Modern writers on public finance typically refer in asides to the high profile of taxation at crucial moments in history: the English Civil War (Charles I and Ship Money), the American Revolution (taxation without representation), the French Revolution (summoning the Estates General to raise taxes), the Napoleonic Wars (income tax as “the tax that beat Napoleon”), the dominance of the House of Commons over the Lords (the “People’s Budget” of 1909), and, of course, “the fall of the Roman empire” through “tax bankruptcy”: the phrase is Hicks’s (1968: 8). Recent decades have seen the emergence of more systematic “fiscal history” as a recognized subdiscipline of modern European history (Bonney 1999). Exponents build on the work of the radical economic theorist Joseph Schumpeter (briefly Austrian Minister of Finance after the Great War), who in 1918 made public his concerns over “the crisis of the tax state.”
This piece of “fiscal sociology” (Schumpeter’s own label) was first to stake out, if somewhat extravagantly, the claim of public finance on historians (7): “The spirit of a people, its cultural level, its social structure, the deeds its policy may prepare - all this and more is written in its fiscal history, stripped of all phrases. He who knows how to listen to its message here discerns the thunder of world history more clearly than anywhere else.” Essentially, Schumpeter was concerned with the long-term shift from what he termed the “demesne state” characteristic of the middle ages, where resources derived substantially from rulers’ estates and dependents, to the “tax state” of early modern Europe, then (as he argued) in crisis owing to the massive demands on resources made by the Great War. Recent scholars (associated with the European Science Foundation’s project, “The Origins of the Modern State in Europe, 13th-18th centuries”) have built on Schumpeter’s broad distinction to construct a developmental model of state-formation in modern Europe.
Bonney and Ormrod (1999) identify four stages in their “conceptual model of change” in European fiscal history, moving from tribute state, through domain (demesne) state and tax state, to fiscal state. Their twenty or so indicators (useful for classicists at least to think with) include contemporary financial theory, forms of government and administration, status of office holders, methods of finance, nature of expenditure, credit structures, public enterprises, and causes of instability and chance within the system. For each stage, they seek to determine the dynamic interaction between expenditure, revenue, and credit, and to identify the fiscal crises and resultant fiscal revolutions which mark shifts between stages (18). Although their remit is early modern and modern Europe, they push back their analysis into the Roman empire (11), where they identify elements of tribute, domain and taxation states (cf. Bonney 1999: 7-9).
Historians of the ancient economy will recognize in the ambivalence of their labeling the heuristic possibilities and epistemological problems of “stage theories” of development (Bucher’s “Household,” “City,” and “National Economy”). Bonney and Ormrod are alert to these limitations, prompting their subdivision of domain states into “primitive,” “less primitive,” “entrepreneurial,” and “colonial” (14-15); favoring the concept of a “financial constitution” - a snapshot of a fiscal system at a particular point in time (Bonney: 1999: 5), and acknowledging that before 1815 there was no guarantee of linear development in taxation regimes.
Their emphasis on fiscal pluralism and flux echoes the experience of antiquity; more clearly still when analyzing the interplay of warfare with taxation. Behind what Bonney terms the “predatory principle,” dominating the European scene down to 1945, the power of the state to coerce depended ultimately on the fiscal strength to underwrite its armed forces; successively, Castile, the Dutch republic, France, Britain, and Prussia (1999: iv). Warfare repeatedly emerges as the fiscal imperative driving taxation and expenditure: chronic insufficiency of revenues to fund warfare precipitated crises in taxation and the forced remodeling of financial regimes, with conspicuous success in Britain 1793-1815, and again 1914-18. From antiquity, it is sufficient to point to the extensive restructuring of finance undertaken by the Athenians in the course of the Peloponnesian War, by Augustus in the aftermath of the Civil Wars, and by Diocletian, consequent on the military upheaval of the third century. But differences again prove illuminating: “the world we have gained” in the modern fiscal state, with its integration of progressive income tax, central banking, planned budgeting and public borrowing, to promote sustained economic growth and even social justice.
A crucial element in modern fiscal stability is the notion of “fiscal compliance.” Although people habitually grumble about taxation and strive legitimately to avoid payment, relatively few practice outright evasion. Behind this observance are key components of the modern fiscal constitution. In Trusting Leviathan (2001), Martin Daunton has detailed the role of the Commons and local government in providing “avenues of appeal and mediation” serving to legitimate the fiscal system in the eyes of nineteenth-century British taxpayers (4-22): “Consent, trust, and legitimacy are crucial to the history of taxation” (7). Leading considerations include confidence in the compliance of other taxpayers: absence of “free riding” through either evasion or glaring grants of exemption; conviction that revenue is not wasted either through inefficient or corrupt collection, or by being diverted to unworthy recipients; and, conversely, trust by the state that the majority of taxpayers honestly make payments, avoiding the need for draconian regimes of collection and deterrence. All these factors constitute more-or-less contested areas within antiquity. The theme of exemption from taxation for individuals and even whole communities runs right through the fiscal history of Rome.
Within the fiscal state can be discerned a complex fiscal psychology; far more subtle than the elemental conflict between the revenue-maximizing state and the taxminimizing public, envisaged by the Virginia school of public economics (Daunton 2001: 8-9). From the ancient world it is difficult to penetrate beyond inevitable (though not necessarily unjustified) complaints about the burden of taxation (N. Lewis 1983: 161-65). But there are occasional hints of a more complex fiscal mentality, as indicated by the “voluntary contributions” (epidoseis) from the wealthy that were, alongside liturgies, such a feature of Athenian public economy. When Theophrastus from later fourth-century Athens wishes to caricature an “over-zealous man,” he has him stand up in the assembly and pledge more money than he can afford; his “illiberal man,” when donations are being solicited, quietly gets up and leaves (Characters 13.2, 22.3; cf. Migeotte 1983; 1992).
Implicit here and elsewhere is the manipulation of taxation in the construction of identity: the rhetoric of resource allocation. This is most apparent where individuals are involved and historical reality is not at a premium, as in anecdotes preserved by Suetonius. Nero was devastatingly pilloried during a food shortage for having ordered that a grain ship from Alexandria be loaded with sand for the arena (Nero 45.1). Gaius supposedly levied extraordinary taxes on the sale of food, on legal transactions, porters, prostitutes, and pimps, perversely posting the new regulations where no one could read them (Calig. 40). When Vespasian was allegedly challenged by his son for levying a tax on public urinals, his response was, “the money does not stink” (Vesp. 23.3). Hardly at stake here is whether such a tax was levied (le Gall 1979: 121-26); more pertinent is the moral dimension represented by the son’s ethical orthodoxy, countered by the earthy pragmatism of Vespasian, disassociating ends from means.
The Historia Augusta, even more remote from (f)actual accuracy, routinely characterizes emperors through their fiscal activities. The “good” emperor Marcus Aurelius encourages the compliance of other payers by his careful public expenditure (11), especially over superfluous handouts (23); but he spends freely to relieve flood, famine (8), and plague (13). The needs of the imperial treasury never influence his judgment in lawsuits (12). After emptying the Treasury through successful wars, he makes up the deficit by a two-month sale of personal possessions (17). By contrast, his son Commodus “squandered the resources of empire” by drinking till dawn (3), murdered for personal profit (5), embezzled funds provided for a faked African journey (9), was ludicrously generous to the plebs and, “having drained the Treasury,” excessively tightfisted to those more deserving (16). He performed hardly any public works, falsely claiming others’ efforts as his own (17). It was left to his successor Pertinax to set things straight (7-9).
World History
