Book: Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity - Daron Acemoglu, Simon Johnson (2024)

Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity

Author: Daron Acemoglu Simon Johnson 

Published by PublicAffairs, Hachette Book Group

Year: 2024

 

A thousand years of history and contemporary evidence make one thing clear: progress depends on the choices we make about technology. New ways of organizing production and communication can either ser
ve the narrow interests of an elite or become the foundation for widespread prosperity.

The wealth generated by technological improvements in agriculture during the European Middle Ages was captured by the nobility and used to build grand cathedrals, while peasants remained on the edge of starvation. The first hundred years of industrialization in England delivered stagnant incomes for working people. And throughout the world today, digital technologies and artificial intelligence undermine jobs and democracy through excessive automation, massive data collection, and intrusive surveillance.

It doesn’t have to be this way. Power and Progress demonstrates the path of technology was once—and may again—be brought under control. Cutting-edge technological advances can become empowering and democratizing tools, but not if all major decisions remain in the hands of a few hubristic tech leaders.

With their bold reinterpretation of economics and history, Daron Acemoglu and Simon Johnson fundamentally change how we see the world, providing the vision needed to redirect innovation so it again benefits most people.

A nova geopolítica mundial: multipolaridade ou visão binária do mundo? - Três artigos para reflexão: Daron Acemoglu, Alexander Vindman, Chris Megerian e Elis Stockhols

 Project Syndicate, Praga – 4.12.2010

The Case for a Quadripolar World

According to the conventional wisdom, the twenty-first century will be characterized by the global shift from American hegemony to Sino-American rivalry. But a bipolar international order is neither inevitable nor desirable, and we should start imagining and working toward alternative arrangements.

Daron Acemoglu

 

Cambridge - Having diminished America’s global role while refusing to accept China’s growing clout, Donald Trump’s presidency represents the last gasp of a unipolar epoch. But while many assume that the unipolar post-Cold War world is giving way to a bipolar international order dominated by the United States and China, that outcome is neither inevitable nor desirable. Instead, there is every reason to hope for, and work toward, a world in which Europe and the emerging economies play a more assertive role.

To be sure, as the world’s most economically successful autocracy, China has already achieved significant geopolitical influence in Asia and beyond. During the two most recent global crises – the 2008 financial collapse and today’s pandemic – the Communist Party of China quickly adjusted the country’s political economy in response to changing circumstances, thereby solidifying its grip on power. Because countries that do not want to toe the US line now routinely turn to China for inspiration and, often, material support, what could be more natural than China emerging as one of the two poles of global power?

In fact, a bipolar world would be deeply unstable. Its emergence would heighten the risk of violent conflict (according to the logic of the Thucydides Trap), and its consolidation would make solutions to global problems wholly dependent on the national interests of the two reigning powers. Three of the biggest challenges facing humanity would either be ignored or made worse.

The first challenge is the concentrated power of Big Tech.While technology is often presented as a key front in the US-China conflict, there is considerable congruence between the two countries. Both are committed to the pursuit of algorithmic dominance over humans, whereby digital platforms and artificial intelligence (AI) are used as tools by the government and corporations for surveilling and controlling the citizenry.

There are differences, of course. Whereas the US government has adopted Big Tech’s own vision and become subservient to the industry, Chinese tech giants remain at the mercy of the government and must abide by its agenda. For example, recent research shows how local governments’ demand for surveillance technologies shapes Chinese AI creators’ research and development. In any case, neither country is likely to strengthen privacy standards and other protections for ordinary people, much less redirect the trajectory of AI research so that its benefits are unambiguous and widely shared.

Likewise, advocacy for human rights and democracy would be a low priority in a bipolar world. With repression in China growing, the US may appear by comparison to remain an exemplar of these values. But America’s principled commitment to democracy and human rights is thin and generally not taken seriously abroad. After all, the US has overthrown democratically elected but insufficiently friendly governments in Latin America, Asia, and Africa. And when it has supported democracy in places like Ukraine, it has generally had an ulterior motive, such as the desire to counter or weaken Russia.

The third big issue likely to receive short shrift in a Sino-American bipolar world is climate change. In recent years, China has appeared more supportive of international agreements aimed at reducing greenhouse-gas emissions than the US has. But the two superpowers are not just the world’s two biggest emitters; they also are both beholden to energy-intensive economic models. China will remain dependent on manufacturing growth, while consumers and growth industries (like cloud computing) will sustain high demand for energy in the US. And one can expect that both sides’ short-term interest in economic supremacy will trump everyone else’s interest in a swift green transition.

All of these problems would be more likely to be addressed in a world with two additional poles, represented by the European Union and a consortium of emerging economies, perhaps within a new organization – an “E10” – comprising Mexico, Brazil, India, Indonesia, Malaysia, Turkey, South Africa, and others.Such a quadripolar world would be less conducive to a new cold war, and it would bring more diverse voices to global governance.

For its part, the EU has already emerged as a standard-bearer for privacy protection and regulation of Big Tech, and it is well positioned to push back against algorithmic automation. Even though it is US and Chinese companies that largely drive concerns about privacy, consumer manipulation, and labor-replacing AI, the European market is so large and important that it can tilt the playing field globally.

But a strategic pole that speaks for emerging economies may be even more consequential. If AI continues to displace humans in the workplace, emerging economies will be the biggest losers, because their comparative advantage is abundant human labor. With automation already cutting into the supply of jobs that had previously been offshored to these economies, it is critical that they have a voice in global debates that will determine how new technologies are designed and deployed.

Europe and the emerging world also can form a powerful constituency against fossil-fuel emissions. While the EU has become a world leader in decarbonization, emerging economies have an acute interest in climate action, because they will suffer disproportionately from global warming (despite having contributed the least to the problem).

To be sure, a quadripolar world would not be a panacea. With a wider array of voices and the possibility for more opportunistic coalitions, it would be much more difficult to manage than was the unipolar world of the recent past. With Brazil, Mexico, India, and Turkey all now led by authoritarians intent on silencing their opponents, independent media, and civil-society groups, Europe inevitably would find itself at odds with this bloc when it comes to human rights and democracy.

Yet, even here, a quadripolar world would offer more hope than the bipolar alternative. Bringing these countries to the international table might make them more willing to countenance opposition at home. Moreover, emerging economies can cooperate as a united front only if they abandon their most authoritarian, nationalistic, and destructive behavior. Ushering in a quadripolar world may thus yield unexpected dividends.

 

Daron Acemoglu, Professor of Economics at MIT, is co-author (with James A. Robinson) of Why Nations Fail: The Origins of Power, Prosperity and Poverty and The Narrow Corridor: States, Societies, and the Fate of Liberty.

 

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Los Angeles Times – 8.12.2020

Biden faces a changed world from when he last held power, and not for the better

Chris Megerian and Elis Stockhols

 

When Joe Biden left the vice president’s office four years ago, the United States was a champion of the Paris climate accord, the architect of the multinational Iran nuclear deal and the leader of a 12-nation free-trade pact in the Pacific Rim region intended to limit China’s growing influence.

