The Persistence of Extractive Institutions: When Ideologies Change, But Power Remains

 

Throughout history, societies have developed different ways of organizing power, distributing resources, and establishing the rules that govern relations among citizens. The institutions that oversee these relationships are not necessarily permanent in their form. They change, evolve, and adapt to the economic, political, and cultural transformations of each era. Nevertheless, behind these shifts, mechanisms often persist that reproduce the exact same fundamental relationship: the concentration of power in specific groups and the use of that power to extract resources and opportunities from the rest of society.

This insight represents one of the major contributions of Daron Acemoglu, Simon Johnson, and James A. Robinson to the study of economic and political development. Their research, recognized with the 2024 Nobel Prize in Economics, demonstrated the critical role institutions play in explaining prosperity disparities among societies and, notably, the persistence of particular institutional structures over time. Institutions are not simply laws or organizations that appear at a specific historical moment; they also encompass power dynamics, incentives, and the rules that determine who participates in decision-making and who benefits from the outcomes.

This perspective sheds light on a particularly relevant phenomenon in the history of Spain and Latin America: the transformation of ideological justifications that have accompanied the construction and reproduction of extractive institutions. The ideas that legitimize the exercise of power can undergo profound changes, while the mechanisms through which certain groups use institutions to advance their own interests remain intact.

During the era of the Inquisition, religion served as a foundational source of political and social legitimacy. The distinction between orthodoxy and heresy was not merely a theological debate; it also established boundaries separating those considered legitimate members of the social order from those who could be targeted, persecuted, or excluded for challenging its foundations. Religious authority provided an instrument to impose specific modes of thought and justify mechanisms of social control. The defense of the faith could simultaneously serve as a pretext for preserving entrenched power structures.

Over the centuries, religious institutions lost much of their capacity to directly organize political life. Yet, this institutional transformation did not necessarily entail the disappearance of all the control and legitimization mechanisms that had accompanied their functioning. Modern politics and ideologies began to occupy space previously dominated by religion. The legitimacy of power ceased to depend exclusively on defending a specific religious doctrine and instead came to be built around political projects, conceptions of social justice, national identities, and ideological conflicts.

While this shift was profound in its forms, it reveals a clear continuity in the mechanisms of power organization. Society stopped dividing strictly between believers and heretics, beginning instead to divide between revolutionaries and reactionaries, defenders of the people and enemies of the people, progressives and conservatives, and representatives of popular interests versus members of elites. Ideological identity began to dictate not only individuals' political preferences, but also their recognized legitimacy to participate in public discourse.

The problem arises when these divisions are exploited to justify institutions that subordinate the interests of one segment of society to those of another. At that point, ideology ceases to be merely an interpretation of reality and becomes an instrument for legitimizing power relations and extractive mechanisms.

The distinction between inclusive and extractive institutions clarifies this phenomenon. An inclusive institution distributes power broadly, enables citizen participation in defining rules, and generates opportunities for diverse sectors of society to develop their capacities and benefit from economic activity. Conversely, an extractive institution concentrates power, allowing those who control it to manipulate the rules for their own gain at the expense of other groups.

The mere existence of elections does not automatically transform an institution into an inclusive one. An electoral majority may legitimately win the right to govern and subsequently use that power to establish mechanisms that favor its own beneficiaries while systematically harming other sectors. Electoral legitimacy does not erase the extractive nature of the rules being imposed. The decisive factors are who participates in shaping those rules, who controls their enforcement, and who ultimately appropriates the resulting resources and opportunities.

This distinction explains why political processes can reproduce extractive institutions even when framed as movements designed to combat them. A segment of society identifies certain groups as responsible for historical inequalities and uses that interpretation to justify transforming economic rules. The former beneficiaries are displaced, and new groups ascend to power and its associated privileges. Nevertheless, the concentration of power and the mechanisms of extraction can remain entirely intact.

Venezuela stands as one of the most striking examples of this transformation. Prior to the rise of Hugo Chávez, the country possessed a political and economic structure characterized by heavy reliance on oil rents and the concentration of significant resources within select sectors. The Bolivarian Revolution challenged that order and built its legitimacy around promises to transform power dynamics, overcome historical privileges, and hand control of national wealth over to the people.

The result was a profound transformation of the nation's economic and political elites. New groups acquired privileged access to public resources, economic opportunities, and decision-making apparatuses. Political power progressively concentrated, institutional checks and balances weakened, and economic activity became increasingly conditioned by ties to the state. Substituting one elite for another did not translate into the creation of inclusive institutions; instead, the system ultimately reproduced and deepened extractive mechanisms.

