Financial Elites
From globalization to nationalist power
Introduction
The rise of leaders like Jair Bolsonaro, Brexit advocates, and Donald Trump signal a transformation of authority, influenced by political figures and second-wave financiers— not banks, but hedge funds and private equity firms who seek to disrupt neoliberal norms and capitalize on libertarian-authoritarian structures that give them greater control. By applying Max Weber’s thinking about types of legitimate authority—legal-rational, traditional, and charismatic—we can better understand how these changes in power reflect historical patterns.
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From neoliberalism to libertarian-authoritarian influence
Recent political upheavals are not isolated cases of populism, but part of a structural change orchestrated by financial elites. First-wave finance - large banks and institutions - aligned themselves with legal-rational authority and supported neoliberal policies that provided a stable legal framework conducive to market growth. Second-wave finance – hedge funds and private equity firms - favor the freedom offered by libertarian-authoritarian governance and align themselves with leaders who seek to dismantle regulatory structures and prioritize profitability over social accountability.
Take Brexit, for example. While traditional finance favored the regulatory continuity of the European Union, hedge funds and private equity firms saw Brexit as an opportunity to escape EU regulation and establish a “Singapore-on-Thames,” a financial hub under looser, opportunistic regulation. This strategy exemplifies a departure from the legal-rational framework of neoliberalism and a preference for charismatic and authoritarian leadership styles that allow for rapid policy change. Rather than promoting nationalist ideology, these financial actors focus on deregulation that increases their wealth and influence.
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Libertarian authoritarianism vs. neoliberalism
Libertarian authoritarianism rejects the checks and balances that characterize neoliberalism and promotes a regime in which economic power is consolidated without legal-rational accountability. This shift is facilitated by charismatic leaders who bypass bureaucratic structures and appeal directly to supporters, thereby consolidating their power. In Weberian terms, they use charismatic authority to push through far-reaching deregulation, curtail social services, and prioritize market freedom, often at the expense of democratic integrity.
In the UK, the impact of Brexit has opened the door to deregulation in risky finance, significantly benefiting second-wave financiers who now operate with fewer social or environmental constraints. While neoliberalism sought to balance market freedom with the common good, libertarian-authoritarian regimes push policies that increase wealth inequality, exploit resources, and circumvent mechanisms designed to ensure transparency.
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Global spread of libertarian-authoritarian regimes
The new model promotes intense competition, fragmentation of regimes, and elation and conflict over resources. We see this ideological shift manifest itself in various forms around the world:
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Understanding power and authority in social change
According to sociologist Max Weber, the stability of authority depends on its legitimacy, whether it is legal-rational, traditional, or charismatic. Without legitimacy, power risks degenerating into coercion and instability. Today’s libertarian-authoritarian regimes derive legitimacy from charismatic authority, embodied in leaders who claim to be exceptionally good at addressing crises and challenges. This mode of government relies on emotional appeals rather than legal or traditional legitimacy, and promotes rapid policy change without the constraints of democratic accountability. As we know, charismatic authority remains inherently unstable. Because it depends on continued public support, it must continually adapt or risk erosion. Max Weber suggested that power struggles, whether in finance or politics, often catalyze social transformation. When elites change their allegiance from legal-rational structures to charismatic or authoritarian governance, they create significant changes that challenge the foundations of democratic accountability.
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The new example of second-wave authoritarianism – Elon Musk
Elon Musk’s influence on X is a contemporary example of the described change. Musk embodies charismatic authority while using personal wealth and influence to change public discourse, circumvent traditional accountability, and promote a vision that minimizes legal constraints. His appeals to free speech and public hostility to traditional media reflect the libertarian-authoritarian tendencies of second-wave financiers, who value control over democratic norms. Musk’s actions exemplify a model in which charismatic authority, backed by financial power, circumvents institutional norms to enforce personal ideologies.
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A historical parallel: Economic authority in the age of dum diversas
To understand how elites historically used authority to consolidate power, we can look to the papal bull Dum Diversas, issued by Pope Nicholas V in 1452. This decree gave Portuguese rulers the right to conquer and enslave non-Christian lands, which laid the foundation for the transatlantic slave trade and a legacy of exploitation. Like second-wave financiers today, European powers used authoritarian measures under a legitimizing ideology to secure economic dominance. This historical example illustrates how financial elites often align themselves with authoritarian rule to gain control over resources and populations.
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The rise of libertarian-authoritarian nationalism
For decades, neoliberalism emphasized global economic integration, the promotion of liberal values, and a growing middle class. Forums like Davos championed diversity and globalization to expand the talent pool and extend the influence of multinational corporations. But as economic expansion slows, elites are turning. They now support libertarian-authoritarian regimes, because they prefer the administrative efficiency and lack of accountability that these structures provide, which allows them to maximize capital flows with minimal oversight. This is a strategic change from globalization to nationalism, in which regulatory flexibility benefits elites at the expense of broader societal interests.
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Implications for social stability and democracy
The rise of libertarian-authoritarian nationalism poses serious risks to democratic integrity, social cohesion, and environmental governance. It facilitates quick financial gains for those at the top, while often ignoring the well-being of the middle and lower classes, which widens economic disparities and undermines social stability. Democratic norms may continue to erode, not because of any inherent shortcomings, but because they no longer serve the interests of an increasingly isolated elite class that now sees authoritarian structures as more efficient vehicles for maintaining power.
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Looking ahead - Challenging the new authoritarian order
This consolidation of power within a narrow elite group calls for a critical response from democratic institutions, social movements, and business leaders committed to equity and accountability. To counter the unchecked authority of wealth and influence that threatens democratic processes, policies must prioritize sustainability, transparency, and social cohesion. By recognizing the reconfiguration of authority in this libertarian-authoritarian change, democratic societies resist self-interested governance models and work to preserve a more inclusive, equitable future.
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