Why Nations Fail, Chapters 9 and 10

Group Name: Jagongbi (Let’s Study Liberalism and Soar)

Book Title: Why Nations Fail

Date/Time: November 26, 2024 (Tue) 8:30 PM

Location: Online Whale On

Participants: mori, J, Born to Run, Jayu, Sora

Written by: mori

Chapter 9. Reversals in Development

Spices and Ethnic Massacre

- Netherlands: acquired from the king of Ambon a monopoly over the clove trade within Ambon.

- To monopolize mace and nutmeg, which grew only in the Banda Islands, they massacred nearly all local inhabitants.

- To avoid Dutch threats, many countries gave up cultivating export crops and halted commercial activity, turning to self-sufficiency.

- Because of Dutch colonial policy, Southeast Asia ceased trade and became more absolutist.

The Slave Trade That Shook African Societies

- Africa did not go through a transition from slavery to serfdom as medieval Europe did.

- It learned forms of slave mobilization from Muslims in the North African kingdoms.

- In the early 17th century, large sugar plantations developed in colonies around the Caribbean; people captured in war were exchanged as slaves. Firearms and ammunition obtained in exchange for slaves were imported, and warfare became more frequent.

- Two negative political processes resulted from the slave trade: 1. regimes became more absolutist; 2. orderly governmental authority was destroyed, laws producing more slaves emerged, and even religious institutions were corrupted into capturing and selling slaves.

- The Kingdom of Kongo was the first African polity to sell its own people into slavery before collapsing into civil war.

The Consequences of Abolishing the Slave Trade

- Britain abolished the slave trade in 1807 and slavery in 1843.

- But abolishing the slave trade did not eliminate slavery in Africa; instead, it led to a reallocation of slaves. Rather than selling slaves, people used slaves to produce goods and engage in trade.

- Thus, throughout the 19th century, slavery in Africa did not contract; it actually expanded.

- Slavery was abolished in Sierra Leone in 1928.

- Because of extractive political and economic institutions based on the slave trade, sub-Saharan Africa failed to enjoy the benefits of industrialization and instead regressed.

The Reality of the Dual Economy

- Arthur Lewis’s 1955 dual economy paradigm: underdeveloped economies consist of a dual structure of a modern sector and a traditional sector. Labor productivity in the traditional sector is so low that reallocating labor to the modern sector does not reduce rural output.

- Based on this, development economists viewed development as drawing labor and resources from the traditional agricultural sector and putting them into the modern sector represented by industry and cities.

- The dual economy is a recent development. It is not something that arose naturally; it is underdevelopment deliberately created, not something accumulated spontaneously over a long period.

- Botswana: escaped the effects of the slave trade and war.

The Natives Land Act

- 1913 Natives Land Act: drove out native farmers competing with white farmers and mobilized large quantities of low-wage labor. Thereafter it enabled whites to monopolize economic rights and laid the foundation for the apartheid regime.

- The dual economy was neither spontaneous nor an inevitable necessity, but a product of European colonial policy.

- Economic growth that benefited only whites, without accompanying creative destruction, could be sustained only while income from gold and diamonds kept rising. By the 1970s, South Africa’s economic growth began to stall.

- Extractive economic institutions were established on the basis of highly extractive political institutions. What supported these political institutions was the military dominance of white settlers.

- The collapse of racial barriers and the disappearance of the homelands were not the result of natural economic development. They happened because Black South Africans rose up against the regime.

- Ultimately, what destroyed South Africa’s dual economy was that Black people gained power, organized, and were able to resist injustice.

Development in Reverse

The cause of these failures can be found in extractive institutions, either as the result of persistent absolutist regimes or because of the absence of a centralized government.

- The case of the Caribbean islands

- The case of Southeast Asia

- The case of India: the East India Company, weakened by the Glorious Revolution, transformed into a continental empire. It plundered the wealth of the native population and inherited and strengthened the extractive tax institutions created by Mughal rulers.

- As a result, India’s textile industry also sharply declined. It was reduced to a country growing opium.

- The case of Africa

Chapter 10. The Diffusion of Prosperity

The French Revolution sparked industrialization in Belgium, the Netherlands, Switzerland, Germany, and Italy.

Australia’s Path

- Australia: a penal colony within the empire.

- The ruling involving the convict couple Henry Kable and Susannah Kable. Judge Advocate David Collins: the first civil case in which he ignored English law and issued an independent ruling.

Economic Freedom for Convicts

- Since flogging and exile were ineffective, incentives were offered.

- Australia’s elite squatters came to realize that establishing inclusive economic institutions was in their own interest.

Demands for Representative Institutions

- Australia’s elite demanded legal ownership of the land they had squatted on.

- 1823 establishment of a Legislative Council appointed by the British government: constrained the governor’s authority.

- 1831 former convicts were also allowed to serve on juries.

- 1842 Legislative Council

- In the 1850s, universal suffrage for adult white men was guaranteed.

- 1856 the world’s first secret ballot.

- As in Jamestown, Virginia, 181 years earlier, Sydney in New South Wales did not have a large enough indigenous population to exploit, nor did it have precious metals like gold or silver, and even its soil and crops were not economically suited to slave-worked plantations.

The French Revolution first overthrew French absolutism and then triggered a succession of interstate conflicts that spread institutional reform across most of Western Europe.

The French Revolution That Removed Obstacles

- 18th-century France: handicrafts regulated by guilds, the Ancien Régime system, serfdom (in decline).

- August 4, 1789, National Constituent Assembly: complete abolition of feudalism, and all citizens to pay taxes equally.

- One of the greatest influences on the French Revolution was the fact that neighboring Britain was rapidly industrializing.

The Fall of the Estates-General

- 1774 accession of Louis XVI: royal finances were exhausted by the Seven Years’ War (1756–1763), and the Assembly of Notables was convened. The Assembly declared that only the Estates-General could approve reforms.

- May 5, 1789: the Estates-General failed to reach agreement and was dissolved; it resolved to convene the more powerful National Assembly.

- July 9, 1789: the National Assembly was reconstituted as the National Constituent Assembly.

- August 4, 1789: passage of a constitution abolishing status privileges; regional factions formed, and émigré nobles emerged.

- September 29, 1791: constitutional monarchy.

- 1792: war with the First Coalition led by Austria against France; this radicalized the masses and triggered the Reign of Terror (~July 1794).

- 1795–1799: Directory -> three-consul government -> Napoleon’s one-man rule.

- 1799–1815: Napoleon’s rule; French military victories -> Bourbon Restoration under Louis XVIII.

Exporting the Revolution

- Until the French Revolution of 1789, Jews across Europe could not live freely; in Frankfurt, Germany, they could reside only in the Judengasse Jewish quarter.

- In 1791, the French National Assembly emancipated the Jews of France. Jews in western Germany were likewise emancipated. Full emancipation came in 1811.

Following the leaders of the French Revolution, Napoleon later spread the spirit of revolution into these regions. He dismantled absolutist systems, broke down land relations rooted in feudalism, abolished guilds, and spread the idea of equality before the law.

- August 1793: introduction of mass conscription.

- 1802: formal French annexation of the Rhineland.

- In the late 1790s, Italy became the main battlefield. The opponent was Austria.

- In early 1797, on his first major continental campaign, Napoleon conquered nearly all of northern Italy except Venice, which was controlled by Austria.

- 1798–1801: War of the Second Coalition.

- Napoleonic Code: codified Roman law and legally institutionalized the principle of equality before the law. Even after France withdrew, the Napoleonic Code remained in force in many regions.

Although the French army inflicted great suffering on continental Europe, it is also true that it transformed Europe’s trajectory in fundamental ways. Across most of Europe, the feudal order disappeared, guilds collapsed, the absolute power of monarchs and princes was shaken to its core, and even the Church, which had long dominated economic, social, and political life, lost its grip. The foundations of the Ancien Régime, which had treated people unequally according to birth, were destroyed.

- These changes made it possible to establish inclusive economic institutions in which industrialization could take root.

- By the mid-19th century, nearly all regions once controlled by France had industrialized.

Japan and China Took Different Paths

- Domain lords governed society with samurai retainers in a manner similar to medieval Europe. Occupational status was rigidly stratified, trade was controlled, and peasants suffered under heavy taxes. The shogun held power in the capital Edo, monopolized foreign trade, and kept foreigners out. With strongly extractive political and economic institutions, Japan was bound to be poor.

- Satcho secret alliance, Sonnō jōi, Eight-Point Program while Aboard Ship (Taisei Hokan).

- January 3, 1868: agreement on the restoration of governing authority; proclamation of the Meiji Restoration.

- In China, even though the south was devastated by the Taiping Rebellion of 1850–1864, no institutional check on the Chinese emperor was established.

As in France, one important consequence of the British Industrial Revolution was that it exposed the military vulnerability of China and Japan.

- Plans to push forward Meiji Restoration reforms were also made because of the recognition that economic backwardness leads to military backwardness.

- China’s situation was similar to Japan’s, but because its political institutions were different from the outset, it was difficult to overthrow the imperial court.

The Roots of World Inequality

Whether a country entered the path of industrialization largely depended on its existing institutions.

- Britain’s institutional changes and Industrial Revolution presented new opportunities and challenges to many European countries. But Eastern Europe, the Ottoman Empire, and China were entirely different.

Whether countries could seize the major opportunities that emerged after the 19th century ultimately depended on the institutional environment described above. The roots of the world inequality we witness today lie precisely in this diffusion of institutions.

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Original title: <국가는 왜 실패하는가> 9장, 10장

Author: Jayujuui Ipmun Dokseo Toronmoim

Date: 2024-11-26

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=reading01&pn=2&idx=27142