By Al Slivinski and Nathan Sussman
Published Online (2010)
Abstract: Public finances and their interaction with political institutions have emerged as an important causal factor in recent growth literature. We explore a unique source – the tailles levied on Paris by Philip the Fair. The method according to which direct taxation took place in the commune of Paris during the commercial revolution is consistent with a community responsibility system, an institution that facilitated exchange, enhanced the enforcement of property rights and contributed to the cohesive action of the community in the face of attempts of ruler to infringe on it rights.
We model the mechanism used by the city of Paris to collect the taille and show it was efficient and effective. We demonstrate that a simple alternative tax collection mechanism can deliver similar results but has certain drawbacks that undermine the commune’s cohesiveness. Quantitative evidence presented here suggests that the mechanism used resulted in de facto progressive taxation. We also show that Paris was a well integrated and cosmopolitan city – the largest in the medieval West and with the highest relative growth rates, evidence which is consistent with the well functioning of the community responsibility system.
Introduction: Public finances and their interaction with political institutions have emerged as an important causal factor in recent growth literature. North and Weingast, (1989) stressed the constraints on government that foster commitment and the resulting access to cheaper sovereign borrowing. Epstein, (2000) and O”Brien (2001) put more emphasis on the development of administration and its ability to tax efficiently. In particular, some recent papers have attempted to focus more narrowly on the growth of cities (De Long and Shleifer, 1993 and Stasavage ( 2007)), suggesting that free cities experienced more growth (borrowed at lower rates) than those cities under princely rule.
Data on population of major European cities (Bairoch et Al, 1988) place Paris at the top of the list in Europe from the thirteenth to the end of the seventeenth century. While a capital of a large kingdom, it was significantly larger than any free Italian city state. Figure 1 shows the relative population size of Paris compared with Venice, the most populous Italian city state and London, its historical rival. One can see that population growth in Paris was much faster than that of London and Venice until 1400. The period of rapid growth lasted from 1000 to 1300 when Paris reached a population size of six times that of London. The corresponding annual population growth rates for Paris were 1% until 1200 and 0.6% during the thirteenth century. This remarkable growth can be attributed to some extent to the growth of the king’s bureaucracy, however, by 1300, the size of the French court was still very small by later standards.