to unelected technocrats, national politicians are no longer capable of responding to the legitimate demands of their electorates for higher growth and shared prosperity. Second, over the past twenty-five years, Western political parties of all stripes have substantially and voluntarily reduced their own flexibility in economic policy choices. Before the 1990s, most political parties in advanced industrial states favored radically different combinations of the ‘macroeconomic policy mix,’ which gave Western electorates a clear choice over a range of possible policy outcomes. Yet, most emerging markets today employ a much more active policy mix, suggesting that there is a lot more room for maneuver than mainstream policymakers usually imply. The paper will ‘process trace’ the economic policy ideas governing mainstream center-left and center-right parties in both Britain and France, complemented by discourse analysis of primary documents and interviews with key party leaders, economic policy advisers, and technocrats.