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46 of 48 people found the following review helpful
5.0 out of 5 stars A Landmark
The success of this book mirrors the progress of the "inclusive institutions" idea it talks about.

The author wrote about this stuff six years ago but did not capture the imagination of the general public. What Acemoglu does not know about growth is not worth knowing, he's the author of an excellent graduate textbook on the subject. But two transformational...
Published 21 months ago by Athan

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259 of 297 people found the following review helpful
1.0 out of 5 stars LOOSE ELASTIC
I bought this book when I read a favourable review and thought it would be interesting to explore the reasons why some states succeed economically, while others never `take off' and others take flight but stall. I smelt a rat when I started to find that the style of writing is repetitive and circular and when I found some straightforward factual errors.

The...
Published on 20 Mar 2012 by Stephen Cooper


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46 of 48 people found the following review helpful
5.0 out of 5 stars A Landmark, 14 Dec 2012
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The success of this book mirrors the progress of the "inclusive institutions" idea it talks about.

The author wrote about this stuff six years ago but did not capture the imagination of the general public. What Acemoglu does not know about growth is not worth knowing, he's the author of an excellent graduate textbook on the subject. But two transformational events have happened since 2006 that have made his ideas relevant and current: the financial crisis and, by dint of having survived it well, the emergence of China in the public's consciousness as a financial superpower.

My prejudice has always been that, warts and all, our pluralistic, capitalist, free-market system works very well. With an eye on the recent performance of markets and the increasing and often justified perceptions of stagnation and inequality in our western society, however, many people these days argue that there's another way and that China holds many of the answers. This is the book that gives you all the ammunition to demolish that theory. I think that is the secret of its massive success.

But that's a mere bonus, and the theory itself is quite beautiful. Here it is, in ten quick bullet points.

1. You can totally forget about growth if nobody holds the "monopoly on violence." You get places like Somalia, Afghanistan etc.

2. There are two types of politics: inclusive and extractive

3. There are two types of economic institutions: inclusive and extractive

4. Extractive political institutions often don't care at all for growth or innovation, lest a new order arises and the new order challenges these extractive political institutions. The author quotes examples from English history where kings and queens stifled innovation in weaving, Austrian history, where the king did not build any railways and Ottoman history where the sultan pretty much banned books.

5. Regardless, growth has occurred in history under extractive political and economic institutions. The Soviet Union provides such an example. The manner in which this was achieved was not through innovation, but through the reallocation of resources from less productive activities (agriculture) to more productive activities (industry). The Soviet Union grew for 30 consecutive years at 6% per annum on the back of this planned reallocation of resources (eat that, China!) and was fully expected by nonpartisan observers to overtake the US economy by the turn of the 20th century. This never came to pass because once the resources had been fully reallocated there were no further productivity gains to be gleaned and thus no growth to be had. The anti-growth facet of extractive economic institutions reared its ugly head, as people simply refused to give their best if they could not enjoy the fruit of their labor. Draconian punishments for people who shirked their duties could not compensate for the lack of personal incentive and the Soviet empire crumbled.

6. The combination of inclusive political institutions with extractive economic institutions is typical of empires and it can work for a while. Rome is the example here. Rome was a republic, but was a ruthless extractor of wealth from its empire. It grew, but only by increasing the size of the empire, as the economic agents (the conquered lands) did not really push the boat out just to send the whole harvest back to Rome. So when Rome stopped expanding at the necessary pace, that was the end of growth at the pace that was necessary to support inclusive political institutions (lots of guys in Rome sitting around pondering on the greater issues in life and citing poetry to one another). What happened next is the political institutions reversed back to extractive, as factions in Rome fought each other for the loot. This occurred hundreds of years before the empire itself fell, significantly. But it was at the core of the decline.

7. The combination of inclusive economic institutions under extractive political institutions has also been tried and ultimately fails if there is no success in transforming the politics. Venice is the example here, and China is the current laboratory. The idea here is more subtle. The inclusive economic institutions go away and do their thing and produce growth. The Venetians ploughed the seas and dominated commerce through the invention of limited companies. The Chinese have set up the factory of the world by partnering with foreign manufacturers. This has brought serious wealth to both Venice and China. Trouble is, the fact that the political institutions are extractive means that the speed limit is lower. Intellectual property rights (not mentioned by the author, NB) spring to mind in China. You would not invest in an idea in China, because you just don't know that a government controlled company won't take it from you immediately. The lower speed limit means you at some stage hit a limit on growth. At that stage, you get reversal. China, for example, is stuck assembling phones designed in California. (again, the author is not stupid enough to write this, he wants his book to sell in China too) The authorities in Venice (the extractive political institutions) closed down the right any layman had to be part of a limited company and wrote in a "libro d'oro" the names of those who could. The extractive political institutions reversed the progress and forced the economic institutions to go extractive.

