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1. INTRODUCTION
In recent decades, the image of the Spanish Empire has been changed drastically. The long-lasting general conception of a backward and absolutist power has gradually been replaced by an alternative in which bargaining appears to be the main feature of imperial rule. Recent historical research has challenged assumptions widely held by economists and, in particular, assumptions held by those working within a neoinstitutional framework (North and Thomas 1973; Acemoglu et al., 2001; Sokoloff and Engerman 2002; Acemoglu and Robinson 2012). These narratives depict the Spanish Empire as a predatory state in which unchecked power was unleashed, leading to absolutism, backwardness and a common violation of property rights. In contrast to the British Empire, where power held by representative institutions prevailed (North and Weingast 1989), the Spanish constitutional structure paved the way for the strengthening of the king's capacity to interfere negatively in political decision-making, and particularly, to levy taxes with no control. The king's ability to extract wealth from the public generated negative incentives for both short- and long-term economic growth.
Drawing on a strand of legal history as well as on political economy and microeconomic approaches, historians have revisited the validity of the concept of absolute power and have posited its inaccuracy in correctly understanding the manner in which power was distributed and dispersed among the bodies and kingdoms that composed European polities (for an economic history perspective, see Rosenthal 1998; for a legal history perspective, see Hespanha 1994). Three main attributes have been put forward with regard to Spanish rule: a composite monarchy where the rule was essentially implemented through endless negotiations involving the king and his vassals (Elliott 1992; Elliot 2006; Grafe 2011); bargaining that took place in many loci of power and which allowed almost anybody to communicate directly with the king. Apparently, in spite of such an extractive institutional framework, economic growth was possible (Coatsworth 2006; Dobado and Marrero 2011; Arroyo and Van Zanden 2016).
This paper seeks to contribute to the absolutism vs. bargaining debate and the discussion on Spanish imperial building in two ways. Firstly, it revisits the political economy of Spanish rule in America by reappraising the role that inter-imperial transfers (situados) had in the Caribbean colonial economy (for regional and overall studies,...