Leviathan's Offer: State-Building with Elite Compensation in Early Medieval China

How to soften resistance to state-building efforts by reform losers? This paper highlights a strategy of compensation via the bureaucracy, in which the ruler offers meaningful government offices in exchange for elites’ acceptance of state-building reforms. We empirically explore this strategy in the context of the Northern Wei Dynasty (386 - 534 AD), which terminated an era of state weakness in early medieval China that initially resulted from entrenched landowning interests and fragile barbarian kingdoms. Our unique dataset combines geocoded family background and career histories of around 2,600 elites with information on medieval Chinese strongholds, which we use to infer state weakness. Leveraging a comprehensive state-building reform in the late 5\textsuperscript{th} century, difference-in-differences estimates document that the reform led to a sustained, substantial increase in the total number of powerful aristocrats from localities with strongholds recruited into the imperial bureaucracy. Subsequent estimates provide evidence for three mechanisms through which compensation facilitates state-building. First, offices taken by these elites came with direct benefits of power and prestige. Second, by transforming these aristocrats from local powerfuls into national stakeholders, these offices potentially induced the realignment of their interests toward those of the dynasty. Third, bureaucracy provided the regime with institutional tools of power-sharing to mitigate credible commitment problems. Findings in this paper shed light on the causes of the ``First Great Divergence,’’ where similar barbarian invasions at similar times led to political fragmentation in Europe but further state consolidation in China.