Why Nations Fail
The Origins of Power
Prosperity and Poverty
By Daren Acemoglu and James A Robinson
Published by Profile Books Ltd., London, UK
The book under review contains 15 chapters, a preface and acknowledgement.
The authors have elaborately dealt with the origins of power, prosperity and poverty of various nations in a fascinating and attractive manner.
The publication is credited with the glory of becoming a best seller on the lists of the New York Times and the Wall Street Journal.
According to the authors, the nations fail today because their extractive economic institutions do not create the incentives needed for people with investments. Extractive political institutions support these economic institutions by cementing the power of those who benefit from extraction. The authors have emphatically stated that extractive economic and political institutions, though their details vary under different circumstances, are always at the root of this failure. The solution to the economic and political failures of nations today is to transform their extractive institutions into inclusive ones. It has been categorically mentioned that many countries in Asia and Africa are economically poor, and, so to say, failed states because their rulers culture absolutism and use exhaustive economic institutions for their personal ends.
As the authors view it, Egypt is poor because it has been ruled by a group of elite which have organised society for their own benefit at the expense of the vast majority. Chapter 13 of the book contains the account on how Robert Mugabe of Zimbabwe has 'destroyed' the prospects for growth of democratic institutions and become a 'despot' to the people of that country. The authors have also referred to Central Asia's 'autocratic' ruler Karimov (Uzbekistan) who has been plundering his own country through a system unique to him. In chapter 5 we are offered an in-depth look at how the former Soviet Union's 'despotic' ruler Joseph Stalin has manipulated the extractive institutions in his favour which ultimately led to the downfall of the erstwhile socialist giant.
In chapter 14 subtitled 'Rebirth in China', the authors have tried to narrate how and why china has been experiencing rapid economic growth and why it is now the world's second largest economy.
The political and economic institutions created in China after 1949 were highly extractive politically; they featured the dictatorship of the Chinese Communist Party. This situation continued till the death of Mao Zedong in 1976. About 30 million people have reportedly died due to famine during Mao's rule. The subsequent leaders of China had shifted from Mao's economic policy. The 'rebirth of China' came up after a significant shift from the extractive set of economic institutions towards the more inclusive ones. Market incentives in agriculture and industry, followed by foreign investment and technology, set China on a path to rapid economic growth. The great shake-up and human sufferings during the 'great leap forward' and the Cultural Revolution generated sufficient demand for change making Deng Xiaoping and his allies capable of winning the power struggle. In the following chapter, the authors warn that this growth of China will run out of steam unless extractive political institutions completely make way for inclusive institutions. As long as political institutions remain extractive, growth will be inherently limited as it has been in all similar cases. Throughout the book the authors have ostensibly indicated that the nations which have shun extractive economic and political institutions and vowed to remain committed to Washington for consensus, which emphasises the importance of market and trade liberalisation and certain reforms for kick starting economic growth, have been successful in sustaining economic growth. However, the book contains some chapters where it has been unequivocally stated how a few protagonists of 'ideal democracy and development' earlier destroyed the economic fabrics of some countries. In one chapter it has been mentioned that the Malaccan Archipelago in modern Indonesia were central to world trade as the only producers of valuable spices, cloves, and nutmeg in the sixteenth century. The inhabitants of these islands exported their produce worldwide in exchange of food, and other manufactured goods. This region attracted the attention of the Portuguese and Dutch people. The Dutch East India Company, a replica of the British East India Company, appeared there more ferociously and had committed one of the earlier genocides in human history. Fifteen thousand people along with their local leaders were killed. Gradually the Dutch established their colony in the area. Economic power of the local people was completely broken.
India was the largest producer and exporter of textiles in the world in the eighteenth century. Indian calicoes and muslins dominated the European markets and were traded throughout Asia and even eastern Africa. Meanwhile, the Industrial Revolution occurred in England. To ensure their market both in India and other places, the British rulers adopted various suppressive measures and ultimately succeeded in destroying the Indian textile industry.
The South African people (Black) were quite happy and had been performing well in agriculture. Only 20 per cent whites of the total people enacted the Native Land Act of 1913 and totally displaced 80 per cent Black owners from their lands. Meanwhile, the whites, with their superior knowledge, power and cunningness became the owner of diamond and other mines. As a consequence of the Native Land Act 1913 the South African people became landless and concentrated in some limited areas. They had no option but to work in the mines of the white people having no power to bargain for wages. On the other hand, the British Empire showed a different policy in case of Australia, Canada and, to some extent, the U.S.A.
The 'criminals and convicts' in the British society were allegedly been sent to Australia for rehabilitation. The British government was very much sympathetic to these relocated people and helped them establish a legislative assembly. Thus Australia developed its 'ideal democratic, inclusive institutions'. Canada was snatched away by the British from France.
According to the authors, the earliest evidence of farming, herding and the domestication of animals came to Europe from the Middle East.
There is no denying the fact that the economic and political institutions shall have to be inclusive if the economic growth is to be sustained for all sections of the people and not to be confined to the elite or the ruling cliques and their beneficiaries.
The topic has been comprehensively discussed in this book.
The authors deserve plaudits for their narration of how brutally some of today's 'ideally democratic' countries totally annihilated the rich economies of some nations. The writers have been faithful and committed to history.
The book was originally published in the UK by Profile Books Ltd., London, and subsequently in hard cover in the United States by Crown Publishers, Crown Publishing Group, a division of Random House Inc. New York.