Macro N Cheese Ep 362 - Debunking the Institutional Theory of Economic Development with Erald Kolasi
Jan 10, 2026
Erald Kolasi, a physicist-economist and author focused on economics and ecology, challenges the traditional institutional theories of development. He critiques the popular narrative around good institutions being key to success, arguing instead that historical context, power dynamics, and resource access are more significant. Using case studies like North Korea’s rise and fall, China’s mixed results, and Venezuela's collapse due to external shocks, he presents a compelling argument for a materialist view of economics. Erald emphasizes that institutions often emerge from crises rather than merely shaping them.
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Institutions Are Not The Whole Story
- Institutional explanations reduce complex history to 'rules of the game' like laws and taxes.
- Erald Kolasi argues this misses power, class struggle, energy, trade, war, and ecological constraints.
Inclusive Vs Extractive Is Too Binary
- The inclusive vs. extractive binary oversimplifies thousands of varied historical trajectories.
- Kolasi notes many 'inclusive' institutions relied on extraction via colonialism and slavery.
Shocks Create Institutions
- Wars and shocks can create institutions, not only amplify them.
- Examples: Magna Carta and Prussian public education emerged from military defeat and political reshuffling.
