E11 — The Virtuous Circle and the Rule of Law

What keeps inclusive institutions alive once they emerge? In this episode of Why Nations Fail — A Deep Dive into Acemoglu & Robinson’s Theory, we explore Chapter 11, which introduces the idea of a virtuous circle — a self-reinforcing cycle where pluralism, constraints on power, and the rule of law protect institutions from elite capture. Using historical examples from Britain and the United States, the authors argue that inclusive political and economic systems are not only born from unique historical conditions, but must also evolve mechanisms that preserve openness and equality. In contrast, countries that fail to institutionalize these checks often fall back into extractive traps, stalling both democracy and development.