The Continuous Moment


The conclusion of the United States election has prompted a resurgence of commentaries on the state’s role in markets. By focusing on the state’s capacity to shape and alter market structure, these discussions build on a longstanding academic tradition which overturned classical historical accounts of free markets.

Among the most influential texts is CHARLES TILLY’s 1990 book, which examines the co-development of commercial capitalism and nation states.

From the introduction:

“The story concerns capital and coercion. It recounts the ways that wielders of coercion, who played the major part in the creation of national states, drew for their own purposes on manipulators of capital, whose activities generated cities. Men who controlled concentrated means of coercion (armies, navies, police forces, weapons, and their equivalent) ordinarily tried to use them to extend the range of population and resources over which they wielded power. When they encountered no one with comparable control of coercion, they conquered; when they met rivals, they made war. War, and preparation for war, involved rulers in extracting the means of war from others who held the essential resources—men, arms, supplies, or money to buy them—and who were reluctant to surrender them without strong pressure or compensation.

The organization of major social classes within a state’s territory, and their relations to the state, significantly affected the strategies rulers employed to extract resources, the resistance they met, the struggle that resulted, and the sorts of durable organization that extraction and struggle laid down. These relations varied significantly from Europe’s coercion-intensive regions to its capital-intensive regions. The demands major classes made on the state, and their influence over the state, varied correspondingly. The increasing scale of war and the knitting together of the European state system through commercial, military, and diplomatic interaction eventually gave the war-making advantage to those states that could field standing armies; states having access to a combination of large rural populations, capitalists, and relatively commercialized economies won out. They set the terms of war, and their form of state became the predominant one in Europe. Eventually European states converged on that form: the national state. “

Link to the book.

  • A 2019 article by Didac Queralt compares tax-financed and externally-financed wars from 1816 to argue that “globalization of capital markets in the nineteenth century undermined the association between war, state making, and political reform.” Link. And a recent article by Roberto Bonfatti, Adam Brzezinski, K. Kıvanç Karaman, and Nuno Pedro G. Palma draws on “money stock and tax revenue data for European states from antiquity to the modern period” to argue that “monetary and fiscal capacity, and by extension, markets and states, have a symbiotic relationship.” Link.
  • In the most recent edition of Herman Mark Schwartz’s States Versus Markets, a helpful overview of debates on the Great Divergence: “Other ancient agrarian empires, like China and the Ottomans, were successful in monetizing their territory, taxing peasants, and subordinating both merchants and the landed aristocracy. But no European state succeeded in unifying Europe.” Link.
  • “The emergence of a peculiarly British version of the fiscal-military state, complete with large armies and navies, industrious administrators, high taxes and huge debts, was not the inevitable result of the nation’s entry into European war but the unintended consequence of the political crisis which racked the British state after the Glorious Revolution of 1688.” From John Brewer’s classic Sinews of Power. Link. And a recent article by Benoît Maréchaux challenges Brewer’s traditional narrative by “analyzing the business organisation and activities of Genoese naval entrepreneurs who managed galleys for the Spanish Empire in the late 16th and early 17th centuries.” Link.


Health Insurance Mergers

PhD Candidate in Economics at Yale University OSCAR SOLER SANCHEZ studies industrial organization with a focus on health economics. In a 2020 paper, Soler Sanchez models concentration in the employer-sponsored health insurance market and the effects of mergers.

From the extended abstract:

“To study the welfare effects of hypothetical insurer mergers I estimate a model of insurer-hospital competition that incorporates employer’s demand for health insurance. Three main features of the model interact to define the effects of mergers. First, insurers and hospitals bargain over hospital reimbursements. Second, insurers set plan premiums. Third, medium-sized employers demand healthcare plans. The model easily accommodates cost efficiency gains to insurers from the mergers, and I estimate the efficiency gains that would be required to compensate for decreases in consumer welfare. Using data from Massachusetts, I estimate the model for the market of medium size firms in the fully-insured market.

My main finding is that premiums rise, and consumer welfare falls in all the hypothetical mergers that I analyze, although magnitudes vary with the size of the merger partners. Mergers that include the largest insurer in the market, BCBS, create the largest drop in consumer welfare (up to 17%), and the highest increase in premiums (up to 24%). The merger currently under review, between HPHC and Tufts, would reduce consumer welfare by 11.1%, and increase premiums by as much as 17%. For this merger, I estimate that a reduction of $957 (26%) in non-inpatient marginal cost for each plan would be required to overcome the negative effect on consumer surplus.”

Link to the text, link to Soler Sanchez’s website.

Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you’d like to see shared here? Send it our way:

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  • Join us on Friday, November 20 at 3 pm ET for a research session on “Unequal Burden: Black Borrowers & The Student Loan Debt Crisis” led by Nicole Perry of the NYC Department of Consumer and Worker Protection. RSVP to
  • “In developing countries, especially in mono-export economies, exchange rate problems have the potential to be a source of macroeconomic instability, but exchange rate policy has not received the same protections from politics.” By Nonso Obikili. Link.
  • Francesco Amodio and Nicolás de Roux examine labor market power and wage suppression in Colombia, finding that “workers produce about 30% more than their wage level.” Link.
  • Rahim Kurwa on policing and local opposition to the federal Housing Choice Voucher program in Los Angeles. Link.
  • “In low-income countries, people actively preparing to emigrate have 30 percent higher incomes than others overall, 14 percent higher incomes explained by observable traits such as schooling.” By Michael Clemens and Mariapia Mendola. Link.
  • Anita Mukherjee finds that inmates in private prisons serve an additional 90 days in part due to a greater likelihood of conduct violations. Link.
  • Saad Ahmad, Nuno Limão, Sarah Oliver and Serge Shikher find that Brexit uncertainty lowered UK-EU services trade by more than 20 percent between 2016 and 2018. Link.
  • Alberto Bracci et al. investigate the Covid-19 shadow economy, examining dark web markets that sell counterfeit vaccines. Link.
  • “Although individual level demographic data before 1538 is sparse we have abundant evidence of the lives of the European nobility. This analysis exploits recent mass digitization of family trees to examine trends in elite adult lifespan over the millennium between 800 and 1800. Plague, which afflicted Europe 1348-1700, killed nobles at a much lower rate than it did the general population. There were significant declines in the proportion of male deaths from battle violence, mostly before 1550. I am able to estimate, from the timing of deaths within the year, the fraction of males who died violently in each epoch. Before 1550, 30 percent of noblemen died in battle. After 1550, it was less than 5 percent. There was a common upwards trend in the adult lifespan of nobles even before 1800. But this improvement was concentrated in two periods. Around 1400, and then again around 1650, there were relatively sudden upwards movements in longevity.” By Neil Cummins. Link.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations:

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