Financial crises, ideological polarization and economic inequality

Abstract

This dissertation looks at implications of various types of financial distress for public and parliament polarization and investigates conditions under which a polarized electorate might lead to higher legislative polarization and instability. Theoretical framework, discussion of the state-of-the-art scholarship and identification of the research gaps are presented in Chapter 2. In Chapter 3 Gerald Schneider and I show that while direct effects of financial crises on left-right public polarization are relatively small, financial turmoil introduces more divisions among political parties in the developed democracies. Importantly, rising polarization among voters increases parliament polarization if the system has the appropriate infrastructure already in place: a higher effective number of parties is a necessary condition to conduct the flow of public discontent further up in the legislature. Using long-term Eurobarometer survey data beginning in the 1970s we demonstrate that the left-right polarization among political elites has remained quite stable over time in Europe on average, while voters have become more polarized. In Chapter 4 I demonstrate that such critical juncture events as post-communist transformational crises and welfare state retrenchments cause increasing intergenerational polarization of redistributive preferences. For older cohorts in Eastern Europe, the views on redistributive policies might be still cross-pressured by communist ideology and present material well-being. However, among younger citizens support for income redistribution is shaped primarily by the level of education and subjective income. I also contrast communist and transitional legacies in Eastern Bloc and use Nordic welfare states as a comparison group. In Chapter 5 I argue that if electoral polarization builds up in a low-trust and high-inequality environment, where voters do not believe that their views can be delegated to politicians and effectively communicated upwards, a representational crisis will begin. In the resulting political vacuum populists can capitalize on highly polarized and disenchanted voters. Employing the European Social Survey, I distinguish among polarization over the left-right super-issue, income equalization, EU unification and attitudes towards immigration. While the relationship between public polarization and vote shares of populist parties differs across various survey questions, inequality acts as a catalyst in all cases. Chapter 6 summarizes the results of the doctoral thesis and outlines the agenda for future research. An event-based approach, combining a sub-group analysis of public polarization with quantitative assessments of political speeches, is among the promising future developments.