When We Are No Longer Needed: Emerging Elites, Tech Trillionaires and the Decline of Democracy

This post is part of a series of contributor perspectives and analyses called "The Coming Age of Tech Trillionaires and the Challenge to Democracy." Learn more about the call for contributions here, and read other pieces in the series as they are published here.

2024 was the “year of elections.” Voters from over 60 countries headed to the polls. Over the course of recent human history and up until 2015, the total number of people across the globe living in democracies steadily increased, as did the percentage of political systems that were characterized as democratic. However, many democracies are less than a generation old, and in the broader picture of human history, democracy is the exception, not the rule. To make matters worse, a phenomenon has recently emerged that experts have termed “democratic backsliding.” In 2023 alone, the Episodes of Regime Transformation data revealed that a staggering 42 countries were undergoing autocratization. Scholars have also noted that democratic resilience has weakened substantially since the early 1990s, noting an unprecedented breakdown of 36 democratic regimes. The same study found that once autocratization has begun, only a fifth of democracies succeed in averting an ultimate breakdown.

If democracy is such a new phenomenon, and yet it is already in decline, should we be worried that its tenure as a superior mode of governance will be short-lived? Is democracy, as some have put it provocatively, “a bit chancy,” a “historical accident,” or a “blip in history”? To answer this question, we need to understand what has historically given rise to democracies and what has contributed to their prevalence. Such an analysis does not inspire hope. It is a story of elites carefully conducting cost-benefit analyses and begrudgingly accepting that enfranchising the wider public is necessary to ensure economic growth and drive innovation, maintain military might, and prevent social unrest.

Today, who we think of as “the elite” has changed. It is not those who were lucky to be born into the right families. It’s not aristocrats or monarchs. It’s those who have succeeded in leveraging a system of exploitation, and increasingly, it is billionaires from a very specific sector: tech. Having positioned themselves at the heart of not only the economy but also our politics, a few figures have begun to wield significant influence. The Spanish Prime Minister, Pedro Sanchez, recently accused tech billionaires of trying to “overthrow democracy,” and Elon Musk has publicly expressed sympathy for the idea of replacing democracies with a government of “high-status males.” Peter Thiel has vocalized his dream that “you could unilaterally change the world without having to constantly convince people and beg people and plead with people who are never going to agree with you through technological means,” calling technology an “incredible alternative to politics.”

The reason that they can get away with this kind of language is a fundamental shift and a turning of the tables. Whatever incentives elites may previously have had to empower and enfranchise wider parts of the citizenry, they are crumbling before our eyes as increasingly powerful AI and automation obviate the necessity for billionaires to engage in productive dialogues with workers. Better data and information processing capabilities weaken the reliance of elites on distributed and decentralized decision-making. Rising inequality, fueled by the various “digital divides” that have been decried, widens the rift between a coming generation of tech trillionaires and the rest while also increasing the perceived cost of enfranchisement.

And so, the agglomeration of money and—by extension—power by a small number of unfathomably rich people steering and reaping the benefits of emerging technology represents a fundamental threat to the relatively stable foundation of what has been described in a quote attributed to Winston Churchill as “the worst form of government, except for all those others that have been tried from time to time.” But how did we get here?

What explains the rise of modern democracies?

At the heart of the question of what explains the rise of modern democracy lies a fundamental puzzle: If you are an elite trying to hold on to (or maximize) power, why would you cede this capability to those who—assuming the status quo persists—have less of it?

Economic development and increasing equality

It’s been observed that an increase in GDP and the emergence of wide-scale enfranchisement have historically often coincided. Economic development benefits those who are worst off, and hence brings with it higher equality. This, however, only shifts the puzzle to a different question: Why is increased equality conducive to democratization?

The threat of democracy is that those who would then wield power would use it to advocate for more redistribution. The greater the disparity between the poor and the rich, the more extreme these calls will be, and the more there is to lose for elites. If, however, the gap between the classes is shrinking, so is the threat of redistribution and higher taxation. One concrete historical example of this evolution over time is the Industrial Revolution, a period in history marked by rapid industrialization and unprecedented economic growth.

