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The Book Club

Daron Acemoglu And James A. Robinson’s “Why Nations Fail: The Origins Of Power, Prosperity, And Poverty”

Taken from https://images-na.ssl-images-amazon.com/images/I/51XYz-Um3pL._SX322_BO1,204,203,200_.jpg.This is part of my “A Book A Week” endeavour, an extension of The Book Club I started on this blog when I was completing my National Service.

The thesis is elegant, even if it may seem straightforward: that nations succeed economically when they have inclusive economic and political institutions, as opposed to extractive ones, where power is vested in a small group of elites. In countries with inclusive institutions, more people have a say in politics and democratic decision-making, which in turn fosters and incentivises growth.

It is a thesis Daron Acemoglu and James A. Robinson repeat throughout the 15 chapters – each detailing the comparative history, development, and characteristics of different countries – in “Why Nations Fail: The Origins of Power, Prosperity, and Poverty”. After distinguishing between extractive and inclusive economic and political institutions and expanding upon these “institutional dynamics”, they then explained why the inclusive ones emerged in some areas, but not in others. More often than not, the interactions between the elite and the people mattered:

“Extractive institutions can be replaced by inclusive ones. But it is neither automatic nor easy. A confluence of factors, in particular a critical juncture coupled with a broad coalition of those pushing for reform or other propitious existing institutions, is often necessary for a nation to make strides toward more inclusive institutions. In addition some luck is key, because history always unfolds in a contingent way.”

The notion of history as being contingent is emphasised, since it complicates evaluations of why nations succeed or fail.

Yet is the thesis too elegant, and are they too dismissive of geographical or cultural factors mooted by others? Acemoglu and Robinson’s narrative – which can be long and dreary at times – is premised upon historical analysis and case studies, though they do not quite justify how particular countries were chosen, raising questions about biased sampling. By extension, on this point about methodology, they too do not explain why other countries were not chosen. And even though they had published previous academic work which used economic or quantitative models, these theories or arguments were not fleshed out in detail (or even mentioned at all) in the book. A more rigorous evaluation, across a much larger number of countries, would have been more compelling.

“Why Nations Fail”, of course, should not be too esoteric for the average reader. Though as a result – without a balance – the thesis appears more descriptive, rather than prescriptive or analytical, with little of value for countries which may be struggling.

In other words, it could be useful to pay greater attention to the quality of economic and political institutions in a country, to make sure the adoption of “better policies and institutions … take place in the context of an explanation [beyond assumptions, of the ignorance of leaders] of why bad policies and institutions are there in the first place”. I agree with Acemoglu and Robinson that understanding the history, the circumstances, and the performance of a country’s institutions is useful. Yet I also think that a broader “context” matters too, and a thesis which seeks to generalise the economic success of nations is unfortunately not found in this book.

About guanyinmiao

A man of knowledge lives by acting, not by thinking about acting. Carlos Castaneda.

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