Poor countries are poor because those who have power make choices that create poverty. Daron Acemoglu.
It has been 70 years since our inception we still have the begging bowl in our hand asking friendly countries to bail us out and begging IMF for mere 1 Billion dollars and which we still don’t have the IMF program.
There has been no continuity of democratic process and whatever we had in the name of democracy was controlled democracy. There has been elite capture of the country since 1958.
We never invested in our human resources, education, or health. No land reforms and industrial development.
And we still take pride in the castle of our religion where innocent people are slaughtered and hanged in the name of religion. Women have no rights and street children are not safe.
We are ignorant, illiterate, and have among the highest maternal mortality and infant mortality rate. Where hepatitis is taking the shape of endemic, people die of malaria, they don’t have access to clean drinking water nearly 25 million children are out of school.
We pray for earthquakes, floods, and pandemics so that international donors can give us money and that also goes unaccountable.
We lost our Eastern half part in 1971 despite having the same religious bonding. Our western half part failed to develop as a nation
So what makes a nation?
Stalin concluded a nation is a historically constituted, stable community of people, formed based on a common language, territory, economic life, and psychological make-up manifested in a common culture.
In defining a nation in this manner, Stalin took on the ideas of Otto Bauer, for whom a nation was primarily a manifestation of character and culture. He instead followed Karl Kautsky in asserting the primacy of language, territory, and integrated economic life without formal acknowledgment of the source.
So what makes a nation fail?
Daron Acemoglu and James A. Robinson in their book “Why Nation Fail” focus on how some countries have managed to achieve high levels of prosperity, while others have consistently failed. It is accompanied by a constant change and improvement of technologies a process called scientific and technological progress.
They concluded that for scientific and technological progress it is necessary to protect the property rights of wide strata of society and the ability to receive income from their enterprises and innovations including from patents for inventions.
They also concluded that pluralistic political institutions that allow wide sections of society to participate in governing the country are also important. With pluralistic political institutions, a decision is made that is beneficial to the majority, and it protects the intellectual copyrights which means that there will be a continuous improvement of technologies.
The interpretation of economic growth as a constant change of goods and technologies was first proposed by Joseph Schumpeter.
Since only pluralistic political institutions can guarantee, using their economic power, will not be able to block the introduction of new technologies, which is a necessary condition for the country’s transition to sustainable development.
Another prerequisite is a sufficient level of centralization of power in the country because, in the absence of this, political pluralism can turn into chaos.
The decisive role in the development of countries is played by institutions. Acemoglu and Robinson divide institutions into two large groups: political and economic. The first regulates the distribution of powers between the various authorities in the country and the procedure for the formation of these bodies, and the second regulates the property relations of citizens.
The concept of Acemoglu and Robinson consists in opposing two so-called. “extractive” and “inclusive” economic and political institutions, Inclusive economic institutions protect the property rights of wide sections of society not just the elite, they do not allow unjustified alienation of property, and they allow all citizens to participate in economic relations to make a profit.
Extractive economic institutions exclude large segments of the population from the distribution of income from their activities. They prevent everyone except the elite from benefiting from participation in economic relations, who, on the contrary, are allowed to even alienate the property of those who do not belong to the elite.
These institutions are the foundation of all modern liberal democracies. In the absence of such institutions, when political power is usurped by a small stratum of society, sooner or later it will use this power to gain economic power to attack the property rights of others, and, therefore, to destroy inclusive economic
Examples include slavery, serfdom, and encomienda. In such institutions, workers have no incentive to increase labour productivity, since all or almost all of the additional income will be withdrawn by the elite. Examples are absolute monarchies and various types of dictatorial and totalitarian regimes, as well as authoritarian regimes where power is supported by power structures: the army, the police, and dependent courts.
The very fact that there are elections in a country does not mean that its institutions cannot be classified as extractive: competition can be dishonest, candidates’ opportunities and their access to the media are unequal, and voting is conducted with numerous violations, and in this case, the elections are just a spectacle, the ending of which is known in advance.
The emergence of democratic pluralism, in which Parliament’s authority over the Crown was established in Great Britain after the Revolution in 1688, as being critical for the Industrial Revolution. The book also tries to explain the recent economic boom in China despite China’s authoritarian regime, the economic growth in China is due to the increasingly inclusive economic policy by Deng Xiaoping, the architect of China’s Opening up policy after the Cultural Revolution.
Acemoglu and Robinson assume that society is simply divided between a small rich class and a large poor class. Second, they assume that regimes must be either democratic or non-democratic; there is nothing in between. Third, people’s preferences in society are defined only by monetary redistribution from the rich ruling class. Fourth, people care not only about redistribution today but also about redistribution in the future. Fifth, the economic output of a country fluctuates year by year, which means the revolution is less costly for the ruling class during the economic downturn. Finally, and most importantly, each individual in society tries to maximize their utility.
Why inclusive political institutions give rise to economic growth. Political institutions such as a constitution determine the de jure distribution of political power, while the distribution of economic resources determines the de facto distribution of political power. Both de jure and de facto political power distribution affect the economic institutions in how production is carried out, as well as how the political institutions will be shaped in the next period. Economic institutions also determine the distribution of resources for the next period.
We had to decide where do we want to lead our country to prosperity or poverty.
References
1 Marxism and the national question J.V.Stalin
2 Why Nations Fail: The Origins of Power, Prosperity, and Poverty, Daron Acemoglu and James A. Robinson.
- Why Women’s Education is Important - 15/05/2023
- Why Nations Fail: Reasons and Solution - 13/05/2023
- Middle East is Changing - 25/04/2023