A number of factors contributed to the rise of democracy during this period. Firstly, economic development increased standards of living and levels of general literacy, which facilitated the emergence of norms and standards such as tolerance and compromise, conducive to the establishment of democratic regimes. Secondly, economic development reduced not just the financial but also the cultural gap between the rich and the poor, making the elites see the median voter as “more worthy” of enfranchisement. Allowing the masses to rule appears less of a threat if you perceive them as well-educated, while rising levels of education also improve the overall quality of decisions made by the general public. Thirdly, higher overall levels of income grow the pie that is to be distributed, reducing struggles for capital and ownership that are characteristic under conditions of scarcity. It is easier to share resources if there are more resources to go around in the first place. And last but not least, there was also an increasing overlap in the interests between different factions caused by industrialization: Before the revolution, what was called for by the lower classes was land reform—an untenable proposal for elites. Thanks to industrialization, the overlap of interests and preferences shared by capital holders and non-holders increased.

Increased value of an educated workforce & increased bargaining power of workers

The fact that democratization coincided with industrialization has led some to develop theories suggesting that democracy began to reveal itself as a potentially advantageous form of rule, particularly in the United States and the United Kingdom, as capital holders increasingly depended on a well-educated labor force in the late nineteenth century. Empirical evidence supports this theory, since states have been found to be able to boost economic growth and attract high-wage employers through investments in education. This way, policies that were redistributive in nature—such as universal education—started to also become appealing to those in power.

A second dynamic occurred at the same time: As workers started to overcome collective action problems by forming unions and organizing within and across companies (and even countries), this shifted the power balance between capital and labor, which led to a rise in the cost of suppression of labor and a renaissance of civic engagement which made democracy more likely to emerge.

“Democracy is the outcome of some version of a utility calculus that all parties conduct: They assess the costs of a democratic regime (chance of losing an election and living under suboptimal policies) against the cost of suppressing and excluding contenders for power in an autocratic regime. Democracy, then, prevails when a) costs for tolerating democracy decline (e.g. because there is only a small difference in welfare resulting from tolerating the opponent’s policies) or when b) the cost for suppression rises.”—Robert A. Dahl

Tearing at the seams: tech billionaires and democratic backsliding

If democracy is indeed just the natural result of the aforementioned dynamics and idiosyncratic historic circumstances, why should we believe it will persist as capital and power get more and more concentrated in the hands of a few wealthy tech billionaires, and as the demand for an educated labor force gradually diminishes? Democracies, seen this way, may not go out with a bang, but rather tear at their seams as the foundations they are built on slowly but steadily degrade.

Economic development and increasing equality

Looking at economic development alone, most forecasts suggest that advances in AI will fuel growth. The potential of new scientific discoveries and large-scale automation stands a chance of opening up entirely new sources of economic value and making existing ones even more profitable. While there is currently no conclusive evidence about the effects of AI advances on inequality, the potential of large-scale automation alone suggests the possibility of a world where capital assets become more, rather than less, monopolized by those with access to key resources, such as computational power or proprietary datasets. As a result, there may be a decisive strategic advantage for first movers, which would allow that party to slow down competitors at a later stage—a dynamic we have already seen in the tech ecosystem, where tying or bundling services are commonplace mechanisms by which power is sought to be consolidated.

It is also conceivable that barriers to entry for users create conditions under which some benefit from using AI systems to increase their productivity, while others do not. Rising inequality has been repeatedly highlighted by experts from around the world as a key risk associated with the development and deployment of increasingly powerful AI systems. Hence, while we should expect economic growth to persist or even accelerate as a result of AI advances, we shouldn’t be similarly optimistic that this will bolster democracy, as it might make the system more costly for those who stand to lose from redistribution.

