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Chapter 13
Themes
Key
LitCharts assigns a color and icon to each theme in Why Nations Fail, which you can use to track the themes throughout the work.
Global Inequality and Economic Growth
History and Institutional Change
Cycles of Wealth and Poverty
Diversity, Pluralism, and Empowerment
Summary
Analysis
In this chapter, Acemoglu and Robinson’s first section is “Three African Chiefs.” In 1895, three Tswana chiefs from southern Africa visited England. The imperialist businessman Cecil Rhodes was trying to take over Tswana land. But on their trip, the Tswana chiefs successfully convinced the British government to do it first, so that Rhodes couldn’t.
In the last two chapters, Acemoglu and Robinson have argued that many poor countries remain poor today because they are trapped in the vicious circle of extractive institutions. They have also emphasized that breaking out of this cycle is incredibly difficult, which helps explain why so few poor nations have managed to become rich. However, in this chapter, they look closely at these exceptions in order to emphasize that change is possible and show their readers what it takes. Their first example is Botswana.
Themes
Acemoglu and Robinson argue that the three Tswana chiefs managed to coordinate and petition the British government because Tswana states have a history of centralized and pluralistic institutions. For instance, in many Tswana states, a tribal assembly of adult men can disagree with the chief or even overrule him. Similarly, Tswana groups often choose chiefs based more on ability than heredity. Because of these institutions, the Tswana were used to resolving conflicts through democratic means and generally viewed their leaders as their legitimate representatives. Therefore, when the three chiefs went to London, they had their people’s support.
The Tswana chiefs’ visit to London was remarkable, and not just because they were asking to be colonized (which they viewed as the lesser of two evils). The authors have frequently emphasized that most of sub-Saharan Africa lacked centralized institutions on the eve of colonization, in large part because of conflict and the slave trade. But Botswana was clearly an exception. Traditional Tswana institutions are pluralistic because they let different groups voice their concerns in government and give ultimate power to the people as a whole, and not to the leader. But they’re also centralized because they make effective decisions on a collective basis, then implement those decisions in a relatively fair way. Because they were both centralized and pluralistic, Tswana institutions were inclusive. This explains why Tswana leaders could go to London and legitimately negotiate with the British on behalf of their people. In contrast, people living under extractive institutions often consider their political leaders illegitimate because they recognize that these leaders neither want nor try to represent the people’s best interests.
Themes
Still, Tswana chiefs tried to stay independent from the British, who built railroads through their land but otherwise didn’t colonize it. This helped the Tswana avoid extractive institutions over time. Ultimately, the Tswana chiefs’ lobbying efforts were successful in part because of their inclusive and centralized state institutions.
The Tswana people’s organized political system enabled them to stave off the worst of colonialism and avoid the vicious circle of extractive institutions. Thus, Botswana’s precolonial history strongly affected its colonial history, which then strongly affected its modern history after independence. Again, this shows that history is a contingent process based on differences that accumulate over time.
Themes
Upon its independence in 1966, Botswana was extremely poor. It had virtually no infrastructure or education system, and its neighbors were all white apartheid regimes. However, it grew extremely fast and is now sub-Saharan Africa’s wealthiest country. It succeeded by building inclusive institutions. Politically, Botswana is a democracy with regular elections and no armed conflict. Economically, its laws protect property rights and encourage innovation and investment.
Upon independence, Botswana’s institutions were unique, but its economy wasn’t. It faced the same economic conditions as many other countries in Africa. But because of its inclusive institutions, it responded to these conditions very differently. This is similar to how North and South Korea were equally poor when they gained independence after the Korean War, but quickly diverged over the following decades due to their differing institutions. These examples again show how nations can diverge from one another by responding to critical junctures according to their own small institutional differences.
Themes
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At the critical juncture of its independence, Botswana harnessed its history of centralization and pluralism. A broad coalition of chiefs and elites worked together to build the political system. The independence movement’s leaders insisted on respecting elections and promoting democracy. After independence, these leaders carefully regulated the country’s two main industries: meat and diamonds. In fact, they funded the state by nationalizing and carefully managing the diamond industry. Botswana’s cultural policies have encouraged different groups to work together—for instance, even though it’s a diverse country, the government defines everyone as ethnically Tswana. In short, Botswana chose to build inclusive political institutions upon independence, which allowed it to create inclusive economic institutions and achieve sustained economic growth.
Botswana’s success again underlines Acemoglu and Robinson’s central thesis: inclusive political institutions create inclusive economic institutions, which create widespread prosperity. Since Botswana’s traditional institutions held together throughout the colonial period, traditional leaders—and not self-interested elites or armed revolutionaries—took control of the country upon independence. Indeed, the government they formed was inclusive because it was both pluralistic and centralized—it included representatives from various groups and provinces, but they all came together to form a unified state. In a way, then, Botswana followed the iron law of oligarchy in reverse: new leaders followed the same inclusive traditions as old ones.
