States of Credit: Size, Power, and the Development of European Polities

In his pioneering book States of Credit, David Stasavage investigates two core aspects of European state formation during the medieval and early modern eras: the development of representative institutions and a system of public credit. Stasavage sought to explain why the latter developed earlier in city-states than in territorial states, and he thoroughly and compellingly accomplished this intellectual task. Stasavage (New York University) argues that unique advances in political representation allowed certain European states to gain early and advantageous access to credit, but the emergence of an active form of political representation itself depended on two underlying factors: compact geography and a strong mercantile presence.
Stasavage shows that active representative assemblies were more likely to be sustained in geographically small polities. These assemblies, dominated by mercantile groups that lent to governments, were in turn more likely to preserve access to credit. Given these conditions, smaller European city-states, such as Genoa and Cologne, had an advantage over larger territorial states, including France and Castile, because mercantile elites structured political institutions in order to effectively monitor public credit. While creditor oversight of public funds became an asset for city-states in need of finance, Stasavage suggests that the long-run implications were more ambiguous. City-states with the best access to credit often had the most closed and oligarchic systems of representation, hindering their ability to accept new economic innovations. This eventually transformed certain city-states from economic dynamos into rentier republics.
Exploring the links between representation, institutions, and debt, and actually demonstrating the mutual embeddedness of state-economy-society, States of Credit greatly contributes to economic history scholarship, debates about state formation, and Europe’s economic rise. (Open access to the Introduction chapter)