For most of post-Roman, premodern history, Europe was hardly the most powerful region in the world. China and Japan were in many ways far more powerful than any European power and had more advanced technology. Africa too featured sprawling empires, such as that of Mali. Europe, by contrast, was something of a backwater, struggling with depressed trade, frequent war, limited education, and disease among other obstacles. And yet starting only a few hundred years ago, strong states emerged in Europe that were able to mobilize vast wealth and military strength sufficient to subdue most of the globe.
The question that scholars have grappled with is how this happened. The “state-formation” literature is generally more applicable to the discussion of state capacity (a topic to be covered in Book 3 of my series) rather than the economy per se; but it is still useful to us as we discuss worldbuilding models of the economy, because in one of the leading theories of state formation, economic development—and the growth of cities in particular—plays a central role.
In Charles Tilly’s Coercion, Capital, and European States, AD 990-1992, he argued that European cities played a key role in the development of strong states because of their role in concentrating and deploying capital. While many states (such as Russia) were heavily coercion-intensive, states that featured a large amount of capital (such as the Netherlands) eventually found that they could mobilize more of that capital by sharing political rights with the merchant class. As a result, high-capital states that made political bargains with their populace were eventually able to build more powerful militaries than predominantly coercive states, and that particular model of state structure became common.
(It is worth pointing out that Tilly explicitly limited the scope of his theory to Europe due to the unusual concentration of urban cities and high populations found there, and did not apply the theory to other regions. For a while, there was a thriving literature arguing that Tilly’s argument failed in various other regions, or that it did not account for various factors even in the European experience. When the dust died down, I think the best evaluation is that Tilly’s basic thesis holds true even outside of Europe where its necessary conditions hold, such as in China. And where it does not hold, scholars trying to explain why have enriched the general theory by discussing the differing conditions that resulted in other outcomes, such as Jeffrey Herbst’s work on African state-building.)
Fundamentally, the driving force behind the development of strong states was the need to prepare for war. The first states were formed by men seeking to extend their control over others, and the states with the most power would extend their control as far out as it could go, stopping only when they reached the limit of their ability to project power—whether because of the limitations of available transportation technology, geographical barriers, or the opposition of other states. As a result, in each region, the most powerful state set the terms of coexistence—neighboring weaker states could either submit to vassalage or outright conquest, or else spend disproportionate resources on their defense. As Tilly puts it, “[M]ost rulers settled for a combination of conquest, protection against powerful rivals, and coexistence with cooperative neighbors.”
Within the constraints imposed by powerful rivals, states had to build structures to efficiently extract resources from their populations (or other populations forced to pay tribute or subject to plundering) and then translate those resources into military power. Tilly zeroes in on four variables to explain the variable success of a European state in doing so:
- its concentration of capital,
- its concentration of coercive power,
- its need, and ability, to prepare for war, and
- its position within the regional or international state system.
For Tilly, the key difference was between capital-intensive and coercion-intensive regions. In short, coercion-intensive states were able to mobilize larger armies, at least initially; but their advantage was nullified when warfare changed to require more and more money, to pay for professionalized troops, new weapons, and regularized logistics, and coercion-intensive states tended to have stunted economies as a result. Meanwhile, capital-intensive city-states had skilled professional armies, but small ones; they had not enough population to compete effectively with national states in the long run. The sweet spot was occupied by national states built around large, capital-intensive cities so that their political institutions tended to grant rights to the holders of capital. As a result, they could access large national populations and the money needed to fuel powerful armies.
Coercion
Tilly describes three kinds of European states during the period under discussion:
- Tribute-taking empires tended to have relatively low accumulations of coercive power, but high concentration—that is, they might have had one or two armies that periodically swept through their vassal territories, demanding resources at swordpoint and punishing rebellions. Such empires were relatively fragile; if an adversary managed to accumulate significant coercive power, the empire’s ability to extract tribute might collapse entirely.
- Systems of fragmented sovereignty typically included city-states as well as urban federations such as the Hanseatic League or the early Netherlands, which featured several loci of political power without a single clear sovereign. Such systems tended to have high accumulations of coercive power (usually because each of the constituent cities or other units was rich enough to afford its own army). This is almost true by definition; if a fragmented system were not able to accumulate a lot of coercive power, it would have been swallowed up by a competitor. However, such systems usually featured low coercive concentration, as the cities often cooperated poorly on defense and rarely subordinated their forces to a unified command.
- Finally, national states were in the middle: featuring a high concentration of strong coercive power, but forced to bargain with their populations for their cooperation—typically by granting them political rights or participation of one kind or another.
Capital
Whether capital is concentrated or not depends heavily on the available technologies, and whether they tend to encourage distributed or centralized production.
