Why Nations Fail: The Origins of Power, Prosperity, and Poverty

Chapter 8 explores the resistance to the spread of industry and innovation in various absolutist and politically fragmented societies during the critical juncture created by the Industrial Revolution. The chapter begins with the story of the Ottoman Empire’s resistance to the printing press, highlighting how Sultan Bayezid II in 1485 forbade printing in Arabic due to concerns about the spread of subversive ideas that might threaten the existing political and social order. This resistance to the printing press had consequences for literacy, education, and economic success in the Ottoman Empire.

The chapter then discuss the broader impacts of absolutism and the lack of political centralization on industrialization, using examples from various countries. In Russia and Austria-Hungary, the absolutist regimes did not encourage economic progress and actively blocked the spread of industry and new technologies. Their opposition to innovation was driven by fear of the creative destruction that accompanies economic change and by their desire to maintain the status quo.

By contrast, the lack of political centralization in Somalia prevented the development of even the most basic security of property rights, making it impossible for the society to benefit from the Industrial Revolution. The absence of a centralized state meant that Somali society remained engaged in internal conflicts and feuding, further entrenching economic decline.

For absolutist Spain, the discovery of precious metals in the Americas paradoxically contributed to the empire’s economic decline. This decline was exacerbated by the expropriation of Jewish and Morisco populations and the imposition of extractive economic institutions. Unlike England, which embraced pluralistic political institutions and commercial expansion, Spain’s absolutist monarchy and rigid economic controls stifled innovation and participation in international trade. This divergence in institutional paths between Spain and England is presented as a pivotal factor in their contrasting economic fortunes and responses to the Industrial Revolution.

Both absolutism and the lack of state centralization served as barriers to the adoption of new technologies and economic development during the Industrial Revolution. These factors prevented many societies from taking advantage of the opportunities presented by this critical juncture, leading to enduring economic decline.

Chapter 9 examines how European colonialism and expansion negatively impacted economic and political development in various regions. The chapter begins with the story of the Moluccan Archipelago in Indonesia, famous for its spices. Initially, these islands engaged in prosperous trade with Asian and Middle Eastern countries. However, European powers, particularly the Portuguese and later the Dutch, sought to monopolize the lucrative spice trade. The Dutch East India Company played a pivotal role in this endeavor, employing violence and coercion to establish control over spice production. Their monopolization had socioeconomic consequences for the local population.

The Dutch’s strategies in the Moluccas were replicated across Southeast Asia, effectively reversing the region’s economic growth and development. Many states retreated from trade and turned inward due to the Dutch threat. For example, Banten in Java destroyed its pepper trees to avoid Dutch aggression, and the ruler of Maguindanao in the Philippines ceased growing nutmeg and cloves for similar reasons. This retreat led to de-urbanization and possibly a decline in population.

In Africa, the slave trade had profound and lasting impacts. European demand for enslaved people led to increased warfare in Africa, as captives were often sold into slavery. This demand for enslaved people not only resulted in demographic changes but also altered the social and political fabric of African societies. Many African states became more absolutist and focused on capturing and selling enslaved people. The abolition of the slave trade in the early 19th century by Britain and the United States did not immediately improve conditions in Africa. Instead, it led to the redeployment of enslaved people within Africa for labor in producing commodities for export.

The chapter also discusses the concept of the “dual economy” in the context of South Africa. It argues that the economic disparity between the modern, developed sector and the traditional, underdeveloped sector was not a natural or inevitable result of development. Instead, it was deliberately engineered by European settlers and the South African government. Policies such as the Natives Land Act of 1913 were designed to impoverish African farmers and create a cheap labor force for European-owned mines and agricultural enterprises. This act of disenfranchisement led to the stagnation and decline of the African economy.