The persistence and change of institutions in the Americas.
Acemoglu, Daron ; Robinson, James A.
Plus ca change plus c'est la meme chose.--French Proverb
1. Introduction
There is now a general consensus that differences in economic
institutions are the primary cause of differences in income per capita
across countries (e.g., North 1990; Engerman and Sokoloff 1997;
Acemoglu, Johnson, and Robinson 2001, 2002). Institutions matter because
they determine the incentive environment, which conditions decisions to
save, invest in human and physical capital, and innovate and adopt
better technologies. The countries of sub-Saharan Africa are poor not
because they are geographically disadvantaged, have malaria, or because
they have a culture that is inimical to capitalism. Rather, they are
poor because they have economic institutions that do not create the
right incentives--property and human rights are insecure, and barriers
to entry and the efficient allocation of resources are rife.
To understand the world distribution of income, we must therefore
understand why different countries' institutions are so different.
Why is it that property rights in African countries are insecure while
those in the United States are not? To formulate an answer to this
question, it is necessary to recognize that economic institutions are
collective choices and are therefore, the outcome of a political
process. As North and Weingast (1989) pointed out, the emergence of
secure property rights in Britain after 1688 occurred as the result of a
political revolution that led both to the rise of Parliament, which
meant that the state represented very different interests, and to the
creation of political institutions, which placed much greater checks and
balances on the exercise of executive power.
Differential economic development, therefore, is a consequence of
differential political development. Explaining comparative development
entails an account of why some parts of the world developed political
and institutional equilibria, which empowered those who were interested
in socially desirable economic institutions (such as the British
Parliament) and placed constraints on those who were not (like the
Stuart monarchy).
There are of course many sources of variation in institutions and
many factors which have moulded the political and institutional
equilibria of societies. Scholars who have focused on the emergence of
capitalist institutions in Western Europe have focused on such
systematic factors as the gradual rise of the mercantile economy
(Pirenne 1937), the differential response of institutions to the
population collapse of the Black Death (Postan 1944), different patterns
of social conflict (Brenner 1976), the great shock of 1492 and the
expansion of European powers into the world (Williams 1944; Pomeranz
2000; Acemoglu, Johnson, and Robinson 2005a), or the French Revolution
(Acemoglu et al. 2008). Institutions may also evolve in ways which
depend on technology, as emphasized by White (1962), or even because of
religious conversion (Pirenne 1939).
Leaving aside the factors that led to the rise of efficient
institutions in Western Europe and instead reflecting on the
distribution of institutions amongst developing countries today, the
role of European colonialism becomes compelling. As emphasized by
Acemoglu, Johnson, and Robinson (2001) and a large literature outside of
economics in history, political science, and sociology, European
expansion after 1492 had profound impacts on the organization of many
societies throughout the world and plausibly plays a large role in
explaining institutional differences between, say, North and South
America.
Engerman and Sokoloff (1997) and Acemoglu, Johnson, and Robinson
(2001) argue that institutional variation between European colonies was
caused primarily by differences in initial conditions at the time of
colonization. In particular, in places with large indigenous populations
and natural resources, such as gold or silver, and where plantation
crops such as sugarcane or cotton could be grown and where the disease
environment was adverse for Europeans, hierarchical societies developed
where a small elite of European extraction lived from the exploitation
of indigenous people, slaves, and natural resources. In
contradistinction, in places without these conditions, it was not
feasible to create such a society, and an alternative had to be found.
As the Virginia Company quickly found at Jamestown, if there was no
option of exploiting Amerindians or natural resources, the economy had
to be based on British labor. But British labor would only come to
Virginia and work when it got there if it was incentivized, and in
consequence much better institutions developed, which gave access to
land and by 1619 the right to vote, at least for adult white males, in a
legislative assembly.
All of these accounts of the historical evolution of institutions
make heavy use of the assumption that institutions, once created, have a
strong tendency to persist over time. For instance, the arguments of
Engerman and Sokoloff (1997) and Acemoglu, Johnson, and Robinson (2001)
imply that to understand the current levels of comparative development
of the United States and Peru, one must go back 400-500 years and study
why these two societies got organized in such different ways. But for
this to matter, this initial divergence must create institutional
differences which persist over time.
That institutions persist is consistent with the robust
correlations that exist between historical variables which may have
shaped institutions and institutions today, such as the density of
indigenous population and the mortality environment faced by Europeans.
Yet such correlations do not tell us the mechanisms of institutional
persistence. That we need to understand this much better is clear once
we recognize that many specific institutions show substantial change
over periods much shorter than a century. Many less-developed countries,
especially those in Latin America and Africa, have changed their
political institutions all too often over the past 100 years, with
frequent switches between democracy and dictatorship (see, e.g.,
Acemoglu and Robinson 2006) and multiple changes in constitutions. (1)
The same pattern also emerges when we turn to economic
institutions. For example, while many historians and economists trace
the economic problems of Latin America to colonial labor practices such
as the encomienda or the mira, and those of the Caribbean to slavery and
to the plantation complex, all of these economic institutions vanished
long ago. (2) Beneath this pattern of change, however, economic systems
often show surprising continuity. The form of agricultural labor
relations in many of the Latin American and Caribbean countries changed
little after colonialism, and perhaps relatedly, these societies
continued to suffer various economic problems, slow growth, and economic
and political instability throughout the 20th century. Another
interesting example comes from the U.S. South. Even though slavery was
abolished at the end of the Civil War, the U.S. South maintained a
remarkably similar agricultural system, based on large plantations and
low-wage uneducated labor, and remained relatively poor until the middle
of the 20th century.