None of those things is true anymore as he prepares to be inaugurated as commander in chief next month.

Even as he will be preoccupied by the deadly coronavirus crisis at home, Biden faces a daunting array of global challenges, frayed alliances and emboldened adversaries. And he must confront these issues even as the country he’s set to lead has increasingly become skeptical of interventionism and a robust leadership role internationally — especially after President Trump’s inward-looking “America first” approach.

“As much as there are a lot of people who just want to say, ‘We’re back,’ you can’t erase the last four years. And we’ve been heading in this direction for a long time,” said Ian Bremmer, president of the Eurasia Group, a global risk assessment firm. “Everything Trump represents is symptomatic of something deeper in the American body politic.”

Biden, who will represent a sharp break from Trump’s caustic presence on the world stage, is likely to enjoy something of a honeymoon with transatlantic allies, eager as they are for the United States to return to its traditional role as a pillar of the international democratic order. And his preexisting relationships with many leaders — as senator, vice president and the longest-tenured U.S. member of the 57-year-old Munich Security Conference, where he spoke last year — will help to soothe the jangled nerves of those from Ottawa to Berlin to Seoul.

Even so, some allies have expressed a resigned determination to continue relying less on Washington, as they were forced to do under Trump. And repairing the diplomatic achievements that Trump abandoned won’t be easy.

Sanctions on Iran and tariffs on imports from China, two key pieces of the current president’s agenda, could remain in place as Biden plots his own strategy and seeks new negotiations. Moreover, having opposed troop surges in Afghanistan over a decade ago, Biden may opt not to reverse Trump’s troop drawdown to bring that 19-year-old war to a close.

The president-elect’s team, many of them veterans like him of the Obama administration, knows the pieces won’t fit together the same as before.

“This is not about going back to the world as it was,” said Antony Blinken, Biden’s choice for secretary of State, in an interview earlier this year. “It’s about dealing with the major transformations we’ve seen since — in power among nations, the diffusion of power away from states and the cratering of trust of governance within them. Your policies have to account for that.”

Some of the most drastic changes have occurred in the Middle East. In 2018, Trump withdrew from the multilateral deal the United States had brokered three years before with Iran, European allies, Russia and China, under which Iran agreed to greatly limit its nuclear program through 2025.

Instead of diplomacy, Trump pursued a “maximum pressure” campaign to squeeze Tehran with sanctions, and he ordered the killing of Qassem Suleimani, the powerful Iranian general who died in a U.S. drone strike Jan. 3. The heightened tensions have emboldened hard-liners within Iran, a barrier to getting the country’s leaders back to the negotiating table.

 “It’s very unrealistic to talk about just rejoining an agreement that was crafted in 2015,” said Brian Katulis, a senior fellow at the left-leaning Center for American Progress. “That was then, this was now.”

Israeli Prime Minister Benjamin Netanyahu, his country’s longest-serving leader, could remain an obstacle as well. He opposed the Iran nuclear deal and now opposes revisiting it.

“When Arabs and Israelis agree on something, I think it’s critical to pay attention,” Netanyahu said in an interview Thursday with the Hudson Institute, a conservative think tank. “We’re in this region, we know it very well.”

Iran is now closer to a nuclear weapon than when Trump took office. Its “breakout time” — an estimate of how long it would take Tehran to build a bomb — has dropped from one year to a few months.

The challenge hasn’t deterred Biden from his plan to revisit the Iran nuclear deal. “It’s going to be hard, but yeah,” he told Thomas Friedman, a New York Times columnist, in a recent interview.

European allies may be more eager to collaborate with the new administration in containing China, given its growing economic might and increasing assertiveness abroad.

 “The best China strategy, I think, is one which gets every one of our — or at least what used to be our — allies on the same page,” Biden told Friedman. “It’s going to be a major priority for me in the opening weeks of my presidency to try to get us back on the same page with our allies.”

Jake Sullivan, the incoming national security advisor, is considering expanding the China team inside the White House National Security Council, to underscore that the issue is a foreign policy priority and that Biden wants to work with allies, according to a person close to the president-elect’s team. Also, because the White House advisors, like Sullivan, would not require Senate approval, Biden could avoid confirmation fights with Republicans who might control the chamber when he takes office.

Hammering out his own trade strategy will prove complicated. Obama was pushing to ratify the Trans-Pacific Partnership, the free-trade agreement that would have linked the United States with other Pacific-fronting countries while leaving out China. The deal was on life support, however, even before Trump took office because of opposition from some Democrats and unions as well as Republicans.

Now China has reached its own trade deal, called the Regional Comprehensive Economic Partnership, with many of those same countries, leaving the United States on the sidelines.

 “It strengthens the continued growth of an Asian supply chain in which China is the hub. It poses a real challenge to the United States,” said Edward Alden, a senior fellow at the Council on Foreign Relations.

Another shared — and even more immediate — global priority is addressing the ongoing pandemic. Distributing newly approved vaccines will require coordination among countries in the near term, and cooperation in the longer term to stabilize markets and mitigate broad economic fallout. The crisis provides an opportunity for Biden to rebuild relationships, but it could also prevent the 78-year-old president-elect from making a symbolic visit to Europe early on.

Rejoining the Paris climate accord will be among the easiest steps. All he needs to do is submit paperwork — something he’s pledged to do shortly after he is inaugurated, possibly on his first day— and wait a month to rejoin.

The challenge will be showing the rest of the world that the United States can make progress on global warming, said Robert Stavins, who leads the Harvard Project on Climate Agreements.

Each signatory to the Paris deal must submit “nationally determined contributions,” which are the country’s plans for meeting certain targets for reducing greenhouse gas emissions. Putting together a credible plan will be difficult, Stavins said, because of domestic political opposition in Congress.

“It’s not just conservative Republicans,” he said. “It’s moderate Democrats and Democrats from coal states. So true climate legislation will be extremely difficult.”

Obama sought emissions reductions through regulations, such as his Clean Power Plan and stricter fuel-efficiency standards for cars. That may be more difficult now that Trump’s administration has been unraveling those policies and stocking the federal judiciary with more conservative, anti-regulatory judges who could prove to be an obstacle.

Biden chose John F. Kerry, his former Senate colleague who was Obama’s secretary of State when the Paris accord was signed in 2015, to lead international efforts on climate change. 

 

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Foreign Affairs, Nova York – 8.12.2020

The United States Must Marshal the “Free World”

Together, Democracies Can Counter the Authoritarian Threat

Alexander Vindman

 

At noon on January 20, 2021, Joseph R. Biden will be sworn in as the 46th president of the United States. He will confront a daunting domestic agenda: the legacy of outgoing President Donald Trump will include a rampant pandemic and a host of unresolved social, cultural, ideological, economic, and administrative problems. Having committed himself to being the president of all Americans, Biden will need to contend with the grievances of millions who did not support him and who even question the legitimacy of his election. These domestic concerns will understandably consume the preponderance of the president’s time and energy.

