Wenkai He's complex and impressive study takes on a classic subject with a novel approach. It traces the emergence of the modern fiscal state, an important institutional innovation that enabled governments to centralize tax collection and use revenues to borrow from capital markets on a long-term, ongoing basis. Compared to the traditional fiscal state, the modern fiscal state collected taxes efficiently and effectively. More importantly, sizeable and stable revenues increased state capacity to manage economies and stimulated the development of long-term credit instruments. The modern fiscal state thus served as “a crucial stage in the evolution toward the credit-based modern economy” (p. 22). Yet it did not emerge everywhere and faced many obstacles militating against its development, since maintaining decentralized tax collection was simply cheaper and more convenient in the short-run.
How, then, did this important institution emerge? To answer this question, He employs an “eventful approach to historical causation...
