Princesa de Asturias Chair and Professor of Economic Geography at the London School of Economics.
04/09/2020
Populism is on the rise all over the developed world. In many parts of Europe, populist parties have seen their share of votes multiply in recent years. The analysis of these movements often concentrates on the motivations of individual voters. But one crucial factor has largely remained under the radar: the long-term economic decline of numerous industrial, but also small-town and rural, communities across many areas of Europe. If we are to tackle this rise, it is essential to fix the problems of the many places that have increasingly come to believe they ‘don’t matter’.
In Hungary, in the Netherlands, in France, in Germany, in Italy, in the UK and in many other parts of Europe, populist options have been gaining ground election after election. At times, they may seem to be losing steam, only to come back with renewed strength. Voters of all ilks are becoming dissatisfied and disappointed with a political system that they consider no longer benefits them, and they are thus turning to political options, both to the right and to the left of more established political parties, because these options supposedly offer easy ‘solutions’ to their problems.
In many ways, populism is becoming mainstream. Parties that not long ago were on the fringes of the electoral system ﹣ such as the Rassemblement National (the former Front National) in France, or the Lega in Italy ﹣ have either already tasted power (in the case of the Lega) or represent a serious alternative (in the case of the Rassemblement National). Other, younger parties ﹣ including Syriza in Greece, Alternative für Deutschland in Germany or Vox in Spain ﹣ have made significant electoral inroads and could be knocking at the doors of power in the foreseeable future.
In other cases, populism has impregnated mainstream political parties. That has been the case of Fidesz in Hungary under Viktor Orbán, the Law and Justice (PiS) party in Poland under the Kaczyński brothers, or of the governing Justice and Development Party (AKP) in Turkey under the stewardship of Recep Tayyip Erdoğan. Other traditional political parties have also adopted more illiberal stances to respond to the populist challenge. This is, for example, the case of the UK Conservative Party, which in recent times has gradually abandoned the centre ground to embrace political positions that not that long ago were championed by the UK Independence or the Brexit parties (Figure 1).
Almost everywhere, populism has gone beyond being a force to be reckoned with to becoming one of the main challenges for democratic societies in Europe today. The number of anti-system parties in government has been increasing across Europe and their postulates and positions are increasingly shaping the electoral and political agenda.
Figure 1. The rise of populism in Europe.
Why has populism risen?
Populism has often been linked with a mounting disenchantment with the economic, social, and political system by individuals who are left behind. Some individual characteristics have been put to the fore as the drivers of this discontent. Populist voters are normally defined by their gender, age, level of education, and type of work they perform or used to perform. According to Goodwin and Heath (2016), populist options at the ballot box are fundamentally supported by “older, working-class, white voters, citizens with few qualifications, who live on low incomes and lack the skills that are required to adapt and prosper amid the modern, post-industrial economy.” These voters are deemed to brandish both cultural and economic reasons to embrace the extremes of the political spectrum. On the one hand, they are considered to be ill at ease in a society that has become more open and multicultural, and that, from their perspective, supports values that are different from the ones they grew up in or were transmitted to them by their parents. On the other, they feel threatened by a more integrated and globalised economy, in which traditional manufacturing jobs have moved or are moving to other parts of the world capable of producing the same type of goods they used to produce at significantly lower prices.
While many of these considerations are indeed important in determining the choice of which party to support at the ballot box, there is an essential factor that has, to a large extent, remained under the radar when analysing the rise of populism. This is the long-term economic decline of numerous industrial, but also small-town and rural, communities across many areas of Europe and the rest of the developed world, and the related rise of territorial inequality.
Large cities and capital regions have been doing very well across the developed world. They have been reaping the lion’s share of recent economic transformations. Wealth and economic growth are increasingly concentrated in a limited number of hands, living in a limited number of places. Europe is no exception. Over the last three decades, economic activity has flocked to large cities, leading to greater economic polarisation. Figure 2 shows the differences in economic performance across regions in Europe over the last three decades, using just two colours. Regions in dark green are those that in this period have grown above the national average. Light green colours denote those regions that have grown below the national average. The differences are stark between the so-called ‘places that matter’ and ‘places that don’t’ ﹣ that is, places that have suffered economic and demographic decline for quite some time and that have fallen in between the cracks of development and investment policies targeting either more developed areas or lagging behind regions. In a country like France, only the Île-de-France region ﹣ the region of Paris ﹣ has grown above the national average. The remaining 21 French regions have grown below it and in some cases, well below it.
But France is not the exception. It is the rule. Similar patterns are in evidence across many parts of Europe. This is the case, for example, of Ireland, Portugal, Greece, Czechia, Bulgaria, Denmark, Sweden and Finland ﹣ and to a slightly lesser extent, Belgium, the UK, Hungary and Romania. In other countries, such as Italy, Spain, Germany, the Netherlands and Poland, it is the traditionally rich regions that perform better than lagging behind areas.
Figure 2. Over- and under-performing regions in Europe since 1990.
