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Economic Actors and the Problem of Externalities: Could Financial Markets Play a Role in Democratic Backsliding?

Author

Listed:
  • Izabela Jedrzejowska-Schiffauer
  • Peter Schiffauer
  • Gratiela Georgiana Noja

Abstract

Purpose: Economic actors tend to exert powerful impact on socio-economic and political developments around the globe, including yielding financial and political crises in developed democracies. Approach/Methodology/Design: While a number of studies discuss the impact of finance on political and societal reality, research on the interlink between finance and democratic processes is very limited. Drawing on secondary literature and a case study of two young Central-European democracies, this paper contends a relationship between financial economy and democratic backsliding. Findings: The findings challenge the existing conventional accounts of the reversal to authoritarian politics in Poland and Hungary. Practical Implications: They also identify a mismatch between the constitutional foundations for embedding the market within the society and its institutions on the one hand, and the political-institutional reality in contemporary democracies. Originality/Value: The research provides theoretical assumptions encouraging further study on unwelcome externalities produced by financial markets.

Suggested Citation

  • Izabela Jedrzejowska-Schiffauer & Peter Schiffauer & Gratiela Georgiana Noja, 2020. "Economic Actors and the Problem of Externalities: Could Financial Markets Play a Role in Democratic Backsliding?," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 215-238.
    • Handle: RePEc:ers:journl:v:xxiii:y:2020:i:1:p:215-238
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    References listed on IDEAS

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    1. Keefer, Philip, 2005. "Democratization and clientelism: why are young democracies badly governed?," Policy Research Working Paper Series 3594, The World Bank.
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    More about this item

    Keywords

    Financial markets; externalities; democratic backsliding; embeddedness.;
    All these keywords.

    JEL classification:

    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • Z18 - Other Special Topics - - Cultural Economics - - - Public Policy

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