8. The main problem is that there is a strong vicious cycle between extractive economic and extractive political institutions. It's also called the "Iron law of oligarchy" apparently. If the inclusive economic institutions are not producing enough to feed the beast, their masters fall prey to the extractive political institutions they are perceived to be challenging. If they are producing too much, too quickly, they are usurped. And to get there in the first place is a rather large challenge to begin with. Fortunately, there's also a virtuous circle between inclusive economic and inclusive political institutions. Acemoglu quotes as an example the case where FDR thought 56% of the popular vote was enough of a mandate for him to stuff the Supreme Court with his own guys. Did not work for him.

9. More often than not, unfortunately, the starting point of societies is some sort of king lording it over a bunch of subjects. So you start with extractive politics sitting on top of extractive economic institutions. How do you make any headway? It takes all of the following: (i) a benign monarch / king / bunch of "elders" / dictator / potentate / senate / whatever / who "gets it" (ii) some kind of plurality on the ground. Like maybe layers of power, or a variety of tribes or a variety of jobs people do. Or some type of nominal alternative (even dormant) power structure left from years before. That way there are many "interests" on the ground that both push for change from many angles, but also fail to move things in any single direction after change has occurred (iii) a significant transformational event, such as the discovery of America that enriched the merchant class or the black plague that made labor so thin on the ground that it was able to negotiate better terms or at least led it to revolt and plant the seeds of transformation later. What happens next is you travel a few yards toward more inclusive institutions and with a bit of luck you don't lose that ground. History is not destiny. The UK did not have to become a pluralistic economy, it had all of the above and good luck, and it got it all at regular instalments. An important point the author makes is that the same events work for some and don't' work for others and the difference on the ground that made it click in England but not in Austria could be truly tiny. You really need the luck. That said, once you get your "first down" things get easier. The guys on top have less of a good thing to defend and the guys at the bottom get a better idea of how much there is to gain!

10. The best way to get there, though, is to send a bunch of guys from a highly developed place, who command the latest technology, to a sparsely populated remote land where nobody is around to challenge them. Provided there isn't enough of them to go around, all extractive political baggage they bring gets checked at the door as they all need to knuckle down to work to avoid starving. The author quotes North America and Australia, but Magna Grecia is a fantastic example from antiquity, when Spartan settlers (Sparta being the Soviet Union of antiquity) set up some very inclusive cities in southern Italy and Sicily. Does not work nearly as well if they land in the middle of a highly evolved and densely populated extractive civilization, on the other hand. The temptation there is to exterminate the local leader and sit on his throne. It's pretty much what the Spanish did in Latin America.

AND THAT'S REALLY IT

Acemoglu is not happy to just discuss his theory, he also spends some time going over alternative theories, such as the theory that the tropics are not conducive to growth and such like, but dismisses them in a manner that is polite enough not to offend. Proponents of such theories even praise him in the jacket of the book. There's a single exception. He spends quite some time toward the end of the book to deal with a theory he considers pernicious. He takes issue with the idea that if we trade enough with the Chinese they will get rich enough that they will come around to espousing democracy. Or that if we install democracy in Iraq the locals will pick up where we left off. He applies the tools discussed above and as far as I'm concerned he succeeds in debunking one of the main pillars of modern western policy. Things basically do not automatically get better merely because people are exposed to our ways and get richer from dealing with us. If their institutions are rotten, we're just wasting time. And by dealing with them, we are supporting those rotten institutions.

There's things about the book I don't like so much, I must admit. I think they all result from the fact that this was a second attempt to get the ideas across, so the author had to go lowbrow. Reading the book sometimes feels like you are on a Chinese tour bus. Pommes frites under the Eiffel Tower on Monday, chocolates opposite the Commission in Brussels on Tuesday, tour of the canals with optional visit to the nightspots in Amsterdam on Wednesday. It's fun, but the author cannot possibly know the history of so many places well enough. So he exposes himself unnecessarily to pedants who happen to know the specifics better and get stuck on detail. I refer you to the negative reviews for more detail.

