In today’s fast-moving business environment, decision-makers often seek quick, technical solutions to complex challenges. But neglecting the long view can be costly. Power and Progress is a powerful reminder of why businesses must listen to academic research, particularly when it offers historical depth.
This book provides a sweeping analysis of how technologies have been deployed in the workplace over centuries, not always to the benefit of workers or society. For those shaping the future of work and innovation, the message is clear: when we fail to learn from history, we risk confronting the same structural pitfalls on our own.
Authors Daron Acemoglu and Simon Johnson put forward the argument that advances in technology are accompanied by coercive decisions of those in power that ultimately determine where prosperity flows. To make technology benefit humanity at large, they suggest that it is necessary to engage technology with democratic institutions and culture.
Power and Progress proves especially relevant in the study of the global supply chain and the workforce behind it.
Fragmented and volatile
Today, this system is under immense strain, shaped by a sequence of shocks: the COVID-19 pandemic, geopolitical realignments, and now a surge of tariffs under the Trump administration. These tariffs have disrupted the accuracy of demand forecasting and inventory planning, particularly undermining the just-in-time ordering model that has long been central to supply chain efficiency.
Companies are pausing or cancelling orders, recalibrating their operations, and in some cases, rerouting distribution entirely, as seen in firms shifting imports directly into Canada to avoid double tariffs, or relocating manufacturing from China to Mexico or India.
The pharmaceutical sector, although temporarily spared from immediate tariff impacts, faces deep exposure due to its reliance on global suppliers for active ingredients and manufacturing equipment. Even those short-term exemptions may not shield it from broader consequences, including rising input costs, retaliatory trade measures, and long-term supply instability.
While tariffs are often debated in terms of trade balances and national competitiveness, their most immediate and destabilizing effects are playing out in the lives of workers, and the consequences are already reverberating back to businesses themselves.
In India, for example, as Walmart and Costco attempt to shift sourcing to the city of Tiruppur to sidestep higher US tariffs on China and Bangladesh, they are encountering a labor shortage so acute that production lines remain idle. Suppliers report that they need over 100,000 additional skilled workers, yet many laborers prefer “smaller, unorganized units” offering longer hours and higher pay, forcing exporters to grapple with both rising costs and unmet compliance standards.
Meanwhile, in Indonesia, the threat of a 32% US tariff has prompted fears of up to 50,000 job losses in labor-intensive industries such as textiles and shrimp processing.
Across Africa, new tariffs are not only disrupting exports but are also jeopardizing tens of thousands of jobs, nullifying the benefits of long-standing trade agreements like the African Growth and Opportunity Act and prompting fears of inflation, factory closures, and broader economic contraction. These developments signal a critical truth: labor conditions are not a peripheral concern but a core element of business resilience.
In today’s fragmented and volatile trade environment, the question for many companies is not simply where to source goods, but how to build resilient and transparent supply chains that can withstand geopolitical shocks, labor shortages, and public scrutiny.
Globalization and technological change
Power and Progress offers insight into this challenge by revealing that globalization and technological change are not separate forces, but deeply intertwined, and neither are predetermined.
“In some popular discussions of rising inequality, globalization is pitted against technology as competing explanations,” write the authors. “It is often implied that technology represents the inevitable forces leading to inequality, while there is some degree of choice about how much globalization and import competition from low-wage countries the United States (and other advanced economies) should have allowed. This is a false dichotomy.”
The authors highlight that the widespread offshoring of production to places such as China and Mexico was not just a product of globalization, but the result of deliberate coercive decisions.
Advances in digital communication tools enabled firms to track and manage operations across great distances, making it feasible, and financially appealing, to shift production from in-house facilities to overseas factories. In doing so, many companies eliminated middle-skill, blue-collar jobs, hollowing out segments of the workforce in pursuit of lower labor costs.
“Globalization and automation have been synergistic, both driven by the same urge to cut labor costs and sideline workers.”
Daron Acemoglu and Simon Johnson
Far from being parallel trends, globalization and automation have moved in lockstep, driven by the same technological infrastructures and corporate incentives. Supply chain dynamics, in this view, are not merely shaped by market forces, but by the specific technologies companies adopt, and how they choose to deploy them.
