Why Nations Fail - Daron Acemoglu

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Here is a summary of the praise for Why Nations Fail:

• The book makes an important contribution by showing through historical examples how small institutional developments based on accidental circumstances have had enormous consequences for economic and political development. Key factors highlighted are a society’s openness, willingness to allow creative destruction, and rule of law.

• It convincingly argues that countries escape poverty only when they have appropriate economic institutions like private property and competition. More original is the claim that countries are more likely to develop good institutions when they have an open and pluralistic political system.

• The book reviews how some regimes developed virtuous cycles with inclusive political and economic institutions that led to sustained prosperity, while others remain trapped in vicious cycles with extractive institutions.

• It lays out a theory that economic fate is determined by political institutions, not geography or culture, synthesizing the work of scholars from Smith to North with empirical research.

• The authors reveal that political institutions, not other factors, best explain why some nations are rich and others poor.

• It delivers an important and provocative statement that “institutions matter” in a highly accessible way for specialists and general readers.

• The book provides a compelling framework integrating economics and political history around the centrality of limiting extraction and creating open political systems that share power.

• It demonstrates through extensive historical examples how shifts in political institutions can tilt a country toward economic success or stagnation.

The chapter discusses how some parts of the world have taken different paths to prosperity compared to Britain. It argues that institutions that encourage broader political rights and inclusive economic opportunities tend to create virtuous circles that sustain prosperity. In contrast, institutions dominated by narrow elites that monopolize power often create poverty traps through vicious circles.

The chapter outlines how institutions are the key determinant of why nations fail or succeed today. A few countries have been able to break out of poverty by changing their institutions. Understanding how different historical trajectories led to differences in prosperity and poverty can help explain why most anti-poverty efforts have failed. The roots of discontent in places like Egypt and Tunisia stem from their poverty, which protestors rightly attribute to corrupt regimes that monopolize power for narrow elites rather than serving citizens. Overthrowing oppressive rulers is not enough - fundamental political transformation is needed to alter society’s structure and make prosperity broadly inclusive. Examples will be studied of how such transformations occurred in places like England, France, the US, Japan and Brazil.

This passage provides a summary of the following key points:

• It describes the economies and living conditions on both sides of the border between Nogales, Arizona and Nogales, Sonora. Nogales, Arizona has a higher average household income, more education, better public services and infrastructure, safer communities, and a more stable democratic system of governance.

• It notes that the populations on both sides share a common ethnic and cultural background, eliminating those factors as explanations for the differences.

• It argues that the main reason for the disparities is the different economic and political institutions of the U.S. and Mexico. The institutions in the U.S. create better incentives for investment, education, technology adoption, and public services.

• It then provides historical context on the founding and early settlements of Buenos Aires and Asuncion to illustrate how divergent institutions arose between the colonies in North and South America from the beginning of colonization. The Spanish were primarily interested in extracting resources and coerced labor, leading them to abandon Buenos Aires initially for Asuncion, where they could exploit the sedentary Guaraní people.

• This institutional divergence beginning in the colonial period is argued to still have implications for differences in economic success between countries today.

• Spanish colonization of the Americas began in earnest in the early 1500s, led by Hernán Cortés’ invasion and conquest of Mexico in 1519, Francisco Pizarro’s expedition to Peru in the 1530s, and Pedro de Mendoza’s expedition to the Río de la Plata in 1536.

• Cortés employed an effective strategy of capturing indigenous leaders to control local populations. When he arrived in Tenochtitlan in 1519, he welcomed the Aztec emperor Moctezuma but quickly seized him and demanded tribute.

• Cortés completed the military conquest of the Aztecs by 1521. He then instituted the encomienda system, granting indigenous populations as tribute labor to Spanish colonists.

• The encomienda system, as described by Bartolomé de las Casas, resulted in the cruel exploitation and mistreatment of indigenous peoples who were forced to labor for the benefit of Spanish colonists.

• Pizarro used a similar strategy of deception and violence in his conquest of the Inca empire in Peru in the 1530s. He captured and later killed the Inca emperor Atahualpa, seized Inca cities and treasures, and divided the population into encomiendas.

• The Spanish established systems of control and labor extraction, particularly the encomienda, to exploit indigenous populations and resources for wealth, forming the basis of the colonial system.

This passage summarizes the actions taken by Viceroy Francisco de Toledo in Peru in the late 16th century to address the labor shortage problem and exploit indigenous labor for the benefit of the Spanish crown. The key points are:

• De Toledo extensively surveyed the population and concentrated indigenous people into new towns called “reducciones” to better control the labor force.

• He revived the Inca system of forced labor called the “mita” and greatly expanded its use, defining a huge catchment area covering much of modern Peru and Bolivia. One-seventh of male inhabitants in this area were required to work in the Potosí silver mines.

• De Toledo also consolidated other exploitative systems like the encomienda head tax, repartimiento de mercancias which forced sale of goods, and the trajin system which used indigenous people as forced porters.

• These institutions drastically reduced indigenous living standards and extracted wealth for the Spanish elite, making Latin America very unequal. The legacy still remained centuries later in differences between provinces that were and were not part of the Potosí mita system.

• When they opened their sealed orders, the Virginia Company had nominated John Smith to the ruling council that would govern Jamestown.

• With Newport sailing back to England and Wingfield uncertain, Smith took charge and initiated trading missions to secure food supplies.

• On one mission, Smith was captured by Opechancanough and brought before Chief Powhatan (Wahunsunacock). According to some accounts, Pocahontas intervened to save Smith’s life.

• Smith realized the colonists could not rely on locals for food through trade or coercion, as the Aztecs and Incas provided for the Spanish. He initiated agricultural work.

• The colonists struggled due to lack of supplies and support from England. Smith imposed a rule that those who didn’t work wouldn’t eat.

• The Virginia Company replaced the council with a strict governor system under Gates and Dale, who imposed harsh martial law. This failed to solve problems of supporting the colony.

• It took the Virginia Company over a decade to learn self-sufficiency and incentives for settlers like land grants were needed, rather than exploiting locals or relying on supplies from England. Early approaches copying Spanish models in Mexico/Peru did not work in Virginia.

• John Locke helped formulate the Fundamental Constitutions of Carolina, along with others. This document laid out an elitist, hierarchical society controlled by a landed elite, similar to constitutions in Maryland and Virginia.

• It established a rigid social structure with “leet-men” on bottom who had no political power, and landgraves and caziques forming the aristocracy allocated large tracts of land. Parliament would have limited powers.

• These attempts to impose strict social control failed, as settlers demanded more economic freedom and political rights. They insisted on owning their own land. Similar struggles occurred in Maryland and the Carolinas, reducing the power of proprietors.

• By the 1720s, the 13 colonies had similar governments with governors, assemblies based on male property ownership. This led to the Continental Congress and American independence movement.

• The US Constitution enshrined democratic principles and limited political power, unlike Mexico. Mexico’s elites opposed the more democratic Cádiz Constitution and ensured independence removed provisions threatening their status. This set Mexico on a path of political instability versus long-term stability in the US.

Here is a summary of the key points about Mexico in the first 50 years after independence:

• Political instability led to 52 presidencies between 1824-1867, with many leaders like Santa Ana seizing power through force rather than constitutional means. This undermined property rights and state authority.

• Santa Ana was president 11 times and presided over the loss of Texas and Mexican-American War, costing Mexico large territories.

• Frequent changes in leadership weakened the economy and blocked economic development as incentives and initiatives were stifled.

• Porfirio Díaz came to rule as a military dictator from 1877-1910, expropriating land and granting monopolies to enrich supporters including in banking.

• Mexico had just 42 banks by 1910 compared to over 27,000 in the US, and they charged high rates limiting loans to elites. This concentrated economic power.

• Political chaos and authoritarian rule undermined the rule of law, property rights, and economic incentives in Mexico in contrast to greater stability and democracy in the developing US.

• In the late 18th century in the US, politicians tried to set up state banking monopolies that they could give to friends in exchange for profits, similar to Mexico. But this was unsustainable due to elections and politicians being held accountable by citizens. Banking monopolies were dismantled.

• In contrast, Mexico’s political institutions allowed politicians like Diaz to create monopolies and lend to other politicians with little accountability. This restricted access to finance and favored the powerful.

• As the global economy boomed in the late 19th century, elites in resource-rich countries like Mexico could profit from exporting resources. Diaz modernized Mexico but maintained the unequal institutions that consolidated power for elites.

• When frontier lands opened up, the US allocated them broadly through legislation, while in Latin America they went to the powerful, making inequality worse. Economic growth was limited by exclusion of many.

• Persistent unequal institutions in Mexico and Latin America led to instability, conflict, and repression over the 20th century as groups struggled for power and benefits. Transitions to democracy were gradual.

• Gates’ success with Microsoft faced antitrust challenges in the US, while Slim monopolized the Mexican telecom industry with political connections, benefiting from entry barriers in Mexico’s system.

• Carlos Slim has faced challenges to his Telmex monopoly in Mexico, but regulatory efforts to limit it have not succeeded due to Telmex’s use of “amparos”, legal appeals intended to claim laws do not apply to them. This has helped cement Telmex’s monopoly power.

• Slim achieved success in Mexico through political connections. When venturing to the US, he was not as successful, such as losing a $454M lawsuit brought by COC Services over a contract violation. This showed the importance of respecting US legal rules.

• Large differences exist in prosperity between rich and poor nations worldwide. Understanding the causes of these inequalities through different economic and political institutions is the focus of the book.

• The differences between Nogales, Mexico and Arizona are due to divergent institutions on both sides of the border creating varied incentives. Similar factors explain global prosperity variations between nations.

• Strong political institutions that determine a nation’s economic institutions are ultimately key to driving prosperity or poverty. This theory analyzes how economic and political institutions interact globally to produce unequal outcomes across countries.

• The introduction outlines how political and economic institutions shape societies over the long run and become persistent over time. This persistence helps explain long-standing inequalities between countries and difficulties in reducing poverty.

• It discusses how institutions are determined by politics and power dynamics within societies, not just economics. Different groups may prefer different institutions that benefit them.

• It then provides examples of broad patterns of inequality among countries - wealth concentrated in Western Europe, North America, East Asia while poverty concentrates in sub-Saharan Africa and some other regions. These patterns have been very persistent over decades and centuries.

• It acknowledges some changes like rapid growth in East Asia but notes many reversals too. Overall it questions existing theories for explaining these patterns of inequality and differences in prosperity between nations.

• It discusses the geography hypothesis that wealthier nations are in temperate regions while poorer nations are in tropical regions. However, it argues this theory cannot fully explain the persistence and patterns of global inequality.

So in summary, it outlines persistent global inequality, questions existing theories, and argues political and economic institutions shaped by politics, not just geography, are better for explaining these unequal development outcomes between nations over the long run.

Here is a summary of the key points made regarding the geography hypothesis:

• The geography hypothesis proposes that differences in climate, geography, and disease environment can explain economic disparities between regions.

• However, comparisons of places like Nogales on the Mexico-US border, North/South Korea, and East/West Germany show that political borders, not geography, caused differences between these neighboring regions.

• Historically, some tropical regions like the Aztec and Inca empires were more economically advanced than surrounding temperate zones in North America. So a simple tropical vs temperate dichotomy does not hold.

• Reversals of fortune have occurred where previously prosperous tropical regions like South Asia and China saw wealth surpass by temperate regions like East Asia.

• Tropical diseases are often a result rather than cause of poverty. Improved health comes after economic changes, as seen in England.

• Agricultural productivity is determined more by land ownership structures and incentives than soil quality alone.

• Modern inequality results more from uneven spread of industrialization, not differences in agricultural productivity.

• Jared Diamond’s thesis about availability of domesticable species influencing technology cannot fully explain today’s gaps, like between Spain and Peru after Spanish conquest.

• The adoption of industrial technologies, not geography, explains why North America prospered over South America starting in the Industrial Revolution.

So in summary, while geography influences development, it alone cannot explain major global economic disparities, both historical and current. Political and institutional factors are more decisive according to this assessment.

• The argument put forth by Jared Diamond that geographical factors like orientation of continents explained global inequality is limited and does not fully account for variations within continents.

• While Eurasia’s orientation allowed innovations to spread more easily, it does not explain inequality within Eurasia between places like England and Moldova.

• China and India benefited from abundant plant and animal resources according to Diamond’s theory, but most of the world’s poor today are in those countries.

• Geography also cannot explain reversals of fortune, like Europeans colonizing the Americas and imposing new institutions that changed outcomes. The Middle East used to be economically advanced.

• Cultural factors alone also do not adequately explain global inequality. Aspects of culture often emphasized in explanations like work ethic are actually outcomes of institutions rather than independent causes.

• Examples are given of North and South Korea and areas around the Mexico-US border having similar cultures originally but diverging based on imposed institutions after borders divided them.

• While ancient African civilizations like the Kingdom of Kongo were exposed to technologies like the plow and wheel from Portuguese contact in the 15th century, they failed to adopt them widely. However, the Kongolese rapidly adopted guns to participate in the slave trade market.

• Early economic experiments by Africans, such as developing trade networks and exports to mining areas, were disrupted by European colonialism and post-independence African governments rather than due to African culture.

• In the Congo, locals lacked incentives to adopt superior technology as their property and lives were insecure under the powerful king. Slavery was also profitable for the king compared to increasing agricultural productivity.

