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Chapter 1
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 the section “The Lay of the Land,” Acemoglu and Robinson describe the global income distribution. The world’s richest countries are those that industrialized in the 1700s (like Britain, the US, and most of Western Europe) and Asian countries that grew quickly in the 20th century (Japan, Singapore, and South Korea). Meanwhile, most of the world’s poorest countries are in sub-Saharan Africa.
Before they explain and propose solutions to global inequality, Acemoglu and Robinson ensure that readers clearly grasp the extent of that inequality. However, while the inequality within individual nations is just as severe as the inequality between different nations, the authors only focus on the second. This inequality is historical and regional: the same countries have been rich and poor for centuries, and these countries are concentrated in certain regions.
Themes
This pattern has barely changed over the last 150 years. Certain regional patterns have also remained the same, like the divide between wealthier and poorer nations in Latin America, or the fact that, other than oil wealth, Middle Eastern countries are mostly poor. These patterns are stubborn, but they’re not unchangeable. They were totally different before the 18th century, for instance. And some countries—especially in Asia—continue to grow rapidly, while others (like Argentina and Russia) have experienced stark economic declines.
Acemoglu and Robinson suggest that inequality is extremely consistent compared to many political and economic trends, but only since the 1800s. This suggests that something in the 1800s helped freeze the global hierarchy of rich and poor countries, and it also suggests that there are certain stable features within countries that keep them rich or poor over time. This all supports Acemoglu and Robinson’s thesis that political and economic institutions cause inequality, since these institutions are obvious candidates for what, exactly, has shaped each country and its wealth (or poverty). But there are also several other possible arguments for why certain nations have remained so rich while others are so poor—arguments the authors will examine in this chapter.
Themes
Acemoglu and Robinson ask what’s responsible for this persistent divide, both globally and within regions like Latin America. They also ask why countries in Africa and the Middle East aren’t growing nearly as fast as those in East Asia. But they reveal that social scientists don’t have a good explanation: most of their hypotheses don’t fully explain the evidence.
Acemoglu and Robinson show why their theory of institutions and economic growth is groundbreaking. It’s the first hypothesis that can truly explain all the variation in growth, wealth, and development across the world. In short, the more extractive a country’s institutions, the poorer it tends to be. According to Acemoglu and Robinson’s thinking, this is why Africa, the Middle East, South Asia, and Latin America are poorer than most of Europe and North America.
Themes
In the next section, Acemoglu and Robinson explore “The Geography Hypothesis,” which is popular because poor countries are concentrated in the tropics. Even in the 18th century, the French philosopher Montesquieu argued that hot weather makes people lazy and unintelligent. And today, the American economist Jeffrey Sachs blames poverty on tropical diseases and poorer soil quality.
The idea that geography determines the wealth or success of a given society has a long history. It is, after all, an intuitive explanation for inequality because rich and poor countries are geographically clustered together. Therefore, this hypothesis has almost always been present in Western culture, which is full of prejudices based on it—like the negative stereotype that people in the tropics are too lazy to work.
Themes
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But the geography hypothesis is wrong. There’s stark inequality between places that share the same geography, like the two halves of Nogales, or North and South Korea. Plus, for most of human history, the richest and most developed civilizations were in tropical areas like Mexico, Peru, India, and China. These regions were far more developed than comparable temperate areas, like present-day Canada, Argentina, or Australia. The situation only reversed because of European colonialism. Moreover, diseases and tropical soils don’t cause poverty. Poverty actually helps disease spread (not the other way around), and land ownership structures explain global differences in agriculture far better than soil quality does.
The geography hypothesis is simply too broad and tries to explain too much. If geography were the sole or primary factor responsible for inequality, then North and South Korea would be equally rich, and Mexico and Peru would not have gone from rich to poor over time. While inequality is a stubborn global pattern, it has shifted in important ways over history. But geography hasn’t changed significantly—at least between the formation of the first human societies and the modern era of climate change. Therefore, inequality must depend on a factor besides geography—a factor that changed sometime during the period of European colonialism. Notably, Acemoglu and Robinson aren’t saying that geography never affects different nations’ fate, but rather that it isn’t the main cause of inequality.