The other beef I have is that in the spirit of Jared Diamond, he does not actually take us to Paris, Brussels or Amsterdam, but to some really basic places instead. The idea is the places he examines are so simple that there can be absolutely no doubt it's his explanation driving things and not something more complex. But I, for one, would like him to get the tools out and apply them to somewhere more fun. I'd bet my house he's thought about all these things so deeply because he comes from Turkey, which not only picked up the baton from the Roman Empire he likes to talk about, but has had two revolutions in the past 100 years, one to overthrow the Sultan and a more peaceful one to get rid of the generals. I guess the author is scared he may bring prejudice to bear if he looks at his homeland. Or it's that they know where he lives.

Regardless, this is a seminal book. It's a chance to tell your kids you read a classic when it came out.

I cannot recommend it enough.
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16 of 17 people found the following review helpful
5.0 out of 5 stars great academic treatise - part economic theory of growth, part history of the world, 8 Dec 2012
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I approached this with hesitation, after reading other reviews. I thoroughly enjoyed reading it - but of course it is a long academic treatise, setting out bags of evidence and potential evidence and a simple central economic thesis for which it argues, at length.

The thesis is a thesis about growth, which the authors see as the test of the success of nations. (Others might think of course, that this isn't just about growth and GDP, but you can see what they have in mind.) Growth is only possible if there is a centralised state. No centralised state, as in Somalia, just means chaos and no prospect of growth. If there is a centralised state, there be what the authors call an 'absolutist' regime where all power is concentrated in the ruler and the ruling elite and there can be growth for a while and of a kind - centrally driven growth, as under Stalin in Russia between 1930 and 1970 as labour was moved from the fields to the cities, or under the Chinese regime today, which has done something to address the need for incentives economically. But such growth will come to an end (and often it doesn't happen at all, because it's against the personal interest of the ruler or ruling elite) - because the essence of ongoing growth is 'creative destruction' the invention of new technologies etc which will throw up a new class of rich people. That's only going to happen in a world in which property rights are secure and there are incentives to innovate and invest. Of course whether that will happen is a matter of history and history is 'contingent' - you can't tell what will happen. The Young Pretender reached Derby in 1745. If he had reached London and regained the throne for the Stuarts, history in England would have been different, and the Industrial Revolution might not have happened.

There are many powerful illustrations of the central thesis in the book. The two halves of Nogales, one half in Mexico and one in the US. The two halves of Korea. And there's a lot of history telling. There's also lots of interesting history. In terms of colonial exploitation of new lands, an accidental difference between North and South America. In the South, there were plentiful natives and plentiful gold and silver to exploit - and a playbook for the colonial power (capture the local king, torture him generally or often to death, and demand rooms of gold and silver). In the North by contrast, there is a sparse population of natives; and no gold or silver. The playbook doesn't work. And people need to be incentivised to work and earn for themselves. Hence inclusive economic and political institutions....Similarly story in Australia...

What might you wonder about here? Well, the 'history is contingent' line takes up a lot of the book. The authors develop a theory of virtuous and vicious circles and what makes it more likely that the right institutions will develop (you start off on the right path, and then it's not quite in the interests of anyone to seize control of the state, because there isn't quite such a thing - power is pretty dispersed already). I would be interested to know if game theory could help here - it isn't discussed. Then you might wonder about states that have been apparently inclusive that cease to be so. Germany under National Socialism for example is not discussed. And then you might wonder just how far political and economic institutions need to be inclusive to drive growth and the success of nations. England gets the thumbs up for the Magna Carta, the Glorious Revolution and so on, which points it on the right path. The industrial revolution happens, however, with a very limited franchise - and no votes at all for women.

Not the least of the merits of the book, though, are the hard thoughts that its 462 pages present. I would very strongly recommend it.
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14 of 15 people found the following review helpful
4.0 out of 5 stars Why do I feel so gloomy?, 5 July 2013
By 
A. O. P. Akemu "Ona" (Rotterdam, The Netherlands) - See all my reviews
(REAL NAME)   
This review is from: Why Nations Fail: The Origins of Power, Prosperity and Poverty (Paperback)
How dare the authors propose to answer a question that has engaged the finest scholarly minds since the mid-eighteenth century? The title of the book betrays the chutzpah of two of the finest political economists alive - Professors Daron Acemoglu (MIT) and James Robinson (Harvard). Jean-Jacques Rousseau, Karl Marx, Max Weber, David Landes, Paul Samuelson, Kenneth Arrow, Jared Diamond, Jeffrey Sachs, Douglas North, Steven Pinker--to name but a few social thinkers--have addressed this question in one form or another. What new insights do Acemoglu and Robinson proffer? These were the questions in my mind after reading a review of Why Nations Fail in The Economist. Despite my initial reservations, I read Why Nations Fail and listened to Robinson's lectures on Youtube. I am glad I did. However, after reading the book, I feel gloomy about the prospects of poor countries like mine (Nigeria).

