Many commentators describe today’s political upheavals as an aberration. US President Donald Trump, in this telling, is a uniquely American threat to an otherwise functioning liberal order. The interpretation is comforting. It is also dangerously wrong. The 45th and the 47th president of the United States did not create the crisis of Western democracy. Nor did Brexit, Marine Le Pen, the Alternative für Deutschland (AfD), or the many other insurgent movements that have transformed the politics of advanced democracies. They are political expressions of a deeper metamorphosis that began long before their rise and will outlast them long after their actors have left the political stage. Today’s populism is not the disease from which Western democracies suffer. It is their fever.
The distinction matters because it determines how democracies respond. The dominant definition, associated above all with the Dutch political scientist Cas Mudde, treats populism as a “thin-centered ideology” that divides society between a virtuous people and a corrupt elite, and insists that politics should express the general will. It’s a definition that is analytically useful but that can become politically misleading when turned into a strategy for confronting the phenomenon. In other words, it points us in the wrong direction, since it encourages political actors to treat populism primarily as an ideological adversary to be defeated. The late Argentinian political theorist Ernesto Laclau offers a more revealing lens. For him, populism is better understood as a political logic: a way of articulating heterogeneous grievances, linking them through “empty signifiers,” and constructing an antagonistic frontier between “the people” and those held responsible for their frustrations. In that sense, populism is not external to democratic politics. It is one of its recurrent possibilities, if not essential features.
Populism as Part of the Political Logic
Populist moments occur when citizens cease to believe that existing institutions can solve the problems that matter to them most. Different demands – higher wages, cheaper housing, controlled migration, better public services, protection from globalization, cultural recognition, political voice – need not be ideologically coherent. They may even contradict one another. What gives them political unity is the belief that the established order is incapable of delivering, and that those who administer it either do not understand or do not care. “Take back control,” “drain the swamp,” “Change, we can believe in,” or “America First”: The power of these kinds of slogans lies precisely in their emptiness. They allow distinct disappointments to merge into a common indictment and turn frustration into political energy.
The real question is therefore not why populists have become so successful. It is why so many people have lost faith in the problem-solving capacity of democratic institutions. Corruption, lobbying, and special interests are part of the answer, sure, but the problem runs deeper. The systems through which Western societies organize economic life, distribute gains, confer status, and provide security were built for a world that is disappearing. Political institutions still promise social outcomes they are increasingly unable to produce. In the United States, according to the most recent Pew survey, just 17 percent of Americans said that they trusted the federal government to do what is right most or all of the time. Such distrust is no longer an episodic reaction to one president or one party; it has become structural. Many Western democracies across Europe follow suit.
The Broken Bargain
President Trump’s American AI Exports Program, established through Executive Order 14320, is the U.S. government’s main instrument for selling the domestic AI stack abroad. It organizes American firms into consortia and asks them to offer foreign buyers complete packages of AI-optimized hardware, data pipelines, models, security systems, and sectoral applications. The Commerce Department backs selected packages with diplomatic advocacy, expedited export licensing, and access to U.S. financing tools, including the Export-Import Bank’s ExportAI initiative. The first proposal window closed on June 30, and Commerce intends to issue designation decisions within 60 days of a complete submission, which will put the first designated consortia in front of foreign buyers by late summer.
While the postwar settlement was never perfect, it established a workable bargain. In the United States and Western Europe, industrial capitalism was embedded in social institutions: stable employment, collective bargaining, social insurance, mass education, progressive taxation, public infrastructure, and – especially in Europe – the welfare state. More importantly, economic growth was connected to employment, and employment was connected to everything that mattered: status, community, income, and political participation. Factories were not merely places of production, they anchored towns, unions, tax bases, schools, families, and a sense of social trajectory.
This model has been eroding for decades. Globalization, automation, financialization, and the transition from production to services have created enormous aggregate wealth, while separating economic dynamism from many of the communities that once sustained mass democracy. Manufacturing accounted for only about 8 percent of US employment in 2024, while growth is increasingly concentrated in metropolitan centers built around technology, finance, professional services, universities, and other knowledge-intensive sectors. The political geography mirrors the economic one: In 2024, Kamala Harris won only 427 counties, but those counties generated roughly 62 percent of American GDP. Donald Trump won the presidency, as well as an overwhelming majority of the nation’s roughly 3,000 counties, while representing a substantially smaller share of national economic output.
