Richard Oestreicher explores the recent history of left-wing populism in the United States: its origins, its motivations, and how that populism is likely to mature and transform U.S. politics with it.

This article is part of a series seeking to understand the issues of political economy driving populist movements around the world as we proceed through the “year of elections.” We will publish a new article every week, which you can find here.

The word populism began as the label for the 1892 US People’s Party created by the Farmers’ Alliances. The Farmers Alliances sought to ease debts by pursuing inflationary monetary policy, reduce expenses through farmers’ cooperatives to buy supplies wholesale, and increase revenue by marketing crops collectively to large buyers.  They supported unions, and some southern populists collaborated across the color line. The People’s Party received 8.5% of the vote in 1892 and nearly doubled that in 1894. But most Populists, fearing the party had reached a limit, supported Democrat William Jennings Bryan in 1896.

Despite the People’s Party short life span, it left a rhetorical heritage: robber barons and bankers would undermine democracy and the livelihoods of Americans unless the citizenry remained vigilant. Populism of both the left and right (with different definitions of “the people” and the elites) persisted globally across time and space, expanding and contracting depending on popular confidence in existing leaders and institutions. A series of economic shocks, especially the stagflation of the late 1970s and the financial crisis of 2007-9, created a potential climate for populism. In that climate, increasing capital mobility and information volatility stimulated the impulse for both right and left-wing populism. How might left-wing populism impact the country’s future political trajectory?

How have capital and information mobility reinvigorated populism?

Karl Marx and Frederick Engels argued in 1848 that capitalism “has played the most revolutionary role in history…has left no other bond between men than naked self-interest…drowned [all other values] in the icy water of egotistical calculation…” Since then, a series of movements including trade unionism, socialism, communism, fascism, and social democracy have sought to protect people from the disruptions of capitalism. From the 1940s to the 1970s, social democracy seemed the most successful candidate. It depended on a new social contract: governments, unions, leftists would respect property rights. In return, governments would offer a social safety net protecting the population from unemployment, disability, and old age, and governments would demand that large corporations, and high-income earners pay increased taxes (to cover costs of the safety net), cease anti-union activities, and bargain in good faith with unions. While the 1930s New Deal, the U.S. version of social democracy, offered less than northern European social democracy, it represented a dramatic change: old age pensions, unemployment insurance, disability insurance, subsidized mortgages, and government protection for unions. Government programs meshed with union benefits such as seniority in hiring and firing (which meant you had a job for life after two or three years unless the company folded).

In the great postwar boom, even the poor saw real improvement. Real take home pay for industrial workers (then the largest occupational category) doubled between 1940 and 1970. The percentage of national income going to the top 1% fell in half in the same years (one estimate has this share dropping from 23% to 9% from the late 1920s to around 1970). Real incomes increased across the income scale doubling approximately for the bottom 20% and increasing about 85% for the 95th percentile. Union density (the proportion of those eligible who belonged to unions) increased from 10% in the late 1920s to 37% in 1947.

And then everything fell apart in the 1970s. Politicians and talking heads blamed Arab oil boycotts, but the system had rested on a potentially unstable foundation. One of the ways wealthy investors can undermine government policies they don’t like is to move their money elsewhere. From the ‘30s to the ‘70s that was hard to do. During the Great Depression, many countries restricted capital export. Then there was war. After the war, Communists doubled the territory they controlled (China and Eastern Europe). Many newly decolonized countries feared foreign investment would impose a neo-colonial yoke. Limited global investment opportunities limited capital’s capacity to make war on social democracy.

