by Prosperity;Poverty Why Nations Fail: The Origins of Power
ACKNOWLEDGMENTS
THIS BOOK IS the culmination of fifteen years of collaborative research, and along the way we have accumulated a great deal of practical and intellectual debts. Our greatest debt is to our long-term collaborator Simon Johnson, who coauthored many of the key scientific papers that shaped our understanding of comparative economic development.
Our other coauthors, with whom we have worked on related research projects, played a significant role in the development of our views, and we would like to particularly thank in this capacity Philippe Aghion, Jean-Marie Baland, María Angélica Bautista, Davide Cantoni, Isaías Chaves, Jonathan Conning, Melissa Dell, Georgy Egorov, Leopoldo Fergusson, Camilo García-Jimeno, Tarek Hassan, Sebastián Mazzuca, Jeffrey Nugent, Neil Parsons, Steve Pincus, Pablo Querubín, Rafael Santos, Konstantin Sonin, Davide Ticchi, Ragnar Torvik, Juan Fernando Vargas, Thierry Verdier, Andrea Vindigni, Alex Wolitzky, Pierre Yared, and Fabrizio Zilibotti.
Many other people played very important roles in encouraging, challenging, and critiquing us over the years. We would particularly like to thank Lee Alston, Abhijit Banerjee, Robert Bates, Timothy Besley, John Coatsworth, Jared Diamond, Richard Easterlin, Stanley Engerman, Peter Evans, Jeff Frieden, Peter Gourevitch, Stephen Haber, Mark Harrison, Elhanan Helpman, Peter Lindert, Karl Ove Moene, Dani Rodrik, and Barry Weingast.
Two people played a particularly significant role in shaping our views and encouraging our research, and we would like to take this opportunity to express our intellectual debt and our sincere gratitude to them: Joel Mokyr, and Ken Sokoloff, who unfortunately passed away before this book was written. Ken is sorely missed by us both.
We are also very grateful to the scholars who attended a conference we organized in February 2010 on an early version of our book manuscript at the Institute for Quantitative Social Science at Harvard. We would particularly like to thank the co-organizers, Jim Alt and Ken Shepsle, and our discussants at the conference: Robert Allen, Abhijit Banerjee, Robert Bates, Stanley Engerman, Claudia Goldin, Elhanan Helpman, Joel Mokyr, Ian Morris, Şevket Pamuk, Steve Pincus, and Peter Temin. We are also grateful to Melissa Dell, Jesús Fernández-Villaverde, Sándor László, Suresh Naidu, Roger Owen, Dan Trefler, Michael Walton, and Noam Yuchtman, who gave us extensive comments at the conference and at many other times.
We are also grateful to Charles Mann, Leandro Prados de la Escosura, and David Webster for their expert advice.
During much of the process of researching and writing this book we were both members of the Canadian Institute for Advanced Research’s (CIFAR) program on Institutions, Organizations, and Growth. We presented research related to this book many times at CIFAR meetings and have benefited hugely from the support of this wonderful organization and the scholars that it brings together.
We also received comments from literally hundreds of people in various seminars and conferences on the material developed in this book, and we apologize for failing to attribute properly any suggestion, idea, or insight that we got from those presentations and discussions.
We are also very grateful to María Angélica Bautista, Melissa Dell, and Leander Heldring for their superb research assistance on this project.
Last, but certainly not least, we have been very fortunate to have a wonderful, insightful, and extremely supportive editor, John Mahaney. John’s comments and suggestions have greatly improved our book, and his support and enthusiasm for the project made the last year and a half much more pleasant and less taxing than it might have been.
BIBLIOGRAPHICAL ESSAY AND SOURCES
PREFACE
Mohamed ElBaradei’s views can be found at twitter.com/#!/ElBaradei.
Mosaab El Shami and Noha Hamed quotes are from Yahoo! news 2/6/2011, at news.yahoo.com/s/
yblog_exclusive/20110206/ts_yblog_exclusive/
egyptian-voices-from-tahrir-square.
On the twelve immediate demands posted on Wael Khalil’s blog, see alethonews.wordpress.com/2011/02/27/egypt-reviewing-the-demands/.
Reda Metwaly is quoted on Al Jazeera, 2/1/2011, at english.aljazeera.net/news/
middleeast/2011/02/2011212597913527.html.
