In fact, a “third wave of autocratization” has seen democracy pushed back to levels not seen since 1978, the authors of the 2026 V-Dem report conclude. Worse, many of the 92 autocracies around the world are becoming more repressive.And all this is happening while the economy has globalized — something that many political economists thought would encourage democracy among previously undemocratic nations.Explaining why economic liberalization doesn’t equal democracy.
The logic was straightforward: Take away the state’s economic power, and you limit its ability to repress. The theory was that economic liberalization did this by privatizing state-owned enterprises, deregulating markets and opening economies to trade and investment. As people became less dependent on the government for jobs, credit and economic opportunity, they would gain the autonomy to organize, oppose authoritarian rulers and demand greater political freedoms.
This idea, associated with Nobel laureates Milton Friedman and Friedrich Hayek, remains influential among many scholars and even served as part of the founding mythos of the Washington Consensus, a policy agenda championed by international financial institutions and leading world powers. It helped make economic liberalization the default prescription for countries across the developing world.