The economic crisis of the ‘70s revealed the unstable base of social democracy. In the U.S., both unemployment and inflation topped 10%, a combined “misery index”, as pundits labeled it, of over 20% (compared to 6% in most of the prior three decades). The U.S. population lost faith in New Deal solutions. Ronald Reagan, invigorated by Milton Friedman’s attack on Keynesianism, won the presidency in 1980 by arguing that government did not the protect the populace; it caused their problems. Once staunch blue collar unionists abandoned the Democratic Party, propelling Reagan to victory.  In office, Reagan immediately fired 13,000 striking unionized air traffic controllers (whose union had endorsed him in the 1980 campaign), the largest example of union-busting since the 1930s. Reagan drastically cut tax rates on high incomes and appointed lawyers, who specialized in helping corporations maintain a “union free environment,” to the National Labor Relations Board and anti-environmentalists to the Environmental Protection Agency.

Reagan had eager counterparts, especially British Tory leader Margaret Thatcher. Pundits invented a label for what was happening: “neoliberalism.” Neoliberalism, only new compared with the liberalism of social democracy, returned to assumptions of nineteenth century classical liberalism: if both governments and potential monopolists didn’t interfere, the market always got it right. The fancy name for this is “Pareto optimality.” At the “free” market clearing price, any redistribution results in a net decline of total utility. Unregulated markets would produce the greatest good for the greatest number. The collapse of communism added further credibility to the neoliberal argument. In his 1992 book, The End of History and the Last Man, Francis Fukuyama declared the debate about political economy over. Thatcher had a more succinct summary: TINA. There Is No Alternative to free market capitalism.

The twin revolutions of capital mobility and information volatility augmented the impact of neoliberal ideology and policies on previously social democratic regimes. As the social democratic regimes collapsed, political barriers to capital mobility also collapsed. Well before Mikhail Gorbachev and his liberalizing policies, the Soviets authorized limited investment by foreigners. The Chinese, witnessing the Soviet collapse, shifted to state sponsored capitalism with foreign investors. Post-colonial regimes now courted foreign capital. Capital hopscotched the world in search of higher profit margins.

The overlapping information revolution facilitated capital mobility and the redesign of production processes. Most machines, for example, became software-driven, dramatically reducing the time necessary to relocate and redesign production. Governments committed to neoliberal ideology collaborated with capitalists seeking to maximize revenue by minimizing taxes through tax-friendly laws (allowing corporations, for example, to declare profits in low tax locations even if they didn’t produce anything there). The internet allowed exponents of neoliberalism, including most mainstream American news outlets, to flood the world with their ideology at reduced cost.

While the new global regime of capital reduced poverty in the poorest countries, it undermined social democracy in the wealthy world. The most visible change was the sharp decline in the industrial working class, the political anchor of social democratic governments. Factories shut down. As Pittsburgh, the Steel City, gradually stopped making steel, the population fell from 676,000 in 1950 to 305,000 in 2010. By 2010 higher education and medical care each employed more Pittsburghers than manufacturing. In small single-industry towns, factory closing threatened town death. Young people moved away. Once bustling Main Street was now boarded up. And the penetration of instantaneous electronic communication, that frequently challenged traditional cultural beliefs, increased the anger of those left behind.

But industrial workers and failed industrial towns were not the only victims. As governments lowered tax rates and redistributed taxation downward—e.g. lower marginal tax rates for high incomes, lower capital gains taxes, and higher sales taxes—governmental capacity to offer services and benefits to the middle classes also deteriorated. Higher education was an important example. Until 1967 all public colleges and universities in California charged no tuition for state residents (at which point they began to charge “ student fees.” The City University of New York charged no tuition for residents until 1976. But from the early ‘70s onward, most states steadily cut state appropriations per student, an average 29% decline between 1988-89 and 2013-14. Tuition rose accordingly. The average annual cost of tuition at public universities (in 2020 dollars) was about $2,224 in 1970-71 and $9,349 in 2019-2020. While once higher education facilitated upward mobility into the middle classes and intergenerational middle class stability, now most college students graduate with colossal debts. Guaranteed pensions disappeared. Unions, which had taught citizens solidarity against institutions of power, declined steadily. Today union membership of private employees is lower percent than any time since the depression of the 1890s.

