Nobel laureate Daron Acemoglu, a distinguished economist from MIT, in a recent article for the Financial Times titled “How liberalism can win back the working class” presents a bold thesis that liberal capitalism must be re-imagined in order to once again serve the working class. Acemoglu believes that the old model of liberalism is exhausted and needs to be renewed, because, as he says, “the enormous successes of liberalism have been overshadowed by some problems.” At the center of his argument is the restoration of the link between economic growth and broad prosperity, which has been disrupted in the digital era, as well as the return of the political left to its working-class roots. Below we explain the three key theses of Acemoglu’s text and consider their application to our regional circumstances.

Acemoglu points out three main problems and solutions:

The digital economy and growth without welfare:

The digital revolution of recent decades has broken the link between economic growth and widely spread prosperity — the economy can grow, but the working class does not feel progress proportional to that growth.

Leftist parties have lost the working class:

Traditional left-wing parties and movements have distanced themselves from the problems of ordinary workers, focusing more on cultural politics or the interests of urban elites, which has left workers politically marginalized.

A new approach and “pro-worker” technology:

A new approach to liberalism is needed — “worker liberalism” — which would return to the idea of broad prosperity. This includes economic policies aimed at jobs and wages, but also a different development of technology (such as artificial intelligence) that would serve workers rather than harm them.

The digital economy: growth without prosperity for all

In the second half of the 20th century, it was a generally accepted expectation that economic growth would automatically mean an improvement in the living standard of the wider population. However, in the digital era that connection has broken. Productivity and GDP are growing, but the wages of the average worker are stagnating, and the benefits of growth are being collected by a narrow group of the well-off. Acemoglu and his colleagues note that “over the last 40 years the spread of digital technologies has significantly increased inequality,” instead of bringing general welfare. In other words, the digital economy has created winners and losers: technological corporations and owners of capital record enormous profits, while many workers remain stuck in insecure jobs or with earnings that do not follow the rise in the cost of living.

This development represents a break in the former connection between growth and prosperity. Economic growth no longer guarantees “prosperity for all.” Advances in technology — from automation of industry to the rise of large digital platforms — have led to a situation where wealth grows but does not spill over to the working class. This undermines the social contract on which liberal capitalism rested: that everyone benefits from economic growth. Acemoglu warns that such dynamics create deep social rifts and dissatisfaction which later manifest politically (as evidenced by the rise of populism). Large technological leaps, without adequate policies to protect workers, have resulted in the digital era producing growth accompanied by wage stagnation, the loss of good jobs, and rising inequality.

Leftist parties and the loss of the working-class base

One of the paradoxes of modern society is that the working class — once the backbone of leftist movements — is increasingly turning its back on traditional left-wing parties. Acemoglu points out that social-democratic and progressive parties in many countries have lost touch with the reality of the working person. Instead of fighting for wages, jobs, and social security, many leftist parties in recent decades have focused on cultural issues and gained the support mainly of the more educated middle class, leaving workers aside. The result is that workers have felt betrayed and invisible in the political process.

The consequence of this rupture is a rise in dissatisfaction which right-wing and populist forces have exploited. Far-right parties attract workers by offering simple solutions and blaming the “establishment” for economic troubles. In the industrialized world, as Acemoglu himself writes, the moderate left and the traditional center are now associated with wage stagnation and rising inequality, which opens space for radical alternatives. In other words, many workers see that they are financially worse off despite the promises of liberal elites, so they turn their backs on mainstream parties.

The tragic irony is that the very parties that historically won workers’ rights — the eight-hour working day, the right to unionize, the welfare state — are now perceived as alienated from workers’ interests. Acemoglu attributes this to two things: first, “post-industrial inequality” — structural changes in the economy where workers without higher education lost quality jobs; and second, “cultural politics” — preoccupation with issues such as identity and worldview divisions at the expense of class and economic issues. In attempting to win a broader electorate, leftist parties often accepted certain neoliberal economic principles (market liberalization, labor flexibilization) that harmed workers. Thus they lost their basic identity as protectors of the oppressed, which led to a void in political representation of the working class. Into that void new forces jumped — either right-wing populists or authentic left-wing movements outside the establishment.

