'Why Nations Fail': co-author Daron Acemoglu offers a comprehensive theory

'Why Nations Fail' co-author Daron Acemoglu suggests that centralized power, rule of law, and open competition are the keys to national success.

L: Peter Tenzer/Random House
MIT economist Daron Acemoglu, co-author of 'Why Nations Fail,' says that the somewhat inclusive economic institutions which have developed in China over the last three decades are fairly unstable and cannot last.

Why do some societies prosper and others grind along in poverty?

Jared Diamond’s “Guns, Germs, and Steel,” popularized the geography-is-destiny view. Others see culture as key: Think Protestant (or Confucian) work ethic. Still others look to technical know-how: Send in the Peace Corps!

“Why Nations Fail” makes a serious case that none of that matters. MIT economist Daron Acemoglu and political scientist James Robinson of Harvard post a simple and sweeping theory that they credibly apply to every society on every continent from the dawn of time through the next 20 years. More or less. Here’s the crib-notes version: Many societies can grow rich. Those who sustain growth need a strong central government that can enforce rule of law and an inclusive system that shares political power widely. Inclusiveness is key. Societies run by elites will block the innovation and creative destruction that powers growth.

Why? Because that’s the kind of change that also redistributes power and wealth to new people. Elites – whether feudal nobility or communist party cadres – create what the authors call “extractive” economies. Political power, rights, and economic opportunity are closely controlled.

This is why, they explain, Nogales, Arizona enjoys first-world prosperity and Nogales, Mexico doesn’t. Same geography and climate, very nearly the same ethnicity and culture. The critical difference lies solely in the political institutions on either side of the border.

“Why Nations Fail” packs an incredible range of historical detail. But the real import of an explanatory theory like this is what it tells us about how to build prosperity now.

China, for example, is not doing this right. It’s an extractive system run by party elites for their own benefit with weak rule of law and unreliable property rights. That will cap the arc of its growth. The US is highly innovative with a competitive political system. But there are worrying signs.

Further conversations with Daron Acemoglu, co-author of “Why Nations Fail”:

Marshall Ingwerson is the Monitor's managing editor.

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.