But Biden’s de facto leadership of the “free world” beyond the United States’ borders will be equally important. China, Russia, and other authoritarian states, which have long seen democracy as an existential threat, are on the offensive, deploying all means of statecraft—diplomatic, informational, military, and economic—to advance their ends. The “un-free” world seeks to undermine international norms, Western liberal values, and democracy itself in order to enable the ascendancy of autocratic governments and permit their exercise of raw power. Biden will need to marshal the very strengths that define democratic government if he is to both mend domestic wounds and temper the threats that face democracies globally.

 

RIVAL GREAT POWERS

 

For two decades, a distracted United States neglected the reemergence of great-power competition, and China and Russia reaped the benefits.During its moment of unipolarity, the United States narrowly focused much of its energies on the Middle East and on immediate concerns, to the exclusion of emerging and long-term national security interests. China took advantage of the United States’ distraction and effectively marshaled its strengths to surge in power at a moment when the United States should have held the edge.

Under Trump, the United States disengaged from global affairs, and China and Russia took advantage of its absence to act with impunity and accelerate China’s climb toward preeminence. If the United States further retrenches or shifts to such strategies as offshore balancing, a void will expand that autocratic states will fill.

For decades, Russia has been using the well-honed tools of the Soviet security apparatus to assault democracies. Inside the United States, Russia has unleashed information warfare to exploit divisions and magnify inequities. In Africa, Europe, and the Middle East, Russia is even less constrained and draws on a broader array of tools. There, the Kremlin attacks democratic values not only through illicit financial and organized crime networks and information and cyberwarfare but also with energy coercion, assassinations, and military force. In this zero-sum game, Russia’s objective is simple: magnify discord, divide societies, and weaken democratic institutions in order to subdue opponents and thereby shift power to Russia.

China, as the world’s most populous nation and its second-largest economy, poses an even more potent and pernicious threat to the United States than Russia does. The Chinese Communist Party’s “hide and bide” doctrine helped mask the danger until recently. Like Russia, China uses statecraft and malign influence to advance its interests and undermine democracies. More menacing, however, is its use of economic coercion against the United States and its closest allies. China has seized on the inequities of globalization and the perceived failure of the U.S.-led international financial system effectively to market the notion that state-led capitalism provides the better path to economic prosperity. China’s success in modeling an alternative, authoritarian, state-commanded capitalist system bolsters autocrats and lures some forces within struggling democracies.

Although there is no clear consensus as to whether China and Russia are collaborating to undermine democracies or simply advancing their independent interests, their common efforts are bearing fruit. During the Trump administration, nationalist populist movements blossomed globally, while many democracies backslid. The United States did not respond to these trends, but authoritarian states did—with support. Under a new administration, the United States must organize a concerted effort, by democracies and for democracies, to counter the rise of illiberalism and authoritarianism. The United States must host a democracy summit.

 

SHARED PURPOSE

 

A multipolar world—even one in which the United States remains disproportionally powerful—calls for a level of burden sharing to which democracies are not accustomed. In 1992, the democracies in what is now the G-20 accounted for nearly 90 percent of the group’s GDP. Today, those same democracies account for only 73 percent of the G-20’s GDP. Their economic influence has diminished, but the problems they seek to solve in common have not, and the United States is no longer able or willing to carry the whole load. The sharing of burdens will be essential if democracies are to remain united in the pursuit of common interests and in the face of common threats.

Uniting the democratic world against the clear and present danger of rising authoritarianism is not an act of idealism but of realism. China and Russia already hold similar interests and perceive similar threats, such that they are inclined to view the world in terms of “us versus them.”To convene a summit of democracies will not therefore drive authoritarian states together so much as it will acknowledge the stark reality of a world bifurcated into authoritarian and democratic camps. The project of supporting democracies and advancing democratic values, in this context, is continuous with past U.S. policy.

The idea of a democracy summit is not new, but the need for one has never been greater. Together, the world’s democracies can devise cooperative solutions to their most vexing domestic problems by collectively addressing such shared issues as demographic shifts, social polarization, and growing inequality. Such shared efforts will make democracies more internally cohesive and collectively resilient.

At the same time, democracies can help protect one another against external attacks, including those that take the form of information warfare or economic coercion. Democracies must deter bad actors from interfering in their internal affairs by making clear that those who seek to exploit the openness of democracies by sowing discord will face reciprocal responses. Forewarned in this fashion, authoritarian states will accept the new ground rules, and all powers will benefit from the elimination of one area of increasingly serious conflict.

The summit should be a forum in which democracies can exchange best practices for addressing many areas of common concern. For instance, participants could share ideas for protecting important industries and technologies from foreign influence or for countering China’s economic exploitation. They could coordinate efforts to promote media literacy, expose information operations, and buttress civil society. And democracies could seek collaborative solutions to such global problems as climate change—and the authoritarian subversion of international norms.

Ultimately, the summit should include all the world’s democracies. But it might begin as a kind of “coalition of the willing,” setting forth a democracy compact that identifies the shared objectives of its participants and pledges institutional, technical, and financial support to those who join.Democracies that are insecure or backsliding may then find themselves attracted to the summit consensus, whether in principle or because they don’t wish to be labeled as holdouts. They would have the opportunity to sign on to the principles. The summit should not tolerate free riders: it must take extreme care to be sure that all burdens are shared.

The United States, in concert with the world’s democracies, can resist the coercion of authoritarian regimes without forcing a direct confrontation between the two systems. In fact, in a multipolar world, democracies must both cooperate and compete with authoritarian powers. Countries of both descriptions see climate change, nuclear proliferation, and transnational terror as threats: to counter these forces, among others, will require the United States to cooperate with China, Russia, and emerging powers in Africa, Asia, and Latin America.

The United States once ushered in an era of new democracies, giving those states succor and benefiting from their allegiance. Today, authoritarianism is once again on the rise, and it poses an existential threat to that order. The United States must lead the democratic world in defending itself from a reversion to historical patterns that could well lead to democracy’s demise.

ALEXANDER VINDMAN, a retired Lieutenant Colonel in the U.S. Army and former Director for European Affairs at the National Security Council, is a doctoral student at the Johns Hopkins School of Advanced International Studies, Pritzker Military Fellow at the Lawfare Institute, and the author of the forthcoming book Here, Right Matters: An American Story. 

 

Daron Acemoglu (Why Nations Fail, com James Robinson): economista mais influente do mundo

Daron Acemoglu, economista armênio nascido em Istambul e que é professor do MIT, acaba de ser indicado como o economista mais influente do mundo

Istanbul-born MIT professor named world’s most influential economist 

http://www.hurriyetdailynews.com/istanbul-born-mit-professor-named-worlds-most-influential-economist-.aspx?pageID=238&nID=86257&NewsCatID=344

Economist Daron Acemoğlu, who is a Turkish economist of Armenian descent living in the U.S., has topped the most influential economists list of the Research Papers in Economics (RePEc) for his last 10 years’ of publications. 

Among leading 2,223 leading economists, Acemoğlu, a professor at the Massachusetts Institute of Technology (MIT), topped the list for his works in the last decade. 

