Two fascinating interactions featuring Nobel Laureates Amartya Sen and Daron Acemoglu shaped a diverse nature of conversations held over a week in panels and lectures organised as part of the recently concluded LSE Festival: Visions for the Future at the London School of Economics, U.K.

While Amartya Sen, now 91, spoke at length about the need to expand ‘knowing’ in the discipline (and its practice) of economics through a more widespread embracement of ‘doubt’ as against ‘certainty’, which helps build curiosity and a quest for interdisciplinary pursuits amongst economists to help understand, address issues of social and economic policy, Daron Acemoglu, the other Nobel Laureate, in his talk, gave a more stark and unapologetic diagnosis of the crisis facing liberal democracy.

Sen emphasised on a greater need to understand the growing concerns emerging from growing cycles of misinformation, disinformation, amidst existing asymmetric information that often preconditions thought and policy-action by not just state-actors, but also academics and those aware of contemporary issues.

The need to divorce one’s thinking from not being too narrowly focused

Universities in this regard have a particular role to play, according to Sen, in understanding and addressing these issues while continuing to contribute to science and reason – given ‘new’ knowledge emerging from an overload of information-providing tools, including artificial intelligence (AI). It will impose a ‘differed’ understanding of most critical issues, offering a challenge to existing debates of critical thought and reason.

The other critical insight Sen offered in his lecture and panel remarks was on the need to divorce one’s thinking from not being too narrowly focused – which sometimes disciplinary contours and methodological individualism promote, especially while studying issues of our lived experience and realisation: from say, poverty to inequality to social justice.

There needs to be a broad based, multidisciplinary focus in looking at even core economic issues as part of the political, social, geographical and anthropological questions they are concerned with (an effort we have also been consciously trying to institutionalise and curate through interdisciplinary and collaborative work at IDEAS here).

While economists are good at ascertaining the relative cost of things, according to Sen, on say, how renewable energy can be made more ‘affordable’ and ‘accessible’ through achieved cost-based efficiency, economies of scale, allowing firms to maximise innovative capabilities and scale their production capacity over time, these interventions have a critical role in shaping our national debates while ensuring energy security for all, especially in the developing world.

The rise and fall of the "industrial-state compact

Acemoglu’s own lecture and talk had a lot to offer in terms of understanding the political economy landscape in which contemporary realities are forcing scholars to rethink concepts that no longer operate in those buckets of axiomatic (narrow) reason.

His beginning at the lecture, drawn from the decadal insights on liberalism from institutional political-economic theory, was straightforward in stating: liberalism is weakening because it has structurally alienated the working class- on economic, cultural, and political grounds.

He explained this by outlining the rise and fall of the "industrial-state compact," as understood in the postwar configuration, when high-speed economic expansion was accompanied by broadly shared prosperity.Mid-20th-century European and American mass-production technologies, say, which required high labour inputs and therefore created blue-collar employment, drove wages higher, and maintained strong unions.

More significantly, according to Acemoglu, these unions ensured self-governance not only in the workplace but in the broader democratic universe as well. And, a central vehicle of legitimacy was thus created, whereby: citizens enjoyed autonomy in the form of work and political engagement. But this compact or arrangement was not guaranteed.

The watershed moment, Acemoglu argues, was the development of post-industrial economics and the advent of digital technology – numerically automated machine tools, software for offices, and robots that enabled businesses to produce more without adding more employees.

Automation took over the low-skill, routine labour which for long was at the heart of working-class participation. And, hyper-globalisation drew labour out of rapidly growing industries like manufacturing and into slower, more education-driven industries like health and education – effectively disconnecting low-education workers from new labour demand.

Acemoglu further added that as these rapid technological-changes widened existing levels of inequality, a political transformation then followed.

The college-educated elite who were once politically fragmented, came together behind centre-left parties, and blue-collar voters began defecting to the right. This transformation was not merely income-based but value-based as well, as there was a widening chasm in values. College graduates, having been shaped by decades of college and insulated urban spaces, started to embrace more cosmopolitan and liberal values. Their cultural attachments were no longer founded on the same customs or communal experiences as the communities they came from.