Therefore, when one talks about the persistence of institutions,
one cannot be talking about the persistence of specific institutions,
since these change a lot. Thus existing theories of institutional
persistence, which are motivated precisely by the desire to explain why
specific institutions persist for long periods, are not very applicable.
This is true both of the political science literature (e.g., Steinmo,
Thelen, and Longstreth 1992; Thelen 2004) and the famous study of the
typewriter keyboard by David (1985). Institutional persistence of the
form we are talking about obviously cannot be explained by making an
analogy to QWERTY.
Rather what is required is a much more explicit theory of the path
dependence of institutional and political equilibria. The fact that the
initial conditions in Jamestown and Cajamarca differed so radically led
to different specific institutions initially. Over time these specific
institutions changed for various reasons, but the underlying
distribution of political power that led to those institutions did not
change and neither did the basic incentive environment which influenced
the performance of the economy. (3)
In Acemoglu and Robinson (2008) we advanced one possible
explanation for the coexistence of frequent changes in political
institutions with the persistence in certain (important) aspects of
economic institutions. In this paper, we briefly re-cap this explanation
but the main contribution is to illustrate it with a detailed discussion
of the evolution of institutions in the U.S. South over the past 150
years along with some related Latin American evidence.
The underlying idea of our explanation is that equilibrium economic
institutions emerge from the interaction between political institutions,
which allocate de jure political power, and the distribution of de facto
political power across social groups (see Acemoglu and Robinson 2006,
and Acemoglu, Johnson, and Robinson 2005b). De facto power is power that
is not allocated by institutions (such as elections), but rather is
possessed by groups as a result of their wealth, weapons, or ability to
solve the collective action problem.
The interaction between de jure and de facto power can create a
simple explanation for the coexistence of changes in political
institutions and the persistence of economic institutions. This is
because a change in political institutions that modifies the
distribution of de jure power need not lead to a change in economic
institutions if it is associated with an offsetting change in the
distribution of de facto political power (e.g., in the form of bribery,
capture of the political parties, or use of paramilitaries). In fact,
Acemoglu and Robinson (2008) show that there is a natural reason to
expect changes in the distribution of de facto political power to
partially or entirely offset changes in de jure power brought about by
reforms in specific political institutions as long as these reforms do
not radically alter the political structure of society, the identity of
the elites, or the source of economic rents for the elites.
The key observation is that the political elite, by virtue of their
smaller numbers and their established position, have a comparative
advantage in solving the collective action problem (Mosca 1939). This
implies that the amount of de facto political power of the elite is an
equilibrium outcome and responds to incentives. Imagine, for instance, a
change in political institutions which moves de jure power away from the
elite--a democratization, for example. In democracy, de jure political
power is allocated to the majority, so the balance of power is tilted
towards the citizens (see Acemoglu and Robinson 2006). In addition,
freedom of political organization and the existence of political parties
may help the citizens in solving their collective action problem more
effectively, thus facilitating their exercise of de facto political
power.
Nevertheless, this does not mean that the citizens will get their
own way easily in a democracy. This is because the elite can intensify
their investments in de facto power. As Acemoglu and Robinson (2008)
show, this effect can be so strong that the distribution of equilibrium
economic institutions is identical in democracy and nondemocracy. (4)
This pattern shows that it could be a mistake to infer from frequent
changes in certain dimensions of political institutions that there is
little institutional persistence. The result also starkly illustrates
how changes in some specific dimensions of political institutions can be
undone by the greater exercise of de facto political power by the elite.
While there are clearly large inertial patterns in the world income
distribution, we also know that societies sometimes change their
institutional and economic trajectories. Therefore, a theory that can
explain persistence ought also be able to give us insights into when
institutional equilibria change. The model in Acemoglu and Robinson
(2008) also sheds some light on how institutional persistence can be
diminished or broken. It suggests that an effective democracy requires
both reforms in specific political institutions (such as voting rules or
electoral procedures) and a method to curb the de facto political power
of the elite, which can be achieved directly by reducing their ability
to capture the political system, for example, or indirectly, by
reforming the economic structure so that with reduced land rents, they
have less incentive to thwart democracy.
These insights enable us to interpret the experience of many less
developed countries in a different light. For example, in the Americas,
labor repression was of central importance during the colonial era and
was achieved by various means including the encomienda, the mita, and
slavery. Yet repression did not end when the mita and slavery were
abolished. It continued with domination of politics by local landed
elites, with the creation of labor market monopsonies (Solberg 1969;
McGreevey 1971; Coatsworth 1974; McCreery 1986) and the systematic
threat of violence against peasants in rural areas. Similarly, in the
sugar plantations of the British Caribbean, Natal, or Mauritius, slavery
was replaced by the use of cheap indentured laborers from the Indian
subcontinent (Tinker 1974; Northrup 1995).
We now investigate the implications of our hypothesis by an
examination of the economic and institutional history of the U.S. South.
We shall see there also that slavery was replaced by monopsonistic
arrangements, policies designed to impede labor mobility, political
disenfranchisement, intimidation, violence, and lynching.
