Social movements and market legitimacy
Explainer of Shakya et al. (2025), Journal of Economic Behavior & Organization. Not the journal article.
Citation: Shakya, S. and Ammons, J. (2025). The Invisible Hand Meets the Raised Fist: Social Movements and Market Legitimacy. Journal of Economic Behavior & Organization. Free PDF
Facts¶
Main finding¶
Nonviolent campaigns that achieve lasting success are associated with substantial improvements in liberal democracy indicators, rule of law, civil liberties, government accountability, and reduced state ownership of the economy - all basic elements of capitalist economies. Violent campaigns show more ambiguous and statistically weaker effects on these institutions, suggesting that the pathway to institutional change (violent vs. nonviolent) matters significantly for market development results.
One caveat¶
Institutional improvements are contingent on cultural and structural variables; results depend heavily on post-campaign cultural dynamics that can expand or counteract mass pressures for market liberalism. Oster (2019) test indicates unobservables would need to be more than twice as influential as observables to overturn results, but unmeasured institutional factors may still play important roles.
Policy hook¶
Do mass social movements - particularly nonviolent campaigns versus violent revolutions - shape the institutional foundations that support market economies? Policy makers and development organizations debate whether collective action supports or weakens capitalism and liberal democracy. This paper tests whether successful nonviolent campaigns build the institutional infrastructure (rule of law, property rights protection, competitive markets) essential for market economies.
Data and setting¶
V-Dem (Varieties of Democracy) dataset and NAVCO (Nonviolent and Violent Campaigns and Results) dataset, 1950-2022, multiple countries globally. Comparison of countries with successful one-time nonviolent campaigns versus politically stable control countries without major campaigns. Tracks changes in liberal democracy, rule of law, civil liberties, government accountability, and economic ownership patterns post-campaign.
Research design (plain language)¶
Event study framework using Callaway and Sant’Anna (2021) methodology on panel data, using a “once-treated-always-treated” specification to avoid violations of the Stable Unit Treatment Value Assumption (SUTVA). Includes parallel trends validation and Goodman-Bacon decomposition to confirm treatment effect homogeneity. Compares pre- and post-campaign institutional trajectories across countries.
PDF or DOI¶
Why it matters¶
The relationship between collective action and capitalism is understudied. This paper shows that nonviolent campaigns, when successful, strengthen the institutional foundations of market economies - rule of law, civil liberties, reduced state ownership. This offers a counter-narrative to critiques that social movements undermine markets: collective action that removes authoritarian regimes can against first intuition strengthen institutions essential for capitalism. The contrast with violent campaigns suggests that how institutional change occurs matters. For development policy makers, the finding implies that supporting nonviolent transitions may better establish durable market-supporting institutions than military intervention or regime change imposed through force. The work also has political consequences: it suggests that nonviolent movements in authoritarian settings may be channeling demands for both political freedom AND economic liberalization, with positive spillovers for market development and rule of law.