A Note on Taxation, Development, and Representative Government

Abstract

This article proposes a model representing the relationship between economic actors and revenue seeking governments. Given a need for revenues, the model predicts the allocation of the new tax burden and patterns of control over public policy. The model is motivated by the history of the rise of parliaments in Western Europe. It is extended to urban and developmental politics. It is designed to employ the techniques of "neo-classical" economics to explore themes which have been developed most clearly in Marxist writings. Most importantly, the model suggests the way in which, given a need for revenues, specific fractions of the private sector can gain control over public policy. And it characterizes precisely the factors which yield differences in the ability of economic agents to employ the market to defect from the tax-levying state. The analysis thus gives insight into both the origins and the limitations of political democracy.