Miguel Angel Garcia Vega Madrid - 11 Nov 2024 - El Pais newspaper from Spain

Daron Acemoglu (Istanbul, Turkey, 1967) has won the Nobel Prize in Economics together with his colleague from the Massachusetts Institute of Technology (MIT) Simon Johnson and James Robison, from the University of Chicago. The award recognises his studies on why some nations are richer than others. He spoke to EL PAÍS via the Zoom application and argues that an independent judiciary and well-enforced property rights are essential for progress.

He also argues that events that occurred centuries ago still affect economic outcomes today. Acemoglu is one of nine MIT professors , the highest rank that can be awarded to a faculty member. His economic position is clear: “inclusive institutions promote well-being” and “extractive ones, which concentrate power and resources in a few hands, lead to economic stagnation.” His award was one of those expected. Perhaps not so much for his findings, but for the courage to confront some of the most important questions in his field. According to Research Papers in Economics — a kind of great library of this science — he is the third most cited economist in the world .

Question: You are the co-author of one of the biggest economic bestsellers of our time: Why Nations Fail (Deusto). The book was published a decade ago, in 2013. What would you change?

Answer: The truth is that it was written in 2010. It's almost 15 years ago. The world has changed. But the essential message of the book has not. We have seen other experts add to it. In The Narrow Corridor we delved into state capacity, into cultural issues, and we also discussed in great detail why today's democracies are still failing. In 2023 we incorporated technology, technological change and the direction it was taking, and we analyzed why many technologies threaten institutions and prosperity.

Q. In your 2019 paper Democracy Does Cause Growth , you and your co-authors pointed out that growth was associated with democratic institutions. What mechanism is behind this?

A. There are several. Different decisions work in a different way. But the general data is very clear: democracy spends more on training and health. This system is investing more in the education of workers and their health. It also helps to eliminate distortions such as monopolies, which are often associated with dictatorial regimes or juntas [usa el español] . These are the mechanisms that lead democracies to achieve better results.

Q. One of the foundations of your thinking is that judicial independence is linked to economic prosperity. In Spain, this situation has been in doubt for years. How does it affect economic growth?

A. Legal institutions are very important. Small problems in the system can undermine them. When the judiciary loses its independence and becomes a political instrument, as in China, then serious consequences appear. For me, the greatest threat lies at the moment when the judicial system becomes an instrument in the hands of the executive branch. For example, this is a real threat in Israel. October 7, 2023 [ataque de Hamás a Israel] changed the situation and priorities. But I think that the reforms of Prime Minister Benjamin Netanyahu put judicial independence at risk.

Q. In your 2023 book, Power and Progress (Deusto), you write that artificial intelligence (AI) can weaken democracy.

A. There are two sides to AI that worry me. First, the effect on institutions in general, including democracies. Artificial intelligence is the compilation of other digital technologies, and this increases inequality. Greater inequality means that democracy is more difficult, social tension and polarization are increased. We see this in industrialized countries. But AI is also changing the way we communicate. Groups are being created in civil society whose aim is to obstruct political action.

P. AI, ChatGPT, quantum computing. Has humanity lost its way?

A. I wouldn't say that we have lost our way yet. Because all the technologies you mentioned, if developed appropriately, can become tools in the hands of humanity. AI could help people do their jobs better. But if we allow ChatGPT or AI to be controlled by a few technology companies and become the masters of knowledge and silence the workers, then we have truly lost our way.

Q. Average incomes in the West have never been higher than they are today. Should we ask ourselves where all this wealth comes from?

A. For me, that is not the right question. It is another one. Humanity has had spectacular growth in recent decades. Why has it not grown much more? Today, poor nations have a fifth of the GDP of Spain or the United States. Why do they have so few resources? Why have they not grown? Political failure, market failure, economic failure. Even in the industrialized world. If you look at patents, for example, their number is greater than ever, but productivity is lower than before. There is a flaw: we should grow faster. Of course, respecting natural resources and the environment. It is possible, but that is not what we are doing now.

Q. Have big tech companies fueled inequality?

A. We certainly have a global inequality crisis. There are so many billionaires in the United States, and real wages for workers have fallen. There is a huge divide between the top and the bottom. Tech companies have the ability to increase the gap between the rich and the poor world. But I don't think it always has to be that way. New technologies, including digital ones, can be a driver of growth in Indonesia, India, Vietnam, Turkey, Mexico. They could help close the gap between the global north and the global south. But to do that we need them to focus on increasing productivity, diversity and increasing the skills of workers in those nations. They have to be tools in their hands.

Q. “Rethinking capitalism.” This is one of the phrases that defines our era.

A. Capitalism is a term I don’t use because it means very different things depending on who you talk to. Capitalism in the United States is quite different from that in Sweden. What I do agree with is the need to rethink the market. Any system that follows the patterns of North Korea or the former Soviet Union is going to fail badly. But we need to rethink it because the market without proper regulation doesn’t work either. For me, better expressions are “rethinking the market economy” or “rethinking the future of prosperity.”