Daron Acemoglu and James A. Robinson – The Narrow Corridor: States, Societies, and the Fate of Liberty

Daron Acemoglu and James A. Robinson – The Narrow Corridor: States, Societies, and the Fate of Liberty

Acemoglu has been on the economics Nobel shortlist for some time. Robinson is a frequent collaborator. When I was in grad school, their papers, often coauthored with Simon Johnson, were referred to in the shorthand “AJR,” especially  “The Colonial Origins of Comparative Development: An Empirical Investigation” and the debate it set off in academic journals.

Acemoglu and Robinson (AR?)’s previous book, 2014’s Why Nations Fail, contrasts extractive versus inclusive institutions, and finds that inclusive-institution countries tend to be both freer and wealthier. Countries with predatory governments with corrupt legal systems tend to be poor and repressive, while countries with a strong rule of law that keep corruption reasonably in check tend to be wealthy and free. Think of North Korea vs. South Korea. While this should not be a controversial argument, it is one that many politicians and academics resist, so Acemoglu and Robinsons’ reminder, while not original, was welcome.

The Narrow Corridor uses a different framework with a little more nuance, and ultimately reaches a similar conclusion. It also does it in an accessible style—which is important in a time of rising populism that needs to be countered. The more ears that hear about the connection between liberalism and prosperity, the better. Instead of a dichotomy of extractive and inclusive, here Acemoglu and Robinson draw a trichotomy between Absent Leviathan, Despotic Leviathan, and Shackled Leviathan. They are the same awful creature, just put into three different situations.

Absent Leviathan is a government that doesn’t do the things governments are supposed to do. When a government does not protect property rights, provide an accessible and fair legal system, a reasonably stable currency, and on down the line—the list varies with one’s political views—that country tends to be poor and stagnant.

Despotic Leviathan is a government that is too present. Like fire, government burns everything it touches if it isn’t kept in check. The twin terrors of fascism and communism are history’s starkest examples. But other types of Despotic Leviathan have appeared everywhere from most European colonial governments, and often their independent successors, to dynastic monarchies in China, Egypt, and most everywhere else in the world through history.

The goal is some kind of Shackled Leviathan, which Acemoglu and Robinson describe on p. 27: “[R]epression and dominance are as much in its [Shackled Leviathan’s] DNA as they are in the DNA of the Despotic Leviathan. But the shackles prevent it from rearing its fearsome face. How those shackles emerge, and why only some societies have managed to develop them, is the major theme of our book.”

The cage of norms is a key concept in understanding why it is so hard to keep Leviathan in that narrow corridor where it is both present and shackled. This represents a bit of a turn for Acemoglu and Robinson. Why Nations Fail was mostly about institutions; the cage of norms is about culture. Many economists downplay or ignore cultural factors in their work because it is often difficult or impossible to measure or formally model. Deirdre McCloskey is the most prominent exception. Her name does not appear in the bibliographies, but her fellow traveler Joel Mokyr’s does, along with Douglass North, Barry Weingast, and a few other similarly minded scholars.

The cage of norms is a catch-all term for highly restrictive cultures. There are many types of cages.  Some cages confine women from public and economic life. Others place taboos against commerce. Nationalist cages engrain hostile attitudes to outsiders. Traditionalist cages can lock out progress and change. India’s caste system is one example. Honor cultures are another. Religious fundamentalism is nearly always a cage of norms. Nationalism, which is currently returning to a vogue not seen in decades, is a very risky cage at the moment in several countries, including Hungary, Italy, the UK, Mexico, and the United States.

The point is that countries that have strong cages of norms gave a hard time keeping their Leviathans shackled in the narrow corridor, and are generally bad places to live.

The Red Queen Effect is Acemoglu and Robinson’s main metaphor for how Leviathan can stay in its proper corridor. It’s essentially competition. When church and state compete with each other, they direct their energies against each other rather than against people. And as Harold Berman pointed out in Law and Revolution, they were also competing for customers. Successful competitor states had to keep their behaviors in the corridor. Federalism, or competing levels of government, is another area for Red Queen-style running. So is separation of powers, with competing branches running as fast as they can to stay in the same place relative to the other branches. A vigorous civil society, unconfined by a cage of norms, is ultimately the most effective Red Queen racer.

In another intellectual turn, Acemoglu and Robinson rely more on history than on economic analysis to make their argument. They offer plenty of numbers and data, but little of the regression analysis or formal model-building that one associates with MIT or University of Chicago economists.

The wide-ranging first chapter alone travels from Wyoming to Ghana in the 19th and 20th centuries, among several other places. To illustrate Absent, Despotic, and Shackled Leviathans, they tell  stories about free-wheeling Siena in Italy, regimented and militaristic Prussia to its north, and Switzerland caught in the corridor between them. China and India get their own in-depth chapters, and the comparison of Costa Rica and Guatemala, and how coffee affected their different trajectories, is especially instructive.

Acemoglu and Robinson find their framework also applies in the present day. Ferguson, Missouri’s police department is simultaneously an Absent Leviathan and a Despotic Leviathan. It doesn’t do things it’s supposed to do, such as providing safety and security. And it does plenty of things it shouldn’t do, some of which became national news. To a greater degree than in wealthier communities, Ferguson’s majority-black residents are subjected to arbitrary and unpredictable fines for everything from jaywalking to the length of the grass in their yard. Residents are then fined further when they are unable to pay. The department’s 2014 murder of Michael Brown was a flashpoint incident that brought stark attention to how far outside the corridor Ferguson’s government—and governments in many other communities like it—had strayed.

The tangle of metaphors is a bit much, but Acemoglu and Robinson’s larger message is sound—the best government is limited government. They are not doctrinaire libertarians, and as Deirdre McCoskey argues in her new book Why Liberalism Works, they rely too much on the traditional, and mistaken, Marxian conception of capitalism as dependent on capital. Innovation and a can-do ethos of continual improvement are actually far more important. But their message of the need to limit political power is important, especially in the current political moment. Leviathan is an awful creature who can kill by the millions when let out of its cage. If government is a necessary evil, one must remember that both of those words are important.

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