Yves here. Gary Feinman makes a provocative but credible argument that taxation is fundamental to having and preserving a representative form of government. The alternatives, such as reliance on slavery or piracy, concentrate power and wealth while also reducing accountability.
By Gary M. Feinman, an archaeologist and the MacArthur curator of anthropology at the Field Museum of Natural History in Chicago. Produced by Human Bridges, a project of the Independent Media Institute
Political debates about democracy often focus on culture, leadership, or polarization. But history points to a more prosaic—and more powerful—driver of political outcomes: how governments raise revenue.
Across thousands of years of human history, the strongest predictor of whether power is shared or concentrated is not population size, technological sophistication, or even ideology. It is whether governing institutions are funded primarily through internal revenues—taxes, participatory fees, and labor contributions drawn broadly from the population—or through external resources that rulers can monopolize without negotiation.
When governments depend on internal taxation, bargaining is required. Taxes are not simply extracted; they are negotiated, enforced, justified, and institutionalized. Revenue collection requires administrative systems, transparency, and at least minimal procedural fairness. Over time, these fiscal relationships provide taxpayers with varying degrees of voice and leverage. Representation, voice, and accountability are not moral add-ons to taxation—they are structural consequences of it.
Historical evidence consistently shows that states financed through broad-based taxation tend to distribute power more widely. By contrast, regimes that rely heavily on external revenues—war booty, royal estates, slave labor, monopolized trade routes, or extractive (spot) resources—are far more likely to concentrate power, suppress participation, and tolerate high levels of inequality. External revenue sources free rulers from reliance on citizens, insulating power from popular pressure.
This pattern holds across eras and political forms. Internally funded governments required more impersonal, merit-based bureaucracies capable of assessing, collecting, and redistributing taxes. Externally funded regimes were more likely to develop patrimonial systems in which offices were allocated based on loyalty rather than competence. In fiscal terms, democracy and autocracy are not merely ideological opposites—they are alternative revenue strategies with political consequences.
The lesson runs deeper. Taxation is not just a source of revenue; it underpins a social contract. Taxes formalize mutual obligations between governments and those they govern; they undergird trust. When citizens perceive that taxes are relatively fair and that revenues fund shared goods—roads, markets, defense, public spaces—compliance increases. When taxation becomes regressive, opaque, or disconnected from benefits, resistance, evasion, and political instability follow. These dynamics are present in ancient and modern states alike.
One of the most persistent myths about governance is that inequality is a natural or lockstep byproduct of complexity. Historical comparisons show otherwise. High inequality correlates closely with systems that minimize internal taxation and maximize extractive control over external resources. Where rulers do not need taxpayers, they have little incentive to limit accumulation at the top. Power, wealth, and decision-making reinforce each other in tight, mutually sustaining loops.
This is why slogans like “no taxation without representation” are never merely rhetorical. They condense a deep historical truth: representation emerges when governments need to rely on their people financially. Remove that reliance, and representation withers—even if formal democratic institutions remain intact.
These insights are not confined to the distant past. Over the last four to five decades, the United States and other democracies have moved away from strongly progressive, broad-based taxation toward systems that rely more on consumption taxes, debt financing, and financialized gains. At the same time, public investment has stagnated, inequality has soared, and political voice has become increasingly skewed toward wealth. History suggests these trends are causally connected, and not coincidental.
Crucially, the historical record also shows that political trajectories are not fixed. Systems oscillate. States that once relied on internal taxation can shift toward external revenue streams—and toward concentrated power. The reverse is also possible. Fiscal structures change, and when they do, political institutions may shift as well.
Modern debates about democratic decline, therefore, focus too narrowly on norms and elections while neglecting the fiscal foundations that make those democratic practices sustainable. Elections without a shared tax base are fragile. Accountability without broad revenue dependence is hollow.
If democracies today are to restore trust, widen participation, and check concentrated power, the historical lesson is unambiguous: they need to rebuild and evenly implement inclusive tax systems. That means not only who pays but also how revenues are collected, how transparently they are managed, and how visibly they return to the public in the form of shared opportunities, services, and goods. Fair, progressive revenue collection from a broad swath of the citizenry is not a sign of oppression, but a ticket toward widespread inclusivity.
Democracy does not survive on values alone. It survives on economic balance sheets. And across historical eras, a more equitable balance has always leaned toward those who contribute, participate, and petition for a voice in return.
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This takes us into Polanyi territory, which you’d like to think had long-since been settled. If even the capitalists (Keynes) saw a century and more ago that it was taxation or barbarism. . .
Part of the mystery of capitalism is the way we progressives have to relearn these lessons over and over (eureka!), have them bonk us–now and again–over the head.
