[Don't worry, this series ends soon!]
What creates good political institutions? A&R answer: “critical
junctures” in which “small differences become important”. Game
theorists would call this transitions between different equilibria.
In a sense this is not a very useful answer, because “small
differences” is likely to mean “differences too small to detect a
priori”. But it might be a true answer.
However there are some unconsidered candidates. For example, Gibbon
thought that the Roman empire’s break-up was important because it
created a set of competing states in Europe. In turn, competition
between states limited their ability to extract rents and gave them
incentives to innovate. (Historically, a lot of innovation has been
driven by war.) This argument suggests a corrective to A&R’s
praise of centralization as a necessary condition for the development
of inclusive institutions.
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