Fiscal Control without a Fiscal Contract: Implicit Extraction and Public Finance in Communist Albania

Abstract

Public finance theory traditionally assumes the existence of a fiscal contract linking taxation, representation, and accountability. Communist regimes challenge this assumption by sustaining extensive public extraction and allocation without pluralistic taxation or political consent. This article develops the concept of fiscal control without a fiscal contract to analyze how public finance operates under central planning as a system of implicit extraction rather than as a policy instrument negotiated with taxpayers. Using Communist Albania (1945–1990) as a primary case study, the article adopts a qualitative, theory-driven approach and constructs an analytical framework structured around visibility of extraction, channels of coercion, fiscal discretion, accounting opacity, monetary control, and distributive effects. The analysis shows that a set of implicit extraction mechanisms—including administered prices, wage compression, constrained monetization, state monopolies, and the direct appropriation of production surpluses through centrally planned productive units—functioned as substitutes for explicit taxation, fulfilling allocative and stabilizing functions while suppressing fiscal visibility and accountability. A brief comparative reference to other socialist systems highlights Albania’s specificity as a case of extreme centralization and fiscal opacity. The article contributes to public finance scholarship by extending the analysis of fiscal systems beyond contractual settings and by conceptualizing budgets and accounting practices as instruments of governance rather than as arenas of collective choice.