He applied the “Page 99 Test” to his new book, States of Credit: Size, Power, and the Development of European Polities, and reported the following:
At first blush, applying the page 99 test to my book may result in puzzled looks. Page 99 of States of Credit refers to the breakdown of the Carolingian Empire. What does this have to do with public debt? In fact, this brief excursion into Carolingian history provides an illustration of one of the main goals of my book - peering deeper into history to reassess received wisdom.Learn more about States of Credit at the Princeton University Press website.
There is a long standing claim that precisely because they were more democratic, European republics such as Venice tended to have better access to credit than did large monarchies such as France. Republican institutions, it is said, placed institutional checks on rulers who might otherwise choose arbitrary actions such as default. We might conclude then that European history demonstrates how democratic institutions have beneficial economic effects. If you want to ensure access to credit, then choose a more democratic set of political institutions. A deeper look at the historical evidence suggests a different conclusion.
First, those European states with the most active representative assemblies almost invariably were small in size. In an era before modern means of communication and travel it was possible to have an active representative assembly in a small city-state, but it was much more difficult to do so in a large monarchy. So institutions were determined by geography; you couldn’t choose them.
Second, among the city-states of Europe, those that had the best access to credit were actually the most oligarchic, and not the most democratic, in character. When a city was dominated by the same rich merchants who also lent to the state, then access to credit tended to be good, precisely because the merchants knew they would get their money back. When a city had broader political participation, credit was less secure. In the long run, however, oligarchic rule may have had significant costs as city-states became rentier republics resistant to the arrival of new economic innovation.
Finally, I have yet to explain what any of this has to do with the breakdown of the Carolingian Empire. In fact, it helps suggest why city-states emerged in some areas of Europe but not others. As the empire fragmented, some of the successor kingdoms proved more durable than others. Through an accident of history, city-states subsequently emerged in a central band within Europe precisely because this was the area subject to the most political fragmentation after the empire’s collapse.