Visions for the future with Daron Acemoglu
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Welcome to the LSE Events Podcast by the London School of Economics and Political Science. Get ready to hear from some of the most influential international figures in the social sciences. Good evening. My name is Larry Kramer. I'm the, for those who don't know, I'm the President and Vice-Chancellor here at LSE. And it's my pleasure and honour to welcome you to this very special event, which is part of the LSE Festival.

As you likely know if you're here, the theme of this year's festival is to explore visions for the future. That includes changes to be wrought by new technologies, by cultural and demographic evolution, by ecological pressures from things like climate change, by population growth or population flattening as the case may be, and much more. One area in which we're especially pressed for a positive vision for the future is the form and nature of governance and government.

So liberal democracy emerged as a possibility in the late 18th and early 19th centuries. Its spread was slow and subject to fits and starts. It was for good reason that Abraham Lincoln's famous Gettysburg Address framed the American Civil War as one asking whether government of the people, by the people, and for the people shall not perish from the earth, because at that moment it looked like it might.

But it did survive. And in the 20th century, it grew and expanded and spread. And in 1900, only 10 countries with less than 10% of the world's population had democratic governments. By 2000, that number had grown to 120 countries and 55% of the world's population.

This century so far has been a little less hospitable to democratic governments. As of last year, 2024, the number of democracies was down to 89. In countries with barely more than a quarter of the global population, more striking, only 15% of the people of the world now live in nations that can be classified as liberal democracies. Now, why that should be so is an interesting and important question, and one about which I suspect everyone in here has a view. It is nevertheless a puzzle.

Because liberal democracy and liberalism generally have, by any conceivable measure, been extraordinarily successful in creating the conditions for modernity in the world's advanced economies. While never perfectly realized, it has enabled enormous progress in improving the material conditions of people's lives, respect for the rights of minorities, openness to new ideas and cultures, and a voice for citizens, all achieved in ways unimaginable in earlier historical periods.

Yet despite that, liberal democracy appears to be flailing and with an uncertain future, particularly in the places where it is oldest and has been thought most deeply established and ingrained in popular political culture. So what has gone wrong and how might we fix it? Is there a future for liberal democracy and liberalism and what might that look like?

To help us think through and answer such questions, and I say this underscoring that I am not being hyperbolic here, there may be no one in the world better than tonight's speaker, Daron Asimoglu.

To explain why, I'll start by checking the usual boxes one covers in these sorts of introductions. Dairana Samoglu is an Institute Professor of Economics at the Massachusetts Institute of Technology, where he is also faculty co-director of MIT's Shaping the Future of Work initiative and a research affiliate at MIT's newly established Blueprint Labs.

He's an internationally renowned expert on such varied topics as political and economic development, inequality, institutions, social policy, and the social consequences of technology. He's published, I want to say depressing for me, but at least an astounding number of books and papers.

Including a few that I bet most, or many at least, of the people in this audience have read, including Why Nations Fail. That, for me, by the way, was the first book I read when I started at the Hewlett Foundation and knew I was going to work on development issues. Just is the go-to piece. The Narrow Corridor, which explores how liberty survives between state power and social resistance. And Power and Progress, his most recent book, which examines what it takes to ensure that new technologies actually improve people's lives.

Derone is also a member of every learned society you've ever heard of and has won virtually every honor in his field, including the Clark Medal and, of course, last year's Nobel Prize in Economics, which he shared with his longtime collaborators, Simon Johnson, who I think is out here somewhere. I won't make him raise his hand. And LSE graduate James Robinson. Thank you.

Speaking of LSE graduates, James was not actually the only LSE Connected winner last year. By the way, Daron earned his master's here in 1990 and his PhD in 1992, which are in fact undoubtedly the finest achievements in his life. LAUGHTER

Who needs that silly little prize? None of those things that really fully captures why Daron is such a well-respected and I dare say beloved member of the Academy. It's also his amazing generosity as a colleague, his openness to challenge and to new ideas and his integrity as a scholar.

As all those of us who've benefited from the opportunity to interact with and learn from Daron over the years will attest, he is a uniquely good colleague, someone always open to new ideas with whom every interaction is an opportunity and a fun one to stretch your own thinking and learn something new, which is what I suspect we will all experience here tonight. So please join me in welcoming Daron Asimoglu. Thank you.

Thank you. It's a true pleasure to be here, and thank you for that introduction, Larry. He forgot to mention one thing, which is that Shaping the Future of Work Center was funded by Larry. Best investment I ever made. So it's fantastic to be here again, and we did not plan this, but...

What I'm going to talk about very much touches on issues that I think the rest of the conference has also explored, which is creating new ideas for the future of governance and the future of the economy. And what I'm going to do is I'm going to share with you ideas from a book I'm working on right now, which will hopefully, fingers crossed, be out May 2026. We'll see. Depends on how much criticism I get.

