Technology, power and political economy
The rapid development of artificial intelligence has brought an age-old question back to the forefront of the debate: does technological progress necessarily lead to widespread economic and social progress? The answer cannot be found solely in the ability of new technologies to increase productivity. Between innovation and well-being lies the issue of distribution: who benefits from the gains of progress, who bears the costs, and which activities are automated. And behind distribution lies power, understood as the ability of individuals and social groups to influence economic and technological decisions.
This article revisits and expands upon some of the points made in a recent note of mine, ‘Beyond Institutions: Power in Economic Analysis’, published in issue 95, Summer/Autumn 2025, of *Proposte e Ricerche* (Russo, 2025). The point we wished to emphasise in that paper is that, whilst institutions play a fundamental role in development trajectories, they do not exhaust the analysis. They are not simply ‘rules of the game’, but also represent the crystallisation – which changes over time – of power relations. Even formally inclusive institutions can therefore coexist with extractive mechanisms.
Technological change makes this perspective particularly relevant. In *Power and Progress*, Acemoglu and Johnson (2023) argue that technology does not follow a single, predetermined trajectory. Progress can either replace labour or increase its productivity; concentrate control over production processes or disseminate new skills; automate existing tasks or create new ones. The prevailing direction depends on economic incentives, institutions and the ability of different social groups to influence decisions. The distributional effects of technological change, therefore, are by no means ‘natural’.
Production and distribution are not two separate stages. The way in which production takes place, the technologies adopted, and the skills that are valued or rendered obsolete already help to determine how income and power will be distributed. Distribution does not merely take place ex post, when a surplus that has already been produced must be shared out, but is partly incorporated into the process through which that surplus is generated. This is a point that takes us back to the tradition of classical political economy, in which production and distribution were analysed jointly and the relationships between social classes formed an essential part of the analysis.
The link between distribution and power, moreover, operates in both directions. Whilst power relations help to determine the distribution of income and wealth, a highly unequal distribution in turn tends to alter them. Stiglitz (2012) has emphasised this cumulative cycle: the growing concentration of income and wealth gives certain groups a greater ability to influence the political process, regulation and the ‘rules of the game’, which can thus help to preserve or exacerbate the inequalities from which that power derives. Society therefore ends up paying the ‘price of inequality’ in terms of reduced social mobility, instability and a decline in the quality of democracy.
