Faculty of Arts & Social Sciences
Different Paths to the Modern State in Europe: Interaction of political regime with economic structure and interstate competition
K. Kıvanç Karaman & Şevket Pamuk
Monday, May 10,
Abstract: The process through which Early Modern (1500-1800) European states monopolized tax collection and achieved gains in fiscal capacity has been at the center of the study of state formation. In this article, based on our recently constructed revenue series for major European states, we review the empirical patterns for the period and investigate alternative theories of state building. We find that, on average, changes in economic structure, as proxied by urbanization, and interstate competition, as proxied by war pressure, had positive effects on states’ fiscal capacity. As for representative and authoritarian regimes, we argue that their relative fiscal performance was determined by the makeup and the incentives of the domestic partners of the ruler. In more rural and agrarian economies where elites’ resource extraction capacity and bargaining power vis-a vis the ruler was based on local control over coercion, representative assemblies facilitated landlords’ capacity to organize an administrative apparatus as separate from and substitute for that of the ruler. In contrast, in more urban and market based economies, elites leveraged information asymmetries in bargaining, and representative assemblies primarily entailed a contract between rulers and domestic elites over the joint governance of a unified coercive apparatus. Consistent with this distinction, we provide evidence that while in more urbanized polities representation aligned ruler’s and elites’ interests with respect to war, in more rural polities it facilitated elites’ consolidation of local administration at the cost of ruler and the fiscal effect of war was centrifugal. Our findings lay out a unified framework to explain how similar institutions facilitated state building in some polities and not in others.