INTRODUCTION

This is a rich and timely collection of chapters to contemplate. Beyond the skill with which each of the authors crafts his or her contribution, this book is relevant for at least three major innovations.

First, it invokes fiscal and monetary policy as its basic subject, a novelty for the period. We are inclined to take the seventeenth through the nineteenth centuries as the era preceding and including the Industrial Revolution, and to look at economic history through the lens of technological change and establishment of the new manufacturing industries. Here, instead, we focus on government and the public sector as it operated in the Old World as well as the New.

Second, it emphasizes the internal tasks of augmenting tax collection and subsequently appropriating the resources rather than the more typical emphasis upon rapidly increasing international trade and capital flows during this period. As such, it is more focused on the insights originally emanating from Lance Davis, Douglass North, Mancur Olson, Oliver Williamson, and others concerning the relationship between institutional change and the process of development. Transactions costs figure prominently in the broad range of causal forces that lead to changing patterns of taxation and expenditure.

Third, it contrasts the New World, and its institutions, with the Old. One of the obvious and important differences is the historical reliance upon the rate of inflation, and the inflationary tax, that characterized the countries of North and South America.