This rising territorial polarisation ﹣ at least within national borders ﹣ is driving the inhabitants of places that consider they have been repeatedly ignored by an aloof and distant elite into the hands of populists. When you witness your services decline, your public transport options dwindle, your schools close, your access to health services moved to other locations, and you are repeatedly told that the place you live has no future and no longer matters, you may be inclined to cry out that ‘enough is enough’ and opt to rock the boat and shake the tree to make sure your plights are heard.
A ‘geography of discontent’ or a ‘geography of resentment’ has been brewing and has become a fundamental driver of the rise in populism. Rural places facing depopulation, losing basic services, and increasingly becoming food or financial deserts are venting their anger at the ballot box. Many of these places were for long among the dynamic industrial hubs of Europe, but have recently struggled to cope with industrial, economic, social, and ecological transitions. The rise of trade and automation has hit them hard. The lengthy financial and economic crisis of the late 2000s and early 2010s and the ensuing austerity has ignited a fuse that was already there. And the current Covid-19 crisis, with its emphasis on technology- and skill-intensive activities that can be performed remotely, is only likely to accentuate this division in areas that remain ill-prepared to cope with remote working. No wonder their citizens are becoming disillusioned with the status quo.
Many people in these places are growing tired of waiting for solutions to come from their capitals or from the EU. They feel ignored by decision-makers, who, based on the dominant theories of economic growth, have either neglected these people or progressively withdrawn from intervention in the places where they live. The anger is reaching boiling point and the line between expressing discontent at the ballot and outright revolt is very thin, as evidenced by the ‘gilets jaunes’ (yellow vest) movement in France.
What can be done?
The rise of populism in Europe represents a serious threat to a system that, despite all its flaws and need for reform, has provided the highest level of prosperity, the greatest degree of equality, and the longest period of peace that the European continent has ever experienced. If we are to tackle this rise in populism, it is essential to fix the problems of the many places in Europe that have increasingly come to believe they ‘don’t matter’. However, the intervention in these areas has to adopt a different form from what has been the norm in the past. In these places, national and, to a far lesser extent, European intervention has often resorted to the ‘easy way out’: subsidies and handouts. Social policies are, indeed, needed in places that have for long witnessed decline, where jobs are in short supply, and ageing is rife. Regions in distress rightly receive more support per capita than those that are more prosperous. Governments have also used public employment to soften the blow of employment decline in many areas that are lagging behind. But social policies and the expansion of public employment ﹣ in regions such as Corsica, public employment amounts to roughly 50% of total employment ﹣ alone are not a long-term solution. They can lead to the creation of assisted and sheltered economies, leaving regions increasingly incapable of fending for themselves and of mobilising their economic potential.
Intervention therefore needs to go beyond ‘solutions’ that are limited to rises in transfers and subsidies to declining territories. It needs to turn to territorially-differentiated and well-targeted investment. This type of investment also demands moving away from the type of glitzy, mostly large infrastructure-related interventions that have dominated policy in recent decades (big infrastructure mega projects often ending up as white elephants). It needs to directly target the potential of many of these places ﹣ for the simple reason that most of these places still hold considerable potential. Big European success stories, like Inditex or Ikea, have not emerged in big cities. They have risen from nowhere in medium-sized cities, such as A Coruña in Spain (Inditex), or rural areas, like Älmhult in Sweden (Ikea). Many of the most dynamic German firms ﹣ the so-called ‘hidden champions’ ﹣ are located in towns and rural areas. There is thus considerable latent potential in most European rural and/or declining areas. But firms and start-ups in these places face greater barriers than firms elsewhere in mobilising this potential in terms of connectivity, skills availability, accessibility, or efficient institutions.
There is thus the need to invest better in those places that have remained overlooked by policy in recent years. There is evidence that well-targeted EU regional development investment has contributed not only to improving the economic prospects of these areas but also to stemming the rise of discontent. As my research with Lewis Dijkstra shows, targeted investments in energy, the environment and natural resources, IT, social infrastructure, and some transport infrastructure have reduced the share of anti-system voting.
We must consequently rethink development intervention, by turning to types of investment that are far more place-sensitive than the blanket, territorially-blind type of policies that have dominated in the past. This would imply ditching the one-size-fits all approaches in favour of investments that are more adapted to the challenges of these territories and more capable of mobilising the potential that is present in almost every place.
This is not just a question of social and political fairness – allowing for a fairer economic, social, and environmental transition – but also an economic necessity. This type of intervention will tap into untapped potential, enabling ‘discontented’ places to unleash their full economic capacity.
Finding solutions to the rise of populism and the threats it poses to the system will not be easy. But there is a need to start somewhere, and the implementation of carefully targeted, place-sensitive investments is, possibly, the best way to start.
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Most of the arguments presented in this article closely follow those of: Rodríguez-Pose, A., 2020. The Rise of Populism and the Revenge of the Places That Don’t Matter. LSE Public Policy Review, 1(1), p.4. DOI: http://doi.org/10.31389/lseppr.4
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