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Standardizing the fiscal state: cabal tax farming as an Intermediate Institution in early-modern England and France

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  • Noel D., Johnson
  • Mark, Koyama

Abstract

How did modern and centralized fiscal institutions emerge? We develop a model that explains (i) why pre-industrial states relied on private individuals to collect taxes; (ii) why after 1600 both England and France moved from competitive methods for collecting revenues to allocating the right to collect taxes to a small group of financiers—a intermediate institution that we call cabal tax farming—and (iii) why this centralization led to investments in fiscal capacity and increased fiscal standardization. We provide detailed historical evidence that supports our prediction that rulers abandoned the competitive allocation of tax rights in favor of cabal tax farming in order to gain access to inside credit and that this transition was accompanied by investments in standardization. Finally (iv) we show why this intermediate institution proved to be self-undermining in England where it was quickly replaced by direct collection, but lasted in France until the French Revolution.

Suggested Citation

  • Noel D., Johnson & Mark, Koyama, 2012. "Standardizing the fiscal state: cabal tax farming as an Intermediate Institution in early-modern England and France," MPRA Paper 40403, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:40403
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    File URL: https://mpra.ub.uni-muenchen.de/40403/1/MPRA_paper_40403.pdf
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    References listed on IDEAS

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    Cited by:

    1. Mark Koyama, 2013. "Preindustrial Cliometrics," Economic Affairs, Wiley Blackwell, vol. 33(2), pages 268-278, June.
    2. Anderson, R. Warren & Johnson, Noel D & Koyama, Mark, 2013. "From the Persecuting to the Protective State? Jewish Expulsions and Weather Shocks from 1100 to 1800," MPRA Paper 44228, University Library of Munich, Germany.
    3. Franck, Raphaël & Johnson, Noel D. & Nye, John V.C., 2014. "From internal taxes to national regulation: Evidence from a French wine tax reform at the turn of the twentieth century," Explorations in Economic History, Elsevier, vol. 51(C), pages 77-93.
    4. Johnson, Noel D. & Koyama, Mark, 2013. "Legal centralization and the birth of the secular state," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 959-978.

    More about this item

    Keywords

    State Capacity; Standardization; Tax Farming; France; England; Transaction Costs;

    JEL classification:

    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-

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