What Happened to Liberal Democracy?

Daron Acemoglu argues that liberal democracy is in crisis not because its core ideas have failed but because its champions lost their way once they became the establishment. He proposes "working-class liberalism," a political philosophy and practical agenda that fuses traditional liberal commitments to individual freedom and equality with a renewed emphasis on community, self-government, shared prosperity, and good jobs.

Acemoglu opens with the story of Hungarian political leader Viktor Orbán, who in 1989 called for an end to communist dictatorship but by 2014 was proudly building an "illiberal state." Orbán's arc mirrors the broader trajectory of liberalism across the West. Acemoglu defines liberalism as a "big tent" united by commitments to individual rights, constraints on power, equality before the law, and belief in progress, specifying that his focus is on its left-leaning variant, including New Deal liberalism and European social democracy.

Liberal democracy, Acemoglu argues, rested on three promises: sharing prosperity, providing public services, and granting democratic voice. All three have been broken. The post-World War II decades delivered broadly distributed economic growth, but after the mid-1970s median wages stagnated, inequality surged, and upward mobility collapsed. Public services deteriorated, and over 85 percent of Americans believe elected officials do not care about people like them. Acemoglu's central thesis is that liberalism failed to adapt once it became the governing philosophy. This failure involved a "sin of omission," neglecting the postindustrial economy's assault on working-class livelihoods, and a "sin of commission," the educated elite's abandonment of community and shared prosperity in favor of top-down social engineering.

To rebuild liberalism, Acemoglu develops a theoretical framework rooted in the dual nature of community: essential for generating and sharing knowledge, yet capable of forming a "cage of norms" that restricts freedom. He builds four premises: fallibility (every belief could be wrong); social learning in community (humans share knowledge through trusted networks, and community-embedded knowledge is often superior to expert opinion); gentle epistemic improvement (incorrect beliefs tend to fade through debate and open exchange); and the desirability of collective knowledge (shared knowledge serves the common good only when institutions ensure broad benefit).

These premises yield four pillars. Experimentation justifies freedoms of expression and economic choice. Nondomination and self-government, drawing on republican philosopher Philip Pettit, hold that freedom requires not merely the absence of interference but the absence of anyone's arbitrary power to restrict one's choices, with self-government at the community level as the best safeguard. Economic growth must be embedded in institutions that check extreme inequalities. Soft communitarianism holds that communities are indispensable but must not become stifling cages.

Acemoglu contends that liberalism should not rest on a social contract, the idea that government legitimacy derives from presumed agreement among citizens, or on a general will, a supposed collective interest that can override individual preferences. He traces how Jean-Jacques Rousseau's dictum that dissenters "will be forced to be free" provided a framework the French revolutionaries used to justify the guillotine. Even political philosopher John Rawls, Acemoglu argues, presumed agreement without actual deliberation. Instead, Acemoglu proposes a "social compact" built on actual buy-in from diverse communities through deliberation, as exemplified by Ireland's Citizens' Assembly on abortion.

Turning to history, Acemoglu recounts liberalism's successes: the spread of individual freedoms, democratic self-government, comprehensive welfare states in Scandinavia, the abolition of slavery, women's suffrage, and scientific progress under liberal institutions. Most consequentially, the postwar "industrial compact" linked mass production to shared prosperity. From 1940 to 1970, inflation-adjusted wages more than doubled and the richest 1 percent's share of national income fell from 20.9 percent to 10.7 percent. Lyndon Johnson's Great Society programs cut poverty from 22 percent in 1959 to 12 percent by the mid-1970s. Yet liberalism always carried inherent dilemmas around inclusion, ignorance, and intolerance that intensified as society became more diverse.

The core of the book explains how the postindustrial economy dismantled the industrial compact. Digital technologies were "skill-biased," boosting demand for college-educated workers while automating manual tasks. Industrial robots in the United States increased from 3.5 per thousand industrial workers in 1993 to 25.5 in 2020, and between 50 and 70 percent of the surge in wage inequality can be attributed to automation. Chinese import competition eliminated an estimated 2 to 2.4 million jobs between 1999 and 2011. Small and medium-sized towns were hollowed out, and social problems multiplied in affected communities. Critically, the direction of technology was a choice: German firms deployed robots faster than U.S. firms but retrained workers rather than laying them off, producing far less inequality.

These economic changes gave rise to a politics dominated by the college educated. The Democratic Party transformed from the party of unionized workers into the party of college-educated professionals: in the 1970s, 60 percent of noncollege Americans voted Democratic, but today only 48 percent do. Geographic and social segregation deepened as college graduates clustered together and lost contact with working-class communities. This coalition, united with the tech sector on cultural issues, prioritized cosmopolitan values while abandoning working-class economic priorities.

The college-educated coalition's turn toward social engineering, Acemoglu argues, betrayed core liberal values. He draws parallels to historical precedents in which functionaries recruited to serve institutional purposes became autonomous drivers of social control: the Catholic Church's evolution into the Inquisition, the Islamic religious scholars known as the ulema who, after the 1017 Qadiri Creed, a doctrinal statement empowering conservative clerics as sole interpreters of religious texts, eliminated rationalist thought within Islam, and China's imperial examination system. In the postindustrial context, universities rescinded invitations for dissenting speakers, diversity programs evolved into restrictions on speech, and journalists lost their jobs for publishing conservative perspectives. Though nonviolent, this social engineering generated a vicious circle: left-liberal overreach was amplified by right-wing media, deepening backlash and opening the door to antiliberal restrictions from the Right.

Social media intensified these dynamics. Acemoglu opens his discussion with the case of Justine Sacco, a private individual whose satirical tweet to 170 followers was algorithmically boosted into a global trending topic, costing Sacco her job before her plane landed. Platforms' ad-based business models create systematic incentives to boost emotionally charged, divisive content, forming an "algorithmic cage" that replaces rather than complements weakened real-world social networks. Acemoglu contends that artificial general intelligence (AGI), machines matching human cognition across all tasks, is unlikely soon and argues that AI should instead be developed in a "pro-worker" direction, expanding worker capabilities through tools such as AI-assisted troubleshooting for electricians and diagnostic aids that enable nurses to perform broader care functions.

Acemoglu concludes by presenting working-class liberalism as a practical agenda organized around five challenges. Community must be restored as a pillar of liberalism. Freedom of expression must remain an inviolable boundary, but communities should otherwise be free to hold values that diverge from prevailing national norms. Center-left parties must reintegrate the working class into their leadership. Shared prosperity requires developing pro-worker AI, reforming the tax code to eliminate its bias favoring capital over labor, and breaking up tech monopolies. Effective public services require removing many ex ante regulatory procedures, meaning approvals required before action can be taken, while strengthening regulation of AI and social media. On immigration, Acemoglu argues for respecting local communities' cultural concerns while protecting established immigrant communities. On climate change, he calls for carbon taxes combined with border tax adjustments, which are import fees matching domestic carbon costs, and job creation in communities losing fossil fuel employment. Liberalism's rebirth, Acemoglu insists, cannot come from elite debates or technocratic fixes but only from returning to foundational values with the working class at its heart.