Yves here. I have to admit that I don’t pay as much attention to the Nobel Prizes as I should. The Swedish Central Bank Knockoff Nobel’s role in promoting elitist orthodoxies has managed to make me sad at the real topic. Here, Jomo offers the best discounts on the latest selection.
By Jomo Kwame Sundaram, former UN Assistant Secretary General for Economic Development. Originally published on Jomo’s website
The new institutional economy (NIE) received another prize called Nobel, which apparently also stated that good institutions and democratic governance ensure growth, development, equality and democracy.
Daron Acemoglu, Simon Johnson, and James Robinson (AJR) are well known for their influential cliometric work. AJR elaborated on the claim of the benefactor Douglass North that land rights were important for growth and development.
But the trio ignored the North’s recent conflicts. For AJR, ‘good institutions’ were replanted by Anglophone European (‘Anglo’) settler colonialism. Although perhaps methodologically novel, their approach to economic history is reductive, distorted and misleading.
NIE caricatures
AJR links land rights as essential to economic inclusion, growth and democracy. They ignore and even ignore the very different economic analyzes of John Stuart Mill, Dadabhai Naoroji, John Hobson and John Maynard Keynes, among other liberals.
Historians and anthropologists are well aware of various claims and rights to economic property, such as cultivated land, eg, usufruct. Even property rights are very different and complex.
The legal creation of ‘intellectual property rights’ grants exclusive rights by denying other claims. However, the Anglo-American NIE view of property rights ignores the history of ideas, the sociology of knowledge, and the history of economics.
A more nuanced understanding of materialism, imperialism and globalization in history is intertwined. AJR does not distinguish between various forms of capital accumulation through trade, debt, resource extraction and various modes of production, including slavery, serfdom, peonage, indeture and wage labour.
John Locke, Wikipedia’s ‘father of liberty’, also wrote the constitutions of the two Carolinas, the slave states of America. AJR’s treatment of culture, beliefs and race is reminiscent of the conflicting civilizations pioneered by Samuel Huntington. Most sociologists and anthropologists would be discouraged.
Colonial and post-colonial studies remain passive, unable to create their own history. Postcolonial empires are treated in the same way and are considered to be unable to effectively deploy investment, technology, industrialization and development policies.
Thorstein Veblen and Karl Polanyi, among others, have long debated the institutions of political economy. But instead of promoting institutional economy, the NIE’s methodological opportunism and simplification were counterproductive.
Another NIE Nobel
In AJR, property rights produced and distributed wealth to Anglo-settler colonies, including US and British rule. Their benefit was allegedly due to ‘inclusive’ economic and political institutions due to Anglo property rights.
Diversification of economic activity was created by successful transplants and the rule of colonial political settlers. More land was available in temperate climates with less population, especially after the indigenous population had dwindled due to genocide, ethnic cleansing and migration.
These were very few people for thousands of years due to poor ‘carrying capacity’. The abundance of land enabled widespread ownership, which seemed necessary to integrate the economy and politics. Thus, the Anglo-settler colonies ‘succeeded’ in establishing such territorial rights in the temperate zone of the world.
Such colonization was highly unlikely in the tropics, which used to support densely populated indigenous populations. Diseases found in tropical areas prevented new settlers from cooler areas. Therefore, the life span of immigrants became both the cause and the effect of institutional transplantation.
The distinction between the ‘good institutions’ of the ‘West’ – including the Anglo-settler colonies – and the ‘bad institutions’ of the ‘Rest’ is central to AJR’s analysis. The low life expectancy of the white settlers and the high morbidity in the tropics were blamed for the inability to establish good institutions.
Anglo-settler privilege
However, the correct interpretation of statistical results is important. Sanjay Reddy offers a very different understanding of AJR’s economic analysis.
The greater success of the Anglo settlers may be due to the nationalistic bias of the colonists in favor of them rather than better institutions. Surprisingly, racist Winston Churchill History of the English-Speaking People celebrates such European Anglophones.
AJR’s evidence, which has been criticized as misleading in some respects, does not necessarily support the idea that institutional quality (as measured by the strengthening of property rights) is important for growth, development and equity.
Reddy notes that international economic conditions in favor of Anglos have stalled growth and development. British Imperial Preference favored such settlers over tropical colonies subject to extractivist exploitation. Settler colonies also received a lot of British investment abroad.
For Reddy, enforcing Anglo-American private property rights was neither necessary nor sufficient to support economic growth. For example, East Asian economies have made reasonable use of other institutional arrangements to encourage participation.
He notes that the authors’ “distorted way of thinking” has confused the “property-centered economy that they favor as ‘inclusive’, as opposed to the resource-oriented ‘worked’ economies.”
Building versus popular rights
AJR’s claim that property rights guarantee an ‘inclusive’ economy is also far from clear. Reddy notes that a Rawlsian property democracy with widespread ownership is very different from a plutocratic oligarchy.
Nor does AJR persuasively explain how property rights guarantee political inclusion. Protected by law, colonists often violently defended their land against ‘hostile’ indigenous peoples, denying them traditional land rights and demanding their own land.
The ‘inclusive’ political concessions in the British Empire were mainly limited to colonial rule. In other colonies, self-government and popular franchises were allowed only under pressure.
In the past the exclusion of native rights and claims allowed such inclusion, especially when the surviving ‘natives’ were no longer considered a threat. Autochthonous traditional rights were curtailed, if not abolished, by settler colonists.
Enshrining land rights also involves injustice and inefficiency. Many such rights activists oppose democracy and other inclusive and inclusive political institutions that have helped reduce conflict.
The Nobel committee supports the adoption of the NIE on property/wealth inequality and uneven development. The leaky AJR also seeks to legitimize the neoliberal project at a time when it is more rejected than ever.
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