November 14th, 2020

The Continuous Moment

STATES AND MARKETS

The conclusion of the United States election has prompted a resurgence of commentaries on the state's role in markets. By focusing on the state's capacity to shape and alter market structure, these discussions build on a longstanding academic tradition which overturned classical historical accounts of free markets.

Among the most influential texts is CHARLES TILLY's 1990 book, which examines the co-development of commercial capitalism and nation states.

From the introduction:

"The story concerns capital and coercion. It recounts the ways that wielders of coercion, who played the major part in the creation of national states, drew for their own purposes on manipulators of capital, whose activities generated cities. Men who controlled concentrated means of coercion (armies, navies, police forces, weapons, and their equivalent) ordinarily tried to use them to extend the range of population and resources over which they wielded power. When they encountered no one with comparable control of coercion, they conquered; when they met rivals, they made war. War, and preparation for war, involved rulers in extracting the means of war from others who held the essential resources—men, arms, supplies, or money to buy them—and who were reluctant to surrender them without strong pressure or compensation.

The organization of major social classes within a state's territory, and their relations to the state, significantly affected the strategies rulers employed to extract resources, the resistance they met, the struggle that resulted, and the sorts of durable organization that extraction and struggle laid down. These relations varied significantly from Europe's coercion-intensive regions to its capital-intensive regions. The demands major classes made on the state, and their influence over the state, varied correspondingly. The increasing scale of war and the knitting together of the European state system through commercial, military, and diplomatic interaction eventually gave the war-making advantage to those states that could field standing armies; states having access to a combination of large rural populations, capitalists, and relatively commercialized economies won out. They set the terms of war, and their form of state became the predominant one in Europe. Eventually European states converged on that form: the national state. "

Link to the book.

  • A 2019 article by Didac Queralt compares tax-financed and externally-financed wars from 1816 to argue that "globalization of capital markets in the nineteenth century undermined the association between war, state making, and political reform." Link. And a recent article by Roberto Bonfatti, Adam Brzezinski, K. Kıvanç Karaman, and Nuno Pedro G. Palma draws on "money stock and tax revenue data for European states from antiquity to the modern period" to argue that "monetary and fiscal capacity, and by extension, markets and states, have a symbiotic relationship." Link.
  • In the most recent edition of Herman Mark Schwartz's States Versus Markets, a helpful overview of debates on the Great Divergence: "Other ancient agrarian empires, like China and the Ottomans, were successful in monetizing their territory, taxing peasants, and subordinating both merchants and the landed aristocracy. But no European state succeeded in unifying Europe." Link.
  • "The emergence of a peculiarly British version of the fiscal-military state, complete with large armies and navies, industrious administrators, high taxes and huge debts, was not the inevitable result of the nation’s entry into European war but the unintended consequence of the political crisis which racked the British state after the Glorious Revolution of 1688." From John Brewer's classic Sinews of Power. Link. And a recent article by Benoît Maréchaux challenges Brewer's traditional narrative by "analyzing the business organisation and activities of Genoese naval entrepreneurs who managed galleys for the Spanish Empire in the late 16th and early 17th centuries." Link.
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