Why Nations Fail

Why Nations Fail

The Origins of Power, Prosperity and Poverty

Book - 2012
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This is a provocative new theory of political economy explaining why the world is divided into nations with wildly differing levels of prosperity. Why are some nations more prosperous than others? "Why Nations Fail" sets out to answer this question, with a compelling and elegantly argued new theory: that it is not down to climate, geography or culture, but because of institutions. Drawing on an extraordinary range of contemporary and historical examples, from ancient Rome through the Tudors to modern-day China, leading academics Daron Acemoglu and James A. Robinson show that to invest and prosper, people need to know that if they work hard, they can make money and actually keep it and this means sound institutions that allow virtuous circles of innovation, expansion and peace. Based on fifteen years of research, and answering the competing arguments of authors ranging from Max Weber to Jeffrey Sachs and Jared Diamond, Acemoglu and Robinson step boldly into the territory of Francis Fukuyama and Ian Morris. They blend economics, politics, history and current affairs to provide a new, powerful and persuasive way of understanding wealth and poverty. They offer a pragmatic basis for the hope that at 'critical junctures' in history, those mired in poverty can be placed on the path to prosperity with important consequences for our views on everything from the role of aid to the future of China.
Publisher: London : Profile, 2012.
Branch Call Number: 330 ACE
Characteristics: xi, 529 p. :,ill., maps ;,25 cm.
Additional Contributors: Robinson, James A. 1960-
Notes: Includes bibliographical references (p. [483]-509) and index.


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May 03, 2019

A fascinating look at the issue of why some nations are rich and some poor. Jared Diamond's "Guns, Germs & Steel" get you to just prior to the industrial revolution and the thesis laid out in this book can get you the rest of the way.
Put simply, it is political institutions that decide.... whether they are extractive for a small ruling elite or inclusive and allow for all the opportunity to increase their personal wealth and thereby the entire country.
Inclusive institutions pose a peril to ruling elites as the systems in place enhance their ability to extract (think serfdom and slavery) and any particular increase in political and/or economic power of those who are not elite can and will erode the privilege and power of the powers that be.
Also aspects of "creative destruction" can destabilize societies. There is a reason why Luddites oppose technological development. The authors list several examples whereby a technological development in the past was about to be introduced to society but was stricken down by monarchs and other members of the ruling class. The reason given is that the technological development would have the impact of placing many of the lower classes out of employment and thereby could cause disorder resulting in revolt and overthrow.
The authors state the reason the industrial revolution occurred in late 18th and early 19th century britain was the result of enhanced political and economic freedoms allowed to British citizens as a result of the 17th century English Civil War and Glorious Revolution. These allowed for technological development and the securing of property rights for more of society.
It is somewhat disturbing to think that the industrial revolution and the enhancement to human well-being was delayed and could have occurred earlier in the world. Combined with the examples given by the authors with David Landes examples in "Wealth and Poverty of Nations", many technological developments were deliberately hindered and an individual's property rights were greatly restricted if one wasn't part of a ruling elite.
China, for example, had many of the elements necessary for industrial revolution. The technological developments of the Tang and Song Dynasties (gunpowder, printing press, etc) certainly indicated the technological prowess of that society, many skilled workers, population density and raw materials. However, Landes' shows instances where elites killed a nascent steel industry. Also, China turned away from overseas exploration and trade in the 15th century just prior to European colonialism.
The authors also demonstrate the lasting effects of colonialism as a country with only extractive institutions will find it incredibly difficult to overcome these including the care for the well-being of its citizens (i.e. education and health care).
The authors indicate that centralized extractive governments can generate more wealth than a completely disordered state (i.e. Soviet Union, colonialism) but only at the expense of the majority of people whose wages must be kept low to allow for wealth to be created and political power must be virtually non-existent so as to keep the state of the country stable.
I wish the authors had gone more into how inequality could be a new form of elites establishing a stranglehold on political power while attempting to convince the majority that they are not doing so. This is only hinted at.

Apr 08, 2019

Reminded me of a Jared Diamond book. Well laid out theory of political and economic advancement. Not completely sure it is true.

Feb 19, 2019

A long and detailed read that might change the way you look at politics and how/why nations develop the way they do. I believed that I had thought these issues through pretty well over the last 60+ years but this book changed some of my opinions.

