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The Institutional Foundations of Prosperity

This chapter shows that the available evidence for fiscal and economic policy is consistent with the model's predictions. It emphasizes that fiscal and economic policy reflects growth-enhancing, innovative departures from the status quo, but departures crafted with an eye to preserving the balance of power among domestic actors. Throughout the fourth century, the Athenians sought to regulate the burden of taxation on the elite. But regulating elite taxation made it even harder for the state to generate revenues in a post-imperial era. In the first half of the century, the Athenians sought to extract rents from abroad while developing market incentives at home. After the defeat in the Social War from 357 to 355 ruled out the coercion option, the Athenians sought to intensify the exploitation of domestic natural resources, most notably the harbor of Piraeus and the Laurion silver mines. But in order to intensify the exploitation of Piraeus and Laurion, the polis had to provide incentives to those actors that were primarily involved in such exploitation. As a result, forms of access to social, legal, and economic institutions were extended to selected categories of noncitizens.