The Colonial Origins of Economics Ingrid Harvold Kvangraven, Surbhi Kesar and Devika Dutt

The recent Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2024 was awarded to Daron Acemoglu, Simon Johnson and James Robinson (henceforth, AJR). The Nobel committee noted that the laureates “have demonstrated the importance of societal institutions for a country’s prosperity. Societies with a poor rule of law and institutions that exploit the population do not generate growth or change for the better.” One of their key insights is that to understand differences in prosperity, we need to consider the “colonial origins of comparative development” (Acemoglu et al 2001). Some have called this a “colonial turn” in economics (Ince 2022). While this is an improvement on a discipline that has historically focused on markets as the main avenue for development, and has tended to neglect the role of colonialism in shaping economies, this colonial turn nonetheless falls short of understanding the roots of global (and local) inequality and the institutions that underpin the economic system. To understand how AJR managed to integrate colonialism into economics without addressing the capitalist dynamics of uneven development, we need to go back to the colonial origins of economics.

Economics has arguably been founded on Eurocentrism since its inception as a discipline (Dutt et al 2025). Economics assumes that development (of capitalism) took place in Europe endogenously, based on a range of internal factors such as technological progress, high productivity, hard work, and cultural and social changes, which meant that the production for the market aligned with what economists would consider rational (Amin 1988). Consequently, if the same conditions can be created in other countries, development can also take place there. This Eurocentric narrative, however, is partial and biased, as it distracts from the violent processes of colonialism, exploitation, changes in social relations, imperialism, and racialisation that shaped the advancement of capitalism in Europe, while creating underdevelopment in other parts of the world (Rodney 1972; Brenner 1976; Patnaik and Patnaik 2021; Inikori 2020). As such, it reduces the process of economic development to fi nding the right kind of institutional mix that ushers in efficiency increases, technological progress, and rational decision-making, in order to propel underdeveloped countries to a path of prosperity. Given this Eurocentric view’s lack of understanding of the role of colonialism in shaping the global economy and creating the development underdevelopment dichotomy as a result of a common historical process, it actually serves to reinforce a colonial view of the world that sees the global North economies as naturally better models for development.

As the discipline’s focus narrowed during the Cold War to strengthen its reliance on methodological individualism and methodological nationalism which sees the nation state and the individual as the most relevant units of analysis without recognising the structures that shape and constrain both the global economy and individual behaviour (Blaug 2003; Fine and Milanokis 2009) the Eurocentric narrative has only been further cemented and has largely gone unnoticed and unquestioned.

Read the full article

(This article was originally published in The Economic and Political Weekly on October 19, 2024)