In the 20th century the United States built a dominant manufacturing base, spawning a thriving middle class and a close link between democracy and economic growth. Acemoglu argues that democracy fuels growth and that industrialization expanded democratic participation.
Since the 1980s income inequality has risen sharply in the U.S. Deindustrialization and offshoring have weakened the working class, alienating them from democratic institutions. Acemoglu stresses that any democratic coalition must include the working class.
His new book What Happened to Liberal Democracy? Remaking a Politics of Shared Prosperity calls for rebuilding “working‑class liberalism,” prioritising shared prosperity, jobs and public services while rejecting top‑down solutions.
Earlier work with Johnson and Robinson showed that stable democratic institutions—including property rights—boost economic growth, earning them the 2024 Nobel Prize in Economic Sciences. Their earlier books Why Nations Fail and The Narrow Corridor explain how democracy guards against both authoritarian overreach and domination by powerful groups.
Acemoglu critiques simplistic social‑contract theories, noting that governance in a pluralistic society is messy and must tolerate diverse perspectives. Heavy‑handed attempts to suppress intolerant views can be politically counter‑productive.
The rise of computers reshaped the labor market, displacing many middle‑income, non‑college workers. Median income growth slowed to about 0.5 % per year, while the top 1 % share of income doubled. Political cleavages now align with education, and social media, AI and other technologies intensify polarization.
To address these trends Acemoglu advocates a “working‑class liberalism” that includes cross‑class politics and strong trade‑union participation. Wage gains alone are insufficient; voters also need political trust and shared values.
He maintains that democracy remains the only system that can protect rights, allow experimentation and meet the challenges of a complex world, even as it faces racial tensions, globalization and other dilemmas. Democracy, he says, is a work in progress.
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