The Political Economy of Absolutism Reconsidered

Abstract

Between the mid-seventeenth century and the end of the nineteenth century, Europeans transformed their political and economic institutions to create modern states. Among the many aspects of this transformation, I focus in this chapter on four that played a key role in determining the process by which countries changed. Over these two centuries, there were three key political changes: central governments increased their control over expenditures and taxation, representative institutions became the norm, and expenditures for war increased stunningly. Finally, the key economic institutions were also transformed in that markets in general, and financial markets in particular, lost their medieval or early modern regulations and expanded dramatically. The spread of this dramatic transformation was slow. Indeed nearly two hundred years elapsed between the Glorious Revolution and the unification of Germany in 1870. This dispersion in time is odd at least in hindsight, since the countries that first adopted these new institutions derived considerable political and economic advantages. This fact poses a common problem for theories of long-term change, since they imply that societies that face common challenges should evolve in similar ways. The historical evidence, however, argues that out theories must bear the burden of explaining both evolution and stasis. This chapter argues that the uneven process of political and economic change across European countries can best be explained by focusing on fiscla institutions.