Translators Discuss the New Acemoglu and Johnson Book: Our Thousand-Year Struggle Over Technology and Prosperity

 The joint work of Acemoglu and Johnson was reviewed by the book's translators;

From Technological Progress to the Illusion of Equality

This session has been transcribed by Saeed Dehghani

Watch the session video here

The latest work by Daron Acemoglu, titled 《Our Thousand-Year Struggle Over Technology and Prosperity》, has been translated into Persian by Alireza Beheshti Shirazi and Mohammad Reza Farhadipour. Mohammad Reza Kadivar, on the Jore’eh page, held a discussion about the book with the translators of this book on Thursday, November 9th. A summary of the translators' remarks, with some editing, follows:

Alireza Beheshti Shirazi:

Over the past two hundred years, one of humanity's greatest questions has been: why did some societies progress while others fell behind?

The most immediate cause that comes to mind is technological progress. But Acemoglu and his colleague, in a shocking claim made in this book, reject this presupposition and argue that technology does not necessarily lead to prosperity. For example, the greatest technological event in human history is the issue of sedentary agriculture. Yet these two authors, citing indisputable archaeological evidence, show that this was not the case. They demonstrate that life expectancy decreased by about 30 percent from the pre-agricultural stage to the time after people domesticated plants. Human height decreased by 12 centimeters. Their diet became poorer. From the teeth of ancient human remains, it is clear that after the transition from hunter-gatherer to agriculturalist, their nutrition deteriorated. In other words, technology not only did not bring prosperity, but caused misery. Other examples are also given in this book; for instance, it is often thought that there was no significant technological progress in the Middle Ages. Meanwhile, the book's authors prove that many important technologies we still use today were invented in the medieval period, such as crop rotation.

The Newcomen steam engine, which is said to have initiated humanity's dominance over nature, brought no change in per capita income. This is while certain individuals profited enormously from it.

Alireza Beheshti Shirazi: The approach of the book's two authors is that if the gains from technological progress were shared in society, these same gains would have multiplied several times over.

He initially raised wages from one dollar to two and a half dollars. His competitors complained, but he did not back down, and by raising workers' wages again, he brought them to five dollars. He organized training classes and counseling for the families of his industry's employees so they could have a warm and healthy home environment. The perception was that Ford was a philanthropic person. Nevertheless, when interviewed, he acknowledged that his primary intention was not to do good for his employees; his main goal was to increase his own income. Although some might suspect he was being humble in his speech and claim, Acemoglu and Johnson, with statistics and meticulous reasoning, confirm what he said.

In the most concise terms possible, it can be said: these two authors see the path to prosperity in prioritizing the issue of equality.

Throughout history, “per capita income” has ranged between $350 and $650. For example, Nigeria currently has a per capita income of about $450. This was the state of affairs for a long period. From the mid-nineteenth century, real per capita income began to increase explosively—though only in some countries. The question that arises here is why a country like England saw its per capita income change so dramatically while other countries remained where they were. This is a question that has confronted humanity for two centuries. What is the cause? This book is also an attempt to answer that question.

Mohammad Reza Farhadipour:

What is explained in this book is this: from a millennium ago until now, there has been a struggle between the owners of technology, or the owners of capital, and labor. Such a project may seem somewhat Marxist, but in reality it is not. Perhaps if we heard or read such a statement from Thomas Piketty, we would label him as left-wing, but this statement has been made by an economist in the mainstream of economics who teaches at MIT. His question, in a nutshell, is whether technological progress necessarily brings about greater welfare and happiness, better health, higher wages, and less inequality among individuals, or not? Their argument revolves around how the benefits resulting from technological progress are distributed among the members of society. Statistics and data show that this distribution has been unequal at various junctures in history; they draw this conclusion from examining the Industrial Revolution up to current technological advances. Consequently, the site of struggle is over the proceeds from technological progress. This is the narrative that the book’s two authors have presented.

To explain any claim, we need a theory. The authors of this book also explain their own theory in two or three chapters. The hypothesis put forward in this book is that technology progresses, but this very progress causes some people to lose their jobs.

One of the key points made by Acemoglu and Johnson is that many of today’s employers are not exposed to competition; for this reason, they have no incentive to raise wages. Technology is advancing, but the owner of a factory that utilizes all these technologies has no reason to increase wages, because they are not exposed to competition.

Another important point the book’s authors mention is that wages are usually the result of bargaining, whereas they ought to be influenced by the market.

Based on all these considerations, Acemoglu and Johnson conclude that the chariot of progress does not necessarily benefit labor. So there exists a phenomenon called “technological unemployment.” But do the data confirm this? Yes. Economic data from the United States, as one of the most advanced countries in the world, shows that the lower the level of education of the labor force, the less it has benefited from technological progress. The two authors consider the Ford factory and show that in 1920, when technology had advanced remarkably, the labor force also benefited from this progress; Mr. Ford at that time raised the minimum wage, thereby increasing the well-being of the employees. However, recent data shows that in the past few decades, despite much faster technological advances, the well-being of the labor force has declined significantly.

Everything that Mr. Beheshti Shirazi and I have said so far means that there is a conflict; technology advances but the situation does not improve. This is a contradiction. It is as if a few individuals pocket the greatest benefits. In economics, this situation is called “rent-seeking.” For example, Mr. Ford in the West or Mr. Khayami at Iran Khodro have utilized technology, but the greatest profit resulting from it goes into the pocket of one person. This situation is described as the person having a rent. The problem is here: when we say, Mr. Ford, Mr. Khayami, Mr. Factory Owner, distribute a larger share of this rent among the workforce. It is here that choice becomes important. The choice of what? The choice of the path of technology. The choice of how to use knowledge to improve production. This choice becomes important somewhere. Suppose the three of us in this meeting are members of the Nobel Economics Committee. We have this question: to whom should we award this year’s Nobel Prize in Economics? After a while, an economist who happens to be among our candidates deposits a considerable sum, like one million dollars, into each of our accounts. Under these conditions, we become somewhat inclined to give the Nobel to the economist in question. Or if powerful institutions are influential, we will lean toward them. Let me give a better example: suppose you are going to the stadium to watch football. In this example, instead of having a ticket, the criterion for entry is physical strength. That is, those who have greater physical strength can enter the stadium. Therefore, a limited spectrum of people can enter this stadium. Suppose we change the criterion to beauty. Consequently, what is determinative are power relations. In the book “The Narrow Corridor of Liberty,” the emphasis is on the balance of power. In this way: there is a powerful Leviathan called the state, and society must also have power. These two must create a balance through negotiation. If the state has too much power and society has no power, society becomes despotic. If society is powerful but the state lacks power, anarchy arises. But there is also a third state: the state and society are both powerful, and through this balance of power, the state serves the people. The Leviathan in the service of society. This is called an optimal choice. A similar equation applies here, in such a way that if this Leviathan of technology is in the service of society. If technological choices, which are rooted in the relations of power holders, are placed on a path that increases public well-being, the Leviathan of technology will be in the service of the people. But if this is not the case, a worrying situation will arise. In the words these two authors use: there is one piece of good news and one piece of bad news for the readers of the book. The good news is that how we use science and knowledge depends on the human perspective. But which humans; the people of skill and power. The bad news is that it is the perspective of these very power holders that determines the path of technology. Therefore, the Leviathan of technology and society fall into conflict. The site of the conflict is right here. These two authors warn us that artificial intelligence is moving on a path that we should be worried about. In other words, power holders are using artificial intelligence in a way that does not reflect Mr. Ford’s way of thinking.