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Democracy's Revival Linked to Economic Prosperity, Argues MIT Economist

MIT economist Daron Acemoglu argues in his new book that the decline of democracy is deeply intertwined with rising income inequality and deindustrialization in the United States. He proposes rebuilding "working-class liberalism" as a path to strengthen democratic institutions.

Acemoglu, a Nobel Prize winner, posits that a strong middle class and democratic participation historically grew together during the industrial age. However, since around 1980, increased income inequality and the offshoring of production have alienated the working class from democratic institutions.

His book, "What Happened to Liberal Democracy? Remaking a Politics of Shared Prosperity," explores the benefits and challenges facing democracy. Acemoglu advocates for a broad coalition that favors self-government and the rule of law, emphasizing shared prosperity, jobs, and public services.

Acemoglu's previous work, including "Why Nations Fail," demonstrated that economic growth is fostered by stable democratic institutions. His 2019 book, "The Narrow Corridor," highlighted democracy's role in protecting citizens from state overreach and societal domination.

The economist critiques simplistic "social contract" theories, stating that governance in a pluralistic society is inherently complex and requires building rules around shared values. He notes that democracy's tolerance for diverse perspectives, including intolerance, presents ongoing dilemmas.

The post-WWII economic boom, which saw significant middle-class income growth, began to erode with offshoring and technological shifts. The rise of computers, while beneficial, has disproportionately benefited college-educated workers, creating a divide between high-paid white-collar employees and lower-paid blue-collar and service workers, contributing to political polarization.

Acemoglu suggests that "working-class liberalism" can counter this polarization by fostering trust between politicians and workers. While economic gains are important, he stresses that politicians must demonstrate shared concerns and values. He believes that despite challenges like globalization and increased diversity, democracy can still work, citing historical progress in addressing racial tensions.

Acemoglu concludes that democracy is a success and a continuous work in progress, urging against viewing the democratic project as doomed to failure, even in the face of current polarization and complexity.

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