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Why some nations are so rich while others are very poor

By By Anyang Nyong'o | November 3rd 2013 at 00:00:00 GMT +0300

By Anyang Nyong'o

As long as I can remember, philosophers, theologians, historians and more recently social scientists have asked themselves the puzzling question of why some nations prosper while others do not.

At one time the German sociologist, Max Weber, argued that the Industrial Revolution took place first in England because of the dominance of the Protestant religion on this “little island set in a silver sea” as Shakespeare described it.

As early as the late 18th Century, the great French political philosopher Baron de Montesquieu noted the geographic concentration of prosperity and poverty, and proposed an explanation for it. He argued that people in tropical climates tended to be lazy and lack inquisitiveness. As a consequence they didn’t work hard and were not innovative, and this was the reason why they were poor.

Much more recently in 1999 the late David Landes, long time professor of economics at Harvard University, published a fascinating book entitled “The Wealth and Poverty of Nations: Why Some are So Rich and Some So Poor”.

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In this book, Landes more or less upheld the Montesquieu thesis, making many more “development economics” look for some “extra threats” to development in tropical countries.

For example, some argue that it is only in the Tropics that one finds the menace of malaria, a terrible hazard to development by killing human beings and “wasting” government resources in health expenditure, which could otherwise have been invested in education and food programmes.

The same development economists have for long upheld the thesis that ignorance plays an important role in keeping developing countries underdeveloped. The argument goes something like this. It is well known that if you want people to work hard for their livelihood and hence to prosper, you must give them the freedom to choose what they do, what they buy and how they use what they buy.

In developing countries, these people argue, government tries to do too much and to meddle too much with people’s lives. Government has no business running a meat commission, or bus services or even banks. All the state corporations and marketing boards that African countries created after independence to stimulate development were all mistakes: they were simply the source of corruption by the elite, bleeding the African taxpayer dry.

Two Harvard-based economists, Daron Acemoglu and James Robinson have now published a book, “Why Nations Fail: the Origins of Power, Prosperity, and Poverty” demolishing all these theories with numerous examples throughout the history of humankind.

Lauded as “a brilliant and uplifting book, yet also a deeply disturbing wake-up call” by Simon Johnson, a professor at MIT, this book contends that countries, wherever they are and having whatever culture, will always prosper if they put in place the right pro-growth political institutions and they will always fail – often spectacularly – when those institutions ossify or fail to adapt.

The danger, throughout the ages, has always been leaders or rulers who use political power to subvert public institutions to serve their own narrow interests of consumption, greed, wasteful wars “to busy giddy minds with foreign quarrels” or internal conflicts to maintain political power in a fragile political environment.

Acemoglu and Robinson traverse history from ancient times to the present, giving examples of nations that prosper or fail precisely as a result of this “institution and growth” thesis.

The best examples they give, as far as Kenya is concerned, are three: North and South Korea, on the one hand, and Botswana on the other. At the end of the Second World War, the people of Korea – same culture, same language and same geographical area – were divided into two along the 38th parallel. To the north was North Korea and the south was South Korea.

When it comes to economic choices and rights to private property, the rule of law prevailed in South Korea as it does in Botswana today. An aerial photograph taken of the two Koreas today shows South Korea well lit at night almost evenly throughout the country while the north is as dark as most of Africa during the night.

Nothing to do with geography, ignorance or culture: all to do with enlightened leadership fusing its interests with that of the nation (without necessarily eliminating the class contradictions that come with capitalism), proper institutions, pro-growth investments and stimulating people to produce, invest and enjoy the fruits of their labour, not to mention domestic peace and tranquility.

Botswana, one the poorest African countries at independence in the early sixties, is now one of the most prosperous and fast growing economies in Africa.

We need to learn something from history if Kenya is going to get somewhere.

We are in danger of entering a never-ending vicious circle that may put us on the Haiti road: always seeking to solve problems which don’t get resolved but simply produce other problems.

Let us at least begin accelerating our development with leaders who are enlightened, institutions that we respect and defend, an economy that grows with the full involvement of our people and a political system that is inclusive.


 


Max Weber Industrial Revolution David Landes
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