Utopias in Equilibrium

Why Latin America writes rules it does not expect to follow

I thoroughly enjoyed James Robinson’s lecture at the Facultad yesterday. This was my first post-Nobel Robinson talk, so I was excited about it. I had seen an earlier version of this talk—the Mancur Olson lecture organized by Sebastian Galiani—but seeing it in person made it far more thought-provoking.

The word disequilibrium features in the title of the talk: “The Fundamental Disequilibrium of Latin America.” I found this confusing because I came out of the lecture convinced that what Robinson is really describing is an equilibrium: one where rules are adapted but not followed. But more importantly: one where most members of society know rules can be adapted but not followed, and everybody knows that everybody knows, and so on.

This equilibrium, featuring common knowledge about how rules that can be adapted but not followed, is particularly salient in Latin America. Referencing 20th century Uruguayan literature, the real and the ideal coexist on top of each other, or side by side, or on some other configuration that prevents the utopian version of society from clashing with its actual version. Rules are aspirational and can be ignored in equilibrium.

One example for his argument are the recommendations from countless “Misiones de Sabios” and other forms of over-diagnosing development. It’s Charles de Gaulle dissing Brazil: “[it’s] the country of the future, and always will be.” The argument helps explain the number and reach of aspirational constitutions going back to the 19th century.¹ It’s Colombia’s cokehead president raising the minimum wage 23% this year, with 5% inflation and unions asking for a 16% increase. Even before the unreasonable increase: the equilibrium leads to setting the minimum wage well over workers’ median monthly income. It's Nicolas Maduro declaring October 1st as the start of Christmas, right on par with Olimpica Stereo.

Why would societies adopt rules that they do not intend to follow? Robinson’s answer was surprising to me as his student. Having read and dissected his most cited and influential work, I expected some version of distributive conflict. Societies are unlikely to adopt rules that threaten the future payoffs or political power of elites, even if those rules would raise average living standards. In that sense, Why Nations Fail is closer to a political economy tradition that emphasizes power and distribution over efficiency. This framework is useful to think about institutional change but it’s insufficient to explain why rules that are not followed even exist in the first place.

In the lecture, Robinson instead shifted toward a cultural explanation. Some societies are more likely to believe that rules can be adopted and ignored if those rules are broadly understood as utopian. The Dominican Republic can change its constitution every few years because constitutions serve as repositories of aspirations rather than constraints. Minimum wages can raise incomes by decree. Christmas can start in October if one truly believes in its magic. Political leaders sell dreams that can be legislated and turned into decrees and ordinances without fundamentally threatening the status quo.

Latin Americans, in Robinson’s account, exhibit this set of beliefs for relatively idiosyncratic reasons that have to do with the cultural legacies from the Counter-Reformation after Protestant Reform. The Catholic Church, facing competition, decided to co-exist with other religions (Christian or not, in Europe and the New World) instead of making concessions to them. Robinson uses religious syncretism in the Peruvian Andes as an example. The Convento de Santo Domingo built on top of the Inca temple in Cusco illustrates society’s ability to accept the real and the ideal together without dealing with the contradictions. Indigenous people in Peru didn’t so much convert to Catholicism as they went “through the motions.”

This talk departs from Robinson’s earlier work in two ways: one practical and one conceptual.

First, Robinson is not primarily concerned with hypothesis testing. His focus is on the internal consistency of the argument rather than on identifying causal chains. While the economist’s impulse is to ask for tests and counterfactuals, I do not think Robinson is arguing for, or against, specific causal mechanisms.

This is partly because measuring the type of belief system he identifies is extraordinarily difficult. Measuring beliefs is hard enough; measuring the “ability to hold the real and the ideal at the same time” may be even harder. Unlike time preferences or risk aversion, this trait does not easily map into survey questions or experimental designs.

Instead, Robinson proposes an example as an argument: the Baroque artistic and architectural movement. Deliberately promoted by the Church, Baroque provided a visual and symbolic platform for religious syncretism—and, in Robinson’s telling, hints at the development of a broader belief system.

Baroque: “A pattern of ornamentation where there is no center, or if there is one, it can be continuously de-centered by more ornamentations. Everything can fit in and be added” (Robinson’s slides)

Church of Santa Maria de Tonantzintla, Cholula, Mexico. More pictures available in this travel .blogspot from 2013 (shoutout blogspot for ever).