RePEc rankings are based on data about authors who have registered with the RePEc Author Service, institutions listed on Economics Departments, Institutes and Research Centers in the World (EDIRC) list, bibliographic data collected by RePEc as well as citation analysis and popularity data compiled, according to RePEC website. 

Acemoğlu is followed by Andre Shleifer from Harvard University, James J. Heckman from University of Chicago and Robert Barro from Harvard University. The former president of the U.S. Federal Reserve (Fed), Ben Bernanke, ranked 25 on the list. 

Acemoğlu’s name has previously been mentioned for the Nobel Prize. Recently, he has been popular because of his book, “Why Nations Fail,” co-authored with James Robinson. 

His works cover a wide range of areas, from income and wage inequality to human capital and training. He wrote a series of papers attempting to disentangle the relationship between strong governmental institutions and economic development. The research revealed laws in rich countries that protect property and limit executive powers contribute to their prosperity.

Acemoğlu’s work has been published in leading scholarly journals, including the American Economic Review and the Journal of Political Economy. He received his BA in economics from the University of York, along with a Master of Science in mathematical economics and econometrics and PhD in economics at the London School of Economics. He has been the recipient of many awards and honors, including the inaugural T.W. Schulz Prize, awarded to him for “exceptional work by an economist in early or mid-career.”

Why Nations Fail, a book by Daron Acemoglu & James Robinson - a review by Sergei Soares

No site da Amazon que anuncia e vende o livro já aqui referido. O resenhista era diretor do Ipea.

 

Why Nations Fail: The Origins of Power, Prosperity, and Poverty 

 

Daron Acemoglu (Author), 

 James Robinson (Author)

 

An Emancipation Proclamation for Economists Interested in Equality May 11, 2012

By Sergei Soares

Format:Kindle Edition

To an economist like me, reading Why Nations Fail, by Daron Acemoglu and James Robinson, is akin to being set free from shackles worn since I began studying. However, first let me say that the book has many and serious shortcomings. Let me talk about these before I get into why this book set me free. Since I am going to strongly criticize aspects of the book, let me make clear that this is one of the best books on economics I have read in a long time.

Several criticisms have been leveled in other reviews against this book: it is simplistic and perhaps overly ambitious, the history is bad, it explains away competing explanations. They are all true.

The book is undoubtedly simplistic. Basically, the authors state that the institutions of a nation or society can be placed on a one dimensional continuum running from "extractive" to "inclusive" and this explains the history of humanity from the neolithic to the present day. A second leitmotif is that the economic and political institutions complement each other and that economically inclusive but politically extractive institutions cannot last for long (as well as the opposite). Finally, since political and economic institutions reinforce each other, they are quite difficult to change, leading to what the authors call "the iron law of oligarchy." Needless to say, this really oversimplifies the analysis of institutions and history. While Acemoglu and Robinson give many, many historical examples to illustrate their thesis, some are more convincing than others. They use a huge mallet to hammer all the facts into their mold, either ignoring or re-interpreting contrary evidence.

I am no historian, but I do know the history of the region in which I live, Latin America, reasonably well. When Latin American examples were used in the book, they were shallow and even wrong. For example, the authors talk quite a bit about the establishment of indigenous "serfdom", with terrible extractive institutions such as the encomienda and repartimiento, in much of Hispanic America. I agree the story they tell is quite important but they do not get it quite right. Acemoglu and Robinson tell the tale of these institutions as if they were simply set in place by colonizing Spaniards when the truth was much more complex, involving conflicts and constant negotiation between the Spanish colonizers, the Spanish Crown, and the conquered peoples themselves. The colonizers wanted to set up slavery instead of serfdom but were impeded from doing so by the Crown through the Leyes Nuevas. The story is told marvelously well in La Patria del Criollo by Severo Martinez Pelaez. The funny thing is that the correct narrative would fit well into the inclusive-extractive framework with a richness that comes from putting in two groups of elite actors with divergent interests, but Acemoglu and Robinson tell it so simplistically so as to miss out.

Likewise, the authors analyze, in different points of the book, Colombia and Brazil, with exceptional praise for Brazilian institutions while they heap abuse upon the Colombian ones. Brazil at the present time has, evidently, better institutions than a Colombia only (we hope) beginning to emerge from decades of civil war. But these two countries are much more alike than different. If you believe the tale told by Acemoglu and Robinson, they could have been comparing Japan and Burma, and not two nations with similar history, GDP, and institutions. While Colombia has seen many horrors and has a long road to travel, recent progress in reigning in lawlessness and chaos is undeniable. While Brazil has seen amazing institutional progress in the last fez decades, many of its cities suffer with murder rates higher than those of Colombian cities, de facto slave labor can be still found in some areas, and its income and especially property distributions are still among the most unequal in Latin America. Especially jarring is that, in other parts of the book, the authors place great emphasis on when institutions limit executive power, giving as an example the American system's unwillingness to allow FDR to pack the Supreme Court to get his way. The same happened in Colombia when Alvaro Uribe passed legislation allowing him to run for a third term and the Supreme Court shot it down with the broad support of Colombian society, including Uribe's allies.

The same can be said of their analysis of Mexico and Argentina: maybe not wrong, but terribly shallow. I know little of the Glorious Revolution, the Roman Empire, the Meiji Restoration, the history of Botswana, or much else of what the book is based upon. But if the standard is the same as the their Latin American examples, then much of the book based upon is poor history. In defense of the authors, it is difficult to draw the details with finesse when painting with a broad brush and the history of humanity from the neolithic to present day is about as broad as you can get in the social sciences.

A final criticism is that Acemoglu and Robinson do not give competing explanations for the backwardness of nations the credit they deserve. They explain away rather than seek dialogue. They classify competing explanations into the Geography Hypothesis, the Culture Hypothesis, and the Ignorance Hypothesis. One problem is that they ignore other competing explanations that go from scientific knowledge (see Margaret Jacob's Scientific Culture and the Making of the Industrial West) to various Marxist explanations based upon capital accumulation. While Acemoglu and Robinson obviously admire Jared Diamond's Guns, Germs, and Steel - which is very well-argued "geography is destiny" book - they ignore other important proponents of the Geography Hypothesis such as Kenneth Pommeranz. I feel their case would be made stronger if they argued that the two approaches were complementary and not adversarial. A relation between geography, technology, political institutions, and economic institutions would be a much stronger theory than institutions alone.

With regards to the Culture Hypothesis, they are (I believe) correct in criticizing it for being so fluid as to be virtually without content. But here my take is not entirely neutral as I particularly loathe the Culture Hypothesis.

But it is on the Ignorance Hypothesis that Acemoglu and Robinson fire their cannon with relish. Being intelligent economists in contact with the intellectual world of "development" I am sure they are very frustrated at the arrogance of policy advisors from the likes of the World Bank, United Nations, or IMF who believe they have the solution to all the developing world's problems "if only policymakers would listen to them." I am not unsympathetic to their disgust at these people but I think Acemoglu and Robinson throw the baby away with the dirty bath water. History is just too full of examples of disastrous policies (disastrous for those who implemented them, not only for the poor souls who inhabit their countries) for the Ignorance Hypothesis to be dismissed out of hand. The authors blame almost all, if not all, bad policies on the material interests of the elite whose position would be endangered by good policy.

