Book Review of Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity by Daron Acemoglu and Simon Johnson
Innovation lays the groundwork for the redistribution of power and wealth. In the Middle Ages, elites used water and windmills to extract wealth from the people to build cathedrals. Today, with AI, we are on the same path – unless we get up for “machine usefulness”.
Innovation lays the groundwork for the redistribution of power and wealth.
Innovation. Nothing can be wrong with that. Can it? Innovation brings us better products, leaner processes, and greener technology. We all benefit. We have better lives. This has always been the case for humanity throughout history, whenever innovation has entered the scene. Innovation is what we need to solve our problems. This applies even more to the latest and most significant innovation of our time, which is now taking off: artificial intelligence.
But what if this common narrative is simply wrong? That’s the argument made by economists Daron Acemoglu, Nobel Prize laureate in 2024, and Simon Johnson in their recent book Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity (2024).
Technology often redistributes prosperity away from ordinary people.
In an unusual move for economists, Acemoglu and Johnson take a deep dive into economic history to support their argument. As a result, their book is full of stories rather than models and statistics, making it an engaging read. The historical examples they provide vividly illustrate what happens when technology “redistributes power and prosperity away from ordinary people”. This is exactly what happened when water and windmills were introduced in the Middle Ages. Instead of enabling a better life for all those involved in production and consumption, the surplus created by the new technology was largely absorbed by the religious hierarchy. Cathedrals, monasteries, churches—that’s where much of the profit ended up.
Mills are just one of many cases Acemoglu and Johnson cite to make their point. Looms and coal mining are other examples. Looking at the broader picture, hardly any progress for ordinary people is discernible. “The quality of life of a European peasant circa 1700 was not much different from that of an Egyptian peasant two thousand or even seven thousand years earlier,” they write. “According to the best available estimates, GDP per capita (in real, price-adjusted terms) was almost the same in 1000 CE as it had been a thousand years earlier.”
But there are exceptions. And this brings us to the brighter outlook that Power and Progress points to. Whether innovation and technological change benefit the general population or just those in power is a matter of choice—both political and technological. These choices are ours to make or enforce. “Machine usefulness” is the term Acemoglu and Johnson propose for a kind of innovation that benefits society and ordinary people.
Machine usefulness means innovation that benefits society, not just elites.
Again, history provides useful examples. Electricity, for instance, embodies the kind of “usefulness” they advocate, as it allowed for diverse applications and development paths. Another example is how the American automobile industry handled automation in the postwar period. Instead of merely cutting costs, technology was used to create new tasks and jobs for workers of all skill levels.
“Managers and engineers could have chosen to double down on automation as a method to cut costs in existing industries. Instead, they […] pushed to build new systems and machinery […], augmenting the capabilities of both skilled and unskilled labour.” This led to an increase in demand for workers in the industry, “which more than made up for declining labour intensity in agriculture and some manufacturing tasks.” All of this is well-documented in recent research on economic history.
Some digital technologies also exhibit traits of “machine usefulness”. Acemoglu and Johnson highlight famous single innovations like the computer mouse, as well as broader advancements such as virtual reality and digital tools that support work in education and healthcare. Steve Jobs referred to such tools as a “bicycle for the mind”. Other examples mentioned in the book include new platforms that connect people with different skills and needs or tools that improve classroom instruction by enabling personalised learning.
AI continues this trend: disrupting labour markets, shifting power to those who control
Overall, however, the introduction of digital technologies marks a turning point—one that contrasts with the shared prosperity model associated with the automobile industry. “Wage growth slowed down, the labour share of national income declined sharply, and wage inequality surged starting around 1980.” AI continues this trend: disrupting labour markets, shifting power to those who control data and make key corporate decisions, impoverishing billions in the global south, reinforcing existing biases (such as those based on skin colour), and even undermining institutions. That’s the dark picture Power and Progress paints.
AI, Acemoglu and Johnson point out, enables “so-so automation”. AI replaces humans, but often without creating new opportunities—just leading to lower service quality. “So-so automation” occurs when stores install self-checkout kiosks that don’t improve customer service or when AI takes over customer support:
“Humans are then brought in as troubleshooters after a long series of menus. By this point, the customer is often frustrated, early opportunities for building a social bond have been lost, and the customer service representative lacks the same depth of communication, limiting their ability to learn from and adapt to specific circumstances. This makes the representative less effective and may encourage managers and technologists to find further ways to reduce their tasks.”
That’s a perfect vicious cycle.
So, what’s our task? The direction that innovation in general—and AI in particular—is taking must be brought under democratic control:
“When a company decides to develop facial recognition technology or track faces in a crowd… their engineers are best placed to decide how to design the software. But society at large should have a voice in whether such software should be developed and deployed.”
Another example: rules for social media platforms that go far beyond the relatively weak measures discussed recently:
“Even with much better monitoring, it would be unrealistic to expect that Facebook can eliminate all posts containing misinformation or hate speech. Yet it is not too much to expect that their algorithms should not amplify such material by boosting it and actively recommending it to other users.”
Will innovation automate work or create new tasks? Will it be used for surveillance or to empower workers? Will it influence political discourse and social outcomes for better or worse? These are the key questions that determine whether a technology exhibits “machine usefulness”. What we need is the right institutional framework and government policies to steer the private sector away from excessive automation and surveillance and toward technologies that serve the broader public interest.
Whether innovation serves the public is a political and technological choice.
Here’s one idea for such a framework: let’s make the direction of technological development a key criterion for investors when evaluating companies. Large investors could demand transparency on whether new technologies align with societal needs.
Last but not least: narratives matter. It is persuasion—not mere physical force—that has historically paved the way for innovation. And the ability to persuade is deeply tied to social status and political power. The tech elite, today’s global oligarchy, have successfully convinced us of their narrative about AI’s exponentially increasing capabilities. Power and Progress offers a counter-narrative. Let’s spread the word!