Introduction

Power and Progress is about the direction of technology development. This book explores the nature of the economic, social, and political choice, the historical and contemporary evidence on the relationship among technology, wages, and inequality, and the ways to direct innovations to work in service of shared prosperity. After reading Poverty, by America, I stumbled upon this book and decided to read it.

Author

Daron Acemoglu is Institute Professor of Economics at Massachusetts Institute of Technology (MIT). He has received several awards and honours, including the John Bates Clark Medal, the BBVA Frontiers of Knowledge Award in economics, finance and management, and the Kiel’s Institute’s Global Economy Price in economics.

Simon Johnson is the Roland A. Kutz Professor of Entrepreneurship in Sloan School at MIT. He was the chief economist at the International Monetary Fund in 2007-2008. He has been a Fannie Mae director since February 2021.

Contents

Power and Progress has a prologue and 11 chapters.

The chapters are

1) Control over Technology

2) Canal Vision

3) Power to Persuade

4) Cultivating Misery

5) A Middling Sort of Revolution

6) Casualties of Progress

7) The Contested Path

8) Digital Damage

9) Artificial Struggle

10) Democracy Breaks

11) Redirecting Technology

Review

Power and Progress details the authors’ explanation for the current social situation in the world, where inequality is rising with advance in technology. They say that whether new technologies bring widespread prosperity depends on economic, social, and political choice.

Definition of technology

Technology comes from the Greek tekhne (skilled craft) and logia (speaking or telling), implying systematic study of a technique. Technology is the way that collective human knowledge is used to improve nutrition, comfort, and health, but often for other nefarious purposes too, such as surveillance, war, or even genocide.

Direction of technology

What we do with technology depends on the direction of progress we are trying to chart and what we regard as an acceptable cost. It also depends on how we learn from setbacks and evidence on the ground. Technology’s advances look after the interests of those who are powerful and whose vision guides its trajectory.

The 2 sources of persuasion are the power of ideas and agenda setting. An idea is more likely to spread if it is simple, backed by a nice story, and has a ring of truth, all else being equal. Viewpoints that are passionately held have a way of becoming more dominant, even infectious.

Productivity bandwagon

Productivity bandwagon maintains that new machines and production methods that increase productivity will also produce higher wages. Thus, technological progresses will pull along everybody, not just entrepreneurs and owners of capital.

However, the authors opine that productivity growth does not automatically deliver broad-based prosperity. It will only do so when new technologies increase worker marginal productivity and the resulting gains are shared between firms and workers.

Productivity bandwagon depends on new tasks and opportunities for workers and an institutional framework that enables them to share some of the productivity gains. Pure automation does not increase workers’ contribution to output and hence does not create the need for additional workers.

Shared prosperity

A different path for technology and distributing gains from higher productivity implied a different vision. The first step was the realisation that, in the name of progress, much of the population was being impoverished. The second was for people to organise and exercise countervailing powers against those who had control over the direction of technology and enriched themselves in the process. This happened in Britain in the second half of the nineteenth century.

Mass production and a systems approach leads to an increased number of patents in United States. The 2 critical aspects of technology during this era are automation of part of the production process and the choices made by companies and the new cadre of engineer-manager. A direction of technology that created new tasks and jobs for workers of all skill levels and an institutional framework enabling workers to share productivity increases with employers and managers.

Electricity, engineering, the systems approach, and new tasks lead to shared prosperity. However, the loss of countervailing power and the choices made led to increased inequality. This is happening in the current world, especially with the rise of artificial intelligence. The tech billionaires hold significant wealth and sway over the society.

But all hope is not lost. Tasks that involve social and situational aspects of human cognition will continue to pose formidable challenges for machine intelligence. The authors also propose some strategies to redirect technology towards shared prosperity.

Strategies to redirect technology

We are heading toward greater inequality not inevitably but because of faulty choices about who has power in society and the direction of technology. 3 strategies that the authors propose are:

1. Altering the narrative and changing norms.

2. Cultivating countervailing powers.

3. Implement policy solutions.

Political and social power shapes technological choices, and institutions and technology choices together determine how much owners of capital, entrepreneurs, and workers of different skill levels benefit from new production methods. With the 3 strategies, it is highly likely that the prosperity will be shared more equally.

Conclusion

This book shows that progress is never automatic. The authors suggest that a new, more inclusive vision of technology can only emerge if the basis of social power changes. A two-tiered society with a small elite and a dwindling middle class is not a foundation for prosperity or democracy. Thus, if the direction of technological progress can be redirected to the right direction, a more equitable world would be within our reach.

Power and Progress is not an easy read. The authors include a lot of evidence and are very detailed about how they come to their interpretations of the evidence. It will take some time to understand their point of view. If you are interested in social inequality, this book is for you.

One-sentence summary for Power and Progress

Technological advancement does not guarantee shared prosperity.

Quotes

1. Technologies do not exist independent of an underlying vision.
2. Great disaster often has its roots in powerful visions, which in turn are based on past success.
3. But a vision is nothing if it is not shared.
4. Power is about the ability of an individual or group to achieve explicit or implicit objectives.
5. History is not destiny.

Rating

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