LSE: Public Lectures and Events – "Why Nations Fail"

Guest: Professor James A. Robinson (Harvard University)
Date: June 8, 2011
Summary Compiled By: LSE Film and Audio Team

Overview

This episode features Professor James A. Robinson, co-author (with Daron Acemoglu) of Why Nations Fail: The Origins of Power, Prosperity and Poverty. The lecture, based on Robinson and Acemoglu’s research, explores why some nations succeed economically while others remain poor. Robinson argues that differences in political and economic institutions—specifically, whether they are “inclusive” or “extractive”—explain global inequality, with historical roots playing a central role in the divergent development of societies.

Key Discussion Points and Insights

1. Historical Roots of Inequality: The Americas Case Study

(09:01–21:00)

• Colonial Institutions Shape Development:

  • Latin America: Spanish colonization based on exploitation of indigenous populations through extractive institutions (e.g., Potosi mita).
  • North America: Initial attempts at coercion failed due to the lack of a large sedentary population; inclusive institutions emerged (land grants, general assembly, early forms of suffrage).
  • Quote:
    "[T]he early colonial society developed on the basis of exploitation of minerals...but principally the indigenous people...a political system dominated by a very narrow group of Spaniards, and underneath them, a large indigenous population being exploited to the benefit of the Spaniards." (B, 11:00)

• Persistence of Initial Institutions and Outcomes:

  • Even when development levels were higher in Latin America pre-Columbus, initial institutional divergence created path dependence, leading to today’s disparities.
  • Quote:
    "If you take the Americas and you line up the Americas from the richest to the poorest countries...you go back 100 years, the rankings almost identical. If you go back 150 years, the rankings almost identical. So that suggests...some very persistent features determining the inequality of nations." (B, 59:58)

2. The Core Concepts: Extractive vs. Inclusive Institutions

(24:00–37:00)

• Definitions:
  • Extractive Economic Institutions: Designed to transfer resources and wealth from one group to another (examples: slavery, forced labor).
  • Inclusive Economic Institutions: Promote participation, free allocation of resources, and broad access to opportunities.
  • Extractive Political Institutions: Concentrate power in a narrow elite, enforce extractive economics (e.g., Spanish colonial system).
  • Inclusive Political Institutions: Distribute political power broadly, supporting inclusive economics (e.g., plurality in political participation, nascent democracy in colonial Virginia).
• Synergies & Feedback:
  • Institutions reinforce themselves (virtuous or vicious circles).
  • Extractive economic and political institutions perpetuate inequality; inclusive ones promote broad-based growth.
  • Quote:
    "Extractive economic institutions...will not generate economic growth now. At least they won't do so in a sustained way." (B, 38:00)

3. Dynamics and Persistence—Why Change is Hard

(37:00–50:00)

• Persistence:
  • Extractive institutions are “sticky”—difficulty in switching equilibrium.
  • Example: The US South, where extractive institutions persisted after slavery through mechanisms like Jim Crow and the KKK.
• Critical Junctures:
  • Major shocks can allow for institutional change (e.g., Black Death, Atlantic trade, the Glorious Revolution).
• Creative Destruction & Resistance:
  • Technological innovation (creative destruction) is a force for inclusion and growth but is disliked by elites who fear loss of power.
  • Quote:
    "Inclusive economic institutions create this economic growth. So why would you have extractive economic institutions? Why would extractive economic institutions ever occur in society? Well, that's for the reason that...any set of economic and political institutions distributes wealth and power in particular ways. And what may be good for some group of powerful people may not be good for the society as a whole." (B, 38:30)

4. Examples and Application to Modern Cases

(50:00–58:00)

• Modern Illustrations:
  • Zimbabwe: President Mugabe’s consolidation of power—lottery “win” shows extreme extraction.
  • Colombia: State weakness; paramilitary rule and collusion with politicians in controlling regions.
  • Uzbekistan: Forced child labor in cotton production enforced by an unaccountable state.
• State Capacity:
  • It's not only about extraction; in many poor places, the inability to provide order and public goods is also fundamental.

5. Q&A Section – Notable Exchanges

Q: Modern China—Inclusive or Extractive?

