WHY NATIONS FAIL

Following up on their earlier collaboration (Economic Origins of Dictatorship and Democracy, 2005), two scholars examine why some nations thrive and others don’t.

Neither geography, nor culture, nor mistaken policies explain the vast differences in prosperity among nations. The reasons for world inequality, write Acemoglu (Economics/MIT) and Robinson (Government/Harvard Univ.), are rooted in politics, in whether nations have developed inclusive political institutions and a sufficiently centralized state to lay the groundwork for economic institutions critical for growth. In turn, these economic institutions give citizens liberty to pursue work that suits their talents, a fairly enforced set of rules and incentives to pursue education and technological innovation. When these conditions are not met, write the authors, when the political and economic institutions are “extractive,” failure surely follows. It matters not if the Tsars or the Bolsheviks governed Russia, if the Qing dynasty or Mao ruled China, if Ferdinand and Isabella or General Franco reigned in Spain—all absolutism is the same, erecting historically predictable barriers to prosperity. The critical distinction between, say, North and South Korea, lies in the vastly different institutional legacies on either side, one open and responsive to the needs and aspirations of society, the other closed with power narrowly distributed for the benefit of a few. In their wide-ranging discussion, Acemoglu and Robinson address big-picture concepts like “critical junctures” in history—the Black Death, the discovery of the Americas, the Glorious Revolution—which disrupt the existing political and economic balance and can abruptly change the trajectory of nations for better or worse. They also offer a series of small but telling stories in support of their thesis: how the wealth of Bill Gates differs from the riches of Carlos Slim, why Queen Elizabeth I rejected a patent for a knitting machine, how the inmates took over the asylum in colonies like Jamestown and New South Wales and why the Ottoman Empire suppressed the printing press.

For economics and political-science students, surely, but also for the general reader who will appreciate how gracefully the authors wear their erudition.