Macro N Cheese
Macro N Cheese
Steven D Grumbine
Ep 362 - Debunking the Institutional Theory of Economic Development with Erald Kolasi
1 hour 23 minutes Posted Jan 10, 2026 at 11:30 am.
Understanding Economic Institutions and Their Impact
The Institutional Dynamics of Economic Outcomes
The Economic Collapse of North Korea
The Emergence of Public Education: Historical Context and Transformations
The Birth of Modern Public Education
The Legacy of Mao and China's Transformation
The Economic Legacy of Mao and Its Impact on China's Future
Venezuela's Economic Crisis and Global Oil Prices
The Impact of Sanctions on Venezuela's Economy
0:00
1:23:35
Download MP3
Show notes

Steve welcomes back Erald Kolasi, physicist-economist, author, and friend of the podcast. Erald is here to do a demolition job on “institutional” development fables like Acemoglu & Robinson’s Why Nations Fail. He argues that by treating good institutions as the master key (inclusive vs. extractive) they smuggle in a liberal moral scoreboard while dodging the real motors of history: power, class struggle, imperial systems, and material constraints like energy, trade dependence, war, and ecological shocks.

To “steelman” Acemoglu and Robinson’s position, Erald uses their favorite showcase case – North vs. South Korea. He lays out their comparison of the “tyrannical dictatorship” vs the “open” society and presents their explanation for these differences.

Erald then flips the script: the DPRK outperformed for decades, then crashed not because its “institutions got worse,” but because the USSR collapsed. Cheap, subsidized energy disappeared, wrecking agriculture and triggering famine.

The pattern repeats across history. Using examples like China and Venezuela, the episode explores how wars, sanctions, resource access, and global power structures shape economic outcomes far more than abstract institutional rules. Development is a struggle rooted in material conditions and geopolitical realities, not a neutral competition between better or worse policy designs.

Erald Kolasi is a writer and researcher focusing on the nexus between energy, technology, economics, complex systems, and ecological dynamics. His book, The Physics of Capitalism, came out from Monthly Review Press in February 2025. He received his PhD in Physics from George Mason University in 2016. You can find out more about Erald and his work at his website, www.eraldkolasi.com.

Subscribe to his Substack: https://substack.com/@technodynamics