And it's provisionally titled, we'll find a better title in the intervening year, but it's called Remaking Liberalism. And the reason for writing the book is that I have become convinced over the last decade that liberalism's enormous successes are being overshadowed by some problems. So it does require remaking of some sorts.

but also the last few years have underscored these challenges, hence the sort of accelerated timeline for writing the book. I think liberalism, broadly speaking, respect for individual liberties and freedoms,

efforts to create rule of law level playing field, commitment to helping the disadvantaged via redistribution and other public investments. So sort of not classical liberalism, but a little bit more the left-leaning liberalism, which I think has been the dominant force in generating new ideas for much of the 20th century, perhaps the late 19th century, is responsible for many of the achievements that

We have witnessed over the last 150 years, perhaps longer, I think if apes could sort of reason with us, they would understand many parts of our civilization. One part that they wouldn't understand is that enormous power is concentrated in the hands of some members of our species, and that power is...

sometimes, for the most part, in functioning institutions, liberal democracies, used for actually helping people rather than what would come so natural for most of our primate cousins. That is a success of liberalism. And that success is even more fantastical because of the three promises that I think were implicit from the beginning in liberalism, especially when married with democracy, have actually been

come true to some extent. Those three promises I will call shared prosperity, meaning that economic growth would take place and pretty much every group in society would get some share out of it. This was axiomatic to many people who worked in the liberal tradition. For example, in the 1840s when Chartists were working for

extending the franchise to the working classes, their motto was universal suffrage is a knife and fork question and a bread and cheese question. So getting the voting rights was very much part of this agenda of creating shared prosperity. Second, drains, or less poetically, public services. Here, I think the

mood is captured by the once poet laureate of Britain, John Beckham, who said, our nation stands for democracy and proper drains, that, you know, getting services to people, which did not exist for the most part in the 19th century, except some episodic periods, even during the conservative-led years of many countries' governments, there wasn't this sort of effort. So that's

That was a very important part of the promise of liberalism. And, of course, voice. Liberalism, as I will argue, is not in conflict with democracy. In fact, liberalism needs and is synergistic with self-government in a way that I'm going to articulate. So these promises, perhaps partly accidentally...

But partly because of the nature of the ideas and the political participation that liberalism and liberal democracy generated came true. So, for example, if you look at 30 to 40 years after World War II in the United States, in the UK, in France,

Pretty much all over the industrialized world, you have rapid economic growth that is associated with wages increasing rapidly. Wages are very, very important, in fact, central for shared prosperity because you're not going to be able to create anything approaching the kind of sharing unless there is a sustained increase in the earnings that people of all sorts of skills are able to make. So that's check, check.

If you look at improvements in health, improvements in education, infrastructure, all sorts of other enabling things, there were tremendous improvements. Illiteracy completely disappeared. Healthcare that did not exist for most of the people, even in places like the UK or the US, became much more widely available.

pretty much all communities became connected via the road system. So it was really the springtime for public services as well, and voice was always contested. Democracy works sometimes, doesn't work other times, but at least there was a general feeling that people were able to participate. A lot of that was about local politics. Local politics is absolutely central, and I think people generally underestimate how central that is, which I'm going to emphasize.

Today, as Larry already prefaced, we live in a very different era. If you look at surveys all across the world, especially in the UK and the US, by the way, and especially the youth, are much more negative towards democracy than they have ever been. Many more people say authoritarian regimes might be better than democracy, or there may be reasons for restricting people's voting rights or participation, something that you didn't really see in much of the West before.

As Larry said, the number of democracies which kept increasing, reaching about two-thirds of the world's population after the fall of the dictatorships in South Europe, has been reversed for the last 15 years. And now many democracies are at the brink, and the number of democracies is as low as it has ever been for the last 40 years. But more importantly, and I think this may come as a shock to some of you,

But my view is that right now, new ideas are coming not from the liberal side, but they're coming from the anti-liberal right. If you look at ideas that are spreading and articulating new ways of organizing society, which many of you, as I do, find very unattractive, they are the ones that are getting traction and attention.

Part of the reason why we need to have this conversation is I think it takes an idea to beat an idea, and just the old version of liberalism I don't think is enough. And part of the reason why it's not enough is going to be the heart of my argument, which is that liberalism failed to adjust to being the establishment. Many of its successes were either when it was in opposition, it forced change, you know, people like Bismarck,

did not introduce the welfare state and rights for workers because they believed in liberalism, because they were trying to resist liberalism. And when it was first coming to power and dealing with major crisis, including the rise of Nazism, fascism, communism, et cetera, for example, with FDR, as well as the Great Depression. But once it became the establishment, I think it did not adjust to being the establishment. But more importantly, it did not adjust to what I'm going to call the post-industrial world.

So before I'll tell you that story, however, I want to take a few minutes and I want to sort of give you my perspective of why liberalism worked. And that has two elements. One is philosophical. The other one is practical politics. In terms of the philosophical, I think the

Key ideas that are inherent in at least some lines of thinking in the liberal tradition, especially the ones that some philosophers call the republican tradition, is that liberalism is about individuals making choices, but then interacting with their community in especially sharing those ideas and working together.

So the reason why I put the emphasis on local government a second ago, because that's just one aspect of that. So to put it a little bit more starkly, I think a lot of what we do is about knowledge acquisition. It's not just techniques. Techniques are important. Science is important. It's critical. But a lot of what we do is actually social adaptation. When I started with the apes, that's about social adaptation.

the way that we live in tremendous ways many times, going from hunter-gatherers, small bands, to big empires, to small city-states, republics, nation-states, multinational empires, and so on and so forth. And in each case, and with each new technology, with each new change, with each new demographic or globalization-related evolution, we have to adapt.