Increased value of an educated workforce and increased bargaining power of an educated workforce

In the past, the reaping of ever-higher economic profits hinged crucially on one’s ability to attract and retain relevant human resources. It is unclear whether having access to a well-educated workforce will remain an equally important factor in a future shaped by powerful forms of artificial intelligence that some in industry promise, such as Artificial General Intelligence (AGI). Sure, skilled workers in certain specialized industries will continue to be a highly coveted asset. The Chinese practice of poaching engineers and semiconductor manufacturing experts from Taiwan and Korea has become a well-documented phenomenon. It is unclear whether this trend will persist, given recent advances in even highly technical professions, such as the electronic design of chips. AI advances would likely usher in more automation across all sectors of the economy, and with that, a reduced dependence on a large base of skilled workers. Even if a niche of professions manages to escape this fate, it will be hard to argue that large swathes of the population need to be highly educated. As a result, the bargaining power of the working class will be significantly weakened. In a world where an AI agent that could replace a worker is cheaper, smarter, and less demanding in terms of management and other potentially scarce resources, labor will lose its ability to threaten capital with traditional means, such as strikes or threats to resign and join a competitor. On a more optimistic note, it is important to recognize that the notion that AI advances will disempower workers is not a foregone conclusion: previous technological advances have sometimes, but not always, shifted the power balance in favor of capital. In other cases, they have made workers more productive (and their output more valuable), which has increased their bargaining power.

A pathway to democratic decline

Tying this all together, a concerning picture emerges: A rise in inequality and the disappearance of a middle class as a stabilizing force could severely undermine the support of tech billionaires for democracy. Growing costs of redistribution that come alongside rising inequality, paired with a reduced need for human labor, could mean that elites see the democratic process as a relic that is simply not needed anymore. This could be exacerbated by a vicious cycle with self-reinforcing feedback loops: As societies become more unequal, the cost of redistribution rises, and efforts to block such measures will become more aggressive. This, in turn, will increase inequality, further raising the cost of redistribution and the cost of tolerating democracy.

There are also more indirect ways through which inequality could eventually lead to the rise of dictatorships—the corrosion of democratic institutions (because elites fear having their wealth redistributed away) increases the risk of corruption and corporate capture of the policy agenda. The close associations between tech billionaires and the Trump administration are only the most recent example of this phenomenon, and are preceded by decades of successful industry lobbying and revolving doors between the tech industry and democratic institutions. Eroding trust in public institutions may pave the way for populists who seek to further dismantle democratic structures, sowing division amongst citizens and decreasing the overall degree of public trust in democratic processes. Early signs of this can already be observed, with extremist and autocratic tendencies in voters routinely being attributed to labor displacement and economic disillusionment. More generally speaking, citizen distrust—worsened by AI-driven mis- and disinformation—could become a driving force behind rising populism. As democratic institutions become weaker and weaker, they will be even less capable of imposing redistributive and equalizing measures, further accelerating the descent into autocracy and the transfer of political power to those in control of the technologies they increasingly depend on.

From an economic perspective, elites may not only have more to lose due to increasing inequality. They may also have a lot less to gain. In a world where elites no longer need citizens to staff their factories and drive scientific innovation forward, large parts of the population may suddenly face a new threat, entirely different from previous precarities such as exploitation or repression, and one that is much harder to fight against: irrelevance. In the early days of democracy, elites needed at least parts of the population to determine the right amount of land and its taxation or to implement and enforce policies. In later years, they became dependent on a well-educated workforce. Once this dependency disappears as the cost of fully automated labor (including in domains like law enforcement) tanks, enfranchisement could become a purely costly endeavor without any associated benefits. Elites might still be incentivized to provide a baseline of services to their citizens to consolidate their power, but that is far from guaranteed, and we should not rely on their goodwill and generosity to distribute their newfound riches in a democratic manner.

A different path is possible: Countries like Taiwan have successfully demonstrated that technologies can empower people and bolster democracies. The promises of a new era of what Ezra Klein and Derek Thompson call ”abundance” need not ring hollow, but they will require a concerted effort to rein in the coming tech trillionaires and their accumulated power.