 |
Book: Why Nations Fail
Authors: Daron Acemoglu & James A. Robinson
Publisher: Profile Books (2012)
ISBN: 978 1 84668 430 2
Authors: Daron Acemoglu & James A. Robinson
Publisher: Profile Books (2012)
ISBN: 978 1 84668 430 2
The expanse between rich and poor nations is vast and sustained. Explaining the gap has long been the site of controversy.
The persistence of poverty sparks off clichés of every mood and rests bitterly in the consciousness of the deprived.
But not there is no consensus as to why quality of life and other development indices are constantly winding down in some countries and shoring up in others.
Diverging choices and fates countries reach in religion, culture, geography or knowledge have been invoked to explain the gap between the haves and the have-nots.
However, according to Daron Acemoglu and James A. Robinson’s 2012 book, “Why Nations Fail,” these explanations cannot answer why offshoots of the same civilisation, such as North and South Korea, have assumed starkly contrasting fortunes.
“Why Nations Fail: The Origins of Power, Prosperity and Poverty” builds on long-run historical developments to propose an alternative theory of wealth and poverty.
The authors argue that inclusive economic institutions, anchored on democracy, equality and meritocracy, provide the incentive for innovation and investment, hence sustained growth.
On the other hand, extractive institutions, whereby the ruling elites are bent to extract the economic output of the rest, facilitate stagnation and underdevelopment since there is no incentive for innovation and investment.
Because extractive institutions are inherently repressive as a requisite for protecting illegitimate privileges, they tend to stifle the disruptive creativity and new talent needed for sustainable growth.
According to the theory, ambition responds to incentive so countries with inclusive institutions and outgrow those impeded by political barriers.
“Inclusive economic institutions that enforce property rights, create a level playing field, and encourage investments in new technologies and skills are more conducive to economic growth than extractive economic institutions that are structured to extract resources from the many by the few and that fail to protect property rights or provide incentives for economic activity,” the duo argues.
Acemoglu and Robinson argue that institutional drift, a situation whereby both inclusive and extractive economies tend towards resolute paths, is bound to widen the gap between poor and rich nations, bar critical juncture of history.
The duo’s case for egalitarian institutions is forcefully argued and urgently felt but there are glaring ironies in the way the authors situate their theory in the world today.
The argument is persuasive as a basis for and understanding inequality and facilitating inclusive development but it slanted to privilege the West.
Acemoglu and Robinson acknowledge that slavery and colonialism created a vicious circle of underdevelopment in Africa but go on give an overwhelming impression that much of Sub-Saharan Africa is poor because of its extractive tendencies while Western Europe and North America’s wealth and power is attributable to their espousal of democratic values.
Such an interpretation erroneously isolates individual nations from the bigger picture, the relationship of exploitation which currently privileges the global north and stunts the global south.
The particular eulogisation of Britain, France and the U.S as nations whose prosperity are anchored on democratic values, notwithstanding their concurrent exploitation of Africa plays down the universal essence of democracy.
Neo-colonialism has been often swept aside as an inconsequential abstract or excuse for deflecting attention away from domestic dysfunction, it is one empirically observable explanation of underdevelopment in Africa.
France’s extractive operations in its former colonies is a case in point. According to a 2015 issue of Pambazuka News, 14 African countries are still paying a debt for being developed by France during the colonial period and France can automatically confiscate a former colony’s national reserve.
More than 50 years after the inception of the African Union (formerly Organisation of African Unity), France claims the right to exploit any natural resource discovered in former colonies and forces African countries to give its companies preferences in public procurement.
It claims the right to deploy troops and intervene in the African country to defend France’s interests and forces former colonies to use the colonial currency, among other colonial privileges.
These colonial advantages, and the fact that African countries get less than 10 percent the value of their resources, seems to me a credible explanation of why nations fail.
As long as democracy is held to be universally applicable, whatever credit can be extended to the imperialists for inclusivity in their apportionment of the spoils of plunder seems to conspiracy than democracy.
All the same, the essential theory of the book holds and must be extended to every layer of inequality. Internal dysfunction must not be used to deflect scrutiny of capitalist and imperialist extraction, and the reserve equally holds.
Acemoglu and Robinson’s interpretation of Zimbabwe’s land reform programme as violation of property rights is also slanted and not entirely historical.
The land reform programme is, in fact, closer to the duo’s institutional reform than they realise as it is effectively the dismantling of the extractive privileges of a minority and a significant step towards inclusive development in an agro-based economy.
The authors bring up creative destruction as a constant for economic growth and observe that extractive political institutions are opposed to the phenomenon as it threatens their relevance.
Whereas the examples cited, including resistance to the initial printing and textile technology by the Ottoman empire and the Tudor monarchy respectively, support this idea, it is not only the extractive authoritarians and luddites whose turf is threatened by creative destruction.
Contrary to Acemoglu and Robinson’s argument, inclusive institutions have an obligation to subject creative destruction to democratic scrutiny and to prevent a course of development which prioritises profit over people.
Robert McChesney and John Nichols’s 2016 book, “People Get Ready: The Fight against a Jobless Economy and Citizenless Democracy” denies a clean bill of health to an emerging wave of creative destruction whereby robots and automation are set to throw millions out of jobs while concentrate profits for companies by drastically cutting the wage bill.
Acemoglu and Robinson rule out aid as means out of poverty, particularly because so little is directed to the economic infrastructure. The failure of the United Nations’ Afghan mission is a case in point.
“Billions of dollars were now coming to Afghanistan. But little of it was used for building infrastructure, schools, or other public services essential for the development of inclusive institutions or even for restoring law and order.
“While much of the infrastructure remained in tatters, the first tranche of the money was used to commission an airline to shuttle around UN and other international officials.
“The next thing they needed were drivers and interpreters. So they hired the few English-speaking bureaucrats and the remaining teachers in Afghan schools to chauffeur and chaperone them around, paying them multiples of current Afghan salaries,” the duo observes.
China, which has been characterised as an alternative development model to the Washington Consensus, seems to be a stumbling block to the duo’s theorisation of democracy and liberalisation as conditions for growth.
The duo argues that China’s growth is still consistent with their theory as it concurred with a shift from extractive institutions to inclusive ones over the past three decades, beginning with the reforms of Deng Xiaoping.
