From powerholders to stakeholders: State‐building with elite compensation in early medieval China

Abstract How do rulers soften resistance by local powerholders to state‐building efforts? This paper highlights a strategy of compensation, where elites receive government offices in exchange for relinquishing their localist interests, and become uprooted and integrated into the national political system as stakeholders. We explore this strategy in the context of the Northern Wei Dynasty of China (386–534 CE) that terminated an era of state weakness during which aristocrats exercised local autonomy through strongholds. Exploiting a comprehensive state‐building reform in the late fifth century, we find that aristocrats from previously autonomous localities were disproportionately recruited into the bureaucracy as compensation for accepting stronger state presence. Three mechanisms of bureaucratic compensation facilitated state‐building. Offices received by those aristocrats: (1) carried direct benefits, (2) realigned their interests toward the ruler, and (3) mitigated credible commitment problems. Our findings shed light on the “First Great Divergence” between Late Antiquity Europe and Medieval China.