2. Persistence of Power and Elites in U.S. South
De landlord is landlord, de politician is landlord, de judge is
landlord, de shurf is landlord, ever'body is landlord, en we ain'
got nothin. (Testimony of a Mississippi sharecropper to an official
of the Agricultural Adjustment Administration in 1936; Schulman
1994, p. 16)
An important example that illustrates our thesis in the
continuation of the economic system based on labor repression,
plantation and low-wage uneducated labor in the U.S. South before and
after the significant changes in political institutions brought about by
the Civil War. (5)
The Antebellum South
Before the Civil War, the South was significantly poorer than the
U.S. average income at about 70% of the Gross Domestic Product per
capita (e.g., Barro and Sala-i-Martin 1992; Easterlin 1960). (6) The
South lacked industry (Bateman and Weiss 1981; Wright 1986, table 2.4,
p. 27), and in 1860 the total manufacturing output of the South was less
than that of either Pennsylvania, New York, or Massachusetts (Cobb 1984,
p. 6). The South had very low rates of urbanization (around 9% as
opposed to 35% in the Northeast) and relatively little investment in
infrastructure. For example, the density of railroads (miles of track
divided by land area) was three times higher in the North than in
Southern states. The situation with respect to canal mileage was similar
(Wright 1986, table 2.1, p. 21). Perhaps more importantly, especially in
the context of the potential for future economic growth and
industrialization, the South was not even innovative for the sectors in
which it specialized. (7)
Although there is no consensus about why the South was backward,
all scholars relate this in various ways to the plantation economy and
slavery. Wright (1986) argues that because slaves were a mobile asset,
there was no incentive for planter interests to support investment in
public goods such as infrastructure, and so manufacturing could not
develop. Bateman and Weiss (1981) show that Southern planters did not
invest in industry, even though the rate of return was superior to that
in agriculture. A plausible explanation for the lack of innovation is
that slavery limited the possibilities for productive investment. Slaves
were forbidden to own property or to become educated in most Southern
states, presumably because this made them easier to control. But this
pattern of labor repression also condemned plantations to low-skilled
labor forces and possibly removed the incentives of planters to
innovate. It is also possible that the lack of urbanization and industry
was a consequence of concerns about the control of slaves and collective
action, though Goldin (1976) disputes this.
Consequences of the Civil War
In the aftermath of the Civil War, the income per capita of the
South fell to about 50% of the U.S. average. If the organization of the
slave economy had been the reason the South was relatively backward in
1865, one might have imagined that the abolition of slavery in 1865
would have removed this blockage to Southern prosperity.
The evidence and historical interpretations show that the abolition
of slavery had a surprisingly small effect on the Southern economy.8
Though planters initially tried and failed to reintroduce the gang labor
system with the freed slaves, out of the ashes of the Civil War emerged
a low-wage, labor-intensive economy based on labor repression. Cut off
from the rest of the United States, income per capita remained at about
half the average until the 1940s when it finally began slowly to
converge. (9) Just as before the Civil War, there was systematic
underinvestment in education (Margo 1990), and Kousser (1974, p. 17)
records a post-bellum adage: "To educate a 'nigger' is to
spoil a good field hand."
The main incentive for this seems to have been to impede migration
(see Wright 1986, p. 79). In 1900, all but two of the non-Southern
states had enacted compulsory schooling laws, while none had such laws
in the South except Kentucky (Woodward 1951, p. 399). Though industrial
development did begin more systematically after 1865, Cobb (1984, p. 17)
notes:
The industries that grew most rapidly in the post-Reconstruction
decades were typical of an underdeveloped economy in that they
utilized both cheap labor and abundant raw materials ... such
industries hardly promised to elevate the region to economic parity
with the rest of the nation.
So why did the economic system of the South change so little
following the Civil War, especially given the significant changes in
political institutions? At first, this persistence of economic
institutions appears at odds with the significant changes in the
distribution of de jure power that took place after the Civil War, for
example, with the enfranchisement of the freed slaves, and the repeal of
the Missouri compromise, which had previously cemented the political
power of the South in the federal government.
Persistence of the Southern Elite and Its Impact
We believe the answer is related to the forces emphasized in the
introduction, in particular, to the exercise of de facto political power
by the Southern landed elites to compensate for the loss of their de
jure political power. Another possibility would be that the continuation
of large plantation agriculture was because of its relative economic
efficiency. Yet this seems inconsistent with the available evidence. For
example, Wright (1986, p. 84) argues:
The plantations survived the Civil War, and their survival had
little to do with their efficiency as producing units ... cotton
and tobacco could be grown just as efficiently on family-sized
farms. No, the key to the survival of the plantation was the
ability of the former slave owners to hold on to their land in the
midst of intense legal and political struggles after 1865. In
national politics, the planters successfully blocked proposals for
land confiscation and redistribution to the freedmen.
