Stephen Haber, Armando Razo, and Noel Maurer provide a detailed, theoretically rich examination of the interplay between political chaos and economic growth in Mexico. Why did Mexico's economy continue to grow through a series of civil wars, coups, and outside interventions? More generally, what conditions lead to robust growth under political instability? Political scientists, economists, and others have searched for, and failed to find, a consistent link between political instability and economic failure. These authors develop an argument on the conditions under which instability and robust economic growth go hand in hand, using the years before, during, and after Mexico's chaotic revolution as their case study.

The state's propensity to trample on property rights lies at the center of the discussion: If economic actors live in constant fear that their assets will be seized, they will not invest, they will not do business, and a country's economy will not grow. Investors prefer a stable democratic system with rules and institutions offering credible property-rights protections in the long run. Absent stable democracy, investors will settle for a stationary bandit, a dictator with a long-term stake in the economic success of the country. The bandit's actions are restrained by a desire to reap maximum rents through taxation, remuneration the dictator will reduce if he or she seizes assets to the point that they deter investment, and thus taxable revenue. We would expect instability, a series of short-term dictators punctuated by chaos, to produce inferior results. These frequent changes in rulers and rules should cause capital flight and mattress stuffing, leading to slow economic growth or even economic contraction. Haber, Razo, and Maurer point out that such instability often fails to strike fear into the hearts of economic actors, who befuddle social scientists by driving economic growth through decades of on-and-off political disorder. The key to sorting out this puzzle, and the main focus of this book, is to illuminate the conditions under which property rights remain secure over multiple political regimes of varying terms and characters.

The book's first chapter provides a focused, enlightening discussion of existing arguments on the interplay of regime type, political stability, property rights, and growth. The second chapter turns to the theoretical arguments. The authors point out that states need not provide property-rights security across the board but can achieve positive economic growth by guaranteeing these rights selectively. “Vertical political integration” (VPI) (p. 29) is crucial to the provision of these rights across changing governments, and thus to economic progress under instability. VPI involves a coalition of rent-seeking asset holders, a weak government that extracts rents from these asset holders, and a third-party enforcer that receives a payoff for protecting asset holders from the state. VPI's positive effect on property-rights protection is enhanced by three conditions: 1) Asset holders' technology or markets cannot be easily expropriated; 2) revenues from these asset holders are crucial to the survival of the government; and 3) asset holders are organized enough to shut down collectively, cutting off revenue to the government. The central argument of the book thus boils down to this: Property rights will be selectively provided over unstable periods when a government–private sector coalition receives property-rights guarantees from a stable third party and where a succession of weak, dependent governments cannot successfully expropriate assets.

The bulk of the book applies these theoretical arguments to a variety of economic sectors. Each chapter evaluates the degree to which VPI in Mexico allowed robust growth through periods of stable dictatorship, chaotic revolutionary war, and a disorganized series of autocratic regimes. The chapter on finance highlights how weak postrevolutionary governments ensured the property rights of banks and investors by allowing them to “write the rules governing their activities” (p. 122). Government commitment not to expropriate assets was ensured by a stream of revenue to key politicians, and also by the integration of these politicians into the banking sector. These relationships were durable, reemerging after a revolutionary-era slowdown and helping to restore economic growth. Subsequent chapters address industry, petroleum, mining, and agriculture, providing detailed accounts of the economic and political ups and downs of these sectors. Third parties are often key to supporting the private sector's property rights, such as U.S. government advocacy for its oil companies and labor unions' using their leverage within government to protect private industry from government predation. The conclusion chapter summarizes the relevance of the study along disciplinary lines, with sections for history, political science, and economics.

This work provides a rich story of how property rights remained secure for much of Mexico's key economic actors over widely shifting political terrain. The central insight is its highlighting of the types of state–market relationships that avoid predation under instability. Such an alignment of forces may even provide better property-rights protection than more stable arrangements. For instance, the authors point out that the introduction of political stability in the late 1930s opened the door for the expropriation of the oil industry, a predatory act that weaker states in unstable times were unable to pull off. Such insights are welcome, as is the well-documented journey through the political economy of Mexico.

The Politics of Property Rights has a few shortcomings. The authors have gone to great lengths to provide quantitative data and other evidence to tell their story, but many will wonder why they did not advance their argument on a much more recent case where such limitations would be rarer, one that might yield more lessons for contemporary policy. The authors suggest that their framework is generalizable, but they could go further in offering examples of other cases that displayed VPI and grew, or cases that do not display VPI and did not grow. Overall, however, the authors have provided a readable and well-documented work that helps to unpack the difficult instability-growth puzzle.