:00:16. > :00:21.It is the most basic question of global economics - why do some
:00:21. > :00:26.nations thrive while others fail? What does Norway have of which
:00:26. > :00:30.Marley blacks? There are of course multiple answers based on physical
:00:30. > :00:34.geography, resources and cultural differences. But my guests today,
:00:34. > :00:38.the renowned Harvard political scientist James Robinson, is
:00:38. > :00:44.adamant one factor determines economic success much more than all
:00:44. > :00:51.others - the development of resilient inclusive institutions.
:00:51. > :01:01.Put crudely, the idea is political freedom begets posterity. But is
:01:01. > :01:23.
:01:23. > :01:28.James Robinson, welcome to HARDtalk. Thank you. Would you accept that it
:01:28. > :01:38.takes a lot to come up with an overarching theory as to why a
:01:38. > :01:39.
:01:39. > :01:43.nation succeeds or fails? Probably. Probably it does. But, as you
:01:43. > :01:47.alluded, we have been writing scientific papers on this for 15
:01:47. > :01:52.years and teaching it and discussing it every day, more or
:01:52. > :01:57.less. The book is an attempt for us... It is an attempt to put
:01:57. > :02:02.together what we think we learnt in a simple framework. The book
:02:02. > :02:06.strikes me as very interesting. He trained as an economist for a long
:02:06. > :02:10.time, a practising economist as well. The message of the book is
:02:11. > :02:14.all about the primacy of politics. That you can only understand the
:02:14. > :02:20.economic case that countries are in with you understand how the
:02:20. > :02:25.politics works. The economics is so important. The economic
:02:25. > :02:30.institutions, the way society is organised, that is very important
:02:30. > :02:34.and varies enormously. Take the comparison between Norway and Mali.
:02:34. > :02:38.They have different economies and economic structures. Systems of
:02:38. > :02:43.property rights. That is important for affecting people's incentives
:02:43. > :02:47.and prosperity. But why do they have such different economies? That
:02:47. > :02:51.is to do with the politics. We emphasise the politics because that
:02:51. > :02:55.can help explain why different societies have the economies they
:02:55. > :03:01.do. But you know a lot of people who worked a great deal on this
:03:01. > :03:06.sort of subject, I am thinking about the author of guns, germs and
:03:06. > :03:10.Steel, he would say, hang on, you have to go more basic than a
:03:10. > :03:14.discussion of either political or economic systems. You have to
:03:14. > :03:17.consider where these countries are at consider things like whether
:03:17. > :03:23.tropical diseases are a big factor in the way they have developed.
:03:23. > :03:32.That is why Norway and Mali, to him, can only be explained in terms of
:03:32. > :03:37.one being 0 European and one from the sub-Saharan Africa. -- north
:03:37. > :03:42.European. I believe that book is a huge source of inspiration for me
:03:42. > :03:46.and many other people. But that is fundamentally wrong, that way of
:03:46. > :03:51.thinking about the world. The way of thinking about his theory it is
:03:51. > :03:57.a very interesting one in terms of differences in intercontinental
:03:57. > :04:06.inequality. But it is one thing to say, why it is erasure richer than
:04:06. > :04:10.sub-Saharan Africa. It is another to say -- to explain differences in
:04:10. > :04:15.Eurasia itself. We therefore look at different hypotheses. But I
:04:15. > :04:18.would say that we tried in many different ways to convince the
:04:18. > :04:22.reader that geographical explorations cannot explain what
:04:22. > :04:25.you see in the world today. Nonetheless, because you are
:04:26. > :04:30.determined to build an overarching theory based on politics and
:04:30. > :04:35.institutions and this idea of inclusive of tea, you do therefore
:04:35. > :04:40.ignores some pretty fundamental factors, like agricultural science,
:04:40. > :04:44.like medicine, like a whole host of other physical reality is that
:04:44. > :04:48.people around the world have to put up with in their daily lives.
:04:48. > :04:54.is true but been a policy in the world today was not caused by
:04:54. > :04:58.differences in agricultural productivity. -- inequality. It was
:04:58. > :05:02.caused by the Industrial Revolution, power, manufacturing, the factory
:05:02. > :05:06.system. The fact that these technologies and the institutions
:05:06. > :05:12.that generated them and fidget technologies spread to some parts
:05:12. > :05:19.of the world. -- future technologies. But why is it that
:05:19. > :05:24.Bolivia or Ethiopia are unlikely developed industrialised economy?