Themes
The scholar Jared Diamond defends a different version of the geography hypothesis: he argues that people were more likely to take up agriculture and build complex societies in regions with more domesticable animals and plants. Similarly, Diamond argues that Spain’s long history of farming helped the Spanish conquer the Americas. But his theories don’t explain modern inequality, like the gap between Latin America and Spain today—which is much greater than it was in the 1500s. The real explanation for this gap is technology. Diamond does address technology, but only how it spread across continents in the ancient world. He can’t explain why areas within the same region are unequal today. All in all, geography clearly doesn’t explain inequality, either within or between regions.
Diamond’s hypothesis might explain some early inequalities in the past, but it can’t explain modern inequality. This is because agriculture and technology have long since spread around the globe, which has eliminated the geographical differences that Diamond blames for inequality. Acemoglu and Robinson particularly criticize Diamond’s determinism—he presents all of history as the inevitable consequence of one specific factor at one specific moment in the past. While Acemoglu and Robinson also emphasize a specific factor (institutions), they emphasize that people can always change these institutions, which means the past doesn’t completely determine the present.
Themes
In the next section, Acemoglu and Robinson address “The Culture Hypothesis,” which attributes inequality to religious and cultural beliefs. For instance, plenty of people still wrongly believe that Europe is wealthy because of the “Protestant work ethic” and Africa is poor because Africans are lazy. But culture has nothing to do with global inequality. Social norms can affect institutions, but usually institutions create those norms. For example, differences in government explain all the cultural differences between the two halves of Nogales or Korea.
The culture hypothesis is just as intuitive to many people as the geography hypothesis, since it’s also a common idea in popular discourse about inequality. In fact, Acemoglu and Robinson agree with the controversial idea that certain kinds of culture might be correlated with poverty or prosperity. But they say that the culture hypothesis has the causality backwards: culture doesn’t create institutions as much as institutions create culture. Thus, the culture hypothesis is just a misreading of the truth: institutions determine prosperity.
Themes
Culture doesn’t explain poverty in sub-Saharan Africa. Some early African civilizations refused to adopt advanced technologies, but only because institutions gave them no incentive to. For instance, farmers in the Kingdom of Kongo refused to adopt the wheel and plow because they had no real property rights. The king could take away their surplus harvest, and they could be captured into slavery at any time. Under these disempowering conditions, they had no incentive to adopt new technology. The king didn’t make them adopt it either, since he was focused on the highly profitable slave trade—not agriculture.
Instead of examining the true historical dynamics that led different nations to diverge over time, the culture hypothesis simply assumes that the nations that prospered are inherently superior to those that didn’t. For instance, instead of understanding why social and economic structures dissuaded people in the Kingdom of Kongo from adopting new farming technologies, proponents of the culture hypothesis would say that these people simply refused to farm because of some shortcoming in their culture. Thus, Acemoglu and Robinson consider the culture hypothesis a superficial and prejudicial explanation for inequality. Most importantly, like the geography hypothesis, it doesn’t explain why some countries go from poor to rich (or vice versa).
Themes
Religion doesn’t explain poverty or prosperity, either. Many social scientists argue that Protestant culture explains prosperity in Europe, but they’re wrong. Catholic countries industrialized a bit later than Protestant countries, but they’re just as rich today. Similarly, many social scientists blame the Middle East’s poverty on Islam, but they’re also wrong. Most Middle Eastern countries are poor because they lived under the Ottomans, then the English and French, and then authoritarian governments, all of which stunted them economically.
Acemoglu and Robinson admit that religion might affect people’s economic decisions at certain moments in time. But they argue that it’s woefully inadequate as an explanation for long-term international inequality in general. Needless to say, there are numerous examples of countries with the same religious profile but wildly different socioeconomic situations. (For instance, Mexico, Peru, Spain, and Ireland are all majority Catholic.)