A more subtle, and, in my opinion, much more serious, problem is that knowledge and interests are not independent. It is one thing for the elite to choose bad (bad for the many) policy if that policy can be dressed up in plausible and attractive intellectual robes and quite another if that policy is seen as nothing more than plundering of the many by the few (see Antonio Gramsci on role of the intellectual in allowing policy agendas to go forward or not). The "economic nationalism" that has destroyed so many African, Latin American, and Middle Eastern economies is not just pure extraction of wealth of the many by the few; it also dressed in a coherent economic theory espoused by a host of intelligent sociologists and economists (for a popular, if somewhat limited exposition, see The Open Veins of Latin America by Eduardo Galeano). This is why dismissal of the Ignorance Hypothesis is so dangerous: not only is knowledge power, but economic theories that are on your side are also power.

So the book has quite a few shortcomings. Why did I like it so much?

Because as economists we are taught from course one that you cannot have your cake and eat it too. The trade-off between efficiency and equity has been fed to us since before we were weaned. The result to an economist very interested in equality such as myself are intellectual shackles that hobble and cripple our thinking.

Acemoglu and Robinson show us that in the real world, not some paretian maximum efficiency world, but the real one full of monopolies and other horrendous extractive institutions, there is no such trade-off. Equity is efficiency. Only egalitarian institutions allow for the full creative potential of people to be unleashed and thus only egalitarian institutions allow for boundless, unlimited growth based upon technology and productivity. There may be an equity-efficiency trade-off in Sweden or Norway, but certainly not in Mexico, Brazil, Haiti, Zimbabwe, or Pakistan. Much of this has been around in different guises since Schumpeter (who the authors cite extensively) and, more recently, in the endogenous growth literature, but nowhere has it been as clearly stated as in Why Nations Fail.

Why Nations Fail not only states this as its official position but, in spite of all its shortcomings, argues the point so well so as to be entirely convincing (at least to me). The fact that the authors get much of the history not quite right and that they fight rather than incorporate "competing" explanations does not reduce importance of the book and its central message. The sheer optimism of its viewpoint is as liberating as the Emancipation Proclamation.

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Daron Acemoglu Conversation: Institutional development

THE WORLD THROUGH INSTITUTIONAL LENSES

A Conversation with Daron Acemoglu [9.12.12]

The issue is that when you look at the world from these sorts of institutional lenses, identifying problems becomes relatively easy. Solving them becomes very hard. It's no mystery how you get economic growth. You need to provide opportunities and incentives. But how do you make that political equilibrium? How do you make it so that everybody in society actually agrees and abides by a system that provides those incentives and opportunities even if it's not in their short-term interests? Those are the real challenges and that's exactly the sorts of issues we're seeing in Europe, it's the sorts of issues we're seeing in the United States, it's the sorts of issues we're seeing in Turkey. The problems are reasonably easy to identify. Developing solutions to them is hard because you cannot develop the solutions from the outside. It's not an engineering problem. At the end of the day you really need the grassroots solution to it. You really need people themselves to start taking part in the political process because any solution you impose from above is not going to stick unless it has the support of the people, unless the people themselves are the ones who push for it, who demand it, and who implement that solution.

DARON ACEMOGLU is the Killian Professor of Economics at MIT. In 2005 he received the John Bates Clark Medal awarded to economists under forty judged to have made the most significant contribution to economic thought and knowledge. He is the author of Why Nations Fail.
Daron Acemoglu's Edge Bio Page

[1 hour 4 minutes]

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THE WORLD THROUGH INSTITUTIONAL LENSES
[DARON ACEMOGLU:] When I got into economics one of the things that attracted me was thinking about why some nations are rich and some are poor, why some are democratic and others aren't, and why they're socially, politically, and economically so different. I grew up in Turkey and I came of age in the middle of a military regime and the economy wasn't doing well so those questions were in the air. That's the sort of thing that attracted me to economics.
When I came into economics I realized those weren't the issues that most economists worked on. I was still interested in economic development and economic growth, but I tried to think about it using the same approach as economists did. Then about 17 or 18 years ago, I started talking to James Robinson who became my long time collaborator, and James and I both had the same issues with the economics approach. A lot of the interesting issues related to politics, institutions, and the roots of the politics of policies and institutions were left out. We started working, thinking, and discussing to try to write papers on these things. At the time it wasn't a big area within economics.

More at: http://edge.org/conversation/the-world-through-institutional-lenses
or here: http://textospra.blogspot.com.br/2012/09/daron-acemoglu-institutional.html

Por que algumas sociedades continuam pobres? - Resenha por Jared Diamond

Um dos livros mais importantes publicados nos últimos tempos. O resenhista, Jared Diamond, é um cientista, foi editor de uma revista científica para jovens, nos EUA, Discover (que eu assinava muitos anos atrás), e é autor de vários livros; dentre os mais conhecidos estão: Armas, Germes e Aço e Colapso!
Paulo Roberto de Almeida 

What Makes Countries Rich or Poor?

JUNE 7, 2012

Jared Diamond

The New York Review of Books, May 23, 2012

Why Nations Fail: The Origins of Power, Prosperity, and Poverty
by Daron Acemoglu and James A. Robinson 
Crown, 529 pp., $30.00                                                  

Gary Knight/VII

Women in Darfur returning from Kutum market to the Fata Borno camp for internally displaced persons under the protection of African Union soldiers, January 2007; photograph by Gary Knight from Questions Without Answers: The World in Pictures by the Photographers of VII. The book has just been published by Phaidon.

The fence that divides the city of Nogales is part of a natural experiment in organizing human societies. North of the fence lies the American city of Nogales, Arizona; south of it lies the Mexican city of Nogales, Sonora. On the American side, average income and life expectancy are higher, crime and corruption are lower, health and roads are better, and elections are more democratic. Yet the geographic environment is identical on both sides of the fence, and the ethnic makeup of the human population is similar. The reasons for those differences between the two Nogaleses are the differences between the current political and economic institutions of the US and Mexico.

This example, which introduces Why Nations Fail by Daron Acemoglu and James Robinson, illustrates on a small scale the book’s subject.^* Power, prosperity, and poverty vary greatly around the world. Norway, the world’s richest country, is 496 times richer than Burundi, the world’s poorest country (average per capita incomes $84,290 and $170 respectively, according to the World Bank). Why? That’s a central question of economics.

Different economists have different views about the relative importance of the conditions and factors that make countries richer or poorer. The factors they most discuss are so-called “good institutions,” which may be defined as laws and practices that motivate people to work hard, become economically productive, and thereby enrich both themselves and their countries. They are the basis of the Nogales anecdote, and the focus of Why Nations Fail. In the authors’ words:

The reason that Nogales, Arizona, is much richer than Nogales, Sonora, is simple: it is because of the very different institutions on the two sides of the border, which create very different incentives for the inhabitants of Nogales, Arizona, versus Nogales, Sonora.

