The False Promise of Populism

Populism has emerged as one of the defining political phenomena of our era, yet it remains shrouded in misunderstanding. At its core, populism thrives on the narrative that ordinary people are pitted against corrupt elites who have manipulated the political and economic landscape for their own gain. Whether manifesting on the left or the right, the populist storyline appeals to “the people” versus “the elite,” promising to return power to the masses by dismantling entrenched interests. But can populism genuinely confront crony capitalism—a system where political and economic elites are inextricably linked? Is it capable of loosening the grip of these entrenched powers?

In a recent working paper, we contend that populist movements often fail to fulfill their lofty promises. The crux of the issue lies in populism’s inability to navigate the dual challenges of epistemic and incentive structures necessary for genuine success.

The Epistemic Problem

Populist movements profess to embody the “true will of the people,” vowing to prioritize the welfare of the masses above the elite. Yet, a deeper scrutiny of societal decision-making unveils significant epistemic hurdles for these leaders. These hurdles arise from the intrinsic challenges political decision-makers face in accurately discerning and promoting the collective will of the populace.

The works of William Riker, James Buchanan, and Timur Kuran shed light on why populism struggles to genuinely represent the “will of the people.”

Riker illustrated through social choice theory that the process of collective decision-making is fundamentally flawed; different voting methods yield varying outcomes, failing to convert individual preferences into a coherent representation of the masses. Consequently, the notion of a unified “will of the people” is more illusion than reality.

Buchanan posited that social welfare functions, which aggregate individual preferences into collective decisions, are inherently deficient. He argued that personal preferences can only be accurately expressed in the context of choice, which is highly situational. This becomes even more complicated as, according to Buchanan, individuals evolve over time rather than existing as fixed utility functions.

Finally, Kuran’s notion of “preference falsification” introduces yet another epistemic challenge for populist leaders attempting to gauge the genuine sentiments of the masses. Kuran argued that social pressures, fear of ostracism, or a desire to conform often lead individuals to misrepresent or suppress their true preferences. As a result, public opinion may not accurately reflect what people genuinely think or desire.

Thus, the crux of populism’s epistemic dilemma lies in its failure to truly comprehend and act upon a singular will of the people. Instead, populist leaders tend to impose their interpretation of the so-called “people’s” desires, thereby consolidating their own power. As noted by Pierre Lemieux, the essence of populism is ontologically impossible because political leaders lack the means to assess the “will of the people” accurately.

The Incentive Problem

Even amidst these epistemic challenges, the question remains: who decides which policies will be enacted? A closer look at organizational politics reveals further flaws in the promises populism makes.

A significant issue is encapsulated in Robert Michels’s concept of the “iron law of oligarchy. Michels argued that any organization, even one with democratic roots, ultimately centralizes power among a small elite. This concentration does not necessarily stem from corruption but rather from the natural emergence of leadership roles and division of responsibilities. Consequently, even a populist movement can rapidly evolve into a new elite structure, facilitating rent-seeking and resource extraction akin to traditional regimes.

This issue becomes more pronounced due to the multiple principal-agent problems inherent in democratic frameworks. Voters (the principals) depend on elected officials (the agents) to enact policies on their behalf. However, voters are frequently ill-informed—a phenomenon known as rational ignorance—and struggle to convey the intensity of their preferences or monitor the intricate negotiations involved in policymaking. This gap in information allows political agents to prioritize narrow interests while masquerading as champions of “the will of the people.”

Two factors exacerbate these incentive dilemmas in populist contexts. First, populism often leaves the parameters of government intervention alarmingly vague, allowing leaders to rationalize nearly any action as aligning with the nebulous “will of the people,” a maneuver readily exploited by rent-seeking groups to further their own agendas. Second, populist movements typically arise from—and are maintained by—a perceived crisis, fostering an environment where expansive, crisis-oriented measures become standard. Even once the initial crisis dissipates, these measures tend to linger, as entrenched interests and empowered elites perpetuate cycles of resource redistribution, leaving voters with scant meaningful control.

The Future of Democracy

If populism—a movement predicated on the notion of authentically representing the will of the people—is fated to falter, what then is the fate of liberal democracy? The answer hinges on our conceptualization of democracy, the idea of a self-governing populace, and their interconnectedness.

Populist movements function under the assumption that there exists a singular “will of the people” that can be enacted through centralized political structures. In this light, the issue is not the political institutions themselves but rather who pulls the strings. Yet, for all their empowering rhetoric, populist movements often revert to established patterns where elites continue to oversee the masses.

However, what if we reconceptualize democracy? Rather than envisioning it as a hierarchical system, we might consider it a network of grassroots processes founded on interactions between autonomous individuals. Vincent Ostrom articulated this alternative view in The Meaning of Democracy and the Vulnerability of Democracies. Following the insights of Alexis de Tocqueville, Ostrom argued that when citizens perceive government merely as a caretaker, they are more susceptible to falling into “democratic despotism”—a scenario where elites dominate the population.

In contrast, Ostrom envisions democracy arising from citizen associations, where interpersonal relationships form the bedrock of a genuinely democratic society. He asserts, “Democratic ways of life turn on self-organizing and self-governing capabilities rather than presuming that something called ‘the Government’ governs” (pp. 3-4).

From this vantage point, meaningful transformation cannot be achieved through superficial reforms of existing political structures or the emergence of new ideological factions within the current system. These strategies fail to confront the foundational issue: elite governance via top-down command-and-control institutions. For Ostrom, overcoming democratic despotism necessitates a shift in citizens’ perceptions regarding the political process and their role in self-governance.

If we genuinely value individual preferences and authentic democratic engagement, salvation does not lie in the hands of centralized political power—even when wielded in the name of “the people.” Instead, it resides “on principles of self-responsibility in self-governing communities of relationships” (p. 4).

Christopher Coyne is a Professor of Economics at George Mason University, the Associate Director of the F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center, and the Director of the Initiative for the Study of a Stable Peace through the Hayek Program.

André Quintas is a PhD student in Economics at George Mason University and a Hayek Fellow through the F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center.