Why Nations Fail (by Acemoglu and Robinson) is a book I am currently reading that attempts to explain the enormous variations in wealth seen in the world today. It attributes these differences to economic institutions, which are largely dictated by political institutions. Institutions is intended in the broad meaning - eg property rights, democracy etc. It highlights how both the patterns in wealth and the patterns in these institutions have been very (though not entirely) stable over the last 150 years, and argues an institutional inertia (my term) that goes beyond the influence of the powerful individuals involved. It suggests why it is so hard to break the mold, and how to break it (not up to that part yet).

It also rejects some of the conventional arguments - eg:

* Culture - that Protestant, Judea-Christian, European or Roman culture is what makes the west so rich, while attempting to disentangle the various meanings of culture. Culture is part of the economic and political institutions that make countries rich or poor. He even argues that the middle east is not poor because of Islam, though I suspect he has never met anyone like Abu.

* Geography - that people in hot countries are lazy, or the soil is less fertile, and various more complicated version of this theory. It addresses the "Guns, Germs and Steel" hypothesis of Jared Diamond and puts it in it's place as an explanation for why the west was able to dominate the world, while highlighting the inability of this theory to explain vast differences in wealth seen in those countries colonised or settled by Europeans.

* Ignorance - that leaders or people in poor countries do not understand how to get rich. This is the explanation favoured by many modern economists. It highlights that even when they do understand, the people in power usually don't want to. Even when they are forced to or try to make the change, it is fraught with danger, because the problems are institutionalised within the economy and the politics. The idiotic economic policies of various tinpot dictators are not determined out of ignorance of economics, but by the economic and political institutions that for the tinpot dictators are an unchangeable reality they must work within.

The causes of wealth and poverty are economic and political freedoms and rights that are closely linked or interact. For example - secure property rights, including patents, economic freedom, democracy and a broad distribution (separation) of political power.

In historical terms, it largely attributes these differences to "accidents of history".