The Malawian experience

By Casper Gelderblom

In his book about state-directed development, Atul Kohli distinguishes three different state types: cohesive-capitalist states, fragmented multiclass states and neo-patrimonial states. While the relatively strong organizational underpinning of the first two types renders growth-stimulating industrialization possible, neo-patrimonial states’ interventions in their economies have led to “disastrous results,” Kohli claims. Illustrating this argument with the case of Nigeria, he shows that neo-patrimonial regimes’ treatment of resources and companies as their own patrimony keep the country from achieving economic development. Convincing as the Nigerian illustration may be, not all historical evidence supports Kohli’s presentation of neo-patrimonialism as necessarily destructive.

In the first 15 years after independence, the
neo-patrimonial state of Malawi, for example, achieved a rate of economic development which the World Bank at the time lauded as “impressive”. Despite president Banda’s personal ownership of more than half of the shares of an enormous corporation that largely controlled the country’s largest chains of supermarkets and shops, hardware stores, the tobacco industry and its two banks, his neo-patrimonial rule was characterised by truly impressive growth numbers. Between 1964 and 1979, Malawi’ average annual GDP growth rate was 5.9%, the annual increase of real GDP per worker about 3%, the growth of manufactured output averaged 5.6% p.a. in the 1970s and, most telling in relation to industrialization, the share of the manufacturing sector in the country’s GDP increased from 7% in 1964 to 13% in 1980.  

The early post-colonial Malawian experience indicates that neo-patrimonialism is not necessarily destructive - it might even
lead to strong economic performance. This raises interesting questions for political economy scholars: what characteristics of neo-patrimonial states stimulate or hinder economic development? Given the obvious differences between Nigeria and Malawi, does the presence/absence of resources matter for the economic impact of neo-patrimonialism? And what role does regime type play? Whatever the answer to these questions, one thing is certain: the case of Malawi calls for a more differentiated consideration of the nature and impact of neo-patrimonialism than the one Kohli presents.

9/11 as a Critical Juncture

 By Casper Gelderblom

“Today,” a French newspaper announced on September 12, 2001, “we are all Americans.” The terror of the previous day had felt like an attack on everyone, everywhere. Indeed, the shockwaves of “9/11” hit Europe hard. The attacks’ immense political salience led to the rapid adoption of a record number of joint EU security policies. Thus, the immediate aftermath of 9/11 can be seen as a critical juncture in the development of EU security governance. The course of this critical juncture, however, can only be fully understood if antecedent conditions are considered.

Capoccia and Kelemen attribute two main characteristics to critical junctures: they expand the range of choices open to political actors and, in Pierson’s words, “place institutional arrangements on paths (…) difficult to alter.” In the context of EU security policy, these characteristics neatly apply to 9/11’s immediate aftermath. Den Boer describes how after 9/11 “all of a sudden, decisions were possible” in the area of EU security governance. Emergency summits were organised and effective decisions were taken. Within two weeks from 9/11, EU member states agreed on an Action Plan on Counter-Terrorism, which contained over sixty joint European security policy measures. Before the 9/11 critical juncture, member states’ insistence on national sovereignty rendered such measures impossible. This placed EU security governance on a self-reinforcing path of increasing cooperation; Argomaniz describes how this path eventually led to the European Security Strategy launched in 2003 and the expansion of Europol competences in 2005.

Decisions made during the 9/11 critical juncture cannot entirely explain this development of EU security governance, as they depended on what
Mahoney calls antecedent conditions, which define the range of options available to actors in critical junctures. After 9/11, European policy-makers could either strengthen national policies or reconsider joint European designs they had blocked in 1999. Pressured to take swift action, policymakers favoured these pre-existing designs. Without considering the antecedent condition of the availability of these designs, the course of the 9/11 critical juncture cannot fully be understood.   

British small coal wagons

By Casper Gelderblom

In 1900, Britain’s industrial railway system, characterized by its small coal wagons, was completely outdated. Modernization would have led to enormous savings in operating costs. However, the railways’ regulating system, designed to protect wagon owners against railway companies, discouraged stakeholders from pursuing modernization. The small coal wagons that persisted in British railway traffic until the late 1940s offer a strong example of how positive feedback processes can lead to inefficiency in path dependence. At the same time, however, these processes cannot convincingly explain the eventual replacement of these small wagons.

The four features Brian Arthur
identified as drivers of positive feedback help explain the persistence of the small wagon system. Firstly, replacing the outdated regulating system was discouraged by the large set-up costs associated with establishing a new system. Secondly, all stakeholders had become skilled in operating within the inefficient system. These learning effects discouraged stakeholders from replacing their wagons, which would largely render their skills useless. Thirdly, under the old system coordination effects had made small wagons the only accepted wagon type. These effects formed a coordination problem in replacing the existing system, as savings could only be realised if a large number of railway companies changed their facilities. This, however, was discouraged by the regulating system. Lastly, since coordination effects supported the existing system, stakeholders’ adaptive expectations were such that they feared ‘picking the wrong horse’ by investing in new technologies that did not match with the existing infrastructure.

Arthur’s approach implies that the old wagon system could only change if the set-up costs of a new system were lower than its prospective gains. Although this never happened, the small wagon system was eventually replaced through an institutional change instigated by a variable Arthur left out of his equation: the role of ideas. The British government that decided to nationalise the railways and so replace the outdated regulatory system, pursued “
radical” leftist policies. Ideas, not prospective gains, thus led to the end of the British small coal wagons.