War, Trade, and the Roots of Representative Governance

Abstract

This paper evaluates the historical roots of representative forms of governance. We argue that the two most important representative institutions invented in medieval Europe—communes and parliaments—emerged in a sequenced bargain over war and trade. Communes emerged first, when merchants offered attractive enough sums in exchange for rights of self-government. In the process, communes became important new actors in tax collection (given the absence of tax-collecting bureaucracies). Soon after, monarchs sought to reduce their costs of negotiating the “extraordinary” taxes that financed their wars. Rather than negotiate individually with each of their newly important towns, they summoned urban representatives to their pre-existing noble councils, creating parliaments. Exploiting two new panel datasets, our empirical analyses show how war and trade combined to motivate the formation first of communes and then of parliaments.