ECONOMY

1008 what is missing from political economy
be repeated: smart authoritarians will defend against means for coordination used in
previous revolutions.
Third, 9/11 dramatically transformed the United States’ view about its security and
vulnerability. The solution to this new form of terrorism is not obvious at this point.
Although not likely, it is possible that the rise of terrorism over the coming decades
will dramatically transform the developed world, shrinking economies. At the current
moment, policy-makers have no real idea how to solve this problem, indeed, whether
or not there is a solution to this problem.
These examples illustrate several points. First, they demonstrate the need for a dynamic
theory of the world. Major events in history—perhaps all major turning points
in history—occur when a novel issue arises where existing patterns of knowledge are
inadequate to understand the world. In each of these examples, a society faced a novel
problem where the solution was not obvious, and, in the case of Kuran’s revolutions,
not even recognized as a problem.
Second, existing theories are useful because they help us learn about human nature
(for example, that politics typically involves a mix of self-interest and the importance
of beliefs) and about basic principles that hold under all circumstances (such as
the principles of economics). But these lessons are about a subset of all problems. The
non-ergodicity implies novel problems are always emerging, necessarily that existing
“lessons” are inadequate guides. This forces us to ask a much tougher question: how
are we evolving and can we understand novel change in the world? This requires that
we have a theory about the dynamics of the process of change, which we do not have.
4 Conclusions
.............................................................................
We have an inadequate understanding of why the developed world is developed;
how it made the transition from non-developed countries to developed ones; why
it can sustain democratic constitutions; and why both economic development and
democracy typically fail in the so-called developing world. This chapter argues that
the failure to understand these fundamental questions reflects that social science fails
to have a truly dynamic theory that takes into account the non-ergodic nature of the
world.
References
Greene, J.P.1986. Peripheries and Center: Constitutional Development in the Extended Polities
of the British Empire and the United States, 1607–1788.NewYork:Norton.
Knack, S.,andKeefer, P.1995. Institutions and economic performance: cross-country tests
using alternative institutional measures. Economics and Politics, 7: 207–27.
Kuran,T.1992. Why revolutions are better understood than predicted. Contention, 1: 199–207.