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Public debt and taxation: Two aspects of the co-evolution of private and public sectors as reflected in German-language public finance 1850-1918

Sturn Richard, Graz University

Private and public sector are often considered in a dichotomous way. The private-public dichotomy co-evolved with the development of the modern state and the modern private economy. In this context, the contributions of the “Triade of German Finanzwissenschaft in its Golden Age” and subsequent works in fiscal sociology are reviewed in order to address the following issues: • How explain the gradual development of a new paradigm of fiscal equilibrium in the second half of 19th century, promoting a better understanding for the macroeconomic and allocative reasons for public credit, while stressing drawbacks related to the political economics of public debt? • How are those views linked to the integration of a co-evolutionary view of public and private sectors, with an emphasis on the dynamic role of the state? • What is the role of ideas of a multi-level equilibrium, including the balance of different sources of revenue in a unified framework including revenues and expenditures? as well as the corresponding sectors of modern society progressed in a process of asymmetric and sometimes discontinuous co-evolution. Taking as appoint of reference a pre-modern state of affairs where the private-public dichotomy is not yet developed, a few key issues and concepts are introduced which are indispensable for (1) distinguishing the modern public sector from other forms of non-market governance and (2) considering the dynamism of individualist private market-mediated economy and the evolution of a distinctively modern public sector as two sides of the same coin. In that context, explicit collective choice (related to individual values and “democratic” procedures) and the distinction between public and private goods are of pivotal importance.

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Keywords: Public debt, taxation, German finances

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