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,
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.

Publication Date: 25 Jul 2022
© 2022 F. Arteaga
Comparative political economy,  International political economy,  Political economy,  Industrial organization
Spanish EmpireLatin American independencestate fragmentation


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


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.



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.