• Middle Eastern countries are poor not because of Islamic religion but because of historical factors like Ottoman and European rule that shaped their development in a negative way. Some areas that temporarily broke free, like Egypt under Muhammad Ali, saw economic growth.

• Differences in prosperity cannot be fully explained by factors like religion, national culture, or European descent. Historical institutions and their evolution are more important influences on economic performance.

• The ignorance hypothesis, that inequality exists because we don’t know how to make poor countries rich, is incorrect. Market failures and lack of appropriate institutions, rather than lack of knowledge, are the key barriers to development according to this analysis.

• The ignorance hypothesis contends that poor countries are poor because they have many market failures that their leaders do not understand how to address. Rich countries are rich because they have figured out good policies to eliminate market failures.

• Could ignorance explain world inequality, with African leaders adopting bad policies out of ignorance while Western leaders are better informed? However, ignorance likely explains only a small part of inequality.

• Ghana’s decline after independence under Nkrumah seemed like a case of ignorance, as he pursued inefficient state industries against advice. However, Nkrumah pursued these policies for political support, not out of ignorance.

• Leaders do not pursue bad policies just because they think they are good economics - they do so because it benefits them politically, like buying support. Ignorance fails to explain why some nations adopt exploitative institutions.

• Ghana’s Busia pursued unsustainable policies for political reasons, not ignorance, and was pressured to implement IMF reforms that led to his overthrow. Political constraints, not ignorance, drive policy choices.

• The ignorance hypothesis assumes better advice can engineer prosperity, but political incentives and constraints are the real obstacles. Nations change policies due to political changes, not new economic understanding. China’s reforms followed political revolution, not better advice.

• To really understand inequality, we must study why some societies organize themselves inefficiently and why nations “get it wrong” - which is usually not due to ignorance or culture but due to the self-interested choices of those in power. Politics, not just economics, must be examined.

The passage argues that prosperity depends on solving basic political problems, not just economic ones. It uses the divide between North and South Korea as an example to show how different political and economic institutions led to vastly different economic outcomes despite the two regions originally being similar.

After WWII, Korea was divided at the 38th parallel, with the South administered by the US and the North by the Soviet Union. Though initially similar, the South adopted a market-based economy with private property and investment incentives under authoritarian rule, while the North instituted a rigid command economy with collectivized agriculture and centrally planned industrialization under Kim Il-Sung.

This led the South to experience rapid economic growth as a “Miracle Economy” while the North suffered economic collapse and recurrent famines due to lack of productivity incentives. Over decades, per capita income grew to be over 10 times higher in the South.

The passage argues the divergence was caused by their different political and economic institutions - the extractive command economy of the North provided few rights and incentives compared to the inclusive market institutions of the South, which encouraged investment, trade, education and prosperity.

Inclusive economic institutions require a level playing field in which people can freely exchange and contract with each other. They must also permit easy entry of new businesses and allow people to choose their own careers based on their talents and skills. This fosters greater economic activity, productivity growth and prosperity.

Key aspects of inclusive institutions include secure private property rights for a broad cross-section of society, not just a narrow elite. An unbiased legal system and public services that promote economic activity are also important. Such institutions help harness people’s skills and talents through competitive markets, encourage technological innovation, and foster greater investment in education. Together these can unleash significant economic growth.

In contrast, extractive institutions do not provide this level playing field or opportunities for most of society. Private property may only exist for a small group. Public services and legal systems are used to extract wealth from the masses rather than promote broad-based prosperity. This stifles competition and the ability of people to make full use of their talents. It also hinders technological progress and investment in public goods like education. Overall economic performance tends to suffer under such exclusionary institutions.

• All economic institutions are created by society and shaped by politics. Institutions in places like North Korea were imposed by those who seized political power, while colonial Latin America’s institutions benefited the Spanish conquistadors.

• Politics determines the rules of society. There is a conflict over whether institutions will be inclusive or extractive, benefiting a narrow elite. The outcome depends on the distribution of political power.

• Political institutions are the rules that govern the political system and influence incentives. They determine who holds power and how it can be used. Absolutist institutions concentrate power, while pluralistic institutions distribute it broadly.

• For inclusive economic institutions to exist, political institutions must be both pluralistic and centralized/empower the state. Somalia’s lack of state centralization led to chaos rather than inclusive institutions.

• Extractive political institutions enable elites to create extractive economic institutions that exploit others for their benefit, locking in their political domination. Inclusive political institutions make extractive economic institutions difficult to maintain.

• There is a synergistic feedback between extractive political and economic institutions that tends to reinforce their persistence over time. Inclusive institutions similarly reinforce each other. Combinations of inclusive and extractive institutions are generally unstable.

• The Congo experienced economic decline and mounting poverty under the rule of Mobutu Joseph between 1965-1997. Mobutu created extractive economic institutions that impoverished citizens but greatly enriched himself and the elite.

• It would not have been in Mobutu’s self-interest to establish more inclusive economic institutions that increased national prosperity, as that could reduce his own wealth and power. Extractive rulers often oppose changes that redistribute income and power away from themselves.

• Economic growth through new technologies and industries creates both winners and losers. Those who lose economic and political power, like feudal aristocracies during the Industrial Revolution, often oppose changes that threaten their privileges. This resistance can block wider prosperity.

• Powerful groups oppose reforms that redistribute power in society. Absolutist rulers have little incentive to establish inclusive political institutions that dilute their control. Institutional change toward more inclusive systems usually requires overcoming the resistance of extractive elites.

• Similar forces make political centralization difficult. No group can impose its will through a stronger centralized state without facing opposition from other political powers that would lose influence. Lack of centralization persists through this mutual resistance to changes in the balance of power.

• The long history of poverty in the Congo illustrates how extractive political and economic institutions can become entrenched through these dynamics of opposition to reforms from those benefitting from the status quo.

• The Kingdom of Kongo was ruled by the king in Mbanza (later Sao Salvador). Outlying areas were governed by an elite class of governors.

• The elite’s wealth came from slave plantations around Sao Salvador and taxes extracted from the rest of the country. Slavery was central to the economy. Taxes were arbitrary and excessive.

• Kongolese farmers had no incentive to invest in new technologies like plows, because any increased output would just be expropriated by the king and elite in taxes. Villagers moved away from markets to avoid theft, taxes, and slave traders.

• This extractive economic system blocked prosperity. Property rights were not protected. The government provided no public services and was itself a threat. Slavery deprived people of labor mobility. Trade was controlled by the king.

• The extractive political institutions, which concentrated power in the king and elite, supported this economic system. Reforms would have undermined the elite’s wealth and power.

• This history of extractive institutions helped produce Congo’s continued poverty today, as political power remains narrowly concentrated in sustaining these institutions rather than enabling growth.

• In the past, lucrative yet exploitative economic institutions in places like Caribbean sugar plantations made them very wealthy, as they could export cash crops globally. However, their economies stagnated when they needed to transition to new industries that threatened the power and wealth of the ruling elites.

• The Soviet Union similarly achieved rapid growth in its early decades by inefficiently reallocating resources from agriculture to industry via coercive central planning. However, political institutions remained repressive.

• Some repressive regimes like South Korea under Park still enabled growth by allowing somewhat inclusive economic institutions, as the elites felt secure enough in their power. This led to Korea’s eventual democratic transition.

• Economic growth can occur under repressive political institutions if there is sufficient state coordination and centralization to force resource reallocation, as in the Soviet Union, or if elites permit some inclusive markets, as in South Korea or modern China. However, such growth models face challenges transitioning to broad-based prosperity and democracy. Sustainable growth requires inclusive political and economic institutions.

• The Black Death plague arrived in Europe in 1348 and quickly spread, killing around half the population.

• In England, the massive scarcity of labor empowered peasants to demand better conditions from landlords. This challenged the existing feudal system where peasants were tied to the land.

• The Statute of Laborers tried to stop wages from rising and restrict peasant mobility, but failed over time. Feudal dues and labor services declined. England transitioned to a market economy with greater freedoms.

• In Eastern Europe, landlords consolidated power after the plague and tightened control over peasants. Unpaid labor services increased over time, leading to a “Second Serfdom” where 90% of the rural population were serfs with few rights.

• Small initial differences between Eastern and Western institutional structures, like more consolidated landlord power in the East, were amplified by the critical juncture of the plague. This led to starkly different economic and social trajectories, with the West developing inclusive market economies and the East dominated by extractive institutions.

The development of inclusive political and economic institutions in England enabled its transition to sustained economic growth and the Industrial Revolution. England became unique around the 17th century when it established a pluralistic political system with constraints on monarchical power following the English Civil War and Glorious Revolution of 1688. This opened up political influence to a broad segment of society and laid the foundations for inclusive institutions.

As a consequence, economic institutions also became more inclusive, securing property rights, limiting monopolies, and encouraging trade, investment, and innovation. Figures like James Watt were then able to profit from their inventions and ideas. The inclusive institutions provided incentives and opportunities that drove England’s industrialization in the 18th century.

While other European nations like France and Spain had similar political conflicts in the 15-1600s, small differences in how power was structured, like England’s dependency on parliamentary taxation, mattered greatly. This influenced how inclusive each country’s institutions became as the world economy expanded through colonization and trade. England’s more inclusive development then allowed it to industrialize first and dramatically increase prosperity while less inclusive nations fell behind.

• Elizabeth I and later English monarchs could not monopolize trade with the Americas like the kings of Spain and France did, as other English traders became independently wealthy through Atlantic trade.

• These wealthy English traders resented royal control and demanded changes to restrict the monarch’s power. They played a role in the English Civil War and Glorious Revolution.

• Unlike in England, the opponents of absolutism in Spain and France were less wealthy and numerous, so less likely to prevail against the monarchy.

• This led the divergent political and economic paths between England, France, and Spain in the 17th century. Small initial institutional differences were amplified during critical moments like the rise of Atlantic trade.

• Critical junctures disrupt existing power balances and present opportunities for major change influenced by existing institutions. The Black Death and colonial expansion were two such junctures for Europe.

• Institutional drift over time also contributed to divergence, as random differences accumulate between societies over centuries. This affects how places respond differently to critical junctures.

• The outcomes of critical moments are contingent on balancing of powers and coalition building rather than predetermined. Events in England like the defeat of the Spanish Armada influenced the trajectory towards more inclusive political institutions.

• Many expected the Spanish Armada to easily defeat the English fleet in 1588, solidifying Spanish control of the Atlantic and potentially allowing them to overthrow Queen Elizabeth I.

• However, bad weather and mistakes by the inexperienced Spanish commander (put in charge last minute) led to the Spanish losing their advantage. Against the odds, the English destroyed much of the Spanish fleet.

• This unexpected English victory opened up the Atlantic to more equal English involvement. Without it, the political transformations in post-1688 England that led to distinct pluralistic institutions may never have occurred.

• At the time, no one could foresee how this victory would create a critical juncture leading to major political revolution a century later in England. Revolutions don’t always lead to positive change.

• Colonization and spread of the Industrial Revolution had different effects worldwide depending on pre-existing institutions. This led to divergence between regions like England/Europe and Latin America in terms of inequality.

• The text analyzes how institutions evolved differently in regions like Europe, the Americas, Africa after critical junctures like colonization, affecting their development trajectories. Past institutional differences were amplified over time.

This passage discusses the development of political and economic institutions in Africa, Asia, and the Middle East from the 19th century onward. Some key points:

• Colonial rule in Africa left behind extractive political and economic institutions that hampered development after independence. Few changes were made to modernize institutions, unlike in Botswana.

• Absolutism blocked industrialization in Asia (China, India) in the 19th century. China and India had trade but rigid social hierarchies and strong states limited inclusive institutions.

• Japan underwent political revolution (Meiji Restoration) after Western intervention, establishing more inclusive institutions and enabling rapid growth, unlike China.

• Different responses to critical junctures (e.g. Western contact) in Japan vs. China were influenced by prior institutional drift/differences between the two.

• Ottoman rule in the Middle East established highly extractive political and economic institutions centered around taxation and state control of land that persisted over time.

So in summary, it discusses how colonialism and past political systems influenced the development of inclusive or extractive institutions in these regions, with implications for economic development. Institutional path dependence and responses to critical moments also played a role.

• The Soviet Union spearheaded rapid economic growth under extractive institutions through the authority and incentives provided by the centralized state. However, this type of growth was not sustainable and ultimately collapsed.

• After the Bolshevik revolution in 1917, the Soviet Union emerged independent from tsarist Russia. Steffens visited the new Soviet regime and was impressed by its “evolutionary plan” to use a “dictatorship” and “scientific rearrangement” of the economy to achieve economic and then political democracy.

• When Steffens returned, he told Baruch that he had “been over into the future, and it works.” He believed the Soviet Union showed the potential of the communist system. Many Westerners held this view through the early 1980s, believing the Soviet economy was working.

• Under Stalin’s rule starting in 1927, the Soviet Union rapidly industrialized and collectivized agriculture through central planning. This drove rapid initial growth but was not sustainable long-term due to the limitations of operating under an extractive system. The growth ultimately collapsed along with the Soviet Union in the late 1980s-early 1990s.

• Stalin rapidly industrialized the Soviet Union through the State Planning Committee (Gosplan) and five-year plans starting in 1928. Heavy industry was prioritized.

• Agriculture was collectivized, eliminating private land ownership. This allowed Stalin to extract agricultural output to feed industrial workers. However, it hurt agricultural production and led to widespread famine that killed millions.

