Extractive political institutions and extractive economic institutions create a reinforcing vicious cycle. “Extractive” institutions are ones where the power and wealth are funneled towards a controlling group.
Conversely, inclusive political and economic institutions create a virtuous reinforcing cycle. "Inclusive” institutions are ones that have pluralistic power and rule of law.
Inclusive institutions support longer-term planning, because people can rely on rights & protection, and thus save and invest in education & innovation.
These ideas are, at their core, basic classically-liberal principles.
The authors have done a good job of showing how inclusive institutions lead to growing nations, and how extractive institutions can lead to capture, authoritarian regimes, or societal collapse.
What the authors have not made a case for is why growth is the most important means of measurement, nor why centralization of power is required for inclusivity. (One can imagine decentralized systems that protect rights and rule of law, for example). Nor have the authors deeply examined resource/environmental extraction and what that will mean for the future of all institutions, should our approach to natural resources not shift to an inclusive model.
Have you read this book or one of the others that talk about why nations rise and fall? Have any recommendations on what to read next? Let’s discuss