We now begin our work on the third theory of "collapse", this time by Robinson and Acemoglu from their book Why Nations Fail. Please look back at the video links for Robinson and Acemoglu that are found on the resources post for Project India, and also examine the following links to form your own judgment as to the veracity of their claims. When you are finished, please post a comment below, and tell us your thoughts and responses to Robinson and Acemoglu's theory of "collapse".
Why Nations Fail blog, index India
What Bill Gates got wrong about Why Nations Fail
JMN
12 comments:
I will come back and make my analysis post later, but jumping around the links, I found a really interesting article: Jared Diamond's response to Why Nations Fail. I highly recommend it.
http://www.nybooks.com/articles/archives/2012/jun/07/what-makes-countries-rich-or-poor/?pagination=false
Yes, I read that as well. It is very good.
I just read it, it was solid .
Acemoglu and Robinson make a compelling argument, as to why some nations rise while others fail. There argument is nothing new, it is the same argument prominent European leaders like Cecil Rhodes have been making for over a century. There argument in short states that institutions cause societies to rise. Specifically, institutions that give incentives to promote economic success. For example, the (voluntary) distribution of property and the protection of property rights opens the flood gates for economic success. They also argue that the large disparity between rich and poor countries is due to this inequality of institutions. Essentially, Acemoglu and Robinson make what I like to call the "economic argument" (which should be no surprise as Acemoglu is possibly the worlds most renowned economist). The economic argument bases itself on the principle that humans are driven by incentives; if they have incentive to work and make money, they will do so; and if they have incentive to be lazy and sit around, they will also do so. Sociology and psychology has largely proven this theory to be true.
Now that their argument is understood, I will now seek to disqualify it on all of the following grounds.
a. They look at a skewed and purely modern view of history.
b. They do not examine the foundations of these institution's success.
c. They grossly misjudge the adverse affects of colonialism and imperialism.
First, both Robinson and Acemoglu mistakenly root their assumptions in the context of the modern world. This failure to examine past non-european civilizations leaves many holes in their argument. For example, they discuss democratic reforms as a means to promote economic growth. Since democracy is a 19th/20th century invention, their statement would imply that real economic growth has only occurred during these centuries. Now for those who would agree with that statement because "the industrial revolution created economic growth that had never been seen before," consider the even greater growth created by the Neolithic Revolution. Did early civilizations like the Sumerians, Mayans, or Shang have democratic reforms? No. Did they have a vastly powerful economy that promoted growth for several centuries? Yes. Thus Acemoglu and Robinson's reliance on institutions limits them to at most a 300 year time frame. Determining that any society is successful using only a 300 year or less time frame is foolish. Many successful empires have dominated their respective regions for much longer than that. Ultimately, my disagreement on this matter stems from the simple matter that civilization has far preceded the institutions they claim are necessary for successful society.
Next, regardless of their mismanagement of history, the biggest hole in their argument is their failure to understand causation. They argue that institutions be it democracy (in the modern day), or a government bureaucracy (in a previous time) has been necessary for societal success. However, the evidence seems to support the fact that economic stability is necessary for these institutions to exist. For example, government in the fertile crescent arose only after there was a necessity to control the budding society. Additionally, european reforms like democracy only emerged after there had been incredible economic growth in the middle and later lower classes. This is best seen in the case of 18th century France. The government under the 3 Louis' (not sure how to punctuate that) was top heavy and did not intentionally promote economic distribution. However, there was incredible growth in middle classes, which gave the third estate the power to reform government and promote more republican reforms. This same phenomena later occurred with the working classes. Universal suffrage did not become a major European phenomena until after the standard of living of the working classes improved. Thus, it is quite clear that these change promoting institutions are more frequently enacted after the change has already been made.
Last, this quibble is less about hole in the logic of their argument than a disagreement with their opinion on the gravity of imperio-colonialism. Both authors frequently use the Americas as a way to compare successful institutions and unsuccessful institutions. However, this is a faulty comparison. First, crediting the US emergence from colonial bondage to institutions is foolish because in the days after independence Latin America and Anglo America had similar societal structures and institutions. America despite its retrospectively proclaimed democracy, was formally a republic ruled by Creole elites [1]. So what is the difference between North American and South American society? North America ie. the United States and Canada were colonized while all of Latin America was imperialized. Much of North American society was of direct and very apparent European descent. Since the Native American population was minuscule, Canada and the United States largely became a haven for European immigration. This seeming "cultural closeness" countered many of the racial arguments in favor of imperialism. Contrasting this, the mixed race of many Latin Americans due to the much larger Native American population gave justification for the indirect imperialism that dominated Latin America into the modern age.
Ultimately, the two men are economists not historians. There argument relies on psychology and social science without examining history. Institutions are most certainly necessary for a stable society. However, institutions do not create success if anything it is the opposite. Furthermore, assuming that a certain type of institution is inherently and indefinitely superior is simply ignorant.
