The turn to the populist right, and the implicit rejection of liberal democracy, are a form of doubling down on precarity. Counter to the widespread opinion that the growth of right-wing populism is caused by rising inequality or, alternatively, the need for security and stability in uncertain times, it should be viewed as an expression of a new found popular appetite for risk, transferred from the economy to politics. Right-wing risk-taking is a by-product of financialization and the revolution of rising expectations that it inflames.
Precarity at Large
There is much that is timely, compelling and original in Albena Azmanova’s essay, which shows persuasively that our growing concern with inequality has blinded us to precarity. She is careful to distinguish precarity from precariousness, following Butler (2004). Precarity is not a feeling but a condition, characterized by long-term economic insecurity in neo-liberal economies which have made it their mission to get the people off the back of the state (rather than the reverse). Neo-liberal states intervene selectively to enhance the advantages of the already wealthy, so as to enhance their own competitive advantage, which would be threatened by genuinely laissez-faire policies. Today’s neoliberal states, on both sides of the Atlantic, are selective de-regulators, correcting the mistakes of the Thatcher-Reagan era, which had a less discriminating belief in deregulation. As Azmanova shows as well, precarity affects almost everybody, and inequality does not. She also offers a sobering picture of the ubiquitous and endemic nature of precarity in our times, which provides a receptive audience for various right-wing brands of populism. Her broad solution to these major challenges is to push for states to provide more substantial and reliable social supports across the range of classes affected by precarity.
Azmanova makes an original case for the specificities of privatization and deregulation over several decades, the important shift from competition to competitiveness which drives states to play favorites in the market, and the steady shifting of state responsibility to citizens (for health, pensions, education) and a corresponding increase in state power, which disempowers citizens progressively. These powerful and original points (also developed in her other published work), provoke me to think of some elaborations and extensions of her arguments.
The ‘capacity to aspire’ blend with ‘the revolution of rising expectations’ to contribute to the sense of a growing deficit which can induce a sense of precarity
The first involves aspiration, on which I made an intervention in 2004, where I proposed the idea of “the capacity to aspire” as a fruitful path beyond the “recognition versus redistribution” debate (Appadurai 2004). I argued there that at the turn of the 21st century, even the poorest populations in such societies as India, had developed this capacity, itself unequally distributed, in the face of radical inequality, vulnerability and adversity. For the poorest urban classes, this capacity is part of a politics of “voice” which has brought about small but striking changes, especially in regard to urban housing. I now see that this capacity can ignite revolutions of rising expectations, an idea generally attributed to the American Cold War diplomat Harlan Cleveland, which builds on Tocqueville’s insight that as social conditions and opportunities improve, frustration often increases, because the real economy does not usually match the horizon of new aspirations. This insight, sometimes referred to as the Tocqueville paradox, takes on fresh force with the last century of intense and sophisticated advertising, “capitalist realism” (Schudson 1984) in every medium, the worldwide spread of the ideology of human rights, the failed promises made by the triumphal free market prophets of the 1990’s and the end of the Soviet Union. The widespread disappointment with the promises of neoliberal evangelism left a powerful sense that both market and state have failed many classes and masses in delivering the measurable goods of a better life. Thus “the capacity to aspire” blends with “the revolution of rising expectations” to contribute to the sense of a growing deficit which can induce a sense of precarity even if net social/national wealth has grown and relative inequality may have declined in some countries. Taking the capacity to aspire into the equation linking inequality to precarity introduces a new dimension into the analysis.
We also need to say more about the social implications of risk. Azmanova criticizes previous lines of argument, notably those of Ulrich Beck, whose work on the growth of the “risk society” she sees as “apolitical”. In her view, Beck fails to see that the global expansion of risk calculations by states, in such areas as climate, population, health and insurance, is part of a deeper neoliberal push to transfer downside risks to the general population while saving the upside of risk for corporations and the super wealthy. Azmanova is right on target with this point but there is a fuller story to be told about the place of risk in the global financial economy.
The critical structural factor that links the size of the global derivative markets and precarity worldwide is the size of the growing global debt
In my own 2016 book on the logic of the derivative form, which dominates and drives the immense growth in the size of global finance capital (Appadurai 2016), I joined various other thinkers (Bryan and Rafferty 2005; Konings 2018, Lee and Martin 2016) who have shown that the logic of the derivative form is part of the long-term process through which the commodification of risk became the single biggest feature of finance capital since the 1970s, when both theorists and practitioners discovered new techniques for monetizing uncertainty. They created a new trade in financial products which created mega-profits for a small group of traders, investment banks and hedge funds, while creating a large class of losers through the dynamics of debt, mortgage defaults and pension funds wrecked by speculative investments.