THE BOOK IN BRIEF
The authors seek to explain two observations: the cross-country disparity of wealth we see today (say the United States compared to Zimbabwe); and the intra-country process of wealth/poverty creation. Acemoglu and Robinson's main argument is that these two phenomena are best explained by intra-country politics: the interplay of inclusive/extractive political and economic institutions. So what? This may seem banal. Of course, politics matters, one may argue. But do geography, climate, culture and ignorance (of the elite) not matter more? The book tackles these putative causes of poverty. Acemoglu and Robinson refute the geographic, climate, cultural and ignorance theses of poverty. Geography may explain inter-continental differences in natural endowments like as arable land and draught animal species, but it does not explain intra-continental disparities in wealth. Cultural arguments are weak because they purport to explain everything. Why was China poor in the early twentieth century? Chinese culture. Why is it now rich? Chinese culture. Not a convincing argument. And ignorance? Poor country elite are not ignorant of the causes of economic development. Most of them are educated in the West; they know that good roads, widespread education and infrastructure make a difference. Yet, they don't build the infrastructure. Why? The causes of poverty must be more fundamental.

The book develops a framework for understanding the causes of long-run nation failure. If the political institutions, defined as the rules of the political game, are extractive (i.e. serve the interests of a narrow section of society at the expense of the majority) then economic power will be concentrated in the hands of the elite. In the process, this will stifle the incentives for innovation and productivity in the country. If, on the other hand, the political institutions serve the needs of society at large (a broad coalition) such that no one group dominates then it is more likely that property rights will be respected and people will be incentivised to improve productivity. But that is not the entire story. It is not enough that the country have a broad coalition; it needs a centralised authority. The book uses Somalia as an example. Somalia is as democratic a country as you could imagine: every adult male has a say in the running of clan affairs. But that is the problem. There is no centralised state with authority over the disparate clans. So while there is a broad coalition, Somalis are not incented to invest in productivity-enhancing technologies; a state of anomic anarchy persists.

Acemoglu and Robinson stress the path-dependent but contingent nature of economic development. Extractive political institutions tend to reinforce extractive economic institutions (a vicious circle), whereas inclusive political institutions reinforce inclusive economic institutions (a virtuous circle). My favourite example in the book is the comparison between Sierra Leone and Australia. Both countries are mineral-rich; yet, Australia is a rich country and Sierra Leone is famous for 'blood diamonds'. Why? The authors argue that there is no resource curse per se. Instead, in Sierra Leone, an extractive political system (British colonialism) was in place when diamonds were discovered. The British cordoned off the diamond belt and awarded a monopoly to De Beers. In Australia, this did not happen. When gold was discovered in the Australia, inclusive political institutions were in place. Did the Australian government cordon off the mineral-rich areas and award a monopoly? No. They did try to monopolise the rents from gold mining, but were forced to open up the land to ordinary Australians. The authors emphasise a fact that most people from the Third World know: politics matters greatly. Ask an average Nigerian why her country is poor. She will not say it is because of culture, disease, rainfall or ignorance of elite. Most likely, she would tell you that it is because elite political interests benefit from the status quo--and have no intention of changing it.

I thoroughly enjoyed reading the book until I reached the chapters about the pre-Civil Rights U.S. South, Sierra Leone, Guatemala and Zimbabwe. I have not read anything so depressing in a long time. Extractive political elite have a remarkable resilience. Despite industrial revolutions, civil wars, coups, social upheaval, these elites--planters in the U.S. South, descendants of the Conquistadors in Guatemala, Mugabe and his clique in Zimbabwe--survive pretty well and continue to impoverish their countries. Further, it is unlikely that outside intervention--no matter how well-intentioned--cannot distort the dynamics of the vicious circle.

