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

D
IVERGING
 P
ATHS
The rise of inclusive institutions and the subsequent industrial growth
in England did not follow as a direct legacy of Roman (or earlier)
institutions. This does not mean that nothing significant happened
with the fall of the Western Roman Empire, a major event affecting
most of Europe. Since different parts of Europe shared the same
critical junctures, their institutions would drift in a similar fashion,
perhaps in a distinctively European way. The fall of the Roman
Empire was a crucial part of these common critical junctures. This
European path contrasts with paths in other parts of the world,
including sub-Saharan Africa, Asia, and the Americas, which
developed differently partly because they did not face the same
critical junctures.
Roman England collapsed with a bang. This was less true in Italy,
or Roman Gaul (modern France), or even North Africa, where many
of the old institutions lived on in some form. Yet there is no doubt
that the change from the dominance of a single Roman state to a
plethora of states run by Franks, Visigoths, Ostrogoths, Vandals, and
Burgundians was significant. The power of these states was far
weaker, and they were buffeted by a long series of incursions from
their peripheries. From the north came the Vikings and Danes in their
longboats. From the east came the Hunnic horsemen. Finally, the
emergence of Islam as a religion and political force in the century
after the death of Mohammed in 
AD
632 led to the creation of new

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Islamic states in most of the Byzantine Empire, North Africa, and
Spain. These common processes rocked Europe, and in their wake a
particular type of society, commonly referred to as feudal, emerged.
Feudal society was decentralized because strong central states had
atrophied, even if some rulers such as Charlemagne attempted to
reconstruct them.
Feudal institutions, which relied on unfree, coerced labor (the
serfs), were obviously extractive, and they formed the basis for a long
period of extractive and slow growth in Europe during the Middle
Ages. But they also were consequential for later developments. For
instance, during the reduction of the rural population to the status of
serfs, slavery disappeared from Europe. At a time when it was
possible for elites to reduce the entire rural population to serfdom, it
did not seem necessary to have a separate class of slaves as every
previous society had had. Feudalism also created a power vacuum in
which independent cities specializing in production and trade could
flourish. But when the balance of power changed after the Black
Death, and serfdom began to crumble in Western Europe, the stage
was set for a much more pluralistic society without the presence of
any slaves.
The critical junctures that gave rise to feudal society were distinct,
but they were not completely restricted to Europe. A relevant
comparison is with the modern African country of Ethiopia, which
developed from the Kingdom of Aksum, founded in the north of the
country around 400 
BC
. Aksum was a relatively developed kingdom
for its time and engaged in international trade with India, Arabia,
Greece, and the Roman Empire. It was in many ways comparable to
the Eastern Roman Empire in this period. It used money, built
monumental public buildings and roads, and had very similar
technology, for example, in agriculture and shipping. There are also
interesting ideological parallels between Aksum and Rome. In 
AD
312,
the Roman emperor Constantine converted to Christianity, as did
King Ezana of Aksum about the same time. 
Map 12
shows the
location of the historical state of Aksum in modern-day Ethiopia and
Eritrea, with outposts across the Red Sea in Saudi Arabia and Yemen.

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Just as Rome declined, so did Aksum, and its historical decline
followed a pattern close to that of the Western Roman Empire. The
role played by the Huns and Vandals in the decline of Rome was
taken by the Arabs, who, in the seventh century, expanded into the
Red Sea and down the Arabian Peninsula. Aksum lost its colonies in
Arabia and its trade routes. This precipitated economic decline:
money stopped being coined, the urban population fell, and there was
a refocusing of the state into the interior of the country and up into
the highlands of modern Ethiopia.

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In Europe, feudal institutions emerged following the collapse of
central state authority. The same thing happened in Ethiopia, based
on a system called gult, which involved a grant of land by the
emperor. The institution is mentioned in thirteenth-century

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manuscripts, though it may have originated much earlier. The term
gult is derived from an Amharic word meaning “he assigned a fief.” It
signified that in exchange for the land, the gult holder had to provide
services to the emperor, particularly military ones. In turn, the gult
holder had the right to extract tribute from those who farmed the
land. A variety of historical sources suggest that gult holders extracted
between one-half and three-quarters of the agricultural output of
peasants. This system was an independent development with notable
similarities to European feudalism, but probably even more
extractive. At the height of feudalism in England, serfs faced less
onerous extraction and lost about half of their output to their lords in
one form or another.
But Ethiopia was not representative of Africa. Elsewhere, slavery
was not replaced by serfdom; African slavery and the institutions that
supported it were to continue for many more centuries. Even
Ethiopia’s ultimate path would be very different. After the seventh
century, Ethiopia remained isolated in the mountains of East Africa
from the processes that subsequently influenced the institutional path
of Europe, such as the emergence of independent cities, the nascent
constraints on monarchs and the expansion of Atlantic trade after the
discovery of the Americas. In consequence, its version of absolutist
institutions remained largely unchallenged. The African continent
would later interact in a very different capacity with Europe and Asia.
East Africa became a major supplier of slaves to the Arab world, and
West and Central Africa would be drawn into the world economy
during the European expansion associated with the Atlantic trade as
suppliers of slaves. How the Atlantic trade led to sharply divergent
paths between Western Europe and Africa is yet another example of
institutional divergence resulting from the interaction between
critical junctures and existing institutional differences. While in
England the profits of the slave trade helped to enrich those who
opposed absolutism, in Africa they helped to create and strengthen
absolutism.
Farther away from Europe, the processes of institutional drift were
obviously even freer to go their own way. In the Americas, for

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example, which had been cut off from Europe around 15,000 
BC
by
the melting of the ice that linked Alaska to Russia, there were similar
institutional innovations as those of the Natufians, leading to
sedentary life, hierarchy, and inequality—in short, extractive
institutions. These took place first in Mexico and in Andean Peru and
Bolivia, and led to the American Neolithic Revolution, with the
domestication of maize. It was in these places that early forms of
extractive growth took place, as we have seen in the Maya city-states.
But in the same way that big breakthroughs toward inclusive
institutions and industrial growth in Europe did not come in places
where the Roman world had the strongest hold, inclusive institutions
in the Americas did not develop in the lands of these early
civilizations. In fact, as we saw in 
chapter 1
, these densely settled
civilizations interacted in a perverse way with European colonialism
to create a “reversal of fortune,” making the places that were
previously relatively wealthy in the Americas relatively poor. Today it
is the United States and Canada, which were then far behind the
complex civilizations in Mexico, Peru, and Bolivia, that are much
richer than the rest of the Americas.