(63:19–65:11)

• Question: “How would you classify modern day China? It’s quite successful economically, but power is concentrated.”
• Robinson:
  • China’s current success resembles the unsustainable Soviet model: inclusive economic institutions without inclusive politics cannot persist long-term.
  • Cites South Korea as a nation that transitioned from extractive to inclusive political institutions.
  • Quote:
    “If the theory has one prediction, it is that the current situation in China is unsustainable. That either it will go the way of Tunisia or it will possibly go the way of South Korea.” (B, 64:43)

Q: Trade, the IMF/World Bank, and Institutional Change

(66:17–72:23)

• On Trade: Trade expansion can reinforce or undermine institutions; e.g., 19th-century Latin America and the slave trade intensified extraction.
• On IMF/World Bank:
  • Robinson regards their influence as minor compared to colonial legacy.
  • Quote:
    “Compared to European colonialism, I think the World bank and the IMF, pretty pathetic really.” (B, 71:16)

Q: Post-Conflict Institution Building (Sub-Saharan Africa)

(72:29–75:39)

• Insight: Post-war periods offer openings for change, but often, patterns of political behavior and power reassert themselves (ex: Sierra Leone).

Q: Testing the Institutions Hypothesis vs. Geography

(76:00–88:50)

• Robinson’s Response:
  • Most geographical correlations (e.g., latitude and wealth) are spurious, explained by historical institutional trajectories, especially as affected by colonial strategies determined by disease environments.
  • Quote:
    "One of the reasons that...there's a correlation between latitude and poverty [is] that...latitude...influenced the way colonialism created different institutions in different societies." (B, 80:13)

Q: Culture/Cultural DNA and Institutional Change

• Robinson:
  • The theory is not about immutable cultural DNA, but about patterns of behavior (institutions) that can persist but are not unchangeable.

Q: Extractive Economics in the Modern West

• Robinson:
  • Open to the idea, especially regarding the role of the financial sector, but believes Western economic institutions remain broadly inclusive—for now.

Notable Quotes and Moments

• The Power of Institutions Over Geography:
  "[I]nstitutions are just in some sense, the rules, the rules that govern economic and political behavior...and to say that it's that that really matters for this economic divergence within the Americas." (B, 21:40)

• On Structural Change & Optimism:
  “I don’t think there’s any reason why, if historically institutions or society in a place like Sierra Leone or Ghana had been structured differently, those places couldn’t be just as prosperous as England or North America today... that part of the theory is kind of, you know, I think that's very optimistic for the future in some sense." (B, 61:38)

• Memorable Moment – On Mugabe’s Luck:
  "So there's not only a powerful man, he's a lucky man, too. ...President Mugabe's name drawn from thousands of customers, top prize in a lottery organized by a partly state owned bank." (B, 52:40)

Timeline of Important Segments

| Timestamp | Segment | Speaker | Key Point | |----------------|-------------------------------------------|------------------|------------------------------------------------------------| | 00:00–04:46 | Introduction | Tim Besley (A) | Context, speaker bio, legacy of Michio Morishima | | 04:47–09:00 | Robinson on inspiration and scope | James Robinson | Personal background, broad purpose of the book/lecture | | 09:01–21:00 | Colonial divergence: Americas | James Robinson | Main story of US & Latin America's institutional differences| | 21:00–37:00 | Definition of extractive/inclusive | James Robinson | Core theoretical framework clarified | | 37:00–50:00 | Persistence, change, critical junctures | James Robinson | When and why institutions change | | 50:00–58:00 | Modern examples of extractive institutions | James Robinson | Zimbabwe, Colombia, Uzbekistan, US South | | 62:39–75:39 | Q&A (various themes) | Audience/Robinson| China, trade, IMF, post-conflict societies, “cultural DNA” | | 76:00–88:50 | Q&A (geography, culture, financial sector)| Audience/Robinson| Empirical tests, institutional vs. geographical drivers | | 88:50–end | Closing statements | Tim Besley | Thanks and reflection |

Tone and Style

Robinson’s lecture is engaging, accessible, and sometimes humorous, aiming to “make it exciting and accessible” for audiences both inside and outside academia (09:01). He uses vivid historical anecdotes, empirical studies, and occasional lightheartedness (e.g., on Paul Samuelson’s Soviet forecasts or President Mugabe’s lottery win), while also acknowledging his cautious openness to critique and alternative explanations (“I haven’t read Rodrik’s book, although I ought to have done”—66:18).

Conclusion

Robinson convincingly advances the case that the deep historical roots of political and economic institutions—more than geography, culture, or external aid—explain why nations succeed or fail. While the process is path-dependent and difficult to change, it is not inevitable: societies’ fates are shaped, but not predetermined, by their institutional histories. Change, though rare and contested, is possible.