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

C
ONSEQUENCES OF
 E
ARLY
 G
ROWTH
The long period between the Neolithic Revolution, which started in
9500 
BC
, and the British Industrial Revolution of the late eighteenth
century is littered with spurts of economic growth. These spurts were
triggered by institutional innovations that ultimately faltered. In
Ancient Rome the institutions of the Republic, which created some
degree of economic vitality and allowed for the construction of a
massive empire, unraveled after the coup of Julius Caesar and the
construction of the empire under Augustus. It took centuries for the
Roman Empire finally to vanish, and the decline was drawn out; but
once the relatively inclusive republican institutions gave way to the
more extractive institutions of the empire, economic regress became
all but inevitable.

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The Venetian dynamics were similar. The economic prosperity of
Venice was forged by institutions that had important inclusive
elements, but these were undermined when the existing elite closed
the system to new entrants and even banned the economic
institutions that had created the prosperity of the republic.
However notable the experience of Rome, it was not Rome’s
inheritance that led directly to the rise of inclusive institutions in
England and to the British Industrial Revolution. Historical factors
shape how institutions develop, but this is not a simple,
predetermined, cumulative process. Rome and Venice illustrate how
early steps toward inclusivity were reversed. The economic and
institutional landscape that Rome created throughout Europe and the
Middle East did not inexorably lead to the more firmly rooted
inclusive institutions of later centuries. In fact, these would emerge
first and most strongly in England, where the Roman hold was
weakest and where it disappeared most decisively, almost without a
trace, during the fifth century 
AD
. Instead, as we discussed in 
chapter
4
, history plays a major role through institutional drift that creates
institutional differences, albeit sometimes small, which then get
amplified when they interact with critical junctures. It is because
these differences are often small that they can be reversed easily and
are not necessarily the consequence of a simple cumulative process.
Of course, Rome had long-lasting effects on Europe. Roman law and
institutions influenced the laws and institutions that the kingdoms of
the barbarians set up after the collapse of the Western Roman Empire.
It was also Rome’s fall that created the decentralized political
landscape that developed into the feudal order. The disappearance of
slavery and the emergence of independent cities were long, drawn out
(and, of course, historically contingent) by-products of this process.
These would become particularly consequential when the Black Death
shook feudal society deeply. Out of the ashes of the Black Death
emerged stronger towns and cities, and a peasantry no longer tied to
the land and newly free of feudal obligations. It was precisely these
critical junctures unleashed by the fall of the Roman Empire that led
to a strong institutional drift affecting all of Europe in a way that has

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no parallel in sub-Saharan Africa, Asia, or the Americas.
By the sixteenth century, Europe was institutionally very distinct
from sub-Saharan Africa and the Americas. Though not much richer
than the most spectacular Asian civilizations in India or China,
Europe differed from these polities in some key ways. For example, it
had developed representative institutions of a sort unseen there.
These were to play a critical role in the development of inclusive
institutions. As we will see in the next two chapters, small
institutional differences would be the ones that would really matter
within Europe; and these favored England, because it was there that
the feudal order had made way most comprehensively for
commercially minded farmers and independent urban centers where
merchants and industrialists could flourish. These groups were
already demanding more secure property rights, different economic
institutions, and political voice from their monarchs. This whole
process would come to a head in the seventeenth century.

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