CHAPTER 1 : So CLOSE AND YET SO DIFFERENT
A good discussion of the Spanish exploration of the Rio de La Plata is Rock (1992), chap. 1. On the discovery and colonization of the Guaraní, see Ganson (2003). The quotations from de Sahagún are from de Sahagún (1975), pp. 47–49. Gibson (1963) is fundamental on the Spanish conquest of Mexico and the institutions they structured. The quotations from de las Casas come from de las Casas (1992), pp. 39, 117–18, and 107, respectively.
On Pizarro in Peru, see Hemming (1983). Chaps. 1–6 cover the meeting at Cajamarca and the march south and the capture of the Inca capital, Cuzco. See Hemming (1983), chap. 20, on de Toledo. Bakewell (1984) gives an overview of the functioning of the Potosí mita, and Dell (2010) provides statistical evidence that shows how it has had persistent effects over time.
The quote from Arthur Young is reproduced from Sheridan (1973), p. 8. There are many good books that describe the early history of Jamestown: for example, Price (2003), and Kupperman (2007). Our treatment is heavily influenced by Morgan (1975) and Galenson (1996). The quote from Anas Todkill comes from p. 38 of Todkill (1885). The quotes from John Smith are from Price (2003), p. 77 (“Victuals …”), p. 93 (“If your king …”), and p. 96 (“When you send …”). The Charter of Maryland, the Fundamental Constitutions of Carolina, and other colonial constitutions have been put on the Internet by Yale University’s Avalon Project, at avalon.law.yale.edu/17th_century.
Bakewell (2009), chap. 14, discusses the independence of Mexico and the constitution. See Stevens (1991) and Knight (2011) on postindependence political instability and presidents. Coatsworth (1978) is the seminal paper on the evidence on economic decline in Mexico after independence. Haber (2010) presents the comparison of the development of banking in Mexico and the United States. Sokoloff (1988) and Sokoloff and Khan (1990) provide evidence on the social background of innovators in the United States who filed patents. See Israel (2000) for a biography of Thomas Edison. Haber, Maurer, and Razo (2003) proposes an interpretation of the political economy of the regime of Porfirio Díaz very much in the spirit of our discussion. Haber, Klein, Maurer, and Middlebrook (2008) extend this treatment of Mexico’s political economy into the twentieth century. On the differential allocation of frontier lands in North and Latin America, see Nugent and Robinson (2010) and García-Jimeno and Robinson (2011). Hu-DeHart (1984) discusses the deportation of the Yaqui people in chap. 6. On the fortune of Carlos Slim and how it was made, see Relea (2007) and Martinez (2002).
Our interpretation of comparative economic development of the Americas builds on our own previous research with Simon Johnson, particularly Acemoglu, Johnson, and Robinson (2001, 2002), and has also been heavily influenced by Coatsworth (1978, 2008) and Engerman and Sokoloff (1997).
CHAPTER 2 : THEORIES THAT DON’T WORK
Jared Diamond’s views on world inequality are laid out in his book Guns, Germs and Steel (1997). Sachs (2006) sets out his own version of geographical determinism. Views about culture are widely spread throughout the academic literature but have never been brought together in one work. Weber (2002) argued that it was the Protestant Reformation that explained why it was Europe that had the Industrial Revolution. Landes (1999) proposed that Northern Europeans developed a unique set of cultural attitudes that led them to work hard, save, and be innovative. Harrison and Huntington, eds. (2000), is a forceful statement of the importance of culture for comparative economic development. The notion that there is some sort of superior British culture or superior set of British institutions is widespread and used to explain U.S. exceptionalism (Fisher, 1989) and also patterns of comparative development more generally (La Porta, Lopez-de-Silanes, and Shleifer, 2008). The works of Banfield (1958) and Putnam, Leonardi, and Nanetti (1994) are very influential cultural interpretations of how one aspect of culture, or “social capital,” as
they call it, makes the south of Italy poor. For a survey of how economists use notions of culture, see Guiso, Sapienza, and Zingales (2006). Tabellini (2010) examines the correlation between the extent to which people trust each other in Western Europe and levels of annual income per capita. Nunn and Wantchekon (2010) show how the lack of trust and social capital in Africa is correlated with the historical intensity of the slave trade.
The relevant history of the Kongo is presented in Hilton (1985) and Thornton (1983). On the historical backwardness of African technology, see the works of Goody (1971), Law (1980), and Austen and Headrick (1983).
