Acemoglu and team have authored a set of influential papers arguing that colonial experience has had a lasting influence on the growth rates of countries well after colonisation through the lasting impact they have had on institutions. Apart from very neat econometric estimations testing of their hypothesis and evaluating them against a variety of alternate thesis, they also draw attention to a host of historical literature on this subject. All this is very impressive.
They make a spirited argument that countries with extractive institutions have done poorly in terms of growth. This is where their work starts getting under-defined and under-theorised. They implicitly define that there is extraction when property rights are violated, but this is problematic.
Let’s say that a group of people produce a product together. They bring different things to the production including let’s say land, labour, skills, capital, etc. Production is done and it’s time to divide the fruits of joint production. There would be expropriation would be when some party gets unjustly more than what is their due. Expropriation cannot be understood without a notion of just division. As Jean Baudrillard shows cleverly in Mirror of production, Marxism or political economy or neo-classical economics will apply different norms making different divisions just. This has huge implications for what expropriation is.
Property rights are assignment of ownership of resources. This could be just or unjust based on the normative basis of our assessment. In other words, expropriation cannot be understood merely as violation of property rights; property rights in itself could involve expropriation. For example in Colonial origins of comparative development they talk about ‘forced labour’ as extractive. The classic forms of forced labour included slavery and bonded labour can be described in terms of property rights. Slaves were a property, and bonded labour is typically related to some unjust contract. Abolition of slavery in their case will involve violation of property rights of slave owners – and is thus extractive. Protection of slavery in turn would be non-extractive.
Their broad argument is that where there is expropriation, there is less incentive for people to be productive and this affects growth. Colonialism involved setting up more extractive institutions in some places that have suffered from growth, presumably because bulk of the population did not have the incentives to stay productive. I feel that the incentives people have cannot be merely captured by the degree of violation of property rights, that too in a highly abstract fashion.
Statistically, they have established a close relationship between settler mortality and current growth rates. This is interesting but can lend itself to a variety of arguments. Drawing from history, they have made a reasonable argument that these institutions have persisted – but this needs qualification. They have also argued reasonably that disproportionate power of the state and of elites can be counterproductive. What they have not done adequately is to theorise this well, and instead they have fallen on a Northian conception of protection of property rights. This theoretical shortcut undermines the beauty of their statistical work and the lessons it may have for us.
There is something in this relationship that’s worth pursuing…but the theoretical framing in this paper lends itself to protection of slavery and forms of forced labour that they stand clearly against. This will be so until expropriation is defined or clarified in clear normative terms.