I find the topic utterly fascinating: why do some nations prosper, and improve the life of their citizens, and others fail, often disastrously so? Daron Acemoglu and James Robinson, both academics, propose a model based on the concepts of "extractive" vs. "inclusive" institutions. They attempt to support their thesis by undertaking a very broad review of economic and historical developments in a spectrum of 30 or so countries. They commence, like medical researchers do when they hope to minimize the number of variables, by examining "twins." In the author's case the "twins" are the cities of Nogales, immediately adjacent, in Arizona, and in Sonora. One is relatively prosperous, the other not so. It is a good start, and later in the book, the author uses the two Koreas. In both cases, geography and culture are relatively constant, which seems to bolster their view that it is the "institutions" that govern the lives of the respective citizens that are causative.
However the book can be a bit of a maddening slog in order to find some enjoyable nuggets of information and/or wisdom. For sure, if one establishes a situation in which individuals have incentives to produce they will work harder. So, why is this concept not universally embraced, by corporations and countries? I once set up a "profit-sharing" program for workers in my company; it seemed to change attitudes, improved the operating efficiency and reduce waste. After I left, the owner immediately eliminated it, though he would pontificate on the needs for economic incentives for himself! His outlook was rigid: if he was "sharing" the profits with the workers, he was a loser, and the thought that he might have a slightly smaller percentage of a much bigger pie never entered his mind. The authors confirmed my personal experience time and time again, and expressed it in terms of "The Iron Law of Oligarchy." An elite would be deposed by "revolutionary forces," only to see those forces turn into a new elite who acted much the same as the old. Among others, the authors cite Ethiopia as an example, where "the Derg" deposed Haile Selassie in 1974, and within four years Mengistu was using the same throne Selassie did. The authors could also have cited George Orwell's Animal Farm: Centennial Edition
. I also found the authors description of how Venice turned into a "museum" to be one of their most concrete examples, in terms of identifying the steps taken by the elites to protect their interests, and eliminate the "profit sharing" with the masses. Likewise, as a counterpoint, there was a good description on how Botswana became the most prosperous country in sub-Sahara Africa.
For sure, I believe the "differential diagnosis" to be essential, and therefore comparisons of one historical situation to another can be most useful. But the authors seem to have taken this concept to the extreme, juxtaposing wildly disparate situations, and providing no "connective tissue." For example, chapter 6 contained 10th-12th Century Venice, the Roman Empire, and Axum, in Ethiopia, without any meaningful comparisons. Over and over again the details of the history of a country were included, generally correctly, but for no apparent reason in terms of supporting their thesis. Thus, we are treated to a catalog of Napoleon's military successes, the number of tons of gunpowder the British sold between 1750 and 1807, and Roosevelt's efforts to pack the Supreme Court. And I dare say that if the redundancies were eliminated by a good editor, a hundred pages would be shaved off the book. For example, three times in 50 pages there is the same list of African countries that had descended into civil war; the Battle of Adowa is mentioned at least twice, and there is the relentless mantra of using "extractive" to mean anything bad that is occurring in a country, and "inclusive" for positive developments. There are also the outright errors of Bill Gates' education (p.43) (Gates dropped out of Harvard in his freshman year), and the circulation of the French "Old Franc" until 1992 (p. 388).
And then there were the sins of omission. Several readily sprung to mind: all of Scandinavia, Singapore, Malaysia, Dubai, and Canada. Examination of these would have provided some useful counterpoints to one of the author's concluding propositions: "You can't engineer prosperity." And where is the rise of "extractive" institutions in the United States over the past 30 years? Totally omitted. Reviewing the extensive bibliography/references was also instructive. There was Kapuscinski's classic account of the fall of Haile Selassie, The Emperor
but I was astonished to find missing Gunnar Myrdal's equally classic inquiry into the poverty of nations Asian Drama: An Inquiry into the Poverty of Nations
It is a rich book, which covers a vast swath of human history. But it lacks the "connective tissue" that supports the author's thesis, and thus remains light-years away from any sort of "unified field theory" of development. 3-stars.