Consistent with our approach, there was considerable persistence in
the identity and power of the political elites. For example, Wiener
(1978) studied the persistence of the planter elite in five counties of
the black belt of western Alabama. Tracking families from the U.S.
census and considering those with at least $10,000 of real estate, he
found that (1978, p. 9) "of the 236 members of the planter elite in
1850, 101 remained in the elite in 1870." Interestingly, this rate
of persistence was very similar to that experienced in the antebellum
period; "of the 236 wealthiest planters families of 1850, only 110
remained in the elite a decade later" (p. 9). Nevertheless,
"of the 25 planters with the largest landholdings in 1870, 18 (72%)
had been in the elite families in 1860; 16 had been in the 1850 elite
group" (Wiener 1978, p. 9). (10) Table 1 reproduces these data from
Wiener (1978) and shows the high degree of persistence in the identity
of Southern landed elites. (11)
After the end of the Civil War, more or less the same group of
planter elites controlled the land and used various instruments to
re-exert their control over the labor force. Though the specific
economic institution of slavery did not persist, the evidence shows a
clear line of persistence in the economic system of the South based on
plantation-type agriculture with cheap labor. This economic system was
maintained through a variety of channels, including both control of
local politics and exercise of potentially violent de facto power. As a
consequence, in the words of W.E.B. Du Bois (1903, p. 88), the South
became "simply an armed camp for intimidating black folk."
The planter elite successfully staffed or co-opted the members of
the Freedmen's Bureau, whose remit was to supervise the freed
slaves. In 1865, the state legislature of Alabama passed the Black Code,
an important landmark towards the repression of black labor. Wiener
(1978, p. 58) describes this as follows: "The Black Code of Alabama
included two key laws intended to assure the planters a reliable supply
of labor--a vagrancy law and a law against the 'enticement' of
laborers." These laws were designed to impede labor mobility and
reduce competition in the labor market. (12)
In addition to moulding the legal system in their favor,
"Planters used Klan terror to keep blacks from leaving the
plantation regions, to get them to work, and keep them at work, in the
cotton field" (Wiener 1978, p. 62). (13) In his seminal study of
the politics of the South after World War II, Key (1949, p. 9) sums up
the pattern of persistence of the institutions of the South both before
and after the Civil War as the "extraordinary achievement of a
relatively small minority--the whites of the areas of heavy Negro
population."
A key to the persistence of the antebellum system after the Civil
War was the continued control over land. For example, in the debate over
the redistribution of 40 acres of land to the freedmen (vetoed by
President Andrew Johnson in 1865), Congressman George Washington Julian
argued (quoted in Wiener, 1978, p. 6):
Of what avail would be an act of congress totally abolishing
slavery ... if the old agricultural basis of aristocratic power
shall remain?
A third strategy, again consistent with the emphasis on the de
facto political power of the elite, was control of the local political
system. Following the Civil War, the period called
'Reconstruction' lasted until 1877 (see Stampp 1965, and Foner
1989). In this period Republican politicians contested power in the
South, and, with the help of the Union Army, engineered some social
changes. Nevertheless, this induced a systematic backlash in the guise
of support for the Democratic Party and the so-called
'Redeemers.' In 1877, in the context of a log-roll between
President Rutherford Hayes and Southern national politicians, Union
soldiers were withdrawn from the South, and the region was left to its
own devices. The period after 1877 then marked the real recrudescence of
the antebellum elite. The 'redemption' of the South involved
the systematic disenfranchisement of the black (and poor white)
population through the use of poll taxes and literacy tests (Key 1949;
Kousser 1974) and the creation of the one-party Democratic regime. (14)
Key (1949, pp. 309-10), in his analysis of the primary elections of
the Democratic party, noted the hegemony of southern society's
"upper brackets" and the political marginalization of its
"lower brackets." He discusses in detail the control of North
Carolina's economic oligarchy over politics, noting that (1949, p.
211): "The effectiveness of the oligarchy's control has been
achieved through the elevation to office of persons fundamentally in
harmony with its viewpoint."
This picture is also confirmed by the analysis of Wright (1986, p.
78), who writes: "Even in the 1930s, southern representatives in
Washington did not use their powerful positions to push for new federal
projects, hospitals, public works and so on. They didn't, that is,
as long as the foundations of the low-wage regional economy
persisted."
In addition to disenfranchisement, a whole gamut of segregationist
legislation--the so-called Jim Crow laws--was enacted (Woodward 1955,
for the classic analysis). These laws turned the post-bellum South into
an effective "apartheid" society where blacks and whites lived
different lives. As in South Africa, these laws were aimed at
controlling the black population and its labor supply.
Consequently, the South entered the 20th century as a primarily
rural society. "It remained an agrarian society with a backward
technology that still employed hand labor and mule power virtually
unassisted by mechanical implements" (Ransom and Sutch 2001, pp.
175176). (15) In 1900, the South's urbanization rate was 13.5%, as
compared to 60% in the Northeast (Cobb 1984, p. 25).
Ransom and Sutch's (2001, p. 186) assessment of the
implications of this economic and political system in the South for
economic progress is representative of the consensus view:
"Southerners erected an economic system that failed to reward
individual initiative on the part of blacks and was therefore ill-suited
to their economic advancement. As a result, the inequities originally
inherited from slavery persisted. But there was a by-product of this
effort at racial repression, the system tended to cripple all economic
growth":
When whites used threats of violence to keep blacks from gaining an
education, practicing a trade, or purchasing land, they
systematically prevented blacks from following the three routes
most commonly travelled by other Americans in their quest for
self-advancement. With over half the population held in ignorance
and forced to work as agricultural laborers, it is no wonder that
the South was poor, underdeveloped, and without signs of economic
progress. (Ransom and Sutch 2001, p. 177)
All in all, the Southern equilibrium, based on the exercise of de
facto power by the landed elite, plantation agriculture, and low-wage,
uneducated labor, persisted well into the 20th century, and only started
to crumble after World War II. Interestingly, it was only after the
demise of this Southern equilibrium, that the South started its process
of rapid convergence to the North.
