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Ken Pomeranz Answers Five Questions About China’s Early Economy

Kenneth Pomeranz is a University Professor of History at the University of Chicago. His work focuses on China, and on comparative and world history. He has researched and written about social, economic, and environmental history, as well as state formation, imperialism, religion, gender, and other topics. As the Kluge Chair in Countries and Cultures of the North, Dr. Pomeranz worked on a book titled “Why is China So Big?” earlier this year.

DT: Ken, China is one of our most significant trading partners, and also a geo-strategic competitor. We hear a lot about what is going on at present – technology development, artificial intelligence, patent issues, the Belt and Road Initiative. What we hear less about is the cultural history around trade and financial issues. For example, in the Anglo-European tradition, we know there is a bias against usury and lending money at interest that goes all the way back to Aristotle. We know that debates around lending became particularly thick during the late Middle Ages. Later, we can point to the Scottish Enlightenment, Adam Smith, Karl Marx, Keynes, and so on as a few of the building blocks that set the context for where we stand today. It’s a nearly impossible request, but, could you give us a sketch of what this kind of cultural history of finance, trade, and commerce might look like for China? For someone wanting to dig deeper, who were a few key figures? What have been some of the most important debates?

KP: The most important of the ancient Chinese thinkers who were concerned with day to day affairs were Confucius and Mencius, along with some others who are much less well-known in the West, such as Mozi, and “Guanzi.” (“Guanzi” actually had to be multiple people, since some of the texts attributed to him were written centuries apart.)

None of them actually discusses commerce that much, though there are a few brief passages. They’re much more interested in thinking about economic affairs from the point of view of the government, and of the need to ensure subsistence for everyone and an adequate income for the state to function. But they’re not generally anti-commercial, and there are some suggestions that the act of moving goods through space to where they are needed most is a worthwhile activity, entitled to some reward. The merchant isn’t the most valuable member of the community, for them, but he’s not worthless.

Credit: Udo J. Keppler, Puck Magazine. Illustration shows Confucius and Jesus Christ standing together on a cloud atop a mountain looking down at the confrontation between the Boxers and the forces of the eight nation alliance during the Boxer rebellion in China.

The earliest text dealing with commerce that almost every educated Chinese would know is something called The Debates on Salt and Iron, which date to 81 BCE, and recount an episode that probably really happened, at the court of the Han emperor. The context was that in order to finance a major military campaign against Central Asian nomads, the government had imposed a set of monopolies. Once the war was successfully over, the question was whether the monopolies should be repealed. The Confucians argued for repeal, based primarily on what I think we’d call a consumer welfare argument: competition would make necessities cheap and available everywhere, and that’s what a good ruler should want.

But before we go and say “Aha! Adam Smith 1,800 years before Adam Smith!” we should notice a couple of other things about the debate. First the Confucians didn’t imagine that efficiencies from trade would lead to growth and an indefinitely rising standard of living. They argued instead that these efficiencies would result in everybody having the basics they needed, so that they, and the ruler, could focus on the more important matter of cultivating virtue and wisdom.

Second, they thought that another bad thing about monopolies was that since state-licensed monopolists could make big profits, which they shared with government, and since government served people as a moral exemplar, observing the monopoly system encouraged people to be greedy and to want to abandon farming for the more lucrative career of a merchant, and greed, in their view, morally degraded both individuals and society.

So they liked trade, and they didn’t mind that people could make a living at it, but they were no great fans of profit-maximization as an individual goal, much less as a fundamental animating principle for society. The text ends with the supporters of monopoly and state power conceding that the Confucians have made some good arguments; but then they make fun of the Confucians’ ragged clothes and general unworldliness, and basically chase them out of the room. And since the text ends there, the statists win—and it’s not clear what we’re supposed to make of that.

DT: Where does Buddhism fit into this picture?

People tend to think of Buddhism as anti-materialist, and therefore either unconcerned with trade or hostile to it, since one is not supposed to focus one’s attention on material rewards of any sort. On a very abstract philosophical level, that’s a reasonable statement, but in the versions of Buddhism familiar to most people, the story would be rather different.

