Technology, power and the political economy of inequality

Technology can affect the distribution of income directly via its influence on both the bargaining power of different parties and the marginal product of different factors of production. This paper focuses mainly on the first route. The role of power is transparent in the case of medieval choke points but modern network technologies have similar features. There is also substantial evidence --from truckers and retail clerks to CEOs -- that power affects the determination of wages. But power relations inevitably have institutional dimensions; regulatory frameworks influence industry structures and the market power of large companies as well as the parameters that determine the earnings of different groups of workers. The institutional framework is arrived at through complex social and political processes; technology, however, may exert some influence on the course of those processes.