The institutional hypothesis and the World Cup final

Spain won the World Cup final against Argentina with a goal scored in the second half of extra time, after Argentina had one of their best players sent off. According to many neutral observers (including The Economist and former German international Toni Kroos), the two teams behaved very differently on the pitch. Spain dominated possession, played attacking football, and created far more goal-scoring opportunities. Argentina, by contrast, resorted to a much more physical style, defending by almost any means in an effort to reach a penalty shoot-out, and several of their players reacted poorly after the defeat. Their greatest player, Lionel Messi, who throughout his career had been exemplary on the pitch, also resorted on this occasion to gamesmanship in an attempt to deceive the referee. In short, many neutral observers concluded that Spain played football, whereas Argentina played anti-football.

This should not be taken as a criticism of Argentine football in general, still less of the Argentine people. Historically, Argentina has been far more successful than Spain in this sport by playing football rather than anti-football. The country has produced, in my view, the greatest player of all time (Maradona) and the player who has sustained the highest level of performance for the longest period (Messi). These two players—along with many others, including Alfredo Di Stéfano before them—and numerous Argentine coaches have made European clubs and leagues stronger than they otherwise would have been. Nor do I believe there is a distinctively Argentine style of play that is inherently aggressive. Argentine football has long been divided into different traditions—for example, the bilardistas and the menottistas—and many Argentine players have been celebrated for their elegance and technical ability.

Beyond football, I admire Argentine actors, writers, human rights activists and lawyers, journalists, sports commentators, academics, chefs, dancers, and many others. Argentina is a great country, and I think it is a privilege for Barcelona, my city, that so many Argentines now live here.

Nor should the exemplary behaviour of the Spanish players in this World Cup, or in recent years more generally, be taken as evidence that Spaniards behave better than Argentines in other walks of life. We have nothing to teach Argentines in that respect. The national team at this World Cup represented Spain at its very best, but we are clearly not always like that in many other domains.

Today, Argentine and Spanish players compete—or have competed—in the same clubs and leagues, almost all of them in Europe. FC Barcelona, the club that contributed the largest number of players to the Spanish national team, was for many years Lionel Messi's club and became famous for its elegant style of play. Atlético Madrid was represented by several players on both sides. Argentina's coach, Lionel Scaloni, played for Spanish clubs and lives in Spain with his family.

The question of why the Argentine and Spanish players behaved so differently in the final is therefore both interesting and difficult to answer. They speak the same language and they broadly belong to the same culture.

It is well known that high-powered incentives can backfire. Agency theory in economics suggests that when success depends on multiple dimensions of effort, very strong incentives to achieve a single objective may encourage agents to resort to dirty tricks rather than pursue all dimensions of performance fairly. Whether they choose fair play or gamesmanship depends on their own abilities, those of their opponents, and the prevailing conventions and institutional norms. In World Cup history, Italian defenders Claudio Gentile (1982) and Marco Materazzi (2006) illustrate how playing on the edge—or beyond it—can sometimes be successful. Argentina itself could easily have won the last final.

It will be interesting to see what happens if Italy appoints Pep Guardiola as national coach, as has been rumoured. Carlo Ancelotti's appointment as Brazil coach did not work out. Coaches, players, and national football cultures do not always fit together. José Mourinho's possible return to Real Madrid for a second spell might even amount to an admission that the only way to defeat FC Barcelona's football in Spain is through Mourinho's anti-football. Whether that would work remains to be seen.

The more interesting question is why Argentina embraced anti-football on this occasion. Why did this particular norm prevail?

Economics Nobel laureate Daron Acemoglu has suggested, on X, that the answer might lie in his theory of institutions.

The argument—originally proposed on X by the Turkish professor Veysi Çeri—was that the Argentine team began committing increasingly serious fouls and became more aggressive after the match because earlier, relatively minor transgressions had gone unpunished. This gradually changed the perceived norms and rules of the game, making further transgressions seem acceptable. The argument referred exclusively to the Argentine squad. Acemoglu prefaced his comments by saying that he was not sure this was the correct explanation, but that he found it intriguing. I do too. I find it intriguing because it parallels the way political leaders and other influential figures—including business leaders—may become increasingly willing to break rules when norms are not enforced against them. Acemoglu was making no claim whatsoever about Argentina or Argentines in general. As he himself made clear, the principal example he had in mind was Donald Trump in the United States.

I am also tempted to relate Argentina's anti-football to the broader political climate associated with Trump and Javier Milei, although I recognise that I may be biased. Another economist, Branko Milanović, offers a simpler explanation rooted in football itself:

"Did people make analogies (they must have but I have not seen them) between Argentina 1990 and Argentina 2026? Ruling champions. Strategy based on two pivots: the best player in the world in his decline & a phenomenal goalkeeper. Anti-football with the objective to get to the penalty kicks. Strategy that worked perfectly until the final. And a very narrow loss."

Whatever the true explanation—which is probably complex and multi-causal—it is important to understand why people sometimes choose anti-football over the best football they are capable of playing, even when those people are the same individuals, as in Messi's case. More broadly, we should ask why people sometimes choose anti-politics over politics. In politics, democracy and even the survival of the planet are at stake. As we know, human beings are capable of the very best, but also of the very worst. The challenge is to understand how we can bring out the best in ourselves.