Among the good economic institutions that motivate people to become productive are the protection of their private property rights, predictable enforcement of their contracts, opportunities to invest and retain control of their money, control of inflation, and open exchange of currency. For instance, people are motivated to work hard if they have opportunities to invest their earnings profitably, but not if they have few such opportunities or if their earnings or profits are likely to be confiscated.

The strongest evidence supporting this view comes from natural experiments involving borders: i.e., division of a uniform environment and initially uniform human population by a political border that eventually comes to separate different economic and political institutions, which create differences in wealth. Besides Nogales, examples include the contrasts between North and South Korea and between the former East and West Germany. Many or most economists, including Acemoglu and Robinson, generalize from these examples of bordering countries and deduce that good institutions also explain the differences in wealth between nations that aren’t neighbors and that differ greatly in their geographic environments and human populations.

There is no doubt that good institutions are important in determining a country’s wealth. But why have some countries ended up with good institutions, while others haven’t? The most important factor behind their emergence is the historical duration of centralized government. Until the rise of the world’s first states, beginning around 3400 BC, all human societies were bands or tribes or chiefdoms, without any of the complex economic institutions of governments. A long history of government doesn’t guarantee good institutions but at least permits them; a short history makes them very unlikely. One can’t just suddenly introduce government institutions and expect people to adopt them and to unlearn their long history of tribal organization.

That cruel reality underlies the tragedy of modern nations, such as Papua New Guinea, whose societies were until recently tribal. Oil and mining companies there pay royalties intended for local landowners through village leaders, but the leaders often keep the royalties for themselves. That’s because they have internalized their society’s practice by which clan leaders pursue their personal interests and their own clan’s interests, rather than representing everyone’s interests.

The various durations of government around the world are linked to the various durations and productivities of farming that was the prerequisite for the rise of governments. For example, Europe began to acquire highly productive agriculture 9,000 years ago and state government by at least 4,000 years ago, but subequatorial Africa acquired less productive agriculture only between 2,000 and 1,800 years ago and state government even more recently. Those historical differences prove to have huge effects on the modern distribution of wealth. Ola Olsson and Douglas Hibbs showed that, on average, nations in which agriculture arose many millennia ago—e.g., European nations—tend to be richer today than nations with a shorter history of agriculture (e.g., subequatorial African nations), and that this factor explains about half of all the modern national variation in wealth. Valerie Bockstette, Areendam Chanda, and Louis Putterman showed further that, if one compares countries that were equally poor fifty years ago (e.g., South Korea and Ghana), the countries with a long history of state government (e.g., South Korea) have on the average been getting rich faster than those with a short history (e.g., Ghana).

An additional factor behind the origin of the good institutions that I discussed above is termed “the reversal of fortune,” and is the subject of Chapter 9 of Why Nations Fail. Among non-European countries colonized by Europeans during the last five hundred years, those that were initially richer and more advanced tend paradoxically to be poorer today. That’s because, in formerly rich countries with dense native populations, such as Peru, Indonesia, and India, Europeans introduced corrupt “extractive” economic institutions, such as forced labor and confiscation of produce, to drain wealth and labor from the natives. (By extractive economic institutions, Acemoglu and Robinson mean practices and policies “designed to extract incomes and wealth from one subset of society [the masses] to benefit a different subset [the governing elite].”)

But in formerly poor countries with sparse native populations, such as Costa Rica and Australia, European settlers had to work themselves and developed institutional incentives rewarding work. When the former colonies achieved independence, they variously inherited either the extractive institutions that coerced the masses to produce wealth for dictators and the elite, or else institutions by which the government shared power and gave people incentives to pursue. The extractive institutions retarded economic development, but incentivizing institutions promoted it.

The remaining factor contributing to good institutions, of which Acemoglu and Robinson mention some examples, involves another paradox, termed “the curse of natural resources.” One might naively expect countries generously endowed with natural resources (such as minerals, oil, and tropical hardwoods) to be richer than countries poorer in natural resources. In fact, the trend is opposite, the result of the many ways in which national dependence on certain types of natural resources (like diamonds and oil) tends to promote bad institutions, such as corruption, civil wars, inflation, and neglect of education.

An example, mentioned in Chapter 12, is the diamond boom in Sierra Leone, which contributed to that nation’s impoverishment. Other examples are Nigeria’s and the Congo’s poverty despite their wealth in oil and minerals respectively. In all three of those cases, selfish dictators or elites found that they themselves could become richer by taking the profits from natural resources for their personal gain, rather than investing the profits for the good of their nation. But some countries with prescient leaders or citizens avoided the curse of natural resources by investing the proceeds in economic development and education. As a result, oil-producing Norway is now the world’s richest country, and oil-producing Trinidad and Tobago now enjoys an income approaching that of Britain, its former colonial ruler.

Those are the main sets of institutional factors promoting power, prosperity, or poverty, and their roots. The other large set consists of geographic factors with direct economic consequences not mediated by institutions. One of those geographic factors leaps out of a map of the world in Why Nations Fail that depicts national incomes. On that map, both Africa and the Americas resemble peanut butter sandwiches, with thick cores of poor tropical countries squeezed between two thin slices of richer countries in the north and south temperate zones.

In the New World the two north temperate countries (the US and Canada, average incomes respectively $47,390 and $43,270) and the three south temperate countries (Uruguay, Chile, and Argentina, respectively $10,590, $10,120, and $8,620) are all richer—on the average five times richer—than almost all of the intervening seventeen tropical countries of mainland Central and South America (incomes mostly between $1,110 and $6,970). Similarly, mainland Africa is a sandwich of thirty-seven mostly desperately poor tropical countries, flanked by two thin slices each consisting of five modestly affluent or less desperately poor countries in Africa’s north and south temperate zones (see map).

Mike King

Mainland Africa’s ‘peanut butter sandwich’ of national wealth. Tropical African countries constitute a thick core between two thinner slices of countries in the north and south temperate zones. All temperate mainland African countries except landlocked Lesotho in the south have average annual incomes above $2,400 (gray), ranging up to over $12,000. All except three tropical mainland African countries—Equatorial Guinea, Gabon, and Angola— have average incomes below $2,200 (red), ranging down to as low as $170 (Burundi).

While institutions are undoubtedly part of the explanation, they leave much unexplained: some of those richer temperate countries are notorious for their histories of bad institutions (think of Algeria, Argentina, Egypt, and Libya), while some of the tropical countries (e.g., Costa Rica and Tanzania) have had relatively more honest governments. What are the economic disadvantages of a tropical location?

Two major factors contribute to the poverty of tropical countries compared to temperate countries: diseases and agricultural productivity. The tropics are notoriously unhealthy. Tropical diseases differ on average from temperate diseases, in several respects. First, there are far more parasitic diseases (such as elephantiasis and schistosomiasis) in tropical areas, because cold temperate winters kill parasite stages outside our bodies, but tropical parasites can thrive outside our bodies all year long. Second, disease vectors, such as mosquitoes and ticks, are far more diverse in tropical than in temperate areas.

