02/12/2016 08:08 GMT | Updated 03/12/2017 05:12 GMT

Democracy Demands a Richer Britain

Talk of "the deficit" has made the political weather ever since some of the world's largest banks, rating agencies and insurers sat down to play pass the parcel with the fiscal equivalent of an IED.

The ensuing bailout catapulted daily talk of "the deficit" from the Treasury cafeteria to the graphics department of UK news channels. And depending on your political persuasion, "the deficit" was either shorthand for tough love at a time of crisis, or Trojan horse for an ideologically imposed austerity. To this day, politicians of all stripes still wield the phrase as some kind of smart bomb intended to silence their opponent mid-sentence.

Except new academic research suggests the same politicians wake up to an altogether more sinister deficit for which no budget fix exists. At least this is the view of two political scientists at Michigan State University (MSU) who believe income inequality is pitting political winners and losers against each other and that conflict over economic interests can undermine citizens' satisfaction with democracy and lead to instability.

In other words, income inequality - rather than who wins an election - is the active and pernicious ingredient behind a democratic deficit that has been building for decades.

Eric Chang and Sung Min Han studied presidential and parliamentary elections in 43 countries, including the United States, and found that rising income inequality increases the gap in satisfaction with democracy between electoral winners and losers. The findings will be published in the December issue of the journal Electoral Studies.

Their work suggests that the degree of income inequality is the real driver behind electoral winners and losers' satisfaction with democracy. Or as Professor Chang puts it: "Elections matter much more for both the rich and poor when income inequality is high."

Essentially, this is because both upper and lower income groups are affected by how politicians engage with rising income inequality. As the gap between rich and poor grows, the poor intensify their demand for the redistribution of wealth. The rich, meanwhile, become more anxious about the possibility of losing income.

Witness President-elect Donald Trump's promise to revive small-town America being perceived by voters as a pledge (at some level) to reverse the transfer of wealth to both overseas workers and the country's elite.

While past research has studied the so-called "winner-loser gap" theory, the MSU research is among the first to put forward that the impacts of economic inequality are more central to satisfaction with democracy than say the institutional effects of political systems, such as America's electoral college or the UK's first-past-the-post.

So while headlines about democracy will inevitably focus on swing state recounts and gaming by-elections to unseat incumbent MPs, the real culprit travels under the name of neo-liberalism. And has done so for three decades or more.

The decision to the leave the European Union is arguably a case in point. Entrenched neoliberalism this side of the Atlantic also spawned gross income inequality, helping foster disaffection and a nascent rebellious sentiment - among both rich and poor - that was ripe for expression come last May's referendum.

Neither has the British public unanimously accepted the referendum result to leave the EU. Hardliners on both sides rush to impose a self-serving and narrow definition of "democracy" as evidenced by The Daily Mail's recent slamming of the judiciary, and Facebook comments by members of the anti-Brexit group "The 48%".

None of this however is confined to the UK or United States. A recent poll in France revealed over three quarters thought democracy was performing "less and less well" while about one in three of those surveyed agreed with the statement "other political systems can be as good as democracy."

Staying in Europe, there is the wider phenomenon of right wing politicians gaining influence and having no little or no allegiance to some tenets of social democracy, including personal freedoms.

Political scientists have long been on the money when they say we might have the trappings of representative democracy but the substance has been hollowed out. Under the banner of "post-democracy", there is a mounting consensus that neoliberal democracies are "losing some of their foundations and evolving towards an aristocratic regime." This echoes the critique of the anti-globalisation movement from the late 1990s, which author Noreena Hertz (now ITV's Economics Editor) characterised back then as 'The Silent Takeover' of democracy by corporations.

As a system for meaningful self-governance, democracy involves much more than general elections and binary-choice referenda. The failings of first-past-the-post systems to represent the balance of views in Britain are well known, and movements for electoral reform will persist. Meanwhile, the benefit of more elected representation in the governance of cities and nations of the United Kingdom is clearer than ever.

The future of democracy will also involve greater deliberation on policies via online platforms such as the pioneering launch of Momentum's MxV platform. All these trends are underpinned by confidence in the principle of democracy itself and the role - though flawed - of our electoral system.

Above all, the political events of 2016 make clear - once and for all - that an unthinking allegiance to neoliberal economics needs to be dropped by the political classes and new economic policies applied to deliver greater equality at pace.

Members of Parliament don't need to have all the answers. Better if they don't. But the onus is on them - as elected representatives - to start an urgent conversation with people about how to reshape our economy for a richer Britain. If citizens sense this could be the beginning of a new participation, then 2016 could yet go down in history as the start of a revival of Western democracy.