Profile, £25

Why Nations Fail, By Daron Acemoglu and James A Robinson

A penetrating analysis of social organisation argues that the West's 'inclusive' states show signs of a relapse.

This is the age of the bold intellectual synthesisers. This book, by two US economists, comes garlanded with praise by its obvious forebears – Jared Diamond, Ian Morris, Niall Ferguson, Charles C Mann – and succeeds in making great sense of the history of the modern era, from the voyages of discovery to the present day.

The essential message is simple: that there are two kinds of states: extractive and inclusive. Extractive states are locked into a vicious circle of kleptocracy, suppression of technological innovation and economic and personal freedom. Consequently, they are extremely poor. Inclusive states have no single centre of power but are innovative and prosperous thanks to the jostling of competing interests under the rule of law and secure property rights.

The reason that inclusive states are far more successful than extractive ones is the concept popularised by Joseph Schumpeter and recently misappropriated by Mitt Romney: creative destruction. Of course totalitarian societies are good at destruction – the kulaks can be liquidated. But creative destruction means challenging vested interests to develop a better way of doing things. It means replacing canals with railways, steam engines with electric, typewriters with word processors. It means that once-proud companies and sometimes whole industries go to the wall when the mode of the technology changes but the overall result is more widespread wealth.Poignantly for this reviewer, the hero of the book is England: the pioneer inclusive state.

Inclusive states virtually all stem from just two models: Britain and France. Together, they ensured that Western Europe would eventually become inclusive and British colonialism spawned inclusive states in North America and Australia. These are still pretty well the only such large states, with the exception of Japan, which began the process in the late 19th century and joined the club after the Second World War. The dirty secret of the inclusive states is that they are only inclusive at home: the authors mercilessly expose the viciously extractive economies they instituted in their colonies. One of the starkest lessons is that even when independence or revolution comes to extractive states, the new regime merely appropriates the corrupt power structure for its own ends.

The one weakness in an otherwise even-handed account is a blind spot with regard to the US treatment of South America. The legacy of the plundering conquistadores is repeatedly cited as the cause of South America's failure to develop fully inclusive societies. You will find no mention here of the Monroe Doctrine whereby the US claimed the right to regulate life in South America, or the Bay of Pigs invasion, or the Nicaraguan Contras, or the CIA and Pinochet, or exploitative US corporations. Over all recent books proclaiming the virtues of the Western Way hangs the question: why does it appear to be going wrong?

The frontrunners of the inclusive society, Britain and America, are showing worrying signs of lapsing into extractivism. Whereas a Henry Ford knew that there was no point in making cars by the thousand if people like his own workers couldn't afford them, the gap today between the very rich and the rest has widened to the point that the elite don't need incomes to be widely spread to enhance their own riches.

What is the shadow banking economy with its mega-bonuses and dodgy financial instruments but an extractive economic system, warping the inclusive economy for the benefit of a few? In Britain: the era of growth in our inclusive structures came to an end with Mrs Thatcher, who undermined sections of the economy – coal, steel, railways and other heavy industries – that produced a culture (ie Labour voters) that she deplored. She put nothing tangible in their place.

Why Nations Fail deserves to be hugely influential: it has what the physicist and philosopher David Deutsch calls reach, meaning that it can be applied to areas beyond its initial terms of reference. Acemoglu and Robinson's ideas could be applied to the questions of why the wars against drugs and gang-related knife and gun crime have also failed. These are microcosms of the big picture, very powerfully painted.

Arts and Entertainment
Eddie Redmayne as transgender artist Lili Elbe in The Danish Girl

First look at Oscar winner as transgender artistfilm
Arts and Entertainment
Season three of 'House of Cards' will be returning later this month

TV reviewHouse of Cards returns to Netflix
Arts and Entertainment
Harrison Ford will play Rick Deckard once again for the Blade Runner sequel

film review
Arts and Entertainment
The modern Thunderbirds: L-R, Scott, Virgil, Alan, Gordon and John in front of their home, the exotic Tracy Island

Arts and Entertainment
Natural beauty: Aidan Turner stars in the new series of Poldark
Arts and Entertainment

Oscars 2015 Mexican filmmaker uses speech to urge 'respect' for immigrants

Arts and Entertainment
The Oscar nominations are due to be announced today

Oscars 2015 Bringing you all the news from the 87th Academy Awards

Have you tried new the Independent Digital Edition apps?
Arts and Entertainment

ebooksNow available in paperback
Arts and Entertainment

Arts and Entertainment
Lloyd-Hughes takes the leading role as Ralph Whelan in Channel 4's epic new 10-part drama, Indian Summers

