Mahoney - Clonialism and Postcolonial Develpment

Colonialism and Postcolonial Development
In this comparative-historical analysis of Spanish America, James Mahoney

offers a new theory of colonialism and postcolonial development. The book
explores why certain kinds of societies are subject to certain kinds of colonial-
ism and why these forms of colonialism give rise to countries with differing
levels of economic prosperity and social well-being. Mahoney contends that
differences in the extent of colonialism are best explained by the potentially
evolving fit between the institutions of the colonizing nation and those of the
colonized society. Moreover, he shows how institutions forged under colonial-
ism bring countries to relative levels of development that may prove remarkably
enduring in the postcolonial period. The argument is sure to stir discussion and
debate, both among experts on Spanish America who believe that development
is not tightly bound by the colonial past and among scholars of colonialism
who suggest that the institutional identity of the colonizing nation is of little
consequence.
James Mahoney is Fitzgerald professor of economic history and a professor of

political science and sociology at Northwestern University. He is the author of
The Legacies of Liberalism: Path Dependence and Political Regimes in Central
America (2001), which received the Barrington Moore Jr. Prize of the Com-
parative and Historical Section of the American Sociological Association. He is
also coeditor of Comparative Historical Analysis in the Social Sciences (2003),
which received the Giovanni Sartori Book Award of the Qualitative Methods
Section of the American Political Science Association. Mahoney is a past presi-
dent of the Section on Qualitative and Multi-Method Research of the American
Political Science Association and Chair-Elect of the Section on Comparative and
Historical Sociology of the American Sociological Association.
Cambridge Studies in Comparative Politics
General Editor
Margaret Levi University of Washington, Seattle
Assistant General Editor

Stephen Hanson University of Washington, Seattle
Associate Editors
Robert H. Bates Harvard University
Torben Iversen Harvard University
Stathis Kalyvas Yale University
Peter Lange Duke University
Helen Milner Princeton University
Frances Rosenbluth Yale University
Susan Stokes Yale University
Kathleen Thelen Massachusetts Institute of Technology
Erik Wibbels Duke University
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Continued after the Index

Advance Praise for Colonialism and Postcolonial
Development
“James Mahoney brings an unprecedented rigor to the analysis of the long-

term, rising and falling, developmental (mis)fortunes of the nations of mainland
Latin America. The region’s historians had long been aware of “The Great
Reversal,” whereby today’s descendants of the great pre-Columbian Inca and
Aztec empires have fallen far behind their regional peers in our measurements
of human well-being and economic development. Mahoney now tells us, with
exquisite (yet accessible) theoretical and methodological clarity and scholarly
care, why those two developmental routes crossed paths roughly two centuries
ago. He especially relates those changes to the greatly varied intensities with
which Spain (and Portugal) first established their mercantilist forms of rule
over many regions, and to how those patterns of ruling were reformed in the
late colonial period, in that process shifting again the developmental arcs of
Latin American nations along new and varied pathways. In my view, he has
now put to eternal rest any and all theories that would collapse Latin regional
(under)developmental arcs into a singular pattern, and throws down the gantlet
before his many, yet less persuasive, theoretical competitors. All future analyses
of long-term Latin American development, including my own, must henceforth
deal with this well-researched and wide-ranging epic of a book.”
– Timothy Wickham-Crowley, Georgetown University
Colonialism and Postcolonial
Development
Spanish America in Comparative Perspective
JAMES MAHONEY
Northwestern University
cambridge university press
Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore,
São Paulo, Delhi, Dubai, Tokyo
Cambridge University Press

32 Avenue of the Americas, New York, ny 10013-2473, usa
www.cambridge.org
Information on this title: www.cambridge.org/9780521133289
© James Mahoney 2010
This publication is in copyright. Subject to statutory exception

and to the provisions of relevant collective licensing agreements,
no reproduction of any part may take place without the written
permission of Cambridge University Press.
First published 2010
Printed in the United States of America
A catalog record for this publication is available from the British Library.
Library of Congress Cataloging in Publication data
Mahoney, James, 1968–

Colonialism and postcolonial development : Spanish America in comparative
perspective / James Mahoney.
p. cm. – (Cambridge studies in comparative politics)
Includes bibliographical references and index.
isbn 978-0-521-11634-3 (hardback) – isbn 978-0-521-13328-9 (pbk.)
1. Spain – Colonies – America – Administration. 2. Latin America – Colonization.
3. Postcolonialism – Latin America. 4. Comparative government – Latin America.
5. Latin America – Foreign relations – Spain. 6. Spain – Foreign relations –
Latin America. i. Title.
f1410.m274 2010
325 .346098 – dc22 2009022864
isbn 978-0-521-11634-3 Hardback

isbn 978-0-521-13328-9 Paperback
Cambridge University Press has no responsibility for the persistence or

accuracy of urls for external or third-party Internet Web sites referred to in
this publication and does not guarantee that any content on such Web sites is,
or will remain, accurate or appropriate.
Dedicated to my mother, Maureen Mahoney,
and to the memory of my father, Elmer Lee Mahoney
Contents
List of Tables, Figures, and Maps page xi

Preface xiii
1 Explaining Levels of Colonialism and Postcolonial
Development 1
Relative Levels of Development 4
Existing Perspectives and Their Limitations: New Principles
for Case Analysis 10
A General Theory of Colonialism and Development 20
A Focus on Spanish America 32
2 Spain and Its Colonial Empire in the Americas 35
The Mercantilist Phase, 1492–1700 36
The Liberal Phase, 1700–1808 44
Conclusion 49
3 Mercantilist Colonialism 50
The Colonial Centers 54
The Colonial Peripheries 77
The Colonial Semiperipheries 100
Conclusion 115
4 Liberal Colonialism 120
The Rising Peripheries 124
The Mercantilist Carryovers 141
The Fallen Cores 161
The Sustained Peripheries 174
Conclusion 183
5 Warfare and Postcolonial Development 189
The Effect of Warfare on Development 190
Costa Rican Exceptionalism in Central America 193
Contrasting Paths: Chile and Paraguay 195
Conclusion 200
ix
x Contents
6 Postcolonial Levels of Development 203

Postcolonial Economic Development 205
Postcolonial Social Development 221
Conclusion 227
7 British and Portuguese Colonialism 229
The British Colonial Empire 231
Portuguese America 242
Conclusion 250
8 Conclusion 253
Summation 253
Implications 264
Notes 271
Glossary 353
Select Bibliography of Works on Colonial Spanish America 357
Index 383
Tables, Figures, and Maps
Tables
1.1 Approximate Levels of Economic Development for the
Spanish American Countries, Late Nineteenth Century to
Present page 5
1.2 Approximate Levels of Social Development for the Spanish
American Countries, Late Nineteenth Century to Present 5
1.3 Types of Political Economies 21
1.4 Types of Precolonial Societies 24
2.1 Political-Administrative Location of Modern Countries
within the Spanish Empire, circa 1650 41
3.1 Types of Spanish Colonial Territories, circa 1650 51
3.2 Determinants of Center, Semiperipheral, and Peripheral
Colonies: Mercantilist Era 116
3.3 Relationship between Mercantilist Colonialism and Levels
of Development 118
4.1 Types of Spanish Colonial Territories, circa 1780 121
4.2 Determinants of Center, Semiperipheral, and Peripheral
Colonies: Liberal Era 184
4.3 Pathway to Higher Economic Development 186
4.4 Pathway to Lower Economic Development 187
4.5 Pathway to Intermediate Economic Development 187
4.6 Determinants of Levels of Social Development for the
Nonperipheral Colonial Regions 188
6.1 Levels of Social Development for Spanish American
Countries 223
7.1 Development Indicators for Major Regions of Brazil, 2005 243
Figures
1.1 Predicted Levels of Colonialism 26
1.2 Predicted Levels of Postcolonial Development 28
1.3 Models of Mercantilist and Liberal Colonialism 30
1.4 A Model of Mercantilist-Liberal Colonialism 31
6.1 Levels of Economic Development: Wealthier Countries 206
xi
xii Tables, Figures, and Maps
6.2 Levels of Economic Development: Intermediate Countries 208

6.3 Levels of Economic Development: Poorer Countries 209
7.1 Relationship between Precolonial Population and Colonial
Settlement for British Colonies 233
7.2 Relationship between Colonial Settlement and Postcolonial
Development for British Colonies 234
8.1 Elaborated Models of Colonialism and Development 255
8.2 Elaborated Model of Mercantilist-Liberal Colonialism 258
8.3 Colonial Paths to Development Outcomes in Spanish
America 260
Maps
2.1 The Viceroyalty of New Spain, circa 1650 39
2.2 The Viceroyalty of Peru, circa 1650 40
2.3 Colonial Spanish America, circa 1780 47
3.1 Precolonial Societies of Mexico 55
3.2 Precolonial Societies of Peru, Bolivia, and Ecuador 65
3.3 Precolonial Societies of Uruguay, Argentina, Chile, and
Paraguay 78
3.4 Precolonial Societies of Central America, Colombia, and
Venezuela 90
Preface
Comparative-historical analysis achieves its potential when it generates new

theoretical insights of broad utility and novel understandings of particular
cases. Focused on questions of colonialism and postcolonial development,
this book seeks to realize the dual promise of comparative-historical anal-
ysis. It offers a general theory for explaining variations in colonialism and
long-run development among non-European countries. And it uses this the-
ory, along with other analytical principles, to work out a new explanation
of colonial and postcolonial experiences specifically for fifteen mainland
countries of Spanish America.
The book’s argument takes issue with certain assumptions embedded in
leading geographical and institutional explanations of development, offer-
ing alternative and more historically oriented frames of reference in their
place. It insists that to explain forms of colonialism, one must look at the
interaction between the potentially evolving political-economic institutions
of the colonizing nation and the societal institutions in the colonized ter-
ritory, which also may change over time. And to make sense of the con-
sequences of colonialism for development, the book argues, one must pay
special attention to the collective actors that are born out of colonialism
and whose capacities will vary depending on the kinds and extent of colo-
nial institutions that were implanted. When applied to Spanish America, the
approach yields a new account of why certain territories were subjected to
more or less colonialism across different eras and why these alternative colo-
nial experiences gave rise to new nations with contrasting levels of economic
and social development.
The ideas in this book have been germinating for nearly as long as I have been
engaging social science questions. When I was an undergraduate student at
the University of Minnesota, the lectures of August Nimtz introduced me
to the power of arguments attributing developmental paths to modes of
colonial domination. Concurrently, classes with Kathryn Sikkink piqued my
interest in Latin America and pointed me to Guillermo O’Donnell’s work
on modernization and authoritarianism, which suggested the possibility of
long-run continuities in relative levels of economic and social development.
These experiences, I can now see, planted in my mind the basic insight that
xiii
xiv Preface
variations in colonialism might explain why Latin American countries today

exhibit strikingly different levels of socioeconomic development.
Yet I did not begin any actual work on colonial legacies and long-run
development for many years. More than anything else, political events in the
world conspired to direct my research elsewhere. While I was at Minnesota,
the revolutionary movements in Latin America charged my emotions and
captivated my imagination; I wrote my senior honors thesis on the causes
of social revolutions in Central America and the Caribbean. Then, when I
pursued graduate study at the University of California, Berkeley, the “third
wave” of democratization swept across the globe, refocusing my scholarly
energies toward issues of democracy and authoritarianism. I wrote a Ph.D.
dissertation on the historical roots of contrasting political regimes in Central
America, which became the foundation for my first book, The Legacies of
Liberalism: Path Dependence and Political Regimes in Central America
(2001).
During the summer of 2000, I finally started this research on colonial-
ism and development. Meanwhile, as it turned out, the second Gulf War
and the subsequent U.S. occupation of Iraq meant that I was soon again
working in line with world events. Across the social sciences, exciting new
research aimed at explaining colonialism and postcolonial development was
taking place. As I read this burgeoning literature, I came to see more clearly
the methodological differences between the comparative-historical approach
that I was employing and the cross-national regression techniques that were
often used in other work. Though it may have delayed this project a bit, I
could not resist writing articles aimed at explicating these differences. For
those who know my writings on methodology, it will come as no surprise to
hear that I believe comparative-historical analysis offers an especially pow-
erful approach for explaining why particular cases experience specific out-
comes (as opposed to estimating the average effects of causes). In this book,
though, my purpose is not to advocate on behalf of comparative-historical
research by abstractly spelling out its distinctive methodological features.
Insofar as the book makes a case for comparative-historical analysis, it tries
to do so by showing that the approach can anchor a valid explanation of
processes of colonialism and postcolonial development in Spanish America
as they have actually occurred historically.
I had the topic and method worked out early; it remained for me to do
the research and write the book. I greatly underestimated just how difficult
that would be, especially establishing a historical grasp over fifteen different
Spanish American countries across very long periods of time. It took years of
reading books and articles before I felt comfortable writing case narratives
that were simultaneously sensitive to historical realities and consistent with
an overarching theoretical argument. In fact, however, it was very fortunate
that the historiography had become so voluminous over the last two or
three decades; otherwise, I would not have had enough basic information to
Preface xv
make the arguments here. Moreover, my reading of histories and my quest

to establish a command over many cases soon became a labor of love. It
instilled great purpose into my work over the last several years.
As an unanticipated result of this effort, I often came away from the books
and articles that I was reading with profound admiration for the historians
who produced them. Through their mastery of times and places, exceeding
my own for every country covered in this book, the best historians make
original interpretations that change the way we think about both individual
cases and general processes. My own goals in writing this book are, of
course, quite different from what most historians set out to achieve. I do not
try to offer a novel argument using fresh archival material or by assembling
already-discovered primary sources in new ways. Rather, throughout the
book, I rely on historians’ works themselves as my sources of information,
drawing especially on points of consensus and, whenever possible, accounts
about which there is little controversy. Precisely because this book builds
so thoroughly on preexisting evidence and established interpretations of
individual cases, the basic facts discussed below will not be much in the
way of “news” to the relevant specialists. Instead, my ambition is to use
systematic comparisons, new theoretical ideas, and the explicit assessment
of alternative causal arguments to arrange mostly uncontested facts into a
new and valid explanation. Comparative-historical analysis is that mode of
research in which investigators contribute to historical understanding on the
basis of broad comparisons and the conscious engagement of theory with
fine-grained evidence. When comparative-historical analysts are successful,
their findings can complement those of the historians on whose research
they inevitably depend.
Most of the work for this book was completed in the solitude of my offices
at Brown University (before fall 2005) and Northwestern University (after
fall 2005). But it was in contact with students and colleagues that I was
inspired to do much of my best thinking. Let me therefore acknowledge the
people whose support and suggestions helped me to move this project from
conception to completion.
I would first of all like to recognize the talented graduate students who
collaborated with me in their roles as research assistants or as coauthors on
papers and articles related to this project. My heartfelt thanks go to Jennifer
Darrah, Diego Finchelstein, Carlos Freytes, Aaron Katz, Matthew Lange,
Jennifer Rosen, Celso Villegas, and Matthias vom Hau. This group knows
probably better than anyone else the research that went into this book and
the feelings of excitement and occasional dismay that it brought to me. I
also received very helpful comments from the following students: Jennifer
Cyr, Christopher R. Day, Jesse Dillon Savage, Andrew Kelly, Armando
Lara-Millan, Erin Metz McDonnell, Elizabeth Onasch, Madeline Otis, and
Robert Rapoport. In thanking these individuals, I need to acknowledge the
xvi Preface
support provided by the National Science Foundation. In 2001, when Joane

