|Peter Boettke & Chris Coyne|
Bill Easterly has a lengthy review of Acemoglu and Robinson's Why Nations Fail in the WSJ. It is a very insightful review and for the careful reader it touches upon contemporary research in development economics at the analytical, empirical, and most importantly methodological level.
Throughout the book, Acemoglu and Robinson rely on comparative historical case studies to illustrate their main point about the need for the elites to bargain with the citizens and establish an inclusive state, as opposed to establishing a exclusive state.
Early in his review essay Easterly raises a challenge to the current methodological fad of randomized controlled experiments in development economics, but he also raises a methodological objection to the use of comparative historical case studies. He wonders about "cherry picking" on the one hand, and "ex post rationalization" on the other. His objections are not new, see Jon Elster's APSR essay, "Rational Choice History: A Case of Excessive Ambitions."
We attempt to address these methodological objections to comparative historical analysis in our paper, "Comparative Historical Political Economy" (with Pete Leeson). Our defense boils down to the selection of the cases --- pick those which are the least favorable to your hypothesis --- and to the detailed analysis of the institutions under question rather than merely retro-fitting history to a rational choice behavioral model.
The great strength of the comparative historical case study approach to political economy is that done correctly it avoids the problems that large scale empirical testing confront when attempting to provide institutionally rich explanations. It permits a more detailed examination and unbundling of institutions --e.g., we cannot so neatly divide political institutions into inclusive or exclusive. What matters most for comparative analysis of the relationship between peace and prosperity is the predatory nature of private and public institutions. If the institutions established are able to curb predation, peace and prosperity follow; otherwise they do not. Within this context, Acemoglu and Robinson's contribution is an important one.