Why Nations #Fail
I recently read, and greatly enjoyed, the new book by Darren Acemoglu and James Robinson on “Why Nations Fail”. You can most likely guess the subject of the book. The theory offered is that economic and political institutions can be classified as either “extractive” and “inclusive”. Neither term is particularly well-defined, but generally it refers to institutions designed either to enrich incumbent powerholders (political or economic) or to those designed to allow impersonal competition and administration. It’s an engaging read, I thought – one spectacularly illustrative passage involved roads in Haiti, which are incredibly poor even in the richest areas. The reason is that the rich all own SUVs – they can handle the potholes, whereas smooth roads would allow the poor to more easily penetrate wealthy neighborhoods. This is a perfect example of an extractive political dynamic.
Something about this explanatory scheme (other than the binary and ill-defined classifications) didn’t really sit right with me. What really brought it into sharp relief was the section where they discussed Jim Crow in the post-Civil War South. Slavery is the quintessential extractive institution, I think unquestionably. It holds captive the powerless and extracts their labor, and in the process retards more productive economic development. It’s also evil, but that’s kind of orthogonal to the point. However, after the Civil War African-Americans in the South were still not “free”…many were held in bondage through sharecropping’s debt slavery, and politically oppressed through Jim Crow. However, the authors refer to Jim Crow as an extractive economic institution and just kind of glide right past it. This basically screamed at me – do you think that the evils of the Jim Crow South were motivated by a desire to extract the labor surplus of African Americans? That sounds…not right to me. Not right at all.
I went back to Francis Fukuyama’s book The Origins of Political Order to figure out what that was. Fukuyama’s book tackles the same question, though from the opposite direction – what are the common attributes of polities peaceful, prosperous and free? I found it pretty convincing, as you may be able to tell from the title of this blog. Early on, he articulates some of the driving forces of human behavior – food, shelter, reproduction, and what he calls “recognition”. Recognition is the drive to be acknowledged as a fully-fledged human with agency over one’s own destiny. In its darker form, it is the drive to be recognized as another’s superior.
I think that this drive for recognition, in the form of the desire to oppress, was the driving force behind Jim Crow. This desire for recognition has no place in Acemoglu and Robinson’s account, which upon reflection seems completely bizarre to me. Nor is this the only gap. They also ascribe the early Soviet years as putting in place a system designed to enrich those sitting on top. This strikes me as completely off-base – the early Soviets genuinely believed communism to be the next step in the emancipation of mankind, a secular holy mission.
Economics perhaps holds too privileged a place in our political discussion. Any discussion of why nations fail that focuses only on the tendency of elites to enrich themselves will wind up making some glaringly ahistorical assertions. No doubt, the “inclusive”/”extractive” split is real, and explains much. But you can’t even hope to describe why it is that nations fail without taking into account the wholly non-rationalized decisions that people make for a wide constellation of reasons. A convincing theory for the success or failure of nations must incorporate economic predation…but so too must it encompass the crusades, mass insanities, and personal leaders’ idiosyncrasies which have afflicted all nations across time.