The Left has an uneven history when it comes to institutional theory. Some Marxists have, for the most part, treated institutions as instruments of bourgeois rule, drawing on the The Communist Manifesto’s characterization of the state as a “committee for managing the common affairs of the whole bourgeoisie.” This has encouraged a structural functionalism in which institutions are understood primarily to stabilize and help reproduce capitalism. In fairness, several Marxist theorists have pushed beyond this view. Poulantzas argued that the state was the “material condensation” of the balance of class forces in his 1978 book, State, Power, Socialism, while the Analytical Marxists pursued lines of inquiry that were unabashedly outside Marxist orthodoxy, particularly in their treatment of institutional questions. More recently, Stephen Maher and Scott M. Aquanno have theorized what they call Institutional Marxism (IM). Informed by the work of Leo Panitch and Sam Gindin, the IM perspective argues that state, business, and working-class institutions are shaped by the struggles among social forces and, in turn, give each period of capitalism its distinctive form.

This lineage has included some heavy-hitting interventions. Famed development economist and September Group member Pranab Bardhan’s analysis shows how states can tolerate inefficient economic institutions when particular elite fractions capture them, while Vivek Chibber emphasizes that industrial policy cannot succeed without proper design.

In this context, What Happened to Liberal Democracy? makes a number of arguments that the Left will nod its head along with and others it will vigorously dispute. The Left will agree that, in many liberal democratic countries, the working class has been left behind, social bonds have frayed, and artificial intelligence (AI), if handled poorly, is a threat to rebuilding a prosperous society. More controversial is his call for a “working-class liberalism” and the political project it entails.

Acemoglu starts off by laying out what he believes constitute the great successes of liberal democracies. This is where the Whiggish tendency Tooze identifies becomes glaring. Acemoglu genuinely believes in the promise of liberal democracy, especially compared with its actually existing alternatives. However, it would be unfair to call his account purely Whiggish. Acemoglu frames liberal democracy as an incomplete but essentially progressive project, the failures of which can be cured by recuperating its fundamental commitments. He acknowledges liberalism’s historical failures, such as colonialism and lack of rights for women, but also believes that its successes have contributed to its present malaise.

For Acemoglu, this malaise includes the de-linking of wages from productivity. He places greater blame for this on technology than on the declining power of organized labor. He also underscores the growing cultural and educational divide between the working class and what might, though he does not use the term, be called the professional-managerial class (PMC).

Acemoglu believes that educated liberals’ efforts at social engineering across a range of cultural issues have exacerbated this divide and have led to a working-class backlash. Algorithms and AI aggravate these problems. A staunch defender of free speech, Acemoglu puts forward a novel proposal — regulate the algorithms, not the speech. This would mean social media feeds would show users content from the accounts they follow rather than shepherding them toward the latest outrage or viral post. On the AI front, Acemoglu is adamant about creating what he calls “pro-worker AI.”

Pro-worker AI would help workers perform existing tasks more effectively, acquire new capabilities, and take on entirely new tasks. Any given job is a collection of tasks. AI can either automate many of those tasks or enhance the productivity of the humans that perform them.

Acemoglu believes that the current business model and ideological orientation of AI companies give them no incentives to develop pro-worker AI. For him, the future direction of AI is therefore a test of liberal democracy. Responding to AI will require not only state regulation but also public deliberation in the best liberal-democratic tradition. Acemoglu rightly grasps that AI is not going anywhere. Donald Trump could throw Sam Altman and Dario Amodei in prison tomorrow and dissolve their companies, and AI would still persist, if perhaps at a slower pace.

The rest of Acemoglu’s vision for working-class liberalism seeks to reconnect liberal democracy with workers’ material interests, social prestige, and political power, especially for those without university degrees. He makes it clear that he values traditional liberal principles of pluralism, freedom of expression, the rule of law, and democratic self-government. But he wants liberalism to prioritize good jobs, rising wages, public services, worker voice, and broadly shared technological progress. Such an agenda would not be out of place at a rally hosted by Alexandria Ocasio-Cortez or Bernie Sanders.

A more fraught matter for the Left is Acemoglu’s view that working-class liberalism should empower local communities and accommodate diverse values and opinions, within the bounds of basic liberties, rather than imposing cultural change from above. It raises the contentious question of the extent to which the consent and solidarity of the broader working-class majority can be secured when the terms of cultural politics are shaped without broad democratic participation.

Acemoglu insists that skepticism toward social engineering from above must not mean compromising minorities’ civil rights. He points to the example of Ireland’s citizens assemblies, which helped clear the way for the referenda legalizing same-sex marriage and repealing the constitutional ban on abortion, as proof that deliberation among the public in a liberal democracy can produce progressive wins.

After its early appearance, the idea of citizens’ assemblies largely disappears from the rest of the book. For all of his enthusiasm for returning to liberal democracy’s local deliberative traditions, there is no extended engagement with the idea of citizens’ assemblies or other ways of enriching local democracy, such as participatory budgeting. This is the problem with much of the literature that seeks to defend liberal values. It offers little vision as to how democracy itself might be deepened beyond making sure existing political institutions start working properly again.

Local deliberation is necessary, but it has its limits given the other issues that Acemoglu wants governments to address. As the Center for Working Class Politics’s Dustin Guastella notes, Acemoglu’s working-class liberalism often overlooks the fact that:

To deliver broad based prosperity we need to solve major economic puzzles including trade, finance, labor migration, tech displacement, industrial policy, and public debt. None of these issues can be dealt with at the local level.

