Why Nations Fail

Australian
, which would from then on lead
the attack on the existing political institutions. Macarthur
didn’t like Wentworth and certainly not what he was asking
for. He went through a list of Wentworth’s supporters,
characterizing them as follows:
sentenced to be hung since he came here
repeatedly flogged at the cart’s tail a
London Jew
Jew publican lately deprived of his license
auctioneer transported for trading in slaves
often flogged here
son of two convicts
a swindler—deeply in debt
an American adventurer
an attorney with a worthless character
a stranger lately failed here in a musick shop
married to the daughter to two convicts
married to a convict who was formerly a
tambourine girl.

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Macarthur and the Squatters’ vigorous opposition could
not stop the tide in Australia, however. The demand for
representative institutions was strong and could not be
suppressed. Until 1823 the governor had ruled New South
Wales more or less on his own. In that year his powers
were limited by the creation of a council appointed by the
British government. Initially the appointees were from the
Squatters and nonconvict elite, Macarthur among them, but
this couldn’t last. In 1831 the governor Richard Bourke
bowed to pressure and for the first time allowed ex-convicts
to sit on juries. Ex-convicts and in fact many new free
settlers also wanted transportation of convicts from Britain
to stop, because it created competition in the labor market
and drove down wages. The Squatters liked low wages, but
they lost. In 1840 transportation to New South Wales was
stopped, and in 1842 a legislative council was created with
two-thirds of its members being elected (the rest
appointed). Ex-convicts could stand for office and vote if
they held enough property, and many did.
By the 1850s, Australia had introduced adult white male
suffrage. The demands of the citizens, ex-convicts and their
families, were now far ahead of what William Wentworth
had first imagined. In fact, by this time he was on the side of
conservatives insisting on an unelected Legislative Council.
But just like Macarthur before, Wentworth would not be able
to halt the tide toward more inclusive political institutions. In
1856 the state of Victoria, which had been carved out of
New South Wales in 1851, and the state of Tasmania
would become the first places in the world to introduce an
effective secret ballot in elections, which stopped vote
buying and coercion. Today we still call the standard
method of achieving secrecy in voting in elections the
Australian ballot.
The initial circumstances in Sydney, New South Wales,
were very similar to those in Jamestown, Virginia, 181
years earlier, though the settlers at Jamestown were mostly
indentured laborers, rather than convicts. In both cases the
initial circumstances did not allow for the creation of
extractive colonial institutions. Neither colony had dense
populations of indigenous peoples to exploit, ready access
to precious metals such as gold or silver, or soil and crops
that would make slave plantations economically viable. The

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slave trade was still vibrant in the 1780s, and New South
Wales could have been filled up with slaves had it been
profitable. It wasn’t. Both the Virginia Company and the
soldiers and free settlers who ran New South Wales bowed
to the pressures, gradually creating inclusive economic
institutions that developed in tandem with inclusive political
institutions. This happened with even less of a struggle in
New South Wales than it had in Virginia, and subsequent
attempts to put this trend into reverse failed.
A
USTRALIA, LIKE THE
U
NITED
S
TATES
, experienced a different
path to inclusive institutions than the one taken by England.
The same revolutions that shook England during the Civil
War and then the Glorious Revolution were not needed in
the United States or Australia because of the very different
circumstances in which those countries were founded—
though this of course does not mean that inclusive
institutions were established without any conflict, and, in the
process, the United States had to throw off British
colonialism. In England there was a long history of
absolutist rule that was deeply entrenched and required a
revolution to remove it. In the United States and Australia,
there was no such thing. Though Lord Baltimore in
Maryland and John Macarthur in New South Wales might
have aspired to such a role, they could not establish a
strong enough grip on society for their plans to bear fruit.
The inclusive institutions established in the United States
and Australia meant that the Industrial Revolution spread
quickly to these lands and they began to get rich. The path
these countries took was followed by colonies such as
Canada and New Zealand.
There were still other paths to inclusive institutions. Large