Daily Times

The long period between the Neolithic Revolution that started in 9500 BC and the British Industrial Revolution of the late 18th century is littered with spurts of economic growth. Those spurts were triggered by institutional innovations that ultimately faltered. In ancient Rome the institutions of the Republic, which created some degree of economic vitality and allowed for the construction of the massive empire, unravelled after the coup by Julius Caesar and the rebuilding of the empire under Augustus. The decline and fall of the Roman Empire was drawn out. But once the relatively inclusive republican institutions gave way to the more extractive institutions of the empire, economic regress became all but inevitable.

The Venetian dynamics were similar. Economic prosperity of Venice was forged by institutions that had important inclusive elements, but those were undermined when the elite closed the system to new entrants, and even banned the economic institutions that had created the prosperity of the republic.

However notable the experience of Rome, it was not Rome’s inheritance that led directly to the rise of inclusive institutions in England, and to the British Industrial Revolution. Historical factors shape how institutions, but this is not a simple, predetermined, cumulative process. Rome and Venice illustrate how early steps toward inclusivity were reversed.

The economic and institutional landscape that Rome created throughout Europe and the Middle East did not inexorably lead to the more firmly rooted inclusive institutions of later centuries. In fact, those would emerge first and most strongly in England, where Roman hold was the weakest and where it disappeared most decisively, almost without a trace, during the fifth century AD. Instead, history plays a major role through institutional drift that creates institutional differences, albeit sometimes small, which then get amplified when they interact with critical junctures. It is because these differences are often small that they can be reversed easily and are not necessarily the consequences of a simple cumulative process.

Much of the energies of the ruling class need to be utilised to reform the institutions and to resolve the conflicts that they inherit. Social change is an instrument of redistributing power in society

Of course, Rome had long-lasting effects on Europe. Roman law and institutions influenced the laws and institutions that the kingdoms of the barbarians set up after the collapse of the western Roman Empire. It was also Rome’s fall that created the decentralised political landscape that developed into a feudal order. Disappearance of slavery and emergence of independent cities were long, drawn out by-products of that process. Those would become particularly consequential when the feudal society was deeply shaken; stronger towns and cities emerged, and a peasantry no longer tied to the land and newly free of feudal obligations. It was precisely these critical junctures unleashed by the fall of the Roman Empire that led to a strong institutional drift affecting all of Europe in a way that has no parallel in Sub-Saharan Africa, Asia, or the Americas. By the 16th century, Europe was institutionally very distinct from Sub-Saharan Africa and the Americas. Though not much richer than the most Spectacular Asian civilisations in India or China, Europe differed from those polities in some key ways. For example, it had developed representative institutions of a sort unseen there. Those were to play a critical role in the development of inclusive institutions. Small institutional differences were the ones that would really matter within Europe; and those favoured England because it was there that the feudal order had made way most comprehensively for commercially minded farmers and independent urban centres where merchants and industrialists could flourish. Those groups were already demanding more secure property rights, different economic institutions and political voice from their monarchs.

People resist change; they are reluctant to accept innovation and inventions that offer higher productivity and convenient, comfortable ways of doing things. Fear of creative destruction is the main reason why there was no sustained improvement in living standards between the Neolithic and Industrial revolutions. Technological innovation makes human society prosperous, but also involves the replacement of the old with the new, and destruction of the economic privileges and political power of certain people. Reinvention is the name of the game.

Conflict over institutions and distribution of resources has been pervasive throughout history. We know how political conflict shaped the evolution of the ancient Rome and Venice, where it was ultimately resolved in favour of the elites who were able to strengthen their hold on power. Much of the energies of the ruling class need to be utilised to reform the institutions and to resolve the conflicts that they inherit. Social change is an instrument of redistributing power in society. Determined efforts are needed to create pluralistic institutions. Extractive institutions are a barrier to innovativeness and creativity, as well as a door open to monopolies.

Monopolies gave individuals or groups the sole right to control the production of many goods. They impeded the type of allocation of talent, which is so crucial to economic prosperity and political stability and maturity. Leadership is expected, everywhere, to reform institutions and resolve conflicts as a national cause. Positive thinking and rethinking is the only way forward. Negativity only leads to tensions and collective stress.

The writer is a former director of the National Institute of Public Administration. His latest book Existential Question for Pakistan discusses issues related to governance and policy