:05:24. > :05:27.Surely the answer is because they are landlocked and they have
:05:27. > :05:32.extremely d extremely dterrain and infrastructure, including transport
:05:32. > :05:37.and everything else. It will never be easy. I don't agree. I don't
:05:37. > :05:42.think the reason for Libya is poor is because of landlocked or
:05:42. > :05:45.mountains. -- for Libya. The reason it is poor is for the last 500
:05:45. > :05:51.years, it has suffered terribly from a particular structure of
:05:51. > :05:56.economic and political institutions. But if you go back and look at the
:05:56. > :06:01.history of Bolivia, this was the centre of the most hideous system
:06:01. > :06:06.of Labour coalition. They had this huge silver mines in the south. The
:06:06. > :06:12.Spanish created this massive system of forced labour to mobilise labour
:06:12. > :06:18.for the minds in that area. Today, if you go to the boundary of where
:06:18. > :06:22.it -- the catchment area yesterday, you look inside, the thing was
:06:22. > :06:27.abolished in the late 1800s, just inside and outside, the places
:06:27. > :06:32.inside a much more poor. Even today you can see the footprint of those
:06:32. > :06:36.institutions. You have massive racial discrimination. You just
:06:36. > :06:42.used one piece of jargon because it is very important to clear up this
:06:42. > :06:48.idea. You talk about extract it institutions. Yous. In the case of
:06:48. > :06:55.Bolivia, it is tempting to think you mean a reference to that mining
:06:55. > :07:01.industry but you don't. -- yes. For you, it means much more? In terms
:07:01. > :07:06.of economic institutions. Here is the simplest way to think about it.
:07:06. > :07:10.Society needs to harp has the talent and skills and ideas of its
:07:10. > :07:15.people to be prosperous. Those are widely distributed. -- harness. If
:07:15. > :07:18.you look at the US in the 19th century and to look at who were the
:07:18. > :07:25.famous inventors, they were fog everywhere. After Simms, farmers,
:07:25. > :07:30.which people, none elites. In Bolivia, you have a very
:07:30. > :07:35.hierarchical society based on the exploitation of indigenous people.
:07:35. > :07:39.-- artists, farmers. Let me stop you for a moment. That is
:07:39. > :07:43.fascinating but it does not matter understanding of history. For
:07:44. > :07:48.example, America, a young nation, its economy for many years was
:07:48. > :07:51.largely built upon the economics of slavery. And even after that, if
:07:51. > :07:55.you go before then, you could say the genocide of an entire people
:07:56. > :08:00.was fundamental to the economic establishment of the first settlers
:08:00. > :08:05.in the US or America as a colony. But going beyond that, even to the
:08:05. > :08:08.current day, many economists looking at America would say it is
:08:08. > :08:14.a highly unequal society based on disparities of wealth, which are
:08:14. > :08:21.some of the widest in the world. These and this vision of inclusion,
:08:21. > :08:27.of hugely successful institutions, that you are painting? In the book,
:08:27. > :08:31.we have this simple dichotomy between extracting and ex -- and
:08:31. > :08:34.inclusive institutions. In reality you could say it is all shades of
:08:34. > :08:39.grey. The thing to understand in the US case, certainly there was a
:08:39. > :08:43.slave economy. But certainly indigenous people suffered by the
:08:43. > :08:47.huge difference between North America and South America was in
:08:47. > :08:50.North America you could not create a society based on the exploitation
:08:51. > :08:56.of indigenous people. They were too thin on the ground, they were not
:08:56. > :09:01.living in centralised polities. They'd tried to exploit them but
:09:01. > :09:05.they couldn't be exploited. A different type of society emerged.
:09:05. > :09:10.At the time which was before the slave economy came. That is crucial.