Nagel and Patricia White worked as the NSF Sociology Program directors,
I received a Career Award grant that provided financial support for travel
and research over a five-year period. Without this grant, I would never have
been able to follow through on this study.
Many colleagues in history, political science, and sociology commented
on draft chapters and related papers. In most cases I heeded their good
advice, but sometimes I may not have been able to address their concerns.
Let me therefore thank the following individuals without implying their
agreement with all aspects of my argument: Jeremy Adelman, Ruth Berins
Collier, Miguel Centeno, John Coatsworth, Frank Dobbin, Susan Eckstein,
Marion Fourcade-Gourinchas, John Gerring, Gary Goertz, Jeffrey Herbst,
José Itzigsohn, Steven Levitsky, Mara Loveman, Shannon O’Neil, Charles
C. Ragin, James Robinson, Ben Ross Schneider, Kenneth Shadlen, Thomas
Skidmore, Richard Snyder, Hillel Soifer, and the late Charles Tilly. I also
received helpful feedback during presentations of this material at Arizona
State University, Brown University, Cornell University, the University of
Florida, Harvard University, New York University, Northwestern Univer-
sity, the University of Notre Dame, the University of Pennsylvania, and
Princeton University. Although I cannot individually thank all of the pro-
fessors and graduate students who asked questions or made suggestions at
these presentations, I can at least point out that they profoundly shaped my
thinking.
I was fortunate to receive extensive and vital feedback on the first nearly
full draft of the book at a workshop in November 2007 at the University of
Washington. This workshop was Margaret Levi’s magnificent “Seattle Semi-
nar,” in which prospective authors of the Cambridge Studies in Comparative
Politics series are invited to have their draft manuscripts discussed over a
two-day period. I benefited enormously from the event, and especially from
the comments of Maureen Eger, Robert Fishman, Anthony Gill, Stephen
E. Hansen, Edgar Kiser, Margaret Levi, Steven Pfaff, Audrey Sacks, and
Rebecca Szper. At about that time, Ben Ross Schneider also gave the whole
manuscript an extremely close reading that rescued me from many errors
and pointed me in promising new directions. After I revised the manuscript
in light of these comments, it was finally ready for review. At Cambridge
University Press, Lewis Bateman served as a wonderfully supportive editor
and arranged for referee reports from which I benefited. The very talented
Nancy Trotic did a magnificent job with the copyediting. For help in making
the maps, I am grateful to David Cox and Erin Kimball.
My career trajectory has taken me from graduate school in political science
at Berkeley to the faculty of the Sociology Department at Brown University
to my current joint position in the departments of Political Science and
Sociology at Northwestern University. At each stop, I have acquired one
or two prominent supporters who helped me in ways that I cannot begin
Preface xvii
to measure. For believing in me, let me thank David Collier, Peter Evans,
Dietrich Rueschemeyer, and Kathleen Thelen. I also need to thank my close
colleagues Bruce Carruthers, Edward Gibson, Patrick Heller, Ann Shola
Orloff, and Monica Prasad for encouraging me with this project and all my
efforts on matters comparative and historical. Although Theda Skocpol was
neither my mentor nor my colleague, she is one of my intellectual heroes, and
I hope that readers will appreciate just how deeply her ideas have influenced
this book.
Finally, of course, let me thank my family. My wife, Sharon Kamra,
deserves my gratitude above all, for she had to live with the preoccupied
professor. Sharon has a full-time career as a project director, but it was
her expert management of our household that enabled me to attend to my
research and still spend lots of time engaged with our wonderful children,
Maya and Alexander. My mother has been a constant source of encourage-
ment and love for my family; she is, to me, the most dependable person in
the world. The memory of my father also continues to inspire me, for he was
nothing if not the world’s most committed perfectionist. As I now complete
this book, I can see some of my mom’s work ethic in myself. And I needed
it, because – for better or worse – I also inherited some of my dad’s yearning
to try to get things just right.
1
Explaining Levels of Colonialism

and Postcolonial Development
Much of the developing world was dragged into the modern era by colonialism.
However one judges it, this is a historical legacy with which all scholars interested
in the political economy of development, especially political economy over the long
duration, must come to terms.
– Atul Kohli
Comparative historical analysis serves as an ideal strategy for mediating between

theory and history. Provided that it is not mechanically applied, it can prompt both
theoretical extensions and reformulations, on the one hand, and new ways of looking
at concrete historical cases, on the other.
– Theda Skocpol
Colonialism was a great force of change in the modern era. From the
Americas to the Asian and African continents, colonial expansion brought
Europeans and their institutions around the world. It stirred nationalist
sentiments and intensified competition within the European core; and the
colonies provided an outlet for citizens who sought or were compelled to
pursue a new life overseas. By disseminating people and institutions, more-
over, colonialism forever changed the structure of trade and production
within what had been an almost exclusively European commercial system.
Nothing less than a genuinely worldwide system of states and trade was born
out of colonialism. In the judgment of Karl Marx and Friedrich Engels, “the
colonization of America, trade with the colonies, the increase in the means
of exchange and in commodities generally, gave to commerce, to navigation,
to industry, an impulse never before known.”1
But the consequences of colonialism were, of course, felt most deeply in
those territories and by those people subjected to this intervention. Preexist-
ing societies were traumatically rearranged and sometimes destroyed. This
was as true for precolonial societies renowned as great civilizations – such as
the Aztec and Inca empires in the Americas – as it was for less well remem-
bered precolonial chiefdoms and hunter-gatherer groups. The institutions
established during colonialism, furthermore, exhibited over-time effects,
whether directly through their own persistence or indirectly through the
actors and processes that they brought into being. Colonial authorities and
settlers almost invariably imposed administrative and political boundaries
1
2 Explaining Colonialism and Development
that subsequently became the basis – or at least the critical starting point –
for demarking the borders of new nation-states. Within those borders, colo-
nialism wrought economic arrangements and state machineries that struc-
tured productive activity and that affected the level of prosperity for the
societies that remained. Colonial powers also introduced new cultural dis-
tinctions and modes of interest representation upon which subsequent social-
stratification systems and political regimes were built.
In modern world history, colonialism is marked by a state’s successful
claim to sovereignty over a foreign land. Under a colonial arrangement,
major actors in the interstate system at least implicitly recognize the col-
onizing state’s patrimony over the occupied territory; and this recognition
is founded in part upon the colonizing state’s proven ability to implant
settlers, maintain governance structures, and extract resources in the ter-
ritory.2 This definition makes colonialism a more thoroughgoing form of
territorial control than what is conventionally thought of as imperialism or,
for that matter, economic and political dependency. While imperialism and
dependency entail asymmetrical relationships between states, they do not
inherently involve a loss of sovereignty or even the insertion of governance
structures under the control of a metropolis. Colonialism is set apart from
these other kinds of interstate domination above all because it renders sub-
ordinate (or makes obsolete) all prior political entities that could once lay
claim to – and perhaps back up through coercive means, if necessary – final
authority over territorial inhabitants. So thoroughgoing is colonial domina-
tion that other international actors must treat the metropolis as the de facto
political representative of the occupied land.
Though delimited in these ways, the intersocietal relationships that qualify
as colonialism are nevertheless numerous and varied. According to David B.
Abernethy, modern European colonialism was carried out by eight different
countries and encompassed the territories of what became 125 different
nation-states at one time or another.3 Most of western Europe was sooner
or later engaged in colonial projects, and most areas in the rest of the world
became objects of these projects.
The undeniable, paramount importance of colonialism beckons social sci-
entists to study the causes and consequences of this historical process. But
what is the most fruitful way for researchers to proceed with their explana-
tory investigations? One worthy approach is to explore why colonialism
occurred in certain places and at certain times;4 another is to generalize
broadly about the effects of colonialism for Europe, for the non-European
regions, or for the world system as a whole.5 Yet some scholars – espe-
cially comparatively and historically oriented social scientists – will always
be drawn to questions about the sources of alternative modes of colonialism
and their legacies for nation-states. Why did similar or different forms of
colonialism arise within the borders of what are now sovereign states? What
were the long-run consequences of particular kinds of colonialism for the
Explaining Colonialism and Development 3
national citizens of those states? Answering these questions, as this book

seeks to do, requires treating territories corresponding to modern nation-
states as the basic units of analysis, including during historical episodes prior
to their appearance as sovereign entities.
In this introductory chapter, I develop a historical-institutional frame-
work for studying colonialism and postcolonial development. The frame-
work offers both principles for the causal analysis of particular cases and
a general theory consisting of propositions to be applied broadly to for-
mer colonial cases.6 The principles of analysis are developed in critical dia-
logue with the two currently dominant orientations for explaining national
development: geographic and institutional perspectives. Concerning the geo-
graphic perspectives, I argue that they too often assume that features of the
natural environment directly affect development; these approaches fail to
give appropriate weight to mediating institutions. And they provide little
guidance for theorizing the time-variant effects of geography and the ways
in which geographic effects depend on the arrangement of already-existing
institutions. The reigning institutional perspectives, for their part, are much
too prone to treat institutions as devices that merely coordinate behav-
ior, rather than as power-implicating instruments that unevenly distribute
resources and constitute collective actors. Moreover, existing institutional
work on colonialism in particular has suffered from vague conceptions of
institutions and overly generalized understandings of their effects that can-
not make sense of basic historical facts about particular cases. In response
to the limitations of both geographic and institutional perspectives, I formu-
late alternative principles to be used in historically grounded, case-oriented
explanation.
The general theory lays out orienting hypotheses that are intended to
apply broadly across cases. These hypotheses seek to explain variations in
both (1) levels of colonialism, which refer to the extent of settlement and
institutional implantation in colonized territories, and (2) levels of postcolo-
nial economic and social development, which capture national differences
in prosperity and human well-being. To account for variations in levels of
colonialism, the theory highlights the interaction between the institutions of
the colonizing nation and the institutions of the precolonial society. Con-
trasts in the political-economic institutions of the European colonizers are
hypothesized as essential for grasping why these nations often pursue quite
distinct modes of colonialism in similar precolonial societies. Likewise, vari-
ations in the institutional complexity of precolonial societies are crucial for
understanding why European colonizers with similar political economies
follow contrasting modes of colonization. Thus, to explain levels of colo-
nialism, I examine the “fit” between the institutions of the colonizing nation
and those of the colonized territory.
To explain levels of postcolonial economic and social development, the
general theory calls attention to the interaction between a territory’s level of
colonialism and the political economy of the colonizing European nation.

The long-run consequences of a given level of colonialism vary across col-
onizers with different political economies. Extensive colonialism featuring
heavy settlement and institution building is not expected always or usually
to leave behind rich and egalitarian new countries (as some analysts sug-
gest). Nor is extensive colonialism predicted to produce impoverished and
conflict-ridden states (as others suggest). Rather, the effect of a given level
of colonialism for long-run development depends on the political-economic
institutions of the colonizing power.
In the core chapters of this book, both the principles of analysis and
the general theory are employed in the analysis of Spanish America. My
approach throughout is to start with the general theory but supplement it
with ideas anticipated by the principles of analysis. In this chapter, I do not
yet summarize the findings that are derived from this comparative-historical
analysis; that summary is found in the concluding chapter. However, I do
advance reasons why a close focus on the Spanish American countries makes
good methodological sense.
The discussion so far merely anticipates arguments that need to be devel-
oped at length. I begin this task in the next section by addressing conceptual
issues concerning the final outcome under investigation: relative levels of
development.
relative levels of development

Why are some countries more developed than others? This basic question,
posed again and again by thoughtful analysts, is an inquiry about relative
levels of development. It asks why some nations have relatively higher (or
lower) positions within the overall hierarchy of development. In a world
system in which countries exhibit enormously different economic and social
conditions, identifying the causes of relative levels of development must be
regarded as one of the most fundamental tasks of the social sciences.
When treated as a theoretical construct, development may be defined,
following Amartya Sen, as “the expansion of the ‘capabilities’ of people to
lead the kind of lives they value – and have reason to value.”7 Under this
definition, development is the process through which individuals are empow-
ered to meet their objectively justifiable interests. Tangible improvements in
wealth and social welfare are the crucial, though not the exclusive, compo-
nents of development. Growth of the economy and real income, especially
at lower and middle levels of prosperity, expands capabilities by provid-
ing access to basic goods and services that all people have reason to value.
Advances in education and health enable individuals to lead longer, more
informed, and enjoyable lives – things that human beings inherently and
rightly seek. And both economic and social enhancements provide oppor-
tunities for individuals to engage in collective activities that are intrinsically
Table 1.1. Approximate levels of economic development for the

Spanish American countries, late nineteenth century to present
Higher level Intermediate level Lower level
1. Argentina 5. Mexico 9. Paraguay

2. Uruguay 6. Costa Rica 10. Guatemala
3. Chile 7. Colombia 11. El Salvador
4. Venezuela 8. Peru 12. Ecuador
13. Nicaragua
14. Bolivia
15. Honduras
worthy and often essential for securing other kinds of freedoms, including
political democracy.8
Though not the only aspects of development, the expansion of wealth
and human welfare – what I call economic and social development – are
thus among its most important ones. They will be the focus of this book. I
will inquire specifically about the causes of relative levels of economic and
social development among the mainland Spanish American countries (see
Tables 1.1 and 1.2) and, to a lesser degree, among the countries colonized
by Britain and Portugal (see Chapter 7). The national differences in relative
levels of development presented in Tables 1.1 and 1.2 will be described
further and substantiated at length in light of the available data. The focus for
now, however, is more general: understanding relative levels of development
as an object of explanation.
The Stability of Relative Levels of Development

Relative levels of development – unlike absolute levels – tend to persist
over time. Countries that now feature higher levels of wealth (or better
Table 1.2. Approximate levels of social development for the

Spanish American countries, late nineteenth century to present
Higher level Intermediate level Lower level
1. Uruguay 5. Paraguay 9. Ecuador

2. Argentina 6. Colombia 10. Peru
3. Costa Rica 7. Venezuela 11. Honduras
4. Chile 8. Mexico 12. El Salvador
13. Nicaragua
14. Bolivia
15. Guatemala
performance on health, education, and other social indicators) usually have

been among the wealthier (or healthier, more educated, and so on) nations
for many decades or even centuries. Similarly, countries that are now rel-
atively poor have usually been relatively poor for a long time, often for as
long as they have been countries. To be sure, there are some exceptions, such
as the once-peripheral case of South Korea, which achieved a comparatively
high level of development during the second half of the twentieth century.9
But the majority of countries tend to fall into relatively stable positions
within the global hierarchy of development.
Social scientists have long explored puzzles related to the persistence of
relative levels of national development. Much of this work takes its cue
from efforts to explain why certain countries – especially those in western
Europe – emerged at the top of the development hierarchy in the first place.
The question, “Why Europe?” (i.e., why Europe or a particular region in
Europe was the birthplace of capitalist commercialization and industrializa-
tion) originally preoccupied the classical theorists and subsequently many
of the most insightful scholars of macrohistorical inquiry.10 Contemporary
analysts have progressed to the point of identifying historical sources of vari-
ations in socioeconomic development among the European countries them-
selves, as well as other advanced capitalist nations.11 What is more, whole
paradigms of scholarship have explored the inability of less-developed coun-
tries to catch up with or replicate the developmental experiences of Europe.12
From this work, we now know much about why nations in Africa, Asia, and
Latin America have not been able to sustain high growth over extended peri-
ods of time. Likewise, we now have plausible theories to explain why a few
extraordinary cases have been able to break with the pattern and achieve
significant improvements in their relative level of development.
What tends to be missing, however, are well-developed theories about the
origins of varying levels of development among the “non-European” coun-
tries. We still know precious little about why countries in Africa, Asia, and
Latin America exhibit higher or lower levels of socioeconomic development
relative to one another. Why, for example, is Uruguay so much wealthier
than Bolivia? Why is Botswana a model of development in Africa whereas
Sierra Leone is not? Can we identify the “original” sources of relative levels
of development in such diverse countries as Uruguay, Bolivia, Botswana,
and Sierra Leone using a single set of explanatory principles and a general
theoretical framework? This book proposes that we can.
Rates versus Relative Levels of Development

