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  • Sheldon Pollack's Interpretation of War, Taxation, and the U.S. State
  • Robert Higgs (bio)
Review of War, Revenue, and State Building: Financing the Development of the American State by Sheldon D. Pollack (Cornell University Press, 2009)

The historian Charles Tilly famously reduced several centuries of modern European history to the formula "war made the state, and the state made war." The maxim has proved enduring not because of its novelty—after all, many others had already said essentially the same thing—but because of its concision and punch. Sheldon D. Pollack, in his new book, War, Revenue, and State Building: Financing the Development of the American State, expands Tilly's formulation, as it were, to make it read: war made the state and when, primarily during a succession of wars, rulers successfully devised effective means of garnering many more resources from society, the state first made wars and later established a welfare state. This version is not so punchy, but it is surely undeniable. Pollack also seeks to determine whether recent interpretations of revenue capture and state building by political scientists and historians, who have focused on European history, also apply to the rise of the U.S. state. In particular, his "objective in this book is to elucidate the linkages between the sources of public revenue available to the American state at specific junctures of its history, the revenue strategies pursued by its political leaders in response to these factors, and the consequential impact of their revenue strategies on the development of the American state" (6).

Rulers are not free to take as much as they like from society or to take what they do get in any manner whatsoever. "In democratic states," Pollack observes, "rulers must enter into 'revenue coalitions' with powerful groups and interests in society, providing benefits (e.g., protection, subsidies, or favored status) in return for their revenue contributions… Taxation is but one of countless methods used to raise revenue; however, it has proven to be the most efficient and effective for extracting great quantities of revenue from prosperous economies" (9). Pollack recognizes that rulers possess substantial [End Page 267] autonomy, and the "central argument of this book is that state autonomy ultimately depends on the state's fiscal powers—its capacity to extract revenue from society" (20). A state that has run out of money has not only run out of luck but also has exhausted its ability to survive.

Pollack premises his historical survey on a remarkably clear-eyed view of the nature of the state and its operations. States originated in the activities of mounted raiders ("roving bandits") who preyed on the settled populations that proliferated during the Agricultural Revolution. These raiders plundered their victims, hauling away portable valuables and sometimes the people themselves as slaves. Gradually, however, the raiders saw greater advantage in settling among their victims (becoming "stationary bandits"), ruling their communities and insisting on a continuing stream of tribute. Thus, the state assumed its classic form as essentially a protection racket, albeit one that sought legitimacy via priestly endorsement and other measures. States that succeeded in establishing a system for garnering regular revenues from their subjects thereby transformed themselves from "plunder states" to "tax states." In their final stage, they devoted increasing proportions of their expenditures not simply to making war but also to the maintenance of a "welfare state." After 1945, the United States achieved unique status as a great warfare state combined with a great welfare state.

Thus, in Pollack's characterization, the current U.S. state "is a 'tax state' that operates a benign form of a 'protection racket'—collecting 'tribute' in the form of income taxation and in return providing such public goods as protection from criminals and foreign invaders, free markets, a stable currency, and the 'rule of law' (e.g., recourse to law courts to enforce contracts)" (22). Some observers ardently dispute this system's benignity, not to mention the extent to which contemporary markets are truly free and the currency stable, but one cannot deny that an ostensible "exchange" occurs between the state and its subjects at large. The often-encountered claim that a "social contract" underlies this essentially coercive arrangement...


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pp. 267-272
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