On February 27, Professor Adrienne LeBas, Associate Professor at the American University School of Public Affairs, presented her co-authored book project, Can Social Intermediaries Build the State? This project, in collaboration with Jessica Gottlieb at the University of Houston, focuses on a field experiment and data to explore statebuilding from non-state intermediaries. 

State capacity refers to a government’s ability to execute policies, collect taxes, and deliver goods and services. If there is low-state capacity — a weak ability of a country to execute state functions — citizens might not believe that tax payments will be enforced, so they are less likely to pay taxes. This also makes tax evasion low-cost, because the state cannot enforce the tax structure. LeBas frames this as a credibility issue.

LeBas introduces a new dimension of this issue: widespread non-state services provision. Present models of fiscal and tax exchange ignore social institutions, which step in to provide services where the state is not. In their project, LeBas and Gottlieb set out to understand if weak states could “borrow” the capacity of stronger social intermediaries, and who should deliver tax appeals — governments, or social intermediaries. 

Lebas and Gottlieb turned to look at Lagos, Nigeria, for a field experiment. Direct taxation has been an aim of the Lagos Government since 1999, and the city has found success in collecting income tax from the formal sector, increasing public goods supply and fiscal credibility. Additionally, Lagos has long been governed by a strong social institution operating between informal vendors and the state, making it a strong case study. 

These social institutions are described as a hierarchical structure of marketplace associations (MPAs). At the market level, these MPAs are headed by an Iyaloja, or “Mother of the Market.” This leader collects taxes, provides services, and bargains with the state. All of these markets are under the leadership of the Iyaloja-General, who heads the Lagos Market Women & Men Association (LMWMA). 

LeBas and Gottlieb partnered with the Lagos Internal Revenue Service (LIRS) and the LMWMA to craft an experiment to increase registration and income tax payment via tax appeals. LeBas and Gottlieb hypothesized that tax appeals will be more effective when delivered by the MPA than by state agents, more effective when delivered by a trusted agent, more effective when viewed as credible, and that ethnic minorities will be less responsive to tax appeals. However, the opposite was found. Those who trusted the MPA were not responsive to MPA-delivered appeals and were less likely to respond after receiving an LIRS appeal. Additionally, ethnic minorities were more responsive to tax appeals, due to their position as a clientelistic in-group. 

During the course of this experiment, LeBas and Gottlieb observed how social intermediaries differ from non-state actors. They are paramount authorities: difficult for the state to bypass, difficult for individuals to escape. They treat in-groups and out-groups differently, generating benefits for in-groups and costs for out-groups. They are central actors in electoral mobilization. 

These findings then show that social intermediaries might impede state-building. While these intermediaries are effective messengers of fiscal exchange, they are also best at generating benefits for in-groups, creating a disadvantage for out-groups. These disadvantages are observed on general market days, when out-groups are required to pay higher fees and pack up earlier, and during elections, when out-groups face electoral repression. 

LeBas concluded by stating that states are unlikely to be able to ”borrow” the capacity of social intermediaries to boost formal tax compliance. Social intermediaries may collaborate with the state but will resist elimination, and they may strike bargains with the state that run counter to individualized fiscal exchange. Additionally, those who are advantaged under the status quo will resist fiscal exchange, and those who are marginalized under the clientelistic status quo are the best candidates for tax appeals.