Credible Enforcement before Credible Commitment: Explaining the Implications of Institutional Sequencing

The project has reached its intended goals by developing a theoretical explanation of the “state first, then democracy” argument and empirically examining the developed theory in a number of empirical setting and using a number of methods. The project has led to the publication of five peer reviewed publications, two of which are in top 10 political science journals: journal articles in Governance, European Journal of Political Research, Journal of Eastern African Studies and FIG Peer Reviewed Journal – and book chapters in books by Oxford University Press and Palgrave Macmillan.

In the project’s flagship article “State First, then Democracy: Using Cadastral Records to Explain Governmental Performance in Public Goods Provision” (Governance, 2017), Michelle D’Arcy and Marina Nistotskaya present a theoretical argument of how and why democratization at different levels of state capacity matters for public goods provision and subject the argument to empirical tests. Building on rational choice theories of public goods production, the paper argues that credible enforcement before credible commitment – democratizing after the state has acquired high levels of state capacity – leads to a more efficient social order than the opposite sequence. Using a theoretically grounded and novel indicator of historical state capacity – the extent and quality of cadastral records – the large-N statistical analysis shows that those countries where the state developed extensive enforcement capacities before democratization exhibit, on average, better provision of essential public goods and are less corrupt. The article calls for more research on theoretically informed understandings of the implications of democratizing at lower levels of state capacity. In 2015 this research was cited in the Swedish government’s Expert Group on Aid (EBA) report on governance and highlighted the 2016 Trinity College Dublin’s Dean of Research Report.

To complement and support the argument put forward in the above paper, the project zoomed in on historical sequence of institutional building of two critical cases: Ireland and Sweden. This work resulted in one journal article and two book chapters on state building in these cases. In “State-building, Democracy and Taxation: Why Ireland will never be Sweden” (University of Tokyo Journal of Law and Politics, 2015), Michelle D’Arcy, Marina Nistotskaya and Robert Ellis trace the implications of democratization at different levels of state capacity for the provision of public goods in the cases of Sweden and Ireland, using a comparative historical method of analysis. Sweden and Ireland democratized in the same year (1922), however while the Swedish state at that time had already achieved formidable powers as an enforcer of collective agreements, the Irish state was particularly weak given the long-run preferences of the British colonizers to keep it as such. The article traces the key political events in both countries from 1922 to show how the Social Democratic project of welfare state in Sweden was successfully building on the historically strong state, while the lack of thereof in Ireland in combination with wide democratic rights of citizens resulted in a considerably lower levels of public goods provision there.

The study of state-building in the Swedish case was also published as a stand-alone chapter in the book The Leap of Faith: The Fiscal Foundations of Successful Government in Europe and America (Oxford University Press, 2018, open access). Given the project personnel’s expertise on state-building and taxation in Sweden, this chapter was commissioned by the editor Sven Steinmo as part of a systematic study into differences in tax compliance between five European countries. Using process tracing methods, the chapter, titled “Getting to Sweden: the Origins of High Tax Compliance in the Swedish Tax State” examines the historical development of a formidable monitoring capacity of the Swedish state, which not only made Sweden one of the most successful states in terms of tax compliance, but also laid the foundations for the extensive welfare project of the Social Democrats in the 1930s after democratization had occurred.

The study of state-building in the Irish case was published as a stand-alone chapter, titled “The Irish Tax State and Historical Legacies: slowly converging capacity, persistent unwillingness to pay” in Douglas Kanter and Patrick Walsh (eds.) Taxation, Politics, and Protest in Ireland, 1662-2016 (London, Palgrave Macmillan, 2019). This chapter examines the development of the Irish tax state since the late seventeenth century until 2016 along two pathways – formal institutions related to the administrative capacity of the tax authority, and attitudes towards taxation. The chapter reveals that for most of the period administrative capacity of the tax administration remained low, and only protracted fiscal crisis of the 1980-early 1990s prompted critical reforms of Irish Revenue, which brought a welcome disruption of this stable equilibrium. However, whilst today administrative capacity is no longer a weighty obstacle, public attitudes towards increased taxation remain deeply resistant, highlighting difficulties faced by politicians in reforming informal institutions. The chapter highlights the ways in which democratic instiutions have constrained the state from increasing its tax levels and capacity because they enable the articulation of historically shaped norms of unwillingness to pay tax. Both chapters make an important contribution to the literatures on taxation and the role of history in shaping contemporary institutions. 