The End of the Southern Equilibrium
What caused the collapse of the Southern equilibrium? Consistent
with the ideas we discussed in the introduction, it seems that this
collapse was brought about by the juxtaposition of a variety of factors.
Initially, the depth of the Great Depression weakened the resolve of
Southern politicians to block federal policies that might integrate the
Southern economy into the rest of the nation (Schulman 1994). Other
important factors include the great outmigration and the impact of the
simultaneous mechanization of cotton picking on the labor requirements
of agriculture. As blacks became harder to trap in the South, they also
became less necessary to generate rents. (16)
Wright's (1999, table 1, p. 281) data on net migration from
the South shows the large increase in black outmigration starting in the
1940s, and Heinicke (1994, table 1, p. 506) shows the concurrent rapid
spread of mechanized cotton picking. First introduced in 1949, by the
end of the 1950s mechanical cotton picking was the rule rather than the
exception in the South; half of the crop in the key cotton states was
being picked mechanically.
[FIGURE 1 OMITTED]
In addition to these changes, the Southern equilibrium was
disrupted by the collective action of the Civil Rights movement and a
sequence of Supreme Court and government decisions, such as Brown vs.
Board of Education in 1954, the Civil Rights Act of 1964, and the Voting
Rights Act of 1965. These significant events can be interpreted as a
decline in the ability of the landed elite to exercise de facto
political power in democracy. McAdam's (1983, figures 1 and 2, p.
739) data on the number of civil rights collective actions (bus boycotts
and sit-ins) shows a sharp increase starting in 1960 (see also Chong
1991), while Wright (1999, figure 2, p. 273) records the dramatic
increase in the registration of black voters in Southern states over
this period. It thus became increasingly more difficult for the Southern
landed elites to control the political process (see also the detailed
analysis of the impact of the Voting Rights Act on economic growth in
the South in Besley, Persson, and Sturm 2005).
[FIGURE 2 OMITTED]
3. Persistence of Elites and Economic Institutions in Latin America
The types of incentives and mechanisms that the last section
discussed in the U.S. South have if anything been far more pronounced in
Latin America. Despite the significant changes in political institutions
that have taken place since the colonial era, the capture of political
and economic institutions by elites is an enduring theme of much of the
historical literature on the sub-continent. There are numerous studies
documenting both the capture of democratic politics by traditional
elites and the resulting continuation of labor repressive policies in
agriculture in many Central and Latin American countries. Some notable
examples include Zeitlin (1984) and Zeitlin and Ratcliff (1988) on
Chile; Smith (1979) on Mexico; and Paige (1997) on Central America. A
central question for understanding the economic development (or lack
thereof) in Central and Latin America is therefore how and why the
economic system based on labor repression and cheap labor in agriculture
failed to change following the political reforms that have gradually
brought more democratic means of collective decision-making in these
societies.
As in the U.S. South, the answer is related to the exercise of de
facto political power by traditional elites in the context of democratic
politics. The capture of democratic politics in Colombia, for example,
took many different forms, depending on the specific conditions and the
options open to the traditional elites, with the most common forms being
the actual domination of political parties by the elites, electoral
fraud, blocking of entry of new parties, and use of violence.
The most obvious form of political capture is the actual running of
political parties and offices by members of the landed elite. This has
been particularly the case in much of Central America and has been
carefully documented by Stone (1990). His genealogical research shows
the extraordinary extent to which elites have persisted in Costa Rica
and other Central American countries from the colonial times.
Figures 1 and 2 (from Stone 1990) show the striking number of
presidents since independence in various Central American countries that
are related to two conquistadors, Crist6bal de Alfaro and Juan Vazquez
de Coronado who both arrived in Central America in the 16th century.
Figure 1 shows that no less that 48 presidents were direct descendents
of Alfaro, 25 of them in Costa Rica. Alfaro's descendents also
include the Somoza dynasty, which ruled Nicaragua for most of the 20th
century until the Sandinista Revolution in 1979. Figure 2 shows the 29
presidents descended from Vazquez, including again the Somoza clan and
many of the same presidents of Costa Rica related to Alfaro.
As a case study, we now examine Colombia in more detail. Colombia
became independent from Spain in 1819, and the Liberal and Conservative
parties first competed in the election of 1850. (17) These two parties
have maintained their hold on political power ever since. As early as
1856, the Liberals introduced universal male suffrage, and as many as
40% of adult males voted (Bushnell 1971). After the 1863 Constitution,
voting rights were determined at the state level, but several of them
maintained universal suffrage (see Delpar 1981). In the 19th century,
the parties contested elections, but they also fought for power.
Although the fighting sometimes took the form of civil wars, the parties
also frequently reached collusive agreements to make sure that other
political parties, especially those representing peasants and workers,
were unable to enter the political system. For example, after the civil
war from 1899 to 1902, the two parties introduced a power-sharing
agreement, which divided all the seats in the legislature between the
two parties by means of the 'incomplete vote' (Mazzuca and
Robinson 2008). This system lasted until 1929. After a civil war in the
1950s (a period know as La Violencia), the parties resurrected this
collusive agreement in 1958, splitting the legislature 50-50 and also
agreeing to take turns at the presidency for 16 years. In practice, this
power-sharing agreement endured until the middle of the 1980s.
