Ructions about the latest Nobel Economics prize

The latest Nobel prize for Economics (actually only a Swedish bank award) is causing ructions. It has been won by Daren Acemoglu, Simon Johnson and James Robinson for their trilogy Why Nations Fail – the origins of power, prosperity and poverty (2012); The Narrow Corridor – how nations struggle for liberty (2019) and Power and Progress – our thousand year struggle over technology and prosperity (2023) 

Michael Roberts asseses their value annually and offers what is certainly 

the most exhaustive treatment of the issue – 
 

The work for which they received the $1m prize is for research that purports to 

show that those countries that achieve prosperity and end poverty are those 

that adopt ‘democracy’ (and by that is meant Western-style liberal democracy 

where people can speak out (mostly), can vote for officials every so often and 

expect the law to protect their lives and property (hopefully). Societies that are 

controlled by elites without any democratic accountability are ‘extractive’ of 

resources, do not respect property and value and so over time do not prosper. 

In a series of papers applying some empirical analysis (ie correlating democracy 

(as defined) with levels of prosperity), the Nobel winners claim to show this. 

Indeed, the Nobel winners argue that colonisation of the Global South 

in the 18th and 19th centuries could be ‘inclusive’ and so turn the 

likes of North America into prosperous nations (forgetting the 

indigenous population) or ‘extractive’ and so keep countries in dire 

poverty (Africa). It all depends. Such is the theory.
Two problems, however, First, if growth and prosperity go hand in hand with 

‘democracy’ and the likes of the Soviet Union, China, Vietnam are considered 

to have elites that are ‘extractive’ or undemocratic, how do our Nobellists 

explain their undoubted economic performance? Apparently, it is explained 

by the fact they started out poor and had a lot of ‘catching up’ to do, but 

soon their extractive character will catch up with them and China’s hyper 

growth will run out of steam. Perhaps now? 
Second, is it correct to say that revolutions or political reforms are 

necessary to set things on the path to prosperity? Well, there may be 

some truth in that: would Russia in the early 20th century be where it is 

today without the 1917 revolution or China be where it is in 2024 without 

the revolution of 1949.  But our Nobellists do not present us with those 

examples: theirs are getting the vote in Britain in the 19th century or 

independence for the American colonies in the 1770s.

Richard Wolff’s video commentary on the Nobel prize-winners on X 

sounds a marvellously humorous and succinct note 

A decade or so ago Acemoglu and Johnson shared their insights in 

an interesting article
 

We pointed out that three broad clusters of long-run economic and 

political institutions are possible. In the first (Absent Leviathan), 

the state is weak, while societal collective action and various norms 

are strong and constrain political hierarchy. In the second 

(Despotic Leviathan), the state is strong; it crushes and further 

impairs an already weak society. In the third (Shackled Leviathan), 

there is a balance between the state’s and society’s capacities, 

which enables their coevolution toward greater strength and also 

undergirds a very different type of state—simultaneously powerful 

and still accountable and responsive to society. 

Economic modernization is almost impossible under the Absent 

Leviathan. It is possible under the Despotic Leviathan, and under 

some circumstances it can proceed rather rapidly. But it will not 

bring democracy or accountable behavior by rulers and bureaucrats. 

The positive feedback between political institutions and economic 

development is only a feature of the Shackled Leviathan. 

As a result, economic changes in, say, South Korea will have 

fundamentally different implications than when the same changes 

happen in China. These insights, though formulated in a different way 

and yielding different implications than in the previous literature, 

are nevertheless related to some classic arguments in political theory. 

Machiavelli [1961 (1532), p. 67] proposed similar ideas more than 

500 years ago, identifying a related trichotomy: 

“The people are everywhere anxious not to be dominated or oppressed 

by the nobles, and the nobles are out to dominate and to oppress the 

people. These opposed ambitions bring about one of three results: 

a principality, a free city, or anarchy.” 
We are, of course, not the first ones to think about the role of culture 

in politics. Although cultural factors are not part of many of the 

seminal frameworks of political science—for example, Tilly’s (1990) 

theory of the emergence of states; Moore’s (1966) theory of 

capitalism, fascism, and communism; or more orthodox Marxist 

frameworks for understanding political and economic change—

they have featured in important contributions. Huntington (1996) 

places a heavy emphasis on culture in his work on civilizations. 

Culture has also played a critical role in the modern literature on 

nationalism and identity (Anderson 1983, Laitin 1998, Horowitz 2000, 

Gellner 2009) and in the literature about the impact of religion on 

politics (Laitin 1986; Kalyvas 1996; GrzymałaBusse 2012, 2015). 

Putnam’s (1993) theory of good democratic governance, 

building on Banfield’s (1958) insights, also includes a central role 

for cultural factors. Finally, Almond & Verba’s (1963) seminal work 

merges culture and political behavior in understanding the support 

for democracy.  

The rest of the article is organized as follows. 

The next section introduces our conceptual framework and highlights 

the interplay between politics and culture. It is followed by three 

sections that apply this framework to illustrative cases of Despotic, 

Absent, and Shackled Leviathans, starting with the Chinese case. 

We then distill some of the lessons from these case studies and 

reevaluate modernization theory. The concluding section suggests 

directions for future work. 

FURTHER READING

Interview with James Robinson (2024)

Noah Smith’s view of the fracas (2024)
A 68 page article on the role of culture on institutions by Acemoglu and Robinson (2023)
Leviathans in CEEC countries 2019
A World Bank presentation about “The Shackled Leviathan: (probably 2018)

The Nobel Factor – the prize in economics, social democracy and the market factor 
A Offner and G Soederberg (2016)