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The making of a fiscal state in Song China, 960–1279

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  • William Guanglin Liu

Abstract

type="main"> In light of the Schumpeterian paradigm, this article explores the rise of the tax state in eleventh-century China and its further transition towards a fiscal state until the Mongol conquest in 1279. By the late eleventh century in the Song dynasty, two-thirds of state revenues came from taxing non-agricultural sectors, especially from the collection of excise. The Song state became the first sustainable tax state in global history, as manifested in three major aspects: monetization; indirect taxation; and centralization and professionalization in the tax administration. The boundary of the Song tax state was largely confined to urban settlements. In rural areas, the state gave up the collection of commercial taxes by farming out this right to local elites. In the twelfth century, as traditional tax revenues fell far short of supporting military defence, the Song administration utilized credit instruments. Around 1200, the amount of redeemable promissory notes first exceeded that of annual tax revenues. This shift from tax-based public finance to credit-based public finance completed the transition towards a fiscal state. Nonetheless, this development in the fiscal state was still at an early stage and proved to be unstable. Toward the end of the Southern Song, hyperinflation caused by the over-issuance of promissory notes seriously threatened the economy.

Suggested Citation

  • William Guanglin Liu, 2015. "The making of a fiscal state in Song China, 960–1279," Economic History Review, Economic History Society, vol. 68(1), pages 48-78, February.
  • Handle: RePEc:bla:ehsrev:v:68:y:2015:i:1:p:48-78
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    File URL: http://hdl.handle.net/10.1111/ehr.12057
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    References listed on IDEAS

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    1. Andrew Wareham, 2012. "Fiscal policies and the institution of a tax state in Anglo-Saxon England within a comparative context," Economic History Review, Economic History Society, vol. 65(3), pages 910-931, August.
    2. Musgrave, R A, 1992. "Schumpeter's Crisis of the Tax State: An Essay in Fiscal Sociology," Journal of Evolutionary Economics, Springer, vol. 2(2), pages 89-113, August.
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    Cited by:

    1. Jiwei Qian & Tuan‐Hwee Sng, 2021. "The state in Chinese economic history," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 61(3), pages 359-395, November.
    2. Deng, Hanzhi, 2021. "The merit of misfortune: Taiping Rebellion and the rise of indirect taxation in modern China, 1850s-1900s," LSE Research Online Documents on Economics 108564, London School of Economics and Political Science, LSE Library.
    3. Rohan Dutta & David K. Levine & Nicholas W. Papageorge & Lemin Wu, 2018. "Entertaining Malthus: Bread, Circuses, And Economic Growth," Economic Inquiry, Western Economic Association International, vol. 56(1), pages 358-380, January.
    4. Deng, Hanzhi, 2021. "The merit of misfortune: Taiping Rebellion and the rise of indirect taxation in modern China, 1850s-1900s," Economic History Working Papers 108564, London School of Economics and Political Science, Department of Economic History.

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