If GDP alone is the measure, the last few decades can, undoubtedly, be described as a remarkable success story, particularly in the United States. But GDP is an increasingly inadequate proxy for whether a society is working or not. Western democracies are richer and more technologically powerful than ever, yet middle-class security has eroded, economic gains have been distributed unevenly, and loneliness and social isolation are widespread, especially among younger adults. Surveys of Americans under 30, for example, reveal a generation preoccupied with housing, inflation, insecure work, and diminished expectations of upward mobility: Only 30 percent believe they will be financially better off than their parents, while nearly two thirds describe American democracy as troubled or already failing. This is not a story of universal impoverishment. It is a story of prosperity increasingly detached from security, dignity, belonging, and confidence in the future.
Today’s politics has followed economics. The old left-right map may not have disappeared entirely, but it explains significantly less than it once did. Across Western democracies, parties of the traditional left gradually lost their role as the political guarantors of economic protection and became increasingly associated with educated, urban, professional constituencies. Populists on the right moved into former industrial regions and working-class electorates; populists on the left mobilized many of the same frustrations through different cultural vocabularies. Regions exposed to disruptive economic change have been more receptive to anti-establishment, nationalist, radical-right, and, in some cases, radical-left appeals. Economic dislocation does not mechanically produce any one ideology. It produces political availability.
This is why migration has become such an explosive issue. Its political power cannot be understood only through statistics on inflows or labor-market effects. Migration often functions as a carrier for broader anxieties about control, fairness, public capacity, cultural change, and whether rules are still enforceable. When mainstream parties moralize these concerns rather than governing them, they effectively hand populists a monopoly over the articulation of grievance. Legitimate anxieties then become fused with xenophobia, conspiracy, or authoritarianism. The failure is not that democratic parties refuse to imitate extremists. It is that they too often refuse to acknowledge the political conditions that make extremist explanations plausible.
The Great Transformation
The economic historian Karl Polanyi understood this pattern better than most. In The Great Transformation, published in 1944, he argued that when markets become disembedded from society, people eventually push back and demand protection. Crucially, that countermovement does not automatically take one political form. Economic dislocation creates a demand for protection; whether that demand is channeled through democratic reform or authoritarian politics is a political question. In interwar Europe, the collapse of the liberal economic order helped create the conditions in which fascist and communist movements could grow. The United States took a different path. The New Deal did not solve all the problems of capitalism, nor should it be treated as a perfect realization of Polanyi’s ideas. But through labor rights, social insurance, financial regulation, and public investment, it gave people the democratic means to respond to economic insecurity rather than leaving that anger to anti-democratic movements. It helped bring markets, at least partly, back under society’s control.
We face an analogous challenge today. The last great industrial transformation – away from manufacturing and toward services – was never adequately socially embedded. Many of the institutions created for an industrial economy weakened as work became more fragmented, capital more mobile, unions less powerful, and economic value more geographically concentrated. Artificial intelligence and other emerging technologies threaten to accelerate the process even further. If productivity becomes increasingly dependent on models, data, compute, and capital rather than human labor, systems of social protection built around stable employment and payroll contributions will become progressively less effective. AI is not creating the current legitimacy crisis. It is arriving in societies that have not resolved the previous one.
Democracy vs the People
This is precisely where the established defense of liberal democracy becomes self-defeating. It is as simple as that: Democracies cannot be defended against their own people. Yet much of the political establishment behaves as though the central task were to protect institutions from voters who have become insufficiently appreciative of them. Populists are sidelined, morally condemned, or treated as foreign bodies invading an otherwise healthy system. In doing so, established parties grant them exactly the status they crave: outsiders standing alone against a self-protecting and self-enriching establishment. Worse, they allow populists to become the only actors willing to say that the system is failing.
None of this absolves populists of responsibility, of course. Their diagnosis is often more compelling than their prescription, and their political genius lies in destruction rather than reconstruction. The very logic that makes populism effective in opposition becomes a liability in government. Heterogeneous grievances can be unified against an enemy far more easily than they can be translated into coherent policy. In other words, empty signifiers are excellent instruments of mobilization and poor blueprints for administration. Trump can delegitimize institutions, break norms, and turn resentment into political identity. What he has not demonstrated is an ability to construct a durable social settlement capable of replacing the order he attacks. The same contradiction haunts many populist movements in Europe.