So why do nations fail? Because they have extractive political and economic institutions. These are difficult to change though they can be successfully challenged and altered during critical junctures. The roots of modern world inequality lie in the emergence of inclusive institutions in Britain and the fruits of this - the industrial revolution - spread to those parts of the world that had similar institutions (settler colonies) or quickly developed them (Western Europe). Other parts of the world languished with extractive institutions which have persisted over time and thus remain poor today.

AUTHORITARIAN GROWTH, DEVELOPMENT AID AND DETERMINISM
Every work of scholarship has limitations; Why Nations Fail is no exception. I perceive three such limitations. First, in their attempt to refute the authoritarian growth thesis--the notion that though authoritarian regimes are unattractive, if such regimes can achieve sustained economic growth then the society can make progress towards more inclusive institutions (see chapter 15)--Acemoglu and Johnson deliberately muddle the intellectual waters. They argue that the 2003 U.S. invasion of Iraq, which was supposedly justified on the basis of the authoritarian growth thesis, was doomed to failure because modernisation theory is incorrect. Really? Should readers believe that U.S. intent to modernise Iraq was the justification for the war? Further, is authoritarian growth not efficacious in poor, post-conflict societies like Sierra Leone and Rwanda? It is easy to write off the authoritarian growth thesis, but I am not so sure that the authors' weak refutation applies to all countries regardless of level of economic development. Would the authoritarian model work for middle-income countries like Chile? Perhaps not. Might it work for desperately poor countries like Sierra Leone? Perhaps.

Second, the authors chronicle the ineffectiveness of foreign aid to trigger long-run economic growth. They give an excellent illustration of aid failure in Afghanistan. This makes sense since poverty is caused by extractive economic and political institutions, not ignorance of local elites. The authors then suggest that in order to be effective aid should be restructured in `so that its use and administration brings groups and leaders otherwise excluded from power into the decision-making process and empowering a broad segment of the population might be a better prospect' (page 547, epub version). What a woolly policy recommendation! The authors assume that development aid is benign, unintrusive and purely `technical'. I am not sure this is the case since development aid may tied to Western geopolitical power interests.

Third, despite protestations to the contrary, the book's central thesis smacks of determinism. Though the authors stress the contingent nature of historical economic development, their notions of the virtuous and vicious circles simply mean that history is (almost certainly) destiny. Well-organised groups like Southern Blacks can interrupt the vicious circle with considerable support from a centralised state. Also, individuals like Seretse Khama, Botswana's first post-independence president, can make a difference in the development of countries' institutions. Unfortunately, such outstanding individuals are extremely rare.

Despite the limitations of the policy recommendations, Acemoglu and Robinson have achieved a remarkable feat in Why Nations Fail. They have put intra-country politics at the centre stage of the development agenda. I salute their broad scholarship and hope the book stimulates further discussion in policy circles. I highly recommend Why Nations Fail.
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259 of 297 people found the following review helpful
1.0 out of 5 stars LOOSE ELASTIC, 20 Mar 2012
By 
Stephen Cooper (South Yorkshire, England) - See all my reviews
I bought this book when I read a favourable review and thought it would be interesting to explore the reasons why some states succeed economically, while others never `take off' and others take flight but stall. I smelt a rat when I started to find that the style of writing is repetitive and circular and when I found some straightforward factual errors.

The authors say that the Spanish Armada was pursued (by the English) `all round the coasts of Britain'. Well no: we stopped pursuing it off the coast of Kent, and it sailed home via the North Sea and the Atlantic because there was no other way back. The Armada was largely destroyed by bad weather, off the West coasts of Scotland and Ireland. Likewise, the authors say - as if there is some significance in this - that at one time England and Hungary were ruled by the same dynasty, the Angevins. Well, it depends what you mean by `Angevin': it was a prolific house; but the Angevin dynasty in Hungary did not come to power until the fourteenth century, by which time we English call our kings `Plantagenets'. They may have been descended from Angevins, but conventionally the Angevins ruled England in the twelfth century; and they were only remotely related to those who ruled in Hungary, Naples, Anjou and Provence.

The detail matters. If you can't get the facts straight, what hope is there for the grand theory?

When you look at the `case studies', the history here is truly crude - almost like Sellars and Yeatman's `1066 and All That', but without the humour. Take English history, which I know something about. The authors place far too much importance on the Black Death of 1381 (feudalism did not come to an end overnight as a result of that event, catastrophic though it was). They accept Geoffrey Elton's account of the `Tudor Revolution in Government', when this was largely discredited by medievalists, almost as soon as it was formulated. They regard Christopher Hill's account of the so-called `English Revolution' of 1640-60 as being the last word, ignoring at least four decades of criticism. They overemphasize the importance of the Glorious Revolution and ignore how English society was between 1688 and 1832 (and beyond), notwithstanding the Industrial Revolution. They constantly confuse `England' with `Britain'.