Sep 24, 2016

Outstanding book. I listened the audio book then had to get the print copy out to read. A fascinating overview of economic and political history and a sound argument of why some countries are poor and why some are rich. I think the comment by the previous reader was a valid one although the influence of religion is mentioned in the book. One thinks of the Muslim Brotherhood in Egypt as an example where religious doctrine repressed pluralism after the Arab spring in Egypt hence resulting in a military coup and a continuation of the graft and corruption that keeps Egypt poor relative to the west. As Acemoglu and Robinson states pluralism and a level playing field is needed for the economic institutions to develop that will return foster development and prosperity. It makes me think where the USA is at the moment with the slow progression towards accumulation of wealth and power with the elites and the decline of the middle class. Could it be in 50 years the US dramatically slips down the list of rich countries due to the corruption of political institutions in that country. As the writer in the book states nothing is immutable, history is not preordained. A compulsory read for anyone who wants to understand how politics and economics, power and prosperity are so closely intertwined.

Aug 18, 2016

This is very good. See the other comments for a discussion of the basic argument.

I have 2 issues. The first, and minor one, is that it is probably a little too long. The essential concept is pretty straightforward. The illustrative examples are interesting, but you get the point pretty quickly.

My second issue is that to discount the role of religion in forming inclusive or extractive hierarchies is a mistake. Religion has a massive impact on how societies function and develop (or not). I think the authors were trying to be a little too PC here which is laudable but, in this case, an error.

Jul 13, 2016

[I originally wrote this for my blog. It is crossposted there.]

The authors of Why Nations Fail dichotomize economies into two basic types: extractive and inclusive. In extractive economies political institutions try to extract as much wealth as possible from the populace. In inclusive economies laws are crafted to distribute wealth in proportion to contributions to the economies. So someone who contributes a great deal would receive a great deal. In an extractive economy all the gains go to the elite. At first an extractive economy can be successful but over time there is little incentive for the vast majority of the populace to do any more than the bare minimum necessary to survive because all the extra gains will inevitably just go to the elite.

What makes the book so poignant to me reading it now is that a big part of what makes a nation inclusive is an ascendable and descendible socioeconomic ladder. In his January 18, 2014 blog post economist Robert Reich wrote:

"…America’s shrinking middle class also hobbles upward mobility. Not only is there less money for good schools, job training, and social services, but the poor face a more difficult challenge moving upward because the income ladder is far longer than it used to be, and its middle rungs have disappeared."

It does seem that the middle rungs are disappearing. The middle rungs Reich mentions are "good schools, job training, and social services." To those I would add good public libraries, affordable good universities and healthcare, access to a neutral Internet/information and a justice system that works well for everyone. Without those middle rungs it becomes very difficult for anyone to climb the ladder.

According to Acemoğlu and Robinson when the ladder no longer functions, in time even the very rich become poor, because plutocrats are not rich in isolation. Their wealth is built on a foundation of comprised of everyone else in the society. The socioeconomic ladder forms not only a means of vertical movement, it is also a means structural support for the higher levels. Without that structural support, most of the populace stops innovating and just does what is essential to survive. Eventually the entire economy falls apart and the nation fails.

A couple of good books to read along with Why Nations Fail are Winner Take All Politics and The Unwinding: An Inner History of the New America.

May 17, 2016

A very long read, but a very good read. Acemoglu and Robinson team up again to provide one of the best and most renowned critiques of modern development theory today. It is not, geography, culture, the environment, or resources that cause poverty, it is human institutions themselves. The authors do well to show how different institutions (and different histories) provide different levels of development, but they somewhat interestingly don't go far enough into the structural issues that create these types of institutions. It's not enough to say "corruption" or "(plutocracy)/autocracy". There is corruption, autocracy, or plutocracy in even the most developed countries of the world. The rosy picture doesn't end there. Even in the most advanced nation in the world there is high levels of poverty and inequality, at times worse than those in the Global South. So, while this book is a great read for anyone interested in development, one has to ask, what social institution really makes all the difference? Is it political, or is it economic, or is it perhaps ideological?

Jul 03, 2013

Well written. Well developed characters. Very enjoyable historical novel

May 14, 2013

This is a fascinating read for a number of reasons: the use of historical evidence to prove the authors hypothesis; the drawing of inferences from a variety of countries, cultures, peoples and the clear way it seems to fall together. In the main though, this work can relate to modern times quite easily. Canada can be seen as an extractive economy, whether we change is still questionable. But stagnation and proverty abound, Why are there so few top people? Anecdotal examples:. Contracts not upheld, criminals not tried, opportunity denied, rights abrogated, select individuals chosen to act for the leadership (senators for the PM), candidates attempt bribes of voters with 'goodies" (see labrador election). Even though Canada is viewed as one of the inclusive ecoomies, there are enough real life anamolies to make one wonder. Canada is a failed nation by this books' assessment, even if not by its admission.

steverenko Jan 04, 2013

This book is magnificant in its approach to the real history, what really happened out there as compared to what I was taught in school. I have rewritten my opinions what history was then.

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