What Killed Liberalism?

LONDON—Modern liberal democracy is buckling in many countries whose citizens have known no other system, with established parties shedding support and populist movements moving from the fringes into the political mainstream. As governments weaponize tariffs and sanctions, the postwar liberal order is giving way to spheres of influence and naked exercises of raw power.

But who, or what, killed liberalism? There is no shortage of suspects. Dani Rodrik points to globalization outrunning the domestic political compromises needed to sustain it, while Raghuram G. Rajan faults economists for focusing too much on markets and the state at the expense of community—his so-called “third pillar.” Robert D. Putnam, for his part, traces it to the decline of social capital and the long retreat from “we” toward “I.” For Michael J. Sandel, the blame lies with the humiliations of meritocracy. And Martin Wolf sees a crisis of democratic capitalism, with slower growth and widening inequality undermining the bargain between markets and democracy.

In his new book, What Happened to Liberal Democracy?, Nobel laureate economist Daron Acemoglu points to the unraveling of the coalition that once sustained liberal democracy. Industrialization created relatively well-paid jobs and powerful worker organizations, giving the working and middle classes economic security and political influence. But deindustrialization and automation eroded those foundations, as did the weakening of organized labor. Liberalism subsequently became associated with a highly educated professional class, leaving many outside it convinced that the system no longer represented them.

Former UK Prime Minister Gordon Brown’s The Future Starts With Us looks beyond the loss of decent work to the hollowing out of the communities that grew around those jobs. He begins in Kirkcaldy, the Scottish town he represented in Parliament for more than three decades. As mining and manufacturing disappeared from the region, the institutions they had supported began to unravel. Trade unions shrank and town centers emptied out, while political parties lost their foothold in local communities.

These changes reinforced one another. Losing a job is one thing when there are still institutions that connect people to those around them; it is quite another when those institutions are no longer there. The future feels more threatening, creating fertile ground for populist leaders who tell voters that migrants, minorities, elites, and foreign countries are prospering at their expense. With this in mind, Brown views US President Donald Trump, Reform UK leader Nigel Farage, and France’s Marine Le Pen less as the originators of populist revolt than as political opportunists exploiting economic and social conditions that developed over decades.

Brown backs this up with new research. Working with Focaldata, he surveyed more than 32,000 people across 20 countries, most of them OECD members, and examined how financial disappointment and people’s social ties affected their economic outlook and trust in institutions, as well as their support for right-wing populist parties. He also draws on separate surveys of attitudes toward international cooperation.

Brown’s estimates suggest that greater community trust and more contact with people from different backgrounds could each cut support for right-wing populists by roughly three percentage points. Reducing financial insecurity could knock off another 4–5 points, while even modest economic optimism could push the figure down by six points. Taken together, these point to a potential 16–20-percentage-point swing. Such a shift would transform electoral politics across much of the West.

The Lonely Voter

It is tempting to take these numbers at face value. But Brown is working from a one-time survey, and his statistical model cannot tell us what is causing what. People who trust institutions may simply be more inclined to join civic organizations, while voters who support immigration may naturally have more contact with people from different backgrounds. And populist voters may feel worse about the economy because they dislike the government.

Brown partly defines his “civic core” by how positively people view trade and immigration, so it is hardly surprising that this group is more supportive of international cooperation. A tougher test would be to see whether joining a civic group can actually change the views of someone who already sees politics in zero-sum terms.

Nor does a strong civic culture guarantee liberal politics. Brown leans on Alexis de Tocqueville’s idea that civic associations act as schools of democracy. Interwar Germany, though, was full of clubs and voluntary groups. As a 2017 study by Shanker Satyanath, Nico Voigtländer, and Hans-Joachim Voth showed, Nazi Party membership grew faster in towns with more of them.

Social capital is not inherently liberal. A trade union builds social ties, but so does a nationalist party. Consider the Louisiana conservatives Arlie Russell Hochschild spent years with for her 2016 book Strangers in Their Own Land. They were devoted to their families and churches, yet many backed the Tea Party movement and later Trump. The “deep story” she kept hearing was about waiting patiently in line for the American dream while watching others, seemingly helped by the government, cut ahead.

Acemoglu has a different theory. Strong communities, in his telling, were less a cause of the postwar economic settlement than a byproduct of it. Unions allowed workers to bond, but they also bargained for higher wages and shifted power toward labor. When they faded, they took both the social capital and the economic leverage with them.

Acemoglu’s alternative, “working-class liberalism,” goes beyond stronger unions or faster wage growth, combining better public services and more political power for working people while retaining scope for differences in values and ways of life. Community has a place in this vision, but people also need real influence over the institutions that govern their lives.

While Brown wants to rebuild social connections and trust, Acemoglu wants to know what would give people reason to trust the system in the first place. Technology is a big part of his answer. In the old industrial economy, growing businesses hired more workers, which tended to push wages up. Automation weakened that link. Acemoglu’s solution, “pro-worker AI,” aims to use technology to make workers more productive instead of replacing them.