Buddhism was brought to China by merchants from Sogdiana, in Central Asia, and was often patronized by merchant families, even down to modern times. A lot of the Jataka—an ancient collection of short stories designed to teach Buddhist precepts and pious behavior in simple terms, a bit like, say, Aesop’s fables—concern merchants, and commercial success is often a reward for good behavior.

In one of the best-known tales a man starts with just a dead mouse as capital, sells it to a cat owner for a few coins, and eventually becomes the richest man in the kingdom, often simply by being smart and energetic, but sometimes by doing things that might raise an eyebrow. For instance, after he’s done a favor for a bunch of people who were cutting grass, he buys some of their cut grass and makes them promise not to sell the rest of what they have until he’s sold his. When a bunch of hungry horses show up, he makes a killing.

At the end of the story he makes a big gift to one of the king’s advisers, because he credits something he overheard that adviser say with giving him the idea to pick up the dead mouse and start a business in the first place. The adviser hears his whole story, and is so impressed by it, and by the man’s generosity, that he gives the man his beautiful daughter as a bride, and later the king makes the merchant his new top adviser.

So there’s no hostility to commerce here, the way you see it in many early Christian texts, for instance, nor is there a feeling that capital accumulation is strange or evil. But it’s also crucial that the good merchant is ultimately rewarded by becoming something more than just a merchant, and that part of being a good merchant is also that you give to others. (The hero in this story also becomes a major philanthropist.) These ideas all change and develop over the next two thousand years, but their influence never goes away completely.

DT: You mention the “Statists” who were arguing with the Confucians in The Debates on Salt and Iron. What was their intellectual formation like? Were they coming at it from what we might call a non-religious perspective, or where they drawing on some alternative religious tradition?

The people I called the “Statists,” since I think that conveys the key aspect of their thought in a way that’s apparent to us today, were actually usually called the Legalists. And you’re right that they come from a non-religious perspective, though you could argue that that’s true of the Confucians, too, given how little Confucius says about the supernatural. One of the famous lines from Confucius is that “We know so little about how to serve people, how can we know how to serve spirits?” So he didn’t necessarily deny that there were spirits, but he saw no reason to focus on them.

Credit: William Henry Jackson. Chinese merchants on street.

The Statists were people who, appalled by the violence and disorder of what’s usually called the Warring States Period in Chinese history (ca. 475-221 BCE) came to the conclusion that what mattered above all was having a government that could guarantee security, and that if a state could deliver that, how they did it was a lot less important. They also believed that by and large, people were inclined to be evil, or at least narrowly self-interested, so that the best way to keep them from harming each other was by having a set of clearly enunciated, strict rules with harsh penalties for any violations.

The Confucians, on the other hand, generally believed that people were born with at least a strong potential to be good, though it required proper education to bring out that potential. Things weren’t that black and white, of course—individual thinkers introduced all kinds of exceptions and qualifications—but at least in theory, the Confucians thought one could potentially have a world in which everyone had learned to play their social roles properly, and did not even desire to do anything that would be prejudicial to somebody else. In fact, since behaving exactly as you should would allow you to have the most satisfying interactions possible with other people—all of whom would be expressing their true nature as social beings—such a world would be not only crime-free, but happy.

Given the prestige of Confucian thought through most of Chinese history, Chinese governments have tended to emphasize their devotion to Confucianism as an ideal to strive for, while actually relying to a great extent on laws and the implicit threat of coercion to actually govern. “Legalist” becomes, for most of the imperial period, something few political or intellectual figures would admit to being; but it’s also widely accepted that they have some useful practical ideas about how to cope in a far from perfect world. Maybe it’s a bit like being called “Machiavellian” in the popular usage of that word—while people who have actually read a lot by and about Machiavelli know there was a lot more to him than that cartoonish “anything goes in the pursuit of power” image suggests.

 DT: If Buddhism and Confucianism have been the two primary influences, how do you see these traditions playing out in contemporary China?

So, to get to the modern period, there’s at least three moments in intellectual and cultural history we have to fill in. First, from about the 3rd to at least the early 8th century CE, Confucianism is in decline, and Buddhism is dominant, along with a third tradition (which we’ll skip here) that we’ve come to call Daoism. After this, there’s a counter-movement that leads to what Chinese call “The Learning of the Way,” and Westerners labelled Neo Confucianism, which reaches its full expression in the work of a man named Zhu Xi (1130-1200), and becomes, in one form or another, the officially approved intellectual orthodoxy all the way to the early 20th century.