[1] the use of the word creole is intentional because it prevents distinguishing mixed ancestry elites from North America and South America.
It seems that there are three very different main criticisms of this argument that I'd like to flesh out before I evaluate the Why Nations Fail theory on collapse.
1) The argument is too narrow in scope. It neglects other contributing factors to collapse, such as geography, human-environment interactions, etc. It also does not provide a "cause to the cause," as Moody and Kyle referenced with Diamond's theory. It does not address a general world historical tendency as to why some states are exclusive versus inclusive. It cites specific examples, but in the end, only moralizes states as selfish or unselfish.
2) The argument is too vague in its language. States are not so black and white as the "extractive" vs. "inclusive" dichotomy that Robinson and Acemoglu present, and therefore, a state's collapse can usually be accounted for by its "extractive" parts (when in fact, in other aspects, it may be "inclusive.") or a state's longevity can be accounted for by its "inclusive" parts (when in fact, in other aspects, it may be "exclusive."
3) The argument is historically unsound. History has shown examples of inclusive societies that have collapsed, or extractive societies that have prospered over a long period of time.
These are obviously very different criticisms of the theory, so I'd like to start with some rebuttals to the criticisms I disagree with. I'll start with #3. I think it's clear that Acemoglu and Robinson are assuming the fact that the power of institutions is a distinctly modern phenomenon. For example, Acemoglu acknowledges that in tribal societies, resources and geography are key, but now, they play less of a role. Bill Gates' references to the Song Dynasty and the Roman Empire are not valid criticisms of the theory because institutions did not play enough of a role anywhere in the world to impact macroeconomics because states did not have the technology to control and manipulate trade as modern states do. Unlike Moody, I actually believe that the modern era is a valid context to view this argument, because only in the modern era did a distinction begin to emerge between "extractive" and "inclusive" societies. Previously, states like the Roman Empire had no institutional control over whether they were being exploitative or inclusive; they had no power to change the social structure that was already in place. The only example of a true ancient democracy was Ancient Greece, and that was a small isolated example that is too small-scale for us to consider in our discussion of the rise and fall of civilizations. However, with the technology that gave Europeans the option of exploitative power versus inclusive power over their subjects in the Americas, inclusive societies began to gain an advantage over extractive societies. In essence, my counter to your argument, Moody, is that the concept of an inclusive state did not /exist/ until the modern era, and therefore, up until that point, the distinction could not be made because all major states were vaguely exclusive but did not have the means necessary to form inclusive states.
I also disagree with Moody's criticism of Acemoglu's and Robinson's misinterpretation of causation in colonization versus imperialism. Chris writes, "So what is the difference between North American and South American society? North America ie. the United States and Canada were colonized while all of Latin America was imperialized." This is a superficial claim, because it does not examine why North America was colonized while Latin America was imperialized. The idea that the Native Americans in North America could not be exploited to produce vast amounts of wealth as their Latin American counterparts could- because of population, as Moody states. This was directly responsible for the formation of democratic institutions in North America and imperialist extractive institutions in South America. The United States did not break free from colonial bondage, but its inclusive institutions were present since the demise of the Virginia Company, in fact, making democracy inevitable. Looking forward, the US's democratic institutions may have actually led to its economic success. Latin America's dependence on extracting labor from a large lower class prohibited it from creating an industrialized society, while the United States's lack thereof allowed it to transform into a leading industrial power in the 19th century. I don't see what's invalid about this argument.
Similarly, I think Acemoglu and Robinson make a key distinction between political institutions and economic institutions. Their main argument is that economic institutions are the driving force behind change, but political institutions are necessary to uphold it. Chris refers to economic institutions being a prerequisite to inclusive political institutions, and that is definitely true. Acemoglu and Robinson would respond, yes, that is true, but these political institutions are necessary to maintain the economically inclusive society made possible by whatever factors, such as the rise of the middle class or later, the working class. In this case, Moody's example of early modern France supports their theory.
The problem with the theory, I believe, is not a specific misinterpretation of historical cause and effect, but rather, a lack of understanding that the causes of whether societies become extractive or inclusive are widely varied and largely due to other factors. While yes, population played a large role in the example of the Americas, population and demography was not a major factor in the formation of all civilizations. This is where Diamond's framework comes into play. Acemoglu and Robinson fail to realize that factors that they completely discredit, such as resource distribution and the environment, are actually sometimes (but not always) leading "causes to the cause." So, since there is no single cause, they simply moralize nations and say that selfish nations are extractive and unselfish nations are inclusive, which is really sad because the foundation of their argument has a lot of potential. The title of their book, "Why Nations Fail" even subtly implies that these nations did something morally wrong to cause their own demise. Diamond would say "anyone who believes there's only one factor is an idiot," and Acemoglu and Robinson are definitely not idiots, but they fail to analyze on a deeper level as Diamond does.
