History of Chinese Economic Thought - Term Paper Example

History of Chinese Economic Thought Term Paper Introduction China is regarded as one of the earliest civilizations in the world, but its history of academic thought is still remote to numerous Western scholars due to its drawn-out linguistic, cultural, and geographic seclusion. This paper discusses the history of Chinese economic thought, from the ancient period to the contemporary era. The leading Chinese economists are also discussed. Chang explains that Chinese economic thought developed primarily between 771-249 BC, during the Eastern Chou Dynasty, an era that partly coincides with the Greek antiquity period.1 The Chou Dynasty was characterized by constant weakening in the power of the landed gentry and the monarchy on the one hand and the growth of the realm’s feudal units as autonomous states on the other. In economic terms, specialization and monetization escalated; the gap between the haves and have-nots widened; marketplaces surfaced; and land productivity rose.2 The Ancient Period Three sets of scholars, the Moists, the Legalists, and the Confucianists, addressed economic themes throughout this pinnacle of Chinese thinking. Confucius, similar to his counterparts in antique Greece, was greatly interested in moral matters. He disseminated an ethical mechanism that controls all social and natural occurrences, as well as interpersonal relationships, the growth and collapse of governments, and the system of heavenly bodies.3 Apart from the far-reaching character of this mechanism, one identifies specific similarities with Greek antiquity. Within the Confucian setting, interpersonal responsibilities are mutual. The power of leaders is not rooted in heredity but in merit. The state is ordained by a group of ethical standards and principles that are organized by famous intellectuals and are administered by individuals who acquire power through moral authority.4 In the hierarchical society of Confucius, every individual has a distinctive role, and social agreement or unity emerges only if each individual knows and performs his/her function. The perfect Confucian society is not motivated by individual motive but is pushed by people’s aspiration to work toward the greater good. These beliefs, as basic and straightforward as they are, established the foundation of Chinese economic thought. Topmost among the teachings of Confucius were the following: government must sustain an overall position of noninterference, but help in the production and maintenance of fair income distribution when needed; the ruler’s primary responsibility is the people’s security and interests; standards of living must complement each individual’s social class, without overindulgences of luxury or frugality; government expenditure, which involves palace expenses, must be tailored to government income, not vice versa; and taxes must be based on people’s productivity and must be restricted to one-tenth of the land’s output.5 Uncertainties in this system became ever more problematic after the death of Confucius and resulted in disagreements among his adherents about the core of human nature and about the government’s appropriate part in the economy. Mencius, one of the followers of Confucius, argued that people are naturally virtuous and that government must support the common good by a rule of noninterference; Hsun-tzu, another Confucian follower, believed that individuals are led by immoral, sinful desires, and he promoted a dictatorial government.6 One of the adherents of Hsun-tzu, Han-fei-tzu, argued that individuals are mostly self-centered. He argued that economic development and social unity would only arise from the rigid, centralized regulation of rewards and punishments.7 Thinking that a Confucian social order would operate successfully as long as people were governed by moral standards and intelligent leaders, Han-fei-tzu claimed that in the actual world societies are led merely by mediocre rulers and that greed is a powerful force.8 The ingenious, legalist bureaucrat Kuan Chung refuted Confucian techniques of moral authority, decentralization, and individual virtue. He advocated legal processes of authority and centralized governance. His adherents, trying forcefully to get rid of the vestiges of the traditional aristocracy from Chinese civilization, discussed such issues as commerce, agriculture, population, price equalization, government control, and fiscal and monetary plans.9 Another group of economic scholars was inspired by Mo Ti, who was a student of Confucian teachings but afterward refuted his ideas. Dissatisfied by Confucian disciples who sacrificed their learned ideals for the sake of personal interest, Mo Ti viewed the failure of Confucian followers to cope with current disorder and despair as defects in their principles.10 Moists, similar to Confucianists, aimed to champion economic wellbeing and coordination under current monarchical governments, but they were different on issues of enforcement. Mo Ti espoused a form of shared fraternal love as a cure to human beings’ natural tendencies toward self-centeredness, greediness, and prejudice. He condemned flamboyance, lavishness, and social hierarchies.11 He preferred a big population, national resources, unity, peace, and social mobility. His idea of division of labor, emphasizing the benefits of specialization, was somewhat progressive for his period. Moreover, Mo Ti was very assured of government efficiency of led by a tough ruler and a well-organized hierarchy.12 He led his followers based on rigid authoritarian and military standards, which raised an authoritarian soul and religious fervor unparalleled in olden China. This form of multiplicity of thinking did more to underline controversial matters than to create an integrated discipline of economic study. Similar to their contemporaries in ancient Greece, Chinese thinkers enclose economic analysis within the context of ethics and morality. Their inquiries were shaped by the established institutions of the societies of their period, wherein the economy was not ever considered as machinery that was able to regulate itself by letting the autonomy of personal self-interest.13 Hence, somewhat unsurprisingly, economics was considered as a field of moral discipline—a pattern that persisted in the East until the 18th century. The Modern Times A key issue in the growth of Chinese economic thought in the 1930s was to form a connection between Chinese sources and foreign thoughts. In this period social scientists and humanists in China dealt with this issue after confronting major problems in comparing Western and Chinese knowledge. Tang Qingzeng helped resolve this issue by conducting a methodical analysis of economic thoughts of the pre-Qin era on the groundwork of contemporary economic thinking. He emphasized the significance of exploring the history of Chinese economic knowledge with regard to other academic disciplines; he supported the application of comparative research methods to Western and Chinese economic thoughts.14 The 1920s, the period when the legacy of Chinese economic thought had stopped getting the attention of academics and curriculum on history of economic philosophies in Chinese academes included only the legacy of Western knowledge, was a deplorable time for him.15 Tang Qingzeng claims that some time ago in China there was no economic science, just economic thought. He argues that the old Chinese economic thought was basic and bare; it was blended with moral and political knowledge, and definite schools were nonexistent. Hence, it was not regarded as a science.16 Even though economic thought developed earlier in China than in the Western Hemisphere, its growth was more gradual. Qingzeng mentions that centuries of tradition in Chinese economic thought received no attention among his colleagues and that the curricula contained only of Western sources: If one tries to ask average students about basic provisions of doctrines of Proudhon and Marx, they will easily tell in details about things that they heard many times and distinctly remember them like a person counting up his own jewelry. But if one tries to inquire about economic sayings of Confucius and Meng Zi, only very few of them will not stare with bulging eyes and will not lose speech. Therefore it is necessary to popularize actively researches in history of Chinese economic thought.17 As stressed by Qingzeng, even young nations in Europe created their own histories of economic philosophies so as to encourage the growth of modern economics. He emphasizes that Italian Giuseppe Pecchio, German Wilhem Roscher, and Englishman Langford Lovell Price all wrote their own histories of economic thought.18 Qingzeng argues that the same effort should be initiated in China for, in the absence of accurate knowledge of past economic thoughts, scholars cannot have a valid reason for pursuing the perfect techniques for solving the modern-day dilemmas of their country. Another scholar, Li Quanshi, also claims that Chinese intellectuals unfairly placed emphasis on Western economic knowledge and there were no studies on the history of Chinese economic thought.19 The economist Zhao Renjun stresses that all economic thoughts develop from a specific regional and historical setting, which must be explored alongside the sources of the knowledge and its impact on the existing generations and future ones. As stated by Zhao Renjun: In our country there is no lack of people studying the history of economic thought, however [their research] is generally sketchy and incomplete, negligent and superficial. A comparison of their works with specialized books in the West is similar to comparing the light of a glowworm with sunlight.20 Tang Qingzeng argues that researches in Chinese economic thought will aid in the discovery of sources of modern economic thoughts, the explanation of specific terms in economic history, the adoption of research methodologies, and the molding of economic science based on Chinese facts.21 He claims that economic issues in China were many and problematic; he emphasizes the need of restructurings in the areas of agriculture and finance. To resolve these issues he believes it is essential to apply accomplishments of economics, while claiming that the facts of the Chinese condition endanger any effort to depend fully on foreign knowledge. The Chinese people should conduct their own academic researches into national facts; they must gain knowledge of the history of Chinese economic thought.22 In order to demonstrate the importance of the history of economic thought for appreciating modern doctrines Tang Qingzeng refers to the