TV Review

The intrigue deepens as we delve further but don't expect any answers just yet
Arts and Entertainment
Jason Segal and Cameron Diaz star in Sex Tape

Razzies 2015 Golden Raspberry Awards 'honours' Cameron Diaz and Kirk Cameron

Arts and Entertainment
The Oscars ceremony 2015 will take place at the Dolby Theatre in Los Angeles
Oscars 2015A quiz to whet your appetite for tonight’s 87th Academy Awards
Arts and Entertainment
Sigourney Weaver, as Ripley, in Alien; critics have branded the naming of action movie network Movies4Men as “offensive” and “demographic box-ticking gone mad”.
TVNaming of action movie network Movies4Men sparks outrage
Arts and Entertainment
Sleater Kinney perform at the 6 Music Festival at the O2 Academy, Newcastle
musicReview: 6 Music Festival
Arts and Entertainment
Sleater Kinney perform at the 6 Music Festival at the O2 Academy, Newcastle
musicReview: 6 Music Festival
Kristen Stewart reacts after receiving the Best Actress in a Supporting Role award for her role in 'Sils Maria' at the 40th annual Cesar awards
A lost Sherlock Holmes story has been unearthed
arts + ents Walter Elliot, an 80-year-old historian, found it in his attic,
Arts and Entertainment
Margot Robbie rose to fame starring alongside Leonardo DiCaprio in The Wolf of Wall Street

Film Hollywood's new leading lady talks about her Ramsay Street days

Arts and Entertainment
Right note: Sam Haywood with Simon Usborne page turning
musicSimon Usborne discovers it is under threat from the accursed iPad
Arts and Entertainment
A life-size sculpture by Nick Reynolds depicting singer Pete Doherty on a crucifix hangs in St Marylebone church
arts + ents
Arts and Entertainment
Escalating tension: Tang Wei and Chris Hemsworth in ‘Blackhat’
filmReview: Chris Hemsworth stars as a convicted hacker in Blackhat
Arts and Entertainment

Oscar voter speaks out

Arts and Entertainment
The Oscars race for Best Picture will be the battle between Boyhood and Birdman

Arts and Entertainment
Anne Boleyn (Claire Foy), Thomas Cromwell (Mark Rylance)
tvReview: Wolf Hall
Arts and Entertainment
Tom Meighan of Kasabian collects the Best Album Award
Arts and Entertainment
Best supporting stylist: the late L’Wren Scott dressed Nicole Kidman in 1997
Arts and Entertainment
Dakota Johnson and Jamie Dornan as Anastasia Steele and Christian Grey in Fifty Shades of Grey


Arts and Entertainment
Mick Carter (Danny Dyer) and Peggy Mitchell (Barbara Windsor)
tv occurred in the crucial final scene
Arts and Entertainment
Glasgow wanted to demolish its Red Road flats last year
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

ES Rentals

    Independent Dating

    By clicking 'Search' you
    are agreeing to our
    Terms of Use.

    HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

    Scientists hail daily pill that protects against HIV infection

    Breakthrough in battle against global scourge – but will the NHS pay for it?
    How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

    Time to play God

    Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
    MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

    MacGyver returns, but with a difference

    Handyman hero of classic 1980s TV series to be recast as a woman
    Tunnel renaissance: Why cities are hiding roads down in the ground

    Tunnel renaissance

    Why cities are hiding roads underground
    'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

    Boys to men

    The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
    Crufts 2015: Should foreign dogs be allowed to compete?

    Crufts 2015

    Should foreign dogs be allowed to compete?
    10 best projectors

    How to make your home cinema more cinematic: 10 best projectors

    Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
    Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

    Manchester City vs Barcelona player ratings

    Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
    Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

    Monaco: the making of Wenger

    Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
    Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

    Chris Gayle: The West Indies' enigma

    Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
    In Ukraine a dark world of hybrid warfare and murky loyalties prevails

    In Ukraine a dark world of hybrid warfare

    This war in the shadows has been going on since the fall of Mr Yanukovych
    'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

    Homage or plagiarism?

    'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
    Broadchurch ends as damp squib not even David Tennant can revive

    A damp squib not even David Tennant can revive

    Broadchurch, Series 2 finale, review
    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

    Inside the mansion of Germany's 'Bishop of Bling'

    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower