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This year’s Nobel Prize reveals problems in colonialism and economics

According to this year’s winners, Europeans settled in the poorest and least populated places and introduced institutions that contributed to long-term prosperity. Credit: Johan Jarnestad / Nobel Prize Support Activities

Daron Acemoglu, Simon Johnson and James Robinson have been awarded the 2024 Nobel Memorial Prize in Economics for their seminal work on how institutions shape economic development. Some might say that the decision to award the Nobel Prize to these scholars was long overdue.

The paper on which their work is based is one of the most cited papers in economics. Acemoglu and Robinson’s subsequent book, Why States Fail, was also very influential.

These studies have sparked a rich debate about the relationship between social institutions and economic development. In that sense, it is something to celebrate. However, they were also the subject of great criticism. It is appropriate to highlight the blind spots in their analysis in response to the award.

The most important part of the criticism concerns the relationship between the quality of a country’s social institutions and the level of economic development. Acemoglu, Johnson, and Robinson’s study divides educational institutions into two categories: “inclusive” and “extractive.”

Comprehensive institutions that enforce property rights, protect democracy and limit corruption foster economic development, the winners said. In contrast, extractive systems result in a high concentration of power and limited political freedom, concentrating resources in the hands of a small elite and thereby seeking to suppress economic development.

The winners claim that the introduction of inclusive systems has had a positive long-term effect on economic prosperity. In fact, these institutions currently exist primarily in Western, high-income countries.

However, a major problem with this analysis is the claim that certain institutions are a prerequisite for economic development.

Mushtaq Khan, professor of economics at Soas, University of London, has extensively analyzed the work of Acemoglu, Johnson and Robinson. This primarily indicates that today’s high-income countries score higher on Western-based institutional indices, and that economic development was not achieved because countries first established comprehensive institutions. claims.

In fact, history is full of examples of countries that grew rapidly without having these comprehensive institutions in place as a prerequisite for growth. East Asian countries such as Singapore, South Korea, and Taiwan are good examples. Recently, the same has been said of China.

Yuen Yuen An’s award-winning book on China’s development process details how China was rife with corruption as it grew. After receiving this year’s Nobel Prize, Mr. Ang went so far as to say that the laureate’s theory cannot explain not only China’s growth but also the growth of Western countries. She points out that American institutions have been mired in corruption throughout the country’s development.

ignore the atrocities of colonialism

It is not wrong for countries to pursue some of the comprehensive systems outlined in the works of Acemoglu, Johnson, and Robinson. But another worrying aspect of their analysis is that it legitimizes the dominance of Western institutions and, at worst, processes of imperialism and colonialism.

Indeed, their work has been criticized for not paying attention to the brutality of colonialism. To understand this criticism, we need to dig a little deeper into their methodology.

The laureates make their case by looking at long-term developments in settler and non-settler colonies. In settler colonies such as the United States, Canada, and Australia, Europeans established inclusive institutions. However, in non-settler colonies, including much of Africa and Latin America, Europeans established extraction facilities.

Acemoglu, Johnson, and Robinson point out that the performance of settler colonies improves over time. They argue that European institutions are therefore better suited for development.

However, given that the process of colonization is a central method of their paper, it is strange that the laureates do not discuss the costs of colonization more broadly.

Even in settler colonies where inclusive institutions were eventually developed, years of violence—often on the brink of genocide of indigenous peoples—preceded the development of such institutions. Ta. Shouldn’t this be factored into the development process?

After receiving the award, Acemoglu said that the normative issues of colonialism are not relevant to them, saying, “Rather than asking whether colonialism is good or bad, we should ask that different colonial strategies produce different institutional patterns. “It’s interesting to see that it has persisted over time.”

This statement may come as a shock to some. Why isn’t Acemoglu concerned about whether colonialism is good or bad? But this statement is not surprising to anyone familiar with the inner workings of economics.

Sadly, analyzing the world without a normative lens or value judgment has become a badge of honor in mainstream economics. This is a broader problem for the discipline and partly explains why economics is becoming increasingly isolated and distant from other social sciences.

The Nobel Prize in Economics, which was not actually included in the original five Nobel Prizes, also illustrates this problem. The list of past recipients has a narrow geographic and organizational scope, consisting primarily of economists affiliated with economics departments at a small number of elite universities in the United States.

Additionally, a recent study found that the organizational and geographic concentration of awards in economics is much higher than in other academic fields. Nearly all major award winners have had to attend one of the nation’s top universities (of fewer than 10) during their careers.

This year’s Nobel Prize in Economics is no exception. Perhaps this is why every year it feels like the prize goes to someone who asks, “How does a change in variable X affect variable Y,” rather than asking difficult questions about colonialism, imperialism, and capitalism? This may be the reason. institution.

Provided by The Conversation

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Source: This year’s Nobel Prize exposes problems in economics related to colonialism (October 20, 2024) https://phys.org/news/2024-10-year-nobel-prize-exposes-economics.html Retrieved October 20, 2024 from

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