James Robinson - Professor of Government, Harvard University HARDtalk

It is the most basic question of global economics - why do some

nations thrive while others fail? What does Norway have of which

Marley blacks? There are of course multiple answers based on physical

geography, resources and cultural differences. But my guests today,

the renowned Harvard political scientist James Robinson, is

adamant one factor determines economic success much more than all

others - the development of resilient inclusive institutions.

Put crudely, the idea is political freedom begets posterity. But is

James Robinson, welcome to HARDtalk. Thank you. Would you accept that it

takes a lot to come up with an overarching theory as to why a

nation succeeds or fails? Probably. Probably it does. But, as you

alluded, we have been writing scientific papers on this for 15

years and teaching it and discussing it every day, more or

less. The book is an attempt for us... It is an attempt to put

together what we think we learnt in a simple framework. The book

strikes me as very interesting. He trained as an economist for a long

time, a practising economist as well. The message of the book is

all about the primacy of politics. That you can only understand the

economic case that countries are in with you understand how the

politics works. The economics is so important. The economic

institutions, the way society is organised, that is very important

and varies enormously. Take the comparison between Norway and Mali.

They have different economies and economic structures. Systems of

property rights. That is important for affecting people's incentives

and prosperity. But why do they have such different economies? That

is to do with the politics. We emphasise the politics because that

can help explain why different societies have the economies they

do. But you know a lot of people who worked a great deal on this

sort of subject, I am thinking about the author of guns, germs and

Steel, he would say, hang on, you have to go more basic than a

discussion of either political or economic systems. You have to

consider where these countries are at consider things like whether

tropical diseases are a big factor in the way they have developed.

That is why Norway and Mali, to him, can only be explained in terms of

one being 0 European and one from the sub-Saharan Africa. -- north

European. I believe that book is a huge source of inspiration for me

and many other people. But that is fundamentally wrong, that way of

thinking about the world. The way of thinking about his theory it is

a very interesting one in terms of differences in intercontinental

inequality. But it is one thing to say, why it is erasure richer than

sub-Saharan Africa. It is another to say -- to explain differences in

Eurasia itself. We therefore look at different hypotheses. But I

would say that we tried in many different ways to convince the

reader that geographical explorations cannot explain what

you see in the world today. Nonetheless, because you are

determined to build an overarching theory based on politics and

institutions and this idea of inclusive of tea, you do therefore

ignores some pretty fundamental factors, like agricultural science,

like medicine, like a whole host of other physical reality is that

people around the world have to put up with in their daily lives.

is true but been a policy in the world today was not caused by

differences in agricultural productivity. -- inequality. It was

caused by the Industrial Revolution, power, manufacturing, the factory

system. The fact that these technologies and the institutions

that generated them and fidget technologies spread to some parts

of the world. -- future technologies. But why is it that

Bolivia or Ethiopia are unlikely developed industrialised economy?

Surely the answer is because they are landlocked and they have

extremely d extremely dterrain and infrastructure, including transport

and everything else. It will never be easy. I don't agree. I don't

think the reason for Libya is poor is because of landlocked or

mountains. -- for Libya. The reason it is poor is for the last 500

years, it has suffered terribly from a particular structure of

economic and political institutions. But if you go back and look at the

history of Bolivia, this was the centre of the most hideous system

of Labour coalition. They had this huge silver mines in the south. The

Spanish created this massive system of forced labour to mobilise labour

for the minds in that area. Today, if you go to the boundary of where

it -- the catchment area yesterday, you look inside, the thing was

abolished in the late 1800s, just inside and outside, the places

inside a much more poor. Even today you can see the footprint of those

institutions. You have massive racial discrimination. You just

used one piece of jargon because it is very important to clear up this

idea. You talk about extract it institutions. Yous. In the case of

Bolivia, it is tempting to think you mean a reference to that mining

industry but you don't. -- yes. For you, it means much more? In terms

of economic institutions. Here is the simplest way to think about it.

Society needs to harp has the talent and skills and ideas of its

people to be prosperous. Those are widely distributed. -- harness. If

you look at the US in the 19th century and to look at who were the

famous inventors, they were fog everywhere. After Simms, farmers,

which people, none elites. In Bolivia, you have a very

hierarchical society based on the exploitation of indigenous people.

