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

nations. A major factor was the French Revolution of 1789. The end of absolutism in France opened the way for inclusive institutions, and the French ultimately embarked on industrialization and rapid economic growth. The French Revolution in fact did more than that. It exported its institutions by invading and forcibly reforming the extractive institutions of several neighboring countries. It thus opened the way to industrialization not only in France, but in Belgium, the Netherlands, Switzerland, and parts of Germany and Italy. Farther east the reaction was similar to that after the Black Death, when, instead of crumbling, feudalism intensified. Austria-Hungary, Russia, and the Ottoman Empire fell even further behind economically, but their absolutist monarchies managed to stay in place until the First World War.
    Elsewhere in the world, absolutism was as resilient as in Eastern Europe. This was particularly true in China, where the Ming-Qingtransition led to a state committed to building a stable agrarian society and hostile to international trade. But there were also institutional differences that mattered in Asia. If China reacted to the Industrial Revolution as Eastern Europe did, Japan reacted in the same way as Western Europe. Just as in France, it took a revolution to change the system, this time one led by the renegade lords of the Satsuma, Chōshū, Tosa, and Aki domains. These lords overthrew the shogun, created the Meiji Restoration, and moved Japan onto the path of institutional reforms and economic growth.
    We also saw that absolutism was resilient in isolated Ethiopia. Elsewhere on the continent the very same force of international trade that helped to transform English institutions in the seventeenth century locked large parts of western and central Africa into highly extractive institutions via the slave trade. This destroyed societies in some places and led to the creation of extractive slaving states in others.
    The institutional dynamics we have described ultimately determined which countries took advantage of the major opportunities present in the nineteenth century onward and which ones failed to do so. The roots of the world inequality we observe today can be found in this divergence. With a few exceptions, the rich countries of today are those that embarked on the process of industrialization and technological change starting in the nineteenth century, and the poor ones are those that did not.

11.

T HE V IRTUOUS C IRCLE
T HE B LACK A CT
    W INDSOR C ASTLE , located just west of London, is one of the great royal residencies of England. In the early eighteenth century, the castle was surrounded by a great forest, full of deer, though little of this remains today. One of the keepers of the forest in 1722, Baptist Nunn, was locked in to a violent conflict. On June 27 he recorded,
    Blacks came in the night shot at me 3 times 2 bullets into my chamber window and [I] agreed to pay them 5 guineas at Crowthorne on the 30th.
    Another entry in Nunn’s diary read, “A fresh surprise. One appeared disguised with a message of destruction.”
    Who were these mysterious “Blacks” making threats, shooting at Nunn, and demanding money? The Blacks were groups of local men who had their faces “blacked” to conceal their appearance at night. They appeared widely across southern England in this period, killing and maiming deer and other animals, burning down haystacks and barns, and destroying fences and fish ponds. On the surface it was sheer lawlessness, but it wasn’t. Illegal hunting (poaching) deer in lands owned by the king or other members of the aristocracy had been going on for a long time. In the 1640s, during the Civil War, the entire population of deer at Windsor Castle was killed. After the Restoration in 1660, when Charles II came to the throne, the deer parkwas restocked. But the Blacks were not just poaching deer to eat; they also engaged in wanton destruction. To what end?
    A crucial building block of the Glorious Revolution of 1688 was the pluralistic nature of interests represented in Parliament. None of the merchants, industrialists, gentry, or aristocracy allied with William of Orange and then with the Hanoverian monarchs, who succeeded Queen Anne in 1714, were strong enough to impose their will unilaterally.
    Attempts at restoring the Stuart monarchy continued throughout much of the eighteenth century. After James II’s death in 1701, his son, James Francis Edward Stuart, the