Paths toward the modern fiscal state : England (1642-1752), Japan (1868-1895), and China (1850-1911)

This dissertation examines the rise of the modem fiscal state, which enabled the state to use centrally collected revenues from indirect taxes to mobilize financial resources either through long-term borrowing or issuing paper notes. The modem fiscal state greatly enhanced state capacity and stimulated financial development; it thus represented a crucial stage in the transformation from early modem to modem state and economy. My comparative analysis of England, Japan, and China shows multiple sequences and outcomes. All three cases had well-established early modem states and sophisticated market economies. Under the pressure of increasing spending demands, state actors conducted similar experiments, such as short-term borrowing, issuing of paper notes, and the collection of taxes upon domestic consumption. England became a modem fiscal state by the 1750s when its government used the revenues from excises and the customs to service its massive long-term debt. Japan made the leap in the late 1880s when tax revenues were employed to back up paper money, i.e., banknotes issued by the Bank of Japan. China, however, failed to develop into a modem fiscal state. I put forward a temporally-based causal mechanism which resulted from the interactions between a profound state credit crisis and socio-economic conditions. Such credit crises were caused by excessive dependence upon fictitious credit instruments such as bills of short-term borrowing unfunded by tax revenue in England or non-convertible paper notes in Japan. As these credit crises were an unintended consequence of earlier policies or events, they were exogenous to subsequent institutional development.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Political Science.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2007

Author dc:creator

• He, Wenkai

Advisor dc:contributor.advisor

• Suzanne Berger.

• Political Science.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/42389

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/42389