-- artists, farmers. Let me stop you for a moment. That is

fascinating but it does not matter understanding of history. For

example, America, a young nation, its economy for many years was

largely built upon the economics of slavery. And even after that, if

you go before then, you could say the genocide of an entire people

was fundamental to the economic establishment of the first settlers

in the US or America as a colony. But going beyond that, even to the

current day, many economists looking at America would say it is

a highly unequal society based on disparities of wealth, which are

some of the widest in the world. These and this vision of inclusion,

of hugely successful institutions, that you are painting? In the book,

we have this simple dichotomy between extracting and ex -- and

inclusive institutions. In reality you could say it is all shades of

grey. The thing to understand in the US case, certainly there was a

slave economy. But certainly indigenous people suffered by the

huge difference between North America and South America was in

North America you could not create a society based on the exploitation

of indigenous people. They were too thin on the ground, they were not

living in centralised polities. They'd tried to exploit them but

they couldn't be exploited. A different type of society emerged.

At the time which was before the slave economy came. That is crucial.

The early formation of institutions of Virginia and Pennsylvania out

was before the slave economy developed. But Thomas Jefferson was

a slave owner. And he wrote the constitution. He was the founding

father. Many of the key individuals who played such an important part

to the development and growth of the US were themselves vindicated

in that system. The art as we point out in the book, the US

constitution is not when US inclusive constitution started. It

was already set up and that is why they had the constitution. If you

compare that with the Mexican constitution, a similar time,

similar constitution but different conflict because the Sidey was

different. I wonder if when developing the theory, as I say it

is fascinating, you sort of have to shoehorn historical facts in order

to suit your agenda. One more piece of history. You describe the grip

of industrialisation in Britain and how that links to the establishment

of parliamentary institutions, the rule of law, property rights. I

would could do to you that through the late 1800s and early 1900s, it

was a highly unequal place where the elite enjoyed rich capital

gains while the masses of the poor were being exploited and were part

of an extracted economy. Again, this idea of inclusion, leading to

economic success, seems like the wrong way round. It is not a bad an

equal society, it is that equality of opportunity and access.

there was not equal opportunity. think there was. The figure that

the man who invented the factory. Where was he from or any of these

famous people from? They were not elites. They were all from very

poor backgrounds. They could develop their talent. The other

could not vote, the law did not regard them as equal citizens in

many respects. This is immaterial? I don't think it's immaterial but

it is absolutely true of course that 18th-century Britain was not a

democracy in the modern sense. But as we tried to show, it was very

open and responsive to what people wanted. Richard are quite for

example, for others, they could take out patterns and protect their

intellectual quality of -- intellectual property rights. That

was crucial to the innovation and investment. He then became a

wealthy man. He was sucked in all allowed into the elite, if you like.

That is a bit unfair. Of course there were aristocrats who valued

their land -- whose value of their land went up. But the fundamental

story as a society of opportunity in which most of the innovation was

done by non- Leeds. You made about the theory and applied the history.

Let's bring it to the present day. You are a political scientist who

looks at the global economy from different places. I wanted to

address what is happening in China today. Nobody would quarrel with

the idea it is the most remarkable economic transformation of the last

50 years. But it does not fit your theory because China has succeeded

economic glee and yet it does not seem to have all of these different

features of a pluralistic, inclusive society that you believe

it ought to have. What out theory says is that if you want to have a

sustained economic prosperity, you need to have this match or this

nexus of inclusive economic institutions. There are many

examples of societies in history... When I was an undergraduate, I was

taught the Soviet Union was the most fabulous economic example of

all time. Now everybody has forgotten that for 40 years it was

an economic miracle. Do you think what has happened in China is as

potentially transient as that? Absolutely. Even though I am sure

much more than the EU had travelled around China and seen the growth of

the megacities right across the country and seen the amazing

infrastructure, the industrially station on an unbelievable scale.

But you that could all disappear? One thing about studying history

that suggests that many things in the world goes into reverse. How

did Venice go into reverse? It was the richest most corporate --

prosperous society in the world in the Middle Ages and it turned into

a museum and became economically backward. But we are talking about

a country of 1.3 billion. It will soon be the most powerful economy

I doubt that. The Chinese have done things that the Soviets were not

able to do. They have increased the extent of inclusiveness. But people

have all kinds of misconceptions. I always hear that the success of

China is because of the Communist policy. It's not, it is in spite of

that policy. Economic growth took off in China when the communists

started withdrawing from controlling economic life. People

were allowed to have incentives in agriculture. But isn't that the

point of the new ones to view of the way the world worked? He

believed that he had to acquire many of the facets of a Western

capitalist society in economic terms but he believed the best way

of doing that was to to harness that in a still of controlled

political system. World economic history suggests otherwise. You

can't have a system with an inclusive economy and this

extractive authoritarian political system. It is too tempting. Someone

whose opinion I suspected you respect, he says he liked a lot of

what you wrote but that China is so important, even if you are right

that they could go into reverse, the fact is that a theory of

development that can't really explain the most remarkable

development story of a kind is not much of a theory. Why can't explain

it? I think it can. You're trying to explain it by saying it isn't

important. Because unless the Chinese changed the political,

institutional from -- framework, it will be transient. But he is saying

that cannot be right. What they have achieved is so important.

