Why Nations Fail: A Theory to Explain World Inequality

7:10 AM

Mature, public conversation about issues that matter is foundational for democratic society. I am delighted that Mark Zuckerberg's "A Year of Books" offers such an opportunity. To contribute to that dialog, I will offer commentary on each of the readings proposed by Zuckerberg.

Somewhere in the back of my head, I recalled seeing Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daron Acemoglu and James A. Robinson in footnotes or the content of some book. After concluding Why Nations Fail, I embarked on a fruitless search to find the reference. I thought maybe Moises Naím included it in The End of Power. Or Hank Paulson, given the lengthy examination of China by Acemoglu and Robinson, might have referred to it in Dealing with China. Finding no reference to it, I even turned to Steven Plinker's The Better Angels of Our Nature, but such a discovery would have been anachronistic as Plinker wrote before Acemoglu and Robinson. While I cannot recall where I first heard reference to this book, I was pleased to embark on this book when Zuckerberg announced its selection.

I delighted in the breadth of the work. Acemoglu and Robinson assess contemporary political and economic institutions as well as reaching back to the archaeological record of the Natufian people and everything in between. They draw examples from every inhabited continent and from different eras. The authors use the breadth of their examples to underscore the utility across time and geography of their theory. Throughout the past couple of centuries, many have theorized about the rise and fall of nations. In high school, Mr. Charles Budke, an inductee into the Kansas Teachers' Hall of Fame, would often challenge us to understand the reasons for the fall of Rome and what they might indicate for us today. In a similar way, Acemoglu and Robinson avail themselves of the sweep of history, including Roman history, to debunk certain conclusions and propose a new theory.
Daron Acemoglu
The authors reject theories that claim nations are poor for reasons of geography, culture, or ignorance. Against the first and second, citing the differences between Nogales in Arizona and in Sonora, Mexico, the differences between North Korea and South Korea, where one sees marked economic and political difference amid similar geographies and cultures. Citing the historical record, they argue that ignorance does not explain the failure of impoverished nations to improve their status. The book seeks to understand the causes of the differences between apparently similar contexts.
James A. Robinson
Acemoglu, an economist at MIT, and Robinson, an economist and political scientist transitioning from Harvard to the University of Chicago, build a theory for world inequality based upon the interplay of political and economic institutions. Their basic thesis is that inclusive political institutions tend to create and strengthen inclusive economic institutions and, at the same time, inclusive economic institutions tend to build inclusive political institutions, a "virtuous circle." In contrast, extractive political institutions tend to create and strengthen extractive economic institutions and, at the same time, extractive economic institutions tend to create and strengthen extractive political institutions, a "vicious circle." Their argument provides a better description for the behavior of nations, especially those that fail, than the arguments for geography, culture, or ignorance.

When I read, I like to underline and write notes in the margin. Key points and graceful turns-of-phrase, both in abundance int his book, meant a lot of underlining. There is a lot that I like about this book, but I am nagged by a margin note that I made: "a Whiggish interpretation of history." Historians criticize those works that demonstrate an inevitable march toward progress as a "Whig interpretation of history." Acemoglu and Robinson go to great lengths to assure us that there is nothing inevitable about "critical junctures" in history, all is contingent, and it feels like they are trying to avoid the "Whig argument." Nonetheless, another criteria that I find helpful for sniffing out a "Whig interpretation" is the search for historical "goodies" and "baddies." England's Glorious Revolution is lifted up as inclusive, economically and politically, but England through the Colonial period could only be seen as "extractive" in its relationships with the American colonies, with Africa, and with India. The U.S. is lifted up, while Mexico is criticized, but Mexico liberated slavery at its inception (inclusive politics), while the U.S. fights a Civil War to en end slavery (1865), replaced by segregation and Jim Crow, and, now, mass incarceration. The theory proposed by Acemoglu and Robinson seems simplified between inclusive and extractive, when institutions have contradictory impulses toward each.

My reading of Why Nations Fail was interrupted briefly by the visit of Pope Francis to the U.S. (which I earnestly watched on television) and the Land Institute's annual Prairie Festival. Pope Francis, in his address to Congress, pointed toward what Acemoglu and Robinson would characterize as inclusive institutions:

If politics must truly be at the service of the human person, it follows that it cannot be a slave to the economy and finance. Politics is, instead, an expression of our compelling need to live as one, in order to build as one the greatest common good: that of a community which sacrifices particular interests in order to share, in justice and peace, its goods, its interests, its social life. I do not underestimate the difficulty that this involves, but I encourage you in this effort.

At the Land Institute, they address issues of how, since the Anthropocene epoch and human farming, humanity has dedicated itself to an extractive relationship with the earth. The growing devastation from climate change and the Sixth Extinction urge us to find more inclusive institutions and processes, broadly understood. Both the Land Institute and Pope Francis urge us to care for our common home, a boldly inclusive view.

Why Nations Fail is a good, readable book. I recommend it. It advances an argument that, while I remain unconvinced based on their evidence, I want to succeed. In the end, I find the argument of Why Nations Fail to be an assertion of hope as well as warning. In the U.S. today, we have growing evidence of political exclusion (e.g., declining rates of voter participation) and economic exclusion (growing economic inequality). Our relationship with the Earth is much more extractive than inclusive. The contrast in language between extractive and inclusive provide some guidance. I earnestly hope that Acemoglu and Robinson are correct and that their vision persuades some to tack for a different course. The alternative is to see more economies and states crash against the rocks, as well as to see our home, Earth, further degraded.

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