"The standard approach to policy-making and advice in economics implicitly or explicitly ignores politics and political economy, and maintains that if possible, any market failure should be rapidly removed," Daron Acemoglu and James Robinson write in a new essay. "This conclusion may be incorrect; because it ignores politics, this approach is oblivious to the impact of the removal of market failures on future political equilibria and economic efficiency, which can be deleterious." The political economy, they argue, actually plays a vital part in the crafting of sound economic policy.

In a Foreign Policy review of the essay, the publication reports that Acemoglu and Robinson are urging economists to pursue a less standard approach to drafting policies. Political factors aren't just externalities that make economic systems function more efficiently, they argue. Rather, political issues are critical to shaping economic outcomes. An example they explore in the essay is the way that labor unions historically funded and founded political parties which then had a direct impact on the extent of taxation and income redistribution. It is crucial to assess the political sphere and incorporate it into any economic analysis.

Perhaps best known for their New York Times bestseller Why Nations Fail, the two economists provide insightful answers to decades old questions. In their book and on their website, they delve into the complex reasons that some nations are poor while others are prosperous. The culmination of 15 years of groundbreaking research, the book details the important role that government and institutions play in the economic success of a nation. In their keynotes, they expand on the points raised in their breakthrough book to show us how to make real change in the countries that need it most.