Everyone said that about the Soviet Union in the '70s. But we used that

example. But they laugh when you tell them that everyone including

the Serie A and the Soviet Union should have themselves thought they

had seen the future. We have all forgotten that. But the Economist

magazine has a very similar grasp that were shown with the Soviet

Union replaced by China. How do you react to the charge that your view

is a very Western centric view of the way politics and economics

works? You are very hung up on the sorts of institutions and political

frameworks that we associate with developed Western democracies.

think that the 0 criticism. I spent most of my career is studying in

Africa and Latin America. One of things that has taught me is that

it something about why those are talking about a universal

values. The values. The of Western experience. A guest from a

programme, he is constantly writing about the way in which the balance

of economic power is shifting. He's as the west misunderstands the east.

The believe that difference in culture doesn't matter because

Western liberal democratic societies have institutions that

are universal and applicable, is just plain wrong. I am not a

scholar of East Asia but I have sent a lot of time in sub-Saharan

Africa. In my experience, Africans are just like you and me. They have

the same aspirations for themselves, their children. But surely East

Asia is more important. There we see the tiger economies. We see a

whole host of them succeeding and not affecting the institutional

structures. The fact that you see tiger economies in Asia and not

Africa has everything to do with the history of State Building.

Nothing to do with the culture. you don't accept any of these

ideas? People so you must understand is a simple human

reality, that different cultures are utterly different. But you

could have enormous cultural between the US and Sweden. Swedes

are very different. But does are both very com -- functional, what

these societies. You can have think

economic and performance. I want to You are based in the US. Your book

have been different if you started out on the project now? There is a

deep malaise in our Western confidence in our financial system.

What we point out in the book is, functional ones, are always

challenged. There is always incentive to set up a more

extractive society. The same is true in the US. We used to things

with the US political institution was seriously challenged by this

happening today. I will say that in the past, the US system has been up

to this challenge us. But is it today? And many you work closely

with, a senior figure at the IMF, he has read your book. He says you

are under emphasising the degree to which Wall Street capitalism has

become, to quote, one of the greatest leap towards making

strategies of all kind. There is a basic dysfunction in today's

American economy. I agree. I agree that financial elites in Wall

Street exercise much too much political power. They have also...

Going back to your rhetorical point, is the US prone to failure looking

ahead because it has allowed this particular elite so much power? You

can extend that to the power of politics. It all comes back to

giving those with the vast reservoirs of capital too much

power. I think that's possible but I don't see it happening. But I

don't see the malaise in the financial system are messing up the

rest of the private sector. Or in other industries. I think that his

potential. It -- the enormous increase in inequality could have a

corrupting affect. If you are a jobless factory worker in at

Detroit, you would be a little less sanguine. They would look at

figures, the top 400 US taxpayers have an average income of $270

million but pay less in average. They look at facts like that and

they think, this system is not inclusive. It is no longer working.

I am not short... I'm not sure the facts are true. I agree with the

fact that this enormous increase in inequality does represent a sort of

falling inclusiveness in the US. But I am confident that the system

can respond to that as it did in the 1930s. I still see democracy as

being vibrant in the US, despite the role of money and politics. I

am still optimistic about the system's response. You bring it

democracy democracy has to be linked directly

to sustainable prosperity. Does that mean, coming back to the point

about Asia, that when one looks at the fastest growing economies today,

many of them in Asia, that this will pass, and that you see

American dominance continuing for a lot longer than most other people?

Yes, I still see the fundamentals in terms of science, human capital,

education. I still see that part of the American economy there and it

is still vibrant and dynamic. You could 0.2 dysfunctional parts. And

we have a recession, there is unemployment and poverty. They

recall for social consequences. But at the end of today, it is the

innovation part of the economy that is critical. Maybe it is optimistic

thought to end on it - democracy trumps all. Inclusive political

institutions. Another way of saying the same thing. Genuine democracy.

Yes, the widespread political institution and democracy is