One of the biggest showdowns of history was the clash of the mighty Inka King Atawallpa and the Spanish conqueror Francisco Pizarro at the 16 of November, 1532. Pizarro was delegated from the Spanish king Karl, which was the most powerful ruler in Europe to that time. Contrary, Atawallpa ruled the geographical largest empire on earth. As it came down to combat, the forces were distributed even more unequally. Pizarro led 168 conglomerated men on a foreign territory, did not speak the language or had any additionally supply. Atawallpa had 80.000 men and was native in his own country. In the end, Pizarro captured Atawallpa and extorted the largest ransom in human history. 40 years afterwards the Inka Empire was conquered totally by the Spanish. This shortcut of history raises a fundamental question on development in general: Why did the Spanish win and not vice versa?
In this blogpost I will disentangle this question from an economic viewpoint. First, I discuss the role of institutions in terms of development. Afterwards I argue that institutions are a widely accepted explanatory variable in explaining nowadays wealth, but geographical arguments are much more suitable to explain differences between nations in the past.
The recent debate in development economics on the question why countries are rich and poor focuses on institutions. According to the seminal work of Acemoglu et al., high economic growth rates in Europe between 1500 and 1800 were linked to non-absolutist initial institutions. Inclusive institutions are those where property rights are assigned and safeguarded. Absolutist institutions are those where only a small minority benefits from Atlantic trade and resource plunder (cf. Acemoglu et. al 2005). In the widely recognized book Why Nations Fail, the Nobel Prize winners Acemoglu and Robinson are explaining what absolutist institutions have been after the conquest of the Inka Empire. The Spanish reintroduced in some parts the mita, which was a workforce system helping to exploit silver and gold resources. Even though it was abolished 1825, the effects on today’s wealth can still be measured. Cities where the inhabitants had to work under the mita are a third poorer than cites with the same geographical and cultural heritage. Thus, oppressing institutions are obstacles in economic development (cf. Acemoglu/Robinson 2012). Against this backdrop, the conclusion why the Inka lost against Pizarro should be very clear: They had the wrong institutions, where less economically developed and hence had the wrong technology to fight against the Spanish crown.
The Geographic Reversal
Puzzling is still the question how the Inka governed the largest empire in whole America for 500 years, developed the so far most coherent paved street system in the highest altitude where men live without institutions (cf. C. Mann 2005). In addition, under Acemoglu´s definition Spain had to that time absolutist institution since only a small majority benefited from economic interaction. Jared Dimond, evolutionary biologist, argues in his book Guns, Germs and Steal that there has been a long chain of causalities leading to the outcome of the battle. Obviously, Pizarro´s victory was based on the superior warfare technology such as canons, horses and steal. But again, how did the Spanish acquire this advantage? Dimond´s argumentation is based on three pillars. Firstly: The development of agriculture, secondly: Resistance against diseases and thirdly: geographical burdens.
First, the development of agriculture was pivotal in the production of food surpluses. Agriculture and stock farming nourished up to 100 times more people than nomad lifestyle. An increase of calorie supply enabled higher birth rates and a higher population density which enabled centralistic government. However, the transition to agriculture was not linear in human history and was highly dependent on the possibility to domesticate animals and plants. According to Dimond, Mesoamerica and North America had disadvantages in the fauna in comparison to Eurasia. Corps such emmer, barley and einkorn delivered more calories than maize which was domestic in South America. Furthermore, the lama was the only farm animal in South America, whereas Eurasia had the sheep, goat, pig, cow, horse, donkey, camel and dromedary. Secondly, the earlier transition to stock farming in Eurasia caused a higher population density which intensified the contact between man and animals. This resulted in the development of many deadly diseases such as Pox or the Black Death. Epidemic outbreaks, such as the Black Death in Europe, killed on the one hand a third of the population, but also created resistances which the indigenous population of the New World did not have. Recent estimations indicate that imported Western diseases killed up to 95% of the pre-Columbian world. Lastly, the speed of innovation was bounded to the geographical axes. The transfer of innovation from east to west was much faster than from north to south, since the shifts of climate zones are less frequent. One example is the invention of the wheel. It was discovered in Mesoamerica around 3000 B.C but didn´t reached the Andes until the arrival of the Spanish. In comparison, France and China had the wheel at almost the same time but where divided by 13000 km (cf. Dimond 2006).
Who conquered the Inka- Institutions or Geography?
Acemoglu and Robinson challenged Jared Dimond´s geographic hypotheses in Why Nations Fail. They argue that there are several examples in history, why geography cannot explain the wealth of today. North- and South Korea have the same culture and geography but South Korea is one of the richest countries whereas North Korea is one of the poorest countries. Thus, institutions matter for the wealth of today. Nonetheless institutions didn´t conquer the Inka. Both had extractive institutions to the given time. The essential factor for the victory of Pizarro was the spread of Western diseases followed by technological advantages such as horses which where a product of the earlier transition to stock farming in Eurasia. Development Economics might explain today’s wealth properly but should be more curious on development in the past.
Acemoglu, D., & Robinson, J. A. (2012). Why Nations Fail. The Origins of Power, Prosperity and Poverty. New York: Crown Business, Crown Publishing Group.
Acemoglu, D., Johanson, S., & Robinson, J. (2005, June). The Rise of Europe:Alantic Trad, Institutional Trade, and Economic Growth. The American Economic Review Vol 95, No.3, pp. 546-579.
Diamond, J. (2006). Arm und Reich. Frankfurt am Main: S.Fischer Verlag GmbH.
Mann, C. (2005). 1491: new revelations of the Americans before Colombus. New York: Knopf.