• Despite inefficiencies, Soviet industrial growth rates reached 6% annually, one of the fastest in history. This was due to reallocating resources from inefficient peasant agriculture to industry.

• Growth slowed by the 1970s as extractive institutions could not sustain innovation long-term. The Soviet system hit roadblocks without property rights and economic incentives.

• Gosplan’s plans had little real impact. Stalin changed decisions frequently and targeted individuals based on political loyalty rather than economic results. Accurate data like the 1937 census was suppressed when it contradicted Stalin’s desired numbers.

• Bonus systems introduced some monetary incentives but also discouraged innovation that could jeopardize output targets and future bonuses. The system prioritized short-term underachievement over expanding production long-term.

• The Soviet Union was able to generate rapid growth under its extractive economic institutions by building a powerful centralized state that allocated resources towards industry. However, this growth was not sustainable and eventually slowed down and collapsed.

• The centralized planning system struggled with creating proper incentives for innovation. Bonuses and targets often led to perverse outcomes as workers and factories focused on meeting quotas, not long-term innovation. Attempts to reform incentives still failed because prices were controlled by the state, not market forces.

• Coercion and punishment were also used extensively to motivate workers, but this did not compensate for the lack of true incentives. Around 36 million Soviet citizens faced criminal charges related to labor between 1940-1955.

• The fundamental problem was that the political and economic system did not allow individuals to use their talents and ideas freely. As long as political power remained with the Communist Party and extractive institutions, sustainable growth driven by technological change was impossible.

• When Gorbachev began reforming economic institutions in the late 1980s, it undermined the power of the Communist Party and ultimately led to the dissolution of the Soviet Union. True reform was not possible without giving up the Party’s political control.

• The author argues that King Shyaam’s establishment of the centralized Kuba Kingdom and state institutions in the lands of the Bushong led to greater economic prosperity there compared to the Lele.

• Shyaam created political and legal structures like a bureaucracy, courts, and police to extract taxes and govern the people. This introduced law and order.

• To generate wealth to extract, Shyaam encouraged agriculture by promoting new high-yield crops from the Americas, mixed farming, and lowering the marriage age to boost the farm labor force. This reorganized and increased production.

• While the institutions were extractive and prosperity was limited, some economic growth was achieved through the centralized state and taxation. This contrasted with the lack of political unity or law among the Lele.

• The author argues contingency played a role in why the Bushong had a political revolution under Shyaam while the Lele did not, though both peoples were similar originally. The revolution was not determined by geography but was an institutional innovation.

So in summary, the key point is that King Shyaam centralized political power in the Kuba Kingdom, implemented institutions like taxation and rules of law, and reorganized agriculture, leading to greater economic prosperity for the Bushong compared to the decentralized, disordered society of the Lele.

• The Natufians were a group of hunter-gatherers living in the Levant region around 13,000-11,500 years ago during a warm climate period known as the Long Summer.

• Archaeological evidence shows the Natufians developing more sedentary, settled populations and signs of social hierarchy and inequality, such as elaborate graves and houses of chiefs, even before transitioning to farming.

• This suggests institutional changes driving the move to sedentism, not just availability of domesticatable plants/animals as traditionally argued. Political elites may have centralized power and benefitted from trade networks.

• Sedentism reinforced these institutional changes and paved the way for the eventual Neolithic Revolution of farming. However, adoption of farming was not guaranteed or uniform in timing/form across regions depending on local institutions.

• While innovations launched population and village expansion, Natufian society and later the region generally did not see sustained prosperity, possibly due to extractive institutions concentrating power with elites rather than promoting long-term growth.

So in summary, the Natufians provide evidence that institutional changes preceded and facilitated the transitions to sedentism and agriculture, driven more by political centralization than environmental factors alone. However, this did not guarantee enduring prosperity for their homelands.

• The Maya civilization in southern Mexico and Central America arose around 500 BC and established city-states. This early period failed by the 1st century AD.

• A new political model emerged around AD 250-900 known as the Classic Era, which saw the full flowering of Maya culture. However, this civilization would also collapse over the next 600 years before the arrival of the Spanish.

• The Maya city-states were never unified but some dominated others. They developed a writing system, sophisticated calendar, and skilled construction techniques.

• Evidence from dated monuments and king lists at Copán show a peak around AD 750-800, followed by a decline. Population estimates for Copán rose to a peak of 28,000 before falling again.

• The Maya economy was based on agriculture, trade, and extractive institutions that centralized power under divine lords (k’uhul ajaw). This enabled economic growth and monument construction but little technological change.

• Wealth created conflicts as the elites fought frequent wars over power, subjugating smaller states. This political instability ultimately led to the collapse of Maya societies by the 10th-11th centuries.

• Venice was strategically located on islands along the northern Adriatic Sea and gained independence in 810 AD.

• It prospered economically starting in the 11th century by taking advantage of increasing trade between East and West Europe as stability returned after the fall of Rome.

• Venice’s population grew significantly, reaching 45,000 in 1050 and 110,000 by 1330, larger than other major cities at the time like Paris and London.

• A key reason for Venice’s economic expansion was innovative contractual institutions like the commenda, a joint stock company for trading voyages. This increased inclusiveness.

• The commenda allowed upward social mobility for young entrepreneurs by letting them travel with cargo in exchange for a share of profits. This fostered more widespread participation in trade.

• Over time however, Venice’s political and economic institutions became less inclusive. Power was increasingly concentrated among wealthy elites, contributing to stagnation and decline relative to other regions.

• The passage discusses the evolution of political and economic institutions in Venice over time. Initially, Venice had very inclusive institutions that allowed for new families and names to join the elite ranks at high rates.

• However, over time the political system became dominated by core powerful families. While the doge was powerful, reforms limited that power and required election and approval from councils.

• Economic expansion created pressure for further political changes. New councils and rules constrained the doge’s power and gave political power to the Great Council.

• Legal, financial and economic institutions innovated. But the growing new elites challenged existing elites’ political and economic power, creating tensions.

• In the late 1200s, rules changed to favor existing elite families and block new members. This “closure” or “serrata” sealed political power within elite incumbents and their families.

• Economic institutions also became more extractive, banning new contracts, taxing trades, and monopolizing industries. This marked Venice’s shift from inclusive to extractive institutions and the beginning of its economic decline.

• Britain was marginally important to the Roman Empire compared to other regions like Western Europe, North Africa, the Balkans, Constantinople, and the Middle East. When the Western Roman Empire fell in the 5th century AD, Britain suffered the greatest decline.

• However, the political revolutions that led to the Industrial Revolution later took place in the British Isles, not other former Roman territories.

• Rome’s legacy is important for understanding the path to the Industrial Revolution in several ways. Rome, like Venice, had early institutional innovations but these became more extractive over time under the Empire.

• The fall of the Western Roman Empire led to critical changes across Western Europe like feudalism, the decline of slavery, the rise of independent cities, and the weakening of royal/aristocratic power. These changes laid the foundation for the impacts of the Black Death and later Atlantic trade.

• Many other parts of the world did not experience similar institutional changes after Rome’s fall and thus diverged developmentally from Western Europe. Archaeological and scientific evidence like shipwrecks and ice cores show economic growth under the Roman Republic but also its unsustainability under increasingly extractive imperial institutions.

• The Roman Republic had partially inclusive and partially extractive institutions. Roman citizens had political and economic rights, but slavery was widespread, benefiting the wealthy senatorial class who dominated politics and the economy.

• Land distribution became very unequal over time, with the large estates of senators steadily absorbing the plots of small landowning citizen-soldiers who fought in wars. This contributed to rising inequality and poverty.

• Tiberius Gracchus observed the hardship of soldiers’ families while traveling and proposed land reform as tribune in 133 BC. This threatened the senatorial class and was blocked, leading to clashes where Gracchus was killed.

• The issues of land distribution and inequality remained sources of tension and fueled support for populists like Caesar who challenged senatorial power. This transitioned Rome from a republic to an empire under Augustus in the 1st century BC.

• By the 5th century AD, the western Roman Empire had declined economically and militarily. Powerful generals like Aetius fought constant civil wars and barbarian peoples that once served Rome now dominated parts of its territory, illustrating the empire’s political and military deterioration from its earlier founding period.

• Geiseric, the king of the Vandals, married Valentinian III’s young daughter in order to form an alliance. However, he annulled his previous marriage by mutilating his wife.

• Geiseric’s child bride was kept in Italy and the marriage was never consummated due to her young age.

• She later married Petronius Maximus, a powerful general who orchestrated the murder of Aetius. Maximus then declared himself Emperor.

• Geiseric later sacked Rome in a major offensive against Italy. His Vandal kingdom had become a formidable threat to the Western Roman Empire by this time.

• The decline of Rome had deep political and economic causes dating back to the transition from Republic to Empire. Augustus centralized power which reduced political representation and accountability over time.

• Instability, inequality, and excessive taxation undermined property rights and economic growth. Political violence and civil wars became more common as factions vied for control of the imperial position.

• Technological progress stagnated under the extractive imperial system, which feared the economic effects of innovation and creative destruction. The state largely controlled new technologies but had little interest in their development.

• By the 5th century, the barbarian invasions were able to take advantage of Rome’s weakened political, economic, and military state after centuries of internal decline and instability under the late imperial system.

• Vespasian, the Roman emperor, rejected two inventions that could have reduced costs - an unbreakable glass and a device for transporting stone columns more efficiently. He did so out of concern for how it would impact his ability to “feed the populace” and keep the Roman plebeians happy through jobs and entertainment.

• Roman slavery discouraged innovation as slaves did the productive work but had no incentive to improve efficiency. Free citizens did not need to work and innovation typically arises from new people with new ideas.

• Correspondence from Vindolanda fort in Roman Britain reveals an advanced monetary economy, road infrastructure, taxation system, and literacy. But this declined after Romans withdrew in the 5th century - money disappeared, urban areas were abandoned, roads overgrown, and literacy declined substantially.

• Technological progress originated in the Middle East and took thousands of years to reach Britain. Rome also brought advances but these were lost after 411. Britain reverted to poverty and political chaos until inclusive institutions emerged much later before the Industrial Revolution.

• The fall of the Western Roman Empire impacted Europe through new states, invasions, and the rise of Islam, leading to a decentralized feudal system relying on obligations rather than strong central states. This common experience diverged from paths in other parts of the world.

• Feudalism emerged across Europe after the fall of the Western Roman Empire. Serfdom, where peasants were bound to the land, formed the basis of the extractive feudal system.

• However, feudalism also led to some consequential later developments. The availability of serfs made slavery unnecessary in Europe. Independent cities specialized in production and trade were able to flourish in the power vacuum.

• Ethiopia also developed a feudal-like system called gult after declining like the Roman Empire. Gult involved land grants from the emperor in exchange for services, especially military. Gult holders extracted a high portion of peasants’ outputs, more than European feudalism.

• The Black Death weakened feudalism in Western Europe. This set the stage for a more pluralistic society without serfdom or slavery.

• While feudal institutions emerged in Ethiopia similarly to Europe, its institutions remained largely unchallenged and absolutist due to isolation afterward. Africa generally did not develop serfdom but continued slavery.

• Early civilizations like Rome, Venice, and pre-Columbian America experienced economic growth spurts but reverted to extractive institutions, preventing sustained growth. Their legacies did not directly lead to later inclusive institutions in places like England.

• In the 17th century, England was experiencing significant economic and political changes driven by commercially-minded farmers and merchants demanding more rights and power.

• In 1583, William Lee invented the stocking frame knitting machine, which had the potential to greatly increase textile production efficiency. However, both Queen Elizabeth I and her successor King James I refused to grant Lee a patent, fearing it would displace many hand knitters and cause unemployment and political instability.

• Lee’s invention illustrates the idea of “creative destruction” - technological innovation brings prosperity but also disrupts the existing economic order and privileges, threatening certain groups. Sustained growth requires overcoming resistance to change from those with power and status to lose.

• Prior to 17th century England, most societies had “extractive institutions” that did not permit or encourage creative destruction and sustained growth. Political conflict over institutions and resources was pervasive throughout history.

• In England, conflict constrained royal power over time through documents like the Magna Carta and establishment of Parliament, though comprised only of elites initially. This set the stage for more pluralistic development compared to places like Rome and Venice where elites consolidated power.

• Under Henry VIII and Henry VII, England saw the centralization of state institutions as power consolidated away from local elites and the Catholic Church. This centralization enabled the possibility of more inclusive political institutions.

• However, it also increased demands from groups like Parliament and local elites to have a say in how centralized power was used, to act as a counterbalance to the monarch. This began the process toward pluralism.

• Economic and political institutions remained extractive under the Tudors and early Stuarts. James I and Charles I sought to strengthen absolutism and reduce Parliament’s influence. Their granting of monopolies was highly damaging and extractive.

• Parliament fought back, passing the Statute of Monopolies in 1623. Conflicts continued and Charles ruled without Parliament 1629-1640, intensifying tensions. His extractive policies led to conflicts and eventually civil war in 1642 between Royalists and Parliamentarians over political and economic institutions.

• The war resulted in the abolition of the monarchy, though this did not lead to inclusive institutions. Beginning in 1660 the restored monarchy sought absolutism again, leading to further conflicts, until William and Mary were invited to rule as constitutional monarchs in 1688.

After William and Mary assumed the throne in the Glorious Revolution of 1688, England established itself as a constitutional monarchy with Parliament firmly in control. While William and Mary were still monarchs, their powers were limited by institutions like the Declaration of Rights.

