Daron Acemoglu: the opportunity economist

The winner of the World’s Top Thinker, as voted for by you, urges us to actively steer the direction of progress
January 24, 2024

After decades of sweeping research covering technology, “democracy, dictatorship and labour laws,” Daron Acemoglu—the polymathic Turkish-American economist whom Prospect readers have voted the world’s top thinker for 2024—is ready to boil things down. “The overall conclusion I’ve reached,” he tells me, “is that there’s nothing automatic about shared prosperity.”

That sounds more measured than electrifying, and will leave the uninitiated scratching their heads at the film-star reception this affable 56-year-old man attracts among young researchers: his recent Resolution Foundation event saw the thinktank’s first-ever queue for selfies. And that’s not to mention the intense admiration of his peers. The eminent Harvard trade economist Dani Rodrik tells me simply: “I think the world of Daron Acemoglu.”

But there are three ways in which the Acemoglu agenda is more disruptive than it appears. First, and most obviously, it defies “techno-optimism”. Not just the extreme “Utopian” form that is the “currency of Silicon Valley,” but also the more general conviction he says “dominates” across “society in the United States”. Namely, the idea that the forward march of human ingenuity will—even if there are odd bumps on the road— soon enough enrich us all. 

Refusal to buy into this is what makes Acemoglu an urgent thinker in 2024, when many are acutely worried about what the rapid rise of AI will mean for work and life in our unequal society. He warns that for all the undoubted potential for good, “technology often is impoverishing for certain groups”, a serious point that—with one of many chuckles—he illustrates with “the oft-quoted semi-joke that the future factory will have two employees, a man and a dog. The man will be there to feed the dog, and the dog is there to make sure that the man doesn’t touch the equipment!”

A completely automated factory would be “very good for productivity,” but there’s no reason why its owners are going to hire extra staff, pay higher wages or otherwise “share those increases in productivity with labour.” 

More conventional economists insist all will come good in the long run, because the extra supply of output should eventually create demand for more labour of another type—maybe the rest of us could thrive by retraining as, say, therapists, fitness instructors or masseurs for the factory owners. But Acemoglu looks back and finds long stretches of history where the new opportunities never arrived: the first 80 years of Britain’s Industrial Revolution, during which working-class living conditions stagnated and on some counts worsened, being one example. We can’t sit around and wait. Because in the long run, as Keynes put it, we’re all dead. 

The second enormously refreshing thing about Acemoglu’s thought is his insistence that we collectively enjoy many choices to reorder the world. After nearly 50 years of Thatcherite “There Is No Alternative” mantras, here is a revered economist who sees myriad opportunities to affect not merely who gets what, but what gets made. Not for him the sort of New Labour agenda based on neat textbook theories that pretend we can “let the market rip, and then… just redistribute income.” “I object to that,” he says. “Imagine a society in which Mark Zuckerberg, Elon Musk and Sam Altman earn everything, and we have to go back to them for crumbs.” They wouldn’t give us many and, more fundamentally, we’d be in “a very weird, very depressing place.”

So what, exactly, is the Acemoglu alternative? It starts with disentangling different forms of technical change: “labour-substituting” automation, which leads us towards the one man and a dog factory, and “labour-augmenting” changes that “create new tasks and skill needs”, making workers more important. Going back to the Industrial Revolution in Britain, the grandchildren of the workers short-changed by the original automation did begin to benefit once demand burgeoned for people to design, operate, and repair ever-more complex machines, and staff the offices of the increasingly sophisticated businesses that owned them.

Acemoglu’s most radical suggestion is that the state should proactively “steer” the innovation process so that we get relatively more of the worker-benefitting augmentation, and perhaps relatively fewer redundancy notices. He’s mindful of the “evolutionary, organic” nature of the inventive process, and wary of “industrial policies on steroids,” where “bureaucrats” presume to choose which technology we should use. Yet he equally rejects the tendency to “throw up our hands” and say nothing can be done—government and civil society can’t dictate the detail, but can give progress a nudge in the right direction. 

His confidence on this point comes from the big “20th-century inventions that have the fingerprints of government all over them.” He rattles off “better aerospace”, “better sensors”, “better antibiotics” and “the internet” as instances where Washington wanted an advance, intervened and “got it.” More recently, green subsidies in California and the EU helped spur an innovation boom that has lowered clean electricity generation costs ten-fold and made displacing fossil fuels realistic. If tech can be steered to such ends, then why not towards good jobs as well? 

The other collective choice is more familiar—at least outside the arid world of neoclassical economics—namely, “building the right institutions.” Unions, disinterested regulation and even democracy itself (something conservative economists see as having to be warily managed) helped spread the gains from growth after the Industrial Revolution and again after the Second World War. The process was scrappy and contested, yet led to huge advances—from the Factory Acts to the universal franchise and on to the minimum wage and other workplace rights. 

After defying blithe optimism, and opening up economic alternatives, the third big Acemoglu shake-up is methodological. While in full command of the technicalities—his PhD was, after all, on the role of contracts as “micro-foundations of macroeconomics”—his mature work blasts through the last 80 years in his discipline, where the soothing preoccupation has been on self-equilibrating market mechanisms, and reconnects with the classical political economists who grappled with social disruption and change. His recent writings have touched on everything from the Zapotec civilisation around 500BCE to the rise of fascism. When I ask for his heroes, the first name offered is Marx: he rejects the old prophet’s theories on wages and profits, yet is thrilled by his blend of “politics, economics, with conflict at the centre.” Other names include David Ricardo, Keynes and also the great growth theorist, Bob Solow, who just died but in the run-up to retirement was “in the next suite”, down the MIT corridor from the younger Acemoglu.

With a door-stopping tome out every couple of years, speeches around the world and new research in top-notch journals every month or two, my final question for Acemoglu is how he gets it all done. What tips for the rest of us hoping to boost our daily brainwork? “Be lucky,” that’s “so important and so under-stated… Work on your passion,” and above all, get “good collaborators.” It’s disarmingly modest, but not even the collaborators are buying it. His most recent co-author, Simon Johnson, was the IMF research chief through the credit crunch. Compared to six months of keeping up with Acemoglu, he has said, that was a breeze. 

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