The Independent View: State as a Governing Institution

One of the books I am reading is “The Origins of Political Order” by Francis Fukuyama, the Olivier Nomellini Senior Fellow at Stanford University’s Freeman Spogli Institute for International Studies.

With the current talk about tax reform and what is the right reach of government, I found this bit of history interesting.

There is evidence to suggest that the Ottomans in their prime did not seek to extract taxes at the maximum rate but rather saw their role as preserving a certain basic level of taxation, while protecting the peasantry from exactions by other elites who were more likely to behave like organized criminals.

But the need for restraint was built into the Ottoman theory of the state itself, which was inherited from earlier Middle Eastern regimes. The Persian ruler Chosros I (531-579) was quoted as saying “With justice and moderation the people will produce more, tax revenues will increase, and the state will grow rich and powerful. Justice is the foundation of a powerful state”. “Justice” in this context means moderation in rates of taxation. We might recognize this is as an early Middle Eastern version of the Laffer curve popularized during the Reagan administration, which held that lower tax rates would produce higher total tax revenues by giving individuals greater incentives to produce. This sentiment was echoed by a number of early Turkish writers and inscribed into the so-called Circle of Equity, which was built around eight propositions:

1. There can be no royal authority without military.
2. There can be no military without wealth.
3. The reaya (a member of the tax-paying lower class of Ottoman society) produce wealth.
4. The sultan keeps the reaya by making justice reign.
5. Justice requires harmony in the world.
6. The world is a garden; its walls are the state.
7. The state’s prop is the religious law.
8. There is no support for the religious lay without royal authority.

These propositions were usually written around circle, with the eighth leading back to the first, indicating that religious legitimacy (point 8) was necessary to support royal authority (point 1). This is an unusually succinct statement about the interrelationships of military power, economic resources, justice (including rate of taxation), and religious legitimacy. It suggest that Turkish rulers did not see their objectives as the narrow maximization of economics rents, but rather the maximization of overall power through a balance of power, resources, and legitimacy.

What do you think about this idea?