In his first speaking engagement at George Mason University on the evening of May 2, Harvard political scientist James A. Robinson paid a compliment to the school by noting its “distinct intellectual atmosphere.”
Robinson appeared at the Arlington campus of GMU at the invitation of the Mercatus Center to discuss his recent book, Why Nations Fail: The Origins of Power, Prosperity, and Poverty, which he co-wrote with MIT’s Daron Acemoglu.
In his lecture, Robinson explained how his and Acemoglu’s empirical research had led to a predictive theory about how nations develop economically and politically. All countries, he said, can be plotted on a matrix using the categories “inclusive” (politics and economics) and “extractive” (politics and economics).
Success or failure for nations depends on whether they have inclusive or extractive institutions, Robinson said, and these institutions have their origins deep in history – although circumstances can change through the adoption and adaptations of new, better institutions.
England and Virginia
As an example of this kind of change, Robinson noted that 200 years before the Industrial Revolution, England was an economic backwater on the edge of Europe. Elizabeth I’s defeat of the Spanish Armada in 1588 was unexpected and unpredictable, yet by 1788, Great Britain was Europe’s most formidable economic power and the world’s leading colonizer. This was the result of institutional change in law and society.
After signing books for fans and admirers, Robinson clarified and expanded some of his remarks in an interview with the Charlottesville Libertarian Examiner.
He explained that although the Spanish and English colonies in the Americas both began with the same model, the English experience at Jamestown, Virginia, set North America down a more economically prosperous path than the colonies in South America trod.
The circumstances in Virginia and, for instance, Buenos Aires, “were very different,” Robinson said.
“Because there were very few indigenous people [who were] organized in a very different way in Virginia as compared to, say, the central valley of Mexico, a very different type of society emerged.” This society was “based on creating incentives and opportunities for European [settlers] rather than exploiting indigenous people,” which was the case in Latin America.
Asked whether there is a difference in the questions of “why nations fail” and “why nations succeed,” Robinson replied that “they’re two sides of the same coin.”
The reason his book has the title it does is that he and his co-author “don’t think of economic development as being mysterious.”
Instead, he said, “to us, the puzzling thing is, why on earth don’t poor countries that ought to be able to generate huge amounts of wealth and improve the living standards of their people” do so by investing in education, adopting technologies, and securing property rights?
“Why don’t they do it?,” he repeated. “We’ve always found failure more puzzling. Why is it people don’t take advantages of these huge opportunities?” This question is particularly salient when countries have abundant mineral resources, climates and soils conducive to agriculture, and convenient locations for trade and industry — yet still fail to develop economically.
Many commentators on economic development – Thomas Sowell, for instance – focus on cultural values as the basis for success or failure. Robinson and Acemoglu take a different approach by emphasizing institutions.
Their approach, Robinson said, came about “mostly because of the empirical work we’ve done, all the scientific research. We’ve always found measures of institutions to have much more predictive power than different measures of culture.”
He conceded that “there’s a problem of language here. When I talk about institutions, I don’t just mean things written down, like the U.S. Constitution.”
He gave the example of the limit of two presidential terms, which was established as “a social norm that lasted for 150 years” by George Washington, before Franklin Roosevelt parted with the tradition and, eventually, the Constitution was amended to make the tradition statutory.
Nobel laureate economist Douglass North, he pointed out, “talks about informal institutions, social norms, and I think that’s enormously important. It’s not just about written-down laws. Social norms and informal institutions are quite similar to what a lot of people talk about when they talk about culture.”
When Robinson and Acemoglu talk about culture, however, “it’s not about values or normative beliefs or normative principles or religious principles. We don’t find that to be important; we don’t think it’s important” in terms of predictive value for economic success or failure.
Why Nations Fail is published in hardback by Crown Business and in paperback by Profile Books Ltd.