Human agency, for Acemoglu, means more than participating in civic life. It also means having some say over one’s wages and working conditions. A stronger civic life cannot compensate for workers’ loss of economic power.

The Long Shadow of Economic Upheaval

Brown’s record in government complicates his case. As chancellor of the exchequer from 1997 to 2007, he oversaw a British economy that became increasingly dependent on finance and property. He himself cites Rachel Reeves’s estimate that roughly 85% of the £1.3 trillion ($1.7 trillion) UK banks lent during those years went to financial companies or property. Brown, of course, did not cause deindustrialization, which had begun decades earlier, and his record in government does not invalidate his diagnoses. Still, for a book that is so critical of the neoliberal era, it has surprisingly little to say about New Labour’s own growth model.

Many of the economic ideas Brown criticizes have fallen out of favor. Few policymakers now believe that maximizing global integration and compensating the losers afterward adds up to an adequate growth strategy. Industrial policy is back, with governments subsidizing semiconductors and clean energy while taking steps to bolster supply-chain resilience. Policymakers also pay far more attention than they did 20 years ago to regional inequality and to the distribution of gains from technological change. Yet even as governments have moved away from neoliberalism, the populist backlash has only intensified.

One explanation is that the damage outlasts the shocks that caused it. Economists call this hysteresis. When a factory closes, the unions and local businesses disappear, too. A new logistics depot or plant may bring jobs back, but not necessarily the status or institutions that gave work its social meaning. Rebuilding these pillars can take decades.

Hysteresis can apply to political narratives, too. Consider Hochschild’s queue: once voters come to see politics as a system in which elites are helping other groups at their expense, stronger growth or higher wages may not be enough to change their minds.

Political change can also outlast its source. Populist movements can shift the terms of the debate even without winning elections, as mainstream parties adopt some of their positions on immigration or trade in order to win back voters. As a result, even if Brown is right about the effects of financial security and civic life, restoring them may not reverse the populist tide. Political identities can persist and parties themselves can change, so the electoral shift Brown predicts could be smaller and take much longer than his counterfactual suggests.

This is the main limitation of Brown’s emphasis on participation. A civic center gives people a place to meet, but it cannot bargain over their wages. The challenge is to create institutions that can do both in economies where careers are less stable and people are more mobile. Nostalgia for postwar institutions will not get us there, and neither will a long list of local initiatives.

The weakness, however, is not Brown’s alone. The literature on liberal decline is generally much better at explaining what went wrong than how to recreate institutions that give people back some of the economic and political power they have lost.

Restoring the Liberal Order

In the second half of The Future Starts With Us, Brown turns to the liberal international order, a subject to which Acemoglu, Rajan, and Putnam devote far less attention. He proposes a form of “values-led pragmatism,” built around a coalition of responsible states operating under a seven-principle charter to strengthen cooperation among middle powers. Multipolarity, Brown argues, need not lead to fragmentation. Countries can compete for power while still cooperating under common rules.

Brown finds that people who are active in their communities and regularly mix with people from different social backgrounds are much more supportive of international cooperation. Just as instability abroad can undermine domestic prosperity and security, a stronger civic life can make cooperation with other countries more politically acceptable.

This echoes the logic that underpinned postwar liberalism. That economic order lasted in part because governments combined openness with decent jobs and social protections. Brown makes a similar case for internationalism: when domestic politics is a zero-sum contest, voters are bound to see relations with other countries in much the same way. If they believe they have something to gain from cooperation, they are more likely to support it.

That said, greater public support for international cooperation is not enough to overcome conflicting national interests. Russia’s war against Ukraine or China’s territorial claims over Taiwan raise questions that a stronger civic culture in Europe or the United States cannot resolve. And the same goes for nuclear proliferation or disputes over who should bear the costs of climate adjustment.

Brown is more convincing when he gets specific, especially when it comes to climate and development finance. A $1 billion government guarantee, he notes, could help reduce the cost of private capital by shifting some risk to public balance sheets. Combined with $200 million in grants, it could generate close to $5 billion for climate adaptation and transition.

Since the forces behind liberalism’s decline emerged at different times and fed into one another, the search for a single culprit is probably futile. The suspects acted in sequence and reinforced one another. Brown captures an important part of that process, but he may be asking civic renewal to fix more than it can.

The Future Starts With Us is still worth reading. Few former political leaders have tried to connect economic insecurity and civic decline to international disorder, much less put those claims to an empirical test.

Although Acemoglu and Brown come at the problem from different directions, they arrive at a strikingly similar conclusion: liberal democracy depends on people having some power over the institutions that govern their lives. Neither economic reform nor civic renewal offers a simple way to repair that model once it has broken down.

• Daron Acemoglu, What Happened to Liberal Democracy? Dutton, 2026.
• Gordon Brown, The Future Starts With Us, Simon & Schuster UK, 2026.

Gene Frieda, a former global strategist at PIMCO, is a senior visiting fellow at the London School of Economics and a non-resident fellow at Bruegel.