If the treatment of English history is so brief and sweeping as to be a caricature, it makes me wonder about the history of other countries; and I am very suspicious of the authors' treatment of Japan, Venice and Ancient Rome in particular. With regard to Rome, they take it as read that the Roman Empire declined before it fell; but there is a very respectable view that it simply fell, when invaded by the Barbarians; and the authors detect the seeds of decay as far back as the reign of Augustus. What then of Gibbon's view that mankind's happiest days were passed in the age of the Antonines, in the second century A.D.?

The problem is that the authors purport to be experts on everything and on every age, when in fact they are masters of nothing but a theory; and the theory is so broad and vague as to be almost incapable of proof or disproof. Thus centralisation + inclusive institutions = lasting economic success and prosperity. I think I go along with this to some extent; but the terms are very elastic. What degree of centralisation counts as such? What is meant by `inclusive' or for that matter `extractive'? They may be right about the USSR and China; but I am not sure they have explained why the former failed and why the seemingly inexorable rise of the latter may be an illusion.
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2 of 2 people found the following review helpful
5.0 out of 5 stars On the engines of prosperity: Inclusive good, extractive bad, 10 April 2013
By 
Mac McAleer (London UK) - See all my reviews
(TOP 1000 REVIEWER)   
This review is from: Why Nations Fail: The Origins of Power, Prosperity and Poverty (Paperback)
THE THEORY
According to this book, for a country to be prosperous it should have a strong centre balanced by a widely inclusive set of organisations. When circumstances change it should be able and willing to change these organisations to suit the new conditions. It should not be dominated by an elite that extracts the state's wealth for itself. This thesis is a celebration of the process started in the 18th century for the development of a socially and economically liberal, democratic, pluralist societies.

Three quotes in this book can be used to define it:
"The central thesis of this book is that economic growth and prosperity are
associated with inclusive economic and political institutions, while extractive
institutions typically lead to stagnation and poverty." (p91)
"Rich nations are rich largely because they managed to develop inclusive
institutions at some point during the past three hundred years." (p364)
"...history is not destiny. Despite the vicious circle, extractive
institutions can be replaced by inclusive ones. But it is neither automatic
nor easy." (p426)

This is a book of recurring phrases, which form part of the authors' theory:
> Absolutist and Centralised States
> Creative Destruction
> Critical Junctures
> Extractive and Inclusive Organisations
> Vicious and Virtuous Circles

In human history things happen and it is a nation's response to these "critical junctures" that determine their prosperity. Historically nations are often organised extractively. This can be very successful for a long time but eventually will fail. At critical junctures there will be decisions to be made about creative destruction. If times have changed then old institutions should be left to die. Often vested interests will oppose this causing a long slow decline of the whole nation. Only with creative destruction in an inclusively organised nation can there be long term survival.

THE EXAMPLES
England (later Britain) is the prime example of the successful inclusive nation followed by the other European and anglosphere nations. But however inclusive Britain was at home, it created extractive organisations in its colonies.

Theories of geography, culture and political ignorance keeping states in poverty are all considered and rejected by the authors in favour of political and economic inclusiveness. Thus the book starts with a comparison of Nogales Arizona with Nogales Mexico, the same town with the same geography and the same people separated by a single border. The examples continue world-wide and thorough history. There is Afghanistan, Argentina, Australia, the Austro-Hungarian Empire, the Aztecs, Barbados, Botswana, Brazil, Columbia, Congo, Egypt, Ethiopia, France, Ghana, Great Britain, Guatemala, the Incas, India, Japan, North and South Korea, the Mayas, Mexico, the Napoleonic Empire, the Ottoman Empire, Peru, the Roman Empire, Russia, Sierra Leone, Somalia, South Africa, Spain, USA, Uzbekistan, the Venetian Republic, Zimbabwe and many more.

THE BOOK
Physically there is a lot crammed into a small paperback book of over 500 pages including a Bibliographical Essay and Sources, References and an Index. There are 20 maps, which all seem too small. In the centre of the book are 16 black and white photographic plates.

