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August 13, 2022

Why do nations fail?

Several books published in the US in the last year are proof of a remarkable melting pot that gives birth to revolutionary ideas in the domain that concerns the evolution of the international system of states. These will undoubtedly format tomorrow’s international system, be it only because such revolutionary ideas become a common good and create unavoidable mindsets for decision makers and public opinion not only in the United States but everywhere in the world. Among these books I would like to point out the book that Joseph Nye Jr. wrote on the significance of military power in today’s and tomorrow’s systemic ensemble. We were accustomed to consider that the states’ systemic hierarchy is mainly determined by their GDPs’ weight/size. This essentially remains true, with the observation that the said state needs the capability to transform that weight/size into military power at the right moment. But Nye proves that, beyond the weight of GDP, military power can have an autonomous evolution – see the case of the USSR during the Cold War when the army was “gobbling up” approximately 30-35 per cent of GDP at the expense of civilian consumption – and remains the main vector when measuring an actor’s systemic weight in the 21st century. After all, the EU is on the first place when it comes to the size of its GDP, but it is an insignificant global power when it comes to military power. At the same time, we are witnessing the debate that centered on whether the United States – the guarantor of Pax Americana – has entered hegemonic decline, being incapable of ensuring global leadership, or whether it continues to be “number one.” From this point of view, two recently published fundamental books are must-haves for the world’s decision makers: Gideon Rachman’s ‘Zero Sum Future,’ and Robert Kagan’s ‘The World America Made.’ While Kagan expresses his confidence that “it is important that the United States work to preserve its leading positions in the world and not succumb to a declinism that becomes a self-fulfilling prophecy,” being thus partisan of the anti-declinist camp, Rachman, invoking the fact that China is approaching United States’ economic weight, believes that “America is still way ahead when it comes to hard military power. [….] It is economic strength – not military power or “soft” power – that will matter most in the contest between the United States and China. And the moment when China pulls ahead of America in economic terms is, I’m afraid, approaching rapidly.” The last of these books of great interest is the one signed by Daron Acemoglu and James A. Robinson – ‘Why Nations Fail.’ It already has had a major impact, made clear by the eulogistic reviews signed by personalities such as F. Fukuyama or T. Friedman, but also by the debates it has sparked. The authors’ blog features numerous posts through which they answer the readers’ questions and widely explain the methodology they used. Basically, what are the theses of this much-discussed book? The authors state that political institutions are the ones that determine economic growth and they are tailored in various states according to the will of local political actors that are interested in keeping them like they are. In other words, political institutions are “bad” not because the elites in those states are ignorant in this regard, but because they are interested in them enduring because they are taking advantage of their existence. Weak institutions are unable to limit the corrupt elites’ will to steal. From this point of view, the authors describe two types of societies, namely those defined by extractive (absolutist) institutions, hence those that protect parasitic elites and discourage investments and innovation, and those defined by inclusive (pluralistic) institutions that protect individual rights and stimulate innovation, work and creative change. The former lead to stagnation and eventually to the bankruptcy of those societies, the latter ensure the prosperity and wealth of those nations. The authors write: “Inclusive economic institutions that enforce property rights, create a level playing field, and encourage investments in new technologies and skills are more conducive to economic growth than extractive economic institutions that are structured to extract resources from the many by the few.” The authors offer historical facts and evidences in support of their theory. Thus, after the geographic discoveries were made, the different approaches adopted by England and Spain made the difference between the two states and their international statute. While England sanctioned free initiative, hence private effort, when it came to the exploitation of its numerous colonies, Spain made a state monopoly out of this effort. The result was that, for example, the establishment of predatory, extractive elite was not possible in the American colonies, inclusive institutions that were to revolt at the end of the 18th century being established instead. Moreover, such an orientation resulted in the dominance of the mobile and dynamic element within the metropolis, an element that asserted itself over the landowning and reactionary aristocracy, tilting the scales in favor of economic growth. Spain on the other hand, through the centralism it imposed when it came to colonial exploitation, determined the emergence of a corrupt, extractive elite in these states, an elite interested in its own well being not in the prosperity of its own nations. The revolutions that took place in the last two centuries in South American states did not manage to overcome this historical paradigm, the new elites subordinating themselves to a societal model that does not encourage creative destruction. In the metropolis this orientation consolidated a parasitic elite interested in safeguarding its own privileges, which hindered economic growth. The authors also explain that in some cases extractive growth may lead to economic expansion (China is today more prosperous than it was 30 years ago). But two conditions must be met: state centralization (which did not happen in many states in post-colonial Africa, in Afghanistan or Yemen) and the existence of an elite that should not feel threatened by economic growth and institutional openness (which happened in China after 1979 when reforms started under the leadership of Deng Xiaoping). What has to be necessarily said about this book – which Thomas Friedman called “fascinating” in an editorial for ‘The New York Times’ – is that the new theory of development links economic growth with the quality of existing political institutions and the political elite’s will to generate their inclusiveness (first of all the citizens’ involvement in the decision making process, but also the transparency and efficiency of societal systems such as education and health). At the same time, the authors admit that there are many issues still left to clarify about various aspects of the theory, including the moment in which a country launches itself in extractive growth. They say: “Why is it that, for example, China and Vietnam have been able to do so, while North Korea has not even tried? Part of the answer may lie in the fact that in North Korea the dictatorship is identified with the Kim family, and an about-face, like the one that Deng Xiaoping engineered after Mao’s death, is not possible.” Thus, this is a book that should be read by any political decision maker. It can be a scientific and moral guide for them.


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