The Liberals and Conservatives managed to successfully block entry
of other parties to the political system through a variety of
strategies. Even after the reintroduction of universal suffrage in 1936,
fraud, violence, and engineering the electoral rules to create barriers
to entry were widespread. (18) Electoral fraud is, in fact, a recurrent
theme in Colombian politics and took many forms (see, for example,
Bushnell 1993, and Chaves, Fergusson, and Robinson 2006). Fraud was also
used by the traditional parties to directly derail populist challenges,
such as during the attempt by Rojas Pinilla to win the 1970 presidential
election. (19)
Violence has also been endemic in Colombian politics. The potential
"Peron" of Colombia, Jorge Eliecer Gaitan, who was likely to
pursue populist and redistributive policies, was murdered in 1948 just
after he became the leader of the Liberal party. Luis Carlos Galan was
murdered in 1990 just as he was emerging as the leader of the Liberal
party. (20) In the 1980s, the first alternative political party to
seriously emerge since the beginning of the National Front in 1958 was
the Union Patriotica. This party was effectively obliterated in the
1980s by the systematic murder of its candidates (see, for example,
Kline 1999). (21)
Finally, as in Central America, the political parties in Colombia
have featured strong family ties. The Conservative Ospina family has
provided three Presidents, Mariano Ospina Rodriguez (1857-1861), Pedro
Nel Ospina (1922-1926) and Mariano Ospina Perez (1946-1950). The Liberal
Lopez family provided not just Alfonso between 1934 and 1938, and again
between 1942 and 1945, but also Alfonso Lopez Michelsen between 1974 and
1978. The Liberal Lleras family provided presidents in 1945-1946 and
1958-1962 (Alberto Lleras Camargo) and again in 1966-1970 (Carlos Lleras
Restrepo). The Conservative Pastrana family provided Misael Pastrana
between 1970 and 1974 and Andres Pastrana between 1998 and 2002. The son
of Conservative President Laureano Gomez (1950-1953), Alvaro was the
Conservative challenger in the late 1980s and early 1990s, and the
father of Liberal President Julio Turbay (1978-1982) had previously been
the most powerful figure in the Liberal party.
Overall, through a variety of means, including elite domination of
politics, electoral fraud, blocking of the creation of new parties, and
violence, traditional elites seem to have been able to have a
disproportionate effect in the democratic politics of Central America
and Colombia. We conjecture that this pattern of elite dominance has
been an important element in the continuation of the economic system
based on cheap labor and quasi-labor repression in the countryside of
many of these countries.
4. Conclusions
Almost all theoretical and empirical research in the literature on
comparative institutions and economic development starts with the
presumption that institutions, once in place, persist and shape the
political-economic interactions of different groups and agents.
Nevertheless, many societies experience frequent changes in their
political institutions, such as the end of the colonial era and the
creation of republics throughout the 19th and 20th centuries, or
multiple switches between dictatorship and democracy during the 20th
century. Certain economic institutions also change, with slavery, forced
labor, and the encomienda coming to an end in Latin America and waves of
nationalization and privatization of industry in many less developed
countries. In this paper, we have emphasized that a convincing theory of
institutional persistence must come to terms with these facts.
In this paper we argued, building on Acemoglu and Robinson (2008),
that such a theory must be based on the recognition that broad economic
institutions, which are essential for economic outcomes, can persist
even when specific political and economic institutions change. In line
with this perspective, we discussed a simple explanation of the
coexistence of change and persistence in institutions. The basic idea is
that economic institutions are decided by groups or individuals that
possess more political power. Political power, in turn, consists of de
jure power regulated by formal political institutions and de Jacto
political power, which comes from the ability of various social groups
to solve their collective action problems, lobby or bribe politicians,
capture and control political parties, or use paramilitaries or other
means of repression. Changes in specific political institutions, for
example, a change from nondemocracy to democracy, affects the
distribution of de jure political power. This, however, may induce
cohesive (and small) groups, such as elites, to increase their
investments in de facto political power to offset their loss of de jure
political power.
We used this theory to interpret the historical evolution of the
economy of the U.S. South and Latin America. Throughout the Americas,
there are many examples of how traditional elites are able to control
democratic politics and maintain their favorite economic institutions.
In all the cases we discussed, changes in some important dimensions of
political institutions, which may have been potentially quite costly for
the elites, were neutralized by the exercise of their de facto power;
for example, control of the party system or key offices, or local
violence. These examples suggest that the mechanism we advanced may be
important in understanding how frequent changes in specific political
institutions go hand-in-hand with the persistence of economic systems,
with their broad distributional and efficiency characteristics
unchanged.
