Why Nations Fail

in #business2 years ago (edited)

The study of the American authors Daron Ajemoglu and James A. Robinson "Why Nations Fail", which is devoted to the problems: why some countries are rich, and others are poor. The book examines the origins of power, prosperity and poverty, analyzes the effectiveness of the social system and the success of individual countries from the standpoint of the development of public institutions - property rights, legality, competition and political order. In a popular study, Ajemoglu and Robinson identify two dominant types of public institutions: extractive and inclusive.

It is believed that a society in which extractives predominate (extract or extract (extractum) - concentrated extraction) institutions are unable to ensure an increase in the standard of living of the population as a whole in the long run, since the elite of such a society consistently select a negative evolution, because of the conflict interests.

Inclusive (French inclusif "including" from Latin includo "include") forms a sub-category meaning in the composition of the category of the person. The literal meaning of the inclusive is "we (I) are with you / with you".

Societies with extractive institutes in any country in the world have a number of similar problems:

support for outdated industries and industries due to the fact that they provide rent for elites, resistance to progress and technological development;
do not allow the transfer of property from ineffective forms to market ones;
blocking development incentives.

The initial choice - egalitarian or elitist society (equality or chosenness) - is due solely to historical randomness. Someone was luckier, but someone less. In primitive social formations, which are characterized by vigilance and rigid centralization, there were no alternatives to elitism. There was a strict hierarchy according to the degree of need and usefulness of each for the clan, community or society, depending on the functions and results to be performed. Eastern tyranny and European feudalism were the last social formations in a long line of elite formations. The first French revolution (1789) as a social challenge and industrial revolution as a universal tool, radically equalized the rights and opportunities of each.

The transition from one type of social institution to another is not only possible, but many times also met on the path of historical development and the transformation of power. WNF authors compare the superpowers of the mid-17th century, England and Spain, as competing for maritime dominance and were at roughly the same level of development as an illustrative example. Spain focused on absolutism to the detriment of the influence of the Cortes and urban communities, while Britain, while remaining a monarchy, limited the royal power, giving the parliament new functions and powers. Less than a century later, Spain ceased to be a world sovereign, and in XIX it was already a second-rate country in the backyards of Europe. Britain became the locomotive of scientific and technological development, became the birthplace of industrial capitalism and parliamentary democracy.

A social or public institution is a form of organization of joint life activity of people, historically established or created by purposeful efforts, the existence of which is dictated by the need to meet the social, economic, political, cultural or other needs of society as a whole or a part of it. Institutions are characterized by their ability to influence people's behavior through established "rules of the game", both formal and informal.

The sociological concept of "institution" is applicable to all spheres of public life and is interpreted more broadly than simply "institution", "law", because it does not always imply the existence of a clearly expressed structure or code of rules. This is a kind of conditional form of compliance with expectations, a given direction of development, the legal field, etc. By social or public institutions it is customary to mean such "institutions" (from the Latin institutio - custom, instruction, order, order): family, education, health, government, civil rights and freedoms, parliamentarism, private property, religion, etc.

Economists and sociologists of the past viewed social life through special forms of social organization, which eventually, in the nineteenth and twentieth centuries. The primacy in the use of the term "institution" in the context of problems of sociology belongs to the Italian philosopher of the Renaissance Giambattista Vico (1668-1744). Actively developed the concept of social institutions and institutions O.Conta, G. Spencer, K.Marx, T.Veblen, E.Durkheim and others.

The idea of ​​egalitarianism, embodied in the functioning of inclusive institutions, presupposes the creation and successful functioning of a society with equal political, economic and legal opportunities for all members of this society. Elitarism consistently eliminates the majority of social institutions, transferring the decision-making process to a single center. In this regard, the Russian cooperative of Putin's friends "Lake" is not much different from the Saudi "Sudeyri" clan.

The Russian president and the Russian oligarchy unite a sense of elbow and mutual support during the formation process, and the current King of Saudi Arabia has appointed the head of the country's oil complex and the power structures of his sons and nephews, as well as those brothers with whom the reigning Salman bin Abdulaziz bin Abdul Rahman Al Saud - father, and mother, - Hessa bint Ahmad As-Sudeyri. Such a narrow sample is dictated by the fact that the royal dynasty of Saudis (or Al Saud) is truly enormous: more than 2,000 of its members control all the power and wealth of the country (and in all, about 25,000 people in the "family").

Extractive institutions are created by the elite and the ruling circles in their own interests. For example, the inheritance of power, the division of society into classes and castes. The formation of such pseudo-structures is always "top-down", and their stability and functioning mechanism are coordinated by the ruling class. In the post-Soviet countries, this process was called "the creation of a vertical power," but in economic theory it is more customary to talk about the model of a "dead bandit". If a person who usurped power is going to own it for a long time, then he is not interested in short-term gain, but will create mechanisms, schemes and flows for the future.

Institutionalism is a harmonious, elegant theory, but with a weak evidence base and a small predictive force. In terms of predictive, predictive analytics is no good.

Extractive social institutions are almost equivalent to a) rental economy, in which natural resources, natural and state monopolies, as well as slave, unpaid labor, bring the main income, and b) the merger of state top managers with oligarchs in power. With an inclusive model of the organization of the political structure of society, a competitive economy, a free market open for any entrepreneurial initiative and a change of power, inevitably come to the fore.

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