And that adaptation is about knowledge acquisition. It's a social knowledge that we acquire, and that is acquired by individuals making choices and then sharing that information with their communities. And communities are very important because by the nature of having a solidarity, meaning mutual respect,

which comes from a shared history and shared trust, they create the pathways for that information to be distributed and to achieve much bigger thing that you can do just by your own learning. But there is one other element, because a lot of the social adaptation, when we're talking about science, perhaps this may not be obvious, but when we're actually talking about social knowledge, social adaptation, this is not something you can do individually most of the time. Social adaptation is a group thing. So actually it is the communities themselves that need to engage in experimentation.

And so these two elements are, I think, the secret sauce of liberalism because liberalism is the set of ideas that encourages that individual choice, that individual organization in communities, the trusted sharing of information and the communities via their self-government and local organization

making different choices. And you see, once you take this perspective, communities being homogeneous is not actually a good thing. Communities need to be heterogeneous because if every community is a cookie-cutter version of each other, they will not make different choices and the community-level learning will not happen. So diversity of communities spanning the full spectrum is actually not a weakness, not a problem, would be a strength. Now,

The conclusions that follow from these observations are also very straightforward. Liberalism should stand for democracy.

experimentation and freedom, freedom of expression, freedom of thought, obviously, but much more than that freedom of action. Economics, for example, is one of those spheres where freedom of action is very important. You cannot understand the consequences of different actions without actually taking them. Firms cannot plan just in their thoughts what actions they're going to take. So the market system, under the right set of regulatory and institutional principles,

is actually ideally made for this. So the experimentation is very much married with a market system. And market system is actually when liberalism has had its successes.

being part of it, and especially the self-government of communities, both as vehicles for their own experimentation, for information sharing, but also as the pathways through which national level democracies are based and arbitrary power can be constrained is very, very important. And third, economic growth. Shared prosperity already bakes in economic growth, and I think one of the most inspiring things, at least to me, about liberalism was that its belief in progress. Not inevitability, but

possibility of progress. And I don't think we can really have progress where we remain stationary, our knowledge remains stationary, what we produce and how we produce them remains stationary. So we have to move forward with constraints, environmental constraints, social constraints, sustainability constraints, but we have to move forward. And I think that was part of liberalism. So I think that's the philosophical part, but all of these things also became a reality. They became a reality because those actually made sense. So building democracy from the bottom up

And with liberalism's idea, allowing people to exercise their freedoms and within a market system for the economic freedoms to come through and economic growth as the glue that's going to sort of keep the system or give people to buy in for the system, I think all sort of worked out. So there is no surprise that liberal democracy or democracy in general became identified with these promises of public services, voice, and shared prosperity. Now,

Of course, anything that I think about, I instinctively also think about the political economy of it. So the question is, how did the political economy of this work? So that has two elements, the economics and the politics. And I think the way that this worked during the, say, first half of the 20th century in small steps and much more so in the decades following World War II, if you want to give it a name, I would call it an industrial compact.

And the industrial compact was based on firms introduce new technologies, new ways of producing in order to reach bigger markets. So the market economy was very important. But in being able to do that, especially produce for the mass market, they also need more labor. As they require more labor, that increases wages and that creates the pathway towards shared prosperity.

There's no necessity that this pathway would work, so the self-government at every level was very important. For example, unions were critical because unions made sure that the employers couldn't use other methods, for example, coercion or short-changing labor or monopsony power in order to get the labor they needed. And self-government also emanating to the democratic level was very important, for example, for those public services to be delivered.

I think the industrial compact was reaching its apogee with economic growth being so rapid, and the conditions at the time, for example, the fact that there were new technologies to be spread, there was the beginning of mass production, all of these were important elements of that. The failure, or one very important part of that failure, I think starts with the era of post-industrial economics. And what I'm going to

have in mind with that is the introduction of digital technologies. And I don't want to explain everything with digital technologies. There were other things related to globalization, deregulation, etc. But I think digital technologies play a very, very important role. Digital technologies did a couple of things at the same time. The first one is that by their nature, early digital technologies were very complementary to more skilled, educated workers. So

They started creating a wedge between what the economic opportunities were for, say, college-educated workers, which were a small minority in the 1950s, 60s, around 15% of the population in the United States, for example. But there was already one divergence between two big blocks, the less educated and the more educated. But more important became how you could use digital technologies for automation.

Once you start doing things like numerically controlled machinery, software systems for office work, and especially robotics and other advanced automated machinery, now you are severing the link that I emphasize as a central part of the industrial compact. Now firms can produce more, but they don't need to increase the demand for labor, especially demand for low-educated workers, for example, who would work for manual tasks or routine tasks in offices.

So this is the period where you see inequality exploding and the lower education parts of the workforce in the United States and other parts of the industrialized world not keeping up with it. There's another very important part, and this is going to play a role when I come to the solutions as well at the end, and those who have studied economics and economics

a wonderful institution like the LSE know about it, Baumol's cost disease. Meaning the fact that not every sector has the same productivity growth. And since people want to have a balanced portfolio of consumption, the economy reallocates labor away from faster growing sectors, which tends to be more manufacturing, towards slower growing sectors such as healthcare, education, and other services. But here is the catch here.