The focus in the comparative case studies on taxation led to a further line of research which tested quantitatively the central argument of these chapters: that levels of state capacity in the area of taxation formed in the pre-democratic period have enduring effects on taxation today. In “The early modern origins of contemporary European tax outcomes” (European Journal of Political Research, 2018), Michelle D’Arcy and Marina Nistotskaya explain variation in tax outcomes between European states today by focusing on the stock of state capacity these states had accumulated from 1450-1800 – a period which is considered as formative for the emergence of modern states.  Using a novel measure of historical fiscal capacity (based on the age, extent and quality of state-administered cadastral records), the article tests whether these observed historical differences affect contemporary tax outcomes. The large-N statistical analysis shows that, on average, countries with higher early modern fiscal capacity have higher tax revenue today, compared to countries with lower early modern fiscal capacity. This association is robust to different model specifications and alternative measurements. The findings have important policy implications as they indicate how deeply the current fiscal problems in some European states entrenched, but also point to what needs to be prioritized within ongoing tax reforms. In relation to the sequencing debate, the paper again underscores how much historical legacies of state capacity acquired before democratization impact on the welfare outcomes that democracy can produce.

In line with the suggested research strategy and plan, the project investigated the credible enforcement-credible commitment dynamics in the empirical setting of the global south. Having developed a measure of credible enforcement that focuses on land (the Cadaster Index), Michelle D’Arcy and Marina Nistotskaya conducted research on the politics of land in Kenya, resulting in “Local Grievances, National Control: the Politics of Land in Kenya after Devolution” (Journal of Eastern African Studies, 2019). The paper examines the dynamics of democratic and state capacity reforms in the area of land in Kenya. The article argues that democratic reform (devolution of power and constitutional recognition of ancestral land rights) intensified local land grievances by empowering majority communities and stoking their attachment to homelands. On the other hand, failed state capacity reforms (land administration reform) have left national institutions as the focus of these grievances, enabling the political elite to use land and the rhetoric of land grievance as a political resource during the 2017 elections. Drawing on both quantitative and qualitative data gathered during the field work in June 2017, the article finds that land indeed was used as a means of mass patronage in the presidential elections, with titles targeted at Kikuyu minorities outside their homelands. Overall, the findings suggest that a combination of democratic empowerment of Kenyans with failed reform that were designed to make subnational government a “credible enforcer” in land-related issues has not resolved land-related conflict in Kenya, but perhaps exacerbated the conditions that led to such conflict in the past. This article again underscores the challenges faced by states who are attempting to democratize at low levels of capacity, and the ways in which democratizing institutions can constrain state-building.

“State Capacity, Quality of Government, Sequencing and Developmental Outcomes” is a chapter in the Oxford Handbook of the Quality of Government (2020), providing “the state of the art” review of the relevant literature, considering both theoretical arguments and empirical evidence,  reflecting on challengers and outlining possible avenues for future research.

There are two papers emanating from the project that are currently in the making: the first paper explores the impact of having cadaster records on the long-run economic development, and another that examines the effects of state capacity on public health outcomes.

One of the most significant results of the project is a new dataset measuring state capacity through the presence, quality and extent of state-administered cadastral records for more than 150 countries across two millennia (from 1000 AD). Through the development of this measure, the project made a significant theoretical and empirical contribution to the literature on state capacity, which has suffered from inadequate conceptualization and measurement of the key concept. Having passed a rigorous peer-review, the article presenting the data is available to the public through an influential outlet of the International Federation of Surveyors (FIG Peer Review Journal).

An important outcome of the project is the inclusion of the project’s publications in the university course at University of Gothenburg (1 undergraduate and 2 graduate courses), University of Dublin (1 undergraduate and 1 graduate course), Oxford University (graduate course) and Lund University (a graduate course). Another important spillover is the initiation of a critical dialog on the state of the state capacity literature. Marina Nistotskaya was one of the organizers of the international workshop “State Capacity Research: Advancing the Conceptual and Methodological Frontier”, which brought together leading state capacity scholars to Gothenburg in June 2019 to discuss issues with conceptualization and measurement of state capacity.