EXTRACT TO FAIL? Ft. James Robinson, Political scientist & author of Why Nations Fail



I don't know welcome to worlds apart it's hard to believe now but there was a time when Western economists genuinely believed that the Soviet Union would almost inevitably overtake the United States as the world's leading economy and it wasn't just fear speaking they had graphs and calculations to prove it decades later it is now China that's projected onto that role and to its benefit and has learned a lot from the Soviet failure is that enough though to win and hold on to economic primacy well to discuss that I'm now joined by James Robinson prominent political scientist and author of why nations fail mr. Robinson it's so good to talk to you thank you very much for your time my pleasure now you published the book back in 2012 when the world felt like a totally different place it was before the the economy became political again before this wave of populism rolled over a number of Western societies if you were writing it today do you think you you would have changed anything in it well not really I mean our focus is very much on the the long run you could say so you know we're trying to figure out you know why does the world look the way it does you know in terms of these big patterns of economic prosperity and poverty and that's a sort of deeply historical process so so you don't change your views over a few years and I would also say that you know in terms of populism I mean you're you're right that in a sense the world looks a lot different but but but not that different I mean there's lots of populism historically and for somebody like me who studies Latin America a lot you know I'm very used to populism you know that's all part of the package in some sense well the reason I'm asking is that question is because I have a sense that in many Western societies people are now starting to question whether indeed they have a winning economic and political systems and you defined failure or success as first and foremost the economic growth but the problem with economic growth in the West that is that it's quite imbalanced a lot of it goes into a very small portion of society the majority other benefits very little on doesn't benefit at all so when you have that growth but only for selective view is that really successful failure and does that qualify the system as inclusive or the other term you use extractive I mean that's a good question I I think you know in the book we you know we make this argument about how you know inclusive economic institutions that create broad-based patterns of incentives and opportunities are what you need for sustained economic growth and innovation and entrepreneurship and and I think you still do have that in the United States I think if you look at these enormously wealthy people you know like besos and Gates and how did they make their money through through innovation you know they make their money by selling people things that people valued but I also agree with you that this enormous increase in inequality is is a challenge you know and like you know in the book we point out this happened in the 19th century in the United States and and the system was able to respond to that you know the inclusive political institutions was able to kind of respond to that enormous increase in inequality and the political challenges it created go back to the time the American Constitution was written in the in the late 18th century James Madison and Hamilton and other people who formulated it they were worried about populism in the 1780s so I think populism is an old thing inequalities and old thing and you know what we try to argue in the book is that you know these challenges have been met successfully in the past in inclusive societies like the United States but that's not to say that that's inevitable mr. Robinson you mentioned that inequality is an old thing and the other I think it would also agree that it's been exacerbated greatly by globalization and at least to some extent this wave of populism especially as represented by Donald Trump is a push against globalization and the very specific set of effects it has an American society now many in the United States believe that Trump is a Russian creature but regardless of Russia's suppose it role in those elections don't you think that those grievances with globalization would have materialized anyway for all his idiosyncrasies yet President Trump is able to capitalize on some of these problems which are being created by globalization I think that's absolutely right you know that people that politicians in the United States have not they've not understood the the the you know the distress and dislocation that's being caused by by globalization and you know and so so I think he's able to capitalize on that new the Democratic Party hasn't done enough to help a lot of its historic constituencies in the Midwest who've suffered as a consequence of globalization and you know that so that's something has to be done about that you know I think the problem is is that President Trump doesn't really have a effective policy for dealing with that you know his policy is to blame blame the Chinese or blame the Mexicans or that doesn't actually address the real problems that face people in the Midwest in the United States really because his policies seem to be quite decisive when it comes to China and other countries for example Germany which has benefited from globalization in his view unfairly so it is Trump really all about rhetoric because I mean from this poor part of the world it seems that his vision as simplistic as it is it may seem at first it actually has a clear clear pretty elaborated philosophy behind it I don't think it's a very coherent philosophy I mean it's an emotional philosophy I think you know the fact of the matter is that you know China China trade with China benefits people in the United States enormous Lee so blocking trade with China is just going to drive up the price of goods that many of president Trump's constituents buy that's not going to make them better off and it's not going to miraculously make the US steel industry come back or any of the other things you know so what's needed is a much more systematic attempt to invest in education and retraining trying to find a kind of feasible employment I don't see those more targeted more realistic policies I don't think just you know driving up the price of Chinese imports is going to help people or quite the opposite actually so it's a kind of emotional reaction it's very much like populist in Latin America you know populist in Latin America like to blame the United States for everything and now we're blaming the Chinese I don't know who the Chinese blame but but it's not you know it's it's rhetorically very successful but it's not really addressing the real problems I also heard that you call populism not only anti leaders but also anti pluralistic and an exclusionary strategy and I wonder if that's