:09:10. > :09:13.The early formation of institutions of Virginia and Pennsylvania out
:09:13. > :09:20.was before the slave economy developed. But Thomas Jefferson was
:09:20. > :09:24.a slave owner. And he wrote the constitution. He was the founding
:09:24. > :09:27.father. Many of the key individuals who played such an important part
:09:27. > :09:32.to the development and growth of the US were themselves vindicated
:09:32. > :09:36.in that system. The art as we point out in the book, the US
:09:36. > :09:40.constitution is not when US inclusive constitution started. It
:09:40. > :09:45.was already set up and that is why they had the constitution. If you
:09:45. > :09:48.compare that with the Mexican constitution, a similar time,
:09:48. > :09:52.similar constitution but different conflict because the Sidey was
:09:52. > :09:57.different. I wonder if when developing the theory, as I say it
:09:57. > :10:04.is fascinating, you sort of have to shoehorn historical facts in order
:10:04. > :10:08.to suit your agenda. One more piece of history. You describe the grip
:10:08. > :10:15.of industrialisation in Britain and how that links to the establishment
:10:15. > :10:23.of parliamentary institutions, the rule of law, property rights. I
:10:23. > :10:27.would could do to you that through the late 1800s and early 1900s, it
:10:27. > :10:31.was a highly unequal place where the elite enjoyed rich capital
:10:31. > :10:38.gains while the masses of the poor were being exploited and were part
:10:38. > :10:48.of an extracted economy. Again, this idea of inclusion, leading to
:10:48. > :10:51.economic success, seems like the wrong way round. It is not a bad an
:10:51. > :10:57.equal society, it is that equality of opportunity and access.
:10:57. > :11:01.there was not equal opportunity. think there was. The figure that
:11:01. > :11:06.the man who invented the factory. Where was he from or any of these
:11:06. > :11:13.famous people from? They were not elites. They were all from very
:11:13. > :11:17.poor backgrounds. They could develop their talent. The other
:11:17. > :11:23.could not vote, the law did not regard them as equal citizens in
:11:23. > :11:26.many respects. This is immaterial? I don't think it's immaterial but
:11:26. > :11:31.it is absolutely true of course that 18th-century Britain was not a
:11:31. > :11:36.democracy in the modern sense. But as we tried to show, it was very
:11:36. > :11:41.open and responsive to what people wanted. Richard are quite for
:11:41. > :11:45.example, for others, they could take out patterns and protect their
:11:45. > :11:48.intellectual quality of -- intellectual property rights. That
:11:48. > :11:54.was crucial to the innovation and investment. He then became a
:11:54. > :11:58.wealthy man. He was sucked in all allowed into the elite, if you like.
:11:59. > :12:04.That is a bit unfair. Of course there were aristocrats who valued
:12:04. > :12:11.their land -- whose value of their land went up. But the fundamental
:12:11. > :12:18.story as a society of opportunity in which most of the innovation was
:12:18. > :12:22.done by non- Leeds. You made about the theory and applied the history.
:12:22. > :12:26.Let's bring it to the present day. You are a political scientist who
:12:26. > :12:30.looks at the global economy from different places. I wanted to
:12:30. > :12:36.address what is happening in China today. Nobody would quarrel with
:12:36. > :12:41.the idea it is the most remarkable economic transformation of the last
:12:41. > :12:46.50 years. But it does not fit your theory because China has succeeded
:12:46. > :12:49.economic glee and yet it does not seem to have all of these different
:12:49. > :12:54.features of a pluralistic, inclusive society that you believe
:12:54. > :12:59.it ought to have. What out theory says is that if you want to have a
:12:59. > :13:03.sustained economic prosperity, you need to have this match or this
:13:03. > :13:08.nexus of inclusive economic institutions. There are many
:13:08. > :13:12.examples of societies in history... When I was an undergraduate, I was
:13:12. > :13:15.taught the Soviet Union was the most fabulous economic example of
:13:15. > :13:20.all time. Now everybody has forgotten that for 40 years it was
:13:20. > :13:24.an economic miracle. Do you think what has happened in China is as
:13:24. > :13:30.potentially transient as that? Absolutely. Even though I am sure
:13:30. > :13:33.much more than the EU had travelled around China and seen the growth of
:13:33. > :13:36.the megacities right across the country and seen the amazing
:13:36. > :13:41.infrastructure, the industrially station on an unbelievable scale.
