Daron Acemoglu on equality and institutions

Prof. Daron Acemoglu gave an interesting interview to Five Books. The interview covers lots of ground and provides useful introductions to the five books he recommends. I have been reading Why Nations Fail: The Origins of Power, Prosperity and Poverty. by Acemoglu and Robinson, and this extract from the interview provides a useful introduction to the ideas contained in the book.

At the centre of our framework is the tension between people who have political power and how they can use that power for their own interests and against the interests of the rest of the society. We don’t live in a zero-sum world – and there is a lot of prosperity-creating capability that many societies have exploited – but there are also some zero-sum aspects. Often there will be tensions within society, about who is going to get the biggest slice, and people will try to manipulate the entire fabric of our institutions in order to get that slice. So that’s the narrative we develop for understanding how societies have developed their institutions. The absolutist institutions created a very unequal distribution of political power and a very unequal distribution of economic gains in society and the two became synergistic – the very unequal distribution of political power locked in a very unequal distribution of economics gains. This created a vicious circle, but the conflict it engendered sometimes led to a breaking down of the institutions that this unequal distribution depended on, opening the way for more open institutions, which are one of the engines of prosperity.

The last part of the book is the converse story, which is how these inclusive institutions, which create a more equitable distribution of political power and so a more level playing field, are going to be constantly challenged. These inclusive institutions don’t guarantee that everything is going to be equally distributed but will at least prevent the most egregious and unfair distribution of resources. They also ensure a more equal distribution of political power in society. But there is no guarantee that they will last for ever. If you are able to garner a little more support, and a little more political power, the danger that you can start tweaking these institutions to your benefit is always present. There are continuous challenges to the inclusive nature of political institutions. So in this framework you can see the threat of the increased inequality in the US as a symptom of the sorts of challenges to the fairly inclusive set of institutions that the US has had for over 200 years.

This is an important distinction, and one that resonates in South Africa. Your views?

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