Elite Conflict and State Formation in Early Modern Europe

This dissertation offers a micro-foundational analysis of macro-structural change in the fiscal structures of the Habsburg and Ottoman Empires from 1660 to 1880. The Habsburg Empire initially had a highly fragmented and decentralized fiscal structure. Yet, by the mid-nineteenth century, the state attained a higher fiscal capacity by centralizing tax-collection. Ottoman state, though it initially possessed a centralized administrative and fiscal apparatus, moved in the opposite direction and decentralized its fiscal structures. I call the puzzling divergence in institutional trajectoriescentralization of the Habsburg state and decentralization of the Ottoman statereversal of fortunes. To solve this puzzle, I construct a causal model of the dynamics of intra-elite conflict over the distribution of economic resources. I use the comparative-historical method and process tracing to analyze the historical data I collected in Austria, Germany and Turkey. I show that the differences in the structure of intra-elite conflict, and in the intensity of conflict at the critical juncture in particular, accounts for the variation in long-term institutional outcomes. More specifically, high levels of elite conflict produced the political incentives for fiscal centralization and a developmental economic policy, as exemplified by the Habsburg case; where such political incentives were lacking, as in the Ottoman case, similar processes of institutional change produced fiscal decentralization and predatory economic policies. iii This project makes three contributions to the extant scholarship. First, it broadens the spatial boundaries of the state formation literature by analyzing the critical yet understudied Habsburg and Ottoman cases. Two, it bridges the gap between the supplyand demandside theories by analyzing how the demandand supplyside dynamics of intra-elite conflict interact. Third, by providing a causal explanation of the divergence of developmental paths of the Ottoman and Habsburg states it sheds new light onto the question of why and how the developmental trajectory of the East was differentiated from that of the West.

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