Over the past 30 years, the world has experienced a profound transformation, becoming both more open and more prosperous. Whereas in 1985 more than half of the countries worldwide were under authoritarian rule, most countries today are considered electoral democracies (Economist Intelligence Unit, 2017). Since 1990, more than a billion people have been lifted out of extreme poverty (World Bank, 2016), while well-being indicators have improved dramatically on a global level, especially in terms of health and education (International Idea, 2017).

Yet, for the most part, this prosperity has not been broadly shared. While inequality between countries has declined considerably since the 1980s (International Panel on Social Progress, 2018), inequality within many countries is at a historic high (Piketty, 2014). There are growing pockets of people who are consistently excluded, or left behind, on the basis of multiple and often intersecting inequalities. Such inequalities, grounded on both socioeconomic status and specific identities (such as gender, ethnicity, religion, geography, sexual orientation, age, etc.), and the kinds of exclusion they generate, have become a defining challenge of our time. As Chapters 9 and 14 of the report compellingly argue, the widening chasm between those who have and those who don’t is fundamentally incompatible with democracy.

In effect, as posited in this paper, inequality and exclusion confront democracy with a paradox. Building on the findings and arguments developed in these two chapters, this paper shows how and why growing inequality and exclusion undermine the quality of democratic governance across both the developed and the developing world. A crucial implication is that if democracy is to prove resilient over time, it needs to address – and redress – inequality and exclusion. Yet, while democracy is intended in principle to promote equality and a more even distribution of power, there is nothing about democracy that automatically reduces inequality and exclusion in actual practice. Policy outcomes depend on the informal institutions and power relations underpinning a political system (Hickey et al., 2014) – and these are often not aligned with efforts to promote greater equality and inclusion (Rocha Menocal, 2017). On the other hand, a variety of democracies have been able to tackle inequality and exclusion in different ways, and this paper outlines some of the factors that have enabled such progress.