Whenever I lecture about markets, wealth and poverty, I always make one point which invariably shocks students: if you want to understand why some countries have successfully transitioned from widespread poverty to material affluence, and others haven’t, the rule of law is far more important than democracy.
Part of the stunned reaction flows from the fact that the word “democracy” functions today as a synonym for everything nice and wonderful. Once, however, we get past the inevitable “Are you saying that you’re against democracy!?!” protestations, followed by my assurance that I favor liberal constitutionalism rooted in natural law premises (quite a few students pick up on the nuance), the more the students recognize that while things like universal suffrage have their own worth, they have little to do with economic growth per se. Moreover, as students grasp the meaning of rule of law, they gradually recognize how countries with similar starting points in terms of demographics, natural resources, geography, religion, culture, etc., can end up in very different economic places.
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