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

T
HE
 C
ONTINGENT
 P
ATH OF
 H
ISTORY
The outcomes of the events during critical junctures are shaped by
the weight of history, as existing economic and political institutions
shape the balance of power and delineate what is politically feasible.
The outcome, however, is not historically predetermined but
contingent. The exact path of institutional development during these
periods depends on which one of the opposing forces will succeed,
which groups will be able to form effective coalitions, and which
leaders will be able to structure events to their advantage.
The role of contingency can be illustrated by the origins of
inclusive political institutions in England. Not only was there nothing
preordained in the victory of the groups vying for limiting the power
of the Crown and for more pluralistic institutions in the Glorious
Revolution of 1688, but the entire path leading up to this political
revolution was at the mercy of contingent events. The victory of the
winning groups was inexorably linked to the critical juncture created
by the rise of Atlantic trade that enriched and emboldened merchants

---

opposing the Crown. But a century earlier it was far from obvious
that England would have any ability to dominate the seas, colonize
many parts of the Caribbean and North America, or capture so much
of the lucrative trade with the Americas and the East. Neither
Elizabeth I nor other Tudor monarchs before her had built a powerful,
unified navy. The English navy relied on privateers and independent
merchant ships and was much less powerful than the Spanish fleet.
The profits of the Atlantic nonetheless attracted these privateers,
challenging the Spanish monopoly of the ocean. In 1588 the Spanish
decided to put an end to these challenges to their monopoly, as well
as to English meddling in the Spanish Netherlands, at the time
fighting against Spain for independence.
The Spanish monarch Philip II sent a powerful fleet, the Armada,
commanded by the Duke of Medina Sidonia. It appeared a foregone
conclusion to many that the Spanish would conclusively defeat the
English, solidify their monopoly of the Atlantic, and probably
overthrow Elizabeth I, perhaps ultimately gaining control of the
British Isles. Yet something very different transpired. Bad weather and
strategic mistakes by Sidonia, who had been put in charge at the last
minute after a more experienced commander died, made the Spanish
Armada lose their advantage. Against all odds, the English destroyed
much of the fleet of their more powerful opponents. The Atlantic seas
were now open to the English on more equal terms. Without this
unlikely victory for the English, the events that would create the
transformative critical juncture and spawn the distinctively pluralistic
political institutions of post-1688 England would never have got
moving. 
Map 9
 shows the trail of Spanish shipwrecks as the Armada
was chased right around the British Isles.
Of course, nobody in 1588 could foresee the consequences of the
fortunate English victory. Few probably understood at the time that
this would create a critical juncture leading up to a major political
revolution a century later.
There should be no presumption that any critical juncture will lead
to a successful political revolution or to change for the better. History
is full of examples of revolutions and radical movements replacing

---

one tyranny with another, in a pattern that the German sociologist
Robert Michels dubbed the iron law of oligarchy, a particularly
pernicious form of the vicious circle. The end of colonialism in the
decades following the Second World War created critical junctures for
many former colonies. However, in most cases in sub-Saharan Africa
and many in Asia, the postindependence governments simply took a
page out of Robert Michels’s book and repeated and intensified the
abuses of their predecessors, often severely narrowing the distribution
of political power, dismantling constraints, and undermining the
already meager incentives that economic institutions provided for
investment and economic progress. It was only in a few cases,
societies such as Botswana (see 
this page
), that critical junctures were
used to launch a process of political and economic change that paved
the way for economic growth.

---

Critical junctures can also result in major change toward rather
than away from extractive institutions. Inclusive institutions, even
though they have their own feedback loop, the virtuous circle, can

---

also reverse course and become gradually more extractive because of
challenges during critical junctures—and whether this happens is,
again, contingent. The Venetian Republic, as we will see in 
chapter 6
,
made major strides toward inclusive political and economic
institutions in the medieval period. But while such institutions
became gradually stronger in England after the Glorious Revolution of
1688, in Venice they ultimately transformed themselves into
extractive institutions under the control of a narrow elite that
monopolized both economic opportunities and political power.