This blog is based on the author’s poster presented to the Economic History Society’s annual conference, 2021. This poster was awarded a New Researcher’s poster prize.
by Safya Morshed (London School of Economics)
The broad message from the literature on early modern state development is clear: in Europe, costly wars incentivised states to raise revenue, and unlike absolutist states, democratic governments were better able to credibly commit to not confiscating wealth or defaulting on loans — which generated greater economic growth and the development of state capacity development. Conversely, for Qing China, it has been argued that numerous rebellions explains the low development of per capita tax revenue. Does South Asia fit into either of these models?
The Mughal empire (1556-1707) was the world’s second largest economy and the largest exporter of cotton before the Industrial Revolution. Militarily powerful, the state won several wars against the Northern Savafids as well as the European trading companies. Foreign colonial expansion was only possible when the empire declined from the early eighteenth century. The Mughal state has been depicted as highly extractive, absolutist and militaristic. Yet rulers exhibited apparently odd behaviours: they forgave rebel leaders that attempted to secede or take over the empire, or who refused to pay taxes without the threat of armed force (Figure 1).
My research analyses data from a newly constructed database on Mughal conflicts, which includes information on 269 rebels for whom it is possible to determine their fates after they rebelled. Of the 269 rebels, 118 (43 per cent) were forgiven. Moreover, some of these rebels were forgiven multiple times. The Mughal noble Ali Quli Khan was forgiven three times despite leading costly rebellions against the state, and on each occasion his status and confiscated land grants were returned to him (Figure 2).
Importantly, these rebellions were not instigated by peasants but rather by wealthy individuals. There are many examples were peasants have been forgiven for their involvement in mass rebellions: the peasant’s revolt of 1381 in England or the Chiang-yin rebellion in Qing China. But in the Moghul era, wealthy rebellion could instigate many costly rebellions and the rulers could have responded by confiscating a rebel’s wealth thereby eliminating a threat and gaining income.
I argue that it was rational for a revenue-maximising state to forgive rebellion leaders because this was a cost saving strategy. The Mughal empire faced numerous internal conflicts. The database records 171 rebellions and 65 wars between 1556 and 1707. Unlike China, however, these rebellions were often led by wealthy intermediaries capable of raising armies that were costly to put down. Moreover, wealthy rebels were not paying taxes during the rebellions.
In these circumstances the act of forgiveness was a way of minimising the losses incurred when quashing rebellions. Consequently, the percentage of rebels forgiven increased when rebellions became increasingly larger and more expensive (Figure 3).
However, this observation does not address how the state was able to ‘credibly commit’ to forgiveness? How did rebels know that the state would not pretend to forgive rebels, only to punish them later? I argue that these rebels possessed high administrative capacity: they could manage local affairs and collect taxes more efficiently than the state. Knowing that the state needed them, rebels leveraged their skills for higher status and better land grants.
The wider implications of my research are two-fold. Firstly, it is possible for a powerful absolutist state to credibly commit to no confiscation. Prohibitively high coercion costs and ambitious intermediaries led to a greater level of violence, which increasingly inhibited economic activity in South Asia toward the end of the seventeenth century. Secondly, my findings raise important questions about the comparison between Asian empires. Ma and Rubin have argued that early modern Chinese dynasties adopted a low-wage, low tax solution for intermediaries, but the Mughal government did not have this option. Consequently, the latter had to adopt very different policies which nonetheless affected long term fiscal development. Interestingly, unpublished research reports evidence of rebel pardoning in the Ottoman empire.
 See, for instance: North, Douglass C, and Barry R Weingast. ‘Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England’. Journal of Economic History 49, no. 4 (1989): 803-32;
 See, for instance: Chan, Kenneth S. ‘Foreign Trade, Commercial Policies and the Political Economy of the Song and Ming Dynasties of China’. Australian Economic History Review 48, no. 1 (2008): 68-90.
 Habib, Irfan, “Potentialities of capitalistic development in the economy of Mughal India”, Journal of Economic History, 29:1 (1969), 32-78.
 Ma, D., & Rubin, J. (2019). The Paradox of Power: Principal-agent problems and administrative capacity in Imperial China (and other absolutist regimes). Journal of Comparative Economics, 47(2), 277-294. https://doi.org/10.1016/j.jce.2019.03.002
 Arslantaş, Yasin (2017) Confiscation by the ruler: a study of the Ottoman practice of Müsadere, 1700s-1839. PhD thesis, The London School of Economics.