Why Nations Fail

participation in the political process.
The virtuous circle arises not only from the inherent logic
of pluralism and the rule of law, but also because inclusive

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political institutions tend to support inclusive economic
institutions. This then leads to a more equal distribution of
income, empowering a broad segment of society and
making the political playing field even more level. This limits
what one can achieve by usurping political power and
reduces the incentives to re-create extractive political
institutions. These factors were important in the emergence
of truly democratic political institutions in Britain.
Pluralism also creates a more open system and allows
independent media to flourish, making it easier for groups
that have an interest in the continuation of inclusive
institutions to become aware and organize against threats
to these institutions. It is highly significant that the English
state stopped censoring the media after 1688. The media
played a similarly important role in empowering the
population at large and in the continuation of the virtuous
circle of institutional development in the United States, as
we will see in this chapter.
While the virtuous circle creates a tendency for inclusive
institutions to persist, it is neither inevitable nor irreversible.
Both in Britain and the United States, inclusive economic
and political institutions were subject to many challenges. In
1745 the Young Pretender got all the way to Derby, a mere
hundred miles from London, with an army to unseat the
political institutions forged during the Glorious Revolution.
But he was defeated. More important than the challenges
from without were potential challenges from within that
might also have led to the unraveling of inclusive
institutions. As we saw in the context of the Peterloo
Massacre in Manchester in 1819 (
this page
), and as we will
see in more detail next, British political elites thought of
using repression to avoid having to further open the political
system, but they pulled back from the brink. Similarly,
inclusive economic and political institutions in the United
States faced serious challenges, which could have
conceivably succeeded, but didn’t. And of course it was not
preordained that these challenges should be defeated. It is
due to not only the virtuous circle but also to the realization
of the contingent path of history that British and U.S.
inclusive institutions survived and became substantially
stronger over time.

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