Stability marks relative levels of national development because differences
in rates of growth and social progress for countries are not stable. Episodes
of sustained high (or low) growth rates are rare in the contemporary world
economy. Likewise, dramatic improvements in social welfare (e.g., literacy,
life expectancy, and education) are often held hostage by uneven growth
rates – for although long-run social development is not simply a derivative
of economic growth, it is shaped by such growth.13
Evidence for the instability of rates of economic growth is not merely
impressionistic. In one important study, William Easterly and colleagues find
that the correlation for national growth rates across decades ranges from
0.1 to 0.3, and hence that the performance of countries in one decade only
weakly predicts performance in the next decade. These authors conclude,
“With a few famous exceptions, the same countries do not do well period
after period; countries are ‘success stories’ one period and disappointments
the next.”14 In his review of the “new growth” literature, Jonathan Temple
likewise warns against using growth rates as a basis for estimating long-run
performance: “Frequently countries have done well for short periods, only
for growth to collapse later on.”15
A concern with relative levels of development differs in basic ways from
a focus on rates of development. Whereas rates highlight variations in per-
formance during specified intervals of time, relative levels cast the spotlight
on differences that tend to endure across any given period. Precisely because
relative levels of development are so persistent, one must explain them his-
torically: their origins rest at some point before countries stabilize their
positions in the hierarchy of development. By contrast, the causes driving
rates of development are typically far less historically rooted, and they may
include such short-range factors as natural disasters, business cycles, and
public policies.
Nevertheless, changes do occur even for relative levels of economic devel-
opment, and recent work on global inequality allows us to generalize about
these changes. Most notably, richer countries tend to grow faster than poorer
countries, producing national-level income divergence in the world econ-
omy.16 Specifically, at least in the post–World War II era, upper-middle-
income nations have had the highest growth rates, and lower-income nations
have had the lowest. As a result, the global trend has been toward income
divergence, even though there has been some convergence among the set
of wealthy nations. To be sure, this trend assumes that countries are not
weighted for population17 and that control variables are not introduced that
mediate the effect of the initial level of economic development.18 Within
these constraints, wealthier countries grow at higher rates than poorer
countries, thereby following a pattern of divergence that has existed at least
since the Industrial Revolution.
One implication of this research is that it is useful to distinguish between,
on the one hand, the lower-income and middle-income countries of the world
and, on the other hand, the upper-middle-income and higher-income coun-
tries. The latter group is simply pulling away from the former. However,
among the lower- and middle-income countries, neither sustained conver-
gence nor divergence appears to be taking place. Rather, when treated as a
single population, the lower- and middle-income countries have been stable
in their relative levels of development.
This last point is of essential importance, because the vast majority of for-
mer European colonies in Africa, Asia, and Latin America are now lower-
or middle-income countries – the population that has exhibited the most
stability in relative levels of development. Contemporary differences in lev-
els of development among these countries are not primarily the result of
diverging rates of growth or social progress since independence. Rather, the
bulk of their differences can be attributed to the fact that they started out
with different levels of development. If one wishes to explain why they have
contrasting relative levels of development today, therefore, the main task
is to locate the causes of their initial differences. This task requires one to
pursue historical analysis and avoid dwelling on the ups and downs that
may have occurred in more contemporary periods.
The Infrequency of Sustained Progress

A country will experience a significant change in its relative level of develop-
ment only when the variables that affect rates of growth (or rates of social
progress) assume atypical values for prolonged periods of time. This means
that we can learn about the sources of stability in relative levels of devel-
opment by elucidating why it is so rare for countries to maintain certain
values on key variables (or combinations of variables) over the long run. To
address this issue, however, we need to locate those specific variables that
actually affect rates of progress.
Interestingly, the econometric new growth literature is not particularly
useful for pinpointing factors that cause trajectories of high or low growth
rates. Although well over fifty variables have been found to be significantly
associated with growth, the effects of most of them are fragile.19 Slight
changes in the control variables or indicators of the regression model over-
turn conclusions about their impact. In addition, those variables that are
robustly related to growth rates are small in number and closely tied to the
phenomenon of development itself. For example, one important sensitivity
analysis found that only four variables – initial level of gross domestic prod-
uct (GDP) per capita, investment spending, population growth rate, and
formal education – are positively correlated with growth across different
model specifications. As Ross Levine and David Renelt note in reporting
this finding, these factors are in part measures or symptoms of development
itself; or, as Douglass C. North and Robert P. Thomas put it in reaching sim-
ilar findings, “The factors we have listed (innovation, economies of scale,
education, capital accumulation, etc.) are not causes of growth; they are
growth.”20
Comparative-historical studies that analyze a small number of countries
have arguably been more successful at explaining exceptional economic
performance among the less developed countries. Various works on the

“developmental state” – a research program pioneered by scholars such as
Alice Amsden, Peter B. Evans, Dietrich Rueschemeyer, and Robert Wade –
suggest that sustained growth is driven by a state apparatus with centralized
power, corporate coherence and autonomy, and dense social ties to key
domestic groups, especially capitalists.21 Likewise, more “society-centered”
analyses – formulated by scholars such as Joel S. Migdal, Robert Putnam,
and Amartya Sen – argue that sustained development requires the removal
of patron-client relations and other hierarchical forms of domination.22
Together, these literatures help make sense of the economic “miracles” in
Korea and Taiwan and cases of great social progress such as Kerala, India.23
They also suggest that a prolonged development failure (e.g., movement from
a relatively high per capita income to a relatively low per capita income)
would be precipitated by the disintegration of existing state machineries
and the degeneration of positive-sum social arrangements into zero-sum
conflict.
With these insights at hand, we can begin to understand why so few
countries have managed to achieve sustained high rates of growth and social
progress. Most basically, a developmental state and a society lacking rigid
hierarchical bonds of dependence are extremely difficult to construct. In
all developing countries, powerful actors derive resources from institutional
arrangements that promote inequalities. To dislodge these institutions and
actors, a fundamental transformation of the basic distribution of power
within society is often required. Historically, such transformations have
occurred largely in conjunction with foreign interventions, land reforms,
revolutions, or wars that unseat dominant economic actors.24 Other possi-
ble conditions are copious international economic aid, an auspicious global
trade environment, low levels of foreign direct investment, a delayed transi-
tion to mass politics, and powerful legitimating ideologies addressing exter-
nal threats.25 Whatever the exact recipe for developmental states and egal-
itarian societies, the ingredients are not often present or found in the right
quantities and sequence.
In sum, the stability of relative levels of national development is a func-
tion of the rarity of those conditions that promote sustained high (or low)
rates of development. Once countries arrive at their particular relative lev-
els of development, they generally stay more or less at those levels unless
something exceptional happens. If one wishes to explain differences in levels
of development, therefore, one should not center explanatory attention on
processes that take place after a country has already settled into a given level
of development. The real explanatory challenge is, instead, identifying the
historical origins of the initial levels of development.
We have now developed an understanding of what it is that this book
ultimately seeks to explain. It is time to examine the ways in which different
kinds of explanatory factors will or will not enter the analysis.
existing perspectives and their limitations:

new principles for case analysis
Competing theoretical perspectives emphasizing either geography or institu-
tions strongly influence contemporary debates about the origins of develop-
ment. These perspectives propose fundamentally different kinds of causes,
directing attention either to physical features of the landscape or to socially
constructed rules that guide behavior. Despite these differences, both per-
spectives as currently formulated share certain problematic ahistorical
assumptions about how to explain levels of development. As a corrective,
this section critiques these limitations and formulates alternatives.
Geographical Explanations
The idea that geographical endowments can explain levels of development
is not new. Niccolò Machiavelli, Charles de Secondat Montesquieu, and
Arnold J. Toynbee all embraced this orientation.26 In our times, the hypothe-
sis is associated with brilliant scholars such as Jared Diamond, David Landes,
and Jeffrey D. Sachs.27 Their work has established beyond any reasonable
doubt that several features of geography are correlated with contemporary
levels of national development. Even the simple variable of distance from
the equator performs reasonably well as a predictor of current levels of
GDP per capita: countries that are more distant from the equator tend to
be richer. Yet for the purposes of actually explaining levels of development,
as opposed to identifying features that are correlated with development, we
must ask questions about how geography affects development, when geog-
raphy affects development, and what specific features of geography affect
development. For each of these questions, the existing literature provides
insights, but these insights need to be enriched by a more historically con-
textualized approach if adequate explanation is to be achieved.
Many geographical features are virtually permanent, preceding in time all
other potentially relevant causal factors. As such, geographical determinants
can often be treated as fully exogenous causes – the “immovable movers” in
a causal argument. One still needs to inquire, however, whether even endur-
ing geographic features directly shape levels of development or whether their
effects work primarily or exclusively through intermediary causal processes.
In recent years, several economists have addressed this issue by exploring the
effect of geographic variables, such as distance from the equator, while con-
trolling for institutional variables (e.g., the extent of rule of law). The title
of an article by Dani Rodrik, Arvind Subramanian, and Francesco Trebbi
suggests the major findings: “Institutions Rule: The Primacy of Institutions
over Geography and Integration in Economic Development.” Rodrik and
collaborators conclude that “the quality of institutions trumps everything
else. Once institutions are controlled for . . . geography has at best weak
Existing Perspectives and Their Limitations 11
direct effects.”28 Even stronger conclusions appear in William Easterly and

Ross Levine’s essay “Tropics, Germs, and Crops: How Endowments Influ-
ence Economic Development.” These authors find that geographical endow-
ments “do not explain economic development beyond the ability of endow-
ments to explain institutional development.”29 Geographical effects simply
disappear once controls for institutional variables are introduced. The key
overall implication is that geography appears to shape levels of development
indirectly, by working through institutional variables. Scholars of long-run
development therefore need to ask about the ways in which particular nat-
ural endowments promote or hinder specific kinds of institution building.
Geographical features may be relatively timeless, but their effects on insti-
tution building are not. The same geographical features can have very dif-
ferent – even opposite – effects on institutional development, depending on
the historical epoch in which they are situated. One reason why historical
context makes a difference is, of course, changing technology. For instance,
John Luke Gallup, Jeffrey D. Sachs, and Andrew D. Mellinger point out:
In early civilizations, when transport and communications were too costly to sup-
port much inter-regional and inter-national trade (and virtually any oceanic trade),
geographical advantage came overwhelmingly from agricultural productivity rather
than from access to markets. Therefore, early civilizations almost invariably emerged
in highly fertile river valleys such as the Nile, Indus, Tigris, Euphrates, Yellow, and
Yangtze rivers. These civilizations produced high-density populations that in later
eras were actually disadvantaged by their remoteness from international trade.30
As technology advanced to favor oceanic commerce, the isolation of river

valleys became disadvantageous to sustaining high levels of economic pro-
ductivity. Similar technology-related arguments have been formulated to
explain why tropical areas tended to perform well before 1500, whereas
temperate areas have been favored in more recent periods.31
The consequences of geography for institution building also vary depend-
ing on the actor that pursues institution building. Actors who seek overseas
trade, for example, may value strategic port locations in a way that overland
traders do not. And changes in a given actor may lead it to react to the same
geography in distinct ways. For instance, whereas soils capable of sustaining
productive family farms may have been of interest to late-eighteenth-century
Spanish colonial settlers in the Americas, this kind of geographical feature
was not of particular note to the Spanish conquistadors who first occupied
the Americas in the sixteenth century. When attempting to understand how
geography shapes institution building, therefore, one must pay attention to
the orientation of the institution builder.
From various literatures, we can begin to draw certain tentative con-
clusions about the implications of specific geographical features – natural
resources, soils, climates, disease environments, and physical location – for
institutional creation. Starting with natural resources, we may note that anal-
yses of the “Dutch disease” suggest that countries with abundant resources –
hard-rock minerals, timber, and especially petroleum – grow at slower rates
than their resource-poor counterparts.32 Some of these arguments maintain
that an institutional mechanism is the culprit: resource abundance fosters
rent-seeking states that engage in corruption and poor economic manage-
ment.33 These arguments are relevant to the present study because colonial
authorities and settlers were often attracted to regions rich in scarce natural
resources. One can reasonably hypothesize that the extent of these resources
affected the ways in which colonizers pursued settlement and organized the
colonial state. This is true even though the specific resources of interest likely
differed across time and across colonizers.
Regional differences in climate and soil are associated with varying poten-
tials for pursuing profitable agriculture, which in turn can influence institu-
tion building. More tropical environments, for example, pose difficulties for
crop production due to a host of ecological maladies – poor soils, pest prob-
lems, lack of water, and unfavorable temperatures and seasons. On average,
more temperate regions achieve significantly greater yields for staples such as
cereals, maize, roots, and vegetables.34 In work on Latin America, these dif-
ferences have been called upon to explain the higher levels of development in
the more temperate Southern Cone region of Argentina, Chile, and Uruguay.
For instance, John Luke Gallup, Alejandro Gaviria, and Eduardo Lora find
that in Latin America, “the four tropical zones have the lowest GDP per
capita, clustered around $5,000 (in 1995 dollars), except for the highlands
at $4,343. The three temperate regions in the Southern Cone . . . have much
higher income, averaging from $7,500 to $10,000.”35 In a similar vein,
Stanley L. Engerman and Kenneth L. Sokoloff argue that contrasting kinds
of soil and climate are associated with different potentials for economies
of scale. They emphasize “the suitability of the climate and soils for the
cultivation of sugar and other highly valued commodities that embodied
economies of production in the use of slaves.”36 Regions with climate and
soils appropriate for export plantation agriculture, they argue, are especially
likely to be subject to a mode of institution building that promotes inequality
and inhibits socioeconomic progress.
Undeniably, there is an association between temperate zones and greater
development and between tropical zones and lesser development in many
regions of the world, Latin America included. Likewise, there is no gainsay-
ing that variables related to other aspects of climate are correlated with devel-
opment in Latin America and elsewhere. But are these relationships causal in
nature? It is the position of this book that they are not: geographic conditions
are strongly associated with an antecedent factor, and this antecedent fac-
tor – much more than geographically determined agrarian potential itself –
gives rise to the institutions that drive levels of development. The association
between geography and institution building is thus a by-product of a more

fundamental historical cause.
The more fundamental cause in question is the institutional organization
of precolonial societies. The varying institutional forms that these societies
assumed were not equally distributed across different geographic settings.
Rather, precolonial societal institutions were correlated with geography.
Ironically, given their agrarian characteristics, prosperous precolonial soci-
eties with highly differentiated institutions tended to be located in tropical
regions that did not feature optimal conditions for agriculture, especially
European crops. Smaller, poorer precolonial societies with less differenti-
ated institutions, by contrast, were often located in those regions with the
best (from a European perspective) geographic conditions. In turn, I contend,
differences in the organization of indigenous societies shaped the extent and
form of European institution building during colonialism independently of
geographical conditions. This argument is supported by statistical models
that simultaneously control for precolonial population size and a large range
of geographic variables related to agricultural productivity; these models find
little or no effect for geography on institutions.37 Moreover, the historical
evidence presented below shows that socioeconomic development in colo-
nial regions did not depend primarily on agricultural potential. Countries
that had similar agricultural endowments (e.g., Nicaragua and Costa Rica)
sometimes turned out quite differently; likewise, countries with quite differ-
ent agricultural settings (e.g., Colombia and Paraguay) sometimes ended up
with broadly similar levels of socioeconomic development.
Tropical and temperate areas vary in their so-called disease climates, and
some scholars hypothesize that this variation drives contrasts in institutional
effectiveness. Daron Acemoglu, Simon Johnson, and James A. Robinson use
data from Philip D. Curtin’s work on soldiers, bishops, and sailors stationed
in different colonies to measure the potential risks of mortality for colonial
settlers.38 In many colonial situations, Europeans were especially vulnerable
to death from malaria and yellow fever, diseases that were not usually fatal
for the indigenous population. Europeans had access to information about
the propensity of these diseases and may have taken it into consideration
when making decisions about where (and whether) to settle. Given this,
Acemoglu, Johnson, and Robinson hypothesize that the mortality environ-
ment was a key cause of the extent of European settlement, and that, in
turn, the degree of European settlement had powerful effects on the kinds
of institutions that were established in the colonies.
Yet as an empirical matter, there are a great many exceptions to the argu-
ment that European colonists chose not to settle in high-mortality environ-
ments.39 Most notably, during the first two centuries of Spanish colonialism
in the Americas, Europeans lived mainly in tropical areas, such as Peru and
Mexico, that featured high-mortality environments. Territories with more
favorable disease climates were comparatively unoccupied by the Spanish.

