(Page 2 of 2)
Whereas Acemoglu and Robinson stress historical contingency in their analysis, North and his colleagues operate at a higher level of abstraction. Their analysis identifies three “doorstep conditions” that enable the development of open access orders: (1) Rule of law for elites; (2) Perpetually lived forms of public and private elite organizations, including the state itself; and (3) Consolidated political control of the military. Essentially the state becomes depersonalized, no longer depending upon the operation of patron-client networks.
What is crucial is that the steps toward an open access order must be in the interests of the elites. For example, expanding the rule of law to non-elites give elite members greater opportunities to engage in profitable transactions. The existence of these “doorstep conditions” does not guarantee a transition from a natural state to open access, but North and colleagues persuasively assert that such a transition will not happen without them. The insight that all human societies before two to three hundred years ago have been organized as patron-client networks helps clarify the historical processes identified by Acemoglu and Robinson.
It’s probably unfair to take the authors to task for not looking at an issue that is arguably outside the scope of their analysis, but can the virtuous circle of inclusive institutions spin out control? Never mind reactionary elites; is it possible for reactionary populaces to kill off innovation and stifle economic growth? Creative destruction doesn’t just destabilize the economic prospects of elites. Acemoglu and Robinson cite the Luddites in Britain for destroying mechanical weaving machines in the early 19th century as a threat to their livelihoods.
In his 2002 The Gifts of Athena: The Historical Origins of the Knowledge Economy, Northwestern University economist Joel Mokyr notes, "Technological progress inevitably involves losers, and these losers...tend to be concentrated and usually find it easy to organize.” He adds, "Sooner or later in any society the progress of technology will grind to a halt because the forces that used to support innovation become vested interests. In a purely dialectical fashion, technological progress creates the very forces that eventually destroy it." In order to forestall this possibility, political institutions must surely be inclusive but they must also be limited in scope.
Now that the institutions that are required to raise people out of natural abject poverty are known, is there anything that can be done to push along their development? Not much. “You can’t engineer prosperity,” flatly assert Acemoglu and Robinson. They reject the notion that the process of modernization leads ineluctably toward open institutions, pointing out that growth fueled by abundant resources has not produced inclusive institutions in places like Venezuela or Saudi Arabia. Hundreds of billions of dollars in foreign aid have been showered on extractive elites in poor countries with almost no effect on poverty in their countries. Development economists' fond hope that enlightening rulers about the proper economic and political policies will in fact do no good since those leaders well understand that implementing such policies would undermine their power.
Assuming that a country meets the three doorstop conditions identified by North and his colleagues, empowering broad coalitions of citizens is the only process that has led to the development of inclusive institutions in the world. So is there any way to kickstart their empowerment? “The honest answer of course is that there is no recipe for building such institutions,” conclude Acemoglu and Robinson. They do hold out a faint hope that the spread of media and information technology will enable people to more easily form the sorts of pluralistic coalitions that can eventually generate inclusive political and economic institutions. In addition, information technology might also produce a kind of demonstration effect in which people can see how inclusive institutions operate.
Acemoglu and Robinson have convincingly identified the cure for poverty, but no one has yet figured out how to get the patients to take the medicine.
*I mistakenly gave Professor Robinson's affilation as MIT in the original review.
Ronald Bailey is Reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books