April 01, 2015 Faculty profile Michael Blanding University Professor James Robinson on the institutions that determine whether countries prosper or collapse Markets and States in Tropical Africa isn’t the kind of title that jumps off the shelf. But it caught James Robinson’s attention one day as he roamed the stacks at the Yale University library. Written by Harvard political scientist Robert Bates, it detailed firsthand research on how the politics of different African countries affected their agricultural yields. With the discovery of this book, Robinson had finally found the first clues to help answer the question that would consume his research for the next two decades: why are some countries rich and others aren’t? Pulling books from shelves at random had been a habit of Robinson’s ever since he was young. His father was an electrical engineer who traveled the world installing telecommunications systems, and the family had followed him to the Caribbean and Africa. Books on Africa lined the shelves of his childhood home, and Robinson read them voraciously. He taught himself economics from a textbook he snagged from his high school library in Kenilworth, England, and went on to study economics at the London School of Economics and the University of Warwick before coming to Yale to pursue a PhD. By this point in his studies, he’d become frustrated by the field. “The more I learned about it, the more there was this enormous disjunction between my impulses of what I thought were the problems in poor countries and what economists said were the problems in poor countries,” Robinson recalls. Seated comfortably in his book-lined Harvard office, he has clearly found a home in the highest echelon of academic economics. But he seems to have retained some of that youthful drive to push against orthodoxy. He’s wearing black jeans and a black blazer, and his square chin and half-smirk give him a passing resemblance to Christopher Reeve. As he talks he waves his hands animatedly, excited by the ideas that come flowing out of him and fired up at the prospect of new discoveries. “Why is Sierra Leone poor?” he continues. “For economists, there is only a narrow set of things that count as relevant, and they kind of chuck out vast amounts of stuff about the nature of society and people and institutions. If you live in Africa, you know African society is different from Western society: families are different, politics is different, the way people relate to each other is different. But all of those things are irrelevant to economists.” That’s what made Bates’ book so irresistible. “It was what I was missing,” he says. “It just coincided much more with what I was incoherently feeling had to be the right way to think about these problems. That book had a huge impact on me.” Since that day, Robinson has made a career of delving into questions mainstream economics has been afraid to touch, drawing seemingly disparate connections and finding answers in places his colleagues would never think to look. The approach has earned him wide acclaim. His bestselling 2012 book, Why Nations Fail: The Origins of Power, Prosperity, and Poverty, co-written by MIT economics professor Daron Acemoglu, sits on a small shelf of titles that are both academically erudite and wildly popular. He lectures around the globe and has taught at some of the nation’s most prestigious schools, including the University of Southern California, UC Berkeley and, since 2004, Harvard University. All of which is to say, the February 3 announcement that Robinson is joining the Chicago Harris faculty was greeted with immense enthusiasm at the school. His appointment as University Professor is effective July 1, and he will be in residence beginning next January. “The balance you always have to get right is between rigor and relevance,” says Chicago Harris Dean Daniel Diermeier. “We believe the best guide for public policy is rigorous analysis, but it has to be founded within the particular domain in which you are operating. What’s really special about Jim’s work is it combines the methodological rigor of game theory and statistical analysis, but it’s grounded in a deep understanding of historical and political context. That’s a very powerful combination.” * * * A conversation with Robinson is a wild ride through history and geography, cruising easily between contemporary Africa, Stuart England and Soviet Russia, frequently with visual aids grabbed from the shelves. “Actually, I can see it behind your head,” he says suddenly at one point, swiveling his chair to reach for a book on the Congo from the 1970s. “From the time I met him, he has had an encyclopedic memory of history,” says Canice Prendergast, the W. Allen Wallis Professor of Economics at Chicago Booth, who was in the same class with Robinson at Yale. “He remains extremely well read compared to most of our peers.” And yet, he adds, Robinson does not come across as overly bookish or conceited. At Yale, he organized a study group with fellow students, and was just as comfortable talking at a pub or a party with glass in hand. “He has a very British sense of self-deprecation that is very appealing,” Prendergast says. “There is this generosity about him; he is not a competitive guy.” “Jim is a true scholar in the sense that he is just really interested in understanding how the world works,” says Nathan Nunn, a Harvard economics professor who is co-teaching a course with Robinson on cultural evolution. “Economists don’t tend to be that broad. They stick to statistics and models they know.” It’s not that economics is necessarily insular, Acemoglu says, but rather that specialization is the consequence of being at the top of your field in any subject. “If you are going to do game theory at a level that is going to make you faculty at Harvard or Chicago or MIT, you need to know the literature and be technically very strong – those take big investments of time,” he says. “It takes exceptional talent and vision to pull off the polymath kind of thing, to have a firm basis in economics and build the same within political science, and be informed and well read on the history of dozens of countries. That is a rare trait. You don’t see that often.” Robinson met Acemoglu while he was studying at Yale in 1992. When he gave a talk at his alma mater, the London