Why Nations Fail

Frank Trentmann has high praise for an ambitious attempt to explain the vast discrepancies of global wealth

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Reviewed by: Frank Trentmann
Author: Daron Acemoglu and James A Robinson
Publisher: Profile
Price (RRP): £25

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Ten per cent of the world’s population enjoy half the world’s wealth. This (probably) includes you.

If you had grown up in Congo you would not have been so lucky. The Democratic Republic of Congo has roughly the same population as Britain but one per cent of its wealth. Why are people rich in London but not Kinshasa?

Many have looked to climate or culture for answers. As Acemoglu and Robinson point out in this riveting, ambitious book, neither offer convincing explanations.

The weather in Mexico is not so different from that across the border in Texas but the gap in prosperity is vast. A century ago, Max Weber identified a “Protestant ethic” as the main spring of capitalism. Yet this is contradicted by Catholics wearing Prada or driving Mercedes in northern Italy and the German Rhineland.

Politics, the authors argue, is why some nations are rich while others are poor. Only countries that built “inclusive political institutions” managed sustained growth. Political success gave them the property rights and trust needed to attract and exploit new technologies.

Societies without these institutions were stuck with corrupt elites who enriched themselves and blocked any innovation that challenged them.

This is a history of the world, but not a typical one. The authors are an economist and political scientist for whom history is a vast laboratory to develop and test their ideas.

They mine the past for what it is worth, crossing national borders and time periods that often imprison the specialist historian. They take us from the Aztecs to Britain and the USA, stopping in Ghana, Mexico and China along the way.

In 1848 Thomas Babington Macaulay published his History of England to show how 1688 – the ‘Glorious Revolution’ – put the nation on a course of liberty and wealth. This book is Macaulay Plus.

The British story becomes a global blueprint. All rich countries – from the US to France and Japan – found ways to  make their elites accountable to a broad section of society. Those that did not, like the Spanish empire, Qing China and the Soviet Union, fell behind.

In its colonies, by contrast, the British empire reverted to extractive politics that strengthened elites and corruption.

Inevitably, in a book of this scope, specialists will find things to quibble with. That “the slave trade has mostly ended after 1807” is rather optimistic. Still, the overall story is presented with evidence, clarity and persuasion.

This may be the most formidable Whig history of the world for some time. The Cold War idea of modernisation, the authors show, had it the wrong way around. Growth has not automatically led to democracy. Instead, prosperity followed inclusive institutions.

This may be true, but the scope and timing of inclusion also mattered. The Glorious Revolution made the British crown more accountable to merchants and gentry, but a century later fewer Britons had the vote, not more. If they had been asked, would they have supported a strong state and the navigation acts and consumption taxes that came with it?

Curiously, in a book about inequality, there is no attention to rich and poor within countries. Yet the Anglo-Saxon model has also brought vast internal inequalities. Inclusive institutions did not stop ordinary Britons from getting poorer in the 18th century.

I am not sure how much faith we should have in the Anglo-Saxon model as a guide for the future.

China has fared pretty well without inclusive institutions in the last generation. The authors doubt China’s growth can last without reform. Perhaps, though the communist state has been remarkably strong so far.

America, Britain and the EU, meanwhile, have struggled politically and economically in the global crisis.

Whether we agree or disagree, this book does what many set out to do but few accomplish: it makes you think about the big questions in history.

Frank Trentmann is professor at Birkbeck and research fellow at the Sustainable Consumption Institute, Manchester
 

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