From the invention of the plough to the world wide web, technology has transformed economic, political, and social arrangements. The impact of technological change on wages and inequality have been well documented. But how do studies in historical political economy inform our understanding of the relationship between technological shocks and politics?
Recent works by scholars working in regions as different as the United States and India suggest that the link isn’t always rosy. In a recent book, Carles Boix compares and contrasts the ways in which technology transformed American politics at the beginning and at the end of the 20th century.
Boix argues that a specific form of capitalism which he labels “Detroit Capitalism” came to dominate early 20th century America. In this era, well-run assembly lines, spotless factories and a balance of power between corporations, unions, and governments resulted in dramatically improved employee wellbeing, better pay for labor, and falling inequality. These changes undercut the radicalism of left-wing parties and moderated politics. Technological innovations in machinery, communication and transportation rewarded semi-skilled labor, and aligned the interests of skilled labor with those of capital. These “joint gains” also moderated right-wing parties. Importantly, the rewards to labor from these technology shifts resulted in lower income and wealth inequality that stabilized American politics for a good part of the 20th century.
In stark contrast, starting in the 1970s, a growth in automation, an explosion of the information economy, and greater global integration have reversed those gains – American labor has become dispensable, wages for the lower half of the income distribution remain stagnant, and the goals of capital and labor are now at odds with each other. This has resulted in weaker parties and greater extremism in today’s politics.
While Boix’s book provides insights on how the changing nature of technology in manufacturing shaped politics, two studies by Aditya Dasgupta, one on India and the other on the US, offer clues on how technology disrupts politics through agriculture .
In a recent working paper, Dasgupta shows that rural American voters weren’t always conservative party voters. In fact, up until the early 20th century, rural areas of the country voted for the Democratic party or for the populist party in large numbers. He argues that technological shifts changed the economic landscape of rural America. Technology made agriculture not only more productive but also more capital intensive.
Technology in this way wrought distributional changes — it drastically reduced the number of small family farms that were typically Democratic party voters. Instead, technology created upwardly mobile farmers and agribusinesses that preferred weaker regulation and conservative economic policies.
Dasgupta examines the effects of the the invention of ground motor pumps that enabled farmers to tap into ground-water to irrigate arid land. In order to do so, he relies on a natural experiment in the Great Plains: the extent of untapped groundwater. The availability of this natural resource would create winners and losers after pumps were invented. Using a diff-in-diff design as well as a spatial matching design along the Ogallala aquifer, he shows how technological shifts shaped partisan realignment towards the Republican party over the century as shown in Figure 1 below.
Dasgupta examines a similar phenomenon in India. He shows how the Green Revolution led to the end of single-party Congress dominance. In this paper he relies on a different natural experiment: the timing of the introduction of hardy high yield variety crops across India, as well as district-level variation in the conditions (especially irrigation) suitable for the crops. He argues that the crops cerated an upwardly mobile class of farmers who could now break away from the Congress, seek out their own political fortunes, and vie for policies that would benefit their class.
Importantly, the green revolution’s agricultural surplus incentivized groups to to seek valuable agricultural subsidies from the government. Consequently, the groups that mobilized were agrarian and regional opposition parties in India’s states and not the traditional parties like the Hindu nationalist parties or the left.
A central feature of the studies I have discussed here is that they center class interests. But technology not only results in distributional shifts across classes, it also holds the potential to disrupt racial or caste based hierarchies. While Dasgupta shows that the green revolution in India led to the rise of backward caste parties focused on increasing farmers’ policy influence, these very same castes faced a concerted political backlash when they attempted to parlay their economic mobility into greater educational or social mobility — as evidenced by upper caste reaction to affirmative action policies in the early 1990s. The link between technological shocks, ethnic inequality, and party-system ethnification that emerged in the 1990s needs further exploration.
Relatedly, while technological shifts have resulted in growing disaffection amongst white working classes it is not clear why non-white voters, who are also affected by the same wage stagnation and decreasing economic mobility, are not persuaded by anti-systemic appeals. Also, the era of “Detroit capitalism” was also the hey day of Jim Crow America. Given the racial and ethnic bases of support for parties in America and India, future studies that examine how technology shapes partisan appeal amongst different types of ethnic groups might hold interesting answers.
On the whole, however, these studies show that technology is a double-edged sword for democracy. Friendly when the distributional effects lift all boats, and antagonistic when it creates winners and losers.