School of Economics, Acemoglu was sitting in the front row. Afterward, Robinson went out to dinner at an Indian restaurant in Covent Garden with several professors and students. On the way Acemoglu struck up a chat, asking if Robinson had read a paper about England’s Glorious Revolution in 1688 – the moment when England passed its Bill of Rights and became a constitutional monarchy. The two were engrossed in the topic throughout the meal, and they continued their discussion remotely after Robinson took a position at the University of Melbourne in Australia and Acemoglu went to MIT. It became clear in subsequent meetings that they were kindred spirits in looking beyond statistical models and demand curves toward a more inclusive view of economics. They began collaborating on papers, eventually culminating in Economic Origins of Dictatorship and Democracy, published by Cambridge University Press in 2006. Before that book was even published, Robinson and Acemoglu had started on their next book, which they conceived of as an explanation of the global roots of poverty. Working on it for a year together, however, the pair became increasingly frustrated by the constraints of writing for an academic audience. “The problem isn’t that academics are thinking about these problems incorrectly,” says Acemoglu. “The problems are that policymakers are thinking about these things incorrectly. The majority of things written in The New York Times or The Washington Post about economic development are just wrong.” In fact, Robinson adds, the problem is that most policymakers aren’t thinking about the origins of policy at all. Focused on developing solutions, they ignore the root causes of why countries are unequal. “The typical economist approach to policy is that the politicians are well meaning but don’t know what to do, so we are in the business of inventing cleverer things for them to do,” he says. Trying to implement those solutions without understanding history and culture is a fool’s errand, he argues. “Politicians might be doing some policy that is not so good for the economy, but maybe there is a systemic reason why they are doing it,” he says. “Just explaining that a policy is not good is not going to get you anywhere.” With this shared perspective, Robinson and Acemoglu set out to write a more popular book that would address the issue primarily through stories and anecdotes. They began test-driving examples through an economic history course Robinson was teaching at Harvard – and synthesized them in Why Nations Fail. * * * Written in a smart but readable style, Why Nations Fail drew inspiration from a wide range of disciplines, including economics, political science, history, sociology, anthropology and psychology. “Every academic discipline has this idea about what’s interesting and what’s not, and I never got that,” says Robinson. “Sometimes the most inspiring things are written by people who are just not thinking about the same questions as you are – so it’s completely fresh.” The book begins with a compelling example of economic inequality: the city of Nogales – one half of which is in Arizona, the other half in the Mexican state of Sonora. Nogales was arbitrarily divided after the Mexican-American War, and on either side of the fence the fortunes of the population couldn’t be more different. People on the U.S. side have relatively high median income, graduation rates, health outcomes and life expectancy; figures for those on the Mexican side are much lower across the board. Robinson and Acemoglu use the example of Nogales to challenge long-held beliefs about the origins of poverty. “I think it is sort of ridiculous to say there is some geographical or ecological reason why the United States ended up rich and Mexico didn’t,” says Robinson. After all, here are two groups of people living in the same location, even descended from the same culture, with very different economic fortunes. So what gives? Why Nations Fail provides a one-word answer: institutions. It’s not the sexiest explanation, to be sure. But in the authors’ hands, the theory achieves a rich vastness of scope. From Nogales, they spool backward hundreds of years to the Spanish conquest of Latin America and the English colonization of Jamestown to show how the two societies grew up in dramatically different ways. South of the border, the Spanish set up systems of plantations that institutionalized the exploitation of the native classes for the enrichment of a small group of elite colonial governors. In the English colonies, by contrast, a lack of gold and large populations of native workers led to a more democratic framework in which the colonists were forced to work the land – as typified by Captain John Smith’s famous dictum, “Those who don’t work, don’t eat.” Robinson and Acemoglu coin names for these two types of institutions – “extractive” and “inclusive” – and show that a country’s position on this continuum affects its ability to generate wealth and prosperity. “It’s the sheer outcome of the historical process of institution building, which had all sorts of idiosyncratic features, that led to these differences,” says Robinson. The authors focus on these small features to show how they had outsized influence over time. In the nineteenth century, for example, the United States became the richest country in the world – in part, says Robinson, because of its inclusive patent system. “It’s all about incentives,” he says. “Anyone could pay the same fee to get a patent on an idea, and the state would protect it.” At the same time, other institutional features – such as property rights, opportunities to invest and a consistent rule of law – created a level playing field. “Emphasis on inclusion drives economic growth, innovation and technological change,” he adds. By contrast, “extractive” institutions only benefit a small percentage of citizens, as is frequently the case in countries ruled by an elite that – through concentrated ownership or corruption – funnels most of the wealth into the hands of the few. In Robinson and Acemoglu’s account, it’s possible for extractive institutions to promote growth for a limited period of time, provided there is a strong enough central state (think of the Soviet Union under Stalin or modern-day China). But the lack of political underpinnings for