Journal of Historical Political Economy > Vol 2 > Issue 2

The Merchant Guilds and the Political Economy of the Spanish Empire on the Eve of Independence

Fernando Arteaga, Economics Department, University of Pennsylvania, USA, arteaga@sas.upenn.edu
 
Suggested Citation
Fernando Arteaga (2022), "The Merchant Guilds and the Political Economy of the Spanish Empire on the Eve of Independence", Journal of Historical Political Economy: Vol. 2: No. 2, pp 299-331. http://dx.doi.org/10.1561/115.00000031

Publication Date: 25 Jul 2022
© 2022 F. Arteaga
 
Subjects
Comparative political economy,  International political economy,  Political economy,  Industrial Organization: Transaction Cost Economics
 
Keywords
Spanish EmpireLatin American independencestate fragmentation
 

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In this article:
Introduction 
The Model: Overview, Design, and Details 
Historical Evidence 
Conclusion 
References 

Abstract

Under what conditions elite competition may disrupt political stability? I study the Spanish Empire on the eve of the wars of independence. I emphasize the role merchant elites played in maintaining the empire unified, and how their interests misaligned in the late eighteenth century creating incentives for political secession. An implicit political arrangement existed, where the Crown maximized tax revenue through its control of the transatlantic trade. It did so by coopting specific American elites located at key nodes (mainly in Lima and Mexico City), which themselves gained rents from their privileged trading positions. The political organization was stable while Spain held sea supremacy in the oceans. The advent of the British Navy after the 7 years war disrupted the Spanish trade networks, affecting the distribution of rents and the corresponding institutional equilibrium. The Spanish Crown tried to adapt by decentralizing its oceanic trade routes, and by coopting a larger set of regional elites within the empire. The tactic backfired: it gave major power to new de-attached local elites creating incentives for political fragmentation.

DOI:10.1561/115.00000031

Companion

Journal of Historical Political Economy, Volume 2, Issue 2 Special Issue - The Political Economy of Empire: Articles Overview
See the other articles that are part of this special issue.