ment administration, which implied small revenues to officials and large
revenues to the leaders.
In other words, France adopted an institutional design where the
monarch and oligarchs divided the surplus among themselves. In Eng-
land, Parliament extracted the surplus from taxation at the expense of
oligarchs and officials. According to our theoretical model, then, the
institutional reform, which led to better public finances, was not a re-
sult of a benevolent parliament, but rather the outcome of opportunistic
behavior on the part of parliamentarians who were sufficiently powerful
in shaping institutions for their private benefit. In England, this turned
out to provide a favorable climate for industrialization. In France, the
circumstances eventually led to revolution.
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