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Thursday, 5 December 2013

Political extremism in the interwar period and its economic roots

Russell Kincaid (Senior Member, St Antony's College, Oxford)

Lenin wrote, “No amount of political freedom will satisfy the hungry masses.” This statement was addressed by Professor Kevin O’Rourke (All Souls College) at PEFM’s penultimate Michelmas seminar on November 25, 2013. In a lively session chaired by Professor Paul Betts (St. Antony’s College), Professor O’Rourke presented empirical analysis on interwar voting patterns using economic and non-economic variables based his recent joint article in the Journal of Economic History. Dr. Othon Anastasakis (St. Antony’s College), as the discussant, asked probing questions and drew modern parallels.

Professor O’Rourke began his presentation showing the parallel sharp declines in global industrial production at the start of the Great Contraction (2008) and at start of the Great Depression (1929). While the decline in global production for the Great Contraction never reach the depths experienced in the Great Depression and revived sooner and faster, the same cannot be said of the downturn felt by the euro-area periphery countries. These countries have also witnessed a rise in extremism, which was eerily reminiscent of the rise of Fascism and Nazism. Was history about to repeat itself? Or did we not understand history properly?

The central issue examined was role played by the Great Depression in the rise of extremism and what were the other dominant forces. This study covered 171 elections in 28—mainly European—countries examining anti-system parties on the left or right that sought to change the system of government and not merely the government itself. The authors attempted to explain these parties’ change in voting shares from 1919 to 1939, employing a range of variables proposed previously by various historians.

Their empirical analysis suggested that voting share were influenced by lower real growth over a prolonged period (three years or more), rather than lower real growth over the preceding one-or two-year period; the Depression benefited extreme right-wing parties, more than it favored Communist parties. This result was somewhat surprising because the Depression is traditionally viewed as a crisis of capitalism, which should have favored the communist. The authors speculate that because communist parties were typically waiting for the collapse of capitalism, they offered no programs to deal with the crisis, while in contrast the national socialists’ and fascists’ parties emphasized their active interventionist policies.

Non-economic factors were also important. For example, fascists received higher vote shares in countries without a prewar democratic tradition, especially after 1929, while countries on the losing side of the WWI had higher Communist votes throughout and saw a higher increase in the fascist vote after 1929. Higher electoral thresholds lowered the seat shares of extremist parties, both on the right and the left, with the effect being particularly pronounced for Communist parties. Apparently, voters were unwilling to “waste” their ballots by voting for candidates who were unlikely to gain seats in parliament. However, not all non-economic factors were empirically significant. Religious and ethno-linguistic divisions did not have statistically significant effects. There also was no support for the thesis that modernity, as measured by urbanization, or the absence of a pre-1914 agricultural elite, would lower support for the right wing.

Professor O’Rourke detailed the various alternative specifications employed to show that these empirical results were robust. However, data limitations would not allow answers to many questions posed by participants at the seminar such as: What was the impact of unemployment? Of hyperinflation? And of greater income inequality within a country? Was Turkey subject to the same forces? Would the results hold if one examined other measures of discontent such as protests, civil unrest, or opinion polls? What if the party classification was modified to differentiate those seeking to change the economic system from those pressing to change the system of government?

Finally, the question that seemed to be on everyone’s mind, what do these results mean for the current European situation, especially for periphery countries? First, a prolonged economic downturn is likely to foment discontent and votes for extremism parties as has been witnessed most notably in Greece. Second, lower election thresholds favor the gains by extremism parties. But Professor O’Rourke also pointed out how 2010s were not like the interwar period. In particular, the social protection schemes are now more extensive and effective in cushioning the impact of unemployment and democratic processes are now more securely rooted. However, this did not mean that policymakers can be complacent about developments in periphery countries.

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