Some key points of the new post-1688 constitutional system included:

• Parliament could remove monarchs and determine succession. This limited monarchical power.
• Monarchs could no longer suspend laws or tax without parliamentary consent.
• A standing army required parliamentary approval.
• Elections were to be “free” but this term was vague.
• Parliaments were to be held regularly but no enforcement mechanism was defined.

This new system firmly established Parliament’s authority over the monarchy. It also led to a more pluralistic political system as the interests of Parliamentarians differed from the Stuart kings. Petitioning allowed broader public influence over policy decisions. This is seen in the abolition of monopolies like the Royal African Company after many petitions against it. Parliament also took steps to strengthen property rights and promote industry rather than impede it as the Stuart kings had done. Overall, the Glorious Revolution marked the triumph of parliamentary government over absolutism in England.

• Parliamentarians who opposed King James were invested in nascent manufacturing enterprises like textiles.

• Parliament passed legislation allowing the consolidation and elimination of archaic forms of land property rights, permitting more flexibility.

• Another priority was financial reform. The Bank of England was created in 1694 as a source of funds for industry, cementing financial expansion. This led to a “financial revolution” with more available loans.

• The Glorious Revolution transformed English political institutions to be more pluralistic and laid foundations for inclusive economic institutions.

• It increased the state’s capability and political centralization. State budgets grew to around 10% of national income, funded by expanded taxes like excise taxes.

• The excise tax bureaucracy grew significantly to enforce tax collection throughout the country. This showed an expanded and merit-based public administration.

• These institutional changes unleashed innovation during the Industrial Revolution, especially mechanizing textiles and factories for manufactured goods.

• After the 1688 Glorious Revolution, Parliament began lifting restrictions on trade and competition that had previously benefiting monopoly groups like the East India Company. This created opportunities for new industries.

• Domestic textile manufacturers like wool producers had previously lobbied for bans on importing cheaper cotton and silk textiles from Asia. After 1688 they intensified these efforts, forming coalitions to restrict imports and wear of foreign textiles.

• In 1701, Parliament passed the Calico Act banning the wearing of Asian silks and calicoes in England. This protected the wool industry but still allowed cotton finishing in England.

• The wool industry then tried restricting linen production but faced opposition from new industrial centers producing mixed linen-cotton fustian cloth. The 1736 Manchester Act allowed this, demonstrating political limits to protectionism.

• Technological innovation accelerated after 1760 as improved property rights, infrastructure, finance access, and trade protections from Acts like the Navigation Acts encouraged the Industrial Revolution. James Watt’s steam engine innovations built on earlier work.

• The story of inventor Dionysius Papin, whose early steamboat was destroyed by trade guilds in Germany, showed how extractive institutions previously suppressed creative destruction and innovation.

• In the 1780s, Henry Cort introduced new ironmaking techniques like dealing with impurities that improved the quality of wrought iron which was critical for machine parts, nails, tools.

• Abraham Darby pioneered using coal instead of charcoal for smelting iron in 1709. John Smeaton adapted water power for blowing cylinders in making coke in 1762.

• In the mid-1700s, there was significant acceleration of innovation, especially in textiles. Major mechanical spinning innovations included Lewis Paul’s rollers in 1738, Arkwright’s water frame in 1769, and Hargreaves’ spinning jenny in 1764 improved by Samuel Crompton’s mule. This greatly increased productivity of spinning cotton.

• John Kay’s flying shuttle in 1733 helped mechanize weaving, leading to Edmund Cartwright’s power loom in 1785. The English textile industry drove the Industrial Revolution and doubled exports 1780-1800.

• In transportation, canals developed after 1770 led by innovators like James Brindley with no prior experience. John McAdam innovated roads and George Stephenson innovated steam trains.

• New industrialists emerged like those in cotton textiles, often with no prior manufacturing experience, driving creative destruction and new political alignments.

• The Peterloo Massacre in 1819 spurred political reforms like the 1832 Reform Act enfranchising new industrial cities and interests. This helped repeal the Corn Laws opposing manufacturers in 1846.

• The Corn Laws were repealed in 1846, demonstrating that creative destruction redistributes not just income but also political power over time. Changes in political power further redistribute income.

• England was uniquely positioned for the Industrial Revolution because of its inclusive political and economic institutions established after the Glorious Revolution of 1688. This strengthened property rights, financial markets, weakened monopolies and barriers to industry.

• The Glorious Revolution made the political system open and responsive to economic needs, giving inventors like James Watt opportunities to develop successfully. However, successful inventors also wanted to block competition.

• England developed inclusive institutions in the 17th century due to a history of pluralistic drift since feudal times, interacting with critical junctures like the Black Death and Atlantic trade opportunities.

• Atlantic trade strengthened merchant interests who opposed Stuart absolutism. A diverse coalition defeated absolutism, establishing pluralism instead of another narrow regime. This broad coalition demanded inclusive political institutions with checks on any single group’s power.

• Contingency and this broad coalition were decisive in England establishing pluralism rather than another absolutist regime after overthrowing the Stuarts in 1688. This laid the foundations for its inclusive economic institutions and the Industrial Revolution.

• Johannes Gutenberg invented the printing press with movable type in the 15th century, allowing books to be mass produced more cheaply and quickly than by hand copying. This increased literacy and availability of books.

• The printing press spread rapidly in Western Europe in the late 15th century, reaching major cities like Rome, Venice, Florence, Milan, Turin, London, and Oxford.

• However, the Ottoman Empire banned printing in Arabic for Muslims from 1485-1727 due to fears it would spread ideas and undermine political and religious authorities who controlled knowledge.

• The first Ottoman printing press was allowed in 1727 but was tightly regulated by religious authorities. Only a small number of books were printed before production declined. Literacy remained very low in the Ottoman Empire compared to Europe.

• Resistance to new technologies like printing stems from fear of undermining existing power structures and status quos. Absolutist regimes especially opposed changes that could weaken their control. This held back literacy, education, and economic advancement in the Ottoman Empire.

The passage discusses how Spain missed out on the economic opportunities of the Industrial Revolution due to its absolutist political institutions and extractive economic policies, in contrast to England.

It notes that absolutism weakened parliamentary institutions like the Cortes in Spain, while they grew stronger in England. This allowed the Spanish monarchy to consolidate power and centralize control over the economy through monopolies and trade restrictions.

Wealth from colonial silver mining further strengthened absolutism. However, insecure property rights, tax farming, and the sale of political offices undermined state capacity and economic development.

By contrast, the defeat of absolutism in England led to inclusive political institutions and greater economic opportunities that spurred growth. This small difference in political trajectories between the two countries had major long-term consequences - England industrialized while Spain experienced economic decline in the 17th century as institutions remained extractive under continued absolutist rule.

• During the Industrial Revolution, Spain did not industrialize much because its economy had already declined significantly by that point. There was little incentive or need for industrialization.

• Countries with absolutist governments like Spain, Russia, and Austria-Hungary were less likely to benefit from industrialization without political changes like in England post-1688.

• In Austria-Hungary, the Habsburg rulers actively blocked industrialization efforts. Rulers like Francis I were diehard absolutists who opposed any changes, including new technologies.

• The Austrian economy was dominated by feudalism, serfdom, guilds, monopolies, and heavy trade restrictions, which stifled innovation and the emergence of markets.

• Francis I explicitly opposed industry and saw it as a threat, banning new factories. He also blocked railway construction, fearing it could spread revolution. Absolute political control was prioritized over economic development.

• Overall, the extractive political and economic institutions in Austria-Hungary under Habsburg rule prevented industrialization from taking hold in the late 18th-early 19th centuries unlike in places with more inclusive institutions like England.

• George Stephenson’s “The Rocket” locomotive demonstrated the potential of steam power for transportation, encouraging Nathan Mayer Rothschild to see profit opportunities in railway development in Austria.

• However, Emperor Francis I of Austria opposed industrialization and railways due to concerns about the “creative destruction” it would cause to the traditional feudal order he ruled over. He wanted to protect the power and privileges of the landed elites who supported him.

• Francis feared industrialization would undermine the stability of Austria’s extractive political and economic institutions by drawing labor away from rural farms into cities. He blocked industry and railroads to maintain the status quo.

• Russia under Tsar Nicholas I had a similar opposition to railroads and industry due to fears it would weaken absolutism and empower workers. Serfdom kept most of the population in poverty and subject to lords.

• Politicians like Count Kankrin opposed developing a banking system or infrastructure to support industry, instead focusing on maintaining the power of the landowning aristocracy. Railroads were very limited in both Austria-Hungary and Russia up until the mid-19th century due to this opposition.

• Absolutism and extractive institutions more broadly held back industrialization across Europe and Asia, including in China and the Ottoman Empire, during the critical period of the Industrial Revolution. Centralized states focused on maintaining the status quo rather than enabling economic progress.

• The passage discusses absolutism in China and Ethiopia/Abyssinia as examples of extractive political and economic institutions.

• In China, under the Song, Ming, and Qing dynasties, the government tightly controlled the economy and opposed change/innovation that could be destabilizing. International trade was state-monopolized. This stunted economic development.

• In Ethiopia/Abyssinia, the monarch (Prester John) claimed absolute divine right to rule. Property rights were extremely insecure as lands were arbitrarily reassigned by the emperor. This discouraged investment in agriculture.

• Accounts from the 15th-17th centuries describe Ethiopia’s political system and land tenure as purely absolutist, with no checks on the emperor’s power and total control over land allocation. This made the population highly dependent on the monarch.

• Absolutism was even more intense in Ethiopia compared to Europe, as it faced fewer challenges to the political status quo. This led to more extractive economic institutions that hindered development.

• Ethiopia was able to maintain independence longer than most African countries due to its strong absolutist regimes. However, absolutism also held the country back from modernizing and industrializing like European nations did.

• The intensive absolutism centralized power with the monarch and upheld extractive economic institutions that impoverished citizens. This persisted until the 1970s.

• Somalia lacked strong central political institutions and was dominated by clan families organized along pastoralist lines. There was no overarching state, just informal clan laws and dispute resolution through blood wealth payments.

• This decentralized political environment prevented the emergence of a modern state and inclusive economic institutions. Somalia remained locked in conflicts over resources between clan groups with no formal legal system or police. This lack of centralization impeded industrialization or development when colonial powers started advancing in Africa.

The passage describes a conflict between two Somali clans, the Tol Ja’lo and the Yuunis. Blood wealth (diya) was accepted to settle a killing of a Yuunis member by someone from the Tol Ja’lo. However, at the handing over ceremony of the blood wealth payment, a Tol Ja’lo member mistakenly killed a Yuunis member, sparking warfare between the two clans. Over the next year, 39 people were killed before elders brokered a deal.

However, the payment of blood wealth did not necessarily stop conflict, as tensions would die down and then flare up again. Political power in Somali society was widely dispersed without any centralized authority to enforce order or property rights. This lack of centralization made it impossible for Somalia to benefit from the Industrial Revolution, as there were no incentives to invest in or adopt new technologies.

The complex politics of Somalia had implications for economic progress. Like other African societies, Somalis did not adopt technologies like wheeled transport or plow agriculture. This may have been due to a lack of incentives created by economic institutions, as was the case in the Kingdom of Kongo.

The example of the Kingdom of Taqali in Sudan is described, where the people and elites resisted the introduction of writing for fear it would strengthen the state’s control over resources and taxation. Both the ruled and rulers saw benefits in oral tradition over written rules. This shows how politics could inhibit the adoption of basic technologies.

The lack of political centralization in Somali society meant there were no incentives to invest in productivity-enhancing technologies. As a result, Somalia remained economically backward as industrialization transformed other parts of the world.

• The Moluccan Archipelago (in modern Indonesia) was historically the sole producer of valuable spices like cloves, mace and nutmeg, trading them with other Southeast Asian kingdoms and countries in India, China, and Arabia.

• The Portuguese established dominance over the spice trade after capturing the strategic port of Melaka in 1511. However, they failed to gain a monopoly.

• The Dutch then took aggressive action through the Dutch East India Company to fully control the spice trade, eliminating competitors. They forced treaties in the northern Moluccas islands.

• In Ambon island, the Dutch intensified existing systems of tribute and forced labor to extract more cloves.

• The Banda Islands had no centralized ruler, so the Dutch governor Jan Pieterszoon Coen massacred the native population of around 15,000 people to gain full control.

• The islands were then divided into plantations, given to Dutch owners who used slave labor to produce spices solely for the Dutch East India Company, establishing an exploitative economic system.

• In summary, the Dutch ruthlessly eliminated competition and established coercive extractive institutions through violence and monopoly controls to gain dominance over the lucrative Southeast Asian spice trade.

The spread of the Dutch East India Company’s colonial strategy in Southeast Asia had profound negative implications for economic and political development in the region. As the Dutch monopolized spice trade routes and crushed local states, many polities abandoned export crop production and international trade out of fear of Dutch aggression. This halted the commercial expansion and institutional changes that had been taking place. States turned inward and became more autocratic to avoid confronting the Dutch. The nascent industrialization and economic growth seen elsewhere in the world at this time did not occur in Southeast Asia due to Dutch colonial policies. This left the region unprepared for the major transformations of the industrial era. Similarly, the rise of slavery and slave trading in Africa due to European demand fundamentally disrupted politics and institutions across much of the continent for centuries. Vast numbers of people were enslaved and exported, and wars fueled by European weapons proliferated as capturing slaves became a primary purpose of states and legal systems. This retarded the development of centralized governance and prevented Africa from experiencing economic growth contemporaneous with Europe. In both regions, coercive European colonial systems replaced developing indigenous institutions and stunted long-term development.

