Recent years have seen somewhat of a populist backlash to globalisation, and trade and immigration in particular. Seemingly less controversial are technological advances that have changed the way we work, play, learn and interact. Indeed, a certain brand of techno-optimism looks to the “white heat” of technology as humanity’s saviour, whether to tackle climate change or provide us all with lives of infinite leisure, unconstrained by the physical limits of planet Earth. Often, those who challenge the prevailing narrative are dismissed as neo-luddites, standing astride the march of progress yelling stop.
A new book by two esteemed MIT economists presents a necessary corrective. Simon Johnson was chief economist of the International Monetary Fund at the onset of the global financial crisis. Darren Acemoglu, an important thinker in political economy, co-authored the influential Why Nations Fail in 2012 and The Narrow Corridor in 2019. They have teamed up to write Power and Progress.
Looking at the broad sweep of history, they challenge the view that technological advances lead inevitably to social progress. Whether medieval improvements in agriculture, satanic mills of the industrial revolution or our very own digital age, the extent to which technological and social progress move in tandem, they argue, depends on the balance of societal power relations. They call this the “productivity bandwagon”.
This is relevant today not only because we are living through an era of great technological change — what has been called the fourth industrial revolution — but because that “productivity bandwagon” has broken down. The last half century has been marked by a continuation of productivity growth — albeit more slowly since the global financial crisis in economies at the technological frontier — while real wages have been relatively stagnant. Inequality has surged as the fruits of productivity gains have been disproportionately captured by the wealthy. Why?
Essentially, Acemoglu and Johnson argue that elites — what they call the “vision oligarchy”, both historical and modern — used their prestige and power to shape the narrative around technology and thereby skew the rules of the economic game in their own interests. In medieval times much of the economic surplus was extracted to build gargantuan cathedrals while living standards stagnated. Today, giant tech firms use dominant market positions to concentrate never-before-seen levels of wealth in the hands of their founders and backers while technology itself “is moving excessively toward automation, surveillance, data collection, and advertising”.
Drawing on the lessons of history, the authors propose in their concluding chapter three pillars for shared prosperity in the digital age: “altering the narrative, building countervailing powers and developing technical, regulatory and policy solutions to tackle specific aspects of technology’s social bias”. As does Robert D Putnam in The Upswing, Acemoglu and Johnson see parallels in these respects with the US’s progressive era of a century ago. In fact, far from being the rule, the authors see this period as a historical exception. More recently, they cite examples of the change in narrative leading to changes in policy and better outcomes around climate change and HIV-Aids. They may not be techno-optimists, but their closing message is a hopeful one: humanity has done this before, and we can do it again.
Altering the narrative means winning the battle for hearts and minds, or what Antonio Gramsci would have called the war of position. The authors cite, for example, Rachel Carson’s trailblazing Silent Spring in 1962, decades of campaigning by Greenpeace, and the 2006 documentary An Inconvenient Truth starring Al Gore as being necessary before environmentalism became central to the prevailing narrative.
Cultivating countervailing powers means supporting institutions that work in the interests of the many, not the few. It was increased democratisation and the rise of trade union power that led to the civilization of the industrial revolution from the second half of the 19th century. In the digital age, the labour movement will continue to play a central role, though the authors acknowledge there may be a need for “new methods for organizing workers”. Even more important, they argue, will be revitalised civil society boasting “more broad-based organizations” and “new and better online communities”. These must come together to form a broad coalition to harness technology for shared prosperity, to promote “a greater focus on human-complementary and human-empowering technologies.” Put simply, this “is an economic, social and political choice”.
As for a concrete policy agenda, Acemoglu and Johnson recognise that government will not itself be an engine for innovation, but “can play a central role in redirecting technological change through taxes, subsidies, regulation, and agenda setting”. Specifically, they identify subsidies of socially beneficial technologies as powerful policy weapons. They also see roles for breaking up big tech, increased privacy protection and granting data ownership rights to individuals. On the fiscal front, they propose reducing taxes on labour, increasing taxes on capital and introducing a digital advertising tax.
Power and Progress is no neo-luddite screed. It recognises the contribution technological advances can make towards shared prosperity, but it is a strident techno-realist takedown of the dominant narrative of its inevitability and a call to arms to make it a reality.