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Even Nobel laureates stumble. Daron Acemoglu, Simon Johnson and James A. Robinson, winners of the 2024 Nobel Prize in economics, argue that nations with extractive and non-inclusive institutions – where elites monopolise power – are doomed to stagnation. Democracies, by contrast, are cast as economically superior. It is a tidy theory, elegant in design. But it falters in the face of China.
To square the circle, the trio invoke “critical junctures”. China’s post-Mao reforms under Deng Xiaoping, they argue, unleashed growth despite extractive institutions. Poor countries can grow quickly for a while, they add, until the contradictions of authoritarian rule catch up.
And if China’s rise seems exceptional? Perhaps it may be attributed to historical luck. But “luck” is not analysis. It is an evasion.
Whether framed as unsustainable or dismissed as a historical accident, such arguments sidestep the deeper question: why has China’s authoritarian system sustained growth for four decades while others have failed?
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Why do poor nations with equally extractive systems fail to replicate China’s trajectory? What explains four decades of sustained expansion, global integration and technological ascent? A lottery ticket cannot suffice as explanation.
The deeper lesson is this: the dichotomy between “inclusive” and “extractive” institutions obscures more than it reveals. China’s story is not about defying economics but about expanding its vocabulary. What matters is not institutional purity but adaptive state capacity – the ability of a system to selectively liberalise without ceding control, to embrace global markets while maintaining domestic authority, to bend rules when necessary while preserving political order.