• In some parts of Africa, the rise of the slave trade led to the emergence of powerful states whose main purpose was raiding and enslaving people. The Kingdom of Kongo was one of the first African states transformed into a slaving state.

• Other prominent slaving states arose in West Africa like Oyo in Nigeria, Dahomey in Benin, and Asante in Ghana (present-day Ghana). The expansion of the Oyo state in the 17th century was directly related to the increase in slave exports to the coast. Oyo established a monopoly on the slave trade along the so-called “Slave Coast” through conquest and warfare.

• A similar connection occurred with the Asante state expanding in the 18th century in present-day Ghana. Asante defeated other states and captured many people to export as slaves during the “Akan Wars.” Over 375,000 slaves exported from this region between 1700-1750 were captives from these wars.

• The massive slave exports had huge demographic impacts, with populations in affected areas estimated to be half of what they would have been without the slave trade due to exports and deaths from warfare to capture slaves.

• When Britain abolished the slave trade in 1807, it disrupted African states organized around slaving but did not end slavery, which was still used within Africa to produce exports like palm oil through coerced plantation labor. Slavery in Africa expanded in the 19th century rather than contracting.

• According to Lewis, labor in traditional sectors like agriculture was used inefficiently and could be reallocated to modern sectors like industry without reducing output in the traditional sectors. This formed the basis of his ‘dual economy’ model of development.

• In Lewis’s model, the problem of development was moving people and resources from traditional to modern sectors through industrialization and urbanization. This guided development thinking for generations.

• South Africa exemplified a dual economy, with a backward traditional sector and a prosperous modern sector separated by borders and institutions. The area east of the Kei River had private property, markets, and industry while the west had communal land and traditional chiefs.

• Lewis was right that dual economies existed, but the divide in South Africa was recently created by white elites to produce cheap labor and reduce black economic competition, not a natural outcome. It showed how underdevelopment can be deliberately imposed.

• In the 19th century, mineral wealth discoveries and the expansion of European settlement in South Africa disrupted traditional Xhosa societies and generated new economic opportunities in agriculture and trade that some African farmers quickly took advantage of. Private land ownership weakened chiefs’ power.

• In the late 19th century, African farmers in South Africa were experiencing economic prosperity and dynamism as they grew crops for trade and donated money to relief funds in England. This threatened the power and wealth of traditional chiefs.

• The authority of chiefs began eroding as people favored individual land ownership and new farming practices. However, chiefs resisted these changes that undermined their influence.

• In the early 20th century, the South African government took measures to destroy this rural African prosperity. The 1913 Natives Land Act allocated just 13% of land to Africans, confining them to reserves/homelands and clearing the rest for white farmers.

• This displaced many African farmers and created a pool of cheap labor for mines. It impoverished Africans by taking away their land and economic incentives. Living standards declined sharply in the homelands.

• The dual economy of a modern white sector and backward African sector was not natural or inevitable, but deliberately created by colonial policies like the Land Act to control land, labor and undermine African autonomy and development. This had long-lasting negative impacts.

• Under apartheid in South Africa, black Africans faced extreme economic restrictions and discrimination. They were paid very low wages, barred from skilled jobs, banned from owning property or starting businesses in the European economy, and denied opportunities for education.

• The apartheid government intentionally kept black Africans uneducated and in unskilled labor to supply cheap labor for mines and white-owned agriculture. Getting an education would allow them to compete with white workers.

• Hendrik Verwoerd, an architect of apartheid, made it clear that black South Africans were meant to serve their own communities and had no place in the European community above unskilled labor levels.

• South Africa had a dual economy by design, not inevitable development. The backward traditional sector exploiting black labor enabled profits and high wages for whites in the modern sector. Black South Africans were purposefully trapped in poverty.

• Both the economic and political institutions of apartheid South Africa were highly extractive, concentrating power and wealth among the white minority at the expense of the black majority population.

• The dual economy did not end due to natural economic development as theorized by Arthur Lewis. It took sustained protests and uprising by black South Africans organizing against the oppressive apartheid regime to eventually bring it down in 1994.

• In the late 18th century, Britain started transporting convicted criminals to penal colonies as a way to deal with them. They first sent convicts to the American colonies but had to find a new destination after the US gained independence in 1783.

• Botany Bay (now Sydney) in Australia was selected as the new penal colony due to its temperate climate and remoteness. The first fleet of convicts arrived in 1788, establishing the colony of New South Wales.

• Among the convicts were Henry and Susannah Cable, who had been promised goods for their journey but the ship’s captain Duncan Sinclair claimed the goods were lost. Despite being convicts with no rights, they sued Sinclair in Australia’s first civil case in 1790 and won.

• This showed the Australian legal system would diverge from strict British law. Convicts were initially forced laborers for soldiers and guards but this system did not work well. They were eventually given incentives like pay and property rights to be more productive.

• While initially just a penal colony, transportation of convicts continued into the 19th century and helped establish the population in Australia, which diverged from Britain in its political and economic institutions over time.

• In early colonial New South Wales, guards set up monopolies to sell goods like rum to convicts, with rum being the most lucrative.

• In 1806, William Bligh was appointed governor. He was a strict disciplinarian who challenged the monopolies, especially the rum monopoly.

• This led to a rebellion known as the Rum Rebellion, led by former soldier John Macarthur. Bligh was overthrown, as he had been in the Mutiny on the Bounty.

• The rebellion’s roots were economic, as the monopolies were very profitable. Macarthur in particular realized the money to be made in sheep farming and became the richest man in Australia.

• Conflict later emerged between the elite squatters like Macarthur and the growing population of emancipated convicts who wanted more rights and political representation.

• Reforms were eventually implemented against resistance, including elected assemblies, trial by jury, land grants, and an end to convict transportation. This established more inclusive political and economic institutions.

• Figures like Wentworth and Macarthur could not stop the tide of reforms and expanding political rights, showing how inclusive institutions developed even without dense indigenous populations that could be exploited.

• Australia and the US did not need revolutions like England’s Civil War and Glorious Revolution to establish inclusive institutions, as they were founded under different circumstances without a long history of absolutism.

• In England, the revolutions were needed to remove the deeply entrenched absolutist rule, but Australia and the US lacked such strong absolutist control from the beginning.

• The inclusive institutions in Australia and the US enabled a quick spread of the Industrial Revolution and economic growth in these colonies.

• Other British colonies like Canada and New Zealand followed a similar path.

• France took a third path to inclusive institutions via the French Revolution, which overthrew absolutism in France and drove reforms across Western Europe through conflicts.

• This led to more inclusive economic and political institutions and industrialization in most of Western Europe.

• The French Revolution in 1789 abolished the feudal system, removed tax exemptions of the nobility and clergy, and established equality before the law for all citizens, removing barriers to economic activity.

• This was a major break from the absolutist French monarchy and moved France away from extractive institutions toward more inclusive ones over subsequent decades of reforms.

The meeting of the Estates-General in Versailles in 1789 failed to reach an agreement, as the Third Estate demanded more political power through greater representation in voting. This led to increasing tensions and radicalization among commoners supporting reforms. A National Assembly was formed instead, and the Third Estate continued pushing for more rights.

In July 1789, the Assembly reconstituted itself as the National Constituent Assembly. Meanwhile, the mood in Paris grew more radical in response. King Louis XVI dismissed his reformist finance minister Necker, further angering the public. This led to the storming of the Bastille on July 14th, marking the beginning of the French Revolution in earnest.

Over the next few years, the Assembly passed reforms abolishing feudalism and establishing a constitutional monarchy. However, war broke out in 1792, increasing radicalism. This led to the Reign of Terror under Robespierre, followed by periods of instability and then the rise of Napoleon Bonaparte. Napoleon’s military victories allowed him to spread French reforms across continental Europe.

While the forces of the revolution ended absolutism in France, reforms were slowly adopted. This paved the way for France and parts of Europe influenced by the revolution to participate in industrialization in the 19th century.

• In 1867, Ōkubo Toshimichi of the Satsuma domain proposed an alliance between Satsuma and the powerful Chōshū domain to overthrow the Tokugawa shogun, who had ruled Japan since 1600.

• At this time, Japan was a socially and economically underdeveloped feudal society dominated by territorial lords and the samurai warrior class.

• Ōkubo Toshimichi and other reformers like Sakamoto Ryūma wanted to abolish the old feudal institutions, expand foreign trade, construct a modern state, and restore power to the emperor (while truly aiming to modernize political and economic systems).

• In 1868, the Satcho Alliance was formed between Satsuma and Chōshū. Their armies marched on Edo and overthrew the shogunate, helping usher in the Meiji Restoration period of modernization and reform in Japan.

• In 1868, the Meiji Restoration occurred in Japan and Emperor Meiji was restored to power after the death of his father Komei.

• Forces from Satsuma and Choshu domains occupied Kyoto and Edo, but feared the Tokugawa shogunate would try to regain power. Okubo Toshimichi wanted to permanently crush the Tokugawas.

• In January 1868, the former shogun Yoshinobu attacked Satsuma and Choshu forces, starting a civil war that lasted until summer 1868 when the Tokugawas were vanquished.

• After 1868, Japan underwent major institutional reforms including abolishing feudalism, centralizing taxation, introducing a modern bureaucratic state, and giving equal legal status and rights to social classes. Infrastructure like railways was also developed.

• Japan was the first Asian country to adopt a written constitution in 1890, establishing a constitutional monarchy with an elected parliament and independent judiciary. These changes enabled Japan’s industrialization and benefited it from the Industrial Revolution in Asia.

• In early 18th century England, groups called “Blacks” engaged in anonymous nighttime crimes like poaching deer, arson, and destroying property in areas like Windsor Forest. This was in response to the new Whig government and landowners encroaching on common people’s traditional rights.

• The Whig government passed the “Black Act” in 1723, creating 50 new capital offenses in response to the poaching and crimes. It targeted blackened faced poachers.

• Attempts were made to hang poachers under this new law. However, in one case involving a man named John Huntridge accused of aiding poachers, the jury acquitted despite pressure from high-level Whig politicians like Sir Robert Walpole involved in the prosecution.

• This showed that even though the Whigs now dominated government after the Glorious Revolution, their power was still constrained by competing interests in parliament and the empowered common people from reforms. The legal system did not simply act as a tool of repression as it had under absolute royal power.

• The Glorious Revolution established the rule of law in England, meaning laws should be applied equally and nobody is above the law. However, this constrained the Whig elites more than they realized.

• The rule of law emerged from pluralistic political institutions after the revolution, as power was shared by multiple groups. This made it natural for laws to constrain all groups equally.

• The Whigs had to abide by the rule of law when implementing the potentially repressive Black Act, as it violated rights established after the Glorious Revolution.

• The rule of law incentivized inclusion, as taking it away could bring back absolute royal power. It also couldn’t just benefit the ruling class.

• The emergence of pluralism and the rule of law created a “virtuous circle” where they reinforced one another over time through things like independent media and a more equal society.

• This virtuous circle helped preserve inclusive institutions against threats but didn’t guarantee their persistence. Challenges from within Britain could have undermined pluralism.

• In response to the Black Act, ordinary British people realized they had more rights than believed and used tools like petitions. But full democracy was still emerging gradually over time through the virtuous circle.

• In early 19th century Britain, there was increasing social unrest from the masses who demanded greater political representation and an end to economic inequities. This included riots protesting new technologies and falling living standards.

• The 1831 election focused on the issue of parliamentary reform. The Whigs campaigned for a small expansion of voting rights but not universal suffrage. They won and Earl Grey became prime minister.

• Reforms were granted not because the elites truly supported democracy, but to prevent revolution and preserve the existing political system. Earl Grey acknowledged this, saying reform was to “prevent the necessity of revolution” and “reforming to preserve and not to overthrow.”

• The masses wanted votes to have a say in defending their economic interests. Further reforms and demands for universal suffrage continued after only a small increase in voting rights from the 1832 Reform Act.

• The British elites reformed partly because using forceful repression like in other countries was seen as undermining their principles of constitutional legality and rule of law. The positive feedback effects of inclusive institutions also made repression increasingly difficult.

• So the virtuous circle of inclusive political and economic institutions in Britain led the elites to grant partial reforms through acts like the 1832 Reform Act to reduce the risk of revolution and preserve the existing political order, while further demands for reform continued.

• Payment of members of Parliament would allow honest working people to serve as legislators without having to neglect their business/jobs. This helps ensure representation of all constituencies.

• Equal constituencies would allocate representation equally based on number of electors, rather than allowing some small constituencies to dominate over large ones.

• Annual parliaments would provide the strongest check against bribery and intimidation, as constituencies could not be bought or influenced as easily each year compared to every seven years. It would also prevent members from defying constituents.

• The “ballot” refers to the secret ballot, which would end open voting and curb the buying/coercing of votes.

• The Chartist movement organized demonstrations calling for electoral reforms. Parliament discussed further reforms. Pressure from the Chartists and Reform League aided reforms, including the Second Reform Act of 1867 which doubled the electorate. This helped curb corrupt electoral practices.

• Subsequent acts further expanded suffrage and ultimately gave all women the vote on equal terms as men. Reforms reflected negotiations between the government and working classes.

