Pharaoh’s Cage: Environmental Circumscription and Appropriability in Early State Development

What explains the origins and survival of the first states around five thousand years ago? In this research, we focus on the role of productivity shocks for early state development in a single region: ancient Egypt. We introduce a model of extractive state consolidation that predicts that political instability should be low whenever environmental circumscription is high, i.e., whenever there is a large gap between the productivity of the area under state control (core) and that of the surrounding areas (hinterland). In these periods the elite can impose high levels of taxation that the population will be forced to accept as exit is not an attractive option. In order to test this hypothesis, we develop novel proxies for historical productivities on the basis of high-resolution paleoclimate archives. Our empirical analysis then investigates the relationship between proxies of the productivity of the Nile banks and of the Egyptian hinterland on the one hand, and political outcomes such as ruler and dynastic tenure durations and the intensity of pyramid construction on the other, during 2685 - 750 BCE. Our results show that while both too high or too low Nile floods are associated with a greater degree of political instability, periods with a greater rainfall in the hinterland (and hence a lower degree of environmental circumscription) are associated with an immediate rise in military and pyramid construction activity but also with a delayed increase in political instability, since the decline in effective circumscription provides the farming population with an outside option in the hinterland.