Exactly that is the opening for democratic renewal, even though it cannot mean restoration. There is no route back to the postwar industrial economy, and nostalgia is no more useful when practiced by liberals than by populists. A new settlement must be designed for a service-based, technologically-intensive economy in which capital is mobile, employment is less stable, and value creation is increasingly detached from labor. Re-embedding markets today therefore means more than redistributing income after the fact. It means rebuilding the connection between economic progress and social participation.
That requires new institutions around income security, portable benefits, lifelong education, worker voice, housing, and place-based investment. It requires tax systems capable of capturing value where it is created even when firms and intangible assets cross borders. It may require public or social ownership stakes in critical technological infrastructure so that productivity gains visibly accrue to society as a whole. And it requires taking status and purpose as seriously as consumption. A society can compensate people financially and still leave them convinced that they no longer matter.
A Democratic Future
This is also a transatlantic challenge. Europe cannot save the alliance by waiting for a post-Trump US to return to an imagined normal. Nor can the United States sustain international leadership if large parts of its population view the domestic and global orders as systems designed for someone else. The postwar transatlantic order was sustainable not simply because governments believed in internationalism, but because openness abroad was embedded in social bargains at home. The future of the transatlantic relationship will therefore depend less on nostalgic invocations of the liberal order than on whether both sides can make democratic capitalism work again for their respective populations. Cooperation on taxation, technology, industrial policy, labor standards, and the distribution of the gains from AI is not peripheral to geopolitics. It is part of the foundation on which geopolitical legitimacy rests. Societies that cannot absorb economic transformation at home will eventually lose the political capacity to sustain ambitious commitments abroad.
The deeper lesson of the populist age is that a new countermovement is already underway. Trumpism is not the antithesis of the economic and social order that preceded it. It is one of the political forms produced by that order’s failure. The same is true, in different ways, of many populist movements in Europe.
What follows the ongoing destruction will depend on who is capable of reconstructing. If guardians of liberal democracy continue to defend the social and economic arrangements that produced the revolt, they will lose. If, instead, they treat populism as a symptom and rebuild institutions capable of providing security, participation, dignity, and a plausible future, the current crisis may yet become a moment of renewal. The old order, however, cannot simply be restored. The defining political struggle ahead is not between change and preservation, but between democratic and authoritarian versions of the next great transformation.
Grand Strategy
Many commentators describe today’s political upheavals as an aberration. US President Donald Trump, in this telling, is a uniquely American threat to an otherwise functioning liberal order. The interpretation is comforting. It is also dangerously wrong. The 45th and the 47th president of the United States did not create the crisis of Western democracy. Nor did Brexit, Marine Le Pen, the Alternative für Deutschland (AfD), or the many other insurgent movements that have transformed the politics of advanced democracies. They are political expressions of a deeper metamorphosis that began long before their rise and will outlast them long after their actors have left the political stage. Today’s populism is not the disease from which Western democracies suffer. It is their fever.
The distinction matters because it determines how democracies respond. The dominant definition, associated above all with the Dutch political scientist Cas Mudde, treats populism as a “thin-centered ideology” that divides society between a virtuous people and a corrupt elite, and insists that politics should express the general will. It’s a definition that is analytically useful but that can become politically misleading when turned into a strategy for confronting the phenomenon. In other words, it points us in the wrong direction, since it encourages political actors to treat populism primarily as an ideological adversary to be defeated. The late Argentinian political theorist Ernesto Laclau offers a more revealing lens. For him, populism is better understood as a political logic: a way of articulating heterogeneous grievances, linking them through “empty signifiers,” and constructing an antagonistic frontier between “the people” and those held responsible for their frustrations. In that sense, populism is not external to democratic politics. It is one of its recurrent possibilities, if not essential features.
Populism as Part of the Political Logic
Populist moments occur when citizens cease to believe that existing institutions can solve the problems that matter to them most. Different demands – higher wages, cheaper housing, controlled migration, better public services, protection from globalization, cultural recognition, political voice – need not be ideologically coherent. They may even contradict one another. What gives them political unity is the belief that the established order is incapable of delivering, and that those who administer it either do not understand or do not care. “Take back control,” “drain the swamp,” “Change, we can believe in,” or “America First”: The power of these kinds of slogans lies precisely in their emptiness. They allow distinct disappointments to merge into a common indictment and turn frustration into political energy.