Nice summary. And just to add: although the US has a nominally “progressive” income tax, the overall taxation falls disproportionately on the working class and middle classes. For example, capital gains is taxed at lower rate than wage income. And the Byzantine tax law makes taxes primarily for the “little people” and oligarchy pay little or no net taxes. (factor in tax breaks, subsidies, and no-bid contracts) We now see the (exponential?) accumulation of obscene levels of wealth and power into fewer hands and a concentrated “super oligarchy”. Since the US has no functioning democracy, and no way to vote for people who represent the interests of voters, this will only get worse, until…
Michael Hudson has advocated taxation as a way to “tax away economic rent” and prevent a polarized, top-heavy economy run by an oligarchy (like in the USA, for example). In the case of the USA, it is too late and if history is any guide, the US will decline and rot from its own institutional corruption and imperial overstretch
This is contrary to MMT. Not contradictory, but contrary.
I think there’s a sort of chicken/egg aspect to the argument. A government that cares about its citizens will be more apt to come around asking for contributions; one that would rather die than talk to the filthy slobs will run things differently.
In Warren Mosler’s Money Story, broad taxation is needed to create a national market. The need to pay tax obliges each person to offer some product for sale to get a bit of government-spent money to give to the tax collector. Once everyone is doing this, suddenly there is a market where all the country’s products are available for sale. Once there’s a market, it makes sense to talk about the government provisioning itself by spending money, even spending hard-currency money that it has received in taxes*.
* with modern account-based money, the usual MMT arguments become literally true.
How is this ‘contrary’? For most of history, the MMT argument of paying with the printing press did not apply. (or, not for long, as it only debased the currency)
In the present case of fiat money, MMT still argues for taxation as being required to pull currency out of the economy. More importantly, Feinman’s argument isn’t about needing to *fund* the government – it’s about creating a broadly shared investment in civil society, and generating a belief that everyone is getting a fair return for their money. This is a sociological question, not a monetary one.
“It is whether governing institutions are funded primarily through internal revenues…”
I’d say that it’s complementary to the MMT account of government money.
As I understand that account, taxation creates need among the citizenry for the government’s money, and this incentivizes people to accept the government’s money as payment for the goods and services it purchases. The government isn’t trying to create a market, it’s trying to provision itself.
This account and the “taxation is essential for representation” account don’t point in the same direction, but they also don’t point in opposite directions; they are asking different questions about the meaning and function of money. MMT answers a question along the lines of “why is taxation important when taxes are not how the government funds itself?” Feinman is answering the question “is taxation important for the function of representative government, and why?”
Or it could answer the question, “Look what happened to the economy when the government moved from broad-based taxes for financing expenditures to the creation of money and a deficit spending?”
Would be nice if he shared any of that “historical evidence”… It seems to me that “broad-based taxation” describes many historical autocracies with strong hierarchies, like the Tokugawa Shogunate or most Chinese dynasties in the time of their early vigour. It would be something of a stretch to call them democratic, but otherwise the point about democracy vs. autocracy becomes meaningless. That broad-based internal revenue sources are better for stable political life seems true to me, but democracy isn’t necessarily a part of it.
The basic argument seems valid. Further, it implies that the US’ “exorbitant privilege “ can have anti-democratic effects, since it makes the federal government less reliant on internal tax receipts. So maybe Trump, by making US hegemony less acceptable to the rest of the world, will ironically play a part in making it possible for the US to be more democratic in the long run. Maybe.
This seems to me to be consistent with Hudson’s Super Imperialism — the recycling of the global dollar system into US treasuries (used among other things to finance the globe-girdling string of US military bases) acting as a form of “tribute” from the periphery to the metropole.
“One of the most persistent myths about governance is that inequality is a natural or lockstep byproduct of complexity. Historical comparisons show otherwise. High inequality correlates closely with systems that minimize internal taxation and maximize extractive control over external resources. Where rulers do not need taxpayers, they have little incentive to limit accumulation at the top. Power, wealth, and decision-making reinforce each other in tight, mutually sustaining loops.”
There’s a real point in here. Inequality doesn’t automatically come from complexity, and systems that don’t rely much on taxing their own people—like resource-heavy or extractive economies—often end up with more concentrated power and wealth. If a government isn’t dependent on its citizens for revenue, it usually has less pressure to be accountable.
But it’s still too simplified. Inequality today comes from a mix of things—capital markets, technology, globalization, and how institutions are set up. You can have broad taxation and still see inequality rise, which has happened in a number of developed countries. So taxation by itself doesn’t explain much.
From an anthropology lens, this argument makes more sense. Looking at long stretches of history, you can see patterns around resource control, taxation, and power. That’s where this framework fits best.