The labor that's shed from manufacturing was manual labor. The labor that was needed in healthcare education was highly educated labor. So the bone marrow cost disease plus globalization have added to this divergence between the fortunes of the educated and the uneducated. That is the post-industrial economics, and I think that would have created a small crisis for liberalism or liberal democracy, definitely for the industrial compact. But I think the big crisis came because post-industrial economics was

of course, in a classic political economy fashion, than was coupled with post-industrial politics. And the post-industrial politics is very much the rise and the divergence of the college-educated as a

body that starts viewing itself as a distinct from the rest of society and also cutting, severing its links with the rest of society. So in other words, what I'm saying is that we, people like us here, very globalized, highly educated people are, I think, quite a big part of the story of the failure of liberalism. In countries like the United States, the United Kingdom, status follows money. So as the educated both became richer and more numerous, the

their status also started increasing. And that status, and they're also changing values, and changing values is very important because actually what do the educated do? We go and study for many years in higher education institutions which have a certain set of values, and we start sharing those values, and those may be very different from the rest of society or with the communities that we come from. Those have created, started creating a number of tensions. One part of that tension is very easy to see, which is that...

the communities that used to be much more mixed in terms of education started sorting itself. So the educated now predominantly marry each other, socialize with each other, live in their own communities. They have very different consumptions. If you look at their experiences, they're completely different. In World War I, sorry, World War II, in the United States, I don't know how it is in the United Kingdom. I should check that. Actually, the college educated served in the military more frequently

were more likely than the less college-educated. By the time the Vietnam War had come, it had completely changed. So the college-educated essentially didn't go to the Vietnam War. It's all the lower education. But around the same time, you also see a big divergence in their values. So before, people were answering questions about

all sorts of social things in very similar manner, you see a bigger divergence. So this is very important in part because around the same time, the political power of the educated started increasing.

And it started increasing in a very surprising manner because if you look into the data in the 1960s, 70s, 1980s, there's a clear divide. Those who are college graduates vote for center-right parties. Those who are not college graduates vote via unions, sometimes part of the unions, but for a variety of reasons, more for central-left parties. The labor government was...

were always brought in with the votes of working class people. The same thing in the United States. If you look into the 1940s, 1930s, 1920s, the Ivy Leaguers in the United States, those with the most prestigious educations, they were pretty much all in the Republican Party. Look at it today, they're all in the Democratic Party.

So there's a complete reversal of which parties stand for the educated and which parties don't stand for the educated. So it's now completely different. The college-educated everywhere vote for the center-left, and those who don't have college degrees vote less and less for the center-left. But it's even more than that. If you look at their policy preferences, there's a clear divergence. So everybody that votes for the Democrats, my guess is the same would be true for labor here,

has some commitment for redistribution and reducing inequality, but the methods they want are very different, and guess which ones the Democratic Party chooses in the United States. It chooses the ones that the educated want. But then when the educated become so powerful, it becomes quite important who they have solidarity with. Perhaps if they lived in the same communities and they had the same values and that they had the same experiences as the manual workers, they would internalize their plight. But by this point, they didn't.

So this divergence in political power was also coupled with a divergence in policies that they favored...

and less communication and less understanding between these different groups. Of course, these are constructed groups. Not everybody in the college group is the same. Not everybody in the non-college group is the same. But in fact, the very fact that these have become groups that around which a lot of the economic and social things are discussed is indicative that there are some commonalities in between these groups.

But actually, to understand the full picture of how we have come to what I see as a crisis of liberalism, we need to dig a little bit deeper into the heterogeneity within the college-educated group. So the college-educated group actually has a big heterogeneity. In the United States, this is very clear, but it's true in other industrialized nations as well. There's a group

for lack of a better term, I don't like this term, let me call it for now, if you have suggestions, give them to me. The cognitive elite, the very top who graduate from elite institutions such as LSE, Harvard, Stanford, with very specialized skills, like the best programmers, the best doctors, the best lawyers, and they go on to have amazing earnings, and all of the social status test goes with it. In the United States, if you look at men, for women it's a little bit different,

All of the increase in the earnings of college graduates between 1980 and 2014 come from the postgraduates. Actually, those men who have just a college degree don't have their real wages increased. So the rest who are not the college educated, again, I don't know what to call them. Let's call them the mass college educated. They have the same aspirations. To some extent, they have the same motivators for them to go into education.

to get the higher status, higher capability, higher powered jobs. To a large extent, they're not achieving the same heights as the cognitive elite. And if you look at the values, there are also big differences. So if you ask, for example, people in Silicon Valley in the United States, which is one microcosm of the cognitive elite, they are much more pro-market, they're more anti-redistribution, they think success is very much merit and profit,

And they have a number of other more right-leaning ideas. Whereas if you ask people in the education sector, public administration, et cetera, they have very different values. So in some sense, this could have been the beginning of a different kind of coalition with parts of the educated group forming coalitions with the working class.

But at the end, I think what has happened is that with the growing status of the educated group, and I think the tech sector here plays a very important role as an amplifier of these trends, the educated came around the agenda of cultural liberalism. And cultural liberalism, I think, has a natural appeal because those are the values that are generally shared between the tech sector, which is very global,

It's very science-driven or technique-driven. And everybody who goes to college infuses some of these values. The problem is that those values were not shared with much of the rest of society. So there is much greater diversity. And that's a dilemma of liberalism that always existed. How to deal with the education problem? People who don't want to get educated, how do you educate them? But more importantly, how do you deal with the intolerant? Do you tolerate the intolerant? What are the limits of toleration?