• Economic institutions also became more inclusive, such as the repeal of the Corn Laws in 1846 and introduction of labor market legislation benefiting workers.

• Over time taxes increased significantly and the system became more progressive, putting a heavier burden on the wealthy. Education was expanded and made more accessible.

So in summary, it outlines the key electoral and economic reforms in Britain that gradually made political and economic institutions more inclusive and representative over the 19th century, through pressure from reform movements and gradual negotiated changes in parliament.

The late 19th century saw the rise of powerful industrialists known as “Robber Barons” who engaged in hard-nosed business tactics to consolidate monopolies in their industries and prevent competition. Figures like Cornelius Vanderbilt, John D. Rockefeller, and John Pierpont Morgan amassed huge fortunes and control over major sectors of the economy through their trusts and holding companies. Their dominance concentrated wealth and political power in fewer hands.

This provoked a populist backlash from farmers and small businesses hurt by monopolistic practices. The Populist and Progressive political movements pushed for antitrust legislation and regulation of large corporations. Early pieces of legislation included the Interstate Commerce Act of 1887 and Sherman Antitrust Act of 1890. Presidents Theodore Roosevelt, William Taft, and Woodrow Wilson strengthened enforcement of antitrust laws and further regulated railroads and large industries through agencies like the Federal Trade Commission and Federal Reserve. This marked the climax of reforms aimed at supervising big business and promoting more competitive, inclusive markets.

The rise and fall of the Robber Barons demonstrated that while markets are important, monopolies dominated by elite economic and political power can undermine inclusive, competitive markets. Antitrust reforms showed that responsive political institutions can counteract threats to inclusive markets when mobilized by affected groups in society.

• The passage discusses the concept of a “virtuous circle” between inclusive economic and political institutions that reinforce each other. It argues this dynamic can be seen in trust-busting efforts in the US that restricted monopolies, unlike in Mexico where monopolies faced less restrictions.

• It then focuses on the role of “muckraking” journalists in the early 20th century US who exposed the excesses of wealthy industrialists known as “Robber Barons” and corruption. Notable muckrakers included Ida Tarbell, Louis Brandeis, and William Randolph Hearst. Their investigations helped raise public support for trust-busting and other Progressive reforms.

• This free media was enabled by the inclusive political institutions of the US, unlike in extractive regimes where such investigations are restricted. The information campaigns were key in mobilizing public opposition to trusts and abuses of power.

• It then shifts to discussing Franklin Roosevelt’s New Deal programs in the 1930s that faced challenges in the Supreme Court. Despite his electoral mandates, the more conservative Court struck down some of his signature policies.

• Roosevelt proposed a controversial plan to expand the number of Supreme Court justices so he could appoint more supportive ones, the so-called “court packing” plan. The plan faced significant opposition and ultimately failed to pass Congress.

• FDR attempted to “pack” the Supreme Court by expanding the number of justices so he could appoint more favorable ones, after recent Court rulings struck down some of his New Deal legislation.

• Congress rejected FDR’s plan, seeing it as undermining the independence of the judiciary and separation of powers. They knew allowing the president to control the Court could destroy America’s pluralistic political system.

• In contrast, when Juan Perón in Argentina successfully impeached Supreme Court justices after a ruling against him, it destroyed any constraints on the executive and allowed presidents to rule as dictators by controlling the Court’s composition.

• The failure of FDR’s plan but success of Perón’s showed the importance of inclusive versus extractive political institutions. In the U.S., Congress defended pluralism, while in Argentina political actors had no incentive to resist authoritarian grabs for power given the extractive system.

• Once Perón established control, it set a precedent in Argentina of presidents appointing partisan justices, undermining judicial independence, unlike the self-reinforcing protection of separate powers in the U.S. system.

• Sierra Leone became a British colony in 1896, with the interior divided among chieftaincies ruled by paramount chiefs. One such chief was Suluku in Kono.

• In 1898, the British tried to impose a hut tax, sparking the Hut Tax Rebellion across the country. The rebellion disrupted construction of a new railway from Freetown into the interior.

• When Sierra Leone gained independence in 1961, power passed to the SLPP party led by Milton Margai, attracting southern support. His brother Albert succeeded him.

• In 1967, the APC party led by Siaka Stevens, from the north, narrowly won elections. He dismantled the railway line to the south, Mendeland, which had strongly supported the SLPP. This damaged the economy but consolidated his political power.

• There was continuity between British indirect rule through paramount chiefs extracting resources, and Stevens’ dictatorship from 1967 onward, also based on extraction and consolidation of power rather than economic growth.

• The Sierra Leone Produce Marketing Board was set up in 1949 to pay farmers for their crops. In theory, it would pay farmers close to world prices, but in practice it exploited farmers.

• Over time, the Board paid farmers less and less, extracting more revenue. By the 1960s farmers were getting less than half of world prices. This heavily taxed farmers and transferred wealth to the government.

• Marketing boards continued under Stevens, who extracted as much as 90% of farmers’ incomes by the 1980s through very low prices. This enriched himself rather than providing public services.

• Chieftaincy systems established by the British under indirect rule also continued largely unchanged post-independence. Chiefs collected taxes and had control over land, undermining farmers’ investment incentives.

-Together, extractive marketing board policies and insecure land tenure explained low agricultural productivity in Sierra Leone compared to theories expecting it to be most dynamic sector.

-In contrast, British colonies like Australia managed gold discoveries inclusively through licensing, allowing all to participate and benefit rather than monopolies.

• In colonial Guatemala, the Spanish conquistadors established an elite class made up of their descendants through systems like encomienda, which allocated indigenous people to the conquistadors for forced labor.

• This elite class maintained political and economic power through institutions like merchant guilds that controlled trade. They also benefited from controlling communal indigenous land and imposing taxes.

• When Guatemala gained independence in the early 19th century, this same colonial elite class continued to rule the country, maintaining extractive political and economic institutions that ensured the persistence of their power and wealth over generations.

• Figures like Ramiro De León Carpio, who became president in 1993, were direct descendants of the original Spanish conquistadors, showing how the same elite families have dominated Guatemala economically and politically since the initial conquest in the 1500s.

• This created a “vicious circle” where the elite structured institutions to preserve their power, leading to the persistence of underdevelopment in Guatemala over several centuries.

• Between 1839-1871, Guatemala maintained the extractive economic institutions from the colonial era largely unchanged. The Consulado, a trade monopoly organization, continued operating even after independence.

• Independence mostly benefited the pre-existing local elite, who maintained the extractive status quo. The Consulado remained in charge of economic development but resisted changes that threatened its monopoly power.

• Infrastructure projects like new ports were opposed if they undermined the Consulado’s control over trade. Roads were not improved if they could strengthen competing groups.

• In 1871, liberals overthrew the dictator and abolished the Consulado. But the same elite families stayed in power and focused extraction on the new profitable coffee industry.

• Land was privatized through a “land grab,” indigenous communal lands were taken, and coercive labor systems like repartimiento (forced labor drafts) were implemented to provide labor for large coffee estates.

• Repartimiento and other exploitative labor systems persisted into the 1940s, maintaining the indigenous population in conditions of low wages, lack of rights, and limited opportunities.

• After the Civil War and abolition of slavery, the extractive political and economic institutions of the South continued in the form of Jim Crow laws and systems of racial segregation and discrimination.

• The pre-existing southern landed elite, who had controlled the plantation economy and slave labor, were able to maintain their political and economic power despite defeat in the war.

• They enacted systems like the Black Code of Alabama, which restricted the rights and mobility of freed black laborers, essentially recreating a system of cheap labor similar to slavery.

• Jim Crow laws establishing segregation in areas like education and public facilities created an apartheid society that reinforced white supremacy and the power of the pre-war southern elite well into the 20th century. This continued the extraction of resources and political power by the same groups that had dominated before the war.

So in summary, the extractive institutions persisted after the war through the replacement of slavery with Jim Crow, allowing the old southern elite to maintain control through segregation and continued exploitation of black communities and labor.

• The Southern U.S. maintained extractive political and economic institutions well into the 20th century through systems like Jim Crow laws that controlled the Black population and their labor for the benefit of the plantation owners.

• Southern politicians in Congress blocked projects and policies that could have undermined the control of the Southern elite over the Black workforce.

• This kept the South rural with low education and technology levels, still largely relying on manual labor and mules rather than machinery. Urbanization was much lower than the North.

• These extractive institutions persisted until after WWII and were truly dismantled by the Civil Rights movement of the 1950s-60s. This allowed the South to rapidly converge economically with the North.

• Like in Guatemala and South Africa, the Southern plantation elite maintained political power and shaped institutions to ensure their dominance continued through the vicious cycle of extractive politics and economics reinforcing each other.

• The example of Haile Selassie’s Ethiopia and Mengistu’s military regime show how new regimes often reproduce the same extractive institutions and patterns of elite control, as predicted by Robert Michels’ “Iron Law of Oligarchy.”

• Mobutu’s regime in the Congo was built upon the same patterns of mass exploitation that began over a century earlier under King Leopold’s Congo Free State.

• It was ironic that Marxist officer Mengistu, who overthrew Ethiopia’s emperor Haile Selassie, began living lavishly like the emperors before him, enriching himself rather than serving the people.

• Repeatedly in Africa, new leaders who overthrew old regimes with promises of change went on to commit the same abuses of power, murdering opponents and ordinary citizens. Mengistu’s policies even caused recurring famines.

• History was repeating itself in a distorted form. The new leaders were no better, and in some ways even worse, than those they replaced. They failed to establish truly progressive, inclusive institutions.

• Vicious circles help perpetuate extractive institutions over time. New rulers consolidate power and wealth through the same extractive means, giving them incentives to maintain the status quo rather than economic and political reforms.

• Factors like broad coalitions for change, checks on executive power, and entrepreneurs demanding reforms can help break vicious cycles and allow more inclusive institutions to develop after critical junctures like revolutions. But in places with long legacies of oppression and few progressive forces, change was unlikely to take root.

This passage discusses the political and economic decline of Zimbabwe under the leadership of Robert Mugabe since independence in 1980. Some key points:

• Zimbabwe had extractive political and economic institutions inherited from the colonial period when a white minority ruled the country. Mugabe took over these systems upon gaining power.

• Mugabe consolidated political control through violence against opponents and rewriting the constitution to concentrate power in the presidency. A de facto one-party state developed under ZANU-PF.

• The economy was tightly regulated by the state, like marketing boards and price controls. This suited political elites who could dispense jobs and favors, but hindered private business development.

• Over time this model became unsustainable as the economy deteriorated. Mugabe began seizing white-owned farmland in the 2000s, deepening the crisis.

• By 2008, per capita income had fallen by around half from independence. Basic services collapsed and unemployment soared to 94%. A deadly cholera outbreak occurred due to failures in health systems.

• Zimbabwe illustrates how extractive political institutions can persist over time, maintaining control of extractive economic systems, and lead to economic decline, social crisis and eventually state failure. The legacy of colonialism also played a role in shaping dysfunctional political and economic development.

• Zimbabwe experienced economic decline after 1991 due to structural adjustment policies imposed by the IMF and World Bank. This led to the emergence of political opposition in the form of the Movement for Democratic Change (MDC) party.

• Elections in the 1990s were not competitive and saw significant irregularities and fraud that ensured ZANU-PF maintained power. But their grip weakened after 2000 as the MDC took almost half the parliamentary seats.

• In response, President Mugabe intensified repression and initiated a violent land reform program from 2000 onwards. This disrupted agricultural production and the economy collapsed, leading to hyperinflation.

• Zimbabwe’s failures are attributed to its highly extractive political and economic institutions inherited from colonial rule, which were maintained by ZANU-PF. Over time, the institutions became even more corrupt and repressive under Mugabe.

• Nations generally fail today due to extractive economic institutions that do not promote investment, saving or innovation. Extractive political institutions reinforce this by concentrating power in the hands of elite benefiting from extraction of resources.

• This failure of institutions led to complete state failure and economic collapse in extreme cases like Zimbabwe and Sierra Leone, destroying law, order and economic incentives. The end result was violence, displacement and poverty.

• Sierra Leone experienced a brutal civil war from 1991-2001 that devastated the country. The Revolutionary United Front (RUF) rebel group engaged in atrocities like forced diamond mining, massacres, and organized forced labor. The government forces also committed human rights abuses.

• By 1991, the Sierra Leone state had totally failed. Extractive institutions that concentrated power and wealth had undermined central authority and investment in public services, paving the way for unrest and war.

• Sierra Leone’s collapse illustrates how extractive institutions can reverse state centralization and lead to state failure, which has occurred in other African countries experiencing civil wars. Conflict further precipitates state failure.

• Weak and failed states are often a consequence of decades of rule by highly extractive political and economic institutions, as was the case in Sierra Leone. This opens the way for civil war and the destruction of state authority and capacity.

• Paramilitary groups in Colombia terrorized and displaced over 4.5 million people from their homes in the early 2000s, constituting about 10% of Colombia’s population.

• Paramilitaries essentially took over the functions of government in some areas, collecting “taxes” but keeping the money for themselves rather than providing services.

• In one region, paramilitary groups called the “Paramilitary Peasants of Casanare” imposed rules on mayors requiring them to give 50% of the municipal budget and 10% of all contracts to the paramilitaries. Mayors were also required to attend their meetings and include them in infrastructure projects.

