Merciful Tyrants? Explaining Rebel Forgiveness and State Capacity in Mughal South Asia (1555-1707)

safya morshed, London School of Economics

Credible commitment, described as the restraint on rulers from reneging on debt payment and confiscating valuables, has been regarded as an important determinant in the development of state fiscal capacity. However, more recent scholarship, like the work of Irigoin and Grafe (2013), has argued that monitoring and coercion costs can equally limit a state’s fiscal capacity, especially where state costs are lower. This paper posits rebel forgiveness as a tool used by the Mughal state to maximise revenue. In the face of large rebellions, state forgiveness was a tool for maximising revenue in an environment where the cost of collecting and monitoring revenue were very high. Therefore, the paper will present a theoretical model for why forgiving rebels was a rational decision for a revenue maximising state. The paper highlights the unique institutional constraints faced by Asian states in the pre-colonial era, and the decisions made in crisis which had implications for long-term development. The contributions of this paper are many-fold, but of primary importance is its contribution to our understanding of how pre-industrial states responded to unique cost structures that would otherwise impede their ability to collect tax revenue, and the impact the decisions had on the longevity of the state. The case-study of the Mughal empire demonstrates that cooperation with the elites was an important, cost-saving practice that was essential to the empire’s strength. When faced with unusually high administrative costs, forgiveness was a strategic device that allowed the state to maximise revenue. Rather than inability to refrain from confiscation, the state opted to retain elites with specific skill-sets valuable to running the empire.

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 Presented in Session 88. From the Top: Elites and Fiscal Policy Making