Noel D. Johnson and Mark Koyama write,
The origins of modern economic growth are to be found in the expansion of market exchange and trade that gave rise to a more sophisticated and complex division of labor that rewarded innovation and to the cultural and potentially non-economic factors that helped spur innovation (Howes, 2016; McCloskey, 2016; Mokyr, 2016). The importance of the rise of high capacity states to this story is that these states helped to provide the institutional conditions that either enabled growth and innovation to take place or at least prevented their destruction through warfare or rent-seeking
we suggest that the long-run relationship between culture, social capital, identity, and state capacity has only just begun to have been studied and awaits much future research.
Pointer from Tyler Cowen.
The authors say that state capacity consists of the capacity to enforce laws and the capacity to collect taxes in order to provide public goods.
The idea that early modern governments were using tax dollars for Public Goods is laughable.
Absolutely agree. And this is not proved by anything. Allegation.
“Specialization,” or “Division of Labor,” is often cited in its causative contexts.
What studies or writings deal with the factors that “drive” specialization? What factors in a “culture” foment beneficial specializations; or in some cases create limitations on, or impediments to, specializations?
What degrees of individual freedoms (and “Open Access”) are necessary for the initiation and development of specializations.
>The authors say that state capacity consists of the capacity to enforce laws and the capacity to collect taxes in order to provide public goods.
That seems like a bad definition, since that’s objectively not what states do. I think this definition is much better:
By “state capacity,” I refer to the ability of a government to administer its territory effectively (Skocpol 1985). In the modern world, the survival and functioning of a political system depends on four basic state capacities: the capacity to mobilize financial resources from the society to pursue what the central policymakers perceive as the “national interest” (extractive capacity); the capacity to guide national socioeconomic development (steering capacity); the capacity to dominate by using symbols and creating consensus (legitimation capacity); and the capacity to dominate by the use or threat of force (coercive capacity).
Other observers argue, persuasively at least to me, that Europe’s ascension was rooted in the commercial culture of the Northern Italian city-states of the 9th through 14th centuries. Merchant culture, and especially lex mercatoria, developed in the absence of state capacity. Trade flourished despite fueling an accompanying growth in parasitic state capacity. The Pax Mongolica is about the strongest example of a case for beneficent state capacity look how long that lasted. Today, it is the transportation infrastructure that China is funding in the belt across all sorts of states of varying capacity, not the state capacity itself, that is promoting development in that part of the world today.