Acemoglu in his text also mentions the example of Zohran Mamdani — a New York politician whose rise, according to him, illustrates both the promises and dangers facing liberalism. Mamdani, a young progressive of immigrant origin, attracted attention with radical economic ideas (such as tenants’ unions and public services for all), which shows that there is fertile ground for policies oriented toward the common person. At the same time, his success indicates that the establishment must take workers’ demands seriously or risk further erosion of trust. The message is clear: left-wing parties can win back the working class only if they return to fundamental economic issues — wages, labor rights, job security, and social justice — instead of being exclusively parties of cultural wars or the technocratic elite.

A new paradigm: Liberalism in the service of workers (and “pro-worker” technology)

The third key thesis of Acemoglu’s essay is a call for a new approach to liberal capitalism — one that would once again place workers at the center of economic progress. This “worker liberalism” entails a series of changes, from policy to technology, in order to restore the link between growth and broad prosperity. Acemoglu advocates a return to basics: instead of relying solely on the market to “magically” solve inequality, the state and society must actively shape the economy in favor of the working majority. This means investing in education and the training of workers, strengthening unions and employee rights, and ensuring that economic gains are distributed more fairly (e.g., through more progressive taxation and greater investment in public services that help working families).

A particularly intriguing aspect of the new approach is how to manage technological progress, especially artificial intelligence (AI), so that workers benefit from technology rather than fear it. Acemoglu points out that the current direction of AI development often favors automation and the replacement of human labor, which increases inequality — big companies save on labor, and workers lose jobs. But this direction is not inevitable. “Nothing in the development of technology is predetermined — we can choose a path of technology that will complement (instead of replace) the worker,” Acemoglu and his colleagues say. They advocate a “pro-worker” artificial intelligence — the development of AI tools that increase the productivity and skills of workers rather than make them redundant.

What would this look like in practice? Instead of AI completely taking over jobs, it could be used as a tool that enables workers to work more efficiently and with higher quality. For example, AI assistants can help teachers personalize instruction, doctors make diagnoses faster, factory workers operate complex machines, or craftsmen plan tasks more precisely. Such “complementary” use of AI would increase demand for skilled labor rather than reduce it. “If AI tools enable teachers, medical workers, electricians, plumbers, and other modern tradespeople to perform more expert work, this can reduce inequality, raise productivity, and increase wages — practically lifting workers to a higher level.”

Of course, such a positive outcome is not possible without conscious policies. Acemoglu emphasizes that a shift is needed in the way companies introduce technology — to stop looking exclusively at how to replace workers and instead see how technology can enable new, higher-quality work for people. There is also the role of the state: through appropriate incentives (e.g., tax breaks for companies that create jobs with AI instead of laying off employees) and regulation (e.g., limiting the use of surveillance algorithms that degrade working conditions), the development of AI can be directed in a socially desirable direction. In short, the liberal capitalism of tomorrow must be “technology + workers,” not “technology instead of workers.” Such a new model would restore the working class’s trust that the economic system works in their interest, not only in favor of the rich.

The Balkan perspective: workers on the margins of transition

The Western context Acemoglu writes about has clear parallels in our region. The Balkan countries, especially the former Yugoslav states, went through a turbulent transition from socialism to a market economy during the 1990s and 2000s. Unfortunately, that transition meant the loss of security and living standards for many workers. Privatization and deindustrialization led to the mass shutdown of factories, while new economic sectors absorbed surplus labor slowly. Workers often became the collateral damage of transition — their labor lost value overnight, and their voice in society weakened.

In the Western Balkans we still witness similar problems to those Acemoglu describes globally. GDP growth is not accompanied by a reduction in poverty or an increase in wages for the broader population. Many workers are employed in insecure, poorly paid jobs. According to one regional manifesto for decent work, “many women and men workers are dealing with the burden of inadequate wages, which deny them a dignified standard of living; low wages not only cause poverty but also sustain social injustice.” Also, “a significant part of the labor force is trapped in precarious forms of employment — without social protection and opportunities for advancement — which perpetuates the cycle of poverty and prevents workers from realizing their potential.” These statements describe the reality of workers in transitional economies: precarious work, low wages, weak protection, and a sense of instability.