In their most recent work, Acemoglu, Johnson, and Robinson stress pre-
colonial urbanization and population density as the fundamental causes
of variations in colonial institutional establishment.40 In this newer work,
mortality environment is relegated to the status of an indirect effect.
Finally, we may note that geography affects access to markets, which can
shape the capacity of a territory to engage in trade. The most obvious reason
is the cost of transporting goods to potential consumers, which is influenced
by spatial proximity to markets, local landscape, and the presence of a sea
or navigable river. For would-be institution builders, these kinds of factors
figured as prominent considerations. Since the earliest conquest civilizations
were founded, geographies that allow access to markets have been chosen
as sites of settlement and institutional establishment. Even today, certain
geographic features that deny access to markets, such as being a landlocked
country, are associated with lower levels of development. Hence, we would
be wise to pay attention to the effects of geography on market accessibil-
ity. But we should also be aware that these effects might vary across time
depending on the types of commerce and specific organizations of inter-
regional economies. The kind of geography that provides superior access
to commercial opportunities is likely to change in conjunction with new
technology and the evolution of economic organization.
Any adequate explanation of long-run development needs to be attuned
to the effects of geographic variables. Yet these effects are indirect, exerting
themselves only or primarily through mediating institutions. Consequently,
in the analysis below, I will take geography quite seriously, but I will do so
with the goal of understanding how it shapes the establishment of colonial
institutions, rather than by trying to make a direct link between geography
and development. And in analyzing the impact of geography on colonial
institutions, I will avoid any mono-causal geographic determinism; other
factors, including demographics, preexisting institutions, and changes asso-
ciated with world-historical time, also shape institutional outcomes.
Institutional Perspectives: The Advantages

of a Distributional Approach
Most work on levels of national development now emphasizes institutional
variables as partially or fully explaining these levels. And despite other dif-
ferences between institutionalists associated with alternative schools, most
scholars define institutions in broadly similar ways.41 They see institutions as
rules or generalizable procedures that provide a guide for behavior and that
promote predictable patterns of interaction (whether consensual or conflict-
ual).42 To have effect, these rules and procedures assume the form of ideas,
memory traces, or “schemas” that exist in people’s minds as knowledge
about how to behave. When written down and codified, institutions are
“formal”; otherwise, they exist informally – sometimes unconsciously – as

information carried by individuals. Consensus thus exists that, minimally,
institutions (1) consist of formal or informal rules, (2) offer a guide to behav-
ior, and (3) are consciously or unconsciously known by individuals in a given
population.
The real differences among alternative institutional approaches concern
the hypothesized consequences of institutions, not their definition. To put
these differences into sharp relief, two ideal-typical orientations can be delin-
eated. One approach sees institutions as coordinating devices that solve
collective action problems and that help individuals realize mutual gains.
This is a common orientation among scholars who take free-rider problems
as the norm and see institutions as generating cooperation by imposing
humanly made constraints on self-interested individuals.43 The alterna-
tive approach views institutions as distributional instruments that allo-
cate resources unevenly and thereby help constitute asymmetrical collective
actors. This orientation puts considerations of power front and center by
emphasizing distributional conflict among aggregate actors as a basic driving
force in history.44
My purpose in drawing this contrast is not to suggest that all institu-
tions or any given institution must either promote coordination or exhibit
distributional consequences. But nor is it to stake out neutral ground and
argue that the two approaches need to be combined in a coequal synthesis.
Rather, I want to take sides and insist that institutions are first and foremost
distributional instruments and only secondarily coordinating mechanisms.
Conceptions of institutions as constraints that generate cooperation, I argue,
need to be subsumed within a power-distributional approach if institutional
effects are to be correctly modeled. Three sets of considerations suggest why
this argument must be made.
In the first place, many institutions do not solve collective action prob-
lems and deliver public benefits, but all institutions do have distributional
effects. Institutions invariably shape distributional outcomes because human
behavior cannot be regulated in ways that affect all equally. Individuals and
groups inevitably enter into social interactions with different endowments
of resources, and these differences ensure that any given set of rules for pat-
terning their action will have unequal implications for subsequent resource
allocations, no matter how justly the institutions are designed. Even institu-
tions that are expressly designed to promote fairness and democracy, such as
one vote per person in elections, differentially benefit individuals depending
on their resources (e.g., levels of education or wealth). Likewise, seemingly
neutral institutions – such as language or the rules that govern day-to-day
codes of appropriateness – privilege some actors (e.g., those with better cul-
tural skills) more than others. Moreover, of course, many institutions are
created with the very purpose of distributing resources to particular kinds
of individuals. The reward systems built into economic institutions such as
job markets are a case in point, but the same is true of countless other social
and political institutions: their intended function is to reward (or punish)
individuals with particular characteristics. The uneven distributional con-
sequences of institutions are undeniable and are precisely why institutional
upholders normally must use the threat of sanctions to achieve compliance
among those whose behavior they regulate.45
The view of institutions as generating mutual gains is challenged by the
fact that many institutions – especially outside of the marketplace – are
inefficient.46 Myriad reasons account for this inefficiency (e.g., poor infor-
mation, the short time horizons of actors, and lock-in via path dependence),
but the most basic one is related to the distributional consequences of institu-
tions. In the words of Jack Knight, “Institutions may or may not be socially
efficient: it depends on whether or not the institutional form that distribu-
tionally favors the actors capable of asserting their strategic advantage is
socially efficient.”47 Actors are not motivated to modify socially inefficient
institutions so long as those institutions deliver disproportionate benefits to
them. To achieve self-gain, in fact, actors may seek to destroy institutions
that sustain public goods and that promote coordination by replacing them
with ones that reduce coordination and collective benefits. They will succeed
if they have sufficient resources to do so.
In the second place, a distributional approach directs attention to issues
of conflict and power – issues that are essential for valid explanation but
that remain hidden so long as institutions are characterized as coordinat-
ing devices. Institutional forms, rooted in their unequal allocations, always
embody an objectively identifiable conflict. In many cases, to be sure, the
conflict is only latent. Perhaps the power of one group relative to others
is so great that the disadvantaged actors must passively acquiesce in the
face of an inescapable status quo. Or perhaps institutions have, over time,
become reified and thus viewed as inherent features of the world. Even
when not taken as such inevitabilities, most institutions will tend toward
stability because they disproportionately distribute resources to actors who
are already powerful, reinforcing their position and better enabling them
to uphold the arrangements from which they already gain. This is one rea-
son why abrupt institutional change, unlike gradual change, is difficult and
often requires transformations in the relative balance of power between
advantaged and disadvantaged actors.48 And when such change does occur,
it may well take a shape that is unforeseen and unintended. As Knight
emphasizes:
Social institutions are the by-product of strategic conflict over substantive social
outcomes. By this I mean that social actors produce social institutions in the process
of seeking distributional advantage in the conflict over substantive benefits. In some
cases they create institutional rules consciously, and in other cases the rules emerge
as unintended consequences of the pursuit of strategic advantage.49
When employing an institutional approach, therefore, it is essential to treat

institutions as the objects of contestation among actors differentially impli-
cated in their resource allocations. Only this perspective can capture the
prominent role that power and conflict play in actual patterns of institu-
tional formation and change.
In the third place, a distributional approach to institutions has advantages
over a coordinating approach because it allows one to properly situate the
coordinating effects of institutions as outcomes of distributional processes.
From this perspective, institutions coordinate behavior among individuals
because of their distributional effects. Individuals are commonly advan-
taged or disadvantaged by multiple institutions that reinforce one another.
A shared position as privileged (or not) within institutional complexes pro-
vides a basis for subjective identification and coordinated collective action.50
The existence of institutions that place whole groups of people in objectively
similar positions with respect to the allocation of resources is, in fact, what
allows us to talk meaningfully about collective actors such as states, classes,
and ethnic groups. The behavior of these collective actors, in turn, is what
gives institutional complexes their causal efficacy. The challenge for ana-
lysts of institutions is thus to identify the collective actors that are born out
of institutional resource allocations. For these collective actors (perhaps in
conflict with one another) are likely to be the forces that carry forward the
effects of institutions on outcomes of interest, including new institutional
arrangements.
Colonial Institutions as Long-Run Causes

Having introduced the basic orientation to institutions that is used in this
book, let us now look at work on specifically the colonial-institutional
causes of levels of development. Here it is instructive to center the dis-
cussion on two enormously influential articles by Acemoglu, Johnson, and
Robinson.51 This focus is appropriate because these authors propose a “gen-
eral theory” of colonialism and development – that is, a broadly conceived
argument that seeks to elucidate causal patterns applicable to all former
European colonies. Many other works on colonialism and development, by
contrast, do not formulate general theories. Some are primarily interpre-
tive rather than explanatory, such as D. K. Fieldhouse’s magisterial The
Colonial Empires: A Comparative Survey from the Eighteenth Century; and
some focus on one particular region, such as Crawford Young’s The African
Colonial State in Comparative Perspective. Still other excellent books derive
major lessons about colonialism and development from comparative case
studies, such as Atul Kohli’s State-Directed Development: Political Power
and Industrialization in the Global Periphery and Jonathan Krieckhaus’s
Dictating Development: How Europe Shaped the Global Periphery.52 The
insights of these rich works will be drawn upon in this analysis. But for
the purpose of showcasing what is distinctive about the general arguments

proposed here, a contrast with Acemoglu, Johnson, and Robinson’s theory
is most enlightening.
Building on North’s celebrated work on economic growth, Acemoglu,
Johnson, and Robinson see institutions that guarantee property rights as the
fundamental cause of long-run development. Property rights induce devel-
opment by promoting markets (i.e., opportunities to exchange commodities
and services), and the authors measure them as protection against the risk of
expropriation. When the risk of expropriation is low, economic actors have
greater incentives to invest and exchange, and their self-interested behavior
becomes coordinated in predictable, market-oriented ways. Interestingly,
however, the specific institutions that guarantee or constitute property rights
are themselves not well defined in this argument. These institutions are
called “the institutions of private property” and are contrasted with “extrac-
tive institutions,” but they are never actually specified concretely.53 Adam
Przeworski makes the point forcefully: “As invoked by this literature, the
concept of ‘secure property rights’ is just a muddle.”54 What is more, Ace-
moglu, Johnson, and Robinson assume that European colonizers are effec-
tively marked by identical institutions, all sharing functional property rights.
This is why they insist that “it is not the identity of the colonizer . . . that mat-
ters” when evaluating the effect of colonialism on long-run development.55
This is also why they believe that when Europeans pursue “settler colonial-
ism,” they invariably establish effective property rights, and that it is only
when Europeans do not physically settle a colonial territory that extractive
institutions predominate.
If we are to develop a compelling theory of colonialism and development,
however, it will not do to pretend that all European colonizers are insti-
tutionally identical in their possession of property rights. In actuality, the
degree to which European colonizers are marked by capitalist institutions
and property rights varies a great deal. As Acemoglu, Johnson, and Robinson
themselves make clear in other work not focused on colonialism, one can
readily distinguish European powers after 1500 according to the extent to
which royal power was checked and commercial interests were politically
influential.56 These kinds of institutional differences are obviously poten-
tially consequential because they may shape the nature of the institutions
that the colonizing powers bring to their colonies. Most basically, Euro-
pean colonizers that are not characterized by effective market institutions
are unlikely to implant capitalist institutions in their colonies, even when
they pursue large-scale settlement.
Nor does it suffice to leave undefined the concrete colonial institutions
that actually drive long-run development (or to speak of them vaguely as
“property rights” and “extractive institutions”). As one critic of Acemoglu,
Johnson, and Robinson pointedly asks, “Is the dichotomy between extrac-
tive institutions and private property enough to explain the diversity of
situations found in the developing world?”57 Problems with the sweeping

generalizations in Acemoglu, Johnson, and Robinson’s work are disguised
by the reporting of results in an article-length format that only superficially
engages the historiography. “Its references to history are broad and lack-
ing in details about actual ‘historical facts’; in their interpretations [they]
include very few historical data, sequence analysis or detailed contextual
studies.” As a result, they “take for granted the existence of a reality which,
in many cases, has been challenged by historical studies.”58 Clearly, how-
ever, to explain development outcomes, any historical-institutional theory
of colonialism worthy of the name must be compatible with the empirical
records of the individual countries when analyzed in some detail.
What is needed, then, is a truly historically grounded analysis of the con-
crete colonial institutions that shape long-run development. While the best
way to identify and describe such institutions is through the close appraisal
of real cases, we can nevertheless make some general remarks about fruit-
ful directions to be pursued. For one thing, in line with our distributional
approach, institutions that produce hierarchical forms of domination are
nearly always of great importance. Laws that regulate access to labor and
land, as well as cultural institutions that control access to social status,
have these effects.59 Thus, attention must turn to colonial rules for securing
indigenous labor, for assigning land rights, and for designating local politi-
cal power holders. These institutions often connect ethnoracial categories to
patterns of resource allocation; they can make ethnic identities into highly
enduring axes of contention for the people designated by the identities. The
consequence for development may be especially grave when a large portion
of the overall society is excluded, on the basis of their ethnoracial identity,
from the fruits of economic prosperity.
In terms of state institutions, we need to look at those rules and associ-
ated patterns of action that promote (or block) “the perception of invest-
ment opportunities and their transformation into actual investments” – what
Albert O. Hirschman calls simply “entrepreneurship.”60 These state insti-
tutions might be referred to as “property rights,” if one wishes, but they
involve primarily rules that coordinate investment, not primarily rules that
protect against the risk of expropriation, the latter being what is measured
by Acemoglu, Johnson, and Robinson.61 Emphasizing investment opportu-
nities helps us better understand why familiar market institutions such as
trade quotas, production regulations, and price controls affect development.
These can stifle entrepreneurship without raising any risk of expropriation.
Moreover, a focus on investment opportunities helps us see more clearly
how commercial opportunities (or commercial obstructions) are constitu-
tive of actors with certain kinds of interests. For the most important long-
run effect of state institutions that regulate the market is not to constrain
the choices of individuals with unchanging preferences. Rather, the criti-
cal consequence is the very creation of powerful collective actors oriented
toward certain outcomes and not others. Most crucially, institutions foster-
ing investment opportunities bring into being commercial classes, even in
situations of colonial rule. When trade opportunities are enhanced, actors
with adequate capital and connections to markets may be converted into
the equivalent of a colonial bourgeoisie. Alternatively, hefty constraints on
the colonial market may foster monopolistic elites with vested interests in
commercial obstructions. And the extent to which either a colonial bour-
geoisie or a market-obstructing elite is constituted can have consequences
for development long after the colonial institutions that originally brought
them into being have ceased to exist.
In sum, a historically grounded institutional theory of colonialism and
development needs to examine how specific institutions and institutional
complexes put whole groups of individuals in similar positions vis-à-vis
the flow of resources. From these common positions, collective actors are
born. These actors may then become critical forces in shaping productive
activity and development outcomes, even long after the demise of the original
institutions from which they were first assembled.
a general theory of colonialism and development

