Institutions without Culture: On Daron Acemoglu and James Robinson’s Theory of Economic Development

Abstract

The role of culture in economic development is still not fully recognized. However, institutional economists have been known for playing an active part in the inquiries into identifying the culture-embedded factors influencing economic performance. Somewhat surprisingly, certain recent theories by the influential new institutional economists recognize culture as an exogenous variable, denying its importance for coining prosperity. By taking Acemoglu and Robinson’s theory, presented in Why Nations Fail and elaborated on in their earlier papers, as a representative example, we bring to light the limitations of such an approach. Firstly, we demonstrate how the eradication of culture leads to an internal inconsistency in Acemoglu and Robinson’s theorizing on economic performance. Their strong rejection of the culture hypothesis is impossible to reconcile with their concept of institutional changes outlined in Paths to Inclusive Political Institutions and The Narrow Corridor. Secondly, we also point to certain cases in which culture was an ontologically important factor affecting economic performance. Our claim is illustrated by some examples of the Central and Eastern European (CEE) countries’ paths of economic development. We conclude that neglecting culture diminishes the explanatory power of such theories of economic development and significantly undermines their practical implications.