Local deliberation may determine whether a community accepts an AI data center, but it cannot determine overall AI policy. Nor can it develop trade policy. Those kinds of interventions require a central government.

Acemoglu also makes the common mistake of making American liberalism and social democracy interchangeable. He supports both New Deal liberalism and European social democracy. In the United States, organized labor was treated as a special interest within the New Deal coalition, whereas in European social democracies, it was a foundational political force. Failing to distinguish between the two leads to a much weaker understanding as to why the United States is an outlier among advanced economies, with its leaner welfare state and higher inequality.

There are other notable omissions. Given the book’s concern with the trajectories of liberalism and social democracy, as well as challenges facing liberal democracies, its exclusion of Adam Przeworski is surprising. Przeworski has argued that there is not systemic collapse of democracy around the world, only political frictions resulting from localized institutional instability. Another surprising absence is mention of Amartya Sen. Sen’s capability approach overlaps with Acemoglu’s working-class liberalism in terms of concern with improving workers’ capabilities and promoting bottom-up democratic deliberation to better understand what communities need.

The most conspicuous absence, however, is foreign policy. If liberal democracy is under threat in the United States from Donald Trump and declining faith in institutions, these developments cannot be separated from foreign policy. While the Great Recession is often tied to much of America’s current malaise, 9/11, the war on terror and the invasion of Iraq have also shaped our current moment. Spencer Ackerman has persuasively written about how those events led to Trump’s presidency. The lies that led to Iraq and the twenty-year occupation of Afghanistan were bound to corrode faith in government trust. Trump’s dovish act was always a fraud, but it played a major role in his electoral success.

In the 2020s, American democracy is once again threatened by its foreign policy, this time over the genocide in Gaza. Freedom of speech and the right to protest have come under increasing strain. In the same way that the war on terror generated a broader malaise and skepticism toward institutions that contributed to the current situation, the suppression of free speech about the Gaza genocide — and successive Democratic and Republican administrations readiness to allow Israel to act with impunity — will further weaken American democracy over the long term. Foreign policy is by far the book’s largest omission.

A further problem is that the book fails to map out exactly how working-class liberalism will come about. When discussing changing mores in society, Acemoglu points to things like civil rights, women entering the workforce, and gay marriage. Yet he offers little analysis of how social movements undergirded these advances. Although the book is a political manifesto, it is hard to understand if it is aimed at building a movement for working-class liberalism or a plea to liberal elites to do better.

One of Acemoglu’s most curious statements comes not from the book but from an interview he gave while promoting it. In an interview posted on Bardhan’s Substack, Acemoglu states:

I believe that the cause of labor has been significantly damaged by communist and ideological unions, because they have stuck to the ultimately self-destructive policy of working for international aims rather than for the betterment of their members, and in the process they have alienated management. So, in my mind we need a new kind of business unionism.

There is a lot to unpack here. Communist-run unions in liberal democracies certainly hurt themselves by following Moscow’s zigzags, though state repression also played a role in their decline in the United States. At the same time, as Judith Stepan-Norris and Maurice Zeitlin have shown in their seminal Left Out: Reds and America’s Industrial Unions, communist-led unions in the 1930s and ’40s did more for racial and gender equality than other union leaderships and had more democratic union constitutions. These are basic values that everyone expects unions to have today, but they were certainly not universal back then.

International commitments, moreover, have always been part of the labor movement, even when they were internally contested. Among these commitments, the labor movement can count support for the Republicans in the Spanish Civil War and for the anti-apartheid movement as well as opposition to US intervention in Central America. Today unions are taking a critical stand toward Israel.

Acemoglu invokes the hard-hat-versus-hippie divide during the Vietnam War, but, as Penny Lewis has shown in Hardhats, Hippies, and Hawks, there was significant working-class opposition to the war. Acemoglu’s suspicion of union engagement with these kinds of activities actually undermines one of his key arguments: that the renewal of liberal democracy will require workers to have a voice outside the workplace.

Acemoglu identifies the decline of associational life as a major problem for liberal democracy. For working-class people, unions were once a key part of that associational world. Business unionism is a subpar foundation on which to sustain it. Unions have played a major role in democratization, notably in Brazil, South Africa, and South Korea. In an American context, the complacency of business unionism during the postwar settlement left unions unable to organize emerging sectors and vulnerable to Ronald Reagan’s attacks. Unions are bulwarks of democracy in the workplace and society, and they should engage in politics at all levels.

Implicit in Acemoglu’s defense of business unionism is a concern about the division between the cultural politics of rank-and-file union members and those of a more ideological leadership. Unions can have a progressive effect on members’ attitudes, including toward cultural issues that Acemoglu might regard as divisive. However, this influence is democratic only when unions ensure space for internal disagreement. In order to not blur the line between associational democracy and top-down social engineering, dissent cannot be stigmatized, and open deliberation is essential.

These reservations, however, do not obscure what the Left can take from Acemoglu’s book. His book deserves serious engagement. He identifies several realities that the Left cannot escape from: economic growth remains essential to improving the lot of the working class, at least in the medium term; control of technology is up for grabs; and that many working people feel deeply alienated. As the Left gets serious about building economic and political institutions, understanding the trade-offs in institutional design will be crucial. Acemoglu’s work and the economic role of institutions cannot be ignored.