Why Nations Fail

T
HE
 C
ONTINGENT
 P
ATH OF
 H
ISTORY
The outcomes of the events during critical junctures are
shaped by the weight of history, as existing economic and
political institutions shape the balance of power and
delineate what is politically feasible. The outcome,
however, is not historically predetermined but contingent.
The exact path of institutional development during these
periods depends on which one of the opposing forces will
succeed, which groups will be able to form effective
coalitions, and which leaders will be able to structure
events to their advantage.
The role of contingency can be illustrated by the origins
of inclusive political institutions in England. Not only was
there nothing preordained in the victory of the groups vying
for limiting the power of the Crown and for more pluralistic
institutions in the Glorious Revolution of 1688, but the entire
path leading up to this political revolution was at the mercy
of contingent events. The victory of the winning groups was
inexorably linked to the critical juncture created by the rise
of Atlantic trade that enriched and emboldened merchants
opposing the Crown. But a century earlier it was far from
obvious that England would have any ability to dominate the
seas, colonize many parts of the Caribbean and North
America, or capture so much of the lucrative trade with the
Americas and the East. Neither Elizabeth I nor other Tudor
monarchs before her had built a powerful, unified navy. The
English navy relied on privateers and independent
merchant ships and was much less powerful than the
Spanish fleet. The profits of the Atlantic nonetheless
attracted these privateers, challenging the Spanish
monopoly of the ocean. In 1588 the Spanish decided to put
an end to these challenges to their monopoly, as well as to

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English meddling in the Spanish Netherlands, at the time
fighting against Spain for independence.
The Spanish monarch Philip II sent a powerful fleet, the
Armada, commanded by the Duke of Medina Sidonia. It
appeared a foregone conclusion to many that the Spanish
would conclusively defeat the English, solidify their
monopoly of the Atlantic, and probably overthrow Elizabeth
I, perhaps ultimately gaining control of the British Isles. Yet
something very different transpired. Bad weather and
strategic mistakes by Sidonia, who had been put in charge
at the last minute after a more experienced commander
died, made the Spanish Armada lose their advantage.
Against all odds, the English destroyed much of the fleet of
their more powerful opponents. The Atlantic seas were now
open to the English on more equal terms. Without this
unlikely victory for the English, the events that would create
the transformative critical juncture and spawn the
distinctively pluralistic political institutions of post-1688
England would never have got moving. 
Map 9
shows the
trail of Spanish shipwrecks as the Armada was chased
right around the British Isles.
Of course, nobody in 1588 could foresee the
consequences of the fortunate English victory. Few
probably understood at the time that this would create a
critical juncture leading up to a major political revolution a
century later.
There should be no presumption that any critical juncture
will lead to a successful political revolution or to change for
the better. History is full of examples of revolutions and
radical movements replacing one tyranny with another, in a
pattern that the German sociologist Robert Michels dubbed
the iron law of oligarchy, a particularly pernicious form of
the vicious circle. The end of colonialism in the decades
following the Second World War created critical junctures
for many former colonies. However, in most cases in sub-
Saharan Africa and many in Asia, the postindependence
governments simply took a page out of Robert Michels’s
book and repeated and intensified the abuses of their
predecessors, often severely narrowing the distribution of
political power, dismantling constraints, and undermining
the already meager incentives that economic institutions
provided for investment and economic progress. It was only

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in a few cases, societies such as Botswana (see 
this
page
), that critical junctures were used to launch a process
of political and economic change that paved the way for
economic growth.

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Critical junctures can also result in major change toward
rather than away from extractive institutions. Inclusive

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institutions, even though they have their own feedback loop,
the virtuous circle, can also reverse course and become
gradually more extractive because of challenges during
critical junctures—and whether this happens is, again,
contingent. The Venetian Republic, as we will see in
chapter 6
, made major strides toward inclusive political and
economic institutions in the medieval period. But while such
institutions became gradually stronger in England after the
Glorious Revolution of 1688, in Venice they ultimately
transformed themselves into extractive institutions under
the control of a narrow elite that monopolized both
economic opportunities and political power.