The Success of the Embedded State in England

Many states exhibit high degrees of capacity without the fiscal resources necessary to fund a modern bureaucracy. We argue that they achieve this by exploiting features of the social structure of the societies they govern to motivate individuals to engage in bureaucratic and governance tasks without pay. We develop and illustrate the concept of the “Embedded State†using a unique survey of British urban government from 1835. Since British local authorities had few resources, only two-thirds of positions were paid. We first show that unpaid positions were significantly more productive than paid ones. We then show that unpaid positions conveyed prestige and were ‘stepping stone’ positions, provided different on-the-job incentives, and were taken up by the socio-economic elite. We also show that the successful Embedded State featured patronage and corruption and could not fully motivate unpaid bureaucrats to implement onerous tasks.