The colonial origins of economics

“The colonial origins of economics” by Ingrid Harvold Kvangraven, Surbhi Kesar and Devika Dutt, published in Third World Resurgence.

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.

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