Leaders, institutions, and the fate of societies

As I, like most people across the world, follow news out of the United States of America (US) concerning that country’s forthcoming presidential elections on November 3, 2020, I can only but recall the arguments I had with my former colleagues in international development over the role of institutions in development. Academic economists, the World Bank, the IMF and United Nations Departments and agencies have in several publications argued the importance of institutions in economic development (talk about the incestuous inbreeding of ideas that characterizes current thinking in international development!). For example, Rodrik and Subramanian concluded in their paper “The Primacy of Institutions” that “Using regression analysis, we came up with some sharp and striking results that have broad implications for development conditionality, discussed below. Our results indicate that the quality of institutions overrides everything else.” One of those victories common in economics of great modeling over objective reality.

These analysts and their institutions blamed Africa’s slow rate of social and economic transformation development on the lack institutions, or weakness of her institutions (when they wanted to be a bit charitable), or both (when they were at their hyper-condemning best). Recommendations were made to African governments and lending institutions to focus on institutions-institutional capacity building etc. For example, Roderik and Subramanian recommended that the IMF and the World Bank should focus on “the appropriate institutional preconditions to ensure the effectiveness of development assistance is challenging”. I must confess that much as I like reading Rodrik, I find his obsession with my beloved country, Nigeria, in his essays on and analyses of poor development outcomes a bit annoying. No, actually, very annoying!

I always thought the focus on institutions strange and misplaced if not wrong – especially when the same World Bank and UN departments in their reports would turn around and blame “lack of political will” for poor development outcomes. The focus on institutions, not on material conditions that create incentives or preconditions for high quality institutions, was to me like the Big Bang theory of creation. Bang, the universe was created! But no one tells you the source of the Big Bang! What caused it? What or who was responsible for it? There is no answer. But we are expected to believe and accept the Big Bang Theory!

I argued in my previous life that the focus on institutions, however defined, was wrong or incomplete. Strong institutions do not just sprout out of the ether or the soil. They are products not of ideals but of material and objective conditions in a country. Individuals and leaders (persons with formal authority and have voluntary followers or a “base”) respond to these conditions. Nigeria’s leaders, for example, did not create the Economic and Financial Crimes Commission (EFCC) because they were enamored of the ideal of a corruption free country; they created it, under considerable foreign pressure to tackle corruption after Abacha’s looting spree, because corruption was and remains a clear and present danger to the stability and cohesion of the country, and an unstable country cannot be provide security for the “wealth” that they had already accumulated. It is the response of leaders and the governed to these economic necessities that determines the nature of institutions and their quality. Emphasis should therefore be on leadership and or the political process: on educating voters and/or the Military (if they are minded to organizing coups as in some countries), to select transformative leaders who respect institutions.

There is, I must confess, little originality in my argument. It stemmed from the little I still remember from my readings of Marx and Engels on historical materialism. Marx had argued, in response to Hegel, that abstract ideas (in this case, institutions as in “the rule of law”, “property rights” etc.) were not the engines of change; that material economic forces instead drive the dialectic of change. According to Cawthon “Marx held that leadership roles emerge through the natural forces of historical inevitability” Cawthon also notes that Marx’s colleague, Friedrich Engels, explained in his “Letters on Historical Materialism” that one’s claim to leadership is driven by the forces of economic necessity.

Recent events in the US, the UK and many of the democracies whose institutions are used as exemplars for Africa lend credence to Marx’s argument. The campaign against the “deep state” is unraveling institutions in a major democracy. Institutions may not be the ultimate determinants of economic development. Individuals are. Individual leaders, driven by economic interests/economic necessity acquire political power and use that political power to create or instigate institutions that advance and secure their economics interests. The institutions over time become strong and of high quality simply because they become a habit of the people and because people become lazy to change them. Once the habit is broken, once a sufficient number of people breaks the habit, breaks from their laziness, otherwise strong and high quality institutions crumble.

Clearly, institutions are only as strong and as stable as the political leadership wants them to be– and that depends on the economic forces and economic necessity (economic forces and economic necessity drive political actions) driving the leadership. Institutions are neither stable nor permanent. This is especially so in democracies. Leaders shape them. Each leader leaves them stronger, weaker or dead. The implication of this reality is that Africans should care less about institutions as development activists/experts/practitioners advise them to, important though they are, and care more about the type and quality of leaders that they elect/select.

Regressions run by economists that provide evidence supporting the notion that institutions are the most important variable in the development equation are in many cases meaningless and unhelpful. Institutions do not have a totally autonomous impact on economic and political outcomes. At best, they are a clash of thinly disguised interests, dependent on the leaders that superintend over them. They survive and thrive when the clash of interests is stable and the habit of respecting institutions has not been eroded or weakened. Like in Italy, for example, where unending political instability appears to have had no discernible adverse impact on the strength and quality of her institutions.

Leaders are the drivers of the development or non-development of societies. And their personalities matter. Get the right person, with the "right" personality, and strong and high-quality institutions will follow; make one mistake in the choice of leaders and indescribable institutional destruction will follow. This destruction will be especially devastating in societies where the habit of respecting institutions has not formed or consolidated and where formed/consolidated, there is laziness on the part of the majority to defend the habits/institutions. In sum, leaders driven by objective economic necessity matter for the strength, quality and survival of institutions and the fate of societies.

Leaders do not have to be honest, they do not have to be believed and seen to be credible by most, they even do not have to be competent and forward looking; they only have to have a shared economic necessity with a powerful, motivated and driven minority that shares their interest to determine the fate of institutions and the fate of societies. Institutions are a veneer for the enduring clash of interests. The Great Man theory remains relevant. The lives of Nnamdi Azikiwe, Abraham Lincoln, Nelson Mandela, George Washington, Winston Churchill, Vladimir Lenin, Adolph Hitler, and Mao Zedong (to name a few) tell us so. Great, affirmative results from econometric models on the pre-eminence of institutions mean little.