:13:41. > :13:47.But you that could all disappear? One thing about studying history
:13:47. > :13:50.that suggests that many things in the world goes into reverse. How
:13:50. > :13:55.did Venice go into reverse? It was the richest most corporate --
:13:55. > :13:59.prosperous society in the world in the Middle Ages and it turned into
:13:59. > :14:04.a museum and became economically backward. But we are talking about
:14:04. > :14:14.a country of 1.3 billion. It will soon be the most powerful economy
:14:14. > :14:15.
:14:15. > :14:20.I doubt that. The Chinese have done things that the Soviets were not
:14:20. > :14:25.able to do. They have increased the extent of inclusiveness. But people
:14:25. > :14:30.have all kinds of misconceptions. I always hear that the success of
:14:30. > :14:35.China is because of the Communist policy. It's not, it is in spite of
:14:35. > :14:38.that policy. Economic growth took off in China when the communists
:14:38. > :14:44.started withdrawing from controlling economic life. People
:14:44. > :14:48.were allowed to have incentives in agriculture. But isn't that the
:14:48. > :14:53.point of the new ones to view of the way the world worked? He
:14:53. > :14:56.believed that he had to acquire many of the facets of a Western
:14:56. > :15:01.capitalist society in economic terms but he believed the best way
:15:01. > :15:07.of doing that was to to harness that in a still of controlled
:15:07. > :15:11.political system. World economic history suggests otherwise. You
:15:11. > :15:19.can't have a system with an inclusive economy and this
:15:19. > :15:26.extractive authoritarian political system. It is too tempting. Someone
:15:26. > :15:32.whose opinion I suspected you respect, he says he liked a lot of
:15:32. > :15:36.what you wrote but that China is so important, even if you are right
:15:36. > :15:40.that they could go into reverse, the fact is that a theory of
:15:40. > :15:45.development that can't really explain the most remarkable
:15:45. > :15:51.development story of a kind is not much of a theory. Why can't explain
:15:51. > :15:57.it? I think it can. You're trying to explain it by saying it isn't
:15:57. > :16:01.important. Because unless the Chinese changed the political,
:16:01. > :16:07.institutional from -- framework, it will be transient. But he is saying
:16:07. > :16:12.that cannot be right. What they have achieved is so important.
:16:12. > :16:16.Everyone said that about the Soviet Union in the '70s. But we used that
:16:16. > :16:20.example. But they laugh when you tell them that everyone including
:16:20. > :16:26.the Serie A and the Soviet Union should have themselves thought they
:16:26. > :16:30.had seen the future. We have all forgotten that. But the Economist
:16:30. > :16:36.magazine has a very similar grasp that were shown with the Soviet
:16:36. > :16:41.Union replaced by China. How do you react to the charge that your view
:16:41. > :16:49.is a very Western centric view of the way politics and economics
:16:49. > :16:55.works? You are very hung up on the sorts of institutions and political
:16:55. > :17:01.frameworks that we associate with developed Western democracies.
:17:01. > :17:07.think that the 0 criticism. I spent most of my career is studying in
:17:07. > :17:16.Africa and Latin America. One of things that has taught me is that
:17:16. > :17:24.it something about why those are talking about a universal
:17:24. > :17:28.values. The values. The of Western experience. A guest from a
:17:28. > :17:34.programme, he is constantly writing about the way in which the balance
:17:34. > :17:38.of economic power is shifting. He's as the west misunderstands the east.
:17:38. > :17:42.The believe that difference in culture doesn't matter because
:17:42. > :17:50.Western liberal democratic societies have institutions that
:17:50. > :17:54.are universal and applicable, is just plain wrong. I am not a
:17:54. > :18:00.scholar of East Asia but I have sent a lot of time in sub-Saharan
:18:00. > :18:06.Africa. In my experience, Africans are just like you and me. They have
:18:06. > :18:11.the same aspirations for themselves, their children. But surely East
:18:11. > :18:18.Asia is more important. There we see the tiger economies. We see a
:18:18. > :18:23.whole host of them succeeding and not affecting the institutional
:18:23. > :18:27.structures. The fact that you see tiger economies in Asia and not
:18:27. > :18:33.Africa has everything to do with the history of State Building.