As I also argued in this 2016 book, the intellectual revolution which opened the door to this geometric growth in the financial markets was a landmark work by Frank Knight (1921), which distinguished risk from uncertainty and pointed to the potential for profit-making through the smart management of risk. But it was not until the early 1970s that this crucial intellectual discovery was turned into models for profitable trading on the future values of financial assets, through such instruments as mortgage backed securities and asset backed securities, as well as a host of more technically complex derivative products. The underlying financial resource on which this galactic mountain of financial transactions was built was DEBT, both consumer debt and corporate debt. As borrowers, shareholders, pension and insurance beneficiaries and as simple consumers of goods, a large percentage of the population (in some sense almost everybody) was either coerced or seduced into borrowing in search of the promised returns of the financial market. The big players made trillions out of these debt-fueled transactions, but a very large part of the losses which were inevitable in any speculative, derivative and future-oriented operation fell on the backs of ordinary citizens. There were corporate losers too, but they were protected by huge payouts for fired CEO’s, bankruptcy protections for major stockholders and junk bond pickings for financial scavengers. Financial assets outweighed the global GDP by 2:1 ($225 trillion to $105 trillion) in 2023. And this calculation of global financial assets does not match the 2023 valuation of the global derivatives market which was more than $700 trillion, seven times the global GDP. In plain English, this means that every dollar of goods and services in 2023 supported seven dollars of risk-based transactions in future value. And we must note that this $700 trillion market is based on a host of instruments which have successfully commodified risk in a manner which rewards a tiny class of risk-transactors and penalizes almost everybody else.
The big players made trillions out of these debt-fueled transactions, but a very large part of the losses which were inevitable in any speculative, derivative and future-oriented operation fell on the backs of ordinary citizens.
Here then is the single most compelling factor which forces us to distinguish precarity from inequality. Almost everyone lives substantially through the operations of borrowing, debt and credit, whether as consumers or as pension funds, banks, states or corporations, through massively leveraged corporate growth municipal bonds for towns and cities, sovereign funds for countries, major investments in the bond markets by insurance companies and pension funds, and debt based transactions between countries through the World Bank, the IMF and national central banks.
The critical structural factor that links the size of the global derivative markets and precarity worldwide is the size of the growing global debt (the total borrowing of corporations, states and individuals) which has crossed the $300 trillion mark. It is this debt that fuels the $700 trillion derivatives market. “In 2022, the last year with data available, low- and middle-income countries paid an unprecedented $443.5 billion to service their external public and publicly guaranteed debt, according to the World Bank’s International Debt Report 2023,” (Masterson and North 2023).
It is important to note that public debt (which is created by governments at all levels from municipalities to Sovereign Wealth Funds) is not an undifferentiated source of precarity. Public debt which funds social expenditures with low exposure to risk can be a positive form of debt (as much earlier observed by Keynes). Likewise, public debts with national monetary boundaries can be much better regulated than public debt involving foreign currencies. Yet, no government can maintain thick walls between private and public debt, national and international financial flows, and low and high risk uses of debt. Thus, the road to precarity is paved by many sorts of debt, including various forms of public debt. The commendable norm that governments should use debt for socially valuable expenditures is under constant pressure from the infinitely intricate instruments of the global financial markets.
The appetite of the global financial markets for risk-based borrowing encourages the increase in debt for all the actors in the global economy, thus opening virtually everyone to the structural precarity of debt and its servicing at all levels.
Though much more could be said about the dangers of this massive global debt, its effects on recessions, cuts in social spending, and its dangers of reduced jobs and economic slowdowns, the basic point is clear. The appetite of the global financial markets for risk-based borrowing encourages the increase in debt for all the actors in the global economy, thus opening virtually everyone to the structural precarity of debt and its servicing at all levels. This appetite for debt benefits directly from the growth in the “capacity to aspire” and the revolution of rising expectations which I discussed earlier, since borrowing is the quickest way to close the gap between income and new consumption horizons.
The high degree of the financialization of global capitalism since the early 1970s has been accelerated in recent decades by high-frequency trading, poor controls on international financial flows, digitalized tools for corruption and tax-evasion and massive leaks of public funds into the gray or black markets of arms, drugs and human trafficking. These latter black markets and the mafias and cartels which control them add an independent vector which contributes to precarity across the world.
