Saving capitalism from empire: uses of colonial history in new institutional economics
| Published date | 01 December 2024 |
| DOI | http://doi.org/10.1177/00471178221104699 |
| Author | Onur Ulas Ince |
| Date | 01 December 2024 |
https://doi.org/10.1177/00471178221104699
International Relations
2024, Vol. 38(4) 589 –614
© The Author(s) 2022
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DOI: 10.1177/00471178221104699
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Saving capitalism from empire:
uses of colonial history in new
institutional economics
Onur Ulas Ince
SOAS, University of London
Abstract
This article contributes to theorising colonialism and capitalism within the same analytic frame
through a critical engagement with the uses of colonial history in new institutional economics
(NIE). The ‘colonial turn’ in NIE holds significant diagnostic value because although it incorporates
colonialism into its account of the ‘great divergence’, it maintains a liberal conception of capitalism
predicated on private property, competitive markets, and the rule of law. It is argued that NIE
achieves this effect by admitting colonialism into its history of capitalism while excluding it from
its theory of capitalism. By filtering colonialism through the dichotomy between ‘inclusive’ and
‘extractive’ institutions, NIE upholds the categorical association of capitalist growth with inclusive
institutions. Drawing on critical theories of political economy, the article shows the limits of
the NIE framework by identifying forms of colonial capitalism that do not resolve into a stylised
opposition between inclusion and extraction. Colonial slavery, commercial imperialism, and
settler colonialism strain the inclusive/extractive binary by highlighting (1) the interdependence
of inclusive and extractive institutions in imperial networks accumulation, and (2) the violent
expropriations at the origins of inclusive institutions, above all private property. Proposing
to view NIE’s critique of colonialism as a ‘liberal critique of capitalist unevenness’, the article
concludes on broader questions about inclusion and exclusion under ‘actually existing capitalism’.
Keywords
capitalism, imperialism, institutionalism, liberalism, settler colonialism, slavery
Introduction
Situating colonialism in the analysis of capitalism is a time-honoured enterprise. At least
since Karl Marx’s subsumption of colonial slavery and plunder under the ‘primitive
Corresponding author:
Onur Ulas Ince, Department of Politics and International Studies, SOAS, University of London,
10 Thornhaugh St, London WC1H 0XG, UK.
Email: ulas.ince@soas.ac.uk
1104699IRE0010.1177/00471178221104699International RelationsInce
research-article2022
Article
590 International Relations 38(4)
accumulation of capital’,1 studies of capitalism have grappled with the role of conquest
and settlement, bondage and migration, and monopoly and extraction in the making of
the global capitalist economy. Ranging across debates over imperialism, capitalism and
slavery, dependency, and world-systems, critics have time and again revisited the colo-
nial question in the hopes of rectifying previously overlooked or misconceived dimen-
sions of capitalism.
Colonialism-capitalism nexus has recently gained salience in the field of International
Political Economy (IPE) as part of a broader reckoning with IPE’s conceptual and disci-
plinary blind spots. In a dedicated issue of the Review of International Political Economy,
the editors pronounce that ‘a lack of attention to colonialism and its legacies leads ana-
lysts to misrepresent key time periods, actors, and dynamics within analyses of capital-
ism and its development’.2 Their declaration amplifies the extant efforts to delineate the
racial and imperial constitution of global capitalism, pushing this agenda over the IPE
community’s epistemic threshold.3
Against this backdrop, one might be surprised to discover that the analytic of coloni-
alism has been comfortably established in a prominent corner of mainstream economics.
New institutional economics (NIE) has long taken a ‘colonial turn’ through the path-
breaking scholarship of Daron Acemoglu and James Robinson, who have made history
of colonialism pivotal to their theory of economic development.4 While Acemoglu and
Robinson’s penchant for cliometrics and formal modelling affirms their disciplinary cre-
dentials, their sustained and critical focus on colonialism gives their work a radical hue
that one is unaccustomed to encounter in the pages of the American Economic Review.
First, unlike earlier institutionalist histories of capitalism centred on Western Europe,5
Acemoglu and Robinson have foregrounded European colonial expansion for assessing
the impact of institutions on economic development. Second, unlike imperial apologias
that vindicate European empires as the avatar of capitalist globalisation,6 they have cast
colonialism as a force of underdevelopment. Their scholarship would thus seem to reso-
nate with the recent calls to centre colonialism in IPE, as attested by the credit they have
received from critical IR scholars.7
The present article throws a more critical light on the uses of colonial history in NIE
with the aim of raising broader theoretical questions about colonialism-capitalism nexus.
It is argued that Acemoglu and Robinson’s analysis ultimately constructs colonialism
and capitalism as categorical antitheses even as it narrates them together. The key to this
construction is admitting colonialism into the history of capitalism while excluding it
from the theory of capitalism. The centrepiece of Acemoglu and Robinson’s account is
the dichotomy between ‘inclusive’ and ‘extractive’ institutions, which functions as an
analytic filter that allows certain historical elements into a theory of capitalist develop-
ment while blocking out others. Viewed through this filter, five centuries of colonial
history yields the conclusion that sustained capitalist growth is the province of ‘inclusive
institutions’. By protecting private property, administering impartial justice, enforcing
contracts, and enabling markets, inclusive institutions incentivise investment and inno-
vation. By contrast, ‘extractive institutions’ enable expropriation, monopoly, and rent-
seeking. If the virtues of inclusion are borne by the positive economic divergence of
Western Europe and its settler offshoots, then the stagnation of the Global South offers
an object lesson about the extractive legacies of slavery and imperialism. Put briefly,
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