“In fact, globalization and automation have been synergistic, both driven by the same urge to cut labor costs and sideline workers. They have both been facilitated by the lack of countervailing powers in workplaces and in the political process since 1980,” say the authors.
To move beyond reactive supply chain restructuring and toward truly resilient, inclusive global business models, Power and Progress offers a vital historical lens. It dismantles the assumption that rising productivity inevitably leads to shared prosperity, showing instead that the distribution of gains has always depended on the choices made by those in power.
The idea of a “productivity bandwagon,” where technological improvements lift all boats, rests on tenuous conditions: only when employers expand output and compete for labor do wages rise. In practice, as history repeatedly shows, these links often break down. Today’s supply chains reflect that same broken logic of cutting labor costs and sidelining workers. Despite technological sophistication and expanded output, many workers in exporting economies face stagnant wages, high attrition, and minimal bargaining power.
At the center of the narrative is an uneasiness about the technological marvel of our day: artificial intelligence. The authors warn that this technology, which offers to think like a super-charged human without a human’s sensitivity to human values, could cause serious problems for employment and self-determination, especially as developers become incentivized to produce “so-so” AI that causes unemployment without meaningful gains in efficiency.
Concerns about AI
Power and Progress’s concerns about AI undermining liberal-democratic norms by prioritizing profit and efficiency over people are well taken, as well as how technology can be used directly – by humans – against humanity in the form of Orwellian surveillance technology.
But just as AI can be deployed directly to cause harm to the average person, AI regulation might also produce unexpected consequences, especially given the intricate and often opaque nature of many generative AI models.
The complexity of AI poses a novel challenge for regulators and legislators trying to curb its potentially harmful and illiberal tendencies. Unlike many of the historical examples of technological excess in Power and Progress, whose collateral negative effects were ultimately human directed, AI has a “black box” problem: In many situations, not even the developers of these highly complex, self-learning systems fully understand how their models’ decisions are made or how their outcomes are generated.
This black box effect can lead AI to pursue goals or prioritize outcomes unconsidered by the most democratically inclined and humanistic developer.
This raises a troubling question of how to address harms that can’t be predicted, and how to refrain from making problems worse by attempting to preempt predicted biases.
Broken logic
One of the book’s sharpest historical warnings for today’s business leaders lies in its account of Lesseps’s “canal vision”: the danger of pursuing grand technological projects or cost-cutting strategies without regard for broader consequences. Ferdinand de Lesseps, celebrated for overseeing the construction of the Suez Canal, became a symbol of this tunnel-visioned optimism.
While hailed as a visionary, his Suez success ignored the brutal conditions under which ordinary Egyptians labored, conditions likened by British critics to forced labor. Emboldened, Lesseps pushed forward with the Panama Canal, dismissing mounting warnings about disease, terrain, and local realities.
The result was catastrophic: more than 20,000 workers died, the project collapsed, and fortunes were lost. The failure was not inevitable. Existing medical knowledge and basic protective measures were available but sidelined by a refusal to prioritize worker welfare.
In today’s global supply chains, similar hubris can be seen in business strategies that stretch labor forces thin, fail to address safety and retention, and prioritize logistics over human conditions.
In supply chain leadership, the ability to persuade is essential, but it must be grounded in broad, informed vision. As Power and Progress highlights, even well-intentioned ideas can fail when driven by narrow interests. Lesseps believed he was acting for the common good, but his limited perspective led to widespread human and financial costs.
Countervailing forces
For today’s businesses, resilience requires what the authors describe as “creating countervailing forces … ensuring that there is a diverse set of voices, interests, and perspectives as a counterweight to the dominant vision.”
Integrating these perspectives, from workers to regional partners, can help companies make more realistic, adaptive decisions in a volatile global environment. As current tariff shocks ripple through key industries, a broader, more diverse dialogue is gradually starting to take shape.
Non-governmental organizations (NGOs) such as the Clean Clothes Campaign are urging fashion brands not to shift the financial burden onto already underpaid workers, while Indian pharmaceutical firms have made clear that relocating production to the US or absorbing high tariffs is not financially viable. As one executive noted, “We can offset single-digit tariff hikes with cost cuts, but anything higher will have to be passed down to consumers.”