The definition of economics proposed by Robbins is from Robbins (1935), p. 16.
The quote from Abba Lerner is in Lerner (1972), p. 259. The idea that ignorance explains comparative development is implicit in most economic analyses of economic development and policy reform: for example, Williamson (1990); Perkins, Radelet, and Lindauer (2006); and Aghion and Howitt (2009). A recent, forceful version of this view is developed in Banerjee and Duflo (2011).
Acemoglu, Johnson, and Robinson (2001, 2002) provide a statistical analysis of the relative role of institutions, geography, and culture, showing that institutions dominate the other two types of explanations in accounting for differences in per capita income today.
CHAPTER 3 : THE MAKING OF PROSPERITY AND POVERTY
The reconstruction of the meeting between Hwang Pyŏng-Wŏn and his brother is taken from James A. Foley’s interview of Hwang transcribed in Foley (2003), pp. 197–203.
The notion of extractive institutions originates from Acemoglu, Johnson, and Robinson (2001). The terminology of inclusive institutions was suggested to us by Tim Besley. The terminology of economic losers and the distinction between them and political losers comes from Acemoglu and Robinson (2000b). The data on Barbados comes from Dunn (1969). Our treatment of the Soviet economy relies on Nove (1992) and Davies (1998). Allen (2003) provides an alternative and more positive interpretation of Soviet economic history.
In the social science literature there is a great deal of research related to our theory and argument. See Acemoglu, Johnson, and Robinson (2005b) for an overview of this literature and our contribution to it. The institutional view of comparative development builds on a number of important works. Particularly notable is the work of North; see North and Thomas (1973), North (1982), North and Weingast (1989), and North, Wallis, and Weingast (2009). Olson (1984) also provided a very influential account of the political economy of economic growth. Mokyr (1990) is a fundamental book that links economic losers to comparative technological change in world history. The notion of economic losers is very widespread in social science as an explanation for why efficient institutional and policy outcomes do not occur. Our interpretation, which builds on Robinson (1998) and Acemoglu and Robinson (2000b, 2006b), differs by emphasizing the idea that the most important barrier to the emergence of inclusive institutions is elites’ fear that they will lose their political power. Jones (2003) provides a rich comparative history emphasizing similar themes, and Engerman and Sokoloff’s (1997) important work on the Americas also emphasizes these ideas. A seminal political economy interpretation of African underdevelopment was developed by Bates (1981, 1983, 1989), whose work heavily influenced ours. Seminal studies by Dalton (1965) and Killick (1978) emphasize the role of politics in African development and particularly how the fear of losing political power influences economic policy. The notion of political losers was previously implicit in other theoretical work in political economy, for instance, Besley and Coate (1998) and Bourguignon and Verdier (2000). The role of political centralization and state institutions in development has been most heavily emphasized by historical sociologists following the work by Max Weber. Notable is the work of Mann (1986, 1993), Migdal (1988), and Evans (1995). In Africa, work on the connection between the state and development is emphasized by Herbst (2000) and Bates (2001). Economists have recently begun to contribute to this literature; for example, Acemoglu (2005) and Besley and Persson (2011). Finally, Johnson (1982), Haggard (1990), Wade (1990), and Amsden (1992) emphasized how it was the particular political economy of East Asian nations that allowed them to be so economically successful. Finley (1965) made a seminal argument that slavery was responsible for the lack of technological dynamism in the classical world.
The idea that growth under extractive institutions is possible but is also likely to run out of steam is emphasized in Acemoglu (2008).
CHAPTER 4 : SMALL DIFFERENCES AND CRITICAL JUNCTURES
Benedictow (2004) provides a definitive overview of the Black Death, though his assessments of how many people the plague killed are controversial. The quotations from Boccaccio and Ralph of Shrewsbury are reproduced from Horrox (1994). Hatcher (2008) provides a compelling account of the anticipation and arrival of the plague in England. The text of the Statute of Laborers is available online from the Avalon Project, at avalon.law.yale.edu/medieval/statlab.asp
The fundamental works on the impact of the Black Death on the divergence of Eastern and Western Europe are North and Thomas (1973) and particularly Brenner (1976), whose analysis of how the initial distribution of political power affected the consequences of the plague has greatly influenced our thinking. See DuPlessis (1997) on the Second Serfdom in Eastern Europe. Conning (2010) and Acemoglu and Wolitzky (2011) develop formalizations of Brenner’s thesis. The quote from James Watt is reproduced from Robinson (1964), pp. 223–24.