:18:33. > :18:40.Nothing to do with the culture. you don't accept any of these
:18:40. > :18:46.ideas? People so you must understand is a simple human
:18:46. > :18:54.reality, that different cultures are utterly different. But you
:18:54. > :19:03.could have enormous cultural between the US and Sweden. Swedes
:19:03. > :19:06.are very different. But does are both very com -- functional, what
:19:06. > :19:16.these societies. You can have think
:19:16. > :19:24.
:19:24. > :19:31.economic and performance. I want to You are based in the US. Your book
:19:31. > :19:41.have been different if you started out on the project now? There is a
:19:41. > :19:51.deep malaise in our Western confidence in our financial system.
:19:51. > :19:52.
:19:52. > :19:57.What we point out in the book is, functional ones, are always
:19:57. > :20:05.challenged. There is always incentive to set up a more
:20:05. > :20:09.extractive society. The same is true in the US. We used to things
:20:09. > :20:19.with the US political institution was seriously challenged by this
:20:19. > :20:24.happening today. I will say that in the past, the US system has been up
:20:24. > :20:31.to this challenge us. But is it today? And many you work closely
:20:31. > :20:34.with, a senior figure at the IMF, he has read your book. He says you
:20:34. > :20:38.are under emphasising the degree to which Wall Street capitalism has
:20:38. > :20:44.become, to quote, one of the greatest leap towards making
:20:44. > :20:52.strategies of all kind. There is a basic dysfunction in today's
:20:52. > :21:00.American economy. I agree. I agree that financial elites in Wall
:21:00. > :21:07.Street exercise much too much political power. They have also...
:21:07. > :21:12.Going back to your rhetorical point, is the US prone to failure looking
:21:12. > :21:16.ahead because it has allowed this particular elite so much power? You
:21:16. > :21:20.can extend that to the power of politics. It all comes back to
:21:20. > :21:25.giving those with the vast reservoirs of capital too much
:21:25. > :21:29.power. I think that's possible but I don't see it happening. But I
:21:29. > :21:39.don't see the malaise in the financial system are messing up the
:21:39. > :21:39.
:21:39. > :21:46.rest of the private sector. Or in other industries. I think that his
:21:46. > :21:52.potential. It -- the enormous increase in inequality could have a
:21:52. > :21:55.corrupting affect. If you are a jobless factory worker in at
:21:55. > :22:02.Detroit, you would be a little less sanguine. They would look at
:22:02. > :22:08.figures, the top 400 US taxpayers have an average income of $270
:22:08. > :22:17.million but pay less in average. They look at facts like that and
:22:17. > :22:23.they think, this system is not inclusive. It is no longer working.
:22:23. > :22:28.I am not short... I'm not sure the facts are true. I agree with the
:22:28. > :22:32.fact that this enormous increase in inequality does represent a sort of
:22:32. > :22:41.falling inclusiveness in the US. But I am confident that the system
:22:41. > :22:46.can respond to that as it did in the 1930s. I still see democracy as
:22:46. > :22:52.being vibrant in the US, despite the role of money and politics. I
:22:52. > :22:57.am still optimistic about the system's response. You bring it
:22:57. > :23:01.democracy democracy has to be linked directly
:23:01. > :23:07.to sustainable prosperity. Does that mean, coming back to the point
:23:07. > :23:14.about Asia, that when one looks at the fastest growing economies today,
:23:14. > :23:22.many of them in Asia, that this will pass, and that you see
:23:22. > :23:28.American dominance continuing for a lot longer than most other people?
:23:28. > :23:34.Yes, I still see the fundamentals in terms of science, human capital,
:23:34. > :23:40.education. I still see that part of the American economy there and it
:23:40. > :23:45.is still vibrant and dynamic. You could 0.2 dysfunctional parts. And
:23:45. > :23:50.we have a recession, there is unemployment and poverty. They
:23:50. > :23:56.recall for social consequences. But at the end of today, it is the
:23:56. > :24:04.innovation part of the economy that is critical. Maybe it is optimistic
:24:04. > :24:10.thought to end on it - democracy trumps all. Inclusive political
:24:10. > :24:17.institutions. Another way of saying the same thing. Genuine democracy.
:24:17. > :24:21.Yes, the widespread political institution and democracy is