I’ve started reading Daron Acemoglu and James Robinson’s eagerly-awaited book,, and am enjoying it.
[amazon_image id=”1846684293″ link=”true” target=”_blank” size=”medium” ]Why Nations Fail: The Origins of Power, Prosperity and Poverty[/amazon_image]
I think the book is going to prove one of the classics of political economy, as the argument links economic outcomes to political institutions but also endogenises the politics. So that notorious Clinton phrase from the 1992 campaign, ‘It’s the economy, stupid,’ in fact got it backwards. It’s all about the politics.
Its early chapters have reminded me of Mancur Olson’s(1982), in which he applied the logic of collective action to differing international economic trajectories, arguing that the emergence of increasingly powerful special interest groups steadily caused a kind of furring of the arteries of each economy. As he put it: “Special interest organizations and collusions reduce efficiency and aggregate income in the societies in which they operate and make political life more divisive.” (p47) This process over time would cause the relative decline of what was the leading economy, and see the rise to prominence of a less sclerotic rival. His book compares the 20th century fortunes of the UK and US.
[amazon_image id=”0300030797″ link=”true” target=”_blank” size=”medium” ]The Rise and Decline of Nations: Economic Growth, Stagflation and Social Rigidities[/amazon_image]
A batch of new books about American decline and China’s revival – reviewed by Gideon Rachman in the Financial Times today and including Arvind Subramanian’s– bring this dynamic into the 21st century. For it’s hard not to see the Olson logic of cartelisation and special interest politics dominating America today. My review of Acemoglu and Robinson will follow in a few days.
[amazon_image id=”0881326062″ link=”true” target=”_blank” size=”medium” ]Eclipse: Living in the Shadow of China’s Economic Dominance[/amazon_image]