E12 — The Vicious Circle: Power, Persistence, and Poverty

Why do extractive institutions survive for so long — and why is breaking free from them so difficult? In this episode of Why Nations Fail — A Deep Dive into Acemoglu & Robinson’s Theory, we unpack Chapter 12, which introduces the vicious circle — a cycle where elite domination and institutional inequality reinforce each other across generations. From Sierra Leone’s postcolonial corruption to Guatemala’s elite continuity and the enduring racism and exclusion in the American South, the authors show how extractive systems, once entrenched, rarely reform themselves. Highlighting the “iron law of oligarchy”, they argue that even revolutionaries often replicate the very systems they vowed to dismantle, especially in the absence of inclusive precedents. The result? Entrenched inequality, stalled progress, and recurring instability.