From a political science lens, it’s less convincing. Modern systems run through institutions, elections, policy design, and influence networks. Taxation is part of it, but not the main driver. Influence often comes from lobbying, access, and how rules are written, not just who pays taxes.
Going back to early historical models doesn’t really solve the problem either. Those models assume a more direct relationship between rulers and taxpayers. Today, governments can borrow, use complex financial systems, and operate through layered institutions. A lot of inequality now is tied to global capital, corporate structures, and policy choices that didn’t exist in earlier systems. Changing taxation alone doesn’t really reach those areas.
Also, if you look at how many modern democracies developed, taxation wasn’t the main trigger. Voting rights expanded through political pressure, labor movements, post-war changes, and decolonization. In many cases, tax systems expanded after those changes, not before.
So it’s a useful historical lens, but it doesn’t fully explain how inequality works in modern democracies.
The fact that there are rulers is the problem. Every society with a ruling class has endless corruption and greed, a few rich and a lot of poor. And yes, some are less equal than others, and if I had to choose an unfree society, I’d prefer one that’s slightly less unequal. But why not study free societies and learn what that way of life is like, and live without a ruling class?
Healthy nations in traditional times don’t (and didn’t) have ruling classes. They’re also called ‘native’ or ‘indigenous’ people living in traditional times. When missionaries or outsiders visit, they commonly have amazing things to say (assuming they’re not too blinded by prejudice). I was rereading Ben Franklin’s essay today “Remarks Concerning the Savages of North America” and he remarks that there are no prisons, no police, and no crime. And this is a common observation of free societies – no prisons, no police, and no crime. I’ve collected many examples of this observation from free societies around the world – that is, healthy nations in traditional times.
If we wanted to create a healthy nation, without corruption and greed, we need to not tolerate a ruling class. We need to learn how to create a nation without a ruling class. After studying healthy nations (that live traditionally) extensively, I’ve found key aspects of their way of life that they all have in common that let people live in a good way with each other indefinitely. How do people make laws without a government imposing them? How do people live without police and crime? How do people share as a way of life, and see greed as a severe disturbance?
All these questions are addressed for anyone interested in learning how to create a truly healthy nation in these videos or this free book. I’m working to spread the message. We don’t need to fixate on this or that attribute, such as taxation, voting, or the layout of the legislative body. No democracy has ever been a free society. We can do so much better – but first people need to learn what free societies are like. It’s a profoundly different and beautiful way of life compared to ours, with very different expectations people have for each other.
(Is Gary Feinman talking about US state governments?)
The most sovereign of governments fund themselves by issuing their own currency. The most sovereign of governments don’t need taxpayers for anything except for the tax payers to accept and to need the currency that is issued. Under pain of arrest, governments do demand back, the currency that they issue.
In the case of Japan, the US, ect., where does the currency originate that the author claims is needed to finance the government?
He begins with the error that governments need tax payer funding then reinforces the error with the claim that the broader the tax base the more inclusive the society.
From inception, the most sovereign of governments do “remove that reliance” from their citizens.
Well, fiat currency systems DO require taxation to drive acceptance of the token and to control inflation — but you are correct that the tokens must be issued first in order to be collected as “revenue” (I think the French meaning involves the premise of “return” consistent with this logic).
All of which presumes the existence of a state apparatus with sufficient power to enforce the tax obligation. The current state of oligarchy in the US suggests state capture in the service of escaping said tax obligation by a narrow class of the citizenry.
The weakness of this essay is the lack of the definition: what is broad or narrow base of taxation? Indirect taxes and debt are termed “narrow” but in the first case everybody pays them, in the second case, interest on debt is paid from taxes…
Evasion by loopholes benefits few, so the base defined by the proportion of people paying changes a little. That was the principle of aristocratic systems: peasants, most numerous, paid most, then imposts/tariffs, and aristocrats, nothing (ideally).
Of course, there is an issue of debate in the political system, and evading it — manufacturing consensus, political diversions of issues, bait and switch as the cornerstone of politics, so a narrow class of beneficiaries prospers most (or only, at times), but what is the chicken and what is the egg here? (Obviously, chicken and egg cannot be neatly separated.)
One quibble — in fiat systems interest on debt is NOT “paid from taxes.” It is paid the same way that the monetary sovereign always pays for anything — with newly created money. As someone among the MMT scholars puts it (can’t recall who) “it always pays the same way.”
(This from examining the actual plumbing of the US Treasury and its banker, the Federal Reserve)
The piece makes a ton of hot historical claims but doesn’t back it up with examples, let alone proper quantitative analysis. And it doesn’t try to examine reverse causation arguments. Sorry but I’m not convinced. The big monster counter-example is, of course, ancient China. Centralized but dependent on internal revenues for thousands of years. Ancient Egypt is likely also the same.