the sophisticated civilization that the Mayas built on
foundations laid by highly extractive institutions coercing
many for the benefit of their narrow elites.
The growth generated by extractive institutions is very
different in nature from growth created under inclusive
institutions, however. Most important, it is not sustainable.
By their very nature, extractive institutions do not foster
creative destruction and generate at best only a limited
amount of technological progress. The growth they
engender thus lasts for only so long. The Soviet experience
gives a vivid illustration of this limit. Soviet Russia
generated rapid growth as it caught up rapidly with some of
the advanced technologies in the world, and resources
were allocated out of the highly inefficient agricultural sector
and into industry. But ultimately the incentives faced in
every sector, from agriculture to industry, could not
stimulate technological progress. This took place in only a
few pockets where resources were being poured and
where innovation was strongly rewarded because of its role
in the competition with the West. Soviet growth, however
rapid it was, was bound to be relatively short lived, and it
was already running out of steam by the 1970s.
Lack of creative destruction and innovation is not the only
reason why there are severe limits to growth under
extractive institutions. The history of the Maya city-states
illustrates a more ominous and, alas, more common end,
again implied by the internal logic of extractive institutions.
As these institutions create significant gains for the elite,
there will be strong incentives for others to fight to replace
the current elite. Infighting and instability are thus inherent
features of extractive institutions, and they not only create
further inefficiencies but also often reverse any political
centralization, sometimes even leading to the total
breakdown of law and order and descent into chaos, as the
Maya city-states experienced following their relative
success during their Classical Era.
Though inherently limited, growth under extractive
institution