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THEY fail when they exclude people from effectively participating in the political process — that is, when a powerful minority takes over the government and creates a system, including laws, for its own benefit and not for the people at large. The extension of this political exclusion is economic exclusion — in other words, when the powerful and rich minority create extractive economic institutions, whereby they shield and perpetuate their own economic interests by extracting wealth from the national resources and from the people at large.
This is the central argument of an influential book Why Nations Fail: the Origins of Power, Prosperity and Poverty by Turkish-American economist Daron Acemoglu and British-American economist and political scientist James Robinson. Both are from the Massachusetts Institute of Technology. They, along with Simon Johnson, shared the 2024 Nobel Prize for their work on institutions and prosperity. Their scholarship is now known as the New Institutional School in economics.
There are few books which have captured my imagination like this one. The reason, of course, is the situation in Pakistan. Their institutional reform theory and daily life in the country makes the book essential reading for those of us who can read and write. Especially those who think they have been bestowed with the mystical power to read and understand all the problems of a complex society like ours and know how to fix it!