really the case because these people the proverbial deplorable z– have been excluded from the political debate for quite some time are they really the ones who are excluding the the so-called elites because the elites still have the control over institutions over in the media over bureaucracy and so on I think in a way know what I talked about when I was talking about populism I sort of said there's two elements to populism there's this you know there's this anti elitism and there's this sort of notion of the people you know that the real people should be deciding what happens but they're not because of this elite capture of the system but I you know I first of all you know I you know I don't think the United States is you know we're not it's not Columbia you know or Peru or you know so I wouldn't you know I wouldn't go too far to think that the elite have you know captured the system you know I feel I still think there's a lot of problems with the US political institutions and democratic institutions but you know I think had the elite captured the system president Trump would never been elected in the first place but I would say you know though the issues are less than they were historically in the United States you know if you go back 100 years the issues of elite capture at the day in the days of the robber barons or 150 years I would say were more severe than they are now and if you go back and look at what President Roosevelt tried to do in the 1930s for example completely undermine the autonomy of the Supreme Court President Trump hasn't done anything like that so let's get things you know let's get things in perspective my view is that you know President Trump you know he has a very strange chemistry I'm not sure I completely understand it but he understood that there were grievances that they can that the politicians were not dealing with so so so it's up to the Democratic and Republican Party to kind of reinvent themselves and and and think about how to address these grievances you know I think it's the same in Britain a lot of people say oh this brexit referendum was such a disaster I didn't think it was a disaster I think brexit as a disaster but I think the referendum showed that there were immense grievances in British society that the politicians were not addressing and that's good they should be discussed and they should be addressed and and that's a healthy thing for a democracy I think many of those grievances whether it is in relation to brexit or in relation to Donald Trump they were economic in nature and they were related again to globalization and I heard you say that they're always incentives for individuals to make stuff more extract extractive if they can get away with it and you often mentioned Bill Gates versus Carlos Slim as example so how a nation-state can encourage innovation while controlling the excesses in the era of globalization who could can do that latter part of preventing big business from extracting too much because I think that's the argument both the brexit years and Donald Trump supporters are making that you need a nation state in order to control those multinational elites who respond to no one yeah I mean I think it's true that that there's failures of regulation I think that people don't really you know there's a very intense kind of debate in the economics profession going on at the moment about what's the best way to regulate these industries now some sense these industries have made enormous amounts of money by capturing information that you know that people didn't really understand they were providing or people didn't understand it was valuable and you know and so they're getting it for free and then they're selling it you know so so so so there's all sorts of issues about how you value information and how you control this I think you know this is like technological innovation running ahead of humans ability to understand it and control it and regulate it and you know we're all trying to catch up at the moment and you know and that's that's that's a process that's you know that's I think you see that many times in history you know you see it in the Industrial Revolution when the Industrial Revolution happened you know there was child labor there was all sorts of exploitation we didn't have the institutions to control it and it took time it took time to catch up with that I think you know if you look at the history over the last couple of hundred years I've you know innovation has created many challenges like that and you know the optimistic view is that you know we'll be able to catch up catch up with it before it kind of derails an inclusive society okay well professor Robinson we have to take a short break now but we will be back in just a few moments stay tuned welcome back to worlds apart with James Robinson prominent political scientist and author of why nations fail professor Robinson before the break we talked about nominally inclusive systems let's talk about extractive ones to which you delegate both Russia and China and I would agree with your main thesis that collective societies often create a potential for client clientelism but they also come with higher demand on the state what this state is supposed to provide in terms of public goods is it really so binary inclusive versus extractive as opposed to being both inclusive and extractive at the same time I think there's a lot of agreement amongst economists about what it takes to have economic prosperity you know it takes innovation it takes entrepreneurship and you know for that people you know you need to have a set of economic institutions which can harness all that latent talent and ability in your society but our view is that you know you can't have that that the whim of some dictator or autocrat you know or some communist party you you know you need to have genuine political participation and accountability to guarantee those economic institutions and so I think you know you see many instances in world history of sort of transitory economic success you know based on extractive economic institutions but it never lasts you know you gave the example of the Soviet Union between the Lightning you know the kind of mid late 1920s and 1919 70s you know that was a very successful experience of economic growth but very narrowly focused you know not based on innovation and except in a few very specific spheres you know like military technology and you know trying it to us China is in is in that is in that category too you know since the 1970s they've experienced rapid economic growth by making economic institutions much more inclusive than they were before so that part is fine but but they don't have the political institutions necessary to really sustain inclusive economic institutions and like you know I think to me if you look at history it's very compelling the Chinese case you know I mean what's been happening in China since the 1970s is extremely familiar from Chinese history going back 2,000 years in China they