Finally, biological characteristics of the responsible microbes have made it easier to develop vaccines against major infectious diseases of temperate areas than against tropical diseases; we still aren’t close to a vaccine against malaria, despite billions of dollars invested. Hence tropical diseases impose a huge burden on economies of tropical countries. At any given moment, much of the population is sick and unable to work efficiently. Many women in tropical areas can’t join the workforce because they are constantly nursing and caring for babies conceived as insurance against the expected deaths of some of their older children from malaria.

As for agricultural productivity, it averages lower in tropical than in temperate areas, again for several reasons. First, temperate plants store more energy in parts edible to us humans (such as seeds and tubers) than do tropical plants. Second, diseases borne by insects and other pests reduce crop yields more in the tropics than in the temperate zones, because the pests are more diverse and survive better year-round in tropical than in temperate areas. Third, glaciers repeatedly advanced and retreated over temperate areas, creating young nutrient-rich soils. Tropical lowland areas haven’t been glaciated and hence tend to have older soils, leached of their nutrients by rain for thousands of years. (Young fertile volcanic and alluvial soils are exceptions.) Fourth, the higher average rainfall of tropical than of temperate areas results in more nutrients being leached out of the soil by rain.

Finally, higher tropical temperatures cause dead leaves and other organic matter falling to the ground to be broken down quickly by microbes and other organisms, releasing their nutrients to be leached away. Hence in temperate areas soil fertility is on average higher, crop losses to pests lower, and agricultural productivity higher than in tropical areas. That’s why Argentina in South America’s south temperate zone, despite its conspicuous lack (for most of its history) of the good institutions praised by economists, is the leading food exporter in Latin America, and one of the leading ones in the world.

Thus, geographical latitude acting independently of institutions is an important geographic factor affecting power, prosperity, and poverty. The other important geographic factor is whether an area is accessible to ocean-going ships because it lies either on the sea coast or on a navigable river. It costs roughly seven times more to ship a ton of cargo by land than by sea. That puts landlocked countries at an economic disadvantage, and helps explain why landlocked Bolivia and semilandlocked Paraguay are the poorest countries of South America. It also helps explain why Africa, with no river navigable to the sea for hundreds of miles except the Nile, and with fifteen landlocked nations, is the poorest continent. Eleven of those fifteen landlocked African nations have average incomes of $600 or less; only two countries outside Africa (Afghanistan and Nepal, both also landlocked) are as poor.

The remaining major factor underlying wealth and poverty is the state of the natural environment. All human populations depend to varying degrees on renewable natural resources—especially on forests, water, soils, and seafood. It’s tricky to manage such resources sustainably. Countries that excessively deplete their resources—whether inadvertently or intentionally—tend to impoverish themselves, although the difficulty of estimating accurately the costs of resource destruction causes economists to ignore it. It helps explain why notoriously deforested countries—such as Haiti, Rwanda, Burundi, Madagascar, and Nepal—tend to be notoriously poor and politically unstable.

These, then, are the main factors invoked to understand why nations differ in wealth. The factors are multiple and diverse. We all know, from our personal experience, that there isn’t one simple answer to the question why each of us becomes richer or poorer: it depends on inheritance, education, ambition, talent, health, personal connections, opportunities, and luck, just to mention some factors. Hence we shouldn’t be surprised that the question of why whole societies become richer or poorer also cannot be given one simple answer.

Within this frame, Acemoglu and Robinson focus on institutional factors: initially on economic institutions, and then on the political institutions that create them. In their words, “while economic institutions are critical for determining whether a country is poor or prosperous, it is politics and political institutions that determine what economic institutions a country has.” In particular, they stress what they term inclusive economic and political institutions: “Inclusive economic institutions…are those that allow and encourage participation by the great mass of people in economic activities that make best use of their talents and skills and that enable individuals to make the choices they wish.” For example, in South Korea but not in North Korea people can get a good education, own property, start a business, sell products and services, accumulate and invest capital, spend money in open markets, take out a mortgage to buy a house, and thereby expect that by working harder they may enjoy a good life.

Such inclusive economic institutions in turn arise from “political institutions that distribute power broadly in society and subject it to constraints…. Instead of being vested in a single individual or a narrow group, [inclusive] political power rests with a broad coalition or a plurality of groups.” South Korea recently, and Britain and the US beginning much earlier, do have broad participation of citizens in political decisions; North Korea does not. Inclusive economic and political institutions provide individuals with incentives to increase their economic productivity as they think best. Such inclusive institutions are to be contrasted with absolutist political institutions that narrowly concentrate political power, and with extractive economic institutions that force people to work largely for the benefit of dictators. The ultimate development of inclusive political institutions to date is in modern Scandinavian democracies with universal suffrage and relatively egalitarian societies. However, compared to modern dictatorships (like North Korea) and the absolute monarchies widespread in the past, societies (such as eighteenth-century Britain) in which only a minority of citizens could vote or participate in political decisions still represented a big advance toward inclusiveness.

From this striking dichotomy, the authors draw thought-provoking conclusions. While absolutist regimes with extractive economic institutions can sometimes achieve economic growth, that growth is based on existing technology, and is nonsustainable and prone to collapse; whereas inclusive institutions are required for sustained growth based on technological change. One might naively expect dictators to promote long-term economic growth, because such growth would generate more wealth for them to extract. But their efforts are warped, because what’s economically good for individual citizens may be bad for the political elite, and because economic growth may be best promoted by political institutions that would shake the elite’s hegemony.

Why Nations Fail offers case studies to illustrate these points: the economic rises and subsequent declines of the Soviet Union and the Ottoman Empire; the resistance of tsarist Russia and the Habsburg Empire to building railroads, out of fear that they would undermine the landed aristocracy’s power and foster revolution; and, especially relevant today, the likely future trajectory of Communist China, whose growth prospects appear unlimited to many Western observers—but not to Acemoglu and Robinson, who write that China’s growth “is likely to run out of steam.”

In their narrow focus on inclusive institutions, however, the authors ignore or dismiss other factors. I mentioned earlier the effects of an area’s being landlocked or of environmental damage, factors that they don’t discuss. Even within the focus on institutions, the concentration specifically on inclusive institutions causes the authors to give inadequate accounts of the ways that natural resources can be a curse. True, the book provides anecdotes of the resource curse (Sierra Leone cursed by diamonds), and of how the curse was successfully avoided (in Botswana). But the book doesn’t explain which resources especially lend themselves to the curse (diamonds yes, iron no) and why. Nor does the book show how some big resource producers like the US and Australia avoid the curse (they are democracies whose economies depend on much else besides resource exports), nor which other resource-dependent countries besides Sierra Leone and Botswana respectively succumbed to or overcame the curse. The chapter on reversal of fortune surprisingly doesn’t mention the authors’ own interesting findings about how the degree of reversal depends on prior wealth and on health threats to Europeans.

