I’ve been reading Why Nations Fail, the blog and book. I’ve reached the section on the Soviet Union and the Lele and the Bushong – the discussions linked to above are from Paul Krugman and James Robinson, but are on very similar lines.
The Soviet Union achieved economic growth in the 1920s-1970s by moving resources, very, very violently, out of low productivity agriculture into high productivity industry. From 1930 to 1960 the Soviet Union saw growth rates of 6% a year, probably the fastest sustained rate ever seen at that time.
The Bushong and Lele are tribes that live on opposite banks of the Kasai river. The Bushong are far wealthier, more peaceful and more technologically advanced than the Lele. This was because in the early seventeenth century, on just one side of the Kasai, Shyaam formed the Kuba Kingdom. This was an absolutist and centralised collection of the local warring villages.
What links both is that in the Soviet Union, and on the Bushong side of the Kasai, elites came to power who had the incentive to move resources to high productivity sectors in order to extract more wealth for themselves. Both societies eventually stagnated – the Soviet Union at the level of a poor industrial society, the Bushong at the level of a rich agricultural one – because both lacked institutions that gave citizens incentives to innovate and invent.
Acemoglu and Robinson argue, at length and convincingly, that wealthy capitalist countries are successful because institutions in these countries are politically inclusive, giving everyone a stake in their functioning, and economically inclusive, giving everyone a chance to take whatever employment suits them and experiment to see what innovations they can make work. Only this combination creates sustained economic growth. There are echoes of Eric Jones’ Growth Recurring, which I have discussed before.
I’ve also just read Richard Seymour‘s history of lynching and its importance in understanding the murder of Trayvon Martin. Richard underlines the long tradition of American citizens being deputised into violently upholding America’s racial hegemony. Lynching was just one part of the system of exploitation and repression blacks faced in the US.
The murder of Trayvon Martin should be seen as part of the continuation of this tradition of separating white and black space by violence in the United States. Florida’s law allowing racists to kill black people and avoid arrest if they can convince local law enforcement they were under some sort of threat. These are exclusionary political institutions in action.
The manifestly exclusionary political institutions the US still has – see also the incarceration of blacks in the US – took an even worse form in the past. These exclusionary institutions and extractive economic institutions did not however seem to significantly retard growth or innovation – although even in the US, evidence for Acemoglu and Robinson’s thesis is available, the more repressive south is poorer than the less repressive north.
The 1930s were a tragic decade macroeconomically but were the most technologically progressive decade in history, never had productivity grown so quickly. So, despite manifestly extractive institutions and exclusionary political institutions existing in the US in this period (for women as well as blacks remember) there was an explosion of innovation.
There seems to be a disconnect between incentives being important for innovation at the societal level and incentives being important for promoting innovation at the individual level. I don’t take this as evidence against the importance of institutions which promote innovation, some people had the incentive to innovate, and they pursued it with enthusiasm. The question all this seems to pose is: to what extent were these innovations individual endeavours?
What this makes me think is that many inventors do not deserve to capture the full results of their innovations. Ideas seem to be more “in the air” than the product of individual efforts. Even if inventors don’t deserve their ideas protecting, and even if it doesn’t make much sense to label something someone’s idea because they perfected it, or submitted a patent a few months or years before someone else, it may still make sense to offer them patent protection and so on to achieve the maximum possible economic growth. What policy implications this notion of desert has then is unclear.
However, synthesising Marxist analyses of race and space and the life’s work of Daron Acemoglu, James Robinson and Alexander Field isn’t something you get to do everyday. So although policy prescriptions are lacking, I hope you find the above thought-provoking.