Through which mechanisms does globalization drive populism? How do the various aspects of globalization play a role in political systems? Why has globalization had a greater impact on politics?
Globalization occupies a prominent place in discussions of populism. In particular, the post-1990s variant of globalization (perhaps more accurately termed hyper-globalization) seems to have led to domestic divisions in many countries, widening the gap between winners and losers in global competition. From the perspective of economic theory, this is not particularly surprising. Standard trade theory clearly explains the severe redistribution effects brought about by free trade; open-economy macroeconomics has long explored the instability of global financial markets. Economic history is also enlightening: in previous eras, periods of peak globalization were often accompanied by populist backlashes.
However, many questions remain unresolved. First, through what mechanisms does globalization drive populism? To answer this, a complete political economy model is required. Second, globalization is not a singular phenomenon; it can be specifically categorized into aspects such as international trade, international finance, and international labor mobility. How, then, do these various aspects of globalization play a role in political systems? Third, globalization is clearly not the only economic shock that causes redistribution effects or economic anxiety, and it may not even be the most significant factor. But compared to technological changes or routine business cycles, why does globalization seem to have a greater impact on politics?
Fourth, thus far, populist reactions have primarily taken the form of right-wing movements. At first glance, this is somewhat surprising, because left-wing populist movements, which advocate for redistribution, should logically have benefited more from economic dislocation. So why have nativist and nationalist populists gained the upper hand? Fifth, related to the previous question, what role do culture, values, and identity play? Could it be that populism is not rooted in economic factors but rather in cultural divides, such as the rift between social conservatives and social liberals, traditionalists and modernists, nationalists and cosmopolitans, or mainstream ethnocentric groups and various immigrant minorities?
In the discussion of populism, the relative importance of economic versus cultural factors has always been a source of controversy. As the research discussed in this article shows, the literature on the economic drivers of populism, especially in relation to globalization, is exceptionally rich. At the same time, many scholars (Sides et al., 2018; Norris and Inglehart, 2019; Margalit, 2019) have forcefully argued for the cultural drivers of populism. In the United States, the cultural argument focuses on the deep-seated racial tensions within American society; in Europe, it centers on the rejection of Muslims and African immigrants, a rejection that has historically underpinned the support of extreme right-wing parties such as the French National Front.
Some counter-arguments focus on empirical research methods. For example, observational studies often support economic factors, whereas survey experiments tend to support cultural factors (Naoi, 2020). However, the core of the issue lies in a key conceptual difference: the relative importance we assign to economic and cultural factors depends largely on whether we are concerned with the level or the change. In other words, are we interested in explaining why so many people vote for populist candidates, or why the vote share for populist candidates has increased so significantly (Margalit, 2019)? (*Margalit, 2019, refers to this as the debate between “outcome significance” and “explanatory significance,” though I’m uncertain if this naming is appropriate. This difference more pertains to the type of outcome we aim to explain. The level of support for populists and its changes are both outcome-related, and we might be interested in explaining one of these outcomes.) Like many economics-centered papers, this review focuses on the latter issue. Cultural change tends to be slow, and constant factors cannot explain change. Therefore, culture is less likely to answer questions about “change.” Of course, economic and technological shocks or the rise of social media could amplify the importance of latent cultural sentiments and intensify cultural polarization, but in these cases, culture is an intermediate variable rather than a fundamental driving force. As we’ll see, in some of the literature discussed in this article, culture does indeed play an intermediary role in magnifying the political impact of globalization.
In any case, this article does not seek to resolve the debate over the relative importance of economic and cultural factors. My goal is more limited. By unpacking globalization and clarifying the different components of its impact on politics, I aim to provide a clearer exploration of how globalization contributes to the rise of populist politics. Evidence from various contexts suggests that globalization shocks often influence populism through cultural and identity factors, playing a key role in garnering support for (especially right-wing) populist movements. This argument does not deny that purely cultural factors may also play a role, and I will briefly discuss evidence from the history of immigration in the United States that tends to support this viewpoint. While I have drawn on a large body of literature, this is not a comprehensive review. For the latest research on the political economy of populism, readers may refer to Guriev and Papaioannou (2020). Bornschier (2018) also reviews the political science literature on the relationship between globalization and the rise of the far-right.