Lambert is free to speculate here: World systems analyst Giovanni Allrighi has argued that the so-called “center of gravity” of capitalism moves in a spiral from west to east, starting in Italy and then moving on (memory). (I paraphrased based on the translation) I will go to the Netherlands, England, and America, and in the future I will move across the Pacific Ocean. Assuming he is right, it would be interesting to discover whether, as capital moved east, patterns of state and civil society evolved in each new center to resemble those described here in Florence. , would be an interesting comparative study. Perhaps there are political economists among my readers who can correct me.
Sesifo network members Marianna Belloc, full professor of economics at the Sapienza University of Rome, Roberto Galbiati, CNRS professor at the Paris Institute of Sciences, and Francesco Drago, professor of economics at the University of Catania. Originally published on VoxEU.
The Medici family ruled Florence for nearly 300 years, patronizing the arts and making Florence the cultural capital of Europe. However, there was a dark side to the rule of the Medici family. In this column, we study the situations in which relatively open political systems can become corrupted by conflicts with concentrated wealth. Without formally changing the constitutional structure of the political system, the Medici apparatus manipulated that system, allowing political bureaucracies to misappropriate public funds and shifting public office from the duty of citizens to the accumulation of personal wealth. turned into a source of
In September 1433, Cosimo de’ Medici, the founder of the Medici dynasty, was summoned to appear before the Signoria, the Florentine government, and informed that he had been expelled from Florence. The decision arose from allegations that Cosimo attempted to manipulate the outcome of the selection process for government members. In response, Cosimo famously said: “Ask how many times I paid the soldiers their salaries with my own funds. The commune then repaid me only if it could repay” (Molho 1971). Cosimo was one of the richest men in the city, the leader of a prosperous bank with branches throughout Europe, and a major lender to the republic during times of financial hardship.
A year later, Cosimo was recalled to Florence. He took control of the city and marked the beginning of the rule of the Medici family, which lasted in various forms for nearly three centuries. The political apparatus constructed by Cosimo produced systematic manipulation of the political system, without formally changing its constitutional structure, and enabled systematic misappropriation of public resources by political officials. Although this historical episode took place six centuries ago, its implications apply to the present situation, as relatively open political institutions with checks and balances on political power can be captured in the face of strong centralization. It warns that the situation is about to change dramatically. wealth.
In the economics literature, research on the effects of wealth concentration on politics has focused on different aspects within the broad scope of institutional capture. In their study of Venice, Puga and Trefler (2014) document how elites can formally move institutions toward political closure. Other scholars such as Dal Bo (2006) and Glaeser et al. (2003) investigate how elites can influence organizations to work to their advantage. Florence’s case falls between these two extremes. This case shows how near-complete political control can be achieved without formal institutional overthrow, and illustrates the consequences of this subtle but profound form of institutional capture. This is emblematic of how political dynasties can arise and persist over time, a situation that can still be found in modern democracies (Mendoza 2012).
Belloc et al. (2022) delves into this historical episode, documenting the mechanisms of institutional capture and associated economic benefits to elites, and exploring its implications for the distribution of wealth.
The Republic of Florence was founded in the 12th century. From the early 14th century to the end of the 15th century, access to municipal government was regulated by a system that combined elections and selection by lottery. This system, called Trattecoupled with short-term limits on officeholders, ensured relatively wide participation in city politics, ensured a relative balance of power among prominent families, and limited rent collection for several decades. The emergence of Cosimo de’ Medici and his family on the political stage marked a breaking point.
Starting in the 1420s, it took part in the Lombard Wars and spent huge military expenditures. The pressures of the resulting fiscal crisis necessitated major reforms to the tax collection system, including expanding the tax base and establishing a mechanism for direct financing from the people to the state. These events stimulated a growing demand for involvement in city government, but also provided opportunities for wealthy individuals to become lenders to the republic (Molho 1971). Among these lenders, Cosimo used his funds to develop a network of patronage and credit relationships (Padgett and Ansell 1993). Opposed by the leading families of the previous regime, the Medici family used the bargaining power generated by their position as bondholders and resource lenders to seize control of political selection mechanisms and control of cities. Figure 1 shows the proportion of credit lent to the republic by rival political factions during the 1420s and 1430s. This indicates that the availability of chattels was strongly correlated with the contribution to the public debt, and that the Medici network held a high proportion of credit. It was about half of the total credits.