connection between William Petty’s theories and Karl Marx’s labor theory of value; he also mentions a connection between the theories of workers’ involvement in state policy written in the early Chinese manuscript Shang shu and socialist philosophy of ‘sacred labor’ that became widespread in China.23 Tang emphasizes that knowledge of specific economic terms is also impossible in the absence of historical sources. He argues that it was not possible to obtain the particular definition of economic terms from an ordinary encyclopedia or dictionary.24 Within the Chinese setting it is crucial to recognize that the concept of the ‘ruler’s field’ as a kind of state asset is connected to Wang Mang’s economic changes, that the administrative rule of the ‘green sprout loans’ was created by Wang Anshi, and that the Ming Dynasty’s ‘yellow registers’ served as documents for the tax collections.25 Without knowledge of the setting of ancient Chinese economic doctrine it is not possible to explain the methodologies of the earlier times. For instance, when Hong Liangji—the scholar of the Qing period—theorized that the population increases more rapidly than basic resources like land and food, he focused on the methodology of observation; he also disproved ideas about supernatural entities and concepts of ‘predetermination’.26 The Chinese Sages As Tang Qingzeng carried out a thorough study of the roots of retardation of Chinese economic though, he also identified several major accomplishments of ancient Chinese scholars. For instance, he explains that Confucius influenced the field of finance, and that the ideas of Mencius about ‘well-fields’ were known far and wide.27 Xun Zi, whose beliefs somewhat resemble the Legalists on matters of foreign trade, investigated thoroughly the issues of public spending. Tang Qingzeng applauded his efforts to provide a logical interpretation of the value of human motives that drive individuals to fulfill them; hence motives or desires must not be subdued but instead regulated by customs. He mentions that Xun Zi comprehensively discussed the concept of restrained spending that contradicted not just the lavishness but also the excessive thriftiness of the Mohist School that causes greater material hardships or poverty.28 Even though Mohism’s frugal ideologies were damaging to the economy, Mo Zi—the leader of that school—created important ideas on labor.29 However, Tang Qingzeng argues that the most important influence on the growth of Chinese economic thinking were the Legalists. He refers to the ideas of Li Kui on land policy, the observations of Han Fei about the dilemma of people’s improvement, the ideas of Shang jun shu about population policy, and Guan-zi’s remarks about foreign trade.30 It is easy to slip into the comment of modern-day Chinese scholar Sun Daquan that the investigation of Tang Qingzeng of the positive and negative aspects of the ancient thinking is different from two general perspectives: Chinese scholars place the emphasis of their investigation of ancient Chinese economic doctrine either on censuring the traditional concepts or, on the contrary, on disclosing exceptional accomplishments of the ancient scholars.31 Tang Qingzeng made an attempt to broaden the context of his inquiry by studying cross-cultural interactions and communications. He was one of the pioneers of research on the influence of ancient Chinese economic thought on Western knowledge32: Ancient Chinese economic thought actually exercised a significant influence on the countries of the West; most noticeable was the [influence] on French physiocrats. This influence was deep but not comprehensive, it was limited only to one period and one school. Nevertheless the influence [of ancient Chinese economic thought on the history of Western economic thought was much more important than of doctrines of Rome, of ideas of Christianity, of the Bible, etc. While Chinese and Western researchers of the history of economic thought of the West know and value the doctrines of Rome, they bypass in silence the ancient Chinese economic ideas. It means that while enumerating historical events they forge the ancestors.33 Contemporary Chinese scholars usually cite ideas of Yuan Wenbu who argued that the impact of Chinese thinking on Western economic doctrine was similar to Christianity, ancient Rome, and Greece.34 He also stressed that Europeans already knew about the economic principles, circumstances, and foundations of China prior to the publication of The Wealth of Nations; hence it is viable to study an influence of Chinese culture.35 According to Tang Qingzeng, the ancient Chinese economic thought has shaped the ideas of Adam Smith, the forefather of English classical political economy. This theory facilitated the identification of a Chinese influence on the liberal tradition, which it is generally regarded to be typical of Western economic thinking.36 Tang Qingzeng claims that the Chinese impact on the growth of Western economic thinking was Confucian in nature. Traditional Chinese intellectuals convey the importance of obeying the natural order; they argued that it was pointless to repress economic development or to stimulate it unnaturally. This concept was promoted by Confucius who rejected government intervention and justified concept of ‘benevolence without great expenditure’.37 This