In the 1930s, economic stagnation and depression led to the rise of Hitler in Germany, Mussolini in Italy and Franco in Spain (among other authoritarians). Today’s brand of illiberal leaders may not yet be as politically virulent as their 1930s predecessors. But their economic corporatism and autocratic style are similar.
The re-emergence of nationalist, nativist populism is not surprising: economic stagnation, high unemployment, rising inequality and poverty, lack of opportunity, and fears about migrants and minorities “stealing” jobs and incomes have given such forces a big boost. The backlash against globalization—and the freer movement of goods, services, capital, labour and technology that comes with it—that has now emerged in many countries is also a boon to illiberal demagogues.
If economic malaise becomes chronic, and employment and wages do not rise soon, populist parties may come closer to power in more European countries. Worse, the euro zone may again be at risk, with a Greek exit causing a domino effect that eventually leads to the euro zone’s break-up. Or a British exit from the EU may trigger European dis-integration, with the additional risks posed by the fact that some countries (the UK, Spain and Belgium) are at risk of breaking up themselves.
In the 1930s, the Great Depression brought to power authoritarian regimes in Europe and even Asia, eventually leading to World War II. Today’s resurgence of illiberal state capitalist regimes and leaders is nowhere close to inciting a war, because centre-right and centre-left governments still committed to liberal democracy, enlightened economic policies and solid welfare systems still rule most of Europe. But the toxic brew of populism now gaining strength may yet open a Pandora’s box, unleashing unpredictable consequences. -- by Nouriel Roubini in Project Syndicate
Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics
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