The paradox of power: understanding fiscal capacity in Imperial China and absolutist regimes

摘要

Tax extraction in Qing China was low relative to Western Europe. It is not obvious why: China wasudmuch more absolutist and had stronger rights over property and people. Why did the Chinese notudconvert their absolute power into revenue? We propose a model, supported by historical evidence,udwhich suggests that i) the center could not ask its tax collecting agents to levy high taxes because itudwould incentivize agents to overtax the peasantry; ii) the center could not pay agents high wages inudreturn for high taxes because the center had no mechanism to commit to refrain from confiscatingudthe agent’s resources in times of crisis. A solution to this problem was to offer agents a low wage andudask for low taxes while allowing agents to take extra, unmonitored taxes from the peasantry. Thisudsolution only worked because of China’s weak administrative capacity due its size and poorudmonitoring technology. This analysis suggests that low investment in administrative capacity can beudan optimal solution for an absolutist ruler since it substitutes for a credible commitment to refrainudfrom confiscation. Our study carries implications for state capacity beyond Imperial China.