Themes
Finally, different nations’ cultures also don’t explain poverty and prosperity. Some people attribute the US, Canada, and Australia’s wealth to “English culture”—but English culture influenced countries across the income spectrum, ranging from the US to Sierra Leone. Others attribute Europe and North America’s prosperity to “the superior European cultural legacy,” but this is also wrong. For instance, the US and Canada have less ethnically European populations than Argentina and Uruguay but are far wealthier. Some people claim that China’s culture explains its poverty (in the past) and rapid growth (in the present). But these shifts are the result of economic policy. They have nothing to do with culture. Ultimately, while there are certainly cultural differences between rich and poor nations, culture simply can’t explain this difference.
When it comes to why certain nations are rich and poor, national culture might be the most intuitive version of the culture hypothesis. But national culture is an extremely vague concept—especially in diverse nations—and can’t predict poverty or prosperity in a consistent way. After all, if Chinese culture can explain both China’s poverty in the past and its rapid growth in the present, then there’s no way to identify whether a certain culture will promote or stifle growth. The version of the national culture hypothesis that focuses on “the superior European cultural legacy” is really a white supremacist idea, since it implies that white European lifestyles are somehow inherently “superior” to other cultures—an idea that is empirically false.
Themes
Next, Acemoglu and Robinson look at the last common explanation for inequality: “The Ignorance Hypothesis.” Many economists believe that poor countries’ rulers just don’t know how to govern well—or create the conditions that free markets need to function effectively. But this doesn’t explain very much of global inequality. For instance, economists often blame Ghana’s post-independence troubles on President Kwame Nkrumah’s ignorant economic policies—like building a mango canning factory in a region where mangos don’t grow. But Nkrumah didn’t make such decisions out of ignorance: he did so in order to win political support from key constituencies and stay in power.
The ignorance hypothesis does tie economic success to policies and political institutions. However, it’s based on a misunderstanding about the challenges and incentives that political leaders face when they make decisions. Acemoglu and Robinson agree that Nkrumah’s economic policy was ineffective, but they see it as self-interested, not ignorant. Because of the structure of Ghana’s institutions, Nkrumah either had to pass these poor economic institutions or risk losing power. A less ignorant, more enlightened leader would not have been able to escape this situation. Thus, the fundamental problem was Ghana’s institutions—not that Nkrumah was ignorant.
Themes
Political leaders don’t create highly unequal economic institutions that protect elite power out of ignorance. They do it because it benefits them and their allies. For example, Kwame Nkrumah’s successor Kofi Busia imposed strict price controls on agriculture, which hurt farmers but benefitted urban elites. When the international community convinced him to reverse this policy, the military overthrew him and reinstated it. This coup shows that inegalitarian political incentives are what cause bad economic policy—not ignorance. When countries like China have broken out of poverty, it hasn’t been because they suddenly elected “enlightened and informed” leaders, but because a different faction with different incentives took power.
Acemoglu and Robinson return to a fundamental principle of political science: when making decisions, leaders always consider both their self-interest and the interests of the people. Effective institutions bring these into alignment—for instance, in a functional democracy, leaders often want to do whatever’s best for the people in order to win reelection. But ineffective institutions allow, incentivize, or even require leaders to put their self-interest first. The coup against Kofi Busia demonstrates that Ghana’s political institutions punished leaders for putting the national interest above the elite’s interest. In other words, these institutions pushed leaders towards an extractive, highly unequal economic model. An “enlightened and informed” president couldn’t have fixed this—only policy change would.
Themes
Acemoglu and Robinson conclude that economists are right to blame poverty on bad policies. But leaders create bad policies because of politics, not because of ignorance or culture. Thus, to understand inequality, social scientists first have to understand politics.
By attributing bad policies to ignorance or culture, economists suggest that poor countries are poor because their leaders aren’t rational enough. According to this line of thinking, if economists ran the world, everyone would be rich. But, the authors suggest, these economists forget that leaders face real-world political constraints. The problem isn’t located inside leaders’ heads. Instead, it’s located out in the world; political constraints and incentives prevent leaders from making what economists would consider rational decisions.
Themes