Most historians would tell you that, though they wouldn’t admit it, the Neo-Confucians’ ideas were in many ways a fusion of Buddhism and Confucianism. They borrowed many ideas and practices from Buddhism in areas like metaphysics and techniques for meditation, where the Confucian texts didn’t say much, and placed those ideas in the service of a fundamentally Confucian agenda of social action, whether on the level of the family, the local community, or the state.

By the early 1300s, people who supported this neo-Confucian synthesis had gained control of the curriculum for the imperial civil service exams, which were used to choose most officials in China all the way down to 1905. That meant that ambitious young men all over the empire studied the neo-Confucians’ preferred texts from the ancient period, read the neo-Confucians’ preferred interpretations of those texts, and answered questions suggested by neo-Confucian priorities.

There was state censorship, which was occasionally a big factor, but for the most part, carrots were far more effective than sticks in creating a shared ideology across most of the elite: you could read other stuff, and people often did, but if you wanted to get ahead, you focused most of your reading on works within this tradition. So when people talk about “Confucianism” today, they are usually talking about some offshoot of this neo-Confucian synthesis and projecting it back on a much more distant past, as if the ideas had never changed.

The third moment that’s important to acknowledge is what’s often called the “New Culture Movement” or the “May 4th Movement” in the 1910s and early 1920s. May 4th refers to a political demonstration held on May 4, 1919 that led to the founding of the Chinese Communist Party (CCP) in 1921 (along with other political and social movements). When the political movement took off, the New Culture movement was already well underway, but the two often get collapsed together, especially on the mainland, where the official Party line is that it’s the political movement, and the way in which it contributed to the eventual triumph of the CCP, that makes the New Culture Movement significant.

This is a movement that blamed Confucianism, and, to a lesser extent, also Buddhism and Daoism, for all of early 20th century China’s many ills, including widespread poverty, oppression of women, political repression, and weakness vis-a-vis the great powers of the day. As an alternative, the movement looked to Western style science and one or more of a variety of imported ideologies, ranging from social Darwinism to progressive-era style American liberalism, various kinds of socialism, feminism, anarchism, and eventually Soviet-style communism.

The CCP, of course, insisted that it was thoroughly committed to Marxism-Leninism, with various twists introduced by Mao Zedong, and that if there were any remnants of Confucianism left in Chinese culture, they needed to be rooted out. But beginning in the 1980s, and especially in the early 2000s, there has been an explosion of popular interest in Confucianism, which the regime has more or less embraced, seeing it as more authentically Chinese and less threatening to their authority than a number of other religious and philosophical movements that have surged in the post-Mao period, including various forms of Buddhism, Daoism, Christianity and, in a few regions, Islam, plus various forms of liberalism, and (among intellectuals) some non-Leninist kinds of Marxism.

The official version of Confucianism that the state promotes is a pretty thin one, philosophically speaking. They cherry-pick the parts they like, such as the focus on education, respect for one’s elders and hierarchical superiors, and an insistence that, as social beings, people are ultimately more fulfilled by focusing on the collective good than on insisting on maximum individual autonomy or pursuing narrow self-interests. The popular versions, meanwhile, are all over the map. There are some popular but pretty shallow “self-help” interpretations that use a quote from Confucius here and there the same way that some Western motivational speakers pick a quote here and there from the Bible or one of the American founders to dress up a message that’s basically just “go out and get ‘em!”

There are also some very serious intellectuals asking how one might draw on the ancient texts for wisdom that’s relevant to issues ranging from environmental stewardship to cultivating personal integrity and self-control when you’re constantly bombarded with messages telling you what to want and how to be “cool.” And it’s probably worth noting, in this context, that serious debates about whether and how Confucianism might be applicable in today’s world started much earlier than the 1980s, in places like Taiwan and Singapore, and among some academics in the West – including Yu Yingshi, an intellectual historian and philosopher who won the Kluge Prize in 2006.

This is part one of a two part blog post. Check back next week for part two.

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