‘Capitalism has to become more humane’: a Stanford economist on big tech, power hoarding and democracy

The billionaires of today are unusually aggressive in their hoarding of cultural and technological influence, according to Mordecai Kurz, a Stanford economist whose research connects monopoly power with political and economic inequality. In his new book, Private Power and Democracy’s Decline, publishing 19 May, he argues the US is living through an extreme version of a pattern that has repeated itself since industrialization: technological power concentrating in the hands of a few, which is eroding democracy.According to Kurz, technological moguls have long seen themselves as superior beings whose natural role is to shape society – so they have no problem disrupting the institution of democracy. During the first Gilded Age, in the late 19th century, as the US was enjoying its first ascent as an industrial powerhouse, wealthy industrialists like Andrew Carnegie and John D Rockefeller “invented all kinds of theories about human evolution”, twisting the logic of social Darwinism to convince themselves that their success was a sign they had been selected by nature to influence society, Kurz explained. Now, Anthropic CEO Dario Amodei has suggested his technology has a mystical potential to become a transcendent good. He’s also openly acknowledged it could lead to mass unemployment.Voters turn towards fascist leaders when democracy no longer serves workers, Kurz says. “New Deal” reforms during the Great Depression limited monopoly power and provided benefits to the vulnerable. According to Private Power and Democracy’s Decline, these reforms precipitated a “half-century of sustained innovations, rapid economic growth and stable income distribution”. Reagan-era reversals of those reforms led to what Kurz calls the “second Gilded Age”, when technological firms could accumulate monopoly power and wealth while most Americans, especially blue-collar workers without college degrees, saw their wages stagnate as the cost of living rose. It was this economic disenfranchisement, rather than cultural forces, that led to the rise of Maga, according to Kurz.The book describes how today’s tech giants are diminishing voter power through both economic and cultural influence. Small tech startups and bigger tech companies like Microsoft and OpenAI prefer to collaborate with one another rather than compete, Kurz says. New technology companies are now formed not with the intention to challenge existing players but with the explicit aim of eventually being acquired by one. This is a symptom of monopoly power so extreme and entrenched that no innovator can survive without an established monopoly’s blessing. David has no choice but to work with Goliath. This same monopoly status gives tech giants enormous lobbying influence. Politicians who rely on their money are unlikely to rein them in.“When you use strategies designed to manipulate knowledge to create market power, you go way beyond what we should be willing to accept,” Kurz said.Tech giants use the force of their largely unregulated social media networks to further drive polarization to serve their bottom lines, Kurz says. “[Social meda] activity is profitable, and sometimes you generate activity by creating falsehoods, which are not good for democracy,” he said, adding that tech companies should be held legally liable for misinformation on their platforms. Unregulated AI could also further entrench disillusionment as it seeks to displace an even larger swath of workers, he projects – not just those without college degrees but doctors, lawyers and engineers as well.Still, Kurz is optimistic that a better democracy will rise again, though it might be a difficult road. “Trumpism will not go in a whimper,” Kurz says. “There may be a big recession or a big depression or some other crisis before we can complete a new reform cycle.”Kurz says that extreme consolidation of technological power has eventually led to reform in the past, and conditions are ripe for it to happen again. “If you talk to any normal, intelligent American, they will tell you something is wrong in America and something has to change,” he said. The Maga coalition is a combination of old-fashioned Republicans, white supremacists and former blue-collar workers who have been disenfranchised, says Kurz. Very specific economic circumstances led this group of people to come together, and they will fall apart again.When the time for that reform comes, Kurz outlines what it should look like in Private Power: the government should tax and redistribute excess wealth that tech firms accumulate due to monopoly power. When workers are displaced by AI, education to help them learn new, more relevant skills should be government subsidized, as should companies who hire them. And new policies should ensure that AI technology assists workers but doesn’t replace them.“We want capitalism to support democracy. Capitalism has to become more humane. It has to be more regulated. And in democracy, we don’t leave anybody behind,” he said.