Why Nations Fail by Daron Acemoglu and James A. Robinson
Title: Why Nations Fail: The Origins of Power, Prosperity, and Poverty
Author: Daron Acemoglu and James A. Robinson
Published: 2012
Type: Non-Fiction
Pages: 462
Inclusive economic and political institutions do not emerge by themselves. They are often the outcome of significant conflict between elites resisting economic growth and political change and those wishing to limit the economic and political power of existing elites.
In Brief:
The first non-fiction book I’ve read in a while! It’s interesting for its case studies and I generally agree with the thesis, but it lacked nuance and was a little too rah-rah capitalism for me.
Rating: 3.5
Synopsis:
In Why Nations Fail, economists Acemoglu and Robinson set out to explain one of the most striking features of the world economy: the glaring gap between rich and poor countries. Armed with a vast array of case studies, they argue that inclusive institutions, as well as technological innovation and creative destruction, leads to sustained economic growth and prosperity. In other words, nations thrive when they build institutions that empower and protect their citizens, giving them the freedom to “save, invest, and innovate.”
Refuting common claims that poverty stems from geography, culture, or ignorance, Acemoglu and Robinson focus exclusively on institutions. They go through examples across history and geography, discussing various historical undercurrents, vicious versus virtuous cycles, institutional drift, and critical junctures that have produced the various political and economic institutions we see today. In simple terms, these institutions can be extractive, meaning they “are structured to extract resources from the many by the few,” or inclusive, meaning they “enforce property rights, create a level playing field, and encourage investments in new technologies and skills.”
According to Acemoglu and Robinson, extractive nations fail. As a few examples, they compare the twin cities of Nogales, one of the Mexican side of the US border, one in Arizona. They compare former Soviet states to Western Europe, pre-Civil War South to the North. They don’t consider the rise of China as particularly dissuading, given its lack of creative destruction, and consider its growth temporary and due largely to state centralization. Ultimately, they argue that many development interventions and policies will fail, unless they address and resolve the underlying structure of institutions.
Where I’m At:
We’re still in quarantine. That’s not particularly exciting.
Much more relevant to my reading of this book was my education as a Political Economy major at Cal, where I focused on Middle Eastern Economic Development, minored in Public Policy and Middle Eastern Studies. In other words, it’s somewhat shocking that I hadn’t read this book already, though I’m pretty sure I read a few chapters here and there in my studies.
Because of this, I found the book unnuanced and pretty basic. To be fair, the bulk of the book’s argument is sort of the underlying, most basic assumption of poli econ. Acemoglu and Robinson write “this book will show that while economic institutions are critical for determining whether a country is poor or prosperous, it is politics and political institutions that determine what economic institutions a country has.” In other words, economic prosperity depends on a state’s political foundations. To which my harsh and probably unfair response is: Yes. Obviously.
I also think I might be a bit late to reading this book. Published in 2012, it felt a bit outdated at times, a little too chipper about the US economy and glaring in its omission of our own vast domestic inequality. It came out shortly after Occupy Wall Street, before Bernie Sanders or Donald Trump, before there were popularized voices and coherent arguments to express dissatisfaction with capitalist economies even in the “developed” world.
Oh also – all the references to the Black Death and its entire restructuring of Europe felt a bit too prescient for comfort.
Getting Into it:
I’ll start by saying that I recognize that a lot of my criticisms of the book are pretty unfair, because I think they fall outside of its scope. It’s decidedly not an academic book, and I wanted more of theory and nuance. It’s about origins (there in the title), and I wanted more solutions. For what it is, the book is very good. I just think I wanted to be reading a different book.
I’ll also say that I’m very impressed by the case studies in this book, for the most part. I can’t imagine all the research that went into writing them, and could never do that myself. They also did a reasonably good job at giving a diverse range of examples, though the book does still lean Western-centric, as all of its kind sort of do and must. I took some issue with the Middle East and Ottomans (it was so diverse and actually a lot more inclusive to minorities than its European contemporaries), but otherwise found these studies persuasive and fascinating.
But. There was so much the book left out, and to me those omissions sort of became more powerful than what was included. Yes, the institutional history of colonialism has hurt the development of some states in Africa or Latin America enormously, but what about good old-fashioned racism? Yes, there are powerful billionaires in Mexico who wield undue influence and benefit from keeping the poorer citizens poor, but what about the powerful, wealthy states that wield undue influence and benefit from keeping poorer states poor? Again, there’s plenty of discussion about what Western/colonial powers did in the past (good start), but very little about what we continue to do now to keep our own dominance, keep international labor/resources cheap, perpetuate a brain drain for our advantage. (I went through my old development studies notes and re-read lectures on Wallerstein and World Systems Theory just to make myself feel better here. It’s also not perfect, but I felt more balanced.)
Acemoglu and Robinson’s argument was also just so single-faceted, it got repetitive and felt like they were beating a dead horse with all their examples and reassertions at the beginning and end of every chapter. Guess what! It’s institutions! I wanted more. They seem to assume that if inclusive institutions exist, then markets will necessarily take care of the rest, which I found very oversimplified and unrealistic. For instance – what does it mean to be inclusive? They talk about inclusive states empowering and protecting their people – but who, exactly, is being empowered and protected? It’s never everyone, look at the state of inequality in the US! What factors feed into that? What does that limit? How are markets resolving things here? Again, this is outside of the scope of the book but I found myself constantly wishing I could push back, ask these questions, dive a little deeper.
The ending was my favorite bit, when they got into how their argument affects foreign aid. I probably could have read an entire book about that. They say “since the development of inclusive economic and political institutions is key, using existing flows of foreign aid at least in part to facilitate such development would be useful… perhaps structuring foreign aid so that its use and administration bring groups and leaders otherwise excluded from power into the decision-making process and empowering a broad segment of population might be a better prospect.” And then the section ended! I was incensed! What might that look like? Are there examples? What exactly do they recommend? Once again, the book I wanted to be reading just wasn’t the book I was actually reading.
Still – I gave this book a 3.5, which isn’t bad. I found aspects of it really impressive, and the writing was always very clear (no easy task from academics). I do actually recommend it to anyone interested in an introduction to the state’s role in economic development how political processes underpin prosperity – I just don’t to people who spent years studying that exact thing.