always oscillate backwards and forwards between these two models you know one model of kind of really micromanaging and controlling society and then a much more sort of relaxed model based on you know Confucian principles and norms of good governance and yeah that's what created economic prosperity in the past you seem to be pretty skeptical about China's ability to maintain its growth rates primarily because of the Communist Party's control but that control seems to be very adaptive and when it comes to the high-tech sector it's much less imposing in fact I've met many Chinese and even Western interpreters who say that they can grow their businesses in China Silicon Valley much faster than in American West Coast I wonder if you are under estimating the adaptability of the Chinese system I think you know that the most the thing which is most telling about that that you're talking about is that what what is it that most Chinese entrepreneurs want to do with their children their money their assets they want to get them out of the country why is that because they have no faith in the they have no faith in the in the system you know of course they say that they have to say that because they've been told to say that that's why they join the party why is Jack Ma a member of the Communist Party because that's what you have to do to survive in that system I'm not an advocate of the Chinese system but if you try to be fair you can see that many institutions in the United States or in the West more broadly are also not particularly inclusive if you take for example school system Chinese schools by and large are much better and inclusive than American schools especially private schools in some areas if you take the public health sector I would argue that Russians have a much better access to public health by and large than the Americans I mean when you talk about inclusiveness are there any specific sectors that aid the economic growth or are you claiming that it has to be across the board no I think I mean I think you're right that you know there's many problems in the United States and I think there's always sort of gray areas you know so talking about inclusive extractive societies you're sort of taking an average you know and I think yeah if you look at the history of the United States there was a lot of kind of dirty deals done you know to cook to create a you know what's on that what's kind of broadly an inclusive society you know black people there was a slave economy and if you go back to the time of the Constitution there was a very dirty deal done to preserve the slave economy and you and since that collapsed in the Civil War there's been enormous discrimination against minority communities among against African Americans and and yeah that's a drawback of the society and it's an it's an impediment to to what the United States could be but I don't think that those things haven't undermined you know their general inclusiveness although are some you know some people have much better opportunities than other that's that that's for sure I mean I tend to think that's a kind of inevitable aspect of of inclusion some level of inequality is inevitable and you know I would certainly say that northern European countries have actually done a much better job of dealing with those issues than the United States has but you know the United States had a much more difficult problem to solve historically you know it had this problem of solving you know how to create Authority and excrete an institutional structure over this huge continent and you know that that that you know they solved that problem it was a difficult problem they solved it a lot better than Latin American countries did but they with lots of imperfections as you're pointing out I always I often hear the same kind of argument from the Russian officials and I want to ask you about Russia now I find it somewhat ironic that the foreword for the Russian edition of your book was penned by none other than Anatoly Chubais the person responsible for the privatization of Soviet properties which was carried out in an extremely extractive way benefiting only a very very limited group of people now mr. Chu bias is also a strong proponent of institutions but he now argues that it is very very difficult to make Western institutions work in Russia as intended do you have sympathy for that kind of argument because he for one from that campaign of privatization my interpretation of what went on in the 1990s was you know it was a failed attempt to create a more inclusive society you know maybe it was a failed attempt because because the people who were running it you know we're never really committed to actually creating you know an inclusive society and that of course includes Westerners who you know who helped them who also enrich themselves you know in the process so so so I you know I I don't know enough about it to know how well-intentioned people people were here's the way I think about it you know I think you know humans all over the world you know are very similar you know West the Westerners did not invent democracy you know there's democracy everywhere in world history in India in China if you go far enough back you know human society historically going back is very egalitarian democracy and inclusion was created all over the world you know and it has a checkered history since then but it's not a Western invention okay how inclusive institutions actually look like in Japan say is nothing what they look like in England in fact inland there's nothing like Sweden or the United States either so so I agree that you know creating inclusion in Soviet Union or you know after 1990 was not a matter of adopting the US Constitution it was a matter of finding what works in that cultural context but I do think you know the intuition about inclusion yeah this is the whole point of the language of inclusion and extractive institutions it's meant to be flexible enough to apply to different cultural parts different parts of the world with different histories and and you know and so I think that's a struggle that the Russians you know to build a set of inclusion inclusive institutions which which resonates with them and this legitimate with them you often mentioned centralization is a necessary component of successful development and I think this is something that authoritarian or semi authoritarian systems are pretty good at do you mean to say that the authoritarian legacy could actually be an advantage if it's leveraged well well that's an interesting question that's you know that's like the question of how you from how you transition you know from extractor to inclusive political institutions I mean I do think that you know the experience in my experience in parts of the world you know which don't really have centralized political Authority for example in sub-saharan Africa is that it's terribly difficult to create that if you don't have it you know and if son says Africans have never had it but the