In his Coercion, Capital and European States: AD 990 - 1992 (Studies in Social Discontinuity) , Charles Tilly tells the story of the modern state as a story of coercion and capital. It is a story of two political forms, state and city. Coercion is gradually monopolized by the state, while the cities were the centers of capital accumulation. There was often tension between the State and the cities, but they also worked out various forms of cooperation and compromise.

Tilly summarizes the history this way: “Through most of the last millennium, European cities and states have carried on a series of liaisons dangereuses , love-hate affairs in which each became at once indispensable and insufferable to the other. Cities and their capitalists drew indispensable protection for their commercial and industrial activity from the specialists in coercion who ran states, but rightly feared interference in their money-making and diversion of their resources to war, preparation for war, or payment for past wars. States and military men depended on city-based capitalists for the financial means to recruit and sustain armed force, yet properly worried about the resistance to state power engendered by cities, their commercial interests, and their working classes. Cities and states found the ground for uneasy bargains in the exchange of protection for access to capital, but until the nineteenth century such bargains remained fragile” (p. 58).

Cities had various reasons to resist the monarchy (p. 61):

“With important exceptions, the Protestant Reformation concentrated in Europe’s city-state band, and at first offered a further base for resistance to the authority of centralizing states.” In the Netherlands and some other places, “Protestantism provided an attractive doctrinal basis for resistance to imperial authority, especially authority buttressed by claims of divinely-sanctioned royal privilege.”

Intriguingly, Tilly (p. 61) suggests that Britain – the arch-capitalist system – is the “obvious challenge to the theoretical opposition of capitalist activity and state power.” This is because in England ‘a substantial state formed relatively early despite the presence of a formidable trading city and maintained a hegemonic state church into the nineteenth century.” He thinks there are several factors that make the British situation unique – the rise of the monarchy before the formation of London as an international trading center, London was tied by kinship and trade with the gentry throughout England, London had representation in parliament. Whatever the reasons, he sees a close link between the British State and the British economy.