In 1954, Yanagita Kunio, arguably twentieth-century Japan's most influential social scientist, wrote, “As distinct from Germany, France, Italy, and other European countries, Japan has long had its own peculiar history, and so theories born in Western societies do not adequately suit Japan. . . . The idea that humans are generally the same and that their problems can be resolved by the application of some universal theory is a most fruitless area of academic inquiry” (Yanagita Kunio, “Watashi no shigoto” [My task], in Yanagita Kunio zenshū [The complete works of Kunio Yanagita], vol. 32 [Feb. 1954], 528; this reviewer's translation).

What would he make of Paths toward the Modern Fiscal State: England, Japan, and China, in which Wenkai He compares three chronologically different episodes of state formation and market development: England between 1642 and 1752, Japan between 1868 and 1895, and China between 1851 and 1911? Part of the answer might be gleaned from He's work (especially conference presentations) in Japan—where I, along with many of my Japanese colleagues, sighed, swooned, grimaced, and scratched our heads as he blazed away with his “institutionalist” comparative historical analysis. He made us think about vital commonalities and shared aspects of fiscal development that are usually only presented as isolated “national” histories, and we learned something new about the world, its historical imbrications, and our own intellectual biases.

Paths toward the Modern Fiscal State is elegantly divided into six chapters: the first addresses the rise of the modern fiscal state, particularly as it pertains to credit crises; the second, England and its remarkable fiscal consolidation; and then there are two chapters each to deal with both Japan and China. Historians of English or British finance will read the second chapter most critically, and I could pick over the odd bone in the chapters about Japan, but I learned a lot from his perceptive comments on Prime Minister Matsukata's policy-driven deflation and the importance of national taxes on alcohol. And in any case, I suspect that the author's greatest intellectual commitments and research interests relate to those chapters on China, and many will find his work here invaluable, particularly for its discussion on lijin (internal tariffs or taxation) and in explaining how China's failure to establish centralized “mutually reinforcing institutions” (bureaucracy) led to financial dysfunction and ruin (pp. 131–50). Although best read together as presented, most individual chapters also read very well as stand-alone essays, and readers will find much that will interest and test them here.

Naturally, some criticisms may be leveled at the work. There seems to be some confusion over the “casting” and “minting” of coins, as the terminology seems to be used interchangeably. Subtitles like “Overcoming an Exogenously Produced Credit Crises as a Mechanism” could have been framed in more straightforward, inclusive language, and I have trouble understanding “sticky” (despite its increasing use in macroeconomics and New Keynesianism) as in “the stickiness of existing institutions” and “sticky existing institutions” (pp. 45, 181). There are also some awkward translations—e.g., “camp of Public Discussion (kōgi seitaiha)”—but they are hardly serious concerns (p. 79). These should serve to remind us that the author, He, has conducted archival research with primary source materials in three very different languages, but published this work in English to reach its widest possible audience.

Intriguingly, He is analyzing why England and Japan succeeded in establishing modern fiscal states and why China did not. In other words, England developed the London money market with the Bank of England, deposit banks, merchant banks, and the discount houses, and Japan established the Bank of Japan, commercial banks, and an array of “special” parastatal and colonial banks. It was, and is, the integrity and experience of these institutions that make the capitals of these two countries financial centers of the world. So what financial and fiscal infrastructure was China able to develop and work with? Generations of historians have been taught to discuss the nature of what has happened rather than what has not, but He's comparative approach incorporating agency and structure, along with historical contingency, sails through these difficult conceptual episodes brilliantly. Cowinner of the 2014 Barrington Moore Book Award, Paths toward the Modern Fiscal State: England, Japan, and China is a pioneering study, sure to provoke further comparative discussion, and thus a highly recommended addition to every library of modern economic and financial history.