Published by EH.Net (September 2012)

Regina Grafe, Distant Tyranny: Markets, Power, and Backwardness in Spain, 1650-1800. Princeton, NJ: Princeton University Press, 2012. xvii + 291 pp. $39.50 (hardcover), ISBN 978-0-691-14484-9.

Reviewed for EH.Net by Mauricio Drelichman, Department of Economics, University of British Columbia.

Spain has long been a thorn in the side of economic historians. In the sixteenth century, it was richer and politically more advanced than virtually all its European peers. At the beginning of the seventeenth it ruled the largest empire that had yet existed, while giving the world masterpieces of art and literature. Ever since, searching for the roots of the long ?decline? that ensued has been the single-minded quest of political commentators and historians of Spain alike. With Distant Tyranny, Regina Grafe may well have put this entire group out of a job.

A large, if relatively recent, literature has established that Spain did not quite stagnate after 1600, and certainly did not decline. It nonetheless grew at a substantially slower pace than the European norm, and hence fell steadily through the ranks of Western economic powers. Economists in the New Institutional Economics tradition pinned the blame for this on a predatory, absolutist state and its extractive institutions. Historians, on their part, have often pointed at the ?tyranny of distance? ? Spain?s famously tortuous geography and difficult communications ? as the main culprit for its economic underperformance.

To take on both the NIE and the geographic traditions, Grafe enlists the help of an unlikely ally: salt cod, or bacalao, as it is still known in Spain. By the seventeenth century cod was a staple food in Spain, and the trade imbalance it represented was a continuous source of worry to mercantilist minds. Traditional studies of market integration have relied almost exclusively on grain prices. Grain markets, however, were characterized by heavy intervention from local governments to guarantee bread supplies. Cod was free from any such distortions, while ubiquitous enough to serve as a benchmark good. Chapter 3 explores the production technology, trade mechanisms, internal distribution, and the cultural and biological bases of cod demand. The result is a strong case that cod can indeed be used to trace and characterize the behavior of markets across Spain.

Data in hand, Grafe proceeds to evaluate the tyranny of distance argument. That Spanish markets were not integrated across different regions is a well-known result. What is new ? and striking ? is that the lack of integration is almost completely uncorrelated with distance and transport costs. These were indeed formidable obstacles, but progress was being steadily made in improving road links and reducing travel times. More importantly, when the price of North American cod in the Atlantic port of Seville was 40% higher than in far inland Madrid, long distances and poor transport seem the wrong places to look for an explanation.

Chapters 5 and 6 deliver the central thesis of the book. The roots of Spain?s lack of integration ?and the backwardness that ultimately resulted from it? are traced to the extreme jurisdictional fragmentation that afflicted the peninsula. The first indictment is handed to Spain?s ?historic territories? ? roughly corresponding to the medieval predecessor states ? which persisted in the form of separate kingdoms until the eighteenth century, and much longer as differentiated fiscal and political institutions. Next, the ?urban republics? ? the cities as seats of economic and political power ? take their share of the blame. Both territories and cities had inherited old ?freedoms?. These consisted in exemptions from royal taxation and the ability to maintain differentiated fiscal regimes, resulting in large distortions and formidable barriers to trade. Cities and territories were able to push back on each and every attempt of the monarchy to streamline and rationalize the system. Their success evidenced how little power the supposedly ?absolutist? Habsburg and Bourbon dynasties really had. While kings were expected to serve as arbiters and mediators, urban and regional elites severely curtailed the power of any monarch that tried to engage in meaningful state-building. In one telling example, the crown strove to harmonize the tobacco monopoly ? one of its most profitable revenue streams ? across the country. While dutifully implemented in Castile, the historic heartland of Spain, the tax was strongly resisted in some territories and lackadaisically enforced in others. The kingdom of Navarre dismissed it outright, arguing that its own monopoly predated the Crown?s. In order to maintain consistency across tax rates and internal borders, and unable to force a unified fiscal implementation, the king of Spain was forced to become the tax farmer of the Navarrese tobacco monopoly ? a monarch reduced to serving as a contractor of one of its own domains.

There is little to quibble with in Grafe?s work. The early chapters build a solid foundation, based on detailed archival research and a meticulous tracing of market behavior. As the focus shifts to broader issues of political economy, the weight of the argument comes to rest on a tightly woven historical narrative and a brilliant command of a literature as unwieldy as any. When applied to an issue as weighty as the long-run underperformance of Spain, one cannot help but admire the combination of a detailed, erudite analysis with a coherent macro-historical logic. If one area for improvement were to be found, it would be on the comparative aspect. While the centralist French experience is consistently brought up as the mirror image of Spain, perhaps Germany, with its large jurisdictional fragmentation but very different political and economic trajectories, might have provided a more interesting counterpoint.

When combined with the weakness of the central state, the hodgepodge of privileges, exemptions, and other ?freedoms? of Spanish territories and cities resulted in a system that preserved the special interests of local elites at the expense of consumers ? and, ultimately, of long-run growth. Whenever kings tried to strengthen their position, revolts and secession ensued. Monarchs used repression sparingly, and always accompanied it with a relaxation of the offending policies. The paradigm of a weak center and strong regions survived throughout the old regime, becoming a headache for the Napoleonic invaders, and only retreating in the twentieth century under the extraordinary violence brought about by the Civil War. However, as these lines are written, nearly two million people fill the streets of Barcelona clamoring for Catalan independence. In a rare feat for an economic history book, Distant Tyranny may yet shed as much light on current events as it does on the past.

Mauricio Drelichman is Associate Professor of Economics at the University of British Columbia, and Scholar in the Institutions, Organizations, and Growth program of the Canadian Institute for Advanced Research (CIFAR). He is the author of numerous articles on the institutional and financial history of early modern Spain.
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