For Robinson, the adoption of Baroque art in Latin America illustrates a willingness to adopt rules that can coexist with, rather than overturn, the status quo. Baroque churches often depict Catholic and indigenous deities alike. This works as an argument if one accepts that cultural beliefs can be inferred from artistic representation.

This is why I find the Baroque example particularly compelling. In recent work with a team led by Miriam Artiles, we explore a related idea: what archaeologists call material culture. We study ~30,000 ceramic objects belonging to twelve societies between 900 BC and 1400 AD and construct simple measures of ceramic style. The data show how material culture evolves systematically with social organization, conflict, and geography. We may never observe the precise belief systems of pre-Inca societies, but we can infer aspects of their evolution from the objects that survived. From this perspective, Baroque art is not evidence, but it is informative.

The second departure concerns the underlying concept of institutions. In earlier work with Acemoglu and Johnson, Robinson followed North’s “institutions as rules” framework: institutions are the rules of the game and the means of enforcement that constrain human behavior. This approach must grapple with the fact that some rules are not followed and that some constraints are not designed deliberately. Why Nations Fail addresses this by distinguishing between formal and informal rules. But some “informal rules” may be better understood as norms or beliefs, closer to culture than to institutions. If institutions are rules, they must be distinguished from cultural traits somehow.

An alternative view—associated with scholars like Avner Greif—argues that this distinction is unhelpful. Institutions are equilibria of behavior: regularities that persist because no individual has an incentive to deviate, given the beliefs and actions of others. What matters is not whether a constraint is written down or consciously articulated, but whether it is self-enforcing.

Seen through this lens, Robinson’s argument becomes clearer. The ability to simultaneously adopt utopian rules and live with contradictory realities is an equilibrium outcome, shaped by cultural forces (e.g. the Counter-Reformation) as well as by classic transaction costs underlying principal–agent problems. “Obedezco pero no cumplo” is not a failure of institutions, it is the institution. It’s an equilibrium behavior that reinforces the status quo and blocks socially efficient institutional change.

Taking stock

Robinson gestures toward a comparative development analysis: North America is not immune to utopian thinking (e.g. William Penn, “the pursuit of happiness”) but lacks the Counter-Reformation legacy that produced the Baroque. Still, the goal of the lecture is not explaining diverging patterns of development. It is to provide a framework for understanding a particular Latin American contradiction.

The danger for development is that adopting rules that are not followed prevents learning. When rules fail to bind, societies cannot learn from implementation. There is an “absent feedback loop”: reality never disciplines the utopia because failed utopias are simply added to the repertoire of aspirations without understanding why they failed to materialize.

Petro may never receive the feedback from his terrible labor market policies. The utopian scenario when workers can earn 18% higher real wages by decree will coexist with the reality of most workers, which is informality and low wages. Colombia’s current fiscal stress reveals how far the 1991 Constitution is from reality—but if Robinson is right, the likely response is not convergence between aspirations and reality, but a renewed utopia.

---

Escuchas

I wanted to write about my five favorite albums from 2025, but it’s proven more difficult than I imagined. So here they are in no particular order, with links to bandcamp or youtube, though they are available in all DSPs.

• Luis7Lunes & Ignorancia Sofisticada - Miedo [youtube]

  • “la piscina del malestar es honda / explotar por dentro: aluminio en microondas / o explorar ese vacío, traigan / del espacio sondas”

• Oklou - choke enough [bandcamp]

• Nick León - A Tropical Entropy [bandcamp] + [remixed version]

• MIKE - Showbiz! [bandcamp]

• Chaos in the CBD - A Deeper Life [bandcamp]

• Bonus (not quite an album): Logic1000 - DJ-Kicks mix [bandcamp]

1. If I were a master’s student interested in these questions, I would attempt to measure how “utopian” different constitutions are by analyzing their texts and comparing them to explicitly utopian works of literature written in the same language. Such a measure could then be used to study the consequences of the gap between the ideal and the real, between constitutional aspirations and actual outcomes. Robinson’s conjecture is difficult to test directly within this framework, but it suggests several guiding questions. For example: is political or social conflict more frequent when constitutions are more utopian, in the sense that aspirations are further removed from reality? Is the relationship between the aspiration–reality gap and conflict weaker in Latin America? What about fiscal balance?Does it deteriorate more quickly following the adoption of highly aspirational constitutions? A project along these lines could form a viable and interesting MA thesis.