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Paths Toward the Modern Fiscal State . By He Wenkai . Berkeley and Los Angeles : University of California Press . 2013. Pp. xx, 417. $55.00, hardcover.
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The modern fiscal state was a precursor to the fiscal institutions now prevalent in developed economies. Under a modern fiscal state, the central government employs tax collectors who implement national tax policies under strict bureaucratic rules. Tax revenues are then amalgamated by a central financial institution, like a national bank, who then issues bonds or paper notes to pay for government services. Despite its social value, the modern fiscal state has been absent for most of human history. Rampant tax evasion, abuse by tax officials, and instability in the monetary system were the norm. How did societies escape this fiscal trap and create the modern fiscal state?
In Paths Toward the Modern Fiscal State, Wenkai He examines the fiscal path taken by England, Japan, and China. It offers a rich comparative analysis which is often lacking in the literature. He's main thesis is that credit crises were necessary for the emergence of the modern fiscal state. Crises focused the search for new solutions to fiscal problems and encouraged experimentation. The idea is that a central fiscal bureaucracy was sufficiently novel--and potentially damaging to some groups--that societies would have rejected it without a crisis. England's fiscal crisis came in the mid-1600s when the Crown's traditional sources of revenues were being depleted and...