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The Great Degeneration

How Institutions Decay and Economies Die

By Niall Ferguson
15-minute read
The Great Degeneration: How Institutions Decay and Economies Die by Niall Ferguson

The Western world seems to be in crisis. It is faced with huge levels of public and private debt, and the economies of the rest of the world are fast catching up. After 500 years of total global dominance, the era of Western powers could be coming to an end.

The Great Degeneration (2014) aims to tackle why this is the case. It suggests that a decline in Western institutions is partly to blame. Only by arresting this decline through radical reform can the West recover.

  • Students of political and economic history
  • Anyone who wants to know why Western nations are in so much debt
  • Anyone who is interested in the future of democracy

Niall Ferguson is one of the United Kingdom’s most famous and distinguished historians. He is the Laurence A. Tisch Professor of History at Harvard University.

Ferguson has written numerous bestsellers including The Ascent of Money, The War of the World and Civilization. He is also well known for his many television series based on his books, and is a regular commentator for publications and networks in the United Kingdom and the United States.

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The Great Degeneration

How Institutions Decay and Economies Die

By Niall Ferguson
  • Read in 15 minutes
  • Contains 9 key ideas
The Great Degeneration: How Institutions Decay and Economies Die by Niall Ferguson
Synopsis

The Western world seems to be in crisis. It is faced with huge levels of public and private debt, and the economies of the rest of the world are fast catching up. After 500 years of total global dominance, the era of Western powers could be coming to an end.

The Great Degeneration (2014) aims to tackle why this is the case. It suggests that a decline in Western institutions is partly to blame. Only by arresting this decline through radical reform can the West recover.

Key idea 1 of 9

Over the last 500 years, Western nations have dominated because they had the best institutions.

About 500 years ago, a powerful geopolitical shift began to take place on Earth. Prior to this, Western nations had not been particularly powerful or influential in global affairs. But then began what is known as the great divergence. Western nations started to outstrip the rest of the world in terms of economic growth, military power and technological development.

Why did this divergence happen?

Because Western nations developed the best institutions, which allowed them to prosper.

For example, England developed very successful political institutions, most notably by creating a parliament that pledged to protect the private property of citizens. This meant citizens had an incentive to work hard and grow wealthy, safe in the knowledge that the fruits of their labor would not be stolen by, say, a greedy king or queen. This, in turn, spurred economic development, which culminated in the British Empire dominating the entire world through trade.

At the same time, the rest of the world had relatively poor institutions, because the rulers in these nations were autocratic and all-powerful, and wanted to keep it that way. This meant they resisted the development of important institutions.

For example, China had a totally corrupt political institution that allowed the state and its elite bureaucrats to help themselves to the property of citizens whenever they felt like it. This meant that Chinese subjects had little incentive to work hard, and the once-powerful nation stagnated, eventually even succumbing to Western imperialism.

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