Geography, Institutions, and Culture

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What drives wealth creation?
Author

Stephen J. Mildenhall

Published

2025-08-21

Modified

2025-08-21

When people talk about why some societies succeed and others stagnate, three ideas often come up: geography, institutions, and culture. Jared Diamond emphasizes geography and ecology, Daron Acemoglu and James Robinson put institutions at the center, and David Landes stresses culture. It is tempting to see these as competing explanations, but that misses the deeper point. They are really talking about different timeframes, and the truth lies in the interaction between them.

Diamond is concerned with deep history, over tens of thousands of years. Why did Eurasia, with its east–west axis, its domesticable crops and animals, and its disease environments, develop complex states earlier than other continents? Acemoglu’s canvas is centuries, not millennia. He asks why, starting from the same colonial origins, North America diverged so sharply from South America. The answer, he argues, lies in the institutions that either limited elite power and broadened opportunity or did the reverse. Landes operates on yet another timescale. His concern is why societies that look similar in terms of geography and formal institutions can nonetheless differ in performance. He finds the answer in culture: values about time, work, trust, and openness to innovation.

The sharp debates between these perspectives are often framed in “I win, you lose” terms, but that is misleading. In practice the three factors interact. Geography sets constraints, institutions structure incentives, and culture shapes how rules are interpreted and sustained. Each of the three can dominate under different conditions, and feedback loops make the story path dependent. Scholars like Douglass North and Nathan Nunn have pushed toward this integrative view. North showed how institutions evolve within belief systems and norms, and Nunn demonstrated how historical shocks persist through both institutions and culture. The result is a richer, less reductionist picture.

It also helps to remember the timeframe. In small forager groups institutions are thin to nonexistent, and culture is broadly shared. Geography dominates: it decides where people can live, what they can eat, and how large their groups can be. With the agricultural revolution, surpluses emerge, and institutions suddenly matter. Who controls the storehouses, who extracts labor, who commands armies — these become the questions of survival. Geography still matters, since only certain places allow farming, but politics decides which societies consolidate power.

Over time, culture begins to play a larger role. The Axial Age produced religions and philosophies that reshaped norms of governance and cooperation, often providing the glue that institutions alone could not supply. In the early modern period, and especially with the Scientific Revolution and the Industrial Revolution, culture in the sense of openness to knowledge, rational inquiry, and innovation becomes decisive. Education, long peripheral, is suddenly central: without it the new ethos cannot spread. Institutions matter too, but more as enablers than as drivers. Geography recedes further into the background.

In the modern era, the balance is once again shifting. Institutions remain critical, but they interact tightly with culture. Democracies, welfare states, and international regimes work only if there is trust, civic engagement, and a willingness to support them. Culture in the Landes sense now matters as much as institutions in the Acemoglu sense. Geography is reasserting itself through climate change and resource competition, but always mediated by politics and culture.

Looking back, the baton has passed in a sequence. Geography dominates in the forager world, institutions in agrarian and early state societies, culture in the scientific and industrial age, and today institutions and culture work together in a tight embrace. Education is the hinge that connects them. Before there was much to learn, its role was small. Once knowledge began to accumulate, it became the key to making institutions inclusive and culture adaptive.

Here is one way to summarize that progression:

Epoch Rough dates Dominant factor Why it mattered most
Foragers to ≈10,000 BCE Geography Environments dictated where humans could survive; institutions minimal, culture broadly shared.
Farmers and early states ≈10,000–1500 BCE Institutions Surpluses required rules, hierarchy, taxation, and armies; geography still set the stage.
Empires and faiths ≈1500 BCE–1500 CE Institutions → Culture States expanded through bureaucracy and law; religions and philosophies gave durable cultural frames.
Early modern and industrial ≈1500–1900 Institutions → Culture Science, innovation, and education drove divergence; institutions enabled it, geography was conditional.
Contemporary ≈1900–present Institutions × Culture State capacity and international regimes depend on civic trust and norms; geography re-enters through climate and resources.

References.