In the long quest for the reasons behind countries' economic development, geography and more recently political and legal institutions occupy prominent positions. Geography's role typically works through endowments and, indirectly, through constraints on the nature of feasible economic activities. Legal and political institutions, instead, mediate the incentives of political and economic elites, shaping innovation, investments in technology, and political extraction, ultimately driving what David Landes dubbed “answers to geography” (The Wealth and Poverty of Nations 1998, p. 17). Yet for all the efforts devoted to understanding the role of geography and institutions, we know relatively little about how they interact over time to shape the political and economic fortune of nations.

The core contribution of this important book lies precisely in the fact that it offers a compelling account of the nature of this interaction in the case of the United States. In The Evolution of a Nation, Daniel Berkowitz and Karen B. Clay provide a rich account of the origins of political and legal institutions across the 50 American states. The focus is on the way in which the degree of political competition within state legislatures, the degree of judicial independence in state courts, and the connection between the two have shaped the economic fortunes of American states from before the Civil War until current times.

Like all good stories, this one begins with a puzzle, in this case about patterns. The authors establish, on the basis of a remarkable data collection effort, three patterns of persistence during the period 1866–2000 (Figures 1.2–1.4 on pages 6–8): persistence in levels of political competition in state legislatures, persistence in levels of judicial independence, and, finally, persistence in the levels of states' per capita income over time. With the exception of the Reconstruction period (1866–78), political competition during the period 1900–18 was highly correlated with other subperiods during 1880–2000. The same correlation is even stronger in terms of judicial independence. Given massive economic, social, and political transformations throughout 1866–2000, what explains these patterns? The answer, according to Berkowitz and Clay, lies in the interplay between geography and colonial legal origins.

It is interesting to note that in this account, geography does not matter primarily via endowments or wealth but through its impact on political competition via the levels of occupational heterogeneity within the state. The connection among geography, occupational heterogeneity, and political competition is tightly defined theoretically and well established empirically. The link is robust to various econometric specifications and to concerns for reverse causality, as well as to the inclusion of controls for wealth and, most prominently in the United States context, slavery. Those states characterized by higher levels of precipitation and larger distances to navigable waters have consistently lower levels of political competition in their legislatures. The crucial mechanism, carefully established in Chapter 3, works through levels of occupational heterogeneity. Precipitation, temperature, and distance to navigable waters generate occupational homogeneity, as a result of which “a single party that reflected the interests of this occupation tended to dominate” (p. 93).

All things being equal, this result leads to worse outcomes because it leads to an institutional environment that is less conducive to the protection of property rights, investment, and innovation, and more conducive to the inefficient allocation of rents. This is in large part due to the tightly knitted connection between political competition and judicial independence: “[W]hen political competition is weak, the majority party in a legislature prefers judicial elections. Elections allow the majority party to put political pressure on judges to behave in ways preferred by the majority party. When political competition is strong, the majority party may become the minority party in a future election. In this case, the majority prefers to appoint judges because they are likely to make favorable rulings in the future if a new majority party emerges” (p. 134). While this result is not particularly novel, as Berkowitz and Clay explicitly acknowledge, the finding that this process is mediated by the colonial legal origins of the states is important.

Colonial legal legacies matter because civil law systems, as opposed to common law ones, tend to have stronger legislatures, less independent judges, and lower judicial budgets. Thus, they set the stage for conflict over judicial independence: In other words, colonial legacies condition the extent to which increasing levels of political competition translate into higher levels of judicial independence. After a painstaking effort to classify the American states according to their colonial legal origin (Chapter 2), the authors develop an empirical analysis to show that partisan elections of judges give way to more independent judiciaries at high levels of political competition. In states with a civil law tradition, however, the levels of political competition required to trigger this change are significantly higher than in common law states. Civil law states also react differently to the introduction of judicial independence; they fund their judicial systems at significantly lower levels following the reform. The authors explore the determinants of the levels of judicial independence, term lengths, and the introduction of intermediate appellate courts as different dimensions of the problem, and offer a large number of specifications and robustness checks to substantiate their argument.

Taken together, the argument and evidence in The Evolution of a Nation make a major contribution to an understanding of the determinants of economic development across the United States. The focus on persistence, however, comes at a price, downplaying an important mechanism that has shaped the economic and political evolution of states between 1866 and 2000. When discussing why the levels of political competition are so sticky over time, the authors point to two reasons: Economic activities change slowly and politicians manipulate institutions to preserve their relative position of power. Yet state politicians are also subject to external constraints and sources of change, both economic and political, that may limit their freedom to maneuver. In any federation, the changing balance of power between the federal government and the states is a major source of political and economic change. Such a balance typically reflects and reinforces transformations in the nature of the party system, which in turn speaks directly to the two mechanisms at work in this book, and shapes the levels of redistribution among states via the federal government and, by implication, their social and economic outcomes.

The United States is no exception. The federal government collects a lot more than it spends on states like New York or Minnesota and spends a lot more than it collects from states like Alabama or New Mexico. It seems odd to tell a story about the evolution of American states without paying closer attention to the increasing role of the federal government in politico-economic terms, especially from the Great Depression onward. This gap reflects a more general imbalance in the book: While the mechanisms driving persistence are well theorized and substantiated, those linking institutions and economic outcomes over time are treated somewhat superficially. By addressing this imbalance, we will advance our understanding of the very deviations from persistence observable in the figures motivating the book. Pursuing this task with the same level of insight and care that Berkowitz and Clay have shown in unveiling the effects of geography and colonial legacies would be to everyone's benefit.