The general theory presented in this section outlines hypotheses for explain-
ing variations in both levels of colonialism and levels of postcolonial devel-
opment. The hypotheses are developed through a chain of reasoning focused
around four arguments. First, in distinct contrast to other recent work on
colonialism and development, I hold that the institutional composition of
the European colonizers – in particular, the institutions that constitute their
political economies – needs to be a center of attention. Second, I suggest
that in order to conceptualize how territories differentially experience insti-
tution building during colonialism, we must analyze their contrasting levels
of colonialism. Third, to identify the origins of differing levels of colonialism,
I emphasize the institutional organization of the indigenous population at
the onset of colonialism. Finally, for understanding the causal consequences
of differing levels of colonialism for long-run development, I stress above
all else the ways in which colonial institutions constitute particular elite
economic actors and define societal ethnic cleavages.
These arguments fit together nicely to form a single overarching theory
of colonialism and development. But to see exactly how, it is essential to
elaborate each argument in turn.
Mercantilist versus Liberal Colonizers

The European nations that engaged in overseas colonialism during the mod-
ern era – Belgium, Britain, France, Germany, Italy, the Netherlands, Por-
tugal, and Spain – were not institutionally identical. And their institutional
General Theory of Colonialism and Development 21
differences affected the ways in which they pursued colonialism, with large
consequences for long-run development. For our purposes now, we will do
best if we generalize about macro-institutional differences and similarities
among the European colonizers and leave the details to the case analyses
in subsequent chapters. To make these generalizations, it is instructive to
examine the overall political economies of the colonizing European powers.
From Adam Smith and Karl Marx to Douglass North and Immanuel
Wallerstein, scholars have distinguished alternative kinds of political-
economic systems by asking basic questions about state activity in the eco-
nomic realm. Among these animating questions are the following: (1) To
what extent is the state oriented toward maximizing immediate consump-
tion versus investing in long-run accumulation? (2) How heavily does the
state regulate economic activity? (3) Does the state support an official system
of socioeconomic stratification? By treating these questions as typological
dimensions, we can distinguish two ideal-typical political economies that
characterized European colonizers: mercantilist and liberal (see Table 1.3).
Under a mercantilist political economy, state authorities seek national
economic self-sufficiency and organize productive activity to ensure favor-
able trade balances and the accumulation of precious metals.62 They are
centrally concerned with maximizing wealth generation in the short run to
meet their hefty immediate consumption imperatives. The key institutions
they wield are a series of restrictions on trade, on property ownership, and
on economic and political participation. These “statist” regulations have
major distributional consequences, providing rents to certain groups and
denying privileges to others.63 The principal beneficiaries are an aligned set
of political and economic elites, the latter including monopolistic merchants
and wealthy landed classes. These elites sit atop and actively uphold a rigidly
hierarchical society in which the vast majority cannot advance.
By contrast, under a liberal political economy, state authorities allow
economic actors to control and use surplus capital for the purpose of
Table 1.3. Types of political economies
Mercantilist Liberal
Accumulation Orientation Promotion of economic Promotion of international

self-sufficiency; comparative advantages;
short-run consumption long-run investment
State Regulation More restrictions on Fewer restrictions on trade,
trade, ownership, and ownership, and economic
economic participation participation
Stratification System Status-group hierarchy; Market-based class
patrimonial stratification; capitalist
state-economic elite elite
stimulating comparative international advantages and long-run accumu-

lation. Entrepreneurial investments that seek to upgrade technology and
achieve competitiveness in open markets are characteristic and encouraged.
To provide the appropriate incentives, moreover, a liberal state works to
ensure law and order and to protect trade and production for profit; it
avoids the most severe restrictions limiting and regulating commercial inter-
ests.64 And the market is the main tool for shaping stratification; institu-
tions that explicitly privilege status groups and impose hierarchical relations
of dependence are discouraged. Nevertheless, the stratification that results
from market institutions can entail as much inequality as under mercantilist
arrangements, or more.
These definitions are not the only ways in which the terms mercantilist and
liberal have been employed, to be sure. Mercantilism is sometimes used as
an encompassing description of non–laissez-faire economic policy in Europe
from the fifteenth century through the nineteenth. With this broad definition,
what I call mercantilism could be thought of as “classical mercantilism,”
and what I call liberalism could be recast as “enlightened mercantilism.”
Yet this approach runs the risk of stretching the concept of mercantilism to
include virtually all modern political-economic systems. For its part, the idea
of a liberal political economy is similar in meaning to “capitalist political
economy.” Capitalism, however, is often understood as a mode of produc-
tion defined by free wage labor, and possibly also industrialism, which is
not my main concern in differentiating European colonizers. In addition,
by some definitions, mercantilism is itself a type of capitalist production,
which makes it impossible to contrast mercantilism to capitalism. For these
reasons, I adopt the labels mercantilist and liberal political economies and
define them as in Table 1.3.
Mercantilism as a political economy characterized European colonizers
primarily during the first two centuries of colonialism, from the fifteenth
century through the seventeenth, when Spain and Portugal took sovereignty
over the bulk of the New World. Thereafter, all European nations rapidly
or gradually moved toward liberal political economies, especially as British
hegemony replaced Spanish dominance in the European states system and as
worldwide capitalism gained momentum. Even Spain and Portugal evolved
toward liberalism during the course of their overseas colonial projects. Such
evolution underscores how, analytically speaking, the key issue is not which
European nation pursues colonialism, but rather the kind of political econ-
omy of that European nation at the time of its colonial project. One cannot
adequately “control” for the identity of a European colonizer simply by rec-
ognizing its national identity (e.g., Spain or Britain); rather, one needs to be
attentive to the actual institutional features of the European nation, which
may change over time.65
Distinguishing mercantilist and liberal political economies in European
history is nothing new; the contrast, perhaps under different labels, has long
been an implicit or explicit point of reference in macropolitical inquiry. What

is new is the contention that these different political economies are essential
for explaining the causes and consequences of colonialism. To develop this
argument further, we need to introduce the concept of level of colonialism.
Level of Colonialism
Level of colonialism refers to the extent to which a colonizing power installs
economic, political, and sociocultural institutions in a colonized territory.
The concept is intended to capture the relative degree to which a coloniz-
ing nation imposes – often in significantly modified ways, obviously – fea-
tures of itself on a colonized territory. Such a focus is warranted because, as
J. A. Hobson wisely noted, the most basic test of colonialism is “the power of
colonists to transplant the civilization they represent to the new natural and
social environment in which they find themselves.”66 Colonization inher-
ently entails settlement and institutional transplantation, and differences in
the extent to which such processes occur reflect fundamental differences in
colonialism itself. When generalizing about the overall level of colonialism
in a given territory, it is relevant to consider a broad range of institutions
and their associated organizations, including political arrangements (e.g.,
forms of government, policing units, and courts), modes of economic activity
(e.g., labor systems, trade policies, and types of agriculture), and sociocul-
tural conventions (e.g., religious doctrines, entertainment venues, and family
structure). Although these diverse institutions define level of colonialism in
general, for explanatory purposes we will pull out those that are especially
consequential for postcolonial levels of economic and social development.
The concept of level of colonialism can be related to other efforts by schol-
ars to distinguish forms of colonialism. Some analysts, for example, have
focused on the extent of European settlement that accompanies colonialism.
This measure is correlated with level of colonialism: more settlement usually
means more institutional implantation. Other scholars have distinguished
between direct and indirect forms of colonialism,67 between settler and
extractive colonialism,68 and between center and peripheral colonialism.69
Although such distinctions may be useful for particular colonial situations,
they cannot always be extended across the full range of European coloniz-
ers. The contrast between direct and indirect colonialism applies reasonably
well to the British colonies, where this difference was formally codified,
but it is awkward for the Spanish colonies in the Americas, which tend to
blur the two categories. Likewise, settler and extractive colonialism were
not mutually exclusive modes in Spanish America. Conversely, the idea of
center versus periphery works well for the Spanish colonies, where a single
colonial system existed, but it is problematic to use when classifying the dis-
parate British colonies, which were spread around the globe and colonized at
different world-historical times. In short, while other distinctions are useful
and indeed will appear in the analysis below, for the purposes of building
a general theory, the concept of level of colonialism has the advantage of
allowing systematic comparison across the full range of colonial experiences.
Causes of Levels of Colonialism

In any given colonized territory, the causes of level of colonialism are rooted
in the interaction of a particular type of European society and a partic-
ular type of precolonial society. As we have seen, European societies can
be classified as mercantilist or liberal, according to their dominant political
economy. But how shall we characterize the indigenous societies that these
mercantilist and liberal powers colonize? For explanatory purposes, I sug-
gest, they are best compared and categorized according to their own level
of institutional complexity. A focus on institutional complexity is fruitful
because it calls attention to those features of indigenous societies that Euro-
pean powers consider most relevant when making decisions about how to
pursue colonialism. The institutional complexity of the precolonial society
powerfully shapes the extent to which colonizers believe it is feasible and
desirable to impose their institutions and people.
A precolonial society’s politics, economics, and culture are all relevant
when judging level of institutional complexity. As Table 1.4 suggests, the
least complex societies include what anthropologists traditionally called
bands and tribes, or what are often referred to as hunting-gathering, herd-
ing, and horticultural societies.70 Politically, these are pre-state societies,
with decentralized and nonbureaucratic decision-making institutions. Eco-
nomically, they lack a significant division of labor and organize production
into relatively nonspecialized activities – mainly hunting, gathering, fishing,
Table 1.4. Types of precolonial societies
Lower complexity Intermediate complexity Higher complexity
Political Decentralized and Centralized but Centralized and

Institutions nonbureaucratic nonbureaucratic bureaucratic
Economic No significant Some division of labor; Significant division of
Institutions division of labor; limited or no slavery; labor; large-scale
no slavery; no semi-intensive slavery; intensive
intensive agriculture agriculture
agriculture
Sociocultural Single ethnicity Single ethnicity and Multiple ethnicities
Institutions and language; language; class- and and languages;
kin-based residence-based class- and
relations; religion relations; religion used residence-based
not a central for rule relations; religion
basis for rule used for rule
and perhaps semi-sedentary agriculture. Socioculturally, they are marked by

a small population with a homogenous ethnicity and a single language; kin-
based relationships; frequent mobility; and the absence of formal religion,
central authority, and systematic labor exploitation.
By contrast, precolonial societies that have a high level of institutional
complexity have been described as “proto-states,” “states,” “historical
bureaucratic societies,” or “advanced civilizations.”71 Political institutions
in these societies are marked by centralized authority and multiple layers
of patrimonial-bureaucratic governance. In the economic sphere, they orga-
nize intensive agricultural production with an advanced division of labor,
normally based at least in part on slavery. Their sociocultural institutions
stratify large populations in the thousands and sometimes millions across
ethnic, class, and residence divides. In addition, sociocultural institutions –
including religion – are used to generate political legitimacy and rationalize
inequalities.
Finally, precolonial societies with intermediate levels of institutional com-
plexity are classified as “chiefdoms” or “advanced horticultural societies”
in the social science literature.72 They feature centralized but nonbureau-
cratic authority structures in the political realm; some division of labor,
settled agriculture, and tribute collection in the economic realm; and ethnic
and language homogeneity alongside class and residence stratification in the
sociocultural realm. Individual chiefdoms often encompass several thousand
people, but never as many as one hundred thousand.
The level of institutional complexity of a society is causally consequential
because it affects the prospects of specifically economic accumulation for
European colonizers. To be sure, diverse factors lead European nations to
choose to colonize particular territories at particular times, including nation-
alism, population growth, religion, and the politics of the day.73 Among
the factors that influence the onset of colonialism, economic considerations
arguably play a secondary role. Once European nations choose to impose
colonialism in a given territory, however, the extent to which they do so is
shaped primarily by economic considerations. Even if political authorities
and settlers show appalling ignorance of the societies that they colonize,
they still do notice and pay very careful attention to the size and institu-
tional complexity of these societies. It is these societal features that allow
them to assess the immediate or potential economic returns that extensive
colonialism might bring. Unless extraordinary circumstances apply, Euro-
pean colonizers do not pursue extensive colonial institution building in the
absence of such economic returns.
Taken together, knowledge of the political economy of a colonizing nation
and knowledge of the institutional complexity of a precolonial society pro-
vide a basis for predicting level of colonialism. As Figure 1.1 suggests, mer-
cantilist and liberal colonial powers pursue different levels of colonialism in
territories marked by similar levels of institutional complexity.
COLONIZER INSTITUTIONS
Higher Higher Level Lower Level

Complexity of of
Colonialism Colonialism
PRECOLONIAL
INSTITUTIONS
Lower Lower Level Higher Level
Complexity of of
Colonialism Colonialism
Figure 1.1. Predicted Levels of Colonialism
Mercantilist powers pursue higher levels of colonialism in comparatively

more complex precolonial regions. They do so because more complex indige-
nous societies provide them with excellent opportunities for economic gain.
Especially because of their orientation toward consumption and immedi-
ate accumulation, mercantilist powers are drawn toward extensive colo-
nialism in large, densely settled precolonial societies that feature a tribute-
collecting state and a hierarchically structured economy with coercive labor.
In these societies, authorities and settlers can seize existing state-led surplus-
extraction networks and employ already-developed coercive labor systems
for the purpose of rapid resource extraction. In effect, the political economy
of complex indigenous societies is familiar to mercantilist colonizers and
(broadly) congruent with their own patterns of economic allocation found
at home.74 Hence, in colonial areas with a complex indigenous society, we
expect to see significant mercantilist activity, including the growth of a large
settler population and the introduction of institutionalized ways of life from
the metropolis.
When mercantilist powers encounter regions with comparatively less
complex indigenous societies, they engage in lower levels of colonialism.
Hunter-gatherer and semi-sedentary societies provide fewer opportunities
for exploiting indigenous labor and for seizing existing tribute-extraction
networks. The problem with these societies is not only that resource extrac-
tion requires the introduction of completely new patterns of authority and
production. Rather, it is also that less complex societies tend to more actively
resist incorporation into coercive economic structures and hierarchical strat-
ification systems. Given that mercantilists are not oriented toward economic
activities that require a long-run investment, therefore, they may be pre-
disposed to ignore (relatively speaking) their colonial possessions with less
complex indigenous societies.
Conversely, liberal economic powers pursue lower levels of colonialism

in more complex precolonial regions and higher levels of colonialism in
less complex regions. More complex precolonial regions feature entrenched
precapitalist institutions, and these institutions make it difficult for lib-
eral colonizers to achieve market-based accumulation. A patrimonial state,
entrenched precommercial agriculture, and multiple ethnicities within a
densely populated polity – all of these are viewed as obstacles to efficient
production and accumulation. Again, the problem is not only that the basic
economic start-up costs of attempting to fundamentally transform a large
and complex indigenous society are prohibitively high; it is also that the
indigenous population may actively resist the colonial imposition of unfa-
miliar forms of economic activity. When confronted with a complex civi-
lization that cannot easily be dislodged, then, liberal colonizers implant only
a limited range of institutions and a small number of settlers.
Precolonial regions with hunter-gatherer or semi-sedentary societies, for
their part, can be more readily displaced or destroyed to make way for the
introduction of liberal institutions that facilitate long-run accumulation for
the European nation and its settler population. Like their mercantilist coun-
terparts, certainly, liberal colonizers view less complex indigenous societies
as obstacles to be removed; they are not attracted to territories with these
societies because their populations can be profitably exploited. Instead, lib-
eral colonizers are drawn to these regions because they can be completely
overwritten with new institutions. In sparsely populated areas with less com-
plex indigenous societies, the preexisting order can be almost entirely elim-
inated, allowing for the installation of institutions that replicate and even
improve upon those in the metropolis. Hence, liberal powers may heavily
settle and significantly impose institutions in their colonial possessions with
less complex indigenous societies.
Consequences of Levels of Colonialism

