Book Review: Why Nations Fail - The Origin of Power, Prosperity, and Poverty
Acemoglu & Robinson (2011) wrote a book Why Nations Fail. The Origin of Power, Prosperity, and Poverty to explain key factors that create disparities that exist between developed and developing countries. The authors establish a connection between economic development and political environments that avail equal development opportunities to all citizens. These environments exhibit zero tolerance to corruption and all types of impunity. According to Acemoglu & Robinson, developed countries have embraced an open pluralistic political system where there is vetting and competition of candidates for elective posts. Moreover, political environment is not harsh to new political leaders, and a widespread electorate freely participates in voting. The authors have cited models of developed nations such as Britain and the United States. They also discussed models of poor states with undemocratic political institutions including Zimbabwe, North Korea, Sierra Leone, Egypt, Tunisia, and other nations in the Arab world. However, even in developed countries, the elite accumulates wealth at the expense of the poor. Civil strife has been exhibited in the developed world on account of poverty and unemployment. This is well exemplified by recent riots in Britain due to poverty and unemployment.
Thesis statement: I disagree with the authors regarding the idea that political emancipation is a remedy for socioeconomic disparities in developed countries. There is a need to address underlying factors such as neocolonialism, capitalism, poverty, and unemployment.
The authors begin by discussing civil unrest that began in Tunisia and sprawled over Arab world. Citizens were discontent with tyrannical regimes that perpetuated impunity over generations. Regarding the case of Egypt Acemoglu & Robinson (2011) claim:
The country is poor precisely because it has been ruled by a narrow elite that have organized society for their own benefit at the expense of the vast mass of people. Political power has been narrowly concentrated, and has been used to create great wealth for those who possess it, such as the $70 billion accumulated by ex-president Mubarak.
Consequently, the masses are impoverished because wealth is accumulated by those in political office. The electorate had minimal influence on policy making and administration. The authors contend:
It is indeed difficult for ordinary citizens to acquire real political power and change the way their society works. But it is possible; we will see how this happened in England, France and the United States, and also in Japan, Botswana and Brazil. Fundamentally, it is a political transformation of this sort that is required for a poor society to become rich.
“Poor society”, as described by the authors, is present in all countries of the world. For many generations, even in modern capitalist system, the bourgeois control wealth. The authors claim that cited developed countries are models of economic splendor. Even with political emancipation in these developed countries, poverty and unemployment rates continue to escalate. In Britain, people went to the streets to protest against rising unemployment and poverty rates. Affected towns included Nottingham, London, Bristol, Birmingham, Liverpool, Manchester, and Gillingham. Riots were perpetrated by young, poor, unemployed youths. Most interesting is that these riots have been likened to those that have occurred in Athens, Tripoli, Damascus, and Cairo. Evidently, the poor are getting poorer, and disparity between poor and rich is getting bigger in Britain. Moreover, social welfare is diminishing, and minorities are worst hit by poverty. The blunt of economic recession is getting shifted downwards to poor masses. In the European Union, relief budgets for protecting the poor have been created in order to safeguard corporate profit margins. Protesters in England were condemning the austerity budget proposed by the government, which included a strategy to cut public spending by £80 billion. The government appears insensitive to inflation and the plight of the masses. This discontent is felt by poor society in all developed countries.
The authors fail to acknowledge the role of capitalism in misfortunes of developing countries. Capitalism plays a major role in wealth distribution. It has great impact on social standing of the masses. In capitalist systems production is profit-driven and private ownership of production means gives owners the power to determine wealth distribution. Distribution of wealth in a capitalist system via union contracts and government spending is ineffective in ending class inequality. Capitalists own the means and products of production. Capitalism systems do not promote the welfare of laborers. Marx confidently asserted that capitalism only served the elite at the expense of the working force. If capital grows rapidly, wages may rise, but the profit of capital rises disproportionately faster. The material position of the worker has improved, but at the cost of his social position. The social chasm that separates him from the capitalist has widened. People in developing countries can be emancipated from corrupt regimes, but their social status will not improve in capitalist system. There is a need to address these social inadequacies that prevail in capitalist systems.
African nations Zimbabwe and Sierra Leone have been worst impacted by poverty. Tyrannical governments have contributed to civil strife, and this has led to depletion of rich natural resources by corrupt individuals. The authors attribute low economic standing to abuse of power by dictatorial administrations. They claim (Acemoglu & Robinson, 2011):
Whether it is North Korea, Sierra Leone or Zimbabwe, poor countries are poor for the same reason that Egypt is poor. Countries such as Great Britain and the United States became rich because their citizens overthrew the elites who controlled power and created a society where political rights were much more broadly distributed.
However, in addition to the wanting administration, these countries are also reeling from the effects of neocolonialism. In the case of Zimbabwe, large territories of land and mining rights were held by whites even after independence. Britain has promoted policies of economic liberalization, property rights, and lawful procedures, but this has been a stumbling block to fair land distribution. This so called economic liberalization defended interests of wealthy landed classes, who emerged during the colonial era. This land policy in post-independence Zimbabwe led to a creation of an economically and politically unstable state.
President Mugabe enforced radical land reforms that saw the ejection of white settlers from large territories of land. What followed was the imposition of strict economic sanctions that caused massive inflation. In 2001, the International Monetary Fund (IMF) blocked Zimbabwe from accessing its resources. Later that year, the Zimbabwe Democracy and Economic Recovery Act was signed into law by President Bush. This law required US representatives in international financial institutions to block any attempt of Zimbabwe for loan and credit as well as loan and credit extension. Moreover, the US would not guarantee any credit application by Zimbabwe. The law authorized the president to take a drastic step to fund opposition media and so called governance programs against the government of Zimbabwe. The move has significantly distorted risk profile assessment of Zimbabwe by financial markets. Zimbabwean companies were not able to access offshore credit lines and operated solely on cash up front basis. British government has also used its influence to block Zimbabwe from accessing credit. Britain has also threatened to withdraw aid from neighboring Southern nations if they fail to impose sanctions on Zimbabwe.
Concerning the situation in Sierra Leone, infamous blood diamonds were not only used by Sierra Leone military and rebel groups. These diamonds continue to be exploited by international terror groups, global criminal networks as well as legitimate transnational companies. Corporate neocolonialists also continue to exploit diamonds of Sierra Leone. This has greatly restricted nation’s economic and social growth.
In conclusion, tyrannical administrations have accumulated wealth at the expense of poor masses. The authors of the book discussed political emancipation and the set up of inclusive institutions that will serve the common good. Extractive institutions have been found in communist regimes, such as the one in North Korea, and dictatorial administrations such as Sierra Leone and Zimbabwe. However, factors, such as capitalism and neocolonialism, have led to increased poverty rate in these developing countries. Neocolonialism has lead to civil war in Sierra Leone. Trade sanctions on Mugabe regime had detrimental effects on citizens of Zimbabwe. The country has suffered greatly from inflation, and growth of Zimbabwe has been stifled. Even in democratic environments capitalism promotes enrichment of the elites, who own means of production and resulting products.
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