The Lopsided Political Effects of Proprietary Income

A Comment on Nilsson’s The Money of Monarchs

Abstract

Rentier state theory holds that external rents from sources such as natural resources stabilize autocracies and suppress democratization. However, as Nilsson (2017) observes in his recently defended doctoral thesis, in historical perspective rents from the domestic economy in the form of proprietary income have been a much more important source of finance for autocrats. In this comment, I endorse Nilsson’s general argument that increases in proprietary revenue tend to facilitate autocratic regime changes. But I identify an important scope condition: domestic proprietary income is likely to have the the same effect as taxation – and hence the opposite effect of what Nilsson theorizes – if the extraction of it visibly affects the lives of the public in adverse ways. In this situation, proprietary income cre- ates political opposition among the citizens, in turn destabilizing autocracy and facilitating the development of institutions of constraints. This is demonstrated by revisiting an important development in the High Middle Ages, namely the opposi- tion sparked by monarchs’ manipulation of coinage in the Iberian Peninsula. These events paved the way for a “money-tax” agreed upon in the nascent representative institutions. This, in turn, sheds additional light both on the origins of medieval par- liaments and on the political effects of proprietary income.