• This region had significant oil wealth, attracting paramilitary groups who then intensified systematic expropriation of property for themselves. Estimates indicate paramilitaries expropriated as much as 10% of rural land nationwide.

• While the national government controlled major urban areas, it provided little security, law, or services in many rural parts of the country that were essentially controlled by paramilitary groups.

• A symbiotic relationship developed where politicians exploited lawlessness in peripheral areas while allowing paramilitaries to operate with impunity. This pattern strengthened under President Uribe, who received more votes in paramilitary-controlled areas.

• Paramilitaries were able to deliver votes and influence to politicians in exchange for leniency, effectively infiltrating and taking over parts of the Colombian state.

• In November 2009, North Korea implemented a currency reform similarly to France in 1960, taking two zeros off their currency. However, unlike France, North Koreans were only allowed to exchange a limited amount of old currency for new currency, expropriating much of people’s savings.

• Black markets have emerged in North Korea to enable private transactions, but the government wants to curb private wealth and power that could threaten the regime. The currency reform was a way to punish those using black markets and ensure citizens remained poor.

• The North Korean government and elite class benefit from markets for luxury goods, though markets are officially opposed. Sanctions from the US specifically targeted luxury items to directly impact the elite.

• Understanding poorer regions requires understanding 20th century communism, which in practice diverged greatly from Marx’s vision of a more humane and equal system. The 1917 Bolshevik Revolution in Russia was a bloody affair with no humane element like Marx envisioned.

• Lenin and the Bolsheviks established a new communist elite in Russia after the 1917 revolution, purging dissenting communists and non-communists who opposed their power.

• Russian communism was brutal and repressive, killing up to 40 million people under Stalin’s regime through purges, collectivization, and famines. Similar repressive regimes emerged in other communist countries like Cambodia, China, and North Korea.

• Communist economic systems in these countries created extractive institutions that appropriated resources from citizens, often leading to poverty instead of prosperity. While the Soviet system grew initially, it later stagnated. China, Cambodia, and North Korea saw economic collapse and famine under communist rule.

• Uzbekistan emerged from the Soviet Union aiming for democracy and markets but instead President Islam Karimov established a dictatorship. He forces farmers to grow cotton over other crops, enslaves children to harvest it, exploits them for cheap labor, and extracts most profits for himself and political elites while citizens live in poverty. Elections are shamStalin-style votes for Karimov. The regime remains repressive with total control over politics, media, and the economy, which benefits Karimov’s daughter expected to succeed him.

• Interspan, an investment company, decided to invest in the tea industry in Uzbekistan in the early 2000s as parts of the country were ideal for growing tea. By 2005, Interspan had taken over 30% of the local tea market.

• However, Interspan then ran into trouble as its local personnel started facing harassment including arrests, beatings, and torture, making it impossible to operate. Interspan had to pull out of Uzbekistan by August 2006.

• Interspan’s assets in the tea industry were taken over by the Karimov family’s rapidly expanding tea business, which grew from 2% to 67% of the market in a few years, demonstrating the family’s control over the economy.

• Uzbekistan’s economy is based on forced labor, including of children, and it exemplifies how extractive institutions can persist in the 21st century, limiting economic opportunities like in other former Soviet states.

• The summary discusses how Egypt in the 1990s and 2000s also had extractive political and economic institutions that benefitted a small, politically connected business elite at the expense of wider economic opportunities and growth. Privatization enriched these well-connected business people rather than increasing competition.

• In many countries, extractive political and economic institutions have been established and perpetuated by elites to enrich themselves and concentrate power and wealth. However, the nature of these elites and the specific institutions they created differ based on each country’s unique history and social structures.

• Common features across countries include elites like Mugabe in Zimbabwe, Kim Jong-Il in North Korea, and Islam Karimov in Uzbekistan establishing systems that transfer wealth to themselves through cronyism, lack of property rights, state control of resources, etc. But the political and economic models differ, e.g. North Korea uses communist-style policies while Uzbekistan modified the Soviet system into crony capitalism.

• Extractive institutions have persisted due to “vicious circles” where they continually reinforce the power of elites. However, intensity of extraction varies between countries like Argentina, Colombia, Zimbabwe and Sierra Leone, leading to large income differences.

• Many of these extractive institutions have roots back centuries to colonialism under regimes like British, Spanish or Soviet rule. Countries are now trapped in long histories of extractive institutions that are hard to break due to entrenched interests of elites. However, change is still possible through coalitions that transform institutions to be more inclusive.

• The Ngwato, Ngwaketse, and Kwena tribes of Bechuanaland (modern-day Botswana) were threatened by Cecil Rhodes’ British South Africa Company expanding into their lands in the late 19th century.

• In 1895, the three tribal chiefs traveled to London to meet with Queen Victoria and Colonial Secretary Joseph Chamberlain to request greater British control over Bechuanaland to protect their lands from Rhodes.

• They succeeded in negotiating an agreement where Britain would control Bechuanaland directly rather than allowing Rhodes to annex the territory. The chiefs were able to maintain autonomy over their tribal lands and institutions like the kgotla council.

• This outcome allowed the Tswana states to avoid colonial exploitation and maintain their centralized political structures and processes like the kgotla that encouraged participation and constrained chiefs. It set the stage for Botswana’s later independence and development success.

• Botswana avoided intense indirect rule under colonialism and was not annexed by Rhodes due to the existing institutions of the Tswana people, which gave their leaders more authority and legitimacy compared to other African tribes.

• At independence in 1966, Botswana was one of the poorest nations but quickly developed inclusive economic and political institutions. It established a stable democracy, property rights, and an inclusive market economy.

• This was enabled by Botswana’s existing Tswana institutions like limited chieftaincy and accountability, which survived colonialism relatively intact. British rule was minimal.

• Independence was orderly led by the ruling Botswana Democratic Party, founded by Seretse Khama and Quett Masire. Power was contested through elections rather than subverted.

• Khama ensured diamond wealth benefited the nation rather than tribes. Revenues were invested in infrastructure, education, and the cattle economy. This contrasted with conflicts over resources in other nations.

• Post-independence laws centralized power in the state and president while maintaining some traditional institutions. A single national language united a formerly heterogeneous population.

• Under inclusive institutions, Botswana achieved rapid economic growth, especially from diamond exports which were managed for national development rather than conflict.

• The passage describes the economic and political development of Botswana after independence compared to other African countries.

• Botswana had inclusive tribal institutions and elites who supported inclusive policies. It established inclusive political institutions after independence that supported economic growth.

• In contrast, most other African countries formed extractive regimes or failed to establish strong institutions.

• Botswana benefited from capable leaders like Seretse Khama and Quett Masire who built upon the country’s existing inclusive foundations.

• It also experienced a contingent historical stroke of luck in having capable leaders rather than corrupt figures like in other places.

• This inclusive development pattern formed a virtuous circle where inclusive political institutions reinforced inclusive economic growth.

• The passage then shifts to discussing the end of extractive institutions in the US South. It describes the civil rights movement challenging Jim Crow laws and segregation, aided by federal intervention from the Supreme Court and government.

• This created pressure that ultimately broke the political dominance of the southern landowning elites and removed barriers to economic growth in the region.

• In 1948, Strom Thurmond ran for president as the candidate of the Dixiecrat party, carrying four Southern states. However, this fell far short of challenging the unified Democratic party’s control of the South.

• Thurmond argued strongly against federal intervention to desegregate the South. He said the federal government could not force Southern states to integrate public facilities like schools, pools, and churches.

• However, the Supreme Court ruled in favor of desegregating schools. When James Meredith, a Black man, was admitted to the University of Mississippi in 1962, it led to massive riots. Over 20,000 troops were needed to restore order.

• Federal civil rights legislation in the 1950s-60s outlawed segregation and discriminatory voting laws in the South. This opened up political and economic opportunities for Black southerners and eroded the Democratic party’s control.

• By intervening to enforce desegregation despite Southern resistance, the federal government helped transform the South’s extractive political and economic institutions over time into more inclusive ones that improved opportunities for Black citizens. This also accelerated the South’s economic development relative to the rest of the country.

• Mao Zedong launched the Cultural Revolution in 1966 to consolidate his power and remove opponents. Red Guards formed across China to purge those seen as opposing Mao. Many people were killed, arrested, or exiled.

• Deng Xiaoping was targeted and sent to work in a rural factory from 1967-1974. He was rehabilitated and made vice premier in 1974. In 1975 he drafted reforms calling for educational revival, material incentives, and removing leftists from power.

• After Mao’s death in 1976, there was a power struggle between Deng and the radical “Gang of Four” who wanted to continue the Cultural Revolution policies. Hua Guofeng initially took over but relied on the Cultural Revolution for legitimacy.

• Deng politically outmaneuvered Hua and the Gang of Four. At the 1978 Third Plenum, Deng’s reforms were adopted and the focus shifted from class struggle to economic development. Agricultural and market reforms began in the late 1970s.

• By the 1980s, Deng had consolidated control and further pursued economic reforms, introducing incentives in farming and industry. Rapid growth followed, especially in rural areas, as China transitioned from a communist planned economy to a more market-oriented system under Deng’s leadership.

• The passage discusses major economic differences that have emerged around the world over the last 200 years, with some nations becoming much richer than others.

• It questions whether these outcomes were inevitable or predetermined, and argues a theory is needed to explain prosperity and poverty.

• The proposed theory distinguishes between extractive and inclusive economic and political institutions. Inclusive institutions are linked to prosperity while extractive ones are not conducive to sustained growth.

• Key events called “critical junctures” can disrupt the status quo and enable transitions between extractive and inclusive institutions. This included things like the Black Death, Atlantic trade routes opening, and the Industrial Revolution.

• Existing institutional differences result from past changes and “institutional drift” as societies evolve separately over time in small, random ways.

• In summarizing the theory, it argues major institutional and economic change requires breaking out of vicious circles created by extractive institutions through critical junctures and coalitions for reform.

So in short, the passage outlines a theoretical framework linking institutions, history, and economic outcomes, arguing inclusive institutions supported by political pluralism enable sustained prosperity.

• Institutional drift leads to small differences emerging over time between societies, as the playing field where conflicts over power/income occur is not fully level. However, these small differences are not necessarily cumulative and may disappear then reappear.

• When a critical juncture occurs, these small pre-existing differences can matter greatly and lead otherwise similar societies to diverge radically in their institutions.

• For example, differences that emerged in England, France and Spain by the 15-16th centuries meant the Atlantic trade had a more transformative impact in opening economic opportunities in England, unlike in the other two countries where the monarchy remained dominant.

• However, history/contingency does not imply determinism. Some examples given that could have lead to very different outcomes are: different colonization paths in North/South America, the Inca resisting colonization like Japan, or other powers like China/Inca dominating global colonization instead of Europe.

• The theory allows for limited predictive power given small differences and contingency. But it better explains broad prosperity differences vs theories based on geography/culture alone. It also provides guidelines on which societies may achieve growth in coming decades.

• Vicious circles imply persistence, so rich Western nations will likely remain so. But institutional changes could see some poor nations transition to become rich within broad patterns. Failed states or those with collapsed institutions are unlikely to change quickly.

The passage discusses which nations are likely to experience economic growth over the next decades based on their existing political institutions. Nations that have attained some degree of centralized government, like Tanzania and Ethiopia in Africa as well as Brazil, Chile and Mexico in Latin America, are more likely to see growth.

The theory suggests sustained growth is unlikely in Colombia. It also argues that growth under extractive political institutions, as in China, will not lead to sustained development long-term, and Chinese growth may run out of steam. There is uncertainty around cases like Cuba, North Korea and Burma, which could transition to inclusive institutions or remain extractive.

The passage cautions against precise predictions given contingencies. It also warns against formulating general policy recommendations, as each nation’s response depends on its unique institutions. While no simple solutions exist, the theory can help identify bad policy by recognizing inadequate understandings of institutional change.

The passage uses China as an example, discussing restricted entrepreneurship and Party control over business. While economic institutions are more inclusive than in the past, political institutions remain extractive. It argues Chinese growth resembles the Soviet model of achieving growth under extractive institutions by mobilizing resources, but this type of growth may not be sustainable long-term.

• The Communist Party controls the Chinese government, military, media, and large parts of the economy. Chinese people have few political freedoms.

• In 1989, student protests in Tiananmen Square raised hopes for greater democracy in China. However, the government cracked down violently, massacring protesters. Political reforms slowed and civil liberties were further restricted after this event.

• Today the Communist Party exerts unprecedented control over information through censorship and surveillance. Political dissent is not tolerated.

• While economic growth has continued under this authoritarian system, it is unlikely to be sustainable long-term without political reform. Past examples show growth stalls under extractive political institutions.

• Some predict China will naturally transition to democracy as it modernizes, but there is little evidence this automatic transition occurs. Trade and economic growth alone do not necessarily lead to more open political systems, as the Chinese experience shows.

• Significant political reforms, moving China toward more inclusive institutions, will likely be needed to maintain economic growth over the long run. But transitioning the existing authoritarian system faces major challenges.

Here is a summary of the key points made in the passage:

• Modernization theory, which claims that economic development will naturally lead to democratic reforms and inclusive institutions, is incorrect and unhelpful.

• While rich nations today tend to have democratic governments, the causality likely runs the other way - inclusive political and economic institutions enable economic growth and development over the long run.

• Growth under extractive or authoritarian regimes, like in China, Russia, Gabon etc., does not necessarily lead to democratic reforms or inclusive institutions. Elite interests are often served by maintaining the status quo.

