wins depends on the distribution of political power in
society.
The political institutions of a society are a key
determinant of the outcome of this game. They are the rules
that govern incentives in politics. They determine how the
government is chosen and which part of the government
has the right to do what. Political institutio ns determine who
has power in society and to what ends that power can be
used. If the distribution of power is narrow and
unconstrained, then the political institutions are absolutist,
as exemplified by the absolutist monarchies reigning
throughout the world during much of history. Under
absolutist political institutions such as those in North Korea
and colonial Latin America, those who can wield this power
will be able to set up economic institutions to enrich
themselves and augment their power at the expense of
society. In contrast, political institutions that distribute
power broadly in society and subject it to constraints are
pluralistic. Instead of being vested in a single individual or a
narrow group, political power rests with a broad coalition or
a plurality of groups.
There is obviously a close connection between pluralism
and inclusive economic institutions. But the key to
understanding why South Korea and the United States
have inclusive economic institutions is not just their
pluralistic political institutions but also their sufficiently
centralized and powerful states. A telling contrast is with the
East African nation of Somalia. As we will see later in the
book, political power in Somalia has long been widely
distributed—almost pluralistic. Indeed there is no real
authority that can control or sanction what anyone does.
Society is divided into deeply antagonistic clans that
cannot dominate one another. The power of one clan is
constrained only by the guns of another. This distribution of
power leads not to inclusive institutions but to chaos, and at
the root of it is the Somali state’s lack of any kind of
political centralization, or state centralization, and its
inability to enforce even the minimal amount of law and
order to support economic activity, trade, or even the basic
security of its citizens.
Max Weber, who we met in the previous chapter,
provided the most famous and widely accepted definition