‘Why Nations Fail – The Origins of Power Prosperity and Poverty’ is the title of a book published in 2012 and authored by two professors Daron Acemoglu and James A. Robinson, one from MIT and the other from Harvard university.
The book has been hailed by Steven Levitt, co-author of Freakonomics, as “truly awesome – brilliant in its simplicity and power…which will change the way we think about economic development.” George Akerlof, a Nobel Laureate in Economics, has compared it with Adam Smith’s Wealth of Nations. He is of the view that it too will retain its importance for a long time to come.
What is the main idea of the book? It is, in the words of the authors: “while economic institutions are critical for determining whether a country is poor or prosperous, it is politics and political institutions that determine what economic institutions a country has.” Only inclusive political and economic institutions provide incentives for people to acquire (cutting – edge) skills and innovate. On the other hand “extractive” political and economic institutions exist for the benefit of a small elite which exploits the masses who remain poor and disadvantaged. Extractive systems unlike the inclusive ones, fail to sustain growth and development. They are unable to generate technological change.
The book does not consider geography, culture or what it calls ignorance as the decisive factors in a country’s growth and development. The authors draw extensively on historical examples from 30 countries to prove their points of view.
Although there is hardly any mention of Pakistan in the book, our countries preposterous record can be analysed squarely in the light of the thesis spelt out by it authors. We, thus, could not emerge as a stable and prosperous state. Political power, all along has remained the monopoly of civil and military elite with little participation of the people at large. The people have been treated like “subjects”. With democracy failing to take root, the country kept on degenerating. The concentration of power in the hands of an elite residing in one part of the country created conditions for the other half to break away. The hold of the feudal lords on political institutions during the days of the civilian rule spawned in egalitarian policies and practices inimical to the interest and welfare of the massive. Allocations for education and health remained minimal. Bureaucracy was used to repress the common man. Possibilities of development of the rule of law were remained suppressed. Nepotism and corruption flourished and became rampant. Myopia and selfish use of economic power drastically reduced incentives for investment and growth. After 9/11, a weak and vulnerable dictatorship turned the country into a subservient mercenary entity. Insecurity increased by leaps and bounds and political institutions were reduced to nonentities. Politicians were seen succeeding the military ruler and with their nefarious doings have brought the country to the edge of a precipice. Never was the country so mismanaged, so impoverished and so bereft of law and security. You name any ill or evil and Pakistan has it in abundance. Almost half of the population is utterly illiterate. Except for some elitist schools and universities, the products of our educational institutions are of extremely poor quality. There is widespread food adulteration and sale of spurious medicines. Quacks and fraudsters are flourishing as never before. Extremism has been escalating, non-stop, with dire results. The Police have become an engine of oppression. Terrorism is the order of the day.
Now a few revealing excerpts from the book in question: “History is key, since it is historical processes that, via institutional drift, create the differences that may become consequential during critical junctures. Critical junctures themselves are historical turning points. And the vicious and virtuous circles imply that we have to study history to understand the nature of institutional differences that have been historically structured. Yet our theory does not imply historical determinism – or any other kind of determinism. Western Europe of the fifteenth century was itself an outcome of a contingent process of institutional drift punctuated by critical junctures, and nothing about it was inevitable. Western European powers could not have surged ahead and conquered the world without several historic turning points. These included the specific path that feudalism took, replacing slavery and weakening the power of monarchs on the way. The centuries following the turn of the first millennium in Europe witnesses the development of independent and commercially autonomous cities. The European monarchs were not as threatened by, and consequently did not try to discourage, overseas trade as the Chinese emperors did during the Ming dynasty; and the arrival of the Black Death, which shook up the foundations of the feudal order. If these events had transpired differently, we could be living in a very different world today, one in which Peru might be richer than Western Europe and the United States”. The book also talks about the Failure of Foreign Aid: “Scores of aid workers and their entourages arrived in town with own agendas, and high-level talks began between governments and delegations, from the international community. Billions of dollars were no coming of Afghanistan. But little of it was used for building infrastructure, schools or other public services essential for the development of inclusive institutions or even for restoring law and order. While much of the infrastructure remained in tatters, the first tranche of the money was used to commission and airline to shuttle around UN and other international officials. The next thing needed were drivers and interpreters. So they hired the few English-speaking bureaucrats and the remaining teachers in Afghan schools to chauffeur and chaperone them around, paying them multiples of current Afghan salaries. As the few skilled bureaucrats were shunted into jobs servicing the foreign aid community, the aid flows, rather than building infrastructure in Afghanistan, started by undermining the Afghan state they were supposed to build upon and strengthen… Many studies estimate that only about 10 or at most 20 percent of aid ever reaches its target. There are dozens of ongoing fraud investigations into charges of UN and local officials siphoning off aid money. But most of the waste resulting from foreign aid is not fraud, just incompetence or even worse, simply business as usual for aid organizations”.
Pakistan has failed to make the grade essentially because of its failure to develop inclusive participatory institutions. A corrupt elite – civil and to some extent military – have been responsible for continuation of an extractive system with the result that democracy just could not take root in our benighted country. A pervasive feudal culture has blocked the growth of participatory and pluralistic traditions. Can Imran Khan and now Tahirul Qadri bring about real change leading to conditions identified in the book: Why Nations Fail.

n    The writer is an ex-federal secretary & ambassador, and a freelance political and international relations analyst.
    Email: pacade@brain.net.pk