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

Noel Johnson () and Mark Koyama

MPRA Paper from University Library of Munich, Germany

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.

Keywords: State Capacity; Standardization; Tax Farming; France; England; Transaction Costs (search for similar items in EconPapers)
JEL-codes: D02 H11 K00 N23 N44 (search for similar items in EconPapers)
Date: 2012-07-31
New Economics Papers: this item is included in nep-acc and nep-his
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:40403

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