Why Nations Fail Page 0,109

the fourteenth century creates a critical juncture (The Triumph of Death painting of the Black Death by Brueghel the Elder) The Granger Collection, NY

Beneficiary of institutional innovation: the King of Kuba Eliot Elisofon/Time & Life Pictures/Getty

The emergence of hierarchy and inequality before farming: the grave goods of the Natufian elite http://en.wikipedia.org/wiki/File:Natufian-Burial-ElWad.jpg

Extractive growth: Soviet Gulag labor builds the White Sea canal SOVFOTO

Britain falls far behind: the ruins of the Roman empire at Vindolanda Courtesy of the Vindolanda Trust and Adam Stanford

Innovation, essence of inclusive economic growth: James Watt’s steam engine The Granger Collection, NY

Organizational change, a consequence of inclusive institutions: the factory of Richard Arkwright at Cromford The Granger Collection, NY

Fruits of unsustainable extractive growth: Zheng He’s ship alongside Columbus’s Santa Maria Gregory A. Harlin/National Geographic Stock

Bird’s-eye view of the dual economy in South Africa: poverty in Transkei, prosperity in Natal Roger de la Harpe/Africa Imagery

Consequences of the Industrial Revolution: the storming of the Bastille Bridgeman-Giraudon/Art Resource, NY

Challenges to inclusive institutions: the Standard Oil Company Library of Congress Prints and Photographs Division Washington, D.C.

Noncreative destruction: abandoned Hasting railway station on the way to Bo in Sierra Leone © Matt Stephenson: www.itsayshere.org

Extractive institutions today: children working in an Uzbek cotton field Environmental Justice Foundation, www.ejfoundation.org

Breaking a mold: three Tswana chiefs on their way to London Photograph by Willoughby, courtesy of Botswana National Archives & Records Services

Breaking another mold: Rosa Parks challenges extractive institutions in the U.S. south The Granger Collection, NY

Extractive institutions devour their children: the Chinese Cultural Revolution vs. “degenerate intellectuals” Weng Rulan, 1967, IISH Collection, International Institute of Social History (Amsterdam)

9.

REVERSING DEVELOPMENT

SPICE AND GENOCIDE

THE MOLUCCAN ARCHIPELAGO in modern Indonesia is made up of three groups of islands. In the early seventeenth century, the northern Moluccas housed the independent kingdoms of Tidore, Ternate, and Bacan. The middle Moluccas were home to the island kingdom of Ambon. In the south were the Banda Islands, a small archipelago that was not yet politically unified. Though they seem remote to us today, the Moluccas were then central to world trade as the only producers of the valuable spices cloves, mace, and nutmeg. Of these, nutmeg and mace grew only in the Banda Islands. Inhabitants of these islands produced and exported these rare spices in exchange for food and manufactured goods coming from the island of Java, from the entrepôt of Melaka on the Malaysian Peninsula, and from India, China, and Arabia.

The first contact the inhabitants had with Europeans was in the sixteenth century, with Portuguese mariners who came to buy spices. Before then spices had to be shipped through the Middle East, via trade routes controlled by the Ottoman Empire. Europeans searched for a passage around Africa or across the Atlantic to gain direct access to the Spice Islands and the spice trade. The Cape of Good Hope was rounded by the Portuguese mariner Bartolomeu Dias in 1488, and India was reached via the same route by Vasco da Gama in 1498. For the first time the Europeans now had their own independent route to the Spice Islands.

The Portuguese immediately set about the task of trying to control the trade in spices. They captured Melaka in 1511. Strategically situated on the western side of the Malaysian Peninsula, merchants from all over Southeast Asia came there to sell their spices to other merchants, Indian, Chinese, and Arabs, who then shipped them to the West. As the Portuguese traveler Tomé Pires put it in 1515: “The trade and commerce between the different nations for a thousand leagues on every hand must come to Melaka … Whoever is lord of Melaka has his hands at the throat of Venice.”

With Melaka in their hands, the Portuguese systematically tried to gain a monopoly of the valuable spice trade. They failed.

The opponents they faced were not negligible. Between the fourteenth and sixteenth centuries, there was a great deal of economic development in Southeast Asia based on trade in spices. City-states such as Aceh, Banten, Melaka, Makassar, Pegu, and Brunei expanded rapidly, producing and exporting spices along with other products such as hardwoods.

These states had absolutist forms of government similar to those in Europe in the same period. The development of political institutions was spurred by similar processes, including technological change in methods of warfare and international trade. State institutions became more centralized, with a king at the center claiming absolute power. Like absolutist rulers in Europe, Southeast Asian kings relied heavily on revenues from trade, both engaging in it themselves and granting monopolies to local and foreign elites. As in