Farage, the Quintessential National Populist

Nigel Farage is the quintessential national populist. Together with Donald Trump, he symbolizes the rise to prominence (in his case, not yet to power) of manipulators and demagogues who exploit the institutions of democracy while subverting them through corruption, deception, and contempt for the rule of law.

His announcement that he was resigning as a Member of Parliament following corruption allegations, while simultaneously forcing a by-election in which he intends to run again, was a masterclass in populism. It was framed as a "people versus the establishment" by-election. All the classic elements were there:

-Victimhood. Farage portrayed himself as a victim of the establishment, just as other national populists present themselves as targets of shadowy elites and conspiracies. This narrative grants populists, in their own eyes, the right to use unconstrained means in order to strike back.

-The people versus the elite. Claiming to stand with "the people" against a supposedly self-serving political elite is the defining feature of populism. In the United States, Donald Trump has used this strategy with remarkable success. Political power resulting from this (despite his obvious belonging to a narrow oligarchy) has enabled him to remain free despite facing multiple criminal charges.

-The people as judges instead of independent institutions. According to the populist logic embraced by Farage, corruption allegations should not ultimately be settled by courts of law but by the voters of his constituency. Popular support is presented as a substitute for legal accountability.

-Plebiscitary politics. The by-election is transformed into a plebiscite, blurring the distinction between elections and referendums. Politics becomes Manichaean, reduced to a false choice between apparently simple alternatives that erase complexity, compromise, and pluralism. Populists—such as Marine Le Pen in France—seek to sidestep legal institutions, and thus the rule of law itself, by appealing directly to voters.

Corruption and racism have enabled Farage, like Trump, to ride two successive waves of populism: first, the relatively moderate (by today's standards) wave of Brexit and Trump 1.0; and second, the current wave of democratic backsliding and open xenophobia. Both illustrate the vicious circle of populism. The first populist wave leaves behind such profound economic, social, and institutional damage that, even when the opposition returns to power, it struggles to repair the inherited problems. This, in turn, creates fertile ground for populists to exploit a second wave of public discontent.

For once, however, this episode has shown what the appropriate democratic response might look like: a tacit display of unity among the major political parties—including Labour and the Conservatives—by refusing to contest the by-election that Farage engineered, leaving him to face only fringe candidates. Rather than legitimizing his attempt to turn the contest into a plebiscite, they declined to play the role assigned to them in his populist script.

Does "business-friedly socialism" make sense?

The next leader of the Labour Party and Prime Minister, the former Manchester mayor Andy Burnham, appears to be advancing a project with more substantive content than that of his predecessor, Keir Starmer. Some commentators have characterised his programme as "business-friendly socialism."

The coherence of this expression depends on what we understand by "business-friendly" and by "socialism." If by business-friendly we mean deference to capital and collusion with business owners, and by socialism we mean an economic system in which capital is owned and controlled not by a minority but by society—whether in a decentralised form or through the state—then "business-friendly socialism" is an oxymoron.

Those around Burnham, however, argue that public ownership or control of essential services—such as utilities and housing—can provide a degree of economic and social stability that ultimately benefits private businesses operating in other sectors. Yet what is meant by government control remains vague. For example, The Productive State, a report published by a think tank close to Burnham, includes a chapter entitled "Beyond Nationalisation: An Ecosystem of Democratic Ownership."

This debate takes place in the context of the failure of the privatisation-with-regulation model designed by Margaret Thatcher and maintained by John Major and Tony Blair. In sectors where competition is difficult or impossible to introduce—unlike telecommunications—that model has largely failed to deliver. At the same time, returning to the previous model of state ownership is neither straightforward nor necessarily desirable, as the transition would be highly complex and both technology and society have changed profoundly. What is needed is a new institutional model, one that looks to the future rather than relying on rhetoric, political expediency, or collusion with selected business interests. Burnham's first leadership campaign speech, however, remained vague on these questions and instead focused on devolution and decentralisation.

On the meaning of the word socialism, Paul Krugman has argued that, at least in the United States, the term often refers to little more than support for the kinds of social democratic policies long associated with Europe. He is largely correct. However, I believe that many of today's progressive leaders are also emphasising a stronger element of collective supply-side policies. Although such policies already exist—for example, in Germany's and Sweden's systems of workplace democracy or Austria's tradition of public housing—they have generally played a secondary role within the traditional welfare-state model of social democracy.

In any case, there is nothing especially radical about these policies. While many in Europe lament the decline of social democracy, something remarkably similar to it—albeit labelled "socialism"—appears to be gaining ground in the United States. The concern expressed by The Wall Street Journal and The Economist over the rise of Gen Z socialist voters is evidence both of the significance of this development and of the fear-based narrative they promote—"Marxism is coming"—to alarm moderate voters. They would be better advised to worry about the genuinely radical and authoritarian tendencies of Trump 2.0.

From my vantage point abroad, Zohran Mamdani, Lina Khan, Bernie Sanders, and Elizabeth Warren are democratic socialists or social democrats who happen to be more politically successful than many of their European counterparts. There are probably good reasons for this, including the fact that Europe's incomplete political and fiscal integration leaves national progressive governments with insufficient fiscal space to pursue ambitious policies.

Initiatives such as the recent Global Progressive Mobilization should encourage a convergence of progressive forces, from the London Consensus to Mamdani. That convergence should work towards a new model of business based on an alliance between democratic socialists and responsible capitalists: empowering workers, democratising investment funds, developing sovereign wealth funds, and pursuing sound industrial and housing policies.