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diversity: strengthening democratization. This argument is most
convincingly presented by Friedman in The Moral Consequences of
Economic Growth. 6

At the very least it seems that when economies stagnate, and
living standards and confidence in a better future decline, this has a
significant impact on politics. It often leads to a decreasing confidence
in liberal democracy as a system, and a weakening of democratic
political institutions. The history of advanced economies -- such as
Germany, Italy, France and the U.S. -- in the 20th Century provides
examples. There is clear evidence that economic difficulties arising from
the 2008 Global Crisis, and more generally from economic globalization,
have contributed greatly to what has been a longer-term trend of
declining political trust in governments, institutions, political parties, and
politicians (discussed further under proposition #4).

The distribution of the gains of economic growth (economic
surpluses), is a key role of politics, for example through the budgetary
process. This involves recognizing, legitimizing, and reconciling differing
interests over such distributions, through debate and compromise in the
political system. However, politics changes fundamentally when
economic growth slows significantly. The challenge then is to share the
pain – the allocation of losses in what may be perceived as a zero-sum
environment; where gains to some groups are seen as losses by others.
Economic progress therefore plays an important role in shaping the
success of politics, however organized. If economic well-being and
7
progress are under threat, so are existing political arrangements.
Therefore ensuring continued economic growth and progress, and
societal confidence in such progress, is a necessary condition for
sustainable liberal democracy. This leads to the second proposition.

6 Benjamin Friedman, 2005. The Moral Consequences of Economic Growth.
Alfred A. Knopf, New York.
7 Willam A. Galson, 2014. The new challenge to market democracies.
The political and social costs of economic stagnation. Brookings, Washington, D.C.,
October 20.

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