Themes
The next section, “The End of the Southern Extraction,” starts with Rosa Parks launching the Montgomery Boycott in 1955. Acemoglu and Robinson explain that the civil rights movement finally broke the US South’s vicious circle of extractive institutions, which kept it much poorer than other parts of the country. The cycle broke because segregation’s Black victims started organizing for political change, while key national institutions took their side. Moreover, when Black workers started migrating to industrialized northern cities, southern planter elites started to lose their power. But cotton-picking machines also made these elites less reliant on cheap labor.
Even after the Civil War, the US South had distinct, highly extractive institutions from the late 1870s until the 1960s. Like in all the other case studies from this book, in the US South, political change was the key to economic change. Of course, economic changes like industrialization helped contribute to this political change. But ultimately, the civil rights movement was truly responsible for overhauling the South’s economic institutions and generating more growth there. This has important lessons for social change all around the world. Namely, while activist movements generally focus on justice and political inclusion, the authors’ argument implies that policymakers and analysists should also take the economic benefits of this inclusion more seriously.
Themes
The federal government played a crucial role in the civil rights movement because it had the power to force change on southern states. The Supreme Court chipped away at segregation, and federal law enforcement implemented these rulings. But this was only possible because it had wide support: civil rights protests won over most northern Democrats, dividing the party and leaving southern Democrats with little option besides integration. Finally, new federal civil rights laws passed in 1957, 1964, and 1965 forced southern institutions to change. They protected voting rights, blocked employment discrimination, and gave Black citizens far better economic opportunities. By building these inclusive institutions, the South has nearly caught up to the North economically.
The authors emphasize that federal intervention was largely responsible for economic development in the South. In other words, powerful inclusive institutions at the national level forced Southern states to build inclusive political institutions at the state level. This provides an important lesson for other rich countries that want to improve state or regional economies through federal action. However, it doesn’t necessarily help poor countries chart a path forward. Of course, international institutions or foreign governments can put similar kinds of pressure on poor countries in order to foster inclusive institutions in them. But Acemoglu and Robinson repeatedly express skepticism about this kind of intervention. They emphasize that change generally has to start with social movements within countries.
Themes
Acemoglu and Robinson look at “Rebirth in China.” The Chinese Communist Party took power in 1949. It immediately built extractive institutions, including a one-party political system and a nationalized economic system without private property rights. During the Great Leap Forward, Chairman Mao tried to industrialize China all at once. Tens of millions of people died in a horrific famine. Next, his regime persecuted and killed its enemies during the Cultural Revolution.
Acemoglu and Robinson would likely consider modern China another example of the iron law of oligarchy. After the Qing dynasty and a period of considerable instability under the Republic of China, the Communist Party took power and kept institutions extractive. Like the early Soviet Union, the Chinese Communist Party did create some growth by reorganizing the economy. But this incurred a great human cost, and it was unsustainable in the long term.
Themes
After Mao’s death, different factions within the Communist Party fought for control. These included the left-wing Gang of Four and moderates like the vice-premier Deng Xiaoping, who opposed the Cultural Revolution and hoped to spur economic growth through inclusive institutions and international commerce. First, the acting premier Hua Guofeng sided with Deng and arrested the Gang of Four. Next, Deng gradually directed the government towards economic modernization projects and away from the Cultural Revolution. Finally, Deng ousted Hua and replaced most of the Party leadership.
Mao’s death was an important critical juncture for China: it gave other party leaders a chance to redirect the country’s future. While Deng favored more inclusive economic institutions, he still rose to power through a coup against other elites, not a democratic process. In other words, he had to follow the norms of China’s extractive political institutions in order to gain power and make China’s economic institutions marginally more inclusive.
Themes
After securing political control, Deng’s government passed economic reforms. It gave incentives for productivity in agriculture and industry, and it embraced foreign investment. While China’s political institutions remained extractive, its economic ones became inclusive enough to generate explosive growth for several decades.
China avoided repeating the Soviet Union’s mistakes. Deng recognized that economic growth requires incentivizing innovation and investment. In fact, by spurring growth, his policies also allowed the Communist Party to keep control over extractive political institutions. But the authors have also emphasized that inclusive and extractive institutions can’t peacefully coexist. They strongly imply that the Chinese system is unsustainable—either the extractive political system will hamper its economic growth, or its inclusive economic institutions will eventually change its political institutions. They go on to explain their reasoning more in their next and final chapter.
Themes
Acemoglu and Robinson suggest that Botswana, the US South, and China (as well as the Glorious Revolution, French Revolution, and Meiji Restoration) prove “that history is not destiny.” It’s possible to escape the vicious circle of extractive institutions—it’s just very difficult. Apart from luck, it requires a broad political coalition to push for reform during a critical juncture.
Acemoglu and Robinson’s examples illustrate the wide variety of ways that nations can build inclusive institutions. Of course, most nations are still extractive—so in a way, every nation with inclusive institutions is an exception to the rule. England, France, and Japan built inclusive institutions through revolutions led by broad coalitions. Botswana escaped the vicious circle because it had a preexisting history of inclusive institutions, and southern US states did so because the federal government imposed inclusive institutions on them. Meanwhile, Deng Xiaoping improbably rose to power within China’s extractive institutions, then reformed them to become more inclusive. But China still has an unstable mix of inclusive and extractive institutions. And in all these cases, inclusive institutions would have never formed if ordinary people hadn’t called for them.
Themes
