The Moral Economy of Growth and Markets: Chinese Narratives over two Millenia

The history of economic thought is written in a deeply Western-centric view. I recently consulted a volume of contributions to monetary theory before Adam Smith that only included European authors. But the first exposition of a theory of money and prices can be found in the Chinese text ‘Guanzi’ which combines different sources across five centuries BCE. Chinese thinkers were deeply aware of the emerging market system of their times and engaged in sophisticated debates over economic policies, such as on government monopolies. In fact, these debates influenced European Enlightenment thinking via the Jesuit reports on China. The French Quesnay and the German Wolff promoted China as a model for European rulers, and some historians argue that the idea of ‘laissez faire’ and free markets originated in the Chinese idea of ‘governing by non-intervention’, ‘wu wei’.

What is most interesting is that these debates already raised the issue of growth and markets. This was acute under the reign of Emperor Wu (156-87 BCE) who pushed the expansion of the Chinese Empire and aimed at harnessing the potential of markets for generating the necessary economic resources. This defined a distinct pattern of ‘Chinese economics’ that persists until today: The market was already conceived as a ‘system’ that can be deployed by government for achieving certain goals. However, two distinct intellectual traditions emerged at the time, the state-centred Legalists and the Confucians. The Confucians criticized expansionism and were worried about the destructive effects of market dynamism on social order. They demanded to constrain government intervention in the economy, which would imply that markets would be given free reign, however, embedded in the moral economy of ritual and social hierarchy. The Legalists rejected this reasoning, pointing towards the effects on the distribution of landed wealth which would be amassed by local landowning elites.

At that time, the economy was conceived as operating under the constraint of fixed resources. Yet, in the older texts of the ‘Guanzi’ the idea was already articulated that consumption can be a driver of growth, in the sense of newly emerging wants, labelled ‘luxuries’. This resulted in