The two topics I have touched on so far, aspiration and risk, as supplements to Azmanova’s analysis of precarity, also open up an additional line of argument about the global swing to the Right, on which both Azmanova and I have written extensively, including in this Forum. No serious analyst doubts that there is some connection between economic distress and the growing turn to right wing populist leaders in societies as different as Argentina, the USA, the Netherlands, Hungary, Turkey and India. What is less clear is the basis of the causal chain.
Inspired by Azmanova’s argument in this essay on precarity, and the observations about aspiration and risk which her essay has triggered for me, I would now offer a further conjecture about the road from economic insecurity to what I have elsewhere called “democracy fatigue” (Appadurai 2017). The revolution of rising expectations, now enhanced by the growth of the capacity to aspire, is a critical inducement to the growth of debt at every level, including individuals, corporations and governments. This debt is now the fuel of global financial markets which are by definition volatile. This volatility creates both the reality and the fear of protracted recessions, sudden inflation and cuts in social spending. The major victims of these adversities are the vast majority of the population, which depends on debt-based financial vehicles (from credit cards and insurance policies to health insurance) for their sense of well-being.
The turn to the populist right, and the implicit rejection of liberal democracy, are a form of doubling down on precarity, by turning to leaders and messages which also promise high returns, quick results and windfall mobility
Thus, the turn to the populist right, and the implicit rejection of liberal democracy, are a form of doubling down on precarity, by turning to leaders and messages which also promise high returns, quick results and windfall mobility, if one is willing to enter the riskiest zones of political life, far from the abstract utopias of working-class solidarity and the slow and incremental machinery of liberal democracy. In this perspective, we need to consider the possibility that, counter to the widespread opinion that the source of the growth of right wing populisms is rising inequality (e.g. Piketty and Cagé 2023, Herzog in this symposium) or alternatively, the need for security and stability in uncertain times (e.g. Azmanova 2004, 2020; Shapiro and Graetz 2020; Shapiro in this symposium), the pull to the right is better viewed as an expression of a new found popular appetite for risk, transferred from the economy to politics. This is a surprising change, since we generally associate all forms of conservatism with risk-aversion. Right wing risk-taking is a by-product of financialization which will require new progressive responses.
- Appadurai, A. 2016. Banking on Words: The Failure of Language in the Age of Derivative Finance. Chicago: University of Chicago Press.
- Appadurai, A. 2017. “Democracy Fatigue”, in H. Geiselberger, Ed. The Great Regression. London: Polity Press.
- Azmanova, A. 2004, “The Mobilisation of the European Left in the Early 21st Century”. European Journal of Sociology 45/2 (2004): 273-306.
- Azmanova, A. 2020. Capitalism on Edge: How Fighting Precarity Can Achieve Radical Change Without Crisis or Utopia. New York: Columbia University Press.
- Butler, J. 2004. Precarious Life: The Powers of Mourning and Violence. London: Verso.
- Bryan, D. and Rafferty, M. 2005. Capitalism with Derivatives: A Political Economy of Financial Derivatives and Class. London: Palgrave Macmillan.
- Cagé, J. and Piketty, T. 2023. Une histoire du conflit politique. Elections et inégalités sociales en France, 1789-2022. Paris: Seuil
- Knight, F. 1921. Risk, Uncertainty and Profit. New York: Houghton Miflin.
- Konings, M. 2018. Capital and Time: For a New Critique of Neoliberal Reason. Stanford: Stanford University Press.
- Lee, B. and R. Martin (Eds.). 2016. Derivatives and the Wealth of Societies. Chicago: University of Chicago Press.
- Masterson, V. and M. North. 2023. “What is ‘global debt’ and how high is it now”? Davos: World Economic Forum (Annual Meeting).
- Shapiro, I. and Graetz, M. 2020. The Wolf at the Door: The Menace of Economic Insecurity and How to Fight It. Harvard University Press.
Dr. Arjun Appadurai is a prominent contemporary social-cultural anthropologist, having formerly served as Provost and Senior Vice President for Academic Affairs at The New School in NYC. He has held various professorial chairs and visiting appointments at some of top institutions in the United States and Europe. In addition, he has served on several scholarly and advisory bodies in the United States, Latin America, Europe and India. Dr. Appadurai is a world renowned expert on the cultural dynamics of globalization, having authored numerous books and scholarly articles. The nature and significance of his contributions throughout his academic career have earned him the reputation as a leading figure in his field.His latest book (co-authored with Neta Alexander) is Failure (Polity, 2019). He is a Member of the American Academy of Arts and Sciences.