Daron Acemoglu argues that liberal politics must reconnect with ordinary workers, rethink its economic priorities and take greater control of artificial intelligence, warning that social media algorithms are also undermining democracy.
Nobel Prize-winning economist Daron Acemoglu has warned that centre-left politics risks losing further ground unless it addresses the economic concerns of working-class voters and moves away from an approach increasingly shaped by university-educated urban constituencies.
In an interview with Bloomberg, the Massachusetts Institute of Technology professor argued that liberal democracy needs a fundamental rethink to remain relevant in an era shaped by artificial intelligence, globalisation and algorithm-driven social media.
Acemoglu, who shared the 2024 Nobel Prize in Economic Sciences, sets out his argument in his latest book, What Happened to Liberal Democracy: Remaking a Politics of Shared Prosperity. The book calls for a renewed political philosophy that places economic opportunity and shared prosperity at the centre of the liberal agenda.
His criticism is directed primarily at the centre-left, which he believes has gradually moved away from the working-class communities that once formed its electoral base.
The growing divide between the centre-left and workers
According to Acemoglu, the transformation of industrial economies over the past half-century has fundamentally changed the relationship between political parties and their traditional supporters.
Globalisation and digital technologies have allowed businesses to expand markets and increase profits while reducing their workforces. At the same time, university graduates have gained greater economic and social influence, shifting the political balance within centre-left movements.
In the United States, inflation-adjusted wages for men without a college degree declined between 1980 and around 2013, despite considerable economic growth during the same period.
Acemoglu argues that this economic deterioration was accompanied by cultural tensions. Working-class communities increasingly felt that their traditional values were being dismissed by socially influential groups, contributing to a political backlash that has benefited right-wing movements.
He does not oppose efforts to tackle discrimination or improve social inclusion. However, he believes that some diversity and inclusion policies were implemented through a top-down approach that alienated communities already struggling with economic insecurity.
For Acemoglu, the challenge is not to abandon these objectives but to build a broader political coalition that takes both economic and cultural concerns seriously.
A new economic agenda for the centre-left
The economist describes his proposed alternative as ‘working-class liberalism’, arguing that governments must rethink taxation and the relationship between technology and employment.
One of his main proposals is to broaden the taxation of capital income. He argues that business owners can often benefit from lower tax rates by classifying earnings as capital rather than labour income, creating incentives that favour investment in machinery and automation over human employment.
Taxing different forms of income more consistently, he suggests, could increase government revenues while reducing incentives for excessive automation.
Acemoglu acknowledges that higher taxes could encourage some wealthy individuals and businesses to relocate. However, he believes that most companies remain closely tied to the countries in which they operate, making large-scale departures less straightforward than often suggested.
He also cautions against imposing wealth taxes without broader public support. Policies targeting expensive second homes, for example, could trigger resistance and capital flight if they are perceived as decisions imposed by one political group rather than the result of a wider social agreement.
Mamdani’s appeal may not extend beyond New York
Acemoglu welcomed New York Mayor Zohran Mamdani’s ability to bring affordability issues into the political mainstream, describing his communication skills and political appeal as significant strengths.
However, he questioned whether Mamdani’s political approach could resonate with working-class voters elsewhere in the United States.
He argued that the mayor’s politics are closely associated with New York’s progressive, university-educated activist community, while some of its central themes remain distant from the everyday concerns of working-class households.
Acemoglu warned Democrats against allowing the party’s political direction to become defined by a choice between moderates and progressives.
Instead, he called for more ambitious economic thinking, particularly on artificial intelligence, combined with a more inclusive approach to social and cultural issues.
In his view, progressive movements have sometimes developed radical economic ideas while simultaneously narrowing the political space available to people with different values. That approach, he argued, makes it harder to build the broad coalitions needed to sustain liberal democracy.
The danger of focusing too heavily on artificial general intelligence
Acemoglu also challenged the direction of the artificial intelligence industry, arguing that the race towards artificial general intelligence (AGI) risks diverting attention from more practical applications.
Although he acknowledged that the adoption of AI has accelerated, he maintained that the widespread use of chatbots should not be confused with the technology’s integration into industrial production and everyday business operations.
He believes that the United States has become too preoccupied with developing increasingly powerful AI systems, while countries such as China are paying greater attention to incorporating the technology into manufacturing and other productive activities.
Acemoglu warned that the industry’s fixation on AGI could become a self-fulfilling prophecy, encouraging talented researchers to concentrate on a single technological ambition rather than exploring alternatives that could improve workers’ productivity and strengthen democratic institutions.
He also criticised the influence of prominent technology executives, including OpenAI’s Sam Altman, Anthropic’s Dario Amodei and Elon Musk, arguing that media organisations give their statements too much attention without sufficient scrutiny.
Drawing a comparison with Donald Trump’s rise to prominence in 2015, Acemoglu said the media’s constant coverage of the former president helped amplify his political influence. He believes a similar dynamic is now emerging around technology billionaires.
Social media algorithms are undermining democratic debate
The economist’s concerns extend beyond artificial intelligence to the structure of social media platforms.
He argued that social media, once expected to strengthen communication and create new communities, has instead contributed to the erosion of real-world social connections.
The problem, in his view, lies largely in the commercial incentives behind recommendation algorithms, which prioritise content capable of attracting and retaining users’ attention.
By repeatedly promoting provocative and extreme material, these systems can intensify political divisions and distort public debate.
Acemoglu believes governments should focus on regulating the algorithms themselves rather than restricting individuals’ freedom of expression.
He also called for a clearer distinction between political donations from individuals and financial contributions made by corporations. While he considers the right of individuals to support political candidates fundamental to liberal democracy, he argues that companies should not be allowed to use their financial resources to exercise the same influence.
Democracy needs a broader coalition
Despite his concerns about political polarisation, Acemoglu remains optimistic about society’s ability to rebuild common ground.
Rather than placing his hopes in a single political leader, he points to the shared sense of fairness that continues to exist across ideological divisions.
In the United States, he highlighted California Representative Ro Khanna and Georgia Senator Jon Ossoff as examples of politicians who combine serious economic debate with an emphasis on political unity.
For Acemoglu, the future of liberal democracy will depend on whether political movements can move beyond narrow ideological divisions and reconnect with the economic and social concerns of a wider electorate.
He concluded that the debate over artificial intelligence must also become a democratic one. If AI is set to transform almost every aspect of society, he argued, decisions about its development cannot be left exclusively to technology executives and major corporations.
Public participation in shaping that future, he believes, is not simply a political choice but a democratic responsibility.
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