Restrained Change: Party Systems in Times of Economic Crisis

Abstract

The global financial crisis of the recent years has been a serious stress test for representative democracies. Voter support has supposedly become more volatile, fragmented and polarized, leaving elites with an intricate mix of economic and political challenges. However, a closer look at a new dataset of party systems during three major crises (1929, 1973 and 2008) reveals that reality is less dramatic than the popular impression suggests. We propose a novel theory of party-system change that explains both the impact of economic crises as well as the robustness of party systems to more serious destabilization. Since voters and elites are risk-averse, economic crises tend to disturb party systems that are generally restrained but, at the same time, help consolidate more complex systems. This explains why party systems rarely fall apart, nor do they reach ultimate stability. We provide evidence for “restrained change” in various party-system dimensions using panel analysis.