The mechanism proposed in this paper, where the identity of the
elites as well as the economic systems persist, is only one facet of
institutional persistence. Another pattern, which appears salient in
practice, for example, in cases such as Bolivia, Zimbabwe, Kenya, and
Ghana, is one in which the identity of the elites changes, but new
elites adopt policies in line with the worst practices of their
predecessors. This is reminiscent of Michels' (1911) Iron Law of
Oligarchy, as well as of the emphasis by sociologists such as Mills
(1956), Mosca (1939), and Pareto (1968) on the persistence and creation
of elites. Returning to Colombia provides another fascinating example of
this. The traditional political parties, while managing politics in
Colombia for well over a century, have during the last decade proved
incapable of dealing with the intensified threat of left-wing
guerrillas, particularly the Fuerzas Armadas Revolucionarias de Colombia
(FARC--The Revolutionary Armed Forces of Colombia). In response to this,
many elite groups in Colombia decided to take the law into their own
hands and create paramilitary forces. Beginning in 2002, this phenomenon
led to the election of Alvaro Uribe as president, running as an
independent and heavily supported by new political parties. As Acemoglu,
Robinson, and Santos (2008) show, these parties received huge vote
shares in the areas dominated by paramilitary groups. In Colombia now
there is a new elite, one just as adept at manipulating elections and
power as the old one.
This pattern seems like a challenging but important area of study.
Most ambitiously, future research may strive towards a unified model
that can explain the composition of elites, when existing elites
persist, when elites change but institutions persist, and when
institutions truly change.
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(1) For instance, Colombia had eight constitutions in the 19th
century (Gibson 1948), while Bolivia had 11 (Trigo 1958) and Peru nine
(Palacios and Guillergua 2003).
(2) In Latin America, the last form of official forced labor,
pongueaje, was abolished in Bolivia in 1952 (Klein 1992, h. 8). Unpaid
labor services lasted in Guatemala until 1945 (McCreery 1994). Slaves
were gradually freed, for example, in 1850 in Colombia. In the British
Caribbean, slavery was abolished after 1834, though it lasted until in
1886 in Cuba and 1888 in Brazil.
(3) It was for precisely this reason that Acemoglu, Johnson, and
Robinson (2001) refer to the continuity of a cluster of institutions;
for example, the extent of enforcement of property rights for a broad
cross-section of society. Lack of property rights enforcement may have
its roots in quite different specific economic institutions; for
example, risk of expropriation by the government or elites; extreme
corruption; economic systems such as serfdom or slavery preventing large
segments of the population from selling their labor freely or from
investing in most economic activities; legal rules making it impossible
for those without political connections to have their contracts
enforced; or entry barriers creating a non-level playing field.
(4) To be precise, there are changes in economic institutions, but
the equilibrium distribution of economic institutions is invariant to
political institutions.
(5) Although many features of the Southern economic system, such as
the plantation system and the reliance on low-wage labor, persisted, as
Wright (1986) emphasizes, there were also important discontinuities, for
example, the fact that the planter class transformed itself from
"laborlords," mostly relying on their slave property, to
"landlords," more reminiscent to the large-scale plantation
owners of South America.
(6) The relative poverty of the South has been hotly debated by
scholars. Although Fogel and Engerman (1974) pointed out that if the
South had been an independent country in 1860 it would have been amongst
the 10 richest in the world, the consensus view is that the South was
relatively backward with poor institutions in 1860 (a view which in its
modern form goes back at least to Genovese 1965). To the extent that it
was relatively prosperous compared to other parts of the world at the
time, this was because it had recently benefited from a huge boom in
cotton prices (Wright 1978) and also because it was embedded in a
society whose institutions were formed in the 17th century, before the
development of the plantation economy.
(7) For example, during the period 1837 to 1859, while the average
numbers of patents issued per year relating to corn and to wheat were
respectively 12 and 10, it was just one for cotton (see Schmookler
1972).
(8) Despite this consensus, there is a debate on the related matter
of why Southern incomes fell after the Civil War. The interpretation by
Fogel and Engerman (1974) is based on the idea that the slavery system
was relatively efficient, though this has been challenged; see, for
example, Ransom and Sutch (2001).
(9) Wright (1986, p. 70) notes "the isolation of the southern
unskilled labor market was a basic background condition for virtually
the whole epoch between the Civil War and World War II."
(10) Death during the Civil War appears to have had little impact
on the persistence of the planter elites because the law exempted one
slaveholder from military service for every 20 slaves held (Wiener 1978,
p. 18).
(11) Other studies find similar persistence in other parts of the
South. See, for example, Ransom and Sutch (2001, pp. 7880) on
landownership in Dallas County Alabama, Huffman (1974) on Clarke County,
Georgia, and Billings (1979) on North Carolina. This research to some
extent contradicted earlier studies which had seen far more change in
the identity of Southern elites after the Civil War (e.g., Woodward
1951).
(12) The extent to which southern planters were able to exert
classical monopsony power is controversial: see Alston and Kauffman
(2001). Nevertheless, economic historians do agree on the use of
coercion, intimidation, violence, and segregationist legislation to
repress and control free black labor.
(13) Relatedly, Alston and Ferric (1999) show how planters
controlled their labor force by offering them "security" from
violence and lynching.
(14) Key (1949, pp. 8-9), for example, notes: "Two-party
competition would have been fatal to the status of black-belt whites. It
would have meant in the 'nineties an appeal to the Negro vote and
it would have meant ... Negro rule in some black-belt counties. From
another standpoint, two-party competition would have meant the
destruction of southern solidarity in national politics ... Unity on the
national scene was essential in order that the largest possible bloc
could be mobilized to resist any national move towards interference with
southern authority to deal with the race question as was locally
desired."
(15) See Whatley (1985) for a hypothesis explaining the lack of
innovation in the post-bellum South in terms of the poor incentives
created by sharecropping contracts.