These exchanges reflect a growing awareness that pushing pressure down the chain is no longer sustainable, and that more transparent, shared approaches to risk and cost may be the only viable path forward.
An example of how businesses are beginning to act on this shifting narrative can also be seen in the pharmaceutical sector, where companies and trade associations are calling for structural, long-term solutions to tariff-driven disruption. Beyond tactical adjustments, there is growing demand for a new approach to how technologies are developed and used, one that prioritizes supply chain resilience and equitable access, rather than short-term cost cutting.
Reimagining supply chains
Power and Progress offers several actionable insights that can help businesses build long-term resilience in times of supply chain uncertainty while protecting their workforce. One key recommendation is for investors and companies to evaluate not just financials, but also the direction of technology, specifically whether it is being used to empower or displace workers.
As the authors note, “choices over the direction of technology should be part of the criteria that investors use for evaluating companies and their effects.”
Transparency is highlighted as another crucial principle. Large investors, boards, and regulators can demand clarity on whether new technologies will automate jobs, enhance worker capabilities, or shape social outcomes such as privacy and civic participation.
Rather than pursuing automation for efficiency alone, companies can deploy digital tools to complement human work, improving productivity in existing roles and creating platforms that connect diverse skills and needs.
Building more resilient organizations also requires broad-based worker participation. The book emphasizes the value of industry-level and multi-layered structures for decision-making, which can enable more adaptive responses to systemic shocks.
Finally, investing in on-the-job training is essential: “Even workers with college and post-college degrees learn most of the skills required… once they start working.” Strengthening human capital is not a cost, it is a strategic asset.
In the author Daron Acemoglu’s own words
GRIP spoke to author Daron Acemoglu about why the book had been written. He told us:
“We are going through an unprecedented period of uncertainty, where many truths and practices taken for granted for so long are challenged and the world of tomorrow could be entirely different from what we are used to.
“This isn’t just because of the Trump administration’s attacks on domestic institutions and the international economic and geopolitical order. It is also because of the disruptive effects of AI, rapidly aging workforces, climate change, and the broader crisis of democratic institutions around the globe.
“Such discombobulating times, however worrying they may be, also provide windows for reimagining a better future. The collapse of shared prosperity is a major contributor to general dissatisfaction with democratic governance and the rise of populist authoritarian leaders such as Donald Trump.
“The best way forward is to bolster existing democratic institutions (since the alternatives are much worse both for human rights and for building shared prosperity) and reprioritize a vibrant labor market and conditions for robust wage growth to regain shared prosperity. There is a small silver lining, in that artificial intelligence could be steered in a way that is more pro-worker and it can be a tool for providing much-needed new goods and services for a changing world. The agenda has to start with the tech sector, where the direction of AI is set.
“But corporate leaders also have a major role, which begins by recognizing that human resources are their most important asset. History does not remember companies that have cut costs and delivered a little more shareholder value. It is made by companies and leaders that use technology to offer entirely new products and reorganize production, like Henry Ford did, in order to kickstart a new chapter of economic vibrancy.
“Oftentimes, workers are at the center of it, because they are the ones with the expertise and they are the ones whose contribution to new goods and services can be bolstered by better use of technology, which can then contribute to wage growth and shared prosperity.
“All of the transformations afflicting us require new products and services, ranging from finance to healthcare and education, and reorganizations of cities, schools and production processes. There is a pro-worker way of embarking on this journey, and this is as good a time as any to formulate a new vision for the future that is shared in every way.”
Creative force of compliance
In moments of global disruption, roles often seen as routine, like compliance and regulatory oversight, can become unexpected catalysts for change. While such positions are often viewed as rigid or disconnected from a company’s broader purpose, the current supply chain and tariff challenges offer an opportunity to reframe that narrative.
As Power and Progress notes, “people are more satisfied and are more engaged with their community when they feel that they are contributing value to society.” This sense of purpose can be reignited when professionals in compliance and governance recognize their unique position to shape resilient, inclusive business practices.
Rather than seeing regulatory work as a constraint, it can be leveraged as a creative force, ensuring that global shifts are met not with reaction, but with forward-thinking strategies that protect both financial performance and the well-being of workers across the value chain.
