Tuesday, July 17, 2012

Not In A Straight Line

 Isobel Coleman, a senior fellow for U.S. foreign policy at the Council on Foreign Relations in New York, and director of the Council’s Women and Foreign Policy Program, reports on a meeting addressed by “MIT economist Daron Acemoglu for an on-the-record meeting at the Council on Foreign Relations to discuss his book, Why Nations Fail, which he recently published with co-author James Robinson”.   HERE 
“Why Nations Fail tackles a question that has bedeviled experts for centuries: why are some nations rich while others are poor? Acemoglu and Robinson’s answer is straightforward – it all depends on institutions. Successful nations have good institutions that are “inclusive” and “pluralistic” and create incentives for people to work hard and invest in the future. Unsuccessful states, on the other hand, are characterized by “extractive” or “absolutist” institutions that economically and politically benefit a small group of elites at the expense of everyone else.”
The above is a small extract from an interesting report of Daron Acemoglu’s talk (follow the link for a fuller report).  But it summarises the main theme, and most interesting it proves to be when you think about it.
Deirdre N. McCloskey in “Bourgeois Dignity: Why Economics Can't Explain the Modern World” (University of Chicago Press, 2010) came at this subject from a more fundamental basis and came to similar conclusions, albeit more thoroughly with closer attention to the metrics.
However, Acemoglou’s summary thesis is impressively clear.
Institutions do not just appear, ready-made, or fully formed, and “created”.  They evolve over long periods.
In Britain’s case, centuries past as small changes, wrought for often quite distinctive reasons, but always without intentions to some general end. Their “inclusive” and “pluralistic” natures were consequential, not causal, and hardly intentional.
King John put his seal to Magna Carta in 1215 under pressure of his barons, without intending to cause subsequent events centuries later that led to a universal franchise.  Trial by peers, not the whims of a king, meant exactly what it said to King John: a baron was to be judged by fellow barons as his “peers”.  Liberty and Justice together are a formidable force.
The institutions that slowly emerged were supported by inquiring minds – working away in proverbial garrets – that added to the eventual clamour for the reform of state religions and challenged fundamental precepts of ossified theology with elementary sciences, mathematics, and philosophy. 
China’s problem was the absolutism of tradition.  The Mandarins wasted years in learning by rote to pass examinations that mummified the past.  The absolutist Emperor, at a wave of his hand, stopped all intercourse with foreigners and expeditions towards the Americas at the very time when Europe reached out towards them.  The consequence was that China’s undoubted scientific and technological heritage, way ahead of Europe’s by centuries, was cast aside.  Modern research show that old China anticipated almost all the scientific “discoveries” that North-Western Europe made from the Fourteenth century, which, wedded to individual initiatives of ‘entrepreneurs’  - the emerging bourgeois virtues – in freer societies, led to its eventual dominance, not, I hasten to add, in a straight line.  


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