Historical determinism

Historical determinism is the belief that a society’s eventual prosperity or poverty follows inevitably from its geography, culture, or past. The book rejects that conclusion without denying history’s force: inherited institutions and earlier turning points constrain what comes next, but they do not make any particular outcome necessary. Its alternative account explains divergence through institutional drift, critical junctures, political conflict, and contingent choices.

What the theory rejects

The book’s conclusion is explicit: historical explanation should not be mistaken for historical necessity. Peru, it argues, is not condemned to poverty by geography or culture. Its relative poverty compared with Western Europe and the United States is instead traced to the development of its institutions, including the way the region was colonized. Five hundred years earlier, the Inca Empire had been richer, more technologically sophisticated, and more politically centralized than the smaller polities occupying North America. The later reversal was neither a natural consequence of those starting conditions nor a foreordained outcome; it emerged through a contingent sequence of institutional developments at critical junctures.

The same distinction applies to individual policy choices. Ghana’s economically irrational state projects, including a footwear factory whose planned transport route connected distant regions and a mango cannery in an area that did not grow mangoes, cannot be explained simply as the product of ignorance. Kwame Nkrumah’s government had access to informed economic advice, including that of Tony Killick and Sir Arthur Lewis. The book attributes the policies instead to the political uses they served: Nkrumah needed them to secure support and sustain an undemocratic regime. Likewise, Kofi Busia’s experience showed that advice about reform did not erase political constraints. A currency devaluation agreed with the International Monetary Fund was followed by unrest in Accra and his overthrow. These cases challenge the notion that better information alone can engineer prosperity.

Drift and turning points

The alternative explanation begins with institutional drift: the slow, contingent divergence of societies that may initially be quite similar. Small differences arise through conflicts over income and power, distinct customs, property rights, and ways of organizing authority. Like genetic drift, institutional drift has no predetermined direction. Nor is it necessarily cumulative: differences can widen, disappear, and later reappear. Over time, however, even modest institutional variations can matter because they shape how societies respond when circumstances change.

A critical juncture is a major event, or convergence of factors, that disrupts an existing political or economic balance. It may open a path toward more inclusive institutions, or strengthen extractive ones. The Black Death illustrates both possibilities. In England, where peasants had relatively greater power and autonomy, the disruption helped dissolve feudalism; in Eastern Europe, it contributed to the Second Serfdom. By 1600, Western workers were increasingly free of feudal dues and part of a growing market economy, while Eastern workers were more often coerced into producing goods demanded by the West. The epidemic did not impose one universal institutional result: the societies’ different starting arrangements shaped their divergent responses.

The interaction of drift and junctures also helps explain why the Atlantic trade had different consequences across Europe. In the seventeenth century, English monarchs could not monopolize overseas trade as the monarchies of France and Spain could. Trade and colonization therefore enriched English merchants with relatively few links to the Crown, who pressed for limits on royal power; in France and Spain, the monarchies and their allies were better positioned to capture the gains. The resulting conflicts and institutional changes did not follow automatically from the existence of Atlantic trade. They depended on small, inherited differences in who controlled commerce and who could use its profits to challenge political authority.

Conflict, persistence, and change

Institutions persist because political and economic arrangements reinforce one another. Extractive institutions can form a vicious circle: those who benefit from them accumulate wealth and political influence, then use that power to resist changes that would threaten their position. Inclusive arrangements can likewise support a virtuous circle. Neither pattern is absolute, however. Some societies have broken out of extractive arrangements and moved toward more inclusive institutions, even though such transitions are difficult and their timing is hard to predict.

The interests behind resistance to change are not necessarily rooted in ignorance. Economic growth and innovation redistribute resources and power as well as increasing total income. During England’s Industrial Revolution, mechanization transformed steam power, transport, and textile production, but the changes also threatened established firms, skills, and political positions. The book describes this process, following Joseph Schumpeter, as creative destruction: new technologies and sectors displace old ones. A ruler such as Joseph Mobutu could have become richer if Congo’s population had prospered, but growth-promoting institutions could also have redistributed income and political power in ways that made a predatory ruler worse off. The gains available to society as a whole did not guarantee gains for those who controlled the state.

This helps explain why advice and aggregate economic benefit cannot, by themselves, predict institutional choices. The relevant question is not only which policies might raise output, but who holds decision-making power, who stands to gain or lose, and what constraints political actors face. Historical outcomes emerge from those conflicts within institutions, not from a simple progression toward greater prosperity. The book’s account therefore treats persistence as powerful, but never as proof that change is impossible.

Contingency and counterfactual paths

The book develops its rejection of inevitability through counterfactuals. The Inca Empire might have resisted European colonization, as Tokugawa Japan resisted external pressure and subsequently underwent major institutional change. Greater extractiveness may have made such a transformation less likely in Peru, but it did not make European domination historically necessary. Had the Inca state resisted and modernized, the history of the New World—and perhaps the wider world—could have been different.

Nor was European expansion itself inevitable. The book points to a sequence of contingent developments: feudalism weakened monarchs as it replaced slavery; commercially autonomous cities emerged in Europe after the turn of the first millennium; European monarchs did not discourage overseas trade as Ming emperors did; and the Black Death disrupted feudal arrangements. Had these developments taken different forms, European powers might not have surged ahead and colonized the world. A world in which Peru was richer than Western Europe or the United States is presented not as an alternative that occurred, but as a possibility that the actual course of history does not rule out.

That contingency limits precise prediction. Few observers in the fifteenth or sixteenth centuries would have anticipated Britain’s breakthrough toward inclusive institutions, which depended on the particular interplay between its institutional development and the opening of Atlantic trade. Nor, during the Cultural Revolution of the 1970s, would many have expected China soon to embark on radical economic change and rapid growth. Such reversals do not make historical explanation useless: the theory can account for broad patterns of prosperity and poverty while acknowledging that it cannot say with certainty which society will prosper relative to another centuries hence. History shapes the available paths; it does not dictate a single destination.