(16) An interesting question, which is not central to our
interpretation, is whether mechanization of cotton reduced the cost of
black migration to the Southern landed elite, who then tolerated such
outmigration, or whether the changes in the supply of cheap labor caused
by black outmigration encouraged mechanization.
(17) The best studies of the origins of the parties are Colmenares
(1968), Safford (1972), and Delpar (1981). Some trace the alignments to
factions that formed in the late 1820s over whether or not Simon Bolivar
should be made Emperor, though there have also typically been
significant policy differences between these two parties.
(18) This is related to the absence of a socialist party in
Colombia. Some scholars have suggested that the relatively egalitarian
frontier expansion that took place in the second half of the 19th
century has contributed to the creation of a middle class of property
owners, which checked radicalism in Colombian politics. This thesis does
not appear to be very convincing in view of the fact that Colombia has
one of the most unequal distributions of land ownership and income in
the world (on this Antioqueno expansion see Christie 1978).
(19) Another factor that appears to have contributed to the
continuation of the two-party system is the way the electoral system
created incentives for dissidents to stay within the traditional
parties. For example, the electoral system ensured that candidates could
be elected with far fewer votes than the electoral quotient, thus
potentially guaranteeing that elite factions would get representation.
At the same time, the traditional parties allowed "dissident
lists" to run, providing a platform to potential dissidents. In
line with these ideas, Dix (1967, p. 250) notes "proportional
representation may have helped to a degree to reinforce the two-party
system by allowing dissident factions to gain representation according
to their strength in the electorate while still not forcing them from
the party. Retaining the party label, or some version of it, they have
usually been reabsorbed into the officialist ranks after one or two
elections."
(20) Political entrepreneurs, like Gaitan and subsequently Alfonso
Lopez Michelsen and Galan, considered forming a third party but then
always returned to the fold because the electoral system made success by
third parties difficult. Indeed, it is quite likely that the
assassination of Gaitan was precisely because he had finally emerged as
the leader of the Liberal party, not because political rivals
anticipated the creation of a third party.
(21) In the 1986 elections, Union Patriotica obtained five seats in
the Senate and nine in the Chamber of Representatives at the national
level, and 14 deputies, 351 councilmen and 23 municipal mayors at the
local level. By 1988, the party was wiped out, however. The Amnesty
International reported that more than 500 of its members, including its
previous presidential candidate, Jaime Pardo Leal, and four congressmen,
had been assassinated, most likely with the involvement of members of
the Colombian military and government.
James A. Robinson
Professor of Government, Faculty Associate, Institute for
Quantitative Social Science, Harvard University
2007 Distinguished Guest Lecture
Daron Acemoglu * and James A. Robinson ([dagger])
* Massachusetts Institute of Technology, Department of Economics,
E52-380, 50 Memorial Drive, Cambridge, MA 02142, USA; E-mail
[email protected].
([dagger]) Harvard University, Department of Government and IQSS,
1737 Cambridge Street N309, Cambridge MA 01238, USA; E-mail
[email protected]; corresponding author.
James A. Robinson is Professor of Government at Harvard University
and a faculty associate at the Institute for Quantitative Social
Science. Professor Robinson studied economics at the London School of
Economics, the University of Warwick, and Yale University. He taught at
the University of Melbourne, the University of Southern California, and
the University of California at Berkeley. His main research interest is
why countries are different: particularly why some are more prosperous
than others and why some are more democratic than others. This was the
Distinguished Guest Lecture delivered at the Southern Economic
Association meetings, New Orleans, Louisiana, on November 18, 2007.
Table 1. The Persistence of the Landed Elite in Three "Black Belt"
Counties of Alabama
Real Estate Holdings (a)
1870 1860 1850
Name County ($) ($) ($)
Minge, G. Marengo 85,000 30,000
Lyon, F. Marengo 75,000 115,000 35,000
Paulling, William Marengo 72,000 150,000 29,000
Hatch, Alfred Hale 70,000 120,000 40,000
Alexander, J. Marengo 69,000 38,000 10,000 (b)
Whitfield, B. Marengo 65,000 200,000 (b) 100,000
Terrill, J. Marengo 62,000 93,000
Taylor, E. Marengo 61,000
Robertson, R. Marengo 60,000
Dew, Duncan Greene 52,000 200,000 (b) 41,000
Walton, John Marengo 50,000 250,000 25,000
Collins, Charles Hale 50,000 201,000 (b) 30,000
Hays, Charles Greene 50,000 113,000
Brown, John Sumter 50,000 69,000 13,000
Pickering, Richard Marengo 50,000 42,000 15,000
Withers, Mary Hale 50,000 40,000 75,000 (b)
Jones, Madison Hale 50,000 36,000 (b) 27,000
Nelson, A. Hale 48,000 10,000 (b)
Taylor, J. Hale 48,000
Pickens, Wm. Hale 45,000 210,000 (b) 51,000
Reese, Henry Marengo 45,000 52,000 24,000
Walker, R. Hale 42,000 55,000
Smaw, W. Greene 42,000 32,000
Blanks, E. Marengo 41,000
Walker, Morns Marengo 41,000
Number of planters 25 18 16
Percent present in 1870 72% 64%
Source: Wiener (1978, table 2, p. 12).
(a) Rounded off to the nearest thousand; as reported in the U.S.
Census of Population, manuscript schedules. To convert to constant
gold prices, see p. 14, note 13.
(b) Wealth of father or husband.