• Many formerly prosperous nations succumbed to repressive dictatorships, showing wealth does not guarantee democracy (e.g. Germany, Japan, Argentina).

• International organizations promote “engineering” prosperity through policy advice focused on economic reforms like privatization, deregulation etc. But this ignores political constraints and incentives. Reforms are often not properly implemented or are undermined.

• Simply informing leaders is not enough; incentives must change to build truly inclusive institutions that can sustain long-term economic development.

The passage discusses the failure of a foreign aid initiative in India and draws broader lessons from it. Specifically:

• An NGO called Seva Mandir introduced a time clock system to incentivize nurses to show up to work at government health clinics in India. This initially increased attendance but was soon undermined by the local health administration.

• This showed that proposed “micro-market failures” solutions may ignore deeper institutional problems. The local administrators sabotaged the program because they were complicit in the absenteeism issues.

• Attempting reforms without addressing extractive political and economic institutions that cause problems won’t work. Small fixes alone won’t bear fruit.

• The anecdote illustrates how interventions can backfire when those in power benefit from the status quo and have means to undermine changes. Many apparent micro problems may stem from root institutional causes.

• Foreign aid initiatives often face similar issues, with funds being wasted or captured by elites rather than building infrastructure or services. Aid has generally failed to promote development over decades due to improper focus on institutions.

So in summary, it uses a local Indian example to argue that micro initiatives often ignore deeper institutional roots of issues, and that foreign aid similarly founders when it doesn’t address underlying political and economic structures. Focusing on small technical fixes alone won’t solve entrenched problems.

The passage discusses the failure of foreign aid to solve poverty in developing nations. It argues that poor countries suffer from “extractive institutions” like lack of property rights and rule of law, which are controlled by elites. This makes foreign aid ineffective, as it often gets plundered instead of reaching those in need. Aid also props up extractive regimes at the root of countries’ problems.

Conditional aid, which ties further funding to reforms, doesn’t work better. Countries still receive aid whether they meet conditions or not. Rulers have little incentive to dismantle the extractive systems they rely on for more aid.

While foreign aid is not very effective, completely cutting it off is also impractical and could harm humanitarian efforts. However, aid could be more useful if structured to empower ordinary citizens and bring more groups into decision-making, rather than relying on existing rulers. Overall, developing inclusive economic and political institutions, not foreign aid alone, is key to solving poverty in the long run.

• Since the 1990s, Brazil’s economy has grown rapidly, reducing poverty from 45% to 30% by 2006. Inequality has also fallen significantly since the Workers’ Party took power in the early 2000s. Education levels have risen considerably.

• The rise of Brazil was not due to policies from international institutions, but rather from the building of inclusive political institutions driven by diverse social movements and organized labor. This eventually led to more inclusive economic institutions.

• Inclusive institutions developed gradually through a process of empowering broader segments of society, not through revolutions that often fail or replace one elite with another. Brazil’s transition to democracy empowered grassroots social movements.

• The Workers’ Party, though having roots in unions, sought to build a broad coalition including intellectuals and opposition politicians. This fused with local social movements and transformed governance at local and national levels in Brazil.

• In contrast to England, France, and other countries that experienced political upheaval, Brazil’s transition happened gradually through grassroots empowerment, leading to truly inclusive and democratic political institutions committed to public services, education, and equal opportunity.

• A free media can play an important role in informing the public, coordinating demands for change, and channeling empowerment into durable political reforms, as seen in transformations in the US, UK, and recent events in other countries.

• The Iranian opposition protested against Ahmadinejad’s fraudulent election results in 2009, leading to repression by the authoritarian regime. The Arab Spring protests that started in 2011 also saw opposition playing a central role in calling for democratic reforms.

• Authoritarian regimes seek to control the media to maintain their grip on power. Under Fujimori’s dictatorial rule in Peru in the 1990s, the intelligence head Montesinos meticulously documented large bribes paid to judges, politicians and media outlets to ensure their loyalty and cooperation. Payments to TV stations reached millions, far more than paid to other institutions, highlighting the importance of media control.

• In China too, authoritarian control of the media is seen as crucial to maintaining Communist Party rule. A Chinese commentator noted that the three key principles for upholding Party leadership are controlling the military, cadres, and news/information.

• However, a free media and communication technologies can only help opposition movements at the margins by sharing information and coordination. Meaningful change requires broader society to mobilize and organize for inclusive political reforms, not just control of extractive institutions for sectarian gain. Whether this occurs depends on contingent historical factors.

Here is a summary of the ion section:

• Haber et al. (2008) extend analysis of Mexico’s political economy into the 20th century.

• Nugent and Robinson (2010) and García-Jimeno and Robinson (2011) discuss differential allocation of frontier lands in North and Latin America.

• Hu-DeHart (1984) discusses the deportation of the Yaqui people in Chapter 6.

• Relea (2007) and Martinez (2002) discuss the fortune of Carlos Slim and how it was made.

• The interpretation of comparative economic development of the Americas builds on previous research by Acemoglu, Johnson, and Robinson (2001, 2002), and has been influenced by Coatsworth (1978, 2008) and Engerman and Sokoloff (1997).

So in summary, it cites several sources that provide context and background for analyzing Mexico’s political economy over time, the allocation of frontier lands in North and Latin America, the deportation of the Yaqui people, Carlos Slim’s fortune, and interpretations of comparative economic development in the Americas.

Here is a summary of the population history of Copán based on the sources provided:

• Estimates of Copán’s population history come from Webster, Freter, and Gonlin (2000). They estimate the population based on dated monuments from the site.

• The number of dated monuments they used in their estimates is from Sidrys and Berger (1979).

• Copán experienced a period of growth between AD 150-600, with the population peaking around AD 600 at around 20,000 inhabitants.

• After AD 600 the population began a gradual decline. By AD 800 the population had fallen to around 10,000 and the city was eventually abandoned by AD 900.

• So in summary, archaeological evidence from dated monuments at Copán indicates it grew into a sizable city by AD 600, but then experienced a slow decline and depopulation over the following centuries, being completely abandoned by AD 900. Webster, Freter, and Gonlin used the dated monuments to estimate population levels over this period.

Here is a summary of the key sources discussed in the passage:

• Acemoglu, Cantoni, Johnson, and Robinson (2010, 2011) discuss the impact of the French Revolution on European institutions.

• Doyle (2002) provides a standard overview of the French Revolution.

• Lenger (2004) contains information on feudal dues in Nassau-Usingen.

• Ogilivie (2011) overviews the historical impact of guilds on European development.

• Iwata (1964) contains a treatment of the life of Ōkubo Toshimichi.

• Jansen (2000) reproduces Sakamoto Ryūma’s eight-point plan.

• Thompson (1975) is the source for discussions of the Black Act and rule of law in England.

• Cole and Filson (1951) contain the full text of the People’s Charter.

• Lindert (2004, 2009) discusses the coevolution of democracy and public policy.

• Keyssar (2009) introduces the evolution of political rights in the US.

• Various online sources are cited for texts of historical speeches and addresses.

• Iaryczower, Spiller, and Tommasi (2002) present data on Supreme Court tenure in Argentina and the US.

• Helmke (2004) discusses court packing in Argentina.

Here is a summary of the sources referenced in the passage:

• Lipset (1959) is cited as clearly articulating the modernization thesis that economic development leads to democracy. Acemoglu, Johnson, Robinson, and Yared (2008, 2009) discuss evidence against this thesis in detail.

• George H. W. Bush’s quote comes from a BBC news article from 2002.

• Discussion of NGO activity and foreign aid in Afghanistan after 2001 references Ghani and Lockhart (2008) and also Reinikka and Svensson (2004) and Easterly (2006) on problems with foreign aid.

• Discussion of macroeconomic reform and inflation problems in Zimbabwe references Acemoglu, Johnson, Robinson, and Querubín (2008).

• Discussion of the Seva Mandir NGO in India references Banerjee, Duflo, and Glennerster (2008).

• Sources for the formation of the Workers’ Party in Brazil and a strike in Scânia include Keck (1992) and quotes from Cardoso and Lula.

• Discussion of Fujimori and Montesinos’ control of the media in Peru references McMillan and Zoido (2004) and a quote about Chinese Communist Party control from McGregor (2010).

• Maps and figures are sourced from various books, articles, and census data from different time periods.

• The final section lists over 30 references used in various discussions and analyses throughout the text.

Here is a summary of the key works:

• bour analyzes the transition from slavery to free labor in Asante, Ghana from 1807-1956. It looks at how land and capital relationships changed over this period.

• Bakewell examines Indian labor systems in Potosí, Bolivia from 1545-1650 under Spanish colonial rule.

• Bakewell also published a general history of Latin America up to 1825.

• Banerjee and Duflo propose an approach to fighting global poverty based on randomized controlled trials of development programs.

• Banerjee et al. study incentives for nurses in the Indian public healthcare system.

• Banfield examines the social and cultural roots of underdevelopment in a southern Italian village.

• Bang analyzes the Roman economy and marketplace using archeological evidence.

• Barker investigates why and how forager societies transitioned to farming in prehistory.

• Bar-Yosef and Belfer-Cohen explore the transition from foraging to farming in the Levantine region.

• Bateman and Weiss argue industrialization failed in the slave economies of the American South.

• Bates’ work examines the political economy of development in Africa, including the roles of markets and states.

• Benedictow provides a comprehensive history of the Black Death pandemic in Europe from 1346-1353.

Hope this high-level summary is helpful! Let me know if you need anything else.

Here are brief summaries of some of the works cited:

• Ferguson (1998) examines the rise of the Rothschild banking dynasty from 1798 to 1848, describing their role in financing governments and industry.

• Fergusson (2010) explores the impact of property rights on rural development in Colombia.

• Finley (1965, 1999) studies technical innovation and economic progress in the ancient world, looking at factors like trade and slavery.

• Fischer (1989) analyzes the cultural influences from British immigrant groups on the development of America.

• Fogel & Engerman (1974) assess the economic efficiency of American slavery through quantitative analysis.

• Freudenberger (1967) argues that the Habsburg monarchy held back economic growth through centralized control and bureaucracy.

• Galenson (1996) examines population growth, labor supply, and development of colonies in British North America.

• Gerschenkron (1970) compares economic development in Europe and Russia.

• Ghani & Lockhart (2008) propose a framework for rebuilding failed states.

• Gibson (1963) analyzes the changes to Aztec society and economy under Spanish colonial rule.

• Goldstein & Udry (2008) study the impact of land rights on agricultural investment in Ghana.

• Haber et al (2003, 2008) examine politics, banking, and economic growth in Mexico from 1876-1929 and post-1980.

Here is a summary of the key points from the article “The Economic Consequences of Legal Origins” by Orencio Lopez-de-Silanes, Johnathan Conley and Andrei Shleifer:

• The article examines how differences in legal origins (common law vs. civil law origins) have impacted economic development.

• Countries with common law origins tend to have stronger protections of property rights, private contracts, minority shareholders and more flexible courts. This leads to more secure private property and better functioning capital markets.

• In contrast, civil law systems tend to have weaker private rights protections, less independent judiciaries and more state intervention in the economy. This reduces incentives for private investment and economic growth.

• Empirical analyses finds countries with common law origins have grown significantly richer than civil law countries over the long-run, even after controlling for other economic and political factors. Common law countries also developed deeper capital markets and financial systems.

• Legal origins shape important political and economic institutions that have enduring effects on economic growth and development around the world. Common law origins have generally been more conducive to free markets and economic prosperity compared to civil law systems.

In summary, the article presents evidence that differences in a country’s legal origins stemming from English common law vs. French/German civil law traditions have significantly impacted long-term economic growth and development pathways around the world.

This is a bibliography listing many academic publications from various fields such as history, economics, political science and anthropology. It does not provide summaries for individual publications, but rather cites them in APA format. The focus is on development, institutions, economic history and related topics. Authors cited include Jeffery Sachs, Immanuel Wallerstein, E.P. Thompson, Robert Putnam and many others.

Here are brief summaries of the chapters:

Chapter 5 discusses how extractive political and economic institutions lead to poor long-term growth outcomes, even if some societies see temporary prosperity from resource wealth or foreign aid.

Chapter 6 describes how societies with different institutional trajectories have continued drifting further apart over time, with inclusive institutions promoting development and extractive institutions hindering it.

Chapter 7 identifies critical junctures when small differences in institutional paths resulted in diverging long-term development outcomes, such as institutions protecting property rights.

Chapter 8 analyzes how extractive elites use barriers like trade restrictions and regimes to block broad-based development and maintain their power.

Chapter 9 examines cases where previously developing nations reverted to extractive institutions, stagnating or reversing economic progress.

Chapter 10 discusses how inclusive economic and political institutions have diffused between societies through trade, migration, and cultural contact.

Chapter 11 and 12 describe virtuous and vicious circles, where institutional quality becomes self-reinforcing over time toward either inclusive and prosperous outcomes, or extractive and poor outcomes.

Chapter 13 discusses why extractive institutions persist in many developing nations today due to challenges like conflict, poverty traps, and bad geographic factors.

Chapter 14 analyzes examples of “mold-breaking” where countries transitioned to more inclusive institutions and spur development.

Chapter 15 summarizes the importance of institutions as the underlying cause of differences in prosperity across countries.

The final chapters acknowledge contributors, discuss sources, and provide references.