Recent election results suggest that right as well as left-wing populism may be more contained than feared and that the "reasonable middle" is reasserting itself in politics.
Political risks to financial markets may be receding, but hopes for a wave of liberalizing reforms are likely to be misplaced.
In 1989, as the Cold War was ending, Francis Fukuyama published his often-cited essay (and later book) proclaiming the "end of history" or, as he predicted more explicitly, the "unabashed victory of economic and political liberalism."
The following decade appeared to corroborate his thesis, as Eastern Europe and Russia transitioned peacefully toward Western democracy, China entered the system of free trade, financial liberalization deepened and unfettered globalization seemed to become an unstoppable force.
The excesses of the financial boom – arguably caused by too great a belief in the self-correcting mechanisms of free markets – ended in the deepest financial crisis and recession of the post-World War II period. In its wake, what had looked like a deeply unifying and growth-enhancing change in monetary regime in Europe came close to collapse and to tearing apart the European Union (EU).