Economic Origins of Dictatorship and Democracy

Citation

Acemoglu, D., & Robinson, J. A. (2009). Economic Origins of Dictatorship and Democracy. Cambridge University Press.

Chapter Summary

The book develops one framework for explaining why some societies are democratic and others are not, why many dictatorships become democracies, and why some democracies consolidate while others collapse. Its core claim, as the publisher summarises it, is that different social groups prefer different political institutions because those institutions allocate power and resources differently. Citizens prefer democracy and elites oppose it. Dictatorship is unstable when citizens can threaten disorder and revolution, and when repression is costly and promises of concessions are not credible, elites may be forced to create democracy because it credibly transfers power. The authors tie these processes to six factors: civil society, political institutions, crises, economic inequality, the structure of the economy and globalisation. The book has five parts and runs to roughly 400 pages plus an appendix, bibliography and index; it won several awards, including the 2007 Riker Prize and a joint Woodrow Wilson Prize from the American Political Science Association.

Part One: Questions and Answers (Chapters 1–3)

Chapter 1: Paths of Political Development. The chapter distinguishes four stylised paths: a gradual and lasting move to democracy (Britain), democracy that is created but repeatedly collapses (Argentina), and two nondemocratic paths, one in which democracy is never created because the society is relatively egalitarian and prosperous and the nondemocratic status quo is therefore stable, and one in which democratisation is much delayed. These paths orient the rest of the book.

Chapter 2: Our Argument. Opening with the contrasting political paths of Britain, Argentina, Singapore and South Africa, this chapter poses the central questions and sets out the framework informally, with a society divided into elites and a more numerous group of citizens whose interests conflict over social choices.

Chapter 3: What Do We Know about Democracy? A review of earlier research. It presents stylised facts about democracy diagrammatically, without formal econometrics, discusses how to measure democracy, and explains how the authors' approach differs from existing ones.

Part Two: Modeling Politics (Chapters 4–5)

Chapter 4: Democratic Politics. The chapter builds models of collective decision making in democracy, showing how preferences and distributional conflicts become policies. The Appendix to Chapter 4 provides the microfoundations for its final section, using probabilistic voting models to justify treating democratic policy as a weighted sum of the utilities of rich and poor.

Chapter 5: Nondemocratic Politics. The mirror image: how policy is determined when political rights belong to an elite subset of society. This is the longest chapter in the book's modelling core.

Part Three: The Creation and Consolidation of Democracy (Chapters 6–7)

Chapter 6: Democratization. The basic model of democratization. Individuals have preferences over regimes because of the policies each regime produces, and the chapter develops the role of the commitment problem that makes concessions by elites not credible.

Chapter 7: Coups and Consolidation. Democracy does not always last. The chapter explains coups against democracy, using the oscillations of Argentina as its leading example, and asks why mass democracy has endured in Northern Europe and been hard to consolidate in many poorer countries.

Part Four: Putting the Models to Work (Chapters 8–10)

These chapters apply the basic game in a deliberately informal way and extend it.

Chapter 8: The Role of the Middle Class. A third group with interests between elites and the mass of citizens is added to the two-group model.

Chapter 9: Economic Structure and Democracy. Income and its distribution are no longer given. People hold assets (land, labour, physical and human capital), a production function combines them, and property rights and competitive markets set rates of return. The chapter asks how the structure of the economy changes the costs of revolution, repression and coups and the nature of redistributive politics.

Chapter 10: Globalization and Democracy. Trade and financial integration alter factor prices and incomes, and so, through the framework, the prospects for democracy.

Part Five: Conclusions and the Future of Democracy (Chapter 11)

Chapter 11: Conclusions and the Future of Democracy. The chapter revisits the four paths from Chapter 1, discusses possible extensions of the framework and considers what the model implies for democracy's future.

Key Concepts

Part One (Chapters 1–3)

• Elites and citizens: the two groups whose conflict over social choices drives the initial exposition.
• Paths of political development: the four stylised historical trajectories used throughout.

Parts Two and Three (Chapters 4–7)

• Commitment problem: promises of future concessions by elites are not credible, so democratisation can be the only way to transfer power durably.
• Threat of revolution: citizens' ability to threaten disorder, which makes dictatorship unstable.
• Coups and consolidation: democracy consolidates when elites lack strong incentives to overthrow it.

Part Four (Chapters 8–10)

• Middle class: an intermediate group whose position changes the elite-citizen conflict.
• Economic structure: asset endowments, technology and property rights that influence the costs of repression and revolution.
• Globalisation: international trade and capital flows acting on regime stability through factor prices.

Critical Analysis

Strengths

• A single model throughout. The same game-theoretic logic about conflict and commitment is used to explain revolution, repression, democratisation and coups. Peter Lindert's endorsement on the publisher's page makes this point about its range, and Thomas Romer's calls the combination of theory and historical application a first-rate basis for teaching.
• Pedagogical structure. The first three chapters give questions, argument and background before the modelling begins, and Part Four deliberately relaxes formality to show the framework at work. The Financial Times review noted that students would study the text for its methodical exposition and academic proofs.
• Historical cases. The four paths in Chapter 1, and examples such as Argentina's cycles of coups in Chapter 7, tie the models to concrete experience, with Latin America and Asia treated as seriously as Europe and North America.
• Self-contained appendix. The microfoundations for the democratic-politics chapter are provided in an appendix for readers who want them.

Limitations

• Heavy prerequisites. The book is a research monograph that expects dynamic game theory, including commitment problems, and graduate microeconomics. A review in the CEU Political Science Journal judged it most useful for economics graduate students with a political-economy focus.
• Stylised cases. The framework works with two main groups, with a third added in Chapter 8. The empirical evidence in Chapter 3 is presented as stylised facts without formal econometrics, which the authors say may not correspond to causal relationships.
• Controversy. Reviewers expected the claims to draw heavy scrutiny; Arvind Subramanian wrote that the authors had set themselves up as targets. Readers should treat the framework as a set of testable hypotheses.

Where It Fits in the Course

In the economic history reading list this book is the formal political-economy monograph. Why Nations Fail, by the same authors, is the general-audience argument about inclusive and extractive institutions and is the right first read for the same questions. Koyama and Rubin's How the World Became Rich is an accessible survey of the explanations for economic growth, while Neal and Cameron's A Concise Economic History of the World and Baten's edited A History of the Global Economy supply the narrative and quantitative background against which the models can be tested.

Douglass North's Institutions, Institutional Change and Economic Performance is the verbal statement of institutional economics; Acemoglu and Robinson work on a related question, how political institutions are determined, with explicit game-theoretic models. North first for concepts, then this book for the formal treatment.

How to Use This Book

The book suits graduate students in economics and political science, and economists who want to see how formal models are applied to historical questions. Comfort with game theory and graduate microeconomics is assumed.

A practical plan:

• Start with Chapters 1 and 2 to learn the four paths and the argument. Read the introductions of the model chapters before the formal parts.
• Core: Chapters 4 to 7, in order, since each model builds on the one before; use the Appendix to Chapter 4 if you want the microfoundations.
• Applications: Chapters 8 to 10 can be read in any order, according to interest in the middle class, economic structure or globalisation.
• Finish with Chapter 11, which restates the framework and revisits the four paths. Chapter 3 is useful as a literature review at any point.