x Abu Dhabi, UAEFriday 19 January 2018

Governments by and for a few must become inclusive, or risk collapse

On a visit to NYU Abu Dhabi, James A Robinson talks about Why Nations Fail, a new book about the political and economic forces that topple governments.

James Robinson, co-author of Why Nations Fail: The Origins of Power, Prosperity and Poverty, during his visit to Abu Dhabi. Christopher Pike / The National
James Robinson, co-author of Why Nations Fail: The Origins of Power, Prosperity and Poverty, during his visit to Abu Dhabi. Christopher Pike / The National

Having a discussion with James A Robinson, the Harvard academic and co-author of Why Nations Fail: The Origins of Power, Prosperity and Poverty, is akin to tagging along with a seasoned traveller on a round the world trip. In conversational terms, at least, he is a dedicated country hopper, a man who collects stamps in the passport of his thoughts as easily as the rest of us might collect stamps on a coffee house loyalty card.

His dialogue traces an impossible, meandering, era-shifting route: one moment he is telling you about the economics of Arab Spring Tunisia, the next he is off to the Soviet Union in the 1970s, before hopping towards contemporary Rwanda and then back to early 1990s China, then forward once more to late Mugabe-era Zimbabwe. He barely pauses in all of this, summoning countless historical examples to underscore the key notes of his discussion and, indeed, the broader sweep of the question his book's title addresses.

Nevertheless, let us pause for a moment in Abu Dhabi.

Robinson recently spent a few days in the capital to deliver a lecture as part of the NYU Abu Dhabi Institute's season of talks. His appearance before a large and lively audience at Manarat Al Saadiyat - a venue that sits just a short hop from the university's gradually emerging new campus on the island - was the latest stop on an ad hoc book tour that has so far taken him to a handful of appearances in Britain and the United States via the United Arab Emirates. More engagements and, one suspects, more country hopping, will fill his diary as the academic year draws to a close and the summer months beckon.

By some estimation, Robinson and Daron Acemoglu, his co-author, demonstrated either perfect or rotten timing with the publication of Why Nations Fail.

The book examines the "huge differences in incomes and standards of living" that divide rich countries (such as the US, Germany and Britain) and the poor in sub-Saharan Africa, Central America and South Asia, and identifies two different systems - "extractive" and "inclusive" - into which the world's economic and political systems tend to fall.

Extractive economies and political systems are geared towards the ruling elite taking the maximum gain (in terms of wealth, power and influence) from the nations they control, while inclusive economies and political systems are generally more democratic. Using countless historical and contemporary examples, the pair illustrate why such extractive economies are always predetermined to fail.

Robinson and Acemoglu were putting the finishing touches to their book when the winds of change began to gather in the Arab Spring. This means that Why Nations Fail largely sidesteps the region save for its preface, which nods to the tumultuous events of the past 18 months.

They would argue that the uprisings in Tunisia and Egypt absolutely validate their theory - both countries demonstrated strong "extractive qualities", or as Mohamed ElBaradei's Twitter feed so eloquently put it in 105 characters on January 13, 2011: "Tunisia: repression + absence of social justice + denial of channels for peaceful change = a ticking bomb". That ticking bomb exploded the following day when Zine El Abidine Ben Ali and his family fled the country for Saudi Arabia.

In Egypt too, the book asserts that the country is poor because "it has been ruled by a narrow elite that have organised society for their own benefit at the expense of the vast mass of people. Political power has been concentrated and has been used to create great wealth for those who possess it ... the losers have been the Egyptian people, as they only too well understand."

Eighteen months further on, the subject of the Arab Spring continues to engage Robinson.

"We thought the Middle East was interesting," he says. "Firstly, because the way that people themselves talk about the issues and were debating them was much more consonant with the way that we think about problems of development than a lot of the conventional wisdom.

"Secondly, [at its root] is this whole process of conflict over institutions, and conflict over the organisation of society.

"We emphasise in the book how institutions evolve as a consequence of conflict. But conflicts don't always create institutional change. Some do, but others just recreate the old system in a new guise which we call the iron law of oligarchy.

"The military in Egypt are still trying to recreate the old system ... they'd like to carry on with some sort of regime that looks more democratic and participatory but nevertheless that they can manipulate from behind the scenes. In Tunisia, the transition has been much more successful.

"Other people are worried about different versions of the iron law. In the book, we talk about the US South after the Civil War, when there seems to be a huge change in the institutions of the region but actually the same people carried on running the country and pulling the strings.

"That's like the military model in Egypt. Other people are worried about the Muslim Brotherhood and them creating a different sort of extractive regime, where one elite replaces another without any real change."

Robinson sees "exciting connections" between the uprisings in the Arab world and the discussion of extractive and inclusive societies that his book unravels.

One wonders, though, how definite the iron law of oligarchy can be in the era of social media.

In the examples of Egypt, Tunisia and Syria, citizen journalists and bloggers have used social media to spread messages that eventually became impossible to suppress or control.

Robinson says that the big technological changes brought about by the internet have made it much more difficult for today's autocratic regimes to control their citizens than would have been the case in the past. Alberto Fujimori, for example, propped up his regime in Peru through a complex network of bribery, in which Vladimiro Montesinos, the head of his repressive national intelligence service, would pay off newspapers and TV stations to provide positive coverage.

The going rate for such favours was anywhere between $3,000 and $8,000 per headline, while bribes for TV stations extended to millions of dollars. One of Montesinos's persuaders explained such a policy by saying, simply: "if we do not control the television, we do not do anything".

Why Nations Fail is peppered with such anecdotes, offering chilling commentary on those whose extractive behaviour has tumbled absolutely into excess.

In one such vignette we see Robert Mugabe winning a large cash prize in a lottery organised by a partially state-owned Zimbabwean bank, in another we see emperor Haile Selassie dragging a pillow-bearer around with him wherever he went on official duty in Ethiopia. The point here is perhaps to amuse but is as much to highlight the dysfunction that stalks failing states. "Selassie presided over an extreme set of extractive institutions and ran the country as his own private property, handing out favours and patronage and ruthlessly punishing lack of loyalty," write Robinson and Acemoglu, before landing the knockout punch, "there was no economic development to speak of in Ethiopia."

The book's concludes by saying that "the solution to the economic and political failure of nations today is to transform their extractive institutions towards inclusive ones."

There are no exceptions to this rule. Even functioning "extractive" economies are destined to fail.

"Our theory makes a very clear prediction that the Chinese model of growth is not sustainable," he says.

"The boom is not sustainable when the political institutions are so extractive. One of two things is going to happen: either the political institutions have to make the transition towards something more inclusive or the whole thing is just going to come to a grinding halt, just like it did in the Soviet Union."

Why Nations Fail spends much time discussing what was once hailed as the Soviet miracle. Incredibly, as late as 1977, many economists believed the Soviet Union's economy was destined to overhaul and overpower the US economy within a decade. That fact seems laughable now.

The suggestion here is that just as the words of Nikita Khrushchev, the table-thumping Soviet leader who once bragged that "we will bury you [the West]", were eventually exposed as the emptiest of threats, so the same fate will one day befall China's rapid growth. Unless, of course, its political and economic systems undergo extensive reform.

Nick March is editor of The Review.