Why Nations Fail: The Origins of Power, Prosperity, and Poverty
by Daron Acemoglu and James A. Robinson. Accordingly, Why Nations Fail is a true tour de force of economic history. Daron is professor of economics at MIT. James taught at Harvard University. Today James is now professor of Global Conflict Studies at the University of Chicago.
Above all, Why Nations Fail is a compelling book based upon an amazing amount of economic research. Nations have evolve into one of two basic forms of economic and political structure.
Firstly, they author extractive institutions. These countries hold concentrated power by a powerful dictator. The elites supporting the dictator are of course also wealthy compared to the rest of the citizens. However, there is little if any technological progress.
Secondly, Acemoglu and Robinson define inclusive institutions: “those that allow and encourage participation by the great mass of people in economic activities that make best use of their talents and skills, and that enable individuals to make the choices they wish.”
Moreover I was impressed by Chapter 6: Drifting Apart, How Venice became a Museum. Certainly Venice’s birth as an economic hub in 810AD was a remarkable result of Charlemagne opening the city to trade. In addition, the rise of the Ducal Council helped solidify Venice’s mark. However, the Venetian fall beginning in 1324 was a result of high taxes placed upon traders. Amazing story indeed.
Inclusive economic institutions also pave the way for two other engines of prosperity: technology and education.
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At the same time Why Nations Fail serves to fully understand the impact of slavery. Throughout history the production of material that drove economies was in due to slavery. This is focused within chapter 9: Reversing Development and chapter 12: The Vicious Circle which addresses modern slavery across America.