Today, it would be hard to find a serious intellectual who would argue that representative democracy is functioning adequately even where it has lasted longest. And newer democracies have been reverting to forms of authoritarianism. Representative institutions are no longer respected by or responsive to the citizens they putatively serve.

Ira Katznelson cites two major factors that undermine representative democracy: its failure to protect political equality in the face of rising economic inequality and its diminishing capacity to uphold anything resembling the public interest. This leads to disrespect for democratic institutions among average citizens and elites alike, reducing the sense of democratic legitimacy.

Though disdain for representative institutions is widespread, it takes different forms. In the United States, critics point to the legislative paralysis produced by political polarization. In the United Kingdom, the complaint is not that parties are polarized but that they are too much alike. Among Europeans, democracy is well and good so long as it doesn’t produce “irresponsible” governments, in which case it must give way to the technocratic rule of the unelected European Commission and European Central Bank.

Democracy is in decline because economic inequality is on the rise.

With such varied reasons for skepticism about representative institutions, why suppose that they all are part of a larger story of democratic decline? The answer, I think, is that the threat to democracy is singular, not two-pronged, as Katznelson argues. Democracy is in decline simply because economic inequality is on the rise. The bedrock of democracy is citizens’ political equality in spite of unequal wealth, and high inequality inevitably erodes the barrier between wealth and political influence. In reality, that boundary has dissolved. The common condition of all democracies is their inability to insulate policies from the influence of globalized financial capitalism.

There is remarkable convergence across democracies on a single policy agenda that not only serves the interests of the few rather than of the many but also deepens economic inequality. That agenda, which followed the post-crash bank bailouts and stimulus packages, is austerity.

Austerity’s incompatibility with democracy is clearest when it is externally imposed, as critics of the International Monetary Fund’s structural adjustment in the global South have noted for decades. Before the financial crisis, democracies of the global North were immune to the external imposition of austerity, though they might have adopted it voluntarily, as under Reagan and Thatcher. “There is no alternative” takes on a different valence when accepting austerity is presented as an ultimatum for, say, staying within Europe than when it is advanced in an election.

But even in countries that have voluntarily adopted austerity measures, austerity undermines democracy. The claim that austerity delivers economic growth is dubious at best, but it is beyond question that it increases economic inequality and diminishes the well-being of and opportunities available to low-income citizens. Inequality is not a temporary side effect of emergency economic measures but an intergenerational pattern visible in rising youth unemployment and shrinking access to higher education. Equality of opportunity, which is essential to reconciling democracy with capitalism, is fading.

Furthermore, austerity distorts democracy by channeling economic frustrations into populist, nationalist, and xenophobic movements. Political elites appeal to these movements for electoral gain, polarizing politics and shutting down genuine negotiation among conflicting interests.

It is therefore not Peronism that we have to fear as the consequence of democracy’s decline, as Katznelson argues. Peronism’s claim to legitimacy turns on delivering benefits to the masses, which austerity makes impossible. Rather, the prevailing alternative to responsive, representative democracy is one in which elites compete to gain control of the state but need pay no attention to citizens’ opinions or needs between elections. Democratic politics then does become a mere spectacle, not far from elective authoritarianism.

Is there an alternative to democracy’s decline? Yes, but not without the collective action of democratic governments to reinstate a barrier between wealth and political influence. Under current conditions of globalized financial capitalism, austerity is the only policy available to most states acting alone, as they lack the capacity to tax global financial flows and dare not raise taxes on domestic corporations for fear of capital flight. When political leaders claim that there is no alternative to austerity, they are choosing capitalism over democracy and with it ever-rising inequality and the political and social instability that inevitably result. If they wish to do more than pay lip service to democracy, they must act together.