The real question is therefore not why populists have become so successful. It is why so many people have lost faith in the problem-solving capacity of democratic institutions. Corruption, lobbying, and special interests are part of the answer, sure, but the problem runs deeper. The systems through which Western societies organize economic life, distribute gains, confer status, and provide security were built for a world that is disappearing. Political institutions still promise social outcomes they are increasingly unable to produce. In the United States, according to the most recent Pew survey, just 17 percent of Americans said that they trusted the federal government to do what is right most or all of the time. Such distrust is no longer an episodic reaction to one president or one party; it has become structural. Many Western democracies across Europe follow suit.
The Broken Bargain
President Trump’s American AI Exports Program, established through Executive Order 14320, is the U.S. government’s main instrument for selling the domestic AI stack abroad. It organizes American firms into consortia and asks them to offer foreign buyers complete packages of AI-optimized hardware, data pipelines, models, security systems, and sectoral applications. The Commerce Department backs selected packages with diplomatic advocacy, expedited export licensing, and access to U.S. financing tools, including the Export-Import Bank’s ExportAI initiative. The first proposal window closed on June 30, and Commerce intends to issue designation decisions within 60 days of a complete submission, which will put the first designated consortia in front of foreign buyers by late summer.
While the postwar settlement was never perfect, it established a workable bargain. In the United States and Western Europe, industrial capitalism was embedded in social institutions: stable employment, collective bargaining, social insurance, mass education, progressive taxation, public infrastructure, and – especially in Europe – the welfare state. More importantly, economic growth was connected to employment, and employment was connected to everything that mattered: status, community, income, and political participation. Factories were not merely places of production, they anchored towns, unions, tax bases, schools, families, and a sense of social trajectory.
This model has been eroding for decades. Globalization, automation, financialization, and the transition from production to services have created enormous aggregate wealth, while separating economic dynamism from many of the communities that once sustained mass democracy. Manufacturing accounted for only about 8 percent of US employment in 2024, while growth is increasingly concentrated in metropolitan centers built around technology, finance, professional services, universities, and other knowledge-intensive sectors. The political geography mirrors the economic one: In 2024, Kamala Harris won only 427 counties, but those counties generated roughly 62 percent of American GDP. Donald Trump won the presidency, as well as an overwhelming majority of the nation’s roughly 3,000 counties, while representing a substantially smaller share of national economic output.
If GDP alone is the measure, the last few decades can, undoubtedly, be described as a remarkable success story, particularly in the United States. But GDP is an increasingly inadequate proxy for whether a society is working or not. Western democracies are richer and more technologically powerful than ever, yet middle-class security has eroded, economic gains have been distributed unevenly, and loneliness and social isolation are widespread, especially among younger adults. Surveys of Americans under 30, for example, reveal a generation preoccupied with housing, inflation, insecure work, and diminished expectations of upward mobility: Only 30 percent believe they will be financially better off than their parents, while nearly two thirds describe American democracy as troubled or already failing. This is not a story of universal impoverishment. It is a story of prosperity increasingly detached from security, dignity, belonging, and confidence in the future.
Today’s politics has followed economics. The old left-right map may not have disappeared entirely, but it explains significantly less than it once did. Across Western democracies, parties of the traditional left gradually lost their role as the political guarantors of economic protection and became increasingly associated with educated, urban, professional constituencies. Populists on the right moved into former industrial regions and working-class electorates; populists on the left mobilized many of the same frustrations through different cultural vocabularies. Regions exposed to disruptive economic change have been more receptive to anti-establishment, nationalist, radical-right, and, in some cases, radical-left appeals. Economic dislocation does not mechanically produce any one ideology. It produces political availability.
This is why migration has become such an explosive issue. Its political power cannot be understood only through statistics on inflows or labor-market effects. Migration often functions as a carrier for broader anxieties about control, fairness, public capacity, cultural change, and whether rules are still enforceable. When mainstream parties moralize these concerns rather than governing them, they effectively hand populists a monopoly over the articulation of grievance. Legitimate anxieties then become fused with xenophobia, conspiracy, or authoritarianism. The failure is not that democratic parties refuse to imitate extremists. It is that they too often refuse to acknowledge the political conditions that make extremist explanations plausible.