suggests that people can gain considerably with moderate government spending. He made a final assumption that Confucius in fact denounced interference and disseminated laissez-faire principles.38 The Contemporary Period The development of contemporary Western economic knowledge is generally attributed to the latter part of the 18th century with the rise of the professed ‘Physiocrats’. Physiocracy is defined in the New World Encyclopedia as “perhaps the first well developed theory of economics. It immediately preceded the first modern school, classical economics…”39 However, there are arguments from Chinese intellectuals that numerous of the major principles conveyed in Western economic discipline were discovered much earlier in China. During the imperial period in China, important concerns were normally handed to top scholars in the court. Young intellectuals apparently lived in Europe for some time. It appears that they could have encountered French economist Francois Quesnay in the latter half of the 18th century.40 In Das Kapital, Karl Marx clearly mentioned a particular Chinese economist.41 Therefore, modern economics may be traced back to Chinese economic thought. Nevertheless, there is a growing interest in the history of China before the establishment of the People’s Republic of China (PRC). The current rise to a powerful economy has encouraged explorations of the long period prior to the middle part of the18th century, when China was already more sophisticated economically and technologically than any other parts of the globe.42 These studies have raised the idea that economic thoughts, as well, were very erudite and progressive in ancient China. Known evidence is the volume Guan zi, which summed up the ideas of the prime minister of the Qi state, Guan Zhong. It is perhaps one of the world’s earliest manuscripts about economic topics, combine with philosophical and political writings. Its ideas about ‘welfare maximization’ through integration of commercial and agricultural policies, government intervention, market control, and price stabilization promoted it as “one of the best economic treatises in ancient China”.43 Economic knowledge did not turn into an independent academic field in China prior to the 20th century. Like in other regions of the world, in ancient China, economic thinking was largely rooted in broader political and philosophical essays. However, it is widely recognized that European Enlightenment scholars in the 18th century like Voltaire mentioned desirably the teachings of Confucius.44 When at the same time Western economic treatises evolved into a separate academic field about state policies, government intervention and markets, French Physiocrats extolled China as a classic example for economic growth. Other economists, like Adam Smith, stated that China, which “has been long one of the richest, that is, one of the most fertile, best cultivated, most industrious, and most populous countries in the world… seems to have been long stationary”.45 Coinciding with Smith’s essays, the Chinese economy had in fact deteriorated after many years of voluntary isolation, and was eventually surpassed by Western Europe’s growing market economies. However, it has been claimed that, by means of Physiocracy, the impact of Chinese thought “on the history of Western economic thought was much more important than the influence of doctrines of Rome or of ideas of Christianity”.46 Conclusions The history of Chinese economic thought was indeed arduous and complex. Even though many brilliant Chinese scholars existed during the ancient period, Chinese economic thought during this time did not receive the attention it much deserved. But the fact that China has already been advanced in terms of economy and technology during the ancient period tells much about the prowess of its economic thinking. Coping with the demands of westernization and modernization of China, the 20th century was a period of rigorous exploration of ancient Chinese economic thought and their influence on and connection to modernity. And the continuous rise of China as a power bloc in the new millennium prompted exhaustive studies of the entire history of Chinese economic thought. References Ekelund, R. & Hebert, R. (2013). A History of Economic Theory and Method: Sixth Edition. Long Grove, IL: Waveland Press. Hu, J., Stockwell, F., & Zhao, S. (1984). Chinese economic thought before the seventeenth century. Los Angeles, CA: The University of California. Hui, W. (2008). The liberation of the object and the interrogation of modernity: Rethinking the Rise of Modern Chinese Thought. Modern China, 34(1): 114-140. Rima, I. (1995). The Classical Tradition in Economic Thought. UK: Edward Elgar Publishing. Ropp, P. & Barret, T. (1990). Heritage of China: Contemporary Perspectives on Chinese Civilization. Los Angeles, CA: University of California Press. Tang, Q. (1936). Zhongguo jingji sixiang shi, [History of Chinese Economic Thought, vol.1]. Shanghai: Shangwu yinshuguan [The Commercial Press]. Whalley, J., Xueyi, Z., & Zhang, Y. (2010). Monetary Theory from a Chinese Historical Perspective. Vox. Retrieved December 5, 2013, from http://www.voxeu.org/article/monetary-theory-chinese-historical-perspective Ying, M. & Trautwein, H. (2013). Thoughts on Economic Development in China. London: Routledge. Read More