In a subsistence economy, there is practically no capital at all as we are used to thinking of it. Even if there are a small handful of nobles living in castles, and merchants living in sturdy houses, most people have absolutely nothing to their names. Fernand Braudel (The Structures of Everyday Life, p. 282), writing of the centuries before the eighteenth century in Europe, notes that official inventories of possessions of the deceased almost invariably were restricted to “only a few old clothes, a stool, a table, a bench, the planks of a bed, sacks filled with straw.” That was all that most people had. Capital as we know it was the province of a very few people who engaged in large-scale trade or taxation. Labor-saving devices were few, even including such things as plows (many farmers were forced to use spades and dig by hand). The most readily available form of capital was living beings: livestock, slaves, professional hirelings, or peasants drafted for periodic corvée labor. (That is, the analytical distinction between capital and labor essentially breaks down.) As a result, to accumulate useful capital you had to command the labor of people, which is why rulers were often forced to rely on local landlords to muster their peasants.
In the “protoindustrialization” era of cottage industries, the available technology made production suddenly more efficient, but did not produce large economies of scale—at a time when the roads were just good enough for finished goods to be cost-effectively sent to markets, but not good enough for raw material and workers to routinely travel to centralized production. Capital flowed to labor, in smaller-scale workshops dispersed through cities and their surroundings or out in the countryside. This was the time of the putting-out system, of small workshops and manufacturies built around windmills and watermills, of largely local production. As a result, there was prodigious accumulation of capital compared to what had come before, but it was not excessively concentrated and was spread around relatively evenly. Still, cities served as nexuses for trade, and represented the most available “containers” for capital. City-based merchants and burghers became politically important, because they had the money that rulers needed to pay for their armies. (And sometimes, as in the case of the Hanseatic League, the burghers became rulers themselves.)
By contrast, industrialization featured massive centralized factories, encouraged by the coal boiler and the huge returns to scale that it created. Workers came to capital, concentrating themselves in the cities. The rewards of production became concentrated in relatively few hands and places, which consequently made it easier for governments to make bargains with such capitalists and appropriate some of that wealth in exchange for political privileges.
Effects on State Power
Tilly notes, “Two factors shape the process by which states acquire resources, and strongly affect the organization that results from the process: the character of the bottom-up hierarchy of capital [that emerges naturally from trade and exchange], and the place within that hierarchy of any location from which a state’s agents try to extract resources.” In other words, for a state to be capable of taxing individual incomes requires far more institutional capacity than a state that can only tax salt entering at a single port, for example. And conversely, a state that is dependent on a few sources of tax income must be more solicitous to the interests of the relatively few, relatively wealthy taxpayers.
As a result, states that emerged gradually during the early modern era developed in a clear pattern. The biggest cities with a lot of commercial activity and wealth often became their own city-states (such as in Italy and pre-Bismarck Germany). The regimes in these city-states were often thinly structured, able to easily collect customs duties and borrow money from bankers without large coercive bureaucracies. That, in turn, tended to discourage coercive government policies on the margin. Somewhat less powerful cities were typically incorporated into national states, but were able to negotiate political bargains with the developing state in exchange for their tax revenue (as in France).
By contrast, regions that were relatively poorer and had relatively few cities with weak commercial links with the hinterlands around them often were subject to straight coercion by the ruler, in states that covered a larger geographic area but a relatively dispersed and poor populace (such as Russia). Tilly writes, “In broadly similar ways, Russian, Polish, Hungarian, Serbian, and Brandenburger states formed on the basis of strong alliances between warmaking princes and armed landlords, large concessions of governmental power to nobles and gentry, joint exploitation of the peasantry, and restricted scope for merchant capital. Repeatedly, leaders of conquering forces who lacked capital offered their followers booty and land, only to face the problem of containing the great warrior-landlords they thereby created.” The only feasible solution was to rely on extensive force, which became less and less effective as the coercive states fell behind their neighbors on economy.
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This has gotten quite long and somewhat disorganized, but the key ideas are still useful in your worldbuilding. States need to survive in a dangerous world, and need money and power to do so. In poor settings, highly coercive states have an advantage; but as capital accumulates, richer societies that made political bargains with their populaces end up pulling ahead. (On average!)
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(This post is part of Politics for Worldbuilders, an occasional series. Many of the previous posts in this series eventually became grist for my handbook for authors and game designers, Beyond Kings and Princesses: Governments for Worldbuilders. The topic of this post will show up in the planned second and third books in this series, working titles Wealth for Worldbuilders and Tyranny for Worldbuilders respectively. No idea when they will be finished, but they should be fun!)