The Great Transformation
The economic historian Karl Polanyi understood this pattern better than most. In The Great Transformation, published in 1944, he argued that when markets become disembedded from society, people eventually push back and demand protection. Crucially, that countermovement does not automatically take one political form. Economic dislocation creates a demand for protection; whether that demand is channeled through democratic reform or authoritarian politics is a political question. In interwar Europe, the collapse of the liberal economic order helped create the conditions in which fascist and communist movements could grow. The United States took a different path. The New Deal did not solve all the problems of capitalism, nor should it be treated as a perfect realization of Polanyi’s ideas. But through labor rights, social insurance, financial regulation, and public investment, it gave people the democratic means to respond to economic insecurity rather than leaving that anger to anti-democratic movements. It helped bring markets, at least partly, back under society’s control.
We face an analogous challenge today. The last great industrial transformation – away from manufacturing and toward services – was never adequately socially embedded. Many of the institutions created for an industrial economy weakened as work became more fragmented, capital more mobile, unions less powerful, and economic value more geographically concentrated. Artificial intelligence and other emerging technologies threaten to accelerate the process even further. If productivity becomes increasingly dependent on models, data, compute, and capital rather than human labor, systems of social protection built around stable employment and payroll contributions will become progressively less effective. AI is not creating the current legitimacy crisis. It is arriving in societies that have not resolved the previous one.
Democracy vs the People
This is precisely where the established defense of liberal democracy becomes self-defeating. It is as simple as that: Democracies cannot be defended against their own people. Yet much of the political establishment behaves as though the central task were to protect institutions from voters who have become insufficiently appreciative of them. Populists are sidelined, morally condemned, or treated as foreign bodies invading an otherwise healthy system. In doing so, established parties grant them exactly the status they crave: outsiders standing alone against a self-protecting and self-enriching establishment. Worse, they allow populists to become the only actors willing to say that the system is failing.
None of this absolves populists of responsibility, of course. Their diagnosis is often more compelling than their prescription, and their political genius lies in destruction rather than reconstruction. The very logic that makes populism effective in opposition becomes a liability in government. Heterogeneous grievances can be unified against an enemy far more easily than they can be translated into coherent policy. In other words, empty signifiers are excellent instruments of mobilization and poor blueprints for administration. Trump can delegitimize institutions, break norms, and turn resentment into political identity. What he has not demonstrated is an ability to construct a durable social settlement capable of replacing the order he attacks. The same contradiction haunts many populist movements in Europe.
Exactly that is the opening for democratic renewal, even though it cannot mean restoration. There is no route back to the postwar industrial economy, and nostalgia is no more useful when practiced by liberals than by populists. A new settlement must be designed for a service-based, technologically-intensive economy in which capital is mobile, employment is less stable, and value creation is increasingly detached from labor. Re-embedding markets today therefore means more than redistributing income after the fact. It means rebuilding the connection between economic progress and social participation.
That requires new institutions around income security, portable benefits, lifelong education, worker voice, housing, and place-based investment. It requires tax systems capable of capturing value where it is created even when firms and intangible assets cross borders. It may require public or social ownership stakes in critical technological infrastructure so that productivity gains visibly accrue to society as a whole. And it requires taking status and purpose as seriously as consumption. A society can compensate people financially and still leave them convinced that they no longer matter.
A Democratic Future
This is also a transatlantic challenge. Europe cannot save the alliance by waiting for a post-Trump US to return to an imagined normal. Nor can the United States sustain international leadership if large parts of its population view the domestic and global orders as systems designed for someone else. The postwar transatlantic order was sustainable not simply because governments believed in internationalism, but because openness abroad was embedded in social bargains at home. The future of the transatlantic relationship will therefore depend less on nostalgic invocations of the liberal order than on whether both sides can make democratic capitalism work again for their respective populations. Cooperation on taxation, technology, industrial policy, labor standards, and the distribution of the gains from AI is not peripheral to geopolitics. It is part of the foundation on which geopolitical legitimacy rests. Societies that cannot absorb economic transformation at home will eventually lose the political capacity to sustain ambitious commitments abroad.
The deeper lesson of the populist age is that a new countermovement is already underway. Trumpism is not the antithesis of the economic and social order that preceded it. It is one of the political forms produced by that order’s failure. The same is true, in different ways, of many populist movements in Europe.
What follows the ongoing destruction will depend on who is capable of reconstructing. If guardians of liberal democracy continue to defend the social and economic arrangements that produced the revolt, they will lose. If, instead, they treat populism as a symptom and rebuild institutions capable of providing security, participation, dignity, and a plausible future, the current crisis may yet become a moment of renewal. The old order, however, cannot simply be restored. The defining political struggle ahead is not between change and preservation, but between democratic and authoritarian versions of the next great transformation.
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