[What Happened to Liberal Democracy? Remaking a Politics of Shared Prosperity by Daron Acemoglu. Dutton, 2026; x + 403 pp.)]
Daron Acemoglu, who is an Institute Professor at MIT and a winner of the Nobel Prize, is one of the world’s leading economists. As one might expect, Austrians will have much to disagree with in this book. For example, Acemoglu is a strong supporter of minimum wage laws and strong labor unions, and indeed, a major concern of his is that AI needs to be regulated so that manual workers lacking a college degree will not be left jobless.
He recognizes that people need liberty and property, but these are not absolutes, and, contrary to libertarians, they are not enough.
Libertarianism, which is built on the sanctity of individual autonomy and economic freedom. . .maintains that taxation and regulation are always violations of freedoms. This type of stance cannot be justified by the arguments here.
The problem is that economic freedom does not suffice for “nondomination.” Following the philosopher Philip Pettit and others, Acemoglu argues that you aren’t free if you are subject to the will of another. If, for example, your boss can fire you unless you accept the onerous terms of employment he offers you, and you have no better opportunity elsewhere, then you are dominated. The cure for this is democracy; people—at both the community and national levels—can collectively decide on the limits of acceptable contracts. (He recognizes that communities can themselves be oppressive.) Contrary to classical liberals and libertarians, who fear “the tyranny of the majority,” Acemoglu stresses that liberty and democracy go together.
By no means does he wish to replace the market with central planning; he has been influenced by Hayek and highlights the need to use local and tacit knowledge and is well aware that experimentation by competing entrepreneurs is essential to economic progress. Further, he has no illusions about the murderous totalitarianism of Stalinist Russia and Maoist China. But it is the regulated market, exemplified by FDR’s New Deal, Lyndon Johnson’s Great Society, and the mixed economies of Sweden, Norway, and Denmark that he wants.
A regulated economy requires expert guidance, and this leads to a problem. The experts, especially those who graduate from elite universities, tend to lose touch with those who lack their stellar credentials, and, as a result, their needs are not adequately considered. As mentioned earlier, AI needs to be regulated in the interests of manual workers without a college degree; and social media pose another threat. The algorithms of Facebook and other social platforms make it likely that users of these sites will become polarized by seeing only posts from those who agree with their opinions, leading to more polarization and extremism. Although freedom of speech is important, social media needs to be regulated to guard against people being misled by false views about climate change, vaccines, and related matters.
In the space that remains, I do not propose to argue against the opinions just described. That task is better left to my economic colleagues, far better equipped than I to argue against a Nobel prize winner. Rather, I will discuss an area in which Acemoglu, not an expert, falls into grievous error, and it is an error that is widespread among others as well.
He says about Rawls’s A Theory of Justice (Harvard, 1971),
The problem with using contractarian arguments, including Rawls’s, as the basis of general ethical principles isn’t that different from the one afflicting Rousseau, Marx and Engels, and other enthusiasts for the general will. In practice, nobody is ever asked their views about justice when a social contract is being designed or behind a veil of ignorance. It may appear oppressive that people are presumed to have agreed, without debate or the right to object, to a scheme or policy that is harmful to their actual interests. For those living in a real society, not behind a curtain, it would be little comfort to hear that their condition had been justified by a philosopher or statesperson claiming they would have assented to such a social contract behind the veil. Given the chance, they would readily tear up that social contract—and the veil.
Acemoglu has failed to grasp a simple point. Rawls was not trying to force his opinions on people who had other preferences. He was engaged in a thought experiment. He thought there was a correct answer to the question about the nature of justice, and he presented arguments that this answer was what self-interested, reasonable, and rational people would choose behind the veil of ignorance. (Rawls modified his views in his later work on “public reason.”) As readers will know, I think that Rawls’s account of justice doesn’t succeed, but it makes no more sense to “refute” Rawls by appealing to people’s actual preferences than it would to challenge Acemoglu’s arguments about the economic benefits of unions by pointing out that many people disagree with them.
Acemoglu errs even more grievously by suggesting that Rawls wanted to force his views on others, regardless of their preferences. If people disagreed, he would try to persuade them that they were mistaken, but the key issue is exactly that—they would be mistaken if they thought otherwise. To his credit, he recognizes that “political philosophy arguments—including ideas like the categorical imperative and appeals to thought experiments behind the veil of ignorance—can be used as inputs into deliberations about shared moral principles.” But on the key issue he does not retreat:
General ethical principles and social welfare functions deduce—from deontological conceptions, appeals to social contracts and general will, and behind-the-veil-of-ignorance arguments—rules that can be applied to a wide range of policy, institutional, or other collective decisions. I argue that these theories do not justify such strong conclusions. Nor are such conclusions consistent with my emphasis on self-government.
Acemoglu does not in fact offer arguments against these theories. Like many economists, he does not take seriously the notion of objective truth in ethics. There are arguments against the notion, but Acemoglu doesn’t address them either. He instead takes his own view for granted.
I will conclude with another example of failure to grasp the nature of a thought experiment, one that has nothing to do with Acemoglu. It has been claimed by some libertarian theorists that if you argue against the libertarian principle of property acquisition by the first user, you yourself would be claiming to own the property in dispute. But that is nonsense. You would be trying to figure out the nature of property ownership, not making a claim yourself. Idiocy isn’t confined to non-libertarians.
