WHY WE FAIL IN OUR POLITICAL-ECONOMIC CHOICES

Since today's announcement of the 2024 Nobel Prize in Economics awarded to Daron Acemoglu and his colleagues for highlighting the role of institutions in fostering prosperity, I’ve been reflecting deeply on his book Why Nations Fail, which I first read in 2012. At that time, I was involved in sustainable development projects and transitional justice initiatives in Somalia, experiencing firsthand the importance of institutions in shaping the future of societies. Now, with the 2024 U.S. elections on the horizon and the rapid rise of artificial intelligence (AI) reshaping industries, I find Acemoglu’s paradigm of “inclusive institutions” versus “exploitative institutions” more relevant than ever.

The U.S. political landscape and the ongoing technological revolution bring these themes to the forefront. Political economy has long fascinated me, beginning with my university teaching role in Mozambique in 1996, and continuing through my leadership of the International Public Service Master’s program at DePaul University in Chicago. As I now focus more on sustainability management and sustainable business solutions, the dichotomy between inclusive and exploitative economies reveals itself as crucial to understanding our current societal challenges.

In this reflection, I aim to unpack why inclusive institutions and policies matter so deeply to our collective prosperity—a concept that goes far beyond mere profit or a nation’s GDP. Prosperity in this context refers to the overall well-being and flourishing of society, which includes social equity, environmental sustainability, and the fair distribution of opportunities and resources. It is about creating conditions where individuals and communities can thrive, not just economically, but in terms of health, education, security, and quality of life. Inclusive institutions play a crucial role in fostering this broader vision of prosperity by ensuring that the benefits of growth and development are shared equitably, enabling more people to participate in and contribute to societal progress. By exploring the implications of Acemoglu’s work for sectors like business, higher education, AI, health, and international relations, we can better understand how building inclusive systems is essential for achieving a sustainable and just future for all.

Why Inclusive Institutions and Policies Matter

Daron Acemoglu and James A. Robinson, in Why Nations Fail (2012) and their subsequent works, such as The Narrow Corridor (2020) and Power and Progress (2023), build a compelling case that a nation’s success or failure hinges on the quality of its institutions. They argue that inclusive institutions—those that encourage broad participation across all sectors of society, protect property rights, enforce the rule of law, and promote innovation—are key to fostering widespread prosperity. These institutions enable individuals to reach their full potential by creating a fair and open system. Rather, exploitative institutions concentrate power and resources in the hands of a few, restrict economic freedoms, and deepen inequality. Such systems often stifle innovation and economic growth, ultimately leading to stagnation and societal instability.

This argument is particularly relevant to the United Nations’ 2030 Agenda for the Sustainable Development Goals (SDGs), specifically SDG 1 (No Poverty), SDG 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation, and Infrastructure), and SDG 10 (Reduced Inequalities). Achieving these goals—eradicating poverty, promoting inclusive and sustainable economic growth, fostering innovation, and reducing inequalities—requires the creation of inclusive economic systems that empower all members of society. However, despite the urgency and clarity of these objectives, many of our political and economic decisions continue to reinforce exploitative structures that concentrate wealth and opportunities in the hands of a few, undermining progress toward these global targets.

Why do we fail in these choices? My current research on anti-fascism and transformative leadership explores a critical dimension: why exploited and impoverished populations often support dictators and undemocratic policies. This tendency can be traced to a lack of critical education and the manipulation of fears and insecurities by those in power, who exploit societal divisions and promise quick fixes to complex problems. Entrenched interests that benefit from maintaining the status quo resist structural reforms that could create more equitable systems. Short-term political and economic decision-making frequently overlooks the long-term societal benefits of inclusivity. Policies such as equitable taxation, social safety nets, and fair labor practices are often met with opposition from powerful groups benefiting from exploitative systems, reinforcing the cycle of inequality and disempowerment. Critical education is vital to breaking this cycle, empowering citizens to recognize these exploitative structures and demand more democratic, inclusive alternatives.

The Implications of Inclusive vs. Exploitative Paradigms Across Fields

The Nobel commission’s recognition of Daron Acemoglu and his colleagues is not just an award for academic scholarship—it is a spotlight on their message, one that holds profound relevance for all of us today. Their work offers us a powerful lens through which to examine our own societies and the choices we face. In that spirit, I invite you to reflect with me: what do these paradigms of "inclusive" vs. "exploitative" systems mean across sectors in our world today? Acemoglu’s framework extends far beyond political economies, influencing every aspect of our society, from business and education to AI, healthcare, and international relations. As we reflect on the implications of choosing inclusivity over exploitation, let’s explore together how we can build systems that foster long-term prosperity, equity, and well-being for all. Here are some applications across fields:?