I've left #2 for last. It is hard to create a dichotomy between "inclusive" and "extractive" societies. This is why critics of the theory keep referencing China- it is not exactly clear what impact China's institutions are having, and you could classify some aspects of China as thoroughly undemocratic, but you could also commend its sort of "inclusive" economic policies as being responsible for its growth. Most societies are not so cut and dried, and therefore, it's hard to make an argument based on such simple distinctions.
Lastly, I hate to be so take a position that so starkly contrasts Moody's, and I don't like calling out my peers, but I have to say that addressing these researchers as "economists and not historians" does verge on ad hominem, and is somewhat disrespectful towards the work that they put in. Just because someone isn't a professional historian doesn't mean they aren't entitled to an opinion about history, just like we're students, but we're allowed to discuss history. I actually think Acemoglu and Robinson have put in quite a lot of work to research historical cause and effect, which is shown through the nuance of their argument. Economic institutions (i.e., the socioeconomic structure that maximizes or prohibits maximum output) are responsible for initial growth (what caused France's middle class to grow? what caused reliance on the encomienda system?). But political institutions, although not necessary to create growth, are necessary to uphold the growth. In addition, Acemoglu and Robinson are not "ignorantly assuming" that inclusive institutions are "inherently and indefinitely superior," as Chris says, but they make a logical argument that inclusive societies are superior because they maximize the economic efficiency of their population. Saying that democracy is more efficient than other political institutions is not the same thing as saying that whites are superior to blacks, or men are superior to women-- there is a relevant economic reason for it.
Analyzing India with this framework, I think first, though, we have to answer the question on whether India is inclusive or extractive. Their political structure are nominally inclusive, but their social structure does not maximize efficiency, as we see with the caste system. With the complexity of this problem, and India, like China, having many different inclusive and extractive factors, however, it almost makes such a black and white thesis like Why Nations Fail useless. That said, I think the thesis is valid, especially when supported with Diamond's framework analyzing possible causes to the cause: the factors that determine whether or not societies are inclusive or extractive.
Like Bradley and Chris, I agree that Why Nations Fail theory of collapse could have been fleshed out more. I wished they would have used other examples besides western ones to explain their argument.
Like Bradley I think it was valid to use the modern era in their argument of institutions. During the Classical and Post-classical era, it is very difficult to differentiate between the extracting institution and the inclusive institution. The modern era however is where we see an abundance of these institutions. I think with the rise of the corporation, you see these types of institutions, but in a different light.
Also, on the topic of colonized N. America vs imperialized S. America, I was interested in Moody's claim that it was due to native population. I would argue resources found in the environment played a larger role in developing the political and economical institutions found in the two regions.
Secondly, I agree with Bradley's point that to distinguish institutions into two simplistic groups, is simply to "fail to analyze on a deeper level as Diamond does".
Speaking of which... I would say Diamond's framework is becoming more and more convincing to me as to why collapse happens. I think his 5 point structure can create imminent collapse to a society.
Here is Acemoglu and Robinson's reply to the New York Times Review by Jared Diamond:
http://www.nybooks.com/articles/archives/2012/aug/16/why-nations-fail/?pagination=false
So, Acemoglu and Robinson reply:
"Fourth, Diamond suggests that, by eschewing geographic determinism, our theory is as if institutions appeared “randomly.” This is not a fair characterization. Though at times the process of institutional development has been influenced by geography or disease ecology (as our own academic research joint with Simon Johnson has documented), these are not the major factors shaping institutional variation today. But this does not mean that institutional dynamics are simply random; our book explains how institutional variation today is largely a systematic outcome of historical processes, and how these processes can be studied, revealing, for example, why Europe, the United States, and Australia are richer than the Middle East, Africa, and Latin America."
...I'd like to know what these "historical processes" are, and what exactly makes them "systematic." This is exactly the problem I have with their argument; they do not attribute the cause of what institutions form to anything, really.
Also, they use a straw man to attack the argument that geography is a factor (by saying that Diamond says that geography is the /only/ factor). Diamond would never claim that environmental effects are responsible for /all/ collapses, so an example of a collapse where geography played a minor role does not disprove Diamond's argument (it would only disprove the straw man that geography is the only factor.) They write "Academic research also shows that once the effect of institutions is properly controlled for, there is no evidence that geographic factors have a significant impact on prosperity today."
Where is this academic research, and would it put them through great pains to at least summarize the findings?
They lastly claim that it is institutions, not the resources themselves, that determine prosperity, and that the type of resource is irrelevant. Diamond counters that diamonds generally lead to corruption, while iron and timber generally do not. One counterexample is not enough to falsify a general trend.
And that is what I believe is the underlying problem with Acemoglu and Robinson's theory as a whole. Diamond is a generalist who provides a framework; Acemoglu and Robinson are uncompromising absolutists who provide a single factor for the collapse of civilizations, completely discounting other factors. However, though they dismiss other factors, their consideration of institutions is extremely important. They are right that institutions play a big role, just not the only role.
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