From domain state to tax state

Abstract

The classic theory of the effects of the transition from the domain state to the tax state was formulated by Joseph Schumpeter under the pressure of the financial and economic chaos prevailing after the First World War.¹ The gist of Schumpeter's thesis was that during.the transition from the Middle Ages to the early modern period the expanding princely governments needed cash revenues for military purposes and that this was responsible for a fundamental reshaping of society. The need for taxes both signposted the shift from the medieval domain state and a subsistence economy and itself hastened the transition from a barter to a cash economy; at the same time the needs of both the cash economy and of the tax state stimulated ‘socio-financia’ changes, as when fiscal impositions reached such a pitch as to cause acute social tensions or even basic social change. And finally, the growth of the tax state encouraged the political development of representative assemblies with powers to grant taxes and to supervise expenditure, and these developed their own bureaucracies.

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E. Ladewig Petersen

E. Ladewig Petersen, M. A. 1955, D. Phil. 1964, Professor of History at the University of Qdense, Denmark. Special fields of interest is the economic and social history of northern Europe from the fifteenth to the seventeenth centuries.