Sunday, September 23, 2012

Book Review: Why Nations Fail by Daron Acemoglu and James Robinson

"All causal paths lead to institutions" is the mantra for Why Nations Fail, one of the newest books looking at the roots of growth and development among nations through the ages. In a field that's been trending towards ever-more theoretical complexity and epistemic humility since Jared Diamond's path-breaking Guns, Germs, and Steel, Acemoglu and Robinson develop a theory with a notably retro feel. That's because of its shocking simplicity: according to Acemoglu and Robinson, the fate of nations (or states, they don't specify) both past and present can be explained by the types of institutions that structure incentives and activity over a given area or population. There exists a continuum between "extractive" institutions (ones that favor a small group of elites by channeling resources from the masses) and "inclusive" institutions (ones that spread resources more evenly across all groups). Successful nations are those that have developed inclusive political, social, and economic institutions, and unsuccessful nations are those stuck with extractive political, social, and economic institutions. Micro-level feedback loops, such as the social aversion to Schumpeterian creative destruction, resist institutional change. The development and drift of these institutions is not predictable, and is determined by idiosyncratic historical context, contingencies, and black swan events (called "critical junctures").

The book is filled with good historical narratives, but Acemoglu and Robinson's theory is at once overly simplistic and fails to establish a satisfying causal mechanism. The main driver of the book--the inclusive/extractive distinction--is so broad and ill-defined that it's basically tautological. Replace "inclusive" with "good" and "extractive" with "bad" and the book reads very much the same. That's because there's little detail about the specifics, dynamics, and boundaries of these institutions. Are institutional changes in the direction of inclusivity always conducive to more growth and development? Is there some point at which institutional inclusiveness reaches pareto efficiency? Does the causal weight of institutional quality stay constant throughout history and technological development? Acemoglu and Robinson's theory contains only two actors, the elites and the masses, implying a zero-sum relationship. This ignores the wealth of comparative politics literature concerning coalition-building between leaders, elites, and the masses and its consequences for political development. Additionally, Acemoglu and Robinson completely miss the whole "strong versus weak" institutional dimension. It's entirely possible that an extractive yet institutionally strong state (i.e. China, or Iraq under Saddam) is preferable to an inclusive yet institutionally weak state (i.e. Native American tribes, or Iraq after Saddam).

On a methodological note, the historical examples that comprise the bulk of the book don't appear to be organized in any systemic way, opening up the possibility of cherry-picked examples that only support the theory. Indeed, certain challenging cases are ignored or brushed aside: the long global history of slavery, India's caste system, and the treatment of immigrants, animals, children, and the disabled in state institutions.

Lastly, the conceptual foundation of Acemoglu and Robinson's theory is somewhat misleading. While the entirety of the book is rhetorically focused on the extractive-versus-inclusive-institution frame, the core message about causality--why some nations develop inclusive institutions while others don't--is not emphasized. Essentially Acemoglu and Robinson claim that there exists a positive correlation between inclusive institutions and success. Though they state that this relationship is causal, Acemoglu and Robinson make a stronger claim prior to this relationship, which undercuts it. They state that the inclusiveness of a nation's institutions is determined by...luck. Or, more specifically, idiosyncratic historical context combined with rare, high-impact events. Neither of which can be predicted or analyzed for patterns. For this topic of research, among political scientists, this position is radical and amounts to a strong critique of pretty much every previous model.

Long story short, Why Nations Fail isn't really a social science theory at all: it has no causal mechanism, it proceeds neither deductively nor inductively, and its terms and concepts are exceptionally vague. Best to view it as some sort of interpretive lens with which to view a certain genre of history.

1 comment:

  1. Such a tempting theory, however. But your analysis seems correct, and makes me think of the creative tension between the English monarchy and the masses, who gained some measure of inclusion by way of the Magna Carta.