Credit: Mimi Phan | Michelle Fiorenza (photography)
Ideas Made to Matter
Drawing a line from colonialism to artificial intelligence
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shared the Nobel Memorial Prize in Economic Sciences this year for explaining how democratic institutions fuel economic growth, work he first published with and James Robinson in 2001.
These days, the MIT Sloan professor’s attention is fixed on how economic policy and technology can ease or exacerbate inequality in the U.S. and worldwide.
This week in Stockholm, Johnson, PhD ’89, connected those streams of work in an address at the Royal Swedish Academy of Sciences. Society is at an inflection point with the rollout of artificial intelligence — one that is not unlike the advent of the Industrial Revolution and the maritime colonialism that preceded it, Johnson said.
“Today, technology has changed even more. We have machines and we have ships and we have processes that dwarf anything that we’ve seen in history,” he said. “But there is an important caveat that looms large over us, particularly in this age of emerging AI: New technology does not necessarily benefit everyone.”
Johnson, along with MIT Institute Professor Daron Acemoglu and the University of Chicago’s Jim Robinson, won the award for their work analyzing the characteristics of prosperous governments.
Their research contrasted inclusive political governments with extractive systems, in which an elite group wields power. They found that inclusive governments that promote individual rights experience sustained, long-term growth. Extractive governments decline after spurts of economic activity as elitists resist collaborative innovation in order to hoard power.
In their addresses to the academy on Dec. 8, the trio framed this pattern in modern terms. For his part, Johnson discussed the repercussions of European colonialism, comparing the wooden ships of colonizers with today’s machines powering AI. Both have the power to undermine or elevate prosperity and equality, with the past offering cautionary lessons for present-day developments.
This pattern is instructive for modern technology. Here are some key points from Johnson’s talk.
The Industrial Revolution foreshadows the AI revolution
In their work cited by the Nobel committee, Acemoglu, Johnson, and Robinson showed that colonialism’s patterns cast a long shadow: Even now, territories that had lower mortality rates among Europeans settlers maintain more inclusive present-day institutions and prosperity compared with those that had higher settler mortality rates and extractive institutions.
For example, the United States, with its inclusive society fostered by colonialism, benefited from the Industrial Revolution; extractive countries, such as Indonesia, Nigeria, and Peru, struggled.
In 2024, little has changed, Johnson said, particularly when comparing GDP per capita, a measurement used to assess the average economic productivity and standard of living for individuals in a given country.
“The inequality of GDP per capita we have today in 2024 is roughly the same as what we had 120 years ago,” Johnson said. “Whether you live in a country that makes computer chips and software or a country that primarily exists by sewing other people’s clothes [is determined by] the 19th-century industrialization experience and where you sat relative to inclusive and extractive institutions in that moment.”
Even wealthy countries aren’t immune to the AI divide
With the advent of AI, power could become increasingly concentrated in a scenario where unskilled and midlevel workers are supplanted by technology while elites thrive.
“If you just have automation without new tasks for humans, what you’re going to get is a lot of unemployment, a lot of deskilling, a lot of people being pushed down to the lower end of the labor market,” Johnson said. “If the machines and the algorithms become so much more potent, then the consequences of this industrial revolution are going to be much more unequal and much worse for more people, including in the United States, including in Western Europe.”
This power division could spill over into lower-income countries too, Johnson said.
“Pro-worker AI” can help promote equality
To counter those trends, Johnson, Acemoglu, and MIT economist David Autor founded the MIT Shaping the Future of Work Initiative, a nonpartisan research group that seeks ways to boost pay and productivity for workers across skill levels. Ideally, such resources and benefits should be distributed in an inclusive fashion — otherwise, populations risk sharing the fate of the extractive societies that are still suffering from European colonialism.
“We should harness this incredible energy behind AI and the capital that’s being deployed and the investments that are being made to productive purposes — to purposes that help people,” Johnson said.
Leaders should ask, “What are we inventing? Why are we inventing it? Whose lives are we improving? How does this lead to shared sustained prosperity around the world?” he said.
The answers to those questions, Johnson said, will help scholars, students, and policymakers “go change the world in a better direction.”
Watch: The 2024 Nobel prize lectures in economic sciences