problem is is that you know once you have it centralized Authority can be used to repress inclusion I think the real story of you know how places like you know Western Europe developed inclusive societies that is these things came together you know that that centralized Authority was built gradually with with with deeper inclusion political inclusion it's a sort of balanced path I think you know I my view of China for example you know which I know much more about than Russia is that you know if you think about China you know if you went back two and a half thousand years China wouldn't look so different from Europe for example but then this you know this very sort of autocratic model wins out you know with the Qin Dynasty in the start of Chinese dynastic history and that's that that model has dominated Chinese society ever since you know so so we you know that seems very likely to me to persist I don't see some natural process of broadening inclusion or modernization like some academics like professor Huntington a professor Fukuyama would argue or george w bush thought that economic growth would just democratize china I think that's that's just not consistent with what we've seen from Chinese history or the logic of how things work there one prominent discourse in both Russia and China is one about technology not only as a vehicle of growth but also as a vehicle of essentially cleansing the the the power structure and making it more efficient for example here in Russia you know once electronic taxation has been introduced you can actually see very well who is abusing the state power for their own purposes or who is trying to use state institutions for for enrichment do you think there anything to it seeing technology as a way of essentially making political power in this autocratic societies less personalized and more sort of technocratic and serving the benefit of society as a whole well I think that all depends on on who's you know who's making decisions and how the state is governed I think technology on its own has no kind of implications you know for freedom or inclusion I would think you know if you think about the child what's happening in China at the moment with the construction of this Social Credit System where they're basically monitoring people and penalizing them or rewarding them that's just a sort of massive you know it's something like George Orwell's 1984 you know when all well wrote big brother is watching you you know Big Brother didn't actually have the technological capacity to watch you but now he does so I think that's that's likely to be to have horrific consequences for inclusion and and just the quality of people's lives so I don't think you can you could guarantee that the technological improvements like that in a dictatorship would would have some technocratic you know benefits I think it just it just facilitates the manipulation of society by by autocratic elites in my opinion but elites are never sold it I mean it's usually not one group of people who are just enriching themselves it's usually you know competing interests who are abusing or using the state for their own benefit and I think it's often the case that the leadership the political leadership of the country it may not necessarily be interested I'm sure Secretary XI or President Putin are not making money out of being the leaders of that country at least not directly do you think that will give them better control of the of the powers that be who are operating within the confines of their systems well I didn't know about President Putin I mean I don't really have any insight into what he's attempting to achieve obviously he has some geopolitical agenda you know which involves you know annexing the Crimea and interfering in kind of superpower politics you know in the Middle East and the way the Soviet Union used to be I know I don't understand what is a attempting to achieve with that or whether he's interested in material rewards you know we certainly know that the child elites in the Communist Party are benefitting staggeringly economically from corruption and you know extracting wealth from this process of economic growth that may not be what's motivating them either you know I think it's very simplistic to think of individuals as just being motivated by material payoffs you know sure President Putin has some project which has nothing to do with I'm not quite sure I understand what it is but I'm ready to believe that it has nothing to do with with money but but it does have a lot to do with power you know he seems to repress opponents the media you know he wants to stay in power so so yeah I'm sure he's willing to do whatever it takes to stay in power and that's clear with the Chinese Communist Party you know the thing the Chinese kombis party most care about is this ideology of their political hegemony and no competition or no challenges you know that's and that's a you know that's deeply seated in they just inherited the Mandate of Heaven you know but now it's called you know it's it's an old theme in Chinese history it's also a very old argument on the part of the West and yet people in Russia and in China have on per capita basis have become a little bit richer than they were let's say 10 or 15 years ago as opposed to people in the West who have become poorer and yet unfortunately we are out of time to have that argument so I have to leave it here and thank you for being with us today my pleasure I encourage our viewers to keep this conversation going on our social media pages and hope to see you again same place same time here on worlds apart

5 thoughts on “EXTRACT TO FAIL? Ft. James Robinson, Political scientist & author of Why Nations Fail

  1. Actions speek louder than words and Trumps actions to date have been that of a Rothschild Zionist Agent. This Chap has no insight.

  2. This man has no clue how China presently works or how in reality it is more "inclusive" than any Western society. The Communist Party is very inclusive and adaptable. frankly it is the most inclusive, participatory, and adaptable system which exists and possibly has ever existed, a million times more inclusive, participatory and adaptable than Western libtards who are absolutely myopic and self centered in their thinking.

  3. He's right, Putin did "annex" Crimea, but of course, it's inconvenient for Westerners to talk about Victoria Nuland's cookies in Kiev, John Tefft's "Tech Camp" in Donbass, and the CIA's role in nourishing Galician Nazis. Putin simply saved Crimea from the "Right Sector" bloodbath the West had prepared.

  4. Trump doesn’t blame the Chinese. He blames the elite here for getting rich destroying industries and shipping them to China. That is what made China what it is today. Leveling tariffs isn’t blame. It’s a time proven tool to change the playing field. A nation that would never consider the use of tariffs is a nation that doesn’t care about their own working citizens.

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