All these sources of economic instability and information volatility had psychic as well as economic effects. A social democratic safety net reduced fear of catastrophe. Its diminishment led people to lose in the institutions they once trusted. They felt promises had been betrayed and that enraged them. But the angered and betrayed did not necessarily agree on who to blame or what to do about it. Unemployed coal miners wanted to end the War on Coal. College-educated young people supported green energy policies and economic redistribution.

The contradictory solutions to the failures of the American political economy became clearer with the 2007-09 global financial crisis. New populist mobilizations erupted worldwide. The Tea Party of 2010 was a harbinger of Trumpism to come. But for the left, the pivot surprisingly began with a sit-in of no more than a few hundred people at a newly privatized New York City park in a movement deemed “Occupy Wall Street.” Within weeks almost the whole country recognized the Occupiers’ meme of the 99% vs. the 1% (a startling reinvention of 1890s language). Weeks later, I attended an Occupy rally in Pittsburgh that drew ten or twenty times more people than the original Occupiers. The 1% vs. the 99% were everywhere. Perhaps, all the dual anti-neoliberal movements lacked to congeal were leaders. Enter Donald Trump and Bernie Sanders, both already widely known, and both perceiving political opportunity. Both leaders also recognized that the command structures of the two major parties could be more easily penetrated than people had assumed. An outsider could credibly contest for their presidential nominations. Trump captured the Republican nomination. Sanders scared the Democratic establishment by coming closer than they imagined possible.

The prospects for left populism in the US

Given the nebulous meaning of populist, it is hard to quantify U.S. support for either right or left populism. Sanders received 43% of Democratic primary votes in 2016 and 26% in 2020 (the difference a function of more candidates in 2020). Thirty-three percent of registered voters register as Democrats. One measure of U.S. left populism might be 43% of 33% or approximately 14% of U.S. voters, plus some who voted for Jill Stein and some non-voters or independents who would accept the label. Perhaps 17% might be a reasonable guess for left populists.

Quantifying right populism is more problematic. Trump received 46% of the popular vote in 2016 and 47% in 2020, but I see no obvious way of unraveling what proportion of Trump voters should be labeled populist. Trump received 10% of self-described liberal voters (24% of the electorate), 34% of self-described moderates (38% of voters), and 54% of voters with incomes over $100,000 (26% of voters). How many of these people should be labeled populists? Maybe the safest guess is that there are significantly more right populists than left populists.

One prerequisite for future populisms is something both Sanders and Trump recognized:  the futility of third partyism. Neither would have had serious chance for political power running as third party candidates (something historical counterparts like Eugene Debs, Robert LaFollette, Henry Wallace, or Ross Perot didn’t understand).

But does left populism within the Democratic Party have a future after Sanders? Some seasoned political reporters answer yes, based on poll data. Recently, a much higher proportion of young voters sympathize with left populism or socialism than older voters. John Judis, a longtime reporter on the left and senior editor of the New Republic, predicts a future “Socialist Awakening.” He notes that a 2015 poll found 36% of Americans between 18 and 29 had a favorable view of socialism (by which most mean a return to social democracy, not state ownership of production). In the 2016 primaries, Sanders got more votes from 18-29 year olds than Hillary Clinton and Trump combined. In the 2020 Democratic primaries Sanders won the 18-29-year-old vote in nearly every state (including Texas!).  But do the opinions of recent young voters predict a future change in majority voter opinion?

I see four reasons to be cautious about such an argument. First, demography is not necessarily destiny. Observers once predicted that the decline in the white percentage of the U.S. population would herald Democratic electoral dominance. That hasn’t happened. Indeed, some previously Democratic Black and Hispanic voters are shifting Republican.

Second, successful political insurgencies depend on high quality charismatic leadership. Who will be the symbol of left populism (or any other leftism) after Sanders? Alexandra Ocasio-Cortez is perhaps the most prominent younger left politician, but she doesn’t seem ready yet to fill Sanders’ shoes. And liberal-to-left Democrats seem less committed to developing future leadership than conservatives. Where is the left-wing counterpart to the Federalist Society?

