ECONOMIST Daron Acemoglu and his co-authors recently won the economics Nobel Prize for their work on institutions.

Interestingly, there is a critique of Acemoglu`s work about which not many people know. Prof Mushtaq Khan at the School of Oriental and African Studies (SOAS), who is inspired by the Marxist theory, has been hugely critical of Acemoglu`s work. Taking cue from the professor, I also critiqued Acemoglu`s famous book, Why Nations Fail, in my doctoral thesis.

The main criticism of Acemoglu`s work is that his interpretation of history is ahistorical. His team has given many examples of `virtuous` and `vicious` economic and political institutions in history whereby the societies that had `virtuous` political institutions led to economic growth as, in his view, democracy and rule of law helped the countries grow economically.

In contrast, the countries that had `vicious` political and social institutions deteriorated economically.

The flaw in this argument is that the research team took the coming together of these political and economic institutions as a given, and did not explain why some countries had `virtuous` institutions and others had `vicious`.

In the political economy analysis offered by the likes of Prof Mushtaq and others, mature and inclusive political institutions evolved due to structural changes in the economy, and the `virtuous` institutions were the result of structural transformation, and not the cause of it.

In other words, Acemoglu and his collaborators figured out the incorrect sequence of causality.

The Marxist analysis offers a much better explanation of historical change by trying to understand the capitalist transformation. Capitalism, which was born out of a violent process of colonialism, slavery and land-snatching, led to limited democracy. Acemoglu skipped all that structuraland theoreticalrigour.

Fogia Sadiq Khan Islamabad