Fiscal Bargains, Political Institutions, and Economic Performance

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Abstract In “Bargaining for Absolutism,” Alejandra Irigoin and Regina Grafe argue three points of considerable interest to historians: political absolutism in Castile did not extend to fiscal matters; fiscal relations within Spain and its empire were characterized by bargaining, not directives from the crown; and the differences between Spanish and British imperial fiscal systems have been overstated. Their first and second points are a welcome corrective to oversimplified treatments of early modern Spanish fiscal politics, and echo findings on absolutism in France. In practice, absolutist sovereigns were not autocrats. They needed money to wage war and defend against predatory rivals, and had to exchange rent-generating privileges and monopolies in order to levy taxes and borrow. Irigoin and Grafe understate, however, the differences between fiscal relations in the British and Spanish empires. The institutions governing economic policy making at home were quite distinct in the two cases. After 1688 Britain relied heavily on Parliament for the formulation and approval of economic policies. The formal mechanisms by which the economic interests of different groups were articulated and brokered between Parliament and the government led to more efficient outcomes. In Spain, where the crown could selectively assign and abrogate property rights in a manner unchecked by formal political institutions, fiscal weakness and economic stagnation resulted. This institutional gap was reflected as well in the implementation of economic policy in their respective colonies. In this difference one can trace one important source of differing economic trajectories in the late colonial and early national periods.