Third, an electorally successful left-wing Democratic coalition would need to unite far more demographically, culturally, and economically diverse constituencies than right-wing populism. Can left populism recruit both high-income educated professionals and working-class lower-income people? (who may think the educated professionals are snooty). Can they unite whites, Blacks, Hispanics, Asians? Liberation theology Catholics, liberal Protestants, Jews, and anti-religious atheists? Cisgender Heterosexuals and the LBGTQ+ community?

But perhaps the biggest hurdle for future electoral left populism is the peculiar nature of the American electoral system. When the 2007 economic crisis sent multiple southern European countries to catastrophic levels of unemployment and government deficits, leaders of the World Bank and the Eurozone insisted that it had been caused by excessive government spending. They made loans or financial support contingent on massive cuts in government spending, sending countries into further downward spirals. In response, newly created populist parties, dodging still existing Marxist parties, campaigned on opposition to the World Bank and the Eurozone, and gained government power, either in coalitions with other left-of-center parties or by themselves. In some multiparty parliamentary systems, they achieved policy-making power with no larger share of the electorate than Sanders received in the U.S. While their accomplishments in office were mixed, their record leads some analysts to speculate about a sudden expansion of power for U.S. left populism.

But in the U.S. electoral system, an electoral base of 15-20% usually yields relatively little. The presidency is out of reach without an electoral college majority. Senate seats similarly demand a state majority. The current House Progressive Caucus claims close to 100 members, and has been surprisingly successful in pushing a centrist president to the left on some issues, such as environmental policies or tuition debt reduction.  But many of them come from safe Democratic districts, often minority-majority, and have trouble communicating to ideologically heterogenous communities. Their website is more legislative wish-list than an inspiring moral vision. And our system is biased against cities (and college towns), where left populist voters disproportionately reside. For a left populist Democrat to capture the presidency, they would need a majority in an electoral college stacked in favor of rural voters. Biden had a four-point margin in the popular vote in 2020 but carried the electoral college in crucial swing states by fractions of 1%. The Senate is more intractable. A vote for a senator in Wyoming (population 576,000) counts 67 times as much as a vote for a senator in California (population 39 million). And a genuine policy revolution, comparable to the New Deal, demands sustained super majorities large enough to make defectors irrelevant and to overcome the arcane operating rules of both houses of Congress.

This suggests the electoral future of left politics in the U.S. may depend on what the Italian political philosopher Antonio Gramsci called a “conjuncture” or what political systems theorists call a political realignment. A conjuncture is an unpredictable moment of disaster, such as an unpopular bloody war (think WWI, which produced democratic European revolutions in addition to the Russian Revolution) or a disaster (think the Great Depression which ushered in most of the successful social-democratic regimes in the world).  An example of a political realignment in the U.S. is the change from decades of Republican electoral dominance before 1932 to Democratic dominance from 1932 to 1968. We would have had no New Deal without the Great Depression and FDR’s response.  The New Deal saved 1.5 million homes from foreclosure, and hired 10 million unemployed in the WPA (Works Progress Administration). Such conjunctures happen infrequently. When opportunities occur, there must be leaders willing to seize the time. Such a moment might have been available to the Obama administration after the 2007-2009 banking crisis. If Barack Obama had bailed out the unemployed with a 21st century WPA, and the underwater homeowners, instead of bailing out the bankers who precipated the disaster with complex financial instruments and suspect lending policies, we might be living in a very different political climate.

The political economy of the United States has produced a citizenry unhappy with capitalism that crosses class, race, age, and party. Leftists in Congress have articulated a platform of policies to mitigate the shortcomings of capitalism. Instead, the future of leftist populism may hinge on promulgating a moral ideology that coheres these policies into unified vision. The future of left populism will require it to become the mainstream.

Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.