The 2024 Nobel Prize for economics has gone to two economists for work on why some poor nations prosper while others fail and remain poor. But it is their 540 page account that fails, by not mentioning the real causes that are foundational in the global economic system.

The main statement of the case is in a book entitled Why Nations Fail. The explanation given is to do with the extent to which nations have political, legal, social etc. institutions that facilitate and encourage (conventional) development. Two basic types of national developmental systems are distinguished, the first characterised by institutions which provide rewards and security for innovation and investment, such as patent protection, legal systems for settling disputes, and freedom for investment. The second involves systems which thwart entrepreneurial activity, especially where a class or regime has hijacked the system to its own enrichment. This thesis is illustrated at length, through 540 pages, via a great deal of evidence and case studies, much of it delving into the extensive detail on the history of many nations. It is very clear and well written, remarkably well informed, and easily understood by the lay person.

So what’s the problem? It’s not that the book agues what seems to me to be an intuitively obvious finding, hardly remarkable or groundbreaking let alone worthy of a Nobel prize. The problem is that it makes no reference at all to overwhelmingly important reason “why nations fail”, why so many remain “poor” and why billions of people live in inexcusably appalling conditions.

The book’s thesis attributes these effects to conditions within poor countries. They are portrayed as having regimes and institutions which enable dictators and/or elites to control, gear economies to their interests and block desirable economic and political development. In the cases discussed this is quite true. But the main reason why at least half the world’s people are poor is because the global economic system keeps them there and is enforced on them by the rich countries which as a result are able to loot them. Economists endorse, staff and promote this system: they cannot imagine any other.

Outrageous? Here’s how “development” works.

Firstly, the book’s authors never ask what “development” means. They take it for granted as virtually all economists do that development = getting materially richer, as nations and as individuals. It is about being able to purchase more, increasing the amount of producing, selling and consuming going on, and thus it is about increasing the GDP. This is the “unidimensional” view of........

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