Does a strong state mean a weak market? This is a common misconception amongst economists. Many view the state as either taxing and regulating the market too much or too little. However, the truth is that state capacity is just not well conceptualized in economic theory.

James A. Robinson is a political scientist, economist, and professor at the University of Chicago. His recent book, co-authored with Daron Acemoglu, “The Narrow Corridor: States, Societies, and the Fate of Liberty,” explores the critical balance needed between state and society and how liberty can continue to thrive despite threats from both sides.

James and Greg explore the correlation between inclusive political institutions and economic growth and prosperity and why the absence of state capacity in developing nations is a major contributing factor to their economic struggles. This highlights the necessity for a genuine debate on whether strong governments and effective state institutions facilitate or stifle independence and innovation.

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Episode Quotes:

The two dimensions to political institutions

27:45: There's two dimensions to political institutions. There's this issue of the breadth of political power in society, and there's also the capacity of the state. So we say why nations fail. Well, you can have extractive political institutions if either or both of those things fail. Either if the state lacks capacity or you have narrow distribution of political power.

19:25: You can't have inclusive economic institutions on the whim of some autocrat or dictator. It's who benefits from inclusive institutions. They have to be empowered politically to demand them.

Building institutions is not an engineering problem

31:43: Building institutions is not an engineering problem. It's an equilibrium between these different forces. And so the state is always trying to get out of control, and you can hem it in a bit with institutions and stuff, but it also needs society to do that.

When it comes to giving helpful policy advice, the devil is in the details

40:18: In order to give useful policy advice, you have to get into all the details of different cases, and at some point, these big social science generalizations don't help you much to know what to do. Maybe the idea of getting into the corridor is useful and institutionalizing the power of civil society and how you deal with all the problems that are different. (40:48) All those details are going to be very important in figuring out what to do.

Show Links:

Recommended Resources:

The Rise of the Western World: A New Economic History by Douglass C. North and Robert Paul Thomas
Master of the Senate: The Years of Lyndon Johnson III by Robert A. Caro
The Power Broker: Robert Moses and the Fall of New York by Robert A. Caro
The Confounding Island by Orlando Patterson

Guest Profile:

Faculty Profile at University of Chicago
Professional Profile on IGC
Professional Profile on National Bureau of Economic Research

His Work:

James A. Robinson on Google Scholar
Articles on Project Syndicate
The Narrow Corridor: States, Societies, and the Fate of Liberty
Why Nations Fail: The Origins of Power, Prosperity, and Poverty
Economic Origins of Dictatorship and Democracy
Natural Experiments of History

274. The New Science of Political Economy featuring James A. Robinson

unSILOed with Greg LaBlanc