The Coatsworth Thesis
Tuesday, August 19, 2014
Daron Acemoglu and James Robinson

The reactions of the campesinos in Chachapoyas to the state might not have been completely surprising to people who had read the work of the historian John Coatsworth. In Chapter 1 of Why Nations Fail we present a comparative economic and political history of the Americas showing how the very different institutions that got set up in colonial Latin America led to its long-run development. In characterizing these institutions as extractive on the one hand we focused on economic institutions, such as systems of labor coercion, designed to exploit indigenous peoples to the benefit of colonists. Lying behind these extractive economic institutions were extractive political institutions, political power concentrated in the hands of the elite and a weak state. Yet why was the Latin America state weak? John Coatsworth has persuasively argued that to understand the institutional path of Latin America it is important to understand the structure of the colonial state which involves an interaction not just between the elite and society, but between society, the Spanish settler elites and the Spanish state. For example, the colonial state often intervened to protect indigenous peoples from exploitation by the settlers. One reason of course was that the colonial state wanted to exploit the indigenous peoples itself (something which comes up in Melissa Dells’ path-breaking study of the impact of labor coercion in colonial Latin America - The Persistent Effects of Peru’s Mining Mita).

But it also wanted to weaken the power of these settler elites because it was also afraid of them declaring independence or refusing to pay taxes. A particularly interesting example of this is attempts by the Spanish crown to rescind grants of encomienda, the earliest system of labor coercion implemented in the Americas. Coatsworth also points out that this is a reason why property rights were ill-defined and insecure in colonial Latin America, by not giving settlers well defined and secure rights the colonial state made them more dependent on it, thus weakening their autonomy and power.

Thus the idea that Peruvians might appeal to the central state to help them fight against the tyranny of local elites was not a new one in the 1930s. It had actually been going on for a long time.

A good place to read his views is in his paper “Institutions and Long-Run Economy Performance in Mexico and Spain, 1800-2000” co-written with distinguished Spanish economic historian Gabriel Tortella.

Article originally appeared on Why Nations Fail by Daron Acemoglu and James Robinson (
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