Power and Progress by Daron Acemoglu & Simon Johnson

Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity
By Daron Acemoglu and Simon Johnson
Public Affairs, 2023

Daron Acemoglu and Simon Johnson’s new book Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity is a flat miss from two powerhouse researches out of MIT.

The 500-page book is written against techno utopians and to “show that progress is never automatic.” And therein lies a key drawback of the book in form and as a reading experience. Sure, there are enthusiasts about particular projects and innovations (we meet a cast of such characters including Ferdinand de Lesseps, developer of the Suez Canal), but who really believes progress is automatic? The dumb reader, perhaps?

This leaky bit of condescension blotches too many of their swiftly-written pages (the book was written in six months).

First, some groundwork: In Chapter 1 they write that “economists have long recognized that demand for all tasks, and thus for different types of workers, does not necessarily grow at the same rate, so inequality may increase because of innovation.” They demonstrate, in laudably clear prose, how what is essential for technology to really benefit labor is that it must increase their marginal productivity and, more generally, demand for workers within a context of rival firm competition and worker freedom (to organize, negotiate, and move).

The struggle they refer to turns on institutions: “Political and economic power matter because they decide who has a voice and who can set the agenda,” they write. “Once you are welcome in all high-status forums, you persuasion power grows, and you can start reshaping political and economic power.” Thus the distribution of benefits and losses from technological change do not strictly depend on economic considerations.

Their clean opening in all its detail ought to have been enough for our distinguished authors to march on through with a muscular history of “technology and prosperity.” Instead we receive more of a freshman lecture in which every innovation disappointing the productivity bandwagon receives a Homer Simpson head slap and disappointed “d'oh!”

Frustrated in the Middle Ages: agricultural innovation increases marginal productivity, but within a context of feudalism and coerced labor, high taxation, and religious domination.

Thwarted in the American South: The cotton gin increased cotton production in the South “from 1.5 million pounds in 1790 to 36.5 million pounds in 1800 and 167.5 million pounds in 1820,” but their sad world was one of brutal slavery.

Bamboozled in the Soviet Union: forced collectivization coupled with mechanization meant that in 1937 grain necessitated 10.6 worker-days per hectare, down from 20.7 days in the 1920s, but the result was famine and livestock destruction within a system based on state expropriation.

After well over 100 pages of this our authors declare: “For anyone who believes that the productivity benefits necessarily trickle down through society and improve wages and working conditions, these formative episodes are hard to explain.”

Certainly. But unless we can find a member of the Southern aristocracy, nomenklatura, or Norman English hierarchy, would “anyone” expect innovation to improve the “wages and working conditions” of a serf, slave, or kulak? The dumb reader, perhaps?

Things shift between the first Industrial Revolution in Britain - when there was a worsening of living standards for particular members of the working class is certain areas (such as in Manchester during the 1830s) who could not collectively bargain, might be prosecuted under the Master and Servant Act, and did not have their marginal productivity rise from new improvements (“d’oh!”) – and the second when the nature of innovation changed and institutions weighed more in favor of worker power.

And it is this emphasis on worker power and technological improvements simply being of the wrong sort where Aecmoglu and Johnson lose their way. From the managerial revolution in the US to AI today the “two-tiered society” seems to have sprung up merely from the power of big business and weakening of democracy. This demands we, with the spirit of the progressive era, “redirect technology” using the policy levers of “carbon taxes, research subsidies, and regulation.”

It seems they have missed a key insight of their own book. The story of institutional change was one in a liberal direction. A direction in which the government relatively withdrew from directing rent and granting privilege to elite classes and instead advanced worker choice and freedom: in short, to a more open society based on equal treatment, however imperfect. There is no indication that during the Industrial Revolution government could “encourage the development of technologies that are more complementary to workers and citizen employment,” or that when fantastic progress came it was from such a mechanism, to the contrary.

In Power and Progress Daron Acemoglu and Simon Johnson argue we ought to lengthen the reach of the state (which itself is subject to rent seeking), direct a spontaneous innovative process (which never works), and tilt privileges toward a preferred class needing help. Taking a lesson from their own history, and because power is a mighty thing and the womb of the future is dark, it is much better to break the corporatist system, enhance worker freedom, and allow the free profit-and-loss system to function in a society where there are no lords and there are no serfs.

David Murphy holds a Masters of Finance from the University of Minnesota.