In Acemoglu, Johnson, and Robinson (2005a) we first presented the argument that it was the interaction between Atlantic trade and initial institutional differences that led to the divergence of English institutions and ultimately the Industrial Revolution. The notion of the iron law of oligarchy is due to Michels (1962). The notion of a critical juncture was first developed by Lipset and Rokkan (1967).
On the role of institutions in the long-run development of the Ottoman Empire, the research of Owen (1981), Owen and Pamuk (1999), and Pamuk (2006) is fundamental.
CHAPTER 5 : “I’VE SEEN THE FUTURE, AND IT WORKS”
On Steffens’s mission to Russia and his words to Baruch, see Steffens (1931), chap. 18, pp. 790–802. For the number of people who starved in the 1930s, we use the figures of Davies and Wheatcroft (2004). On the 1937 census numbers, see Wheatcroft and Davies (1994a, 1994b). The nature of innovation in the Soviet economy is studied in Berliner (1976). Our discussion of how Stalinism, and particularly economic planning, really worked is based on Gregory and Harrison (2005). On how writers of U.S. economics textbooks continually got Soviet economic growth wrong, see Levy and Peart (2009).
Our treatment and interpretation of the Lele and the Bushong is based on the research of Douglas (1962, 1963) and Vansina (1978).
On the concept of the Long Summer, see Fagan (2003). An accessible introduction to the Natufians and archaeological sites we mention can be found in Mithen (2006) and Barker (2006). The seminal work on Abu Hureyra is Moore, Hillman, and Legge (2000), which documents how sedentary life and institutional innovation appeared prior to farming. See Smith (1998) for a general overview of the evidence that sedentary life preceded farming, and see Bar-Yosef and Belfer-Cohen (1992) for the case of the Natufians. Our approach to the Neolithic Revolution is inspired by Sahlins (1972), which also has the anecdote about the Yir Yoront.
Our discussion of Maya history follows Martin and Grube (2000) and Webster (2002). The reconstruction of the population history of Copán comes from Webster, Freter, and Gonlin (2000). The number of dated monuments is from Sidrys and Berger (1979).
CHAPTER 6 : DRIFTING APART
The discussion of the Venetian case follows Puga and Trefler (2010), and chaps. 8 and 9 of Lane (1973).
The material on Rome is contained in any standard history. Our interpretation of Roman economic institutions follows Finlay (1999) and Bang (2008). Our account of Roman decline follows Ward-Perkins (2006) and Goldsworthy (2009). On institutional changes in the late Roman Empire, see Jones (1964). The anecdotes about
Tiberius and Hadrian are from Finley (1999).
The evidence from shipwrecks was first used by Hopkins (1980). See De Callataǿ (2005) and Jongman (2007) for an overview of this and the Greenland Ice Core Project.
The Vindolanda tablets are available online at vindolanda.csad.ox.ac.uk/. The quote we use comes from TVII Pub. no.: 343.
The discussion of the factors that led to the decline of Roman Britain follows Cleary (1989), chap. 4; Faulkner (2000), chap. 7; Dark (1994), chap. 2.
On Aksum, see Munro-Hay (1991). The seminal work on European feudalism and its origins is Bloch (1961); see Crummey (2000) on Ethiopian feudalism. Phillipson (1998) makes the comparison between the collapse of Aksum and the collapse of the Roman Empire.
CHAPTER 7 : THE TURNING POINT
The story of Lee’s machine and meeting with Queen Elizabeth I is available at calverton.homestead.com/willlee.html.
Allen (2009b) presents the data on real wages using Diocletian’s Edict on Maximum Prices.
Our argument about the causes of the Industrial Revolution is highly influenced by the arguments made in North and Thomas (1973), North and Weingast (1989), Brenner (1993), Pincus (2009), and Pincus and Robinson (2010). These scholars in turn were inspired by earlier Marxist interpretations of British institutional change and the emergence of capitalism; see Dobb
(1963) and Hill (1961, 1980). See also Tawney’s (1941) thesis about how the state building project of Henry VIII changed the English social structure.
The text of the Magna Carta is available online at the Avalon Project, at avalon.law.yale.edu/medieval/magframe.asp.
Elton (1953) is the seminal work on the development of state institutions under Henry VIII, and Neale (1971) relates these to the evolution of parliament.