broad economic participation always eventually leads to collapse. In support of their theory, the authors marshal an impressive array of examples that span both geography and history, which Acemoglu freely attributes to Robinson’s polymathic brain. “He knows the history of pretty much every country better than I do,” says Acemoglu. “And it also helps that he is an incredibly decent and likable person, who has so many good friends around the world. If I say we should find out about the nineteenth-century history of Egypt, he will say, ‘Let me call my friend Omar and ask what the good sources are on that.’” Much of their thesis swirls around the dramatic changes in institutions that occurred in Europe as a consequence of the Glorious Revolution of 1688 – the (relatively) bloodless coup that transferred power from the extractive Stuart dynasty to the more inclusive regime of William and Mary, setting the stage for the industrial revolution a century later. But their version of history isn’t one in which England, the United States or any other country is preordained for power. Rather, it turns on small moments they call “critical junctures” during which the scale could have tilted either way. “Institutions in any society can go off the rails,” Robinson says. “It could have happened in the U.S. at the end of the Civil War, or in the 1880s. Or in the 1930s – what would have happened if Roosevelt had been able to pack the Supreme Court and turned them into a bunch of lackeys? That would have taken away a big pillar of constraints on the abuse of political power.” In general, however, Robinson is bullish on the United States, despite evidence in recent years of increasing inequality and politics driven by campaign contributions by the rich. * * * “People criticize the book for being too positive about the U.S., but that’s because if you spend all of your summers in Colombia or the Congo or Haiti, and you come back to the U.S., everything seems so functional,” Robinson argues. “I understand there are a lot of special interests getting favors in the political system, but if I just look at the economy, I don’t see this more extractive political system.” Other critics have called the book too simplistic. Political scientist Francis Fukuyama (who famously labeled the post–Cold War era “the end of history”) described the terms “inclusive” and “extractive” as too imprecise to be measured. Jared Diamond, a good friend and colleague of Robinson’s and the author of the hugely ambitious book Guns, Germs, and Steel, took issue with the authors’ dismissal of factors he considers crucial to understanding national trajectories. Diamond allowed that institutions might help explain national differences in prosperity, but he argued that they are not the “overwhelming determinants,” citing other climate and geographical factors that burden tropical countries with disease and poor agricultural yields. Perhaps the harshest criticism came from former Microsoft chairman Bill Gates, who called the book “vague and simplistic” and a “major disappointment.” Robinson and Acemoglu responded with a scathing article in Foreign Policy that took Gates to task for historical inaccuracies and questioned whether he’d even read the book. It’s not surprising that Gates, whose philanthropic foundation has poured billions of dollars into developmental aid in Africa, would slam the book, Robinson says. “Bill Gates has this view of the world that poverty is just waiting for clever ideas and lots of money, and that will solve all of the problems,” Robinson says. It’s precisely that kind of viewpoint, he believes, that has led to decades of failed efforts by rich countries to help poor ones. Because political elites actually benefit from extractive policies, they have little incentive to change them – making any aid or development initiative they might consider just another opportunity to capture more wealth. It’s only when leaders voluntarily agree to make institutions more inclusive that true prosperity can emerge. “From my perspective, this is not about coming up with some better policy,” Robinson says. “You have to change the political and institutional equilibrium, and that is not easy to do.” Robinson’s current work is helping him gain more insight into how those transformations take place. He and Nathan Nunn are conducting field research in the Democratic Republic of the Congo (DRC), where they’re looking at the impact of culture on institutions. “What makes successful societies is something deeper and more fundamental than education or health or machines to make capital,” says Nunn. “We are still trying to understand how culture responds to institutions, or whether it goes the other way, that people’s cultural beliefs influence the institutions they create.” Nunn and Robinson hypothesized that good institutions help establish cultural norms that take on a life of their own as they are internalized over successive generations. To test that supposition, they played behavioral economic games with two tribes: one the descendant of the Kuba Kingdom, which had strong institutions; the other a loose network of decentralized villages. In doing so, they found the decentralized tribes were less likely to cheat – exactly the opposite of what they predicted. “It’s possible that formal rules and motivations can crowd out intrinsic motivations, while the people living in the small villages who determine everything by consensus are the ones who have internalized these values,” speculates Nunn. Robinson and Nunn will travel back to the DRC this summer to further test this hypothesis. The work could also feed into a new book project Robinson and Acemoglu have begun discussing that would explore the impact of state creation on economic effectiveness. Robinson hopes that by coming to Chicago Harris and joining a culture that champions such deep inquiry and interdisciplinary scholarship, he will be able to strengthen the impact of his work and perhaps even institutionalize the kind of research he’s been focused on for the past few decades. True to form, he is also looking forward to the serendipity that comes with new places, new colleagues and new books on the shelves. “Who knows what will happen?” he says with a smile. “When you get into a new place with new people, you start talking about new ideas.”