Electronic copy available at: http://ssrn.com/abstract=1899287
Social unrest has led to key turning points in modern history since, at least,the French Revolution. Marx saw it as the driving force of the transition of societies from feudalism to capitalism and, eventually, communism. Unrest
spower as a catalyst for change manifests itself explicitly regime changes, suchas during the
of 2010-2011, or it operates through expectations:The extension of the franchise in Western societies has been interpreted as anattempt to heed off the threat of revolution (Acemoglu and Robinson 2000).
What leads to social unrest is less clear. Economic shocks are one importantcontributing factor: The demise of the Weimar Republic during the GreatDepression is a prominent example of how economic hardship can translateinto unrest (Bracher 1978).
In this paper, we examine what leads to social instability and violentprotests. In particular, we ask whether fiscal policy affect the level of socialunrest. The extent to which societies fracture and become unstable in responseto drastic changes in the government budget is a primary concern forpolicymakers attempting to reduce budget deficits: From Argentina in 2001to Greece in 2010-11, austerity measures have often created a wave of violentprotests and massive civil unrest. Economic conditions can deteriorate furtherand faster if political and social chaos follows attempts to reign in spending.Consequently, sustainable debt levels for countries that are prone to unrestmay be lower than they otherwise would be.We use a long panel dataset covering almost a century, focusing onEurope, 1919 to 2009.
The continent went from high levels of instability in thefirst half of the 20th century to relatively low ones in the second, and fromfrequently troubled economic conditions to prosperity. It thus provides a richlaboratory of changing economic, social and political conditions. In terms of outcome variables, we focus on riots, demonstrations, political assassinations,government crises, and attempted revolutions. These span the full range of forms of unrest, from relatively minor disturbances to armed attempts tooverthrow the established political order. We compile a new index thatsummarizes these variables, and then ask -- for every percentage cut ingovernment spending, how much more instability should we expect?The data shows a clear link between the magnitude of expenditure cut-backs and increases in social unrest. With every additional percentage point of
In a related exercise, Boix (2003) models the incentives of the populace to resort to violence as afunction of the wealth distribution and economic development.
The French Revolution has also been interpreted in these terms (Soboul 1974; Doyle 2001). The viewis controversial (Hunt 2004; Cobban 1964).