Why Nations Fail Paper

Topics: Virtuous circle and vicious circle, Economic growth, Daron Acemoğlu Pages: 5 (1564 words) Published: April 23, 2013
The Potential Pitfalls of Inclusivity

It is hard in our society today to read the paper or watch the news without hearing about a failing nation or an impoverished state. Coming from a nation of power and prosperity it is easy for us to pass judgment and be quick to offer advice without understanding the root of the problems. Where did these differences originate? How did these issues develop? Daron Acemoglu and James Robinson, in their book Why Nations Fail, attempt to address these questions and provide answers to the huge economic disparities we see today. The main focus of their book is that “economic growth and political prosperity are associated with inclusive economic and political institutions, while extractive institutions typically lead to stagnation and poverty” (Acemoglu & Robinson, 2012, p. 91). I agree with the authors’ distinction between inclusive and exclusive institutions, and the use of critical juncture as their explanation for why these institutions emerged, while disagreeing with their lack of explanation on the connection between inclusive and extractive nations. The progress of an inclusive nation often relies on the weakening of an extractive one, continuing the virtuous and vicious circles. Acemoglu and Robinson (2012) state that political institutions determine who has power over society and to what ends that power can be used (p. 80). They argue that nations are successful when they develop inclusive political institutions and they fail when they are extractive. Why Nations Fail defines inclusive political institutions as the ability to “distribute political power widely in a pluralistic manner and are able to achieve some amount of political centralization so as to establish law and order, the foundations of secure property rights, and an inclusive market economy” (p. 430). Acemoglu and Robinson state when these circumstances are not met the institutions are considered to be extractive, which are narrow and unconstrained, they concentrate power into the hands of a few and ensure their dominance. The authors’ explanation for the emergence of these institutions lies in the idea of critical junctures. Acemoglu and Robinson discuss the critical junctures which affect a nation's aptitude to develop inclusive institutions. They argue this by revealing the state’s ability to either embrace or reject the idea of creative destruction. A detailed example is shown in the authors’ discussion of England and a description of its transformation to more inclusive institutions. I thought their presentation of this nation was a concrete example and it established a timeline allowing for the reader to see the evolution. They started with the fear of creative destruction using William Lee’s invention of the stocking frame and continued showing the break away from extractive institutions until the 1800s. Acemoglu and Robinson’s (2012) example of England answers the why questions: “why did this unique process start in England and why in the seventeenth century? Why did England develop pluralistic political institutions and break away from extractive institutions?” (p. 208). They described the developments up to the Glorious Revolution and how a new regime based on constitutional rule and pluralism emerged from the outcome. These changes brought about by the Glorious Revolution made the political system more open and responsive. “It strengthened and rationalized property rights, improved financial markets, undermined state-sanctioned monopolies in foreign trade and removed barriers to the expansion of industry (Acemoglu & Robinson, 2012, p. 208).” Then the Industrial Revolution started due to these inclusive institutions which gave people incentives to learn and create. In turn major innovations began to occur in many aspects of English life transforming the economy and providing a model for future success. Acemoglu and Robinson then use their example of England and the Industrial Revolution as a...
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