Well, I think this new coalition wanted to have a much tougher line on this. But I think in a way that at the end doesn't work with the nature of liberalism, because once you try from the top down to change the values of communities at the bottom, you are damaging the communities and you are destroying the basis of self-government, which is so important for liberalism. And even more consequentially, perhaps you're going to create backlash.

So I think that's the basis of the crisis of liberalism. So one number in the United States, when I saw it, I couldn't believe it, is that almost 90% of people in the recent surveys say that politicians...

do not care for what they think or people like them think. So this is, I think, a consequence. So is the fact that only 10% of the people trust the Congress or courts or the media in the United States. There's some misinformation. There is some exploitation of existing discontent by cultural entrepreneurs, especially from the right. But I think this is reflecting something of this very important backlash.

So I think the basic idea, and I don't want to go on for much longer because I want to leave time for Larry to disagree with me, is to create-- - They're the ones who are gonna-- - Okay, all right, okay, for you to disagree with me,

is to create what I would like to call a working class liberalism. A liberalism that actually gets buy-in from the working classes. So not a liberalism that is so centered on the educated, much more about communities and much more about self-government at the community level. It's actually very interesting because if you go and read the books that are written, that were written in the 1980s and 1990s about multiculturalism,

They were about immigrant communities or ethnic communities in places like France, United States, United Kingdom. What they demand, rightly, is allow communities of very different cultures of immigrants to have their own traditions and have the ability to participate in politics within those elements.

But funnily enough, I think in much of Europe, that same thing has not been granted to working class communities. So I think the liberalism that we need is one that actually needs to create that, to generate that broad buy-in at the community level. And I think there are two elements that will make that feasible. All of these communities want self-government. Actually, a lot of the discontent, a lot of the backlash is about the feeling of lacking self-government. That should be

part and parcel of any liberal project. Second, they want jobs. Shared prosperity cannot be achieved without anything other than jobs. So this has to be a liberalism that is much more tolerant to the diversity of communities, especially working class communities. Different religions, different traditions, different prejudices, fine.

takes their cultural concerns seriously, but also prioritizes economic growth, especially job creation. That, of course, intersects with another set of themes, which I'm not going to talk about, but that means we have to use technology in order to create jobs, in order to actually build skills that are diverse enough, not just college-educated. The future is not going to be one, and it wouldn't be a happy one, in which 90% of the population goes to college. Sorry.

I think we should find other ways of building skills via new versions of what the United States did via community colleges. We should have better training possibilities, but we should also have technologies that can create jobs because the future is also not going to be

It won't be a happy future and it certainly will not be a democratic future if 50% of the population doesn't generate any income and has to live on transfers. So I think it's actually not a choice, but it's an imperative to create something like what I'm calling working class liberalism. Okay, I'll stop here and I look forward to Larry's and your comments and questions. So we'll open the floor to questions from the audience, both here and online. Those of you here in the theater, just raise your hand.

That was good. And someone will bring you a microphone when you're called on. Please just give your name and affiliation and pose one. Please try to make it a short question. Those of you online, by the way, can submit your questions through the Q&A feature at the bottom of your screen and over...

Please also let us know your name and affiliation, and we're especially keen to hear from students and alumni. And just so everybody knows, the event is being recorded and will hopefully be made available as a podcast subject to no technical difficulties. So let me ask, I'm going to ask just one question, which is just, especially if you think about the political dynamic you're trying to describe, I was just curious, you never mentioned the word race once.

So just say a little bit about, because I think most people would think that was a really profound factor in shaping where we've gone. So just if you could say a little bit about that. And where are the microphones? I think that's a very important part of it. And it's one of the issues that we have to grapple with because some of the community values will not always be those that create the best content.

pathways for racial integration. So one of the mistakes that I think many traditions have made, I think libertarians

and extreme progressives, is to deny trade-offs, that everything is a solution. There is a best way, and everything will follow from it. I think liberalism didn't have that. There are major trade-offs, and we have to jointly work out where the limits are. So I think, for me, the limits would be if a community completely abridges the freedoms of its members,

and does not even allow them to exercise the most basic freedoms, freedom of thought, freedom of expression, and freedom of movement to move out of the community, like, for example, the Amish do in the United States, that's not allowed. But if a community has values that we don't like, that's completely allowed. So I think forcing communities to have uniform values is a losing proposition. Now, then you have to find the right trade-off of how to make policies work.

within that scheme. So in hindsight, now at the time, I thought, or not at the time, I wasn't around at the time, but long ago, I thought busing was a great policy in the United States. I no longer do so because I think busing really puts a very big strain on the community's values in a way that's going to create a backlash. And it did. Hi, I'm interrupting this event to tell you about another awesome LSE podcast that we think you'd enjoy.

LSEIQ asks social scientists and other experts to answer one intelligent question. Like, why do people believe in conspiracy theories? Or, can we afford the super-rich? Come check us out. Just search for LSEIQ wherever you get your podcasts. Now, back to the event. Okay, we have a question there, and...

So go ahead. Thank you. Daniela Gabor from SOAS, University of London. As a fellow economist, I want to congratulate you for the courage of trying to theorize politics. It's quite brave. And I have two questions related to that. First, the political theorist Wendy Brown described the exhaustion of liberal democracy as a viable political form because of neoliberalism and its appeal to markets and to the expansion of markets as an entrepreneurial self-governing mode.