Figure 1 Financing of the Republic of Florence by political factions, 1427-1434
Precautions: The bar graph (left vertical axis) measures the share of total credit provided as voluntary loans to the republic between 1427 and 1432, by political affiliation. The points (right vertical axis) indicate average liquid assets by political party affiliation. Above each bar, the corresponding per capita loan is reported (1427 gold florins). The shaded area of the third bar shows the percentage of credit provided by Cosimo and his son Lorenzo.
sauce: Belloc et al. (2022).
Our research draws on archival and secondary sources, including valuations of the wealth of entire Florentine households in 1427, 1457, and 1480, as well as detailed information on family political party affiliation and individual political participation over 15 centuries. It relies on its own compiled dataset.1
Based on this dataset, we find that the Medici’s capture of Florence’s political institutions included manipulating the officer selection system to favor members of their faction. After the Medici family came to power, faction membership was correlated with the probability of being elected to public office, but the likelihood of a Medici political opponent decreased. Figure 2 shows the relative frequency of political affiliation and term of office for each five-year interval over the period of interest. As you can see, while the political presence of individuals with divided loyalties has remained fairly stable throughout the century, the presence of individuals close to either the Medici family or its opponents has dramatically increased since the late 1420s. Branch to
Figure 2 Relative frequency of term dates by party affiliation and 5-year intervals
Precautions: The lines show the relative frequency of terms of office by party and by five-year interval. The left (right) vertical axis refers to individuals whose affiliation is known (unknown).
sauce: Belloc et al. (2022).
Our data also allow us to track the correlation between political participation and changes in personal wealth over time. As shown in Figure 3, before the Medici family came to power, the number of individual tenures (measured between 1393 and 1426) was not significantly correlated with individual wealth accumulation (1427) . In contrast, the correlation between office holding (1427–1456 and 1457–1480) and wealth (1457 and 1480, respectively) increased significantly after the Medici family took control of the political system.
Figure 3 Political participation and personal asset status
Precautions: The graph shows OLS coefficients estimated from a regression of personal wealth (1427, 1457, and 1480) on personal tenure (1393–1426, 1427–1456, and 1457–1480, respectively) is plotted, and the vertical line indicates the confidence interval. 95% level.
sauce: Belloc et al. (2022).
The above data and the results of other empirical experiments in the paper suggest that the institutional capture of the Medici family turned active political participation into a means of personal enrichment. Nor was this system harmless to the overall distribution of wealth. In fact, although the political system remained formally unchanged, hundreds of people who participated in city government saw their wealth increase with each term. We find that after the Medici family consolidated power, the concentration of wealth at the top of the distribution increased as the dynamics of wealth accumulation favored families belonging to the Medici family over families outside the Medici network. Ta.
We identify two main mechanisms by which political officials may have exploited rents under the Medici regime. It is the direct appropriation of public resources and the use of political roles to leverage patronage networks for personal gain (Padget and Ansell 1993). Misappropriation and patronage of public resources, although difficult to document, are not uncommon in modern political contexts (Prem et al. 2019, Labonne and Fafchamps 2016). Civil servants who collaborated with the Medici family were able to use their position to secure favorable loans, contracts, and other economic benefits. Our paper shows that during the Medici regime, rather than before, the Republic paid higher interest rates to households that held more terms.
We conclude that the occupation of Florence’s political institutions by the Medici family had significant economic consequences. Political office in 15th-century Florence had long been a position of civic duty with little personal economic benefit. Under the Medici regime, it became a source of personal wealth accumulation. This transformation contributed to widening wealth inequality, thereby further enriching political factions at the expense of civil society. The Medici family were patrons of the arts and helped make Florence one of Europe’s most important cultural, economic, and political centers. This is the main reason why their name remains famous all over the world. However, as we will show, the Medici legacy is also associated with the private exploitation of public office and the perpetuation of inequality. What happened under their regime is similar to many situations we see today, where economic and political power intertwine, creating a vicious cycle of wealth inequality and abuse of public office.
Original and available references.
