You want institutions?

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The answer, to paraphrase Jack Nicholson, is: you can’t handle institutions!

Certainly not Daron Acemoglu and James A. Robinson [pdf]—and not, for that matter, Branko Milanovic. They simply can’t handle the institutions Marx refers to and analyzes throughout his oeuvre.

Milanovic discusses many of the problems in Acemoglu and Robinson’s treatment of Piketty’s book I noticed when I read their critique: dismissing the role institutions play in Piketty’s analysis (although, to be honest, I would have preferred to see less on elite educational institutions and more on the institutions that are the sources of the income and wealth of the 1 percent), the facile equation of Piketty and Marx (and thus, in their mind, guilt by association), the failure to understand what it means that labor income plays a role in driving the inequality of the 1 vs 99 percent (do we really want to treat the salaries of the 1 percent in the same way as we do the labor incomes of the other 99 percent?), and so on. And, of course, there’s Milanovic’s quite-accurate dismissal of Acemoglu and Robinson’s own attempt to conduct an institutional analysis of Sweden and South Africa:

I do not discuss Acemoglu-Robinson  analysis of South Africa vs. Sweden increase in inequality because I really fail to see a great virtue in it. As I unfortunately have to confess, I often find reading Acemoglu-Robinson descriptions of political changes quite superficial: they read like Wikipedia entries with regressions. I had the same feeling here too.

But let me take issue with one of Acemoglu and Robinson’s assertions, with which Milanovic agrees: that there’s no institutional analysis of capitalism in Marx’s texts.

Acemoglu and Robinson do admit that Marx allowed for “feedback from politics and other aspects of society to the forces of production” in the Eighteenth Brumaire but that’s it. They can’t seem to find any other institutional analysis worth its name in the rest of Marx’s oeuvre—nor do they even bother to mention Engels (ever hear of The Condition of the Working Class in England, The Peasant War in Germany, or The Origin of the Family, Private Property, and the State?) or the work of generations of Marxian scholars (on a wide variety of local, national, and international institutions).

But let’s stick with Marx for the time being. Do they want institutions? Admittedly, they won’t find much in the 1844 Manuscripts or the German Ideology. But they might take a look at Marx’s journalism (with Engels, for the Neue Rheinische Zeitung, or Marx alone in the New York Daily Tribune). Or beyond the journalism: The Civil War In France and The Paris Commune. And the list could go on.

But maybe Acemoglu and Robinson and Milanovic are just confining themselves to volume 1 of Capital. Surely, they’ve read the institutional detail in Marx’s discussion of such topics as The Working-Day, National Differences of Wages, the Industrial Reserve Army, and, of course, the entire section on the so-called Primitive Accumulation of Capital, in which Marx analyzes the institutional detail surrounding the Expropriation of the Agricultural Population from the Land, the Bloody Legislation against the Expropriated, from the End of the 15th Century. Forcing down of Wages by Acts of Parliament, the Genesis of the Capitalist Farmer, the Reaction of the Agricultural Revolution on Industry. Creation of the Home-Market for Industrial Capital, the Genesis of the Industrial Capitalist, the Historical Tendency of Capitalist Accumulation, and The Modern Theory of Colonisation.

They want institutions? Then try this vivid summary (from Chapter 31) of the institutions that gave rise to capitalism:

Tantae molis erat, to establish the “eternal laws of Nature” of the capitalist mode of production, to complete the process of separation between labourers and conditions of labour, to transform, at one pole, the social means of production and subsistence into capital, at the opposite pole, the mass of the population into wage labourers, into “free labouring poor,” that artificial product of modern society. If money, according to Augier, “comes into the world with a congenital blood-stain on one cheek,” capital comes dripping from head to foot, from every pore, with blood and dirt.

Acemoglu and Robinson and Milanovic (not to mention Piketty) can’t, it seems, handle that kind of institutional analysis.