Why didn't we hear anything about neoliberalism tonight? Is it not part of your categories or you just don't read the political theories? And the second part of the question has to do with the argument that you made. So if I understood correctly, in your account, liberalism lost its appeal because it lost the working class because it wasn't able to stop

labor-saving technologies from being implemented by capital, and your solution is for liberalism to transform itself into working-class neoliberalism by how exactly? Thank you. Okay. So actually on neoliberalism, you know,

Larry's project for which we got funding was, what was it? Rethinking Alternatives to Neoliberalism. Just Rethinking Neoliberalism. No, it was Beyond Neoliberalism. Beyond Neoliberalism. Or After. It had many names. Reimagining Capitalism. And so perhaps Larry is now distressed that I'm Rethinking Liberalism, not Neoliberalism. So neoliberalism is a broad tent.

I'm not sure I like the label, but the deregulation movement that really shifted power from labor unions and towards big corporations was a very important part of it. But I think in the grand scheme of things, it did have very important consequences. I think some of the technological developments and the union's inability to resist those technological developments would not have happened the same way without Reagan and Thatcher. But if you look at Reagan and Thatcher, they were still within the liberal tradition.

So every element that I said here, Reagan and Thatcher would at least

on the face of it would have agreed. So individual rights, creating rule of law, progress, and they would say some degree of help for the most unfortunate members. So there is disagreement about how you achieve that and how much help. So they would give minimal help, whereas Labour or Democrats would give much more. But so in that sense, I think the challenge that we have today from some of the anti-liberal thinkers is very different than neoliberalism. And in terms of...

crisis of liberalism it's it is labor-saving technologies and it is the change in politics so both of them need to be dealt with and i didn't have time to talk about as i said i'm referring to the ideas from the power and progress book there which is that we have an ability to use digital technologies in a more pro-worker direction but that can never happen unless politics changes

So in some sense, the sins of the last 40 years, some of them are sins of commission, but many of them are sins of omission. So essentially, the educated leaders that rose to power completely ignored the plight. So they didn't worry about what digital technologies were doing to working classes, to inequality, etc. So that's the part that will need to be reversed, but that has to start from politics and then trickle down to the direction of technology and economics.

And we have the microphones there. Yeah, please. Hi, my name is Roberto. I'm a visitor to LSE. My field is technology, not social science. I was here the other day on the London Consensus presentation, and I was stuck by a community of faith that was spoken about.

I heard here today again about community. My view is that the social science...

scholars have made a poor work on defined community because it's a difficult theme, it can be taken aside. So I think that a lot more effort must be done on that. Yeah, absolutely, 100%. And I purposefully did not define community because there are two definitions. One puts shared history as

centerpiece, so faith communities of faith communities, ethnic communities, communities of working class people who have lived in the same town, those would be communities. But then you can define people who have the same values as a community, a community of scholars or a republic of letters as the people who were discussing their ideas. I think both of them have some elements of community, but I think shared history or at least enough trust is central, at least the way that I'm using it.

So let's take a question from online. This is a question on demographics. Given that we're seeing population constraints, decreasing birth rates and below replacement rate, as these constraints become more pronounced in Western nations, what does this mean for the future of liberal democracy? And how does your new idea of liberalism address the impact of an aging and shrinking population? So I think actually declining populations will be helpful in two ways. One is that the

and birth rates are going to create labor shortages. So creating higher wage and enough jobs will be easier with labor shortages. Second, I think one of the big areas in which all of these cultural issues are coming, I didn't have time to talk about it, but everybody I'm sure thought about it themselves, is immigration. So immigration is

is the issue that has really created the big divide between the educated and the uneducated. And that's why the tech sector is very important. The tech sector was the linchpin that held the view that immigration is completely okay because economically as well as socially, the tech sector was very pro-immigration. Now, I think as population declines, the attitudes towards immigration are going to change because...

many countries, especially in Europe, but to some extent even the United States, will have labor shortages. So then it will be easier to reach some sort of agreement on immigration that was much harder when there isn't as much shortage of labor. So let's hear from youth in the back, all the way in the back there.

Hi, I just had a question about what does the shift to working class liberalism and local governance look like? Does it mean a shift more towards the right? You mentioned the kind of divergence between an academic elite, which are predominantly left, and the kind of perhaps more right-wing working class elite.

So does that mean that you expect to see a shift to the right wing with local governance and is this a necessary thing to preserve? Excellent question. I don't know. I think it will be whichever party makes an effort here. So the commitments that I'm talking about are more naturally at home with the center-left.

So especially creating a more competitive environment and helping the more disadvantaged. And unions, if they are going to play an important role, are still, you know, it's changing, but are still closer to the center left. On the other hand...

Now the working class, those without, say, with a high school education, are in the U.S. and the U.K. voting much more for the center-right. So I think both parties could play that role. But what we are seeing in the United States is that, you know, the right has been taken over by the anti-liberal idea. So that's certainly, in the United States, it's not going to be the Republicans. In the U.K., in Germany, it may be the center-left or the center-right. And I think that's great because the two parties should compete for this. Andres? Yes.