Two major factors that Acemoglu and Robinson do mention, only to dismiss them in a few sentences, are tropical diseases and tropical agricultural productivity:

Tropical diseases obviously cause much suffering and high rates of infant mortality in Africa, but they are not the reason Africa is poor. Disease is largely a consequence of poverty and of governments being unable or unwilling to undertake the public health measures necessary to eradicate them…. The prime determinant of why agricultural productivity—agricultural output per acre—is so low in many poor countries, particularly in sub-Saharan Africa, has little to do with soil quality. Rather, it is a consequence of the ownership structure of the land and the incentives that are created for farmers by the governments and institutions under which they live.

These sweeping statements, which will astonish anyone knowledgeable about the subjects, brush off two entire fields of science, tropical medicine and agricultural science. As I summarized above, the well-known facts of tropical biology, geology, and climatology saddle tropical countries with much bigger problems than temperate countries.

A second weakness involves the historical origins of what Acemoglu and Robinson identify as inclusive economic and political institutions, with their consequences for wealth. Some countries, such as Britain and Japan, have such institutions, while other countries, such as Ethiopia and the Congo, don’t. To explain why, the authors give a just-so story of each country’s history, which ends by concluding that that story explains why that country either did or didn’t develop good institutions. For instance, Britain adopted inclusive institutions, we are told, as a result of the Glorious Revolution of 1688 and preceding events; and Japan reformed its institutions after 1868; but Ethiopia remained absolutist. Acemoglu and Robinson’s view of history is that small effects at critical junctures have long-lasting effects, so it’s hard to make predictions. While they don’t say so explicitly, this view suggests that good institutions should have cropped up randomly around the world, depending on who happened to decide what at some particular place and time.

But it’s obvious that good institutions, and the wealth and power that they spawned, did not crop up randomly. For instance, all Western European countries ended up richer and with better institutions than any tropical African country. Big underlying differences led to this divergence of outcomes. Europe has had a long history (of up to nine thousand years) of agriculture based on the world’s most productive crops and domestic animals, both of which were domesticated in and introduced to Europe from the Fertile Crescent, the crescent-shaped region running from the Persian Gulf through southeastern Turkey to Upper Egypt. Agriculture in tropical Africa is only between 1,800 and 5,000 years old and based on less productive domesticated crops and imported animals.

As a result, Europe has had up to four thousand years’ experience of government, complex institutions, and growing national identities, compared to a few centuries or less for all of sub-Saharan Africa. Europe has glaciated fertile soils, reliable summer rainfall, and few tropical diseases; tropical Africa has unglaciated and extensively infertile soils, less reliable rainfall, and many tropical diseases. Within Europe, Britain had the further advantages of being an island rarely at risk from foreign armies, and of fronting on the Atlantic Ocean, which became open after 1492 to overseas trade.

It should be no surprise that countries with those advantages ended up rich and with good institutions, while countries with those disadvantages didn’t. The chain of causation leading slowly from productive agriculture to government, state formation, complex institutions, and wealth involved agriculturally driven population explosions and accumulations of food surpluses, leading in turn to the need for centralized decision-making in societies much too populous for decision-making by face-to-face discussions involving all citizens, and the possibility of using the food surpluses to support kings and their bureaucrats. This process unfolded independently, beginning around 3400 BC, in many different parts of the ancient world with productive agriculture, including the Fertile Crescent, Egypt, China, the Indus Valley, Crete, the Valley of Mexico, the Andes, and Polynesian Hawaii.

The remaining weakness is the authors’ resort to assertion unsupported or contradicted by facts. An example is their attempt to expand their focus on institutions in order to explain the origins of agriculture. All humans were originally hunter/gatherers who independently became farmers in only about nine small areas scattered around the world. A century of research by botanists and archaeologists has shown that what made those areas exceptional was their wealth of wild plant and animal species suitable for domestication (such as wild wheats and corn).

While the usual pattern was for nomadic hunter/gatherers to become sedentary farmers, there were exceptions: some nomadic hunter/gatherers initially became nomadic farmers (Mexico and lowland New Guinea) while others never became farmers (Aboriginal Australia); some sedentary hunter/gatherers became sedentary farmers (the Fertile Crescent) while others never became farmers (Pacific Northwest Indians); and some sedentary farmers reverted to being nomadic hunter/gatherers (southern Sweden about four thousand years ago).

In their Chapter 5, Acemoglu and Robinson use one of those exceptional patterns (that for the Fertile Crescent) to assert, in the complete absence of evidence, that those particular hunter/gatherers had become sedentary because, for unknown reasons, they happened to develop innovative institutions through a hypothesized political revolution. They assert further that the origins of farming depended on their preferred explanation of institutional innovation, rather than on the local availability of domesticable wild species identified by botanists and archaeologists.

Among arguments to refute that widely shared interpretation, Acemoglu and Robinson redraw in their Map 5 on page 56 the maps on pages 56 and 66 of archaeobotanists Daniel Zohary and Maria Hopf’s book Domestication of Plants in the Old World, depicting the distributions of wild barley and of one of the two hybrid ancestors of one of the three wheats (which Acemoglu and Robinson misleadingly identify just as “wheat”). They take these maps to mean that “the ancestors of barley and wheat were distributed along a long arc” beyond the Fertile Crescent, hence that the Fertile Crescent’s unique role in agriculture’s origins “was not determined by the availability of plant and animal species.”

What Zohary and Hopf actually showed was that wild emmer wheat is confined to the Fertile Crescent, and that the areas of extensive spread of wild barley and wild einkorn wheat are also confined to the Fertile Crescent, and that the wild ancestors of all the other original Fertile Crescent crops are also confined to or centered on the Fertile Crescent, and hence that the Fertile Crescent was the only area in which local agriculture could have arisen. Acemoglu and Robinson do themselves a disservice by misstating these findings.

My overall assessment of the authors’ argument is that inclusive institutions, while not the overwhelming determinant of prosperity that they claim, are an important factor. Perhaps they provide 50 percent of the explanation for national differences in prosperity. That’s enough to establish such institutions as one of the major forces in the modern world. Why Nations Fail offers an excellent way for any interested reader to learn about them and their consequences. Whereas most writing by academic economists is incomprehensible to the lay public, Acemoglu and Robinson have written this book so that it can be understood and enjoyed by all of us who aren’t economists.

Why Nations Fail should be required reading for politicians and anyone concerned with economic development. The authors’ discussions of what can and can’t be done today to improve conditions in poor countries are thought-provoking and will stimulate debate. Donors and international agencies try to “engineer prosperity” either by foreign aid or by urging poor countries to adopt good economic policies. But there is widespread disappointment with the results of these well-intentioned efforts. Acemoglu and Robinson pithily diagnose the cause of these disappointing outcomes in their final chapter: “Attempting to engineer prosperity without confronting the root cause of the problems—extractive institutions and the politics that keeps them in place—is unlikely to bear fruit.”

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   Full disclosure: I provided a book jacket quote of praise. I co-edited one book and co-organized two conferences with James Robinson. ↩