CONCLUSION
The authors discuss only nation states and historical empires. There is no mention of trans-national elites extracting wealth world-wide. This includes legal avoidance of national corporation tax by most of the world's largest trans-national companies. Applying their theory to large companies would also be interesting.

This book can seem repetitive, as the theory is applied to so many examples. This theory also needs a name and a formal definition somewhere near the start of the book, but it is certainly a book well worth reading, perhaps more than once. Indeed, this is an important book that ought to be read.
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2 of 2 people found the following review helpful
5.0 out of 5 stars EXCELLENT, 9 Nov 2012
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a very good historical review of the development process around the globe.
then they look to the prevailing theories/myths and the logic behind them.

I must confess that I agree with their views right from the beginning, so in some way the book confirmed my personal vision. highly recommended.
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27 of 32 people found the following review helpful
3.0 out of 5 stars Interesting Idea Poorly Presented, 3 April 2012
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Stephen Cooper has made valid critical points, above. In addition, the book is repetitive and somewhat patronizing. Furthermore, the authors do not seem to understand the nature of historical proof, so the examples they use serve as illustrations of their main thesis but not as evidence that might convince the skeptical reader. The broad sweep of their theory is interesting, however, and deserves better treatment. For two better works in this genre, see Francis Fukuyama's "The Origins of Political Order" and Mancur Olson's great classic "The Rise and Decline of Nations." The latter, especially -- a seemingly simple book -- has not lost its gloss and power, nor its relevance, in the decades since its publication.
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25 of 30 people found the following review helpful
3.0 out of 5 stars Broadly correct but too long and theoretically underdeveloped, 9 April 2012
The comments by others are correct. The book is good but flawed by loose writing, some crude history and the theory is underdeveloped. A far better job is done in their earlier book, but for a general readership North, Wallis and Weingast's Violence and Social Orders does the same job in half the space and with a better developed theoretical apparatus.
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4 of 5 people found the following review helpful
4.0 out of 5 stars Some Criticisms, 2 Jan 2014
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This review is from: Why Nations Fail: The Origins of Power, Prosperity and Poverty (Paperback)
The authors believe that nations succeed when they have pluralist civil society where no one group is able to seize the state machinery and use it to direct the economy to their advantage. This allows creative destruction to continually revolutionize society and lead to economic growth and eventually prosperity for all. Conversely in states with weak or non-existent civil society there is always the temptation by rulers to adopt extractive economic policies that maintains the status quo.

The sheer wealth of examples and historical depth of their theory is impressive and is probably worth reading for this fact alone. Other reviews give a good outline of the argument so I'll just focus on some criticisms I have.

1. Ignoring the dangers of monopoly capitalism.

The authors illustrate how pluralist societies manage to regulate the monopoly tendency in capitalism by telling the story of how in the United States trusts like Standard Oil were broken up in the late 19th and early 20th century.

My comment would be that such monopoly busting actions is actually quite rare and only carried out in relatively healthy pluralistic societies. Marx's view that the state is run by the bourgeois for the bourgeois seems just as common throughout history. Britain and America's reaction to the financial crisis- shoveling credit to Banks and selling off state assets whilst cutting welfare, education and health care - is a classic example of this.

Also the authors are really quite blithe to the dangers of creative destruction. The primary benefit of pluralistic institutions for them seems to be that they allow the process of creative destruction to go unhindered. Yet creative destruction can destabilize civil society to the extent to which they begin to look to extreme political parties- like 1930s Europe and Japan.

Our own age will probably see the disappearance whole sectors of employment to robotization and consequently unemployment rates hit 40% + across much of the developed world. It will be interesting to see how modern capitalist states cope with this without letting half of society slide into poverty.

2. Ignoring the the Cold War

The effects of the Cold War were felt right across the Third World and it's absence in the authors discussion is striking. The slave trade and colonialism are rightly seen as sowing the keys for exploitative regimes, but the wars (Vietnam, Korea) and purges (Indonesia) in Asia, the 'Bush wars' in East and Southern Africa (Angola, Ethiopia) and the twenty two coups engineered by the US in South America are apparently peripheral to their argument.

Their account of Columbian para-military groups seems particularly naive in it's presentation of such groups as spontaneous responses to left wing violence. Ignoring that such groups are responsible for at least 70 to 80% of political murders in Colombia per year and the funding such groups have historically enjoyed by the CIA.

