I remember the first time I encountered the idea that geography determines destiny. It was in Jared Diamond’s ‘Guns, Germs, and Steel’ (1997), an ambitious, sweeping argument that placed the fates of civilizations in the hands of crops, climate and contagious disease.
The book was persuasive, enthralling even, but something about it never quite sat right with me. Was it really the case that economic success boiled down to a head start in domesticable wheat and livestock? Years later, Daron Acemoglu and James A. Robinson’s ‘Why Nations Fail: The Origins of Power, Prosperity and Poverty’ (2012) landed on my desk like a thunderclap, dismantling Diamond’s geography-first thesis and replacing it with a bold, elegant alternative: institutions, not environment, shape the fortunes of nations.
The authors have, with elan, dexterity, fascinating detail and eloquent simplicity, explained why certain countries have forged ahead and certain others have lagged behind, both economically and politically.
This book is the culmination of fifteen years of meticulous research, a sweeping inquiry into the forces that propel nations forward or hold them back. Acemoglu and Robinson, who jointly received the 2024 Nobel Economics Prize for their contribution in comparative studies of prosperity between nations, argue that prosperity is not a matter of geography, culture or sheer historical luck, but rather the result of institutions - specifically, whether they are inclusive or extractive. Societies that distribute power broadly, protect property rights and encourage innovation tend to flourish; those that concentrate wealth and control in the hands of the few inevitably stagnate. History, they suggest, is shaped by a slow but persistent “institutional drift,” occasionally jolted by “critical junctures.”
Their analysis reads like an intellectual travelogue through history’s winners and losers. The difference between North and South Korea, they argue, isn’t a matter of latitude or natural resources. It is a matter of governance. One embraced democracy and market-oriented policies; the other entrenched dictatorship and centralized control. It’s the kind of theory that, once encountered, makes previous explanations seem almost quaint.
The book weaves together centuries of history with the precision of a watchmaker. It traverses from the Glorious Revolution in England, which set the stage for an explosion of economic growth, to the predatory colonialism of the Belgian Congo, which left behind an extractive nightmare. We see Japan’s pivot from feudalism to a modern industrial powerhouse post-Meiji Restoration, while Argentina, despite an abundance of resources, floundered under the weight of corruption and cronyism.
But Why Nations Fail is at its most gripping when it examines the nations stuck in the in-between: countries that flirt with economic success despite political repression. China looms large in this category. The authors argue that while Beijing has allowed market reforms, the Communist Party’s firm grip on political life makes long-term success unsustainable. It is a provocative assertion, one that challenges the idea that an authoritarian regime can indefinitely engineer prosperity without democracy.
That said, the book has its blind spots. Acemoglu and Robinson deftly analyse how institutions emerge and evolve, but their narrative falters when confronting the role of external influence, particularly the United States’ own history of meddling in Latin America. The book recounts how countries like Venezuela and Colombia suffered under extractive regimes but largely omits the CIA-backed coups and interventions that helped keep those institutions in place. The absence of this context makes their argument feel incomplete, as if history operates in a vacuum rather than as a contested battleground of power.
Still, ‘Why Nations Fail’ is a triumph of economic history, standing alongside Douglas North’s ‘Institutions, Institutional Change and Economic Performance’ and Acemoglu’s own ‘The Narrow Corridor’ as a landmark work on the fate of nations. In dismantling rival theories like geographical determinism, cultural exceptionalism, even the modernization theory by Seymour Martin Lipset, Acemoglu and Robinson place institutions at the centre of the global economic puzzle. It is an argument that echoes the work of North and Milton Friedman but with a more historical sweep.
As I turned the final pages, I found myself returning to a question that haunts every reader of economic history: If institutions shape nations, who shapes institutions? ‘Why Nations Fail’ provides the diagnosis, but the cure - messy, political and deeply contingent - remains elusive. Perhaps that, too, is part of the story.
(The author is a research scholar based in Mumbai.)
Comments