Thank you, Larry. Great talk, Darren. Welcome back to the LSE. Look forward to reading the book. The story you told is very, very compelling for a country like the US and perhaps the UK. I'd like to hear you...

speculate a little bit on how applicable it is to other countries which are very different where liberalism is also in crisis. You know, liberal values and liberal democracy is sliding back in your country, Turkey, and in India, and in Brazil, and in South Africa, and in Poland, and Hungary, and the Philippines. These are countries which at first, but I want to hear you talk about it, would not seem to meet at least three of your points in the checklist.

You talked about liberalism having promised growth and prosperity. India and Turkey grew very quickly and elected autocrats or people on the far right. Secondly, you talked about what in the US is known as the diploma divide.

Very big deal in the U.S., much less so in countries where the wage premium has been, in fact, shrinking. Last but not least, you talked about this top-down liberalism from elites. Again, much less of an issue in some of these countries, maybe not all.

So how do we take your theory and apply it to these other countries where liberalism is also in crisis? So it's an excellent question. I don't have a universal answer. Some of it actually emanates, you know, if certain ideas, including democracy, is in crisis in the US, UK, France, that spreads. But in Turkey, there are actually strange parallels. So in 2007 or 8, Erdogan gave a speech in which he,

He constructed his own terms, and many of these social constructs are actually partly constructed. He said, in this country there are white Turks and black Turks, and your brother Tayyip stands with the black Turks.

And what he was referring to is the black Turks are the people who live not in the big cities and don't have the education, and the white Turks are the well-educated, westernized, globalized elites. So I think one thing that brings unity between these things is the globalized elites. The globalized elites in every country have more overlap in their values, and those values are perceived, if not handled correctly,

as being top-down imposed. So that was the Black Turks in Erdogan's telling, despite the fact that it's actually patently not true, by the way, because what he's calling Black Turks have sometimes been very dominant politically. But he was doing the politics of grievance. You know, these globalized elites are imposing their values on you. You should rise up, and I am your agent. So he was doing what Trump is, you know, sort of making a mess of.

So I think there is an element of that. And also, in many of these cases, economic growth is much faster in the metropolis. And many of the people who are in the provincial cities, just like in the United States, feel left behind. So those are the small parallels. So we're over here.

Hi, I'm visiting LSE. I'm from Lancaster University. Year three PhD student in marketing. I'm measuring technology shocks and something like this, but my question is really to when you talk about this education or labor reallocation. So there's a voice going around among the younger generation saying that higher education or I'd say higher degree wouldn't really guarantee me a job as expected. It's also happened to me. I've had this thought for a while.

And people are very lost. So what do you think this kind of voice is coming from? And what do you think of the solutions to this? Because in my opinion, I think it's more of like a structural problems. But what do you think, especially at this very...

uncertain times, what do you think will be the way out for younger generations? Well, excellent question. It intersects with the first question on where the future of technology is. But I think there is a sense among some people

that AI is taking entry-level positions very rapidly, and that's going to create difficulties for college graduates today. There is some truth to that, but I think it's much exaggerated. AI is making only slow progress. And I think your question intersects with what I am emphasizing, although I didn't have time to get into it, that I think shared prosperity, as I am defining it, can only be

We can only become a reality if we also start using AI in what I call a pro-worker direction, meaning AI to increase the possibility in formation and capabilities of workers with diverse skills, college graduates as well as those who have craft skills or manual workers or office workers. And that's a pathway for job creation, which I talked about. The challenge, that's not where AI is going right now.

And I think a renewed political agenda will have to prioritize redirecting AI in a way that could be consistent with shared prosperity. So before we go over here, I want to take another question from online. Just give the people online a chance. This is someone who I think heard you talk about trade-offs. How do your ideas on remaking liberalism compare with the abundance recommendations that are now making the rounds from Ezra Klein and Derek Thompson?

So I think the abundance arguments are complementary but very different. So I didn't talk about it, but I share the view that the regulations have become a burden,

But I think that has to be understood within the context of the new post-industrial politics that has emerged. I think what I have two problems with the abundance views, and if I explain those problems, I think it will clarify how they are different, in my opinion, from what I've outlined. First of all, the abundance doesn't have a diagnosis. It offers a solution without a diagnosis, and I think that's not right.

generally good. Now, there is a different version of abundance. There's a book that I recommend very strongly by a gentleman called Mark Dankleman called Why Nothing Works that has a diagnosis. It's about Jeffersonian and Hamiltonian ideas clashing and one becoming dominant during certain periods. I think it's interesting. I don't subscribe to it. I would recommend that book rather than the abundance book.

The second is that abundance is naively optimistic about AI. So essentially, if you read between the lines, we're going to get abundance because AI is going to bring abundance. My view, which I haven't talked about here, is that productivity gains from AI are much exaggerated, at least in the next 10, 20 years. So it's not going to be the solution to all the problems. Yeah, it may well be that if we become all so rich, many political problems will be solved, but I don't think that's realistic.