Why is this ignored? I think because the authors know that the foreign policy of the most aggressive Western nations France, Britain, Israel and America doesn't work within the check and balances framework that domestic policy is framed by and it never has. Their capitalist form of development has always demanded constant expansion and expropriation of new lands, resources and peoples whether under the slave trade, colonialism or free market capitalism. If the industrial revolution had occurred in a Britain without colonies it would have quickly run out of both raw material and consumer demand for it's manufactures. So in many ways the rich successful pluralist societies of the world are in symbiotic relationship with the poorer nations.

3. Unsympathetic views on alternatives

The story told of Asia's development stagnating in the early modern period isn't really true.

To take the Chinese example: The population tripled in size between 1600 and 1850 to 420 million, new world crops were adopted, manufactures boomed and the Empire was vastly expanded. Some historians like Pomeranz even argue that as late as 1800 there very little difference in European and Chinese GDP. The Chinese state was in fact in some ways a proto-welfare state in it's redistribution of resources to the under developed hinterland at the expense of the coastal ports. This development strategy makes sense given that the primary threat seen by the Chinese State (an alliance of bureaucrats and Northern warlords) remained the Mongols. Eventually this path of development was defeated by European navies enabling colonial powers to foist unfair trade agreements upon the country and open it up to cheap Western goods (and Indian opium).

Similarly in the authors account the Chinese Communist regime before Deng's reforms is rightly disparaged for the great suffering it caused without any note of it's successes. But from my reading in health-care, education and in particular land reform Mao laid the foundations for subsequent economic success. See the Chapter on the 'Origins and Dynamic of the Chinese Ascent' in 'Adam Smith in Bejing' by Arrighi.

It seems odd that the authors are so suspicious of any redistribution of land or revolution in the developing world yet freely admit the decisive role the French revolution played in subsequent capitalist development by modernizing laws and redistributing property.

From my reading the success of East Asia against Africa and South America is precisely because East Asian countries succeeded in redistributiing land even if, like the French revolution, this was a bloody process. Many South American revolutionaries tried to achieve this but a combination of elite oppression backed up with CIA arms blocked all attempts at reform.

The authors seems beholden to an Anglo-sphere development path which ignores the fact that in most countries the only way to end the power of the landlord class is revolutionary appropriation of land.

Another point is that the authors are overly sanguine about the decline of the 'extractive' Ottoman, Austro-Hungarian and Russian Empires. For all their flaws each of these multi-national Empires were achieving impressive growth rates prior to the First World War in comparatively liberal environments. Their collapse lead to the death of multiculturalism in Eastern Europe and West Asia whose end game is being played out in Iraq and Syria today.

4. Pluralist Societies

Finally I am skeptical about how truly pluralist Western institutions are. Compare America and China today.

Are we so sure that America, despite it's riches and it's long legacy of representative government is a more pluralist society - that it's checks and balances work and truly represent and cater to the needs of it's people?

The historical record of last two Presidencies has been bleak. From the fixed election in 2000 through to Afghanistan, Iraq, the implosion of the financial sector, rising inequality and political extremism and recently revelations about widespread illegal spying by the NSA.

No doubt China's political and legal system is far more corrupt and will have to fundamentally reform sometime in the next twenty years. However the power of the labor movement combined with the ideological commitment of the state to Communism means that the leaders are much more scared of repressing the lower end of society, and much more anxious about maintaining growth than the US state is.

Parallels could be draw with early 20th century Germany which was less democratic than America, but had much larger and most successful labour movement.

Anyway I'm rambling. It's a interesting book but ultimately I think it is unsuccessful at fitting modern history within the confines of a rather simple theory.

I recommend therefore reading it in conjunction with.

The Making of the Modern World - Bayly
Adam Smith in Bejing - Arrighi
Power and Plenty - Findlay & O'Rourke
23 Things They Don't Tell You About Capitalism - Chang
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1 of 1 people found the following review helpful
4.0 out of 5 stars A Well-Reasoned Book, 8 Oct 2013
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This review is from: Why Nations Fail: The Origins of Power, Prosperity and Poverty (Paperback)
This is a well-written book, debunking most of the well-worn but probably erroneous theories about why some nations fail and others prosper. Their view is that the reasons are political. That's the easy bit. More difficult is their explanations why some nations end up with political regimes that encourage freedom and growth whereas others don't.

It's very thought-provoking, and a good read.
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Why Nations Fail: The Origins of Power, Prosperity and Poverty
Why Nations Fail: The Origins of Power, Prosperity and Poverty by Daron Acemoglu (Paperback - 7 Feb 2013)
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