The other side of the technological revolutions

Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity  

Author: Daron Acemoglu & Simon Johnson

Publisher: PublicAffairs

Pages: 560

Price: Rs 592

Does the transformation of work through technology make life better or worse for people?  In their lucidly written study of the economics of technological progress on prosperity and poverty, renowned economists Daron Acemoglu and Simon Johnson offer conclusions that are as surprising as they are disturbing.

They challenge, for instance, the standard conclusion that posits as a force of good the technologically-driven economic progress in Europe in the Middle Ages. They show that some of it was actually harmful. Their conclusion is premised on demonstrating that early modern agriculture technologies actually impoverished peasants. They also show how advances in European ship design in the late Middle Ages, while enabling transoceanic trade, were also used for transporting millions of enslaved people from Africa to the New World.

 The authors assert that the age of automation today is no different. The book makes a compelling argument that, historically, progress was never automatic, but followed the vision of a powerful elite capable of persuasion, influencing decisions, setting agendas and creating a nexus to perpetuate their power and wealth. It explains how in medieval Europe a small elite, including bishops, abbots, monastic clerics and so on owned one-third of all agricultural land for which they extracted tax exemptions, thus marginalising peasants who constituted 90 per cent of the population. Both the Panama Canal and Suez Canal are said to have been built on that asymmetric pattern of ownership. Today, Wall Street presents the most potent economic nexus involving a small group of bankers. 
 

Similarly, corporate America is represented by Google, Facebook, Apple, Amazon, Microsoft and so on, which collectively account for one-fifth of US gross domestic product, and disproportionately influence domestic economic policies as well as those in other countries.

 No one would understand the negative impact of technological progress better than Indians under British rule. This process is covered well in this book, tracing the summary deindustrialisation of the Indian economy that began under the East India Company through selective use of technology. It explains how Indian weavers were ruined in a short time as a consequence of textiles export to India made from Lancashire spinning machines using imported Indian raw cotton. The Railways were used as an instrument of oppression both by commission and omission; it was conveniently used to transport raw materials to ports and send troops to quell freedom struggle protests across the country. The omission was even more horrific as during famines the British chose not to send food by rail to millions even as they starved to death.

 We get an insightful understanding as to how automation is mercilessly replacing workers, a fault-line feared by the famous economists David Ricardo and John Maynard Keynes in the 19th and 20th centuries respectively. Since globalisation is driven by technological advances both processes are synergistic and driven by the same logic: To cut labour costs. These idealised market processes have been part of economic theory ever since Adam Smith’s The Wealth of Nations introduced the notion of the “invisible hand”—a metaphor for the notion that the market provides good outcomes for everyone. It also resonates with the Friedman doctrine of unregulated markets working for the common good. This trend is supp­osedly worse than the damage low-cost Chinese products do to manufac­turing and employment in recipient countries, the authors contend.

They express their apprehensions that Artificial Intelligence (AI) could be used as potent tools in the hands of governments and companies to subvert democracy.  Although this view may appear to be far-fetched at this juncture, the Chinese government’s use of sophisticated surveillance technology to suppress dissent in the political discourse and the controversy surrounding Cambridge Analytica’s misuse of data for meddling in the US elections using algorithms are ominous signs for the future of democracy.

The emphasis on shared prosperity as a measure of social progress favours state interventionist welfare policy. In that sense the authors contend that the Malthusian trap was not a law of nature, it was a condition contingent on particular political and economic systems. The more egalitarian Indus Valley and Mesoamerican civilisations illustrate that governance structures matter. The Soviet policy of collectivisation was a disastrous choice. In Japan and Korea different circumstances helped toward shared prosperity. In the western world, women, minorities, Blacks and immigrants remained excluded from shared prosperity.

The underlying false dichotomy about technology is that it is neither preordained nor inevitable but depends on the choices that governments make. Shifting focus from “machine intelligence” to “machine usefulness” for complementing worker capabilities could be far-sighted. Digital technologies can be reoriented to be useful, for example, online meetings and communications can reduce costs and enable larger-scale cross-cutting assoc­iations. Supportive policies, including subsidies, tax reform, worker-training programmes, data-ownership and data- protection schemes can be helpful.

Investment in education can be beneficial for upgrading skills, generating higher earnings and creating a technical pool of engineers and computer programmers. In the fight against HIV/AIDS, governments played a critical role and in the fight against climate change too support for renewable energy projects is helping in making the energy transition from fossil fuels. Remarkably, China followed Europe and America in the redirection of technology.

This book is a necessary antidote to the poisonous rhetoric of tech inevitability that promotes “winner-take all” technologies. The authors make a compelling case for humans to take control of technology to enhance shared prosperity— but sustaining it hinges on promoting democratic rights, values, principles and good governance.

The reviewer is a serving Indian Foreign Service officer