By MICHAEL ROBERTS*

It must be said that the theories that advance the “catch-up” are vague and, as such, unconvincing.

1.

Daron Acemoglu, Simon Johnson and James A. Robinson were awarded the Nobel Prize (which is actually the Riksbank Prize) in Economics in 2024 “for their studies on the formation of institutions and how they affect prosperity”. Daron Acemoglu and Simon Johnson are professors at the Massachusetts Institute of Technology. James Robinson is a professor at the University of Chicago, also in the United States.

Here is what the Nobel judges say about why they awarded the prize: “Today, the richest 20 percent of countries are about 30 times richer than the poorest 20 percent. Income disparities between countries have been very persistent over the past 75 years. Available data also show that income disparities between countries have grown over the past 200 years. Why are income differences between countries so large and why are they so persistent?”

“This year’s laureates have pioneered a new approach that has proven capable of providing quantitative and reliable answers to this question, which is clearly important for humanity. They have empirically examined the impact and persistence of economic development strategies adopted by many low-income countries after liberation from colonialism. They have found that many of them have created institutional environments that they have described as extractive. Their emphasis on using historical data to capture institutional experiments has initiated a new tradition of research that continues to help uncover the historical drivers of prosperity – or lack thereof.”

“These economists’ research focuses on the idea that political institutions fundamentally shape the conditions that enable the generation of wealth in nations. But what shapes these institutions? Drawing on existing political science scholarship on democratic reform, largely based on game theory, Acemoglu and Robinson developed a dynamic model in which the ruling elite makes strategic decisions about political institutions—particularly electoral processes—in response to periodically emerging threats. This theoretical framework is now the standard for analyzing political institutional reform. And it has had a significant impact on the development of research in this field. And evidence is mounting in support of one of the model’s key implications: that more inclusive governments promote economic development.”

2.

Now, what I have discovered myself in examining previous winners is that the winner (more rarely) – whatever the quality of his or her work – received the prize not for the best, but usually for the worst part of his or her research. For the winning papers always confirmed the prevailing view of the economic world as it currently exists, even if they did not go very far in understanding its inherent contradictions.

I think this conclusion applies to the recent winners mentioned above. The work for which they received the million-dollar prize consists of research aimed at showing that the countries that have achieved prosperity and ended poverty are those that have adopted “democracy.” By democracy, I mean Western-style liberal democracy, where people can speak out (mostly), vote for professional politicians, and expect the laws to protect their lives and property (this is to be expected).

From this perspective, societies that are controlled by elites who have no democratic accountability, who promote the mere extraction of resources, who do not respect property and the value generated over time, do not prosper. The Nobel laureates proved this thesis through a series of articles in which they presented empirical analyses, which showed the existence of a correlation between democracy (as defined) and levels of prosperity.

In fact, the Nobel laureates argue that the colonization of the Global South in the 18th and 19th centuries could have been “inclusive.” The countries of North America, because they were “inclusive,” became prosperous nations (this prosperity must obviously exclude the indigenous population). The countries of the South, because they were “extractive,” remained in poverty (Central and South America) or even in extreme poverty (Africa). For them, everything depends on the institutions thus classified. This is the theory they defend.

This type of economic analysis is called institutionalist. It claims that it is not the blind forces of the market and capital accumulation that drive growth (and inequality), but the decisions and superstructures built by social actors. Supported by this type of model, the current winners claim that revolutions precede economic changes; for them, it is not economic changes (or the lack thereof before a new economic environment is created) that precede revolutions.

3.

Two points emerge from this analysis. The first is: if growth and prosperity go hand in hand with “democracy,” how can we explain the success of countries like the Soviet Union, China, and Vietnam if they supposedly have “extractive” and/or antidemocratic elites? How do these noble Nobel Prize winners explain such unquestionable economic performances?

Apparently, they explain this by the fact that they emerged from a state of extreme poverty by copying technology from more developed countries; however, after the first leaps, the extractive nature of their governments causes them to lose strength? Well, perhaps they believe that China's hypergrowth will soon lose strength. Perhaps this is happening now!

Secondly, is it correct to say that revolutions or political reforms are necessary to put things on the path to prosperity? Well, there may be some truth in that: Russia in the early 1917th century would have gotten to where it is today without the 2024 revolution; China, exploited by British imperialism, would have gotten to where it is now in 1949 without the XNUMX revolution. Now, these noble Nobel Prize winners do not refer to such examples: they prefer Great Britain and the United States as examples of winning countries.

However, the state of the economy, how it operates, investment and the productivity of the workforce also have an effect on the progress of nations. Capitalism and the industrial revolution in Britain preceded the move towards universal suffrage, which only came later, after much struggle. The English Civil War of the 1640s laid the political foundations for the hegemony of the capitalist class in Britain, but it was the expansion of trade (including slave trade) and colonisation in the following century that produced economic prosperity.

The irony of this award is that Acemoglu and Johnson's best work came only more recently. But the award's judges focused on the researchers' earlier work. Just last year, the authors published the book Power and progress (Objective) (Power and Progress), in which they present the contradiction present in modern economies between technology that increases labor productivity but also tends to increase inequality and poverty. It is clear that the political solutions they propose do not address the issue of changing property relations, even if they recommend that there needs to be a greater distributive balance between capital and labor.

In favor of this year’s winners is the fact that their research attempts to understand the economic world and its mode of development, rather than establishing some mysterious equilibrium theorem, as has been the case in the past. Many previous winners have been honored for such esoteric contributions. However, it must be said that the theories they put forward for “catching up” are vague (or “contingent” as they themselves refer to them) and, as such, unconvincing.

I believe that there is a much better and more persuasive explanation of the process of catching up (or failing to catch up) in the recent book by Brazilian Marxist economists Adalmir Antônio Marquetti, Alessandro Miebach and Henrique Morrone. They have produced an important and very insightful book on global capitalist development. They have even created an innovative way of measuring the progress of the majority of humanity in the so-called Global South, which is aiming, without being able, to “catch up” with the living standards prevailing in the “Global North”.

Their book, Uneven Development and Capitalism – Catching Up or Falling Behind in the Global Economy (Unequal Development and Capitalism – Catching Up and Falling Behind in the Global Economy, Routledge), deals with several variables that the current Nobel laureates ignore, namely, productivity of labor and capital, rate of accumulation, unequal exchange, rate of exploitation – as well as with the most important institutional factor, that is, the one that defines who controls the surplus, whether this controller is from within or from without.

*Michael Roberts is an economist. Author, among other books, of The great recession: a marxist view (Lulu Press) [https://amzn.to/3ZUjFFj]

Translation: Eleutério FS Prado.

Originally published in The next recession blog.

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