Published by EH.NET (October 2006)

Daron Acemoglu and James A. Robinson, Economic Origins of Dictatorship and Democracy. New York: Cambridge University Press, 2005. xv + 416 pp. $35 (cloth), ISBN: 0-521-85526-6.

Reviewed for EH.NET by Michael Munger, Department of Political Science, Duke University.

The key questions posed in this book have to do with the origins and stability of institutions. Specifically, why do some nations introduce democratic institutions and others fail to do so? And, among nations that have become democratic at least once in their histories, why is it that some become stable democracies and others revert to authoritarian regimes, and in some cases careen wildly back and forth between regime types?

The book rests on a seeming paradox: politically powerful groups need some device that will allow them credibly to commit to reducing their own power. The threat of mass revolution cannot be forestalled by the promise of side payments, unless the means by which those side payments are decided and awarded is literally within the power of the masses.

The authors (Acemoglu is Kindleberger Professor of Applied Economics at MIT, and Robinson is Professor of Government at Harvard) note that democracies face this problem just as much as autocracies. That is, coups against democracies that impose an oligarchy have much the same logic as coups against oligarchies that seek to impose democracy. In both cases, at least with full information, the current regime will nearly always be better off offering concessions and side payments. But the coup may occur anyway, if the existing regime, regardless of its type, fails to devise a credible means of guaranteeing the compensation once the coup threat dissipates. This is a particular problem when the leaders of a potential coup recognize that their ability to make threats is transitory.

Their methodological approach rests on an extremely innovative suite of formal models. There is more than enough use of historical examples and applications to give flesh to the mathematical skeleton, however, and the book can be profitably read even by those for whom advanced modeling is difficult.

Ultimately, the testable predictions of the models can be summarized, with only minor damage to nuance, fairly briefly. First, democracies have historically been created by elites when the threat of social unrest and violence cannot be defused in any other way. This condition will only be met when the conditions in which citizens live are so bad, but the set of civic connections and infrastructure for overcoming the collective action problems inherent in organizing revolution are so good, that revolution is imminent. Second, democracies will not be an answer to the threat of revolution, even credibly imminent revolution, when inequality is so high, and/or when the assets of elites are easily nationalized or taxed away, or when elites expect to lose control of the ability to write down basic constitutional rules that constrain the scope of democratic government action.

More simply, then, we expect elites to support democratic transitions when the threat of failing to do so is nearly certain revolution, and when the expected political and economic costs of democracy can be kept within certain bounds.

The set-up for the analysis is a very brief, “history seen from a hang-glider,” overview of four regime transition histories: England (from oligarchy to stable democracy); Argentina (veering wildly between numerous unstable equilibria); Singapore (from oligarchy to stable oligarchy, but with significant economic growth); and South Africa (from colonial kleptocracy to apartheid to possibly stable democracy).

I expect that the book will be one of the influential pieces of scholarship of the past decade. Its virtue is its flaw: it develops a coherent framework that takes a particular perspective (instantiating the claims of threat and cost outlined above in a model), and derives propositions from those models. Some might interpret coherence as narrowness, even over-simplification, but those of us committed to the enterprise of modeling are persuaded that parsimony is a virtue. The perspective taken here may be wrong, of course. But it is clear just what theoretical assumptions and premises for argument underlie the claims, and it is equally clear how the conclusions are reached. The models, and their implications, are dramatic steps forward, precisely because some of them are likely to be extended or corrected in work that is provoked by Acemoglu and Robinson.

There is one kind of problem the book does not handle very well, and I would like to discuss this briefly. The authors clearly recognize that making promises about a fundamental change in the way that political and economic property rights are defined, and disputes adjudicated, is very difficult, no matter how good one’s intentions. The problem is that no one can be sure that the initial assignment will be stable. The problem is more complex than the simple generic instability results, to which the authors here give cursory attention in Chapter 4. Their solution, a variant of the probabilistic voting model, goes some way toward ensuring an outcome, in the sense of the existence of equilibrium.

But not far enough, in my opinion. William Riker’s idea of heresthetics is something more than the passive acceptance of the dimensionality of the space of political conflict given by elite consensus. Heresthetics, or the strategic introduction of one or more new issues calculated to split the ruling coalition, either in an oligarchy or a democracy, is a dynamic force that is difficult or impossible to control. Acemoglu and Robinson are entirely too confident of the ability of political institutions to control the specter of political, and ultimately revolutionary, chaos. Their invocation of probabilistic voting, with its implicit convexification of the nonconvexities in aggregate preference orders, is a band-aid that will not hold things together.

That said, I have no alternative solution to offer, and the forecasting of the outcome of chaotic voting trajectories is by definition rather dicey. The threat of the heresthetician is something close to, “Give me what I want, or I’ll blow up the building we all live in!” This threat may not be strictly rational, since one is trading away risk and embracing true uncertainty. But it is plausible that some groups excluded from power, in either oligarchic or democratic regimes, might be willing to threaten, and perhaps even to carry out, revolutionary actions that seem suicidal.

My quibble about social choice stability aside, I would recommend this book to anyone with a serious interest in democratic transitions and economic development. Its historical scope, and the power of the models it develops, set a new standard in political economy.

Michael Munger is chair of the Political Science Department at Duke University, and writes on political economy and public choice.