Thank you Dr. Atumoglu. My name is Sahachini David from Star Holder Consulting. What institutional innovations or sequencing would you recommend to gradually stabilize development in countries such as South Sudan or the Sahel region

or what angles of research would you recommend to explore how best to achieve it? That's a great question. Unfortunately, my focus in this book and in this talk has been much more the West and the industrialized world, but I think there's one implication for the developing world, which is that

I think developing world needs better institutions and it's certainly not a very powerful force, but one gentle force that was useful was if the better, somewhat better institutions, democracies,

and some ideas of liberalism are seen to work in the West, it makes them more likely to spread to the rest of the world. And if liberalism and liberal democracy is in crisis, I think it makes it less likely that they also spread to the rest of the world. Now, I don't think that if I were to think about Sudan or Nigeria or the Philippines, I don't think the elements of the institutions should be a copycat of

of the U.S. I think there are different ways of ensuring self-government, and I think each society's own history might provide different pathways, but I think self-government is very important for all of these countries. So the man in the blue shirt in the back has had his hand up patiently for a very long time. Hi, good evening. I'd like to hear your thoughts on the wind turbine makes the energy, the machines do the work, we can have a better world. I think it's that simple.

I call it bigger caterism. So no question. All right. Well, thank you. I like your view, really. That's okay. I don't know if you want to say anything. I think that

First of all, I don't think it's such an easy future in the near term. So I don't think we're going to be at a situation like that in the next 20, 30 years. And that's, you know, for many of us, our lifetimes are the most important part of our lifetimes. And we can do incredible damage during those 30 years. But more importantly...

Humans may evolve to live under very different circumstances, but right now I think most people wouldn't find dignity, happiness, or a meaning of life if they're just sitting at home and playing video games, or even worse, if many of them feel that they are not contributing anything and there is a small group of machines and entrepreneurs who are doing all the contribution, that would be a very dystopian society in my opinion. Yeah, that's Wally. There's a woman back there with, no, no, in the back with the green jacket on.

Thank you. My question is, we're seeing a rise of national security concerns, or rather resurgence, from countries trying to advance in AI development or interstate conflict. How would these interstate conflict impact internal politics to what you're trying to advance in creating a neoliberal society within a state? Thank you. Great question. I don't know. For some parts of this...

Of course, international conflict would make things much harder because it would bring the worst part of jingoism, of nationalism. And for things like AI and social media, I think both are important elements. You need global cooperation. One of the tragedies right now is that actually the Med...

focus on reaching AGI within the next five years, which is nothing more than a pipe dream, has made any kind of cooperation between China and the United States impossible in the short term. So I think that's the biggest issue I see. Frank van Gansbeek is visiting from Middlebury College.

So how do you see your vision implemented in view of the collapse of the division of power? Secondly, also the collapse of the division of power, the constitutional power. So secondly, also in view of the oligopolies dominating the markets. But thirdly, also surveillance, which again are interlinked. So I think those are all excellent questions. I'm not yet worried about surveillance.

Because even though Google, Facebook, all of these companies have tremendous amount of data, they still cannot process it. So that would be a real concern in 10 years' time, perhaps. But look at what a mess they make of content moderation. So, you know, this is why AI's capabilities should not be exaggerated. So monopoly is a much bigger problem. And I think, you know, humanity has not seen corporations as big, as powerful as Google, Amazon, Apple, Facebook, or

Microsoft, NVIDIA. And they are both shaping the future and direction of technology and creating tremendous social and economic power concentration. I think that has to be dealt with. Actually, interestingly, the United States is now ahead of Europe in trying to take steps, breaking up Google. Let's see whether Europe will follow. And executive presidency.

That's a big problem. And it's not a Trump problem. It had started long before, but it is reaching its apex with Trump. And in some sense, Trump's agenda is really to create a very extreme version, a Schmittian, Carl Schmittian version of executive presidency. Yes, indeed. That is a mortal threat. But that's what I mean by the anti-liberal ideas. In some sense, Trump, if there is a philosopher who Trump is most close to, it's Carl Schmitt. Yeah, right there.

Thank you. Thank you for your talk, Dr. Acemoglu. My name is Fatima. I'm from LSE. I'm a master student. And my question is, from your talk, it seems like the terms democracy and liberalism are kind of interchangeable.

But what happens in places where democratic practices are previous to liberalism? Because actually in many countries, multicultural countries like South American countries, democratic practices are previous to liberalism. So what is the path for those countries when liberalism and democracy don't go hand to hand?

Very good question. And I was trying to, I paid lip service to that. I think it depends on how we define democracy. I think national democracy is very complex. But I believe self-government is very synergistic with liberalism, meaning that I think even in places where some communities have religious or other values that are not very liberal, they

starting from self-government is the path towards more liberal values to develop. The path will be very different and I think my focus has been on the easier cases such as the industrialized world where there is more of a consensus on these things. Yes, indeed, but under us already all race, Turkey, India...

Mexico. I think those are bigger challenges and I don't have the full answer. But I think self-government... But I want to emphasize the same thing I, again, paid lip service to. In the last 10, 15 years, there is this very influential view that has emerged in the US and other countries that there is a fundamental conflict between liberalism and democracy. I do not agree with that. In fact, if you go back to the Republican...

and the very early traditions, it's very clear that self-government and all of the liberal ideas are very synergistic. And I think the kind of liberalism that we should aspire to has to have that. So that's why I sometimes slipped and used liberalism and liberal democracy too interchangeably when I shouldn't have done.

So thank you. I think we're actually at time, although I want to say that last question also was a great place to end what has been, and to the audience, thank you, an incredibly wide-ranging set of questions. So thank you for, I think, what everybody would agree was an incredibly insightful talk. And let's please give the speaker a hand.

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