A generation of educated elites alienated from preferences of working class voters

This split, according to Acemoglu, created a generation of educated elites who, even when advocating for redistribution, implemented policies aligned with their own technocratic tastes frequently uncorrelated with working-class voters' preferences and wants. Acemoglu implies that while in the United States, Democrats ideologically would prefer to reduce inequality, their favoured policy tools e.g. means-tested welfare, targeted credits, or carbon pricing tend to alienate or are unintelligible to the very voters they want to assist.

One of the critical points made in Acemoglu's lecture was on the subject of condemning the elite drift towards "top-down liberalism" – an effort, he argued, aims to make society better by imposing values rather than institutional engagement.

"Asking communities to have the same values is a losing battle," he cautions.

Instead of encouraging solidarity, this will only engender resistance. The intolerant cannot be educated out of existence; when liberalism is boiled down to technocratic condescension and cultural disdain, it loses its democratic aspect. These pressures, Acemoglu contends, are not American and British alone.

Populist authoritarianism in Turkey, India, and Brazil finds its strength in the same cleavage: cosmopolitan, internationally connected elites against provincial communities isolated from the political centre.

He remembers Erdoğan's 2007 speech in which he spoke as the representative of "black Turks" against "white Turks" – a point-blank rhetorical reversal of Western elite self-image. In these nations too, liberalism's identification with technocratic rule, cosmopolitanism, and market-first polices has neither given voice nor dignity to the majority.

So what is the remedy?

Acemoglu provides what he calls a need to embrace "working-class liberalism": a reimagination of liberal democracy based on self-government, local initiative, and good work.

This is not an idealisation of the past but a reconsideration of the institutional bases of liberalism. Liberalism can only endure if it ceases to be an elite consensus and becomes a pluralist coalition – one that is genuine in its commitment to community practices, respectful of cultural diversity (including views it does not share itself), and reorients economic policy to the creation of work and participatory democracy.

Technology is at the center of the argument here.

Acemoglu is severely critical of the "abundance" thesis of authors such as Ezra Klein and Derek Thompson that AI will cure political stagnation by making everyone rich. AI productivity improvements, he argues, are narrow and biased.

More menacingly, AI is already being deployed in labour-replacing applications, concentrating economic power in the tech monopolies Google, Microsoft, and Nvidia. He warns against relinquishing control of technology to market forces and executive power: "Humanity has not seen corporations as powerful as these before."

Instead, the Nobel Laureate promotes an AI agenda for workers – in which the digital technologies augment, not replace, human labor at every educational level.

He demands diversifying avenues to skill building beyond four-year college education, but still unattainable or irrelevant to too many. Community colleges, vocational schools, and apprenticeship programmes must be reshaped to serve a labour market driven by, not excluded by, digital technology.

The final test, however, is political, a concern where both, Sen and Acemoglu, in different ways, find a common thread of argumentative cohesion.

Liberalism without a foundation in the working class is impossible to operate

In much of the writing, Acemoglu (and Sen in his own way) agree that "The sins of the last 40 years (in disciplines of social science) are not just sins of commission, but sins of omission,". Acemoglu here says that political elites – on the center-left and the center-right-did not negotiate the effects of technological change and somewhere academic ideology too became increasingly polarised in this regard which didn’t help to enable a bridge between warring political factions.

This divide relinquished control over how innovation would be defined in the public interest, and in doing so, alienated the very constituencies that had comprised liberalism's backbone.

Acemoglu felt that liberalism without a foundation in the working class isn't just in danger – it's impossible to operate. Rebuilding that foundation means building institutions that confer dignity, not welfare alone; respecting community, not just individual rights on their; and reconstituting a ‘new’ form of self-government, not just by representation but through a more inclusive, multidisciplinary approach.

Sen too is quite conscious of this aspect, while emphasising that the realisation of any such process will require more collaboration, cooperation amongst all those concerned with these questions in creating their vision and purpose for the near future.

The author would like to thank Geetali Malhotra from CNES for her contribution and insights shared in this column.

Deepanshu Mohan is a Professor of Economics, Dean, IDEAS, and Director, Centre for New Economics Studies. He is a Visiting Professor at London School of Economics and an Academic Visiting Fellow to AMES, University of Oxford.

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