Level of colonialism is important in its own right as an outcome to be
explained. But in this study, level of colonialism is also of interest as a cause
of postcolonial development. Two variables in particular – level of colonial-
ism and the political economy of the colonizer – jointly produce postcolonial
levels of socioeconomic development (see Figure 1.2). Level of mercantilist
colonialism is negatively related to postcolonial development, whereas level
of liberal colonialism is positively related to postcolonial development. To
understand why these relationships make good analytic sense, something
more needs to be said about the specific institutions and actors that accom-
pany the mercantilist and liberal modes of colonialism.
Within their most important colonial possessions, mercantilist powers
impose restrictions on economic participation and grant exclusive rights to
privileged merchants. They also construct or uphold coercive labor systems
COLONIZER INSTITUTIONS
Lower Level Higher Level

Higher of of
Development Development
LEVEL OF
COLONIALISM
Higher Level Lower Level
Lower of of
Development Development
Figure 1.2. Predicted Levels of Postcolonial Development
and sociocultural conventions that define different and unequal ethnora-

cial categories. As a consequence, higher levels of mercantilist colonialism
leave behind powerful commercial actors who enjoy and seek to preserve
monopoly rights while stifling those who might stimulate investment and
profits through exchange in open markets. The monopolistic colonial mer-
chants are, furthermore, likely to be closely aligned with landed interests who
control dependent labor – actors who are also not oriented or positioned to
promote long-run economic development. Powerful coalitions of antimar-
ket actors can thereby be expected to come into being and operate as road-
blocks to development once the artificial colonial supports are torn down.
Meanwhile, the labor and cultural institutions of extensive mercantilist colo-
nialism subject the indigenous population (or perhaps an imported worker
population) to systematic deprivation and ensure its long-run poverty. Inso-
far as this group represents a substantial percentage of the total population,
which is the norm under extensive mercantilist colonialism, the social per-
formance of the territory as a whole is greatly compromised.
Less extensive mercantilist colonialism is hardly innocuous and certainly
does not allow a territory to fully escape these calamities. But it does spare
the territory from the most deleterious effects of colonialism. Thus, if a mer-
cantilist power chooses to mostly ignore a colonial area, powerful coalitions
of monopolistic merchants and landed classes will be truncated or absent.
And labor-exploiting institutions will be less extensive, with the possibility
that indigenous people might be actively incorporated into society on some-
thing other than a completely subservient basis. Most importantly, because
mercantilist institutions and actors are weaker, the postcolonial society can
still be relatively easily reconfigured with new institutions and actors. The
“advantage” of lower levels of mercantilist colonialism is, therefore, not
linked to anything positive that colonialism brings. Rather, the damage

done by colonialism is not so extensive as to completely close out future
possibilities for successful development.
In liberal colonialism, the hypothesized pattern is just the opposite: higher
levels of colonialism are associated with higher levels of postcolonial devel-
opment. When liberal colonial authorities heavily colonize an area, they
create institutions that resemble those found in the metropolis. They lay
down coherent administrative, juridical, and police institutions that provide
the basic infrastructure for functioning markets. These institutions empower
a local bourgeoisie from the settler population that is capable of promot-
ing autonomous economic development and also expanding the very state
institutions that constituted it in the first place. A virtuous circle can thus
ensue, one in which effective state institutions and investment-oriented elites
reinforce each other, driving the economy toward ever-higher levels of devel-
opment. Still, there is no cause for a celebration of extensive liberal colonial-
ism. For it does not extend anything approaching full and equal citizenship
rights to all people. And while it does ultimately tend to produce more
homogenous societies with less deeply implanted ethnic hierarchies, it does
so through processes that are socially devastating in the short run – namely,
the physical isolation and/or elimination of the indigenous population.
Unmitigated underdevelopment is the outcome expected when low lev-
els of colonialism are pursued by a liberal colonizer. Less extensive liberal
colonialism introduces problematic governance institutions that define sub-
ordinate groups according to race, region, or religion. For when liberals
indirectly and incompletely rule their colonial territories, they empower
only a small group of elite allies and subordinate all others. While this is
an economical means of controlling large populations, it places most people
in a position of dependency and creates a polarized society in which elites
appeal to ethnicity, ideology, or territorial homeland to bolster their rule
or their claim to power. Indeed, the same indirect-governance institutions
that demarcate subordinate groups usually also define politically privileged
patrons who are charged with imposing order and sustaining legitimacy.
By ensuring that loyal supporters hold monopolies over valued commodi-
ties, limited liberal colonialism breeds politically privileged rent-seeking eco-
nomic elites quite incapable of orchestrating postcolonial development.
Models of Colonialism and Development

Now, finally, all of the pieces of the general theoretical argument can fall
into place. We can summarize the basic argument with three-variable mod-
els for mercantilist and liberal colonialism, presented in Figure 1.3. In the
models, the association between precolonial level of institutional complexity
(variable 1) and postcolonial level of development (variable 3) is ultimately
negative for both mercantilist and liberal colonizers. However, the directions
a. Mercantilist Colonialism
Precolonial Level Postcolonial

Level of + of Level of
Complexity Colonialism Development
b. Liberal Colonialism
Precolonial Level Postcolonial

Level of of + Level of
Figure 1.3. Models of Mercantilist and Liberal Colonialism
of the colonial causal processes (variable 2) that mediate this relationship

are inverted. Thus, for the mercantilist colonies, the absence of precolonial
complexity is an advantage because it leads to less extensive colonialism,
which in turn has comparatively positive effects on long-run development.
By contrast, for the liberal colonies, the absence of precolonial complexity
is an advantage because it produces more extensive colonialism, which has
comparatively positive effects for postcolonial development.
With these models, we can see why colonialism triggered a “great rever-
sal” in levels of economic development.75 Precolonial territories that were
in some sense the most economically advanced – that is, state-like societies –
tended to become the least economically developed postcolonial nations
under both mercantilist and liberal colonialism (though via very different
colonial processes). By contrast, the least economically developed precolo-
nial societies – that is, nonsedentary and semi-sedentary societies – tended to
become the wealthiest postcolonial countries, irrespective of the particular
colonizer.
Although it is not acknowledged in the literature, there was in fact no
great reversal for social development. The more institutionally complex and
“wealthier” precolonial societies were not the most socially developed ones.
Rather, they had lower levels of social development.76 Colonialism rein-
forced this poor social performance by leaving behind large subordinate
ethnic populations. By contrast, individuals living in territories marked by
less institutional complexity (e.g., hunter-gatherer bands) enjoyed, on aver-
age, healthier and longer lives during precolonial periods. The inhabitants
of these territories after colonialism were also better off, not only because
they lived in richer postcolonial societies, but also because these societies
had less rigid, more egalitarian stratification systems.
Precolonial + Level of Postcolonial

Level of Mercantilist Level of
+
+ +
Size of Level of
Indigenous Liberal
Population Colonialism
Figure 1.4. A Model of Mercantilist-Liberal Colonialism
Lastly, the general theory can be extended to accommodate more complex

colonial situations. Figure 1.4 offers an elaborated model in which a territory
is first colonized by a mercantilist power and subsequently by a liberal
one. This “mercantilist-liberal” model is appropriate here because, as we
shall see, Spain evolved from a classically mercantilist power in the sixteenth
and seventeenth centuries to a more liberal (or “enlightened mercantilist”)
power toward the end of the eighteenth century. The mercantilist-liberal
model thus best captures the overall colonial experience in Spanish America.
In this model, the initial step is the link between precolonial level of com-
plexity and level of mercantilist colonialism (following the basic mercantilist
model). The next major step concerns the determinants of level of liberal
colonialism. Since there is no longer any precolonial society in the after-
math of mercantilist colonialism, the model hypothesizes that the size of the
remaining indigenous population (which is positively related to precolonial
level of complexity) and the extent of mercantilist colonialism itself together
shape level of liberal colonialism. The size of the indigenous population in
effect substitutes for the complexity of the precolonial society, and thus it
is expected to be negatively related to level of liberal colonialism. Level of
mercantilist colonialism, however, is hypothesized to be positively related
to level of liberal colonialism. The assumption here is that liberal colonizers
will be more likely to settle and implant institutions in areas where exten-
sive European colonial settlement has already occurred, even if that original
settlement was directed by a mercantilist power. The final key step in the
model holds that level of postcolonial development is the product of both
level of mercantilist colonialism and level of liberal colonialism.
Clearly, the mercantilist-liberal model yields more complicated and less
exact predictions than do models in which only a single type of colonizer
is involved. Level of liberal colonialism, in particular, is affected by two
countervailing forces (size of indigenous population and level of mercantilist
colonialism), which can cancel each other out. Likewise, for explaining
the final outcome of postcolonial development, levels of both mercantilist
and liberal colonialism are crucial, but they work in opposite directions.
Consequently, when conducting the causal analysis of particular cases, we
will sometimes have to supplement this version of the general model with
additional variables – including geographical ones – as suggested in the
earlier discussion of principles for case analysis. The implication is, again,
that the general model is an essential starting point, but it needs to be
augmented with additional insights for adequate historical explanation to
be achieved.
a focus on spanish america

The principles of analysis and general theory developed in this chapter could
be used to explain levels of colonialism and levels of postcolonial develop-
ment among any or all territories that experienced European overseas colo-
nialism. And the argument could be tested in a variety of ways. One obvious
approach would be to pursue a large-N statistical analysis, drawing on the
full range of cases from around the world and identifying quantifiable prox-
ies to stand for the major explanatory factors and other relevant control
variables emphasized here. But that is not the main kind of empirical test
that I employ in this book. Instead, I use a comparative-historical method-
ology that draws on evidence from countries located in a single region and
colonized by a single European nation. Although broader comparisons with
British and Portuguese colonialism are made (see Chapter 7), the bulk of the
analysis focuses closely on the fifteen mainland countries of the Americas
that were colonized by Spain. Why is this focus appropriate?
One set of reasons for selecting the countries of Spanish America concerns
the advantages of working with a relatively small number of cases.77 The
Spanish American region is not so large and heterogeneous as to prohibit
historically grounded research. And the close analysis of individual cases
allows for the matching of conceptual definitions with fine-grained evidence.
Concepts can be measured within the overall context of each case, thereby
avoiding certain simple measurement errors that sometimes arise in research
focused on large numbers of cases.78 This is especially true given that the
argument at hand draws on “thick” concepts – such as precolonial societal
complexity, level of colonialism, and postcolonial economic development –
that are not always adequately captured by quantitative proxies such as
precolonial population density, number of colonial settlers, and GDP per
capita.
More importantly, comparative case-study research allows for the simul-
taneous assessment of general causal factors that operate across all cases and
more specific causal factors that assume significance in only certain cases
(or individual cases). By conjoining both kinds of causes, the comparative-
historical researcher can pursue “complete” explanations – that is, explana-
tions that identify combinations of nontrivial causes that are jointly sufficient
Focus on Spanish America 33
for outcomes.79 Certainly, a large-N, statistical model could be used to test

the importance of the general causal variables emphasized here, including
their hypothesized interactions. And if the theory is correct, these statistical
tests should explain some portion of the variation in levels of colonialism and
long-run development (provided that appropriate indicators are found and
measurement error is not too large a problem). But a statistical model could
not uncover variables that may be of particular relevance to select cases; all
case-specific causes would be relegated to the error term. By contrast, each
of the country analyses in this book draws on the theoretical principles for-
mulated above to supplement the general argument and to arrive at a causal
account that is valid even when confronted with historical details and the
particularities stressed in histories of the individual case.
These considerations suggest some reasons for analyzing a relatively small
number of cases using a comparative-historical methodology; they do not
tell us why specifically the fifteen Spanish American countries should be
examined. The answer to this question involves recognizing that the degree
to which valid causal inference can be achieved depends heavily on the kinds
of similarities and differences present among the cases under analysis. The
Spanish American cases share certain crucial similarities and contrast in
other basic ways to offer great leverage for causal inference. For one thing,
similar colonial experiences among these cases allow for the elimination
of many temporal and contextual variations that otherwise would have to
be addressed. These territories were all colonized by Spain at roughly the
same time and achieved independence more or less together, allowing us to
control for key changes associated with world-historical time. Indeed, the
three major Spanish American countries that are not featured in this book –
Panama, Cuba, and the Dominican Republic – are excluded in part because
they lack these core similarities.80 Likewise, Spanish monarchs applied cer-
tain institutional arrangements to all of their New World colonies, such as
the Catholic religion and the encomienda system of labor exploitation, even
as they did so to differing degrees. Hence, we can zero in on the extent to
which similar kinds of colonial institutions were developed and worry less
about having to control for broad differences in types of colonial institutions.
Still other reasons for focusing on the fifteen mainland Spanish American
countries draw our attention to differences across cases. One crucial point
concerns variation in the institutional identity of Spain: before 1700, Spain
approximated the ideal type of a mercantilist colonizer; by the late 1700s,
however, it more closely corresponded to the liberal type. By looking at
Spanish America, therefore, we can evaluate hypotheses about both mer-
cantilist and liberal colonialism. And we can do so using the same territorial
units, thereby controlling for many other kinds of differences that might oth-
erwise need consideration. We can explore, for example, whether regions
that were heavily colonized during the mercantilist phase but marginally
colonized during the liberal phase experienced lower levels of postcolonial
development (as the mercantilist-liberal model predicts). Analogously, we

can see empirically if regions that were marginally colonized during the
mercantilist phase but heavily colonized during the liberal phase follow the
prediction of higher levels of postcolonial development.
Cases within Spanish America, finally, capture the full spectrum of theo-
retically important variation across precolonial, colonial, and postcolonial
phases. Precolonial societies exhibit institutional complexity ranging from
hunter-gatherer bands to large-scale bureaucratic civilizations. Colonial
Spanish America includes both “center” territories that featured huge,
European-like cities and “peripheral” territories that were almost uninhab-
ited by settlers. Postcolonial levels of development within Spanish America
differ to an extent that is nearly equal to what exists in the full universe of
non-OECD countries (see Chapter 6). Thus, in selecting the Spanish Amer-
ican cases, one chooses a population of cases whose range of differences
on key variables approximates the degree of variation for most formerly
colonized countries.
The Analysis to Come