Politically, leftist options in our region have also been weakened or discredited, precisely because of mismanagement during the transition. In some former Yugoslav countries, parties descended from the old communists embraced market fundamentalism and oversaw controversial privatizations, distancing themselves from workers’ interests. Elsewhere, nationalist rhetoric pushed class issues aside, so the working class was often mobilized along ethnic rather than socio-economic lines. The result is that workers in the region today largely lack a strong political representative to fight for their interests — unions are weakened, and social-democratic ideas are often marginalized in practice.

Yet the situation in the region confirms the importance of Acemoglu’s message. The transition showed what happens when liberalization is carried out without enough consideration for workers: society becomes polarized between a small number of winners (newly formed economic elites) and a large number of losers (workers and the middle class). Many young and skilled workers see little perspective at home and emigrate en masse for better wages and working conditions — the best indicator that the economies have not delivered broad prosperity.

For the Balkan countries, “liberal capitalism that lifts the working class” would mean rethinking the existing development model. At present we often rely on foreign investment that seeks cheap labor, which keeps wages low and workers in a subordinate position. Such a model brings growth in the short term but in the long run cements backwardness and dissatisfaction. Instead of a “race to the bottom” through lowering labor standards to attract investment, the region needs a more sustainable, inclusive development path — one that values domestic workers, invests in their skills, and creates quality jobs. This includes stronger enforcement of labor legislation, higher minimum wages, support for collective bargaining, and public investments in infrastructure and industries that can employ local labor. Also, in line with Acemoglu’s ideas, our region should adopt technology thoughtfully — not to replace people but to enable them to work smarter and more productively.

The Balkans have talented engineers and IT experts, but the fruits of digitalization must not remain confined to elite sectors; digital tools need to be brought into traditional industries (agriculture, manufacturing, services) so that the average worker becomes more productive and better paid. An example of this are initiatives for automation in manufacturing combined with retraining workers — when a worker operates a robot or machine, their value increases instead of being fired. Such a vision of “technology in the service of workers” could help Balkan economies avoid some of the pitfalls of transition and catch up with the developed world without discarding their workforce.

Conclusion

Daron Acemoglu concludes his article in the Financial Times with an optimistic message: liberalism can win back the working class, but only if it is fundamentally reformed — returning to the principle of broad distribution of prosperity and responding to the challenges of the digital era more bravely than before. This practically means that economic policy must once again “speak” the language of workers: priorities such as decent wages, stable employment, accessible healthcare and education, and dignity at work must come before abstract goals such as deregulation at any cost or mere GDP growth. Liberal capitalism of the 21st century, to survive and remain legitimate, must show that it can lift those at the bottom, not just those at the top.

The key message of Acemoglu’s text — relevant globally and for our region — is that economic growth has no value if its fruits do not reach the majority of citizens. If the old paradigm continues, where gains go to a small layer, worker frustration will grow, with unforeseeable consequences for democracy and society. On the other hand, the new vision of “worker liberalism” offers hope: through a realistic economic plan (reviving industries, investing in the green economy and infrastructure), political will to reduce inequality, and technology that works for people, it is possible to restore the trust of the working class.

For countries like ours, this means that the transition is not over as long as the ordinary worker does not feel improvement. How can liberal capitalism lift the working class? — According to Acemoglu, by returning to its liberal ideals but with one correction of course: that the free market and technology be tools for the common good, not ends in themselves. This is a call for leftist parties and all progressive forces to once again find common language with workers. Because only an economy that works for the majority can ensure stability, prosperity, and healthy democracy in the years to come.

Source: Daron Acemoglu, Financial Times — “How liberalism can win back the working class.” Nobel laureate Acemoglu has elaborated on this topic in detail in his other works, including the book Power and Progress and joint studies on technology and inequality, pointing out that the fight for pro-worker policy and economy is a key point for the future of liberal democracy. His ideas serve as a reminder that prosperity makes sense only if it is shared — otherwise neither liberalism nor democracy will maintain the trust of the many. The working class, once the driver of social progress, must not remain forgotten — it is precisely in its empowerment that the path toward a fairer and more successful society for all lies.

Note: The text is inspired by and partially relies on Daron Acemoglu’s article in the Financial Times under the mentioned title, with a reflection on the regional context (the Balkans, former Yugoslavia) where questions of workers’ position and transition remain of exceptional importance.

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