Social Networks and the Origins of State Capacity in Early Modern Venice

• In Event: Elite Conflict and Confluence in Political Development

Abstract

A key challenge for the early modern state was the integration of the periphery into the central state apparatus. Specifically, the central state faces a credible commitment problem when trying to extract resources from the periphery in exchange for protection and public good provision. In a simple model, we argue that marriage networks can make this commitment credible, by aligning the incentives of the elites in the periphery and the center. We find the process of social integration between center and periphery to be self-reinforcing. We evaluate our argument using the case of early modern Venice. We exploit an exogenous demographic shock that pushed the elites from the center to marry the elites from the periphery. Using a difference-in-differences design to compare families that were integrated into the nobility marriage networks earlier with those that were integrated later, we show that social integration is positively associated with investment in public debt. We also observe increased tax revenues from the provinces that had families integrated and more military spending and state institutions established in the integrated provinces. Our findings highlight the role of social networks in aligning the incentives of central and local elites in favor of a strong central state.

Authors

• Caterina Chiopris, Columbia University

• Yuhua Wang, Harvard University