In the following chapters, the principles of analysis and the general theory
developed in this introduction are put to work in the in-depth analysis of fif-
teen Spanish American countries (and more briefly for British and Portuguese
colonial cases). The evidence is gathered mostly from secondary sources –
books, articles, and monographs by historians and area and country experts.
For the Spanish American cases, each country receives sustained analysis in
its own right; and each country is evaluated in light of an extensive read-
ing of the historiography. At the same time, systematic comparisons are
always explicitly made across the cases. Indeed, causal arguments are for-
mally summarized using qualitative comparative methods at the conclusion
of key substantive chapters.
The investigation begins, in Chapter 2, with the evolution of Spain and its
colonial empire in the Americas during the course of some three centuries.
In the core chapters, Chapters 3 and 4, attention turns to, respectively, the
Habsburg colonial empire (1500–1700) and the Bourbon colonial empire
(1700–1808). These chapters elucidate the causes and consequences of levels
of colonialism during episodes of mercantilist colonialism and liberal colo-
nialism, respectively. Postcolonial developmental trajectories are the subject
of Chapters 5 and 6, including the ways in which nineteenth-century pro-
cesses of war fighting affected development in certain special cases. Chap-
ter 7 evaluates the theoretical framework in light of comparative evidence
from British and Portuguese colonialism. Finally, the book concludes with
a summary of findings and a consideration of their larger implications.
2
Spain and Its Colonial Empire

in the Americas
The history of the nineteenth and twentieth centuries . . . has been, in essence, the
struggle between the Hapsburg heritage of economic and political traditional society,
regional autonomy, and Christian ideals and the Bourbon legacy of liberal economics,
centralized authority, and “enlightened” thought.
– Miles L. Wortman
Basic changes took place in Spain’s institutional organization and policy

orientation during the more than three centuries it held sovereignty over
territories in the Americas. From the early sixteenth century until the end of
the seventeenth, Spain was a great mercantilist empire, the most powerful
of its kind in the world. Organized fundamentally to wage war and conquer
territory, the Habsburg Empire was always in desperate need of resources,
and it imposed classically mercantilist policies at home and abroad to gen-
erate them. The monarchy regulated production through guilds, restricted
trade, and hoarded precious metals. And it upheld order with a stratification
system that arranged citizens into a hierarchy of caste groups all ultimately
beneath the king.
The rise of the Bourbon monarchy in the eighteenth century did not all at
once and altogether transform Spain from a nation organized by classically
mercantilist institutions to one that was enlightened and liberal. Yet dur-
ing the first half of the eighteenth century, Bourbon monarchs did pursue
reforms at home that centralized authority, furthered the bureaucratiza-
tion of the state, and cut into the overwhelming political power of landed
and ecclesiastical elites. Then, under the thirty-year reign of Charles III
(1759–88), liberalizing reforms were implemented: assaults on the church,
the reduction of corporate privileges, the loosening of commercial restric-
tions, and eventually the declaration of “free trade” within the Spanish
Empire. While these reforms did not erase the elite stratification system, the
guilds, and the monopolies, they did make Spain into a nation predicated
on an uneasy (and soon unsustainable) balance of mercantilist and liberal
ideas, actors, and institutions.
Undeniably, the reforms in Spain during the late eighteenth century had
large consequences for the evolution of colonialism in the Americas. They
35
36 Spain and Its Colonial Empire in the Americas
influenced the kinds of territories in the New World where the Spanish
preferred to live. And they transformed the types of institutions that the
Crown and the settlers brought to the New World. These changes, in turn,
helped to reverse the effects of levels of Spanish colonialism on long-run
development. In the following chapters, we will consider these implications
at length. But for now, in this chapter, we shall explore more carefully the
characteristics of Spain and its colonial empire during the two historical
periods.
the mercantilist phase, 1492–1700

Mercantilism predominated from Spain’s first contact with the New World
until the fall of the Habsburg monarchy in 1700. In the Americas, these
years saw the conquest of the most complex indigenous societies, perma-
nent Spanish settlement, and the implantation of sometimes radically new
institutions. We can prepare ourselves for explaining the different ways in
which Spain colonized distinct New World territories by considering here,
sequentially, the basic institutions and orientation of Habsburg Spain, the
political organization of its territories in the New World, and the settlers
who carried the Spanish institutions across the sea and into the Americas.
The Habsburg Monarchy

Spain is the name we use to designate the political entity that formed out
of the alliance of the kingdoms of Castile and Aragon after the celebrated
marriage of Isabella and Ferdinand.1 In 1492, the year of Columbus, this
union of Catholic kings completed the reconquest of Islamic Granada and
expelled the Jews, poising it to turn to more worldly affairs and make its
bid for political dominance in Europe.
Holy Roman Emperor Charles V (1516–56) already inherited vast terri-
tories scattered throughout the continent. When he ascended to the throne
of Castile, making him King Charles I of Castile, he could lay claim to the
prized Low Countries, Franche-Comté, the Duchy of Burgundy, Naples,
Sicily, Sardinia, and of course the newly discovered possessions in America.
This was a formidable empire, to be sure, but it lacked centralized control,
and holding on to it while pursuing further expansion fostered continuous
crisis and ultimately proved impossible for the Habsburg monarchs.2 “The
struggle with France in the 1520s, the offensive and defensive operations
against the Turks in the 1530s, and then, in the 1540s and 1550s, the
hopeless task of quelling heresy and revolt in Germany, imposed a constant
strain on Imperial finances.”3 By 1588, when England crushed the Invincible
Armada, the end of Spain’s hegemony within Europe was at hand. For, as
J. H. Elliott concludes, “The late 1580s and the 1590s seem in retrospect the
critical years [of Spain’s decline]: the years of major reverses in Spain’s north
European policies, of another official ‘bankruptcy’ in 1597, of the death of
the old king himself in 1598, and of the famine and plague which swept
through Castile and Andalusia at the end of the century.”4 Spain remained
a major power into the seventeenth century, but it never again seriously
threatened to conquer the world.
Empire building required staunch mercantilist policy, which made Spain
a conquering power but ironically jeopardized long-run accumulation in
the Castilian economy.5 According to Robert S. Smith, Castilian economic
thinking was marked by “the absence of even theoretical interest in lais-
sez faire and simple competition.”6 Beginning with Ferdinand and Isabella,
the Crown protected the wool industry at the expense of all else. This left
Spain thoroughly dependent on costly manufactured imports (linen cloth,
dry goods, and paper products) and increasingly food (fish, corn, and wheat)
from the Low Countries, Italy, France, and England. Such policy was main-
tained because the heavy taxes on wool exports provided immediate capital,
which was always desperately needed, whereas advancing agriculture would
have required a long-run commitment.7 Agriculture could not but stay back-
ward under this crushing system of taxes and monarchical protections. Nor
could a competitive textile industry ever take root under the prevailing poli-
cies. As John Lynch points out, “Throughout the sixteenth century Spanish
industry was shackled by regulations . . . At a time when industry in the rest
of Europe was beginning to escape from guild control, that of Castile was
put into a corporate straightjacket.”8 Absent any kind of manufacturing and
industrial breakthrough, Spain was soon relegated to the semiperiphery of
the capitalist world economy.9
The sixteenth century was thus the height of mercantilism in Spain, even
as liberalism started to sprout in other parts of Europe. During this century,
the great merchant guilds (consulados) were formed in the major Spanish
port cities. After 1543, the Guild of the Merchants of Seville monopolized
trade between Spain and America, at least until the Consulado of Cádiz
used its superior location to win its own monopoly control in the mid-
seventeenth century.10 Dozens of new artisan guilds (shoemakers, hatters,
butchers, locksmiths) also formed in the major cities in the mid-sixteenth
century.11 The Crown further controlled the economy by prohibiting the
export of precious metals, confining the shipment of merchandise to Spanish
ships, and imposing weighty customs duties.12
Nor did Spanish society deviate far from the mercantilist ideal of a rigid
and hierarchically organized estate system.13 At the top of the hierarchy
were a small number of tightly linked families who made up the political-
economic elite: dukes, marquises, counts, and other high-ranking titled
nobility. Though less than 2 percent of the population, this tiny stratum
controlled much of the kingdom’s land and, along with knights, hidalgos,
and other lesser nobility, monopolized political authority within Castile.

Cardinals and archbishops of the dioceses must also be included among this
rarefied elite, for the church had its own vast territories and commanded
considerable influence over all important political affairs and sociocultural
events. At the bottom was the so-called common estate, a mostly rural
class that labored on the properties of the nobility and accounted for some
90 percent of Castile’s population.14
After 1492, of course, the New World territories were brought under
the proto-bureaucratic structure of Castile. Ferdinand and Isabella initially
created the House of Trade as a mercantile tribunal to oversee monopoly
trade with America, including the licensing and registration of all ships and
merchandise bound for the New World.15 Soon the House of Trade became
part of the Council of the Indies, the overarching bureaucratic organ charged
with running all American affairs on behalf of the monarchy. The Coun-
cil controlled migration flows and recommended major political officials,
including the viceroys – those highest-ranking Spanish officials in the New
World who embodied the authority of the monarch himself. Despite all of
these responsibilities, however, Council ministers usually had no experience
in the New World and could not directly oversee territories that required two
to three months for one-way travel through the monopolistic fleet systems
(the flota for Mexico and the galeones for Peru).
The Organization of Colonial Rule

Colonial political-administrative organization in the Americas before 1700
was disorganized, often changing, and incomplete and inconsistent in its
application. But it is still quite possible and useful to describe its basic
forms.16 Most simply, the Habsburg colonial territory was composed of two
large viceroyalties (see Maps 2.1 and 2.2). In 1535, Charles I ordered the
creation of the Viceroyalty of New Spain, which encompassed the nations of
modern Mexico and Central America, as well as portions of the United States
and Venezuela. Then, in 1542, the Crown established the Viceroyalty of
Peru, which encompassed Panama and all of the Spanish possessions in South
America except part of Venezuela. These viceroyalties were subdivided into
a series of audiencias, which were originally designated as courts of justice
but actually became critical political bodies in charge of myriad governance
tasks.17 The audiencias were further split into governorships (gobiernos)
or provinces (provincias), as well as smaller political jurisdictions such as
principal mayoralties (alcaldı́as mayores) and corregimientos. Finally, of
course, Spanish settlers lived in towns of varying sizes, which had their own
political councils (cabildos, ayuntamientos).
Already by the seventeenth century, we begin to see the contemporary coun-
tries of Spanish America in these political units. As Table 2.1 summarizes,
39
1
Map 2.1. The Viceroyalty of New Spain, circa 1650

Sources: Mark A. Burkholder and Lyman L. Johnson, Colonial Latin America, 4th ed. (New York: Oxford
University Press, 2001), 82; Carolyn Hall and Héctor Pérez Brignoli, Historical Atlas of Central America
(Norman: University of Oklahoma Press, 2003), 33; Cathryn L. Lombardi and John V. Lombardi (with K.
Lynn Stoner), Latin American History: A Teaching Atlas (Madison: University of Wisconsin Press, 1983),
28.
2
1
Map 2.2. The Viceroyalty of Peru, circa 1650

Sources: Mark A. Burkholder and Lyman L. Johnson, Colonial Latin Amer-
ica, 4th ed. (New York: Oxford University Press, 2001), 82; Cathryn L.
Lombardi and John V. Lombardi (with K. Lynn Stoner), Latin American
History: A Teaching Atlas (Madison: University of Wisconsin Press, 1983),
29; Nicolás Sánchez-Albornoz, The Population of Latin America: A His-
tory, trans. W. A. R. Richardson (Berkeley: University of California Press,
1974), 81.
Table 2.1. Political-administrative location of modern countries within the

Spanish Empire, circa 1650
Modern Approximate political-administrative

country location circa 1650 Notes
Argentina Governorships of Tucumán and the The Cuyo region is part

River Plate within the Audiencia of of the Audiencia of
Charcas Chile.
Bolivia Upper Peru within the Audiencia of
Charcas
Chile Audiencia of Chile Northern Chile is part of
the Audiencia of
Charcas.
Colombia Audiencia of Santa Fe de Bogotá
Costa Rica Governorship of Costa Rica within The Nicoya region is part
the Audiencia of Guatemala of the Governorship of
Nicaragua.
Ecuador Audiencia of Quito
El Salvador Principal mayoralties in the
Governorship of Guatemala
within the Audiencia of Guatemala
Guatemala Governorship of Guatemala within
the Audiencia of Guatemala
Honduras Governorship of Honduras within
Mexico Audiencias of Mexico and The Chiapas region is
Guadalajara part of the Audiencia
of Guatemala. Much
of the Audiencia of
Guadalajara becomes
part of the United
States.
Nicaragua Governorship of Nicaragua within
Paraguay Governorship of Paraguay within the
Audiencia of Charcas
Peru Audiencia of Lima
Uruguay Governorship of the River Plate
within the Audiencia of Charcas
Venezuela South American part of the
Audiencia of Santo Domingo
the modern state territories started to acquire political significance because

they roughly overlapped with the audiencias, governorships, and principal
mayoralties of the Spanish Empire. As we analyze colonial Spanish America,
therefore, we will be able to gather and use data that more or less apply
to the future countries by focusing on colonial political jurisdictions. In

proceeding this way, however, we shall not make the mistake of assuming
that the modern countries actually existed or that their emergence was a
teleological inevitability, destined to occur irrespective of intervening events
during the eighteenth and nineteenth centuries.
New World territories occupied by Spain were – or at least were treated
as – part of Castilian society.18 One might thus argue, as does Ricardo
Levene, that the New World territories were not fundamentally distinct
from other possessions in Europe that came under Castilian sovereignty.
As Levene puts it in the title of his book, “las Indias no eran colonias” (the
Indies were not colonies).19 Yet such a position makes little sense by any con-
ventional definition of colonialism or colonies. Unlike the Low Countries or
Naples, the Americas were (to Europeans) a distant, unfamiliar, and indeed
entirely new set of lands. Spaniards regarded their inhabitants as inferior in
ways that legitimated brutal oppression and large-scale exploitation – prac-
tices far beyond what was deemed appropriate or feasible for people hailing
from the European continent. To rule the New World, moreover, Castilian
kings established brand-new administrative bodies and staffed them with
personnel charged with extracting resources as thoroughly and quickly as
possible. And Spain sent large numbers of its own people as settlers partly
for the purpose of implanting its values and modes of behavior in what it
saw as alien and pagan lands. Although other European powers sought their
own influence on the fringes of Spain’s New World empire, they too were
forced to accept Spanish hegemony as the de facto reality. Let us thus harbor
no illusions that the Spanish relationship to the New World was something
other than colonialism.
The Colonial Population

Spanish colonialism moved hundreds of thousands of people to the New
World, and it was through these people that institutions were transplanted
into the Americas. That arrivals from Spain would carry with them knowl-
edge of Spanish institutions and then might install some of these institutions
directly or in modified form hardly needs belaboring. This is especially true
when we recognize that the settlers were not an atypical group somehow
hostile or immune to the dominant ways of Spain.
Historical works suggest that two hundred thousand or more emigrants
traveled to the New World during the sixteenth century, and possibly nearly
that many during the first half of the seventeenth century.20 It is therefore
not unreasonable to believe that well over half a million passengers were
carried from Spain to the New World during the Habsburg phase of colo-
nialism (Spain’s population in the late fifteenth century was about 5.3 mil-
lion). Some portion of these travelers returned home, but a hefty majority
did not. Bureaucratic oversight of this migration was handled at first by

the House of Trade, the royal agency in Seville that also controlled com-
merce and navigation, and later (after 1546) by the Council of the Indies in
Madrid. Migration was voluntary; no one was forced to move. Early on, in
fact, when the Crown experimented with creating agricultural colonies
in the Caribbean, the king granted all of his subject people the right to
live in the New World and encouraged them to move by paying for their
voyage and promising them land and agricultural inputs upon arrival. By
the mid-sixteenth century, however, the Crown limited New World travel to
peninsular Spaniards (in the case of women, they also had to be married) and
ceased providing incentives to migrate; licenses were in fact now required.21
Still, it seems wrong to conclude, as does one set of commentators, that
these state restrictions dramatically reduced the outflow of people.22 In fact,
before the eighteenth century, enforced legal controls on the movement of
Catholic Spaniards to the New World were never so substantial as to rep-
resent serious impediments for those who were determined to come.23 It
was commonplace and easy for Catholic Spaniards – even sometimes single
women – to bypass the legal obstacles. Substantial numbers of foreigners
also slipped through the cracks. The real challenges and risks for penin-
sular Catholic males were economic, for individuals had to finance their
voyage in one way or another and then stake out a new life in a faraway
world. But these considerations did not prevent large numbers of people
of modest means from undertaking the voyage (sometimes as indentured
servants).
The migrants hailed overwhelmingly from the Andalusia, Extremadura,
León, and New and Old Castile regions of Spain.24 These were places with
towns and cities that had good access to news from the New World. This
facility of communication probably explains why people left these locations
at high rates better than do socioeconomic factors, such as the prosperity of
the local economy.25 The travelers had remarkably different class and estate
origins: they included educated bureaucrats, merchants (wealthy or not),
ecclesiastics, artisans, peasants, major and marginal hidalgos, and sailors
and servants. We should not imagine that they were a fully representative
sample of Spanish society; on some dimensions, they certainly were not. For
instance, few women and children initially made the trip; by the 1560s, still
only about 30 percent were women, who settled in Mexico City and Lima in
large numbers at that time.26 Overall, however, we can confidently conclude
that the emigrants who arrived in the New World were not people drawn
primarily from any one class or caste, much less people who escaped the
influence of the mercantilist political economy of the sixteenth and seven-
teenth centuries. These were people who were part and parcel of mercantilist
Spain, and they, in their own autonomous ways, would aid the Habsburg
monarchy in transplanting its institutions into the Americas.
the liberal phase, 1700–1808

