Wang, Z., & Chen, D. (2025). The Price of Sacrifice: Revolutionary Capital and Localized Fiscal Bargaining in China

How does revolutionary sacrifice translate into material compensation? In China’s fiscal system, central resource allocation involves not only economic criteria but also political considerations such as rewarding historical loyalty and bolstering legitimacy. We argue that the legacy of revolutionary martyrs constitutes a form of “revolutionary capital” that enhances localities’ bargaining leverage with the central state, enabling them to secure greater fiscal transfers. To test this, we use large language models with structured schema-based classification to compile a novel dataset of over 2 million revolutionary martyrs, aggregated to 2,800 county-level units, linked to contemporary fiscal transfer data across three decades (1994, 2000, 2018). We find that localities with more martyrs consistently receive substantially higher fiscal transfers from upper-level governments. Furthermore, the returns to sacrifice are stratified: localities with high-ranking martyrs secure even greater fiscal premiums, suggesting that elite networks, rather than mere mass sacrifice, serve as the primary mechanism for mobilizing revolutionary capital. Beyond hierarchical stratification, we uncover significant temporal heterogeneity, with sacrifices during the Party’s formative stages yielding the highest returns. Crucially, we disentangle the transmission mechanisms through two contrasting channels. The first is a “dying channel” of institutionalized memory, where martyr memorial parks serve as physical anchors of legitimacy to secure transfers. The second is a “living channel” of elite networks, demonstrating that fiscal premiums are most pronounced where revolutionary cohorts survived into the post-1949 regime. This comparison reveals a stark political reality: while the dead provide the historical legitimacy, the living disproportionately amplify its conversion into bureaucratic power. To address endogeneity, we exploit an interaction-based instrumental variable strategy. We leverage exogenous variation in revolutionary mobilization driven by historical drought shocks (which lowered the opportunity cost of rebellion) and terrain ruggedness (which provided strategic sanctuary), conditional on the distance to revolutionary base areas. These findings contribute to the political economy of authoritarianism by demonstrating how revolutionary legacies of state formation become embedded in distributive politics, revealing an enduring “price” the state pays to compensate for historical loyalty.