Revolutionary ideology provided the necessary legitimacy to frame this transformation as a social conquest. Meanwhile, power concentration and institutional decay progressively curtailed opportunities for participation, investment, and economic development. The destruction of productive capacity, the deterioration of public services, legal insecurity, and political persecution fueled a crisis that ultimately drove millions of Venezuelans out of their own country.

The most critical takeaway from this process is not merely the magnitude of the economic crisis, but the institutional transformation that preceded and accompanied it. Venezuela demonstrates that changing who holds power does not guarantee the disappearance of extractive institutions. A new elite can utilize an entirely different ideology to replicate mechanisms of resource concentration and appropriation that ultimately harm society.

Argentina offers another expression of this phenomenon. Throughout various stages of its history, the country has witnessed political projects that deployed state intervention, resource redistribution, and ideological confrontation as tools to build legitimacy and consolidate power. Singling out particular economic sectors as responsible for national problems has served to justify policies that transfer resources and opportunities among social groups, all while reinforcing dependencies on the state. Political transformations have not necessarily eliminated extractive mechanisms; rather, they have frequently merely shifted their beneficiaries and their justifications.

Colombia is not immune to this pattern either. Contemporary political confrontation illustrates how various movements build their identities around opposition to specific social groups. From one perspective, economic elites and the privileged class represent the root of inequalities and must bear the cost of institutional transformation. From the opposing viewpoint, political projects employing that argument threaten property, investment, private initiative, and citizens' economic autonomy.

What is truly fascinating is that both sides can end up reproducing a strikingly similar logic: using ideology to pinpoint a group to blame for social problems and, based on that identification, justifying institutions that favor their own interests. The identities of the beneficiaries change, but the relationship between political power and economic extraction remains steady.

This phenomenon is also visible in Spain, where divisions among political forces have taken on dimensions that far transcend discussions over government programs. Conflicts between left and right frequently devolve into disputes over the legitimacy of the adversary, their right to participate in public debate, and the very validity of their ideas. Controversies surrounding media outlets, property and housing decisions, and debates over the distribution of economic costs reflect a society where ideological identity increasingly dictates the interpretation of collective problems.

Social media has amplified this dynamic. There is no longer any need for a formal institution dedicated to deciding which opinions are acceptable and which must be rejected. Social pressure, public disqualification, stigmatization, and targeted harassment campaigns can fulfill control functions against anyone expressing views contrary to the convictions of specific groups. Technology changes the tools, but the logic of exclusion replicates itself across new spaces of social interaction.

The gravest consequence is that debates over institutional design are sidelined by ideological confrontation. Rather than evaluating rules based on their outcomes, incentives, and capacity to generate opportunities, people tend to judge them according to the political group proposing them and the interests they are believed to represent. A proposal is no longer evaluated on its economic or institutional merit, but is instead accepted or rejected based on its ideological origin.

In this way, ideology can become the primary instrument for securing social acceptance of institutions that concentrate power and distribute benefits in an exclusionary manner. Society ends up defending institutional arrangements that harm it, simply because it interprets them as part of a political project with which it identifies, or because it believes their implementation represents a defeat for the adversary.

The history of Spain and Latin America demonstrates that transforming institutions does not necessarily eliminate the mechanisms that permit resource extraction and power concentration. Religion, nationalism, socialism, progressivism, or the defense of traditional values can all provide different justifications for political projects that ultimately reproduce similar institutional relations.

Consequently, the fundamental problem is not determining whether a society is governed by the left or the right, nor is it establishing which group possesses the best arguments to justify its aspirations to power. The truly vital question is whether institutions allow all citizens to participate in defining rules, develop their capacities, and benefit from society's generated opportunities—or whether, conversely, they allow those who control power to use those rules to extract resources from everyone else.

A society does not build inclusive institutions simply by swapping one ideology for another, nor by letting an electoral majority decide who governs. It builds them by establishing effective limits on power, protecting the participation of all citizens, and preventing any single group from converting the state into an instrument for imposing its own interests over the rest.

The true lesson of history is that elites can change, ideologies can transform, and institutions can adopt new forms. But as long as society continues to accept that political power can be used to favor some by extracting resources and opportunities from others, extractive institutions will always find new justifications to reproduce themselves.

Ideologies change. The groups controlling power are replaced. Justifications evolve. But extraction can persist.

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