No revolution occurred when Bourbon monarchs replaced the Habsburgs.
But under the Bourbons, Spain did witness the introduction of more “enlight-
ened” policies and institutions. Moreover, these reforms were often most
completely implemented in the American colonies. The effect of the Bourbon
reforms was thus to leave Spanish America with a colonial heritage that
combined mercantilism and liberalism.
Bourbon Reforms
By the time the first Bourbon king, Philip V (1701–46), ascended the throne,
Spain had become a more or less unitary state and was no longer in pos-
session of dependencies around Europe; the empire was basically reduced
to modern Spain and its American colonies.27 The economy at home was
still overwhelmingly agricultural, backward compared to that of England,
and rigidly stratified into hierarchical groups. In the early eighteenth cen-
tury, the first words of Enlightenment thought were spoken, though they
could barely be heard, and they certainly lacked anything like a consoli-
dated bourgeois class to give them real voice.28 One of the few portents of
the liberal changes to come occurred when the War of the Spanish Succession
(1700–1713) forced Philip V to grant his ally England some access to trade
in the New World, thereby temporarily breaking the Spanish commercial
monopoly.
Even though at first nearly everything remained the same under the
Bourbons, there was one conspicuous transformation: state modernization.
The first half century of their rule witnessed real administrative changes that
professionalized and modernized the absolutist state and that increased its
power vis-à-vis regional governments and landed aristocrats.29 Under a new
intendant system, these more professional provincial officials were appointed
to oversee public administration, finance, and military and judicial affairs.
Centralization was then pushed further by the capable and reform-minded
King Charles III (1759–88), who among other things extended the power
of the state’s ministries at the expense of the nobility.30 “When, therefore,
Charles III began to implement the reforming projects which were being pre-
pared he had a central agency, at once more efficient and manageable, that
afforded far greater possibilities of control over colonial affairs than had
ever been available to the Habsburgs.”31 Yet how effective was he at using
this more centralized state to transform reigning economic institutions? The
answers are different for Spain and the New World, and also for different
territories within the New World.
State proposals and legal actions after 1759 for modernizing Spain itself
were ambitiously liberal, but they were often not implemented, leaving the
country a contradictory amalgam of mercantilist and liberal institutions.32
For instance, the Crown issued legislation promoting greater freedom of

trade for textiles and grain. But the textile protections were soon reinstated
when Spanish industries failed to compete, and while free trade in grain
was staunchly maintained by Charles III, this effort was reversed in the
early nineteenth century.33 More successfully, the monarchy abolished the
trade monopolies of Cádiz and Seville, which crucially boosted commercial
growth in Catalonia and helped stimulate the formation of bourgeois mer-
chants in Barcelona. While Cádiz’s traditional merchant actors still wielded
influence over trade, the center of economic gravity had shifted to Catalonia
and Barcelona, regions where Enlightenment ideas had taken hold. Other
guilds and monopolies were likewise weakened, including to some degree
the powerful mesta that represented the sheepholders, even as the country
overall remained fettered by privileged associations.34 As for the nobility, its
size was reduced and its political leverage loosened with state centralization,
but its inherited and acquired privileges (including certain seignorial rights),
its estates, and its social standing persisted largely intact.35 Concerning the
church, the government of Charles III was unambiguously antipapal, and
it famously issued a royal decree expelling the Jesuits from Spain and the
colonies in 1767. Still, in other ways, the Bourbon reforms did not undercut
ecclesiastical power. While the monarchy promulgated legislation curtailing
the privilege of fuero, which provided clerics with various judicial protec-
tions and immunities, it was not successful in fully abolishing it.36
It was in the colonial New World – not Spain proper – where the Crown’s
reforms had their most demonstrable and far-reaching impacts. In the realm
of administration, reform efforts began in earnest in the 1750s, when the
Crown prohibited the sale of audiencia seats and appointed to the admin-
istrative courts educated officials committed to bureaucratic norms. The
measures were a resounding success in Mexico City and Lima: the audien-
cias were transformed from governmental organs dominated by Creoles and
“native sons” to ones run mostly by peninsulars and Creoles from periph-
eral parts of the empire.37 In both government and the courts, furthermore,
the Bourbons installed more predictable career trajectories, so that promo-
tions and advancement better reflected seniority and merit, as opposed to
wealth and patrimonialism.38 This was accomplished partly through the
introduction of the intendant system, a reform that, especially in commer-
cially oriented urban areas of the New World, helped fight corruption among
local officials (corregidores and alcaldes mayores) by installing more pro-
fessional administrators, who then monitored local government, promoted
economic growth, oversaw public works, collected revenue, and regulated
ecclesiastical institutions.39
What is more, the Bourbons initiated reforms that liberalized economic
policy.40 The declaration of “free trade” – begun in the 1760s and extended
to most colonial areas by the 1770s – ended the monopoly of Cádiz, low-
ered tariffs, and allowed broad participation by the colonies in trade with
each other and with Spain (though rarely with other parts of Europe).41
Especially targeted for reform were laws that previously restricted trade
almost entirely to the American ports of Veracruz, Cartagena, Portobelo,
Havana, and Callao and that allowed only the flota and galeones ships to
sail prescribed routes at stipulated intervals. The fleet systems had become
so dilapidated and so burdened by regulations and fees that they made their
voyages unpredictably and increasingly infrequently by the end of the sev-
enteenth century. Meanwhile, contraband trade flourished to the point that
the New World was thoroughly dependent on English and Dutch smug-
glers for the provision of both basic and luxury goods. The changes under
Charles III sought to rectify these problems. The old fleets were superseded
by “register” (i.e., individually licensed) and free-trade ships that responded
to supply and demand. They were permitted to move with fewer constraints,
visit a much wider range of ports, and transport goods from one part of the
empire to another without having to engage in smuggling or meet impossi-
bly stringent regulations. Bourbon policies also encroached on the powerful
merchant monopolies of Lima and Mexico City, as well as certain trading
companies (e.g., the Caracas Company) that had been more recently estab-
lished. Reforms put the administration of commerce taxes in the hands of
royal officials rather than the consulados, as had historically been the case;
and the Bourbons encouraged new merchants from ports not linked to the
guilds to partake in the rewards of the more open trade regime.
Bureaucratic and liberal economic reforms initiated by Bourbon mon-
archs were, in short, a significant institutional reorientation. And their con-
sequences were rather immediately felt: they stimulated nothing short of an
explosion of trade. From 1782 to 1796, the value of colonial goods exported
to Spain increased tenfold, while the value of imported goods arriving in the
colonies increased fourfold.42 Many of the exports were now livestock and
agricultural products – hides, cacao, tobacco, wheat, yerba, coffee, and
sugar – that were produced in previously remote parts of the empire. While
Habsburg “bullionist” economic policies had discouraged agrarian exports
from the Americas,43 the Bourbons actively promoted commercial agricul-
ture. Such a fundamental reorientation lay behind the rise of peripheral
areas in the Americas that had suffocated under mercantilist regulations.
This peripheral rise was, in turn, part of a broader “reversal of fortunes”
in Spanish America during the period from 1750 to 1850.44 The reasons
for the colonial reversal – as well as exceptions to it – will be examined
on a case-by-case basis in the analysis to come. For now, suffice it to stress
that one critical factor explaining economic successes and failures in the
Americas during the Bourbon period involves precisely the extent to which
people and institutions were introduced into particular territories. For while
the Bourbons sought to apply their reforms across the whole empire, the
reality is that Bourbon colonialism – like Habsburg colonialism before it –
laid down institutional changes quite unevenly in the New World.
3
1
Map 2.3. Colonial Spanish America, circa 1780

Sources: Mark A. Burkholder and Lyman L. Johnson, Colonial Latin Amer-
ica, 4th ed. (New York: Oxford University Press, 2001), 257; Cathryn L.
Lombardi and John V. Lombardi (with K. Lynn Stoner), Latin American
History: A Teaching Atlas (Madison: University of Wisconsin Press, 1983),
31–2.
Political Reorganization and Settlement Patterns
Bourbon administrative reforms also entailed a basic restructuring of the
viceroyalties in ways that allowed previously peripheral areas to become
political and bureaucratic centers (see Map 2.3). The Viceroyalty of New
Granada was created in 1739 (after an earlier aborted effort), and it encom-
passed more or less modern Colombia, Ecuador, and Venezuela. Then, in
1776, the Bourbons established the Viceroyalty of the River Plate, which
included the lands of roughly modern Argentina, Bolivia, Paraguay, and
Uruguay (and a slice of northern Chile). Hence, the old Viceroyalty of New
Spain remained intact, while the old Viceroyalty of Peru was reduced to mod-
ern Peru and most of Chile. Commercial areas within the new viceroyalties
enjoyed greater autonomy and political clout. Notably, Caracas was made
the capital of a captaincy general in 1777 and then home to an audiencia in
1786; and Buenos Aires housed its own audiencia after 1783.
Disappointingly little is known about Spanish migration to the New World
during the eighteenth century. Writing in 1985, Magnus Mörner believed
that the only existing estimate of total net migration, which was 52,500
persons, was “merely a conjecture without any real basis.”45 More recently,
David Eltis estimated that 193,000 Spaniards left for the New World from
1700 to 1760, but his methods are dubious.46 The distinguished histori-
ans Mark A. Burkholder and Lyman L. Johnson suggest that the Spanish
migrants who arrived after 1700 (especially after the 1760s) often made
their way to once-peripheral areas of the empire. They estimate the total
net migration during the eighteenth century at forty to fifty thousand for
the peripheral colonies (excluding Mexico and Peru).47 As we shall see in
Chapter 4 by looking at individual cases, several previously marginal cities
were indisputably key destinations for Spanish arrivals during the eighteenth
century. And some previously major colonial cities stagnated or declined
during this same period. While a portion of this demographic change is due
to intracolonial migration among the existing settlers, as opposed to migra-
tion across the Atlantic, the outcome is the same: Spaniards were populating
new areas in considerable numbers, especially after the reforms of the 1760s
and 1770s.
Whatever their exact numbers, the eighteenth-century Spanish migrants
were surely oriented more toward liberal ideas than were their counterparts
from the previous two centuries. This is obviously true for the professional
bureaucrats who arrived in the region with the express purpose of enforcing
Charles III’s reforms. But it also holds for other actors, who were drawn
to travel across the Atlantic in order to pursue the opportunities that arose
from market reforms. Most notable here are the merchants who arrived
in the port cities of once-peripheral areas: “The loosening of commercial
restrictions after 1765 and the more important administrative and territorial
reforms attracted Spanish merchants to the peripheral ports and capital
cities. Peninsulars dominated the merchant elites of Buenos Aires, Caracas,
Santiago, and Havana.”48
Some of these merchants were Catalans linked to the emerging bourgeoisie
and the nascent capitalist economy of Barcelona.49 They embraced liberal
Conclusion 49
economic thought and carried their ideas from Spain to the colonies. Non-
elite migrants were often Galicians, Asturians, and Basques who traveled to
the New World as artisans or unskilled workers. These individuals sought
to make a fortune in America, or at least lead a prosperous life, through
whatever opportunities presented themselves.50 And in the late eighteenth
century, these opportunities were more commercially oriented than they
had been during all previous periods. Non-elite settlers acting on their own
interests therefore might also contribute to the construction of more liberal
institutions in the Americas.
conclusion
Spain evolved during the eighteenth century from the epitome of a classically
mercantilist political economy to an enlightened-mercantilist political econ-
omy that was increasingly subject to liberal influences. This transition was
particularly salient in the New World, where royal policy aimed at mod-
ernizing bureaucracy and stimulating trade reflected the emergent Spanish
liberalism. The implication of this transition is that colonialism in the Amer-
icas entailed a dual legacy – a mercantilist-liberal one. The liberal advance
occurred only during the late colonial period and was built on top of more
than two centuries of mercantilist colonialism. But it will not serve us to pre-
tend that this liberal heritage was inconsequential any more than it would
be appropriate to assume that the liberal phase made the prior mercantilist
phase irrelevant. We need to take both periods of colonialism seriously.
Taking both phases seriously entails two overarching tasks. First, it means
identifying and explaining variations in the extent to which Spanish colo-
nizers established institutions during each phase and across each territory
that would become a country in Spanish America. Second, it means under-
standing how different combinations of mercantilist and liberal institutions
led particular countries to arrive at specific positions in the world hierarchy
of development. These tasks are pursued in the next two chapters.

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Colonialism and Postcolonial Development

In this comparative-historical analysis of Spanish America, James Mahoney

James Mahoney is Fitzgerald professor of economic history and a professor of

Assistant General Editor

Other Books in the Series

Continued after the Index

“James Mahoney brings an unprecedented rigor to the analysis of the long-

Cambridge University Press

© James Mahoney 2010

This publication is in copyright. Subject to statutory exception

First published 2010

Printed in the United States of America

Library of Congress Cataloging in Publication data

Mahoney, James, 1968–

isbn 978-0-521-11634-3 Hardback

Cambridge University Press has no responsibility for the persistence or

List of Tables, Figures, and Maps page xi

6 Postcolonial Levels of Development 203

6.2 Levels of Economic Development: Intermediate Countries 208

Comparative-historical analysis achieves its potential when it generates new

variations in colonialism might explain why Latin American countries today

make the arguments here. Moreover, my reading of histories and my quest

support provided by the National Science Foundation. In 2001, when Joane

Explaining Levels of Colonialism

Comparative historical analysis serves as an ideal strategy for mediating between

national citizens of those states? Answering these questions, as this book

colonialism and the political economy of the colonizing European nation.

relative levels of development

Table 1.1. Approximate levels of economic development for the

Higher level Intermediate level Lower level

1. Argentina 5. Mexico 9. Paraguay

The Stability of Relative Levels of Development

Table 1.2. Approximate levels of social development for the

Higher level Intermediate level Lower level

1. Uruguay 5. Paraguay 9. Ecuador

performance on health, education, and other social indicators) usually have

Rates versus Relative Levels of Development

The Infrequency of Sustained Progress

performance among the less developed countries. Various works on the

existing perspectives and their limitations:

direct effects.”28 Even stronger conclusions appear in William Easterly and

As technology advanced to favor oceanic commerce, the isolation of river

between geography and institution building is thus a by-product of a more

favorable disease climates were comparatively unoccupied by the Spanish.

Institutional Perspectives: The Advantages

“formal”; otherwise, they exist informally – sometimes unconsciously – as

When employing an institutional approach, therefore, it is essential to treat

Colonial Institutions as Long-Run Causes

the purpose of showcasing what is distinctive about the general arguments

situations found in the developing world?”57 Problems with the sweeping

a general theory of colonialism and development

Mercantilist versus Liberal Colonizers

Table 1.3. Types of political economies

Accumulation Orientation Promotion of economic Promotion of international

stimulating comparative international advantages and long-run accumu-

been an implicit or explicit point of reference in macropolitical inquiry. What

Causes of Levels of Colonialism

Table 1.4. Types of precolonial societies

Lower complexity Intermediate complexity Higher complexity

Political Decentralized and Centralized but Centralized and

and perhaps semi-sedentary agriculture. Socioculturally, they are marked by

Higher Higher Level Lower Level

Figure 1.1. Predicted Levels of Colonialism