Why Nations Fail: The Origins of Power, Prosperity, and Poverty (32 page)

This outcome was a consequence of the drift in English institutions and the way they interacted with critical junctures. We saw in the previous chapter how feudal institutions were created in Western Europe after the collapse of the Western Roman Empire. Feudalism spread throughout most of Europe, West and East. But as
chapter 4
showed, Western and Eastern Europe began to diverge radically after the Black Death. Small differences in political and economic institutions meant that in the West the balance of power led to institutional improvement; in the East, to institutional deterioration. But this was not a path that would necessarily and inexorably lead to inclusive institutions. Many more crucial turns would have to be taken on the way. Though the Magna Carta had attempted to establish some basic institutional foundations for constitutional rule, many other parts of Europe, even Eastern Europe, saw similar struggles with similar documents. Yet, after the Black Death, Western Europe significantly drifted away from the East. Documents such as the Magna Carta started to have more bite in the West. In the East, they came to mean little. In England, even before the conflicts of the seventeenth century, the norm was established that the king could not raise new taxes without the consent of Parliament. No less important was the slow, incremental drift of power away from elites to citizens more generally, as exemplified by the political mobilization of rural communities, seen in England with such moments as the Peasants’ Revolt of 1381.

This drift of institutions now interacted with another critical juncture caused by the massive expansion of trade into the Atlantic. As we saw in
chapter 4
, one crucial way in which this influenced future institutional dynamics depended on whether or not the Crown was able to monopolize this trade. In England the somewhat greater power of Parliament meant that the Tudor and Stuart monarchs could not do
so. This created a new class of merchants and businessmen, who aggressively opposed the plan to create absolutism in England. By 1686 in London, for example, there were 702 merchants exporting to the Caribbean and 1,283 importing. North America had 691 exporting and 626 importing merchants. They employed warehousemen, sailors, captains, dockworkers, clerks—all of whom broadly shared their interests. Other vibrant ports, such as Bristol, Liverpool, and Portsmouth, were similarly full of such merchants. These new men wanted and demanded different economic institutions, and as they got wealthier through trade, they became more powerful. The same forces were at work in France, Spain, and Portugal. But there the kings were much more able to control trade and its profits. The type of new group that was to transform England did emerge in those countries, but was considerably smaller and weaker.

When the Long Parliament sat and the Civil War broke out in 1642, these merchants primarily sided with the parliamentary cause. In the 1670s they were heavily involved in the formation of the Whig Party, to oppose Stuart absolutism, and in 1688 they would be pivotal in deposing James II. So the expanding trade opportunities presented by the Americas, the mass entry of English merchants into this trade and the economic development of the colonies, and the fortunes they made in the process, tipped the balance of power in the struggle between the monarchy and those opposed to absolutism.

Perhaps most critically, the emergence and empowerment of diverse interests—ranging from the gentry, a class of commercial farmers that had emerged in the Tudor period, to different types of manufacturers to Atlantic traders—meant that the coalition against Stuart absolutism was not only strong but also broad. This coalition was strengthened even more by the formation of the Whig Party in the 1670s, which provided an organization to further its interests. Its empowerment was what underpinned pluralism following the Glorious Revolution. If all those fighting against the Stuarts had the same interests and the same background, the overthrow of the Stuart monarchy would have been much more likely to be a replay of the House of Lancaster versus the House of York, pitting one group against another
narrow set of interests, and ultimately replacing and re-creating the same or a different form of extractive institutions. A broad coalition meant that there would be greater demands for the creation of pluralist political institutions. Without some sort of pluralism, there would be a danger that one of the diverse interests would usurp power at the expense of the rest. The fact that Parliament after 1688 represented such a broad coalition was a crucial factor in making members of Parliament listen to petitions, even when they came from people outside of Parliament and even from those without a vote. This was a crucial factor in preventing attempts by one group to create a monopoly at the expense of the rest, as wool interests tried to do before the Manchester Act.

The Glorious Revolution was a momentous event precisely because it was led by an emboldened broad coalition and further empowered this coalition, which managed to forge a constitutional regime with constraints on the power of both the executive and, equally crucially, any one of its members. It was, for example, these constraints that prevented the wool manufacturers from being able to crush the potential competition from the cotton and fustian manufacturers. Thus this broad coalition was essential in the lead-up to a strong Parliament after 1688, but it also meant that there were checks within Parliament against any single group becoming too powerful and abusing its power. It was the critical factor in the emergence of pluralistic political institutions. The empowerment of such a broad coalition also played an important role in the persistence and strengthening of these inclusive economic and political institutions, as we will see in
chapter 11
.

Still none of this made a truly pluralistic regime inevitable, and its emergence was in part a consequence of the contingent path of history. A coalition that was not too different was able to emerge victorious from the English Civil War against the Stuarts, but this only led to Oliver Cromwell’s dictatorship. The strength of this coalition was also no guarantee that absolutism would be defeated. James II could have defeated William of Orange. The path of major institutional change was, as usual, no less contingent than the outcome of other political
conflicts. This was so even if the specific path of institutional drift that created the broad coalition opposed to absolutism and the critical juncture of Atlantic trading opportunities stacked the cards against the Stuarts. In this instance, therefore, contingency and a broad coalition were deciding factors underpinning the emergence of pluralism and inclusive institutions.

I
N 1445 IN THE
G
ERMAN
city of Mainz, Johannes Gutenberg unveiled an innovation with profound consequences for subsequent economic history: a printing press based on movable type. Until then, books either had to be hand-copied by scribes, a very slow and laborious process, or they were block-printed with specific pieces of wood cut for printing each page. Books were few and far between, and very expensive. After Gutenberg’s invention, things began to change. Books were printed and became more readily available. Without this innovation, mass literacy and education would have been impossible.

In Western Europe, the importance of the printing press was quickly recognized. In 1460 there was already a printing press across the border, in Strasbourg, France. By the late 1460s the technology had spread throughout Italy, with presses in Rome and Venice, soon followed by Florence, Milan, and Turin. By 1476 William Caxton had set up a printing press in London, and two years later there was one in Oxford. During the same period, printing spread throughout the Low Countries, into Spain, and even into Eastern Europe, with a press opening in Budapest in 1473 and in Cracow a year later.

Not everyone saw printing as a desirable innovation. As early as 1485 the Ottoman sultan Bayezid II issued an edict that Muslims were expressly forbidden from printing in Arabic. This rule was further reinforced by Sultan Selim I in 1515. It was not until 1727 that the first
printing press was allowed in the Ottoman lands. Then Sultan Ahmed III issued a decree granting İbrahim Müteferrika permission to set up a press. Even this belated step was hedged with restraints. Though the decree noted “the fortunate day this Western technique will be unveiled like a bride and will not again be hidden,” Müteferrika’s printing was going to be closely monitored. The decree stated:

Müteferrika was allowed to set up a printing press, but whatever he printed had to be vetted by a panel of three religious and legal scholars, the Kadis. Maybe the wisdom and knowledge of the Kadis, like everybody else’s, would have increased much faster had the printing press been more readily available. But that was not to be, even after Müteferrika was given permission to set up his press.

Not surprisingly Müteferrika printed few books in the end, only seventeen between 1729, when the press began to operate, and 1743, when he stopped working. His family tried to continue the tradition, but they managed to print only another seven books by the time they finally gave up in 1797. Outside of the core of the Ottoman Empire in Turkey, printing lagged even further behind. In Egypt, for instance, the first printing press was set up only in 1798, by Frenchmen who were part of the abortive attempt by Napoleon Bonaparte to capture the country. Until well into the second half of the nineteenth century, book production in the Ottoman Empire was still primarily undertaken by scribes hand-copying existing books. In the early eighteenth
century, there were reputed to be eighty thousand such scribes active in Istanbul.

This opposition to the printing press had the obvious consequences for literacy, education, and economic success. In 1800 probably only 2 to 3 percent of the citizens of the Ottoman Empire were literate, compared with 60 percent of adult males and 40 percent of adult females in England. In the Netherlands and Germany, literacy rates were even higher. The Ottoman lands lagged far behind the European countries with the lowest educational attainment in this period, such as Portugal, where probably only around 20 percent of adults could read and write.

Given the highly absolutist and extractive Ottoman institutions, the sultan’s hostility to the printing press is easy to understand. Books spread ideas and make the population much harder to control. Some of these ideas may be valuable new ways to increase economic growth, but others may be subversive and challenge the existing political and social status quo. Books also undermine the power of those who control oral knowledge, since they make that knowledge readily available to anyone who can master literacy. This threatened to undermine the existing status quo, where knowledge was controlled by elites. The Ottoman sultans and religious establishment feared the creative destruction that would result. Their solution was to forbid printing.

T
HE
I
NDUSTRIAL
R
EVOLUTION
created a critical juncture that affected almost every country. Some nations, such as England, not only allowed, but actively encouraged, commerce, industrialization, and entrepreneurship, and grew rapidly. Many, such as the Ottoman Empire, China, and other absolutist regimes, lagged behind as they blocked or at the very least did nothing to encourage the spread of industry. Political and economic institutions shaped the response to technological innovation, creating once again the familiar pattern of interaction between existing institutions and critical junctures leading to divergence in institutions and economic outcomes.

The Ottoman Empire remained absolutist until it collapsed at the end of the First World War, and was thus able to successfully oppose or impede innovations such as the printing press and the creative destruction that would have resulted. The reason that the economic changes that took place in England did not happen in the Ottoman Empire is the natural connection between extractive, absolutist political institutions and extractive economic institutions. Absolutism is rule unconstrained by law or the wishes of others, though in reality absolutists rule with the support of some small group or elite. In nineteenth-century Russia, for example, the tsars were absolutist rulers supported by a nobility that represented about 1 percent of the total population. This narrow group organized political institutions to perpetuate their power. There was no Parliament or political representation of other groups in Russian society until 1905, when the tsar created the Duma, though he quickly undermined what few powers he had given to it. Unsurprisingly, economic institutions were extractive, organized to make the tsar and nobility as wealthy as possible. The basis of this, as of many extractive economic systems, was a mass system of labor coercion and control, in the particularly pernicious form of Russian serfdom.

Absolutism was not the only type of political institution preventing industrialization. Though absolutist regimes were not pluralistic and feared creative destruction, many had centralized states, or at least states that were centralized enough to impose bans on innovations such as the printing press. Even today, countries such as Afghanistan, Haiti, and Nepal have national states that lack political centralization. In sub-Saharan Africa the situation is even worse. As we argued earlier, without a centralized state to provide order and enforce rules and property rights, inclusive institutions could not emerge. We will see in this chapter that in many parts of sub-Saharan Africa (for example, Somalia and southern Sudan) a major barrier to industrialization was the lack of any form of political centralization. Without these natural prerequisites, industrialization had no chance of getting off the ground.