1. Implications for Political Economies: This is the core of Acemoglu's theory which focuses on inclusive political economies that encourage broad participation in the political process, promote transparency, and ensure that institutions benefit a wide spectrum of the population. This leads to equitable wealth distribution, social stability, and sustainable economic growth. In contrast, extractive political economies, where power and wealth are concentrated in the hands of a few, foster inequality, corruption, and ultimately slower growth. In today’s polarized political environment, we see clear examples of systems that either promote inclusivity or enable exploitation. Governments that focus on fair taxation, robust public services, and transparent governance are better positioned to create social cohesion and long-term prosperity. By contrast, those that allow for the concentration of wealth and weakened institutional frameworks often experience social unrest and economic stagnation.
2. Implications for Business Management: In business management, Acemoglu’s framework applies to how companies are run and what values they create. Inclusive businesses prioritize stakeholder engagement, ethical leadership, and strategies that benefit employees, consumers, and society alongside shareholders. Companies that adopt inclusive management principles typically experience stronger employee loyalty, customer trust, and long-term financial success. In contrast, exploitative business models, which prioritize short-term profit at the expense of worker welfare, sustainability, and innovation, often face reputational risks, legal challenges, and financial volatility. The rise of social and inclusive economies along circular economies and ESG (Environmental, Social, Governance) standards is a testament to the increasing pressure on businesses to adopt more inclusive and socially responsible models. The age of stakeholder (vs. shareholder only) economies have become mainstream and characterized by consumers and investors demanding that businesses contribute positively to society, not just profit from it.
3. Implications for Higher Education: Higher education must serve as a catalyst for empowerment, not a privilege reserved for the elite. An inclusive education system offers equitable access to learning opportunities, enabling individuals from middle and lower classes to achieve upward mobility and better prospects. Beyond personal advancement, inclusive education fosters mindsets that emphasize collaboration over competition and shared prosperity over individual gain. By nurturing critical thinking, innovation, and human potential across all social groups, it helps build a foundation for a more equitable and cohesive society. In contrast, exploitative education systems entrench existing social hierarchies, restricting access to quality education and reinforcing privilege. Limited access—especially for marginalized populations such as forced migrants, refugees, and lower-income groups—perpetuates systemic inequities and exploitation. This not only undermines the broader societal benefits of education but also stifles innovation, excluding the talents and potential of many.
4. Implications for Artificial Intelligence (AI): AI and emerging technologies offer both significant opportunities and risks, depending on how they are developed and deployed. Inclusive AI seeks to ensure that the benefits of AI are broadly distributed, addressing public good and ethical considerations, which can enhance education, healthcare, and economic opportunities, especially for underserved communities. Conversely, exploitative AI risks concentrating power in the hands of a few tech companies or nations, exacerbating inequality and privacy violations. The recently adopted Global Digital Compact highlights the importance of closing digital divides by ensuring universal access to the digital economy, fostering a safe and inclusive digital space that protects human rights and privacy, and governing AI and data responsibly to maximize benefits and minimize risks. The challenge for the future lies in whether AI will be a force for inclusive growth, driving equitable access and opportunities, or whether it will deepen societal divisions and inequality.
5. Implications for Health-Medicine: The recent pandemic has starkly underscored the interconnectedness of our global existence while exposing the urgent need for more inclusive healthcare solutions, particularly in accessing vaccines and essential care. Inclusive healthcare systems prioritize universal access, focusing on marginalized communities and the broader public health needs. In contrast, exploitative healthcare models often prioritize profit, limiting access to those who can afford it, which worsens health disparities and leaves vulnerable populations behind. To address these inequities, it is essential to develop inclusive coverage policies that prioritize universal healthcare, ensuring no one is left behind. This requires integrated healthcare models that recognize the importance of not just physical health but also mental health and neurodiversity, ensuring they receive equal attention and care. By building healthcare institutions that embrace inclusivity, we can create systems that deliver better health outcomes and provide equitable access to essential services for all, fostering a healthier and more just society.
6. Implications for Global-International Relations: Inclusive international policies prioritize collaboration, fairness, and multilateralism, ensuring that global governance is equitable for all nations, regardless of size or power. These policies protect the rights of vulnerable groups—refugees, stateless people, internally displaced persons (IDPs), children, people with disabilities, and exploited workers—recognizing their right to exist, be heard, and live with dignity. In contrast, exploitative relations concentrate power and wealth in stronger nations, leaving weaker ones with little voice in decision-making and fostering instability. What are the implications of this inclusive paradigm for the displaced Palestinian people or the invaded Ukrainian people? How can we ensure their rights are protected and their voices heard in the global community? The path forward must involve inclusive frameworks that promote stability, fairness, and shared prosperity for all.

Daron Acemoglu’s paradigm of inclusive vs. exploitative systems provides a compelling framework for understanding the institutions and policies that shape our world. Across sectors—whether in political economies, business management, education, AI, healthcare, or international relations—the choice to foster inclusive systems paves the way for long-term prosperity, equity, and innovation. In contrast, exploitative systems concentrate power and wealth, exacerbate inequalities, and undermine societal stability. The future of our societies and economies hinges on the choices we make today—choices that prioritize inclusivity, empower people, and build institutions that serve the common good rather than narrow interests. We extend our congratulations to Dr. Acemoglu and his colleagues for their well-deserved recognition, as the insights from Why Nations Fail are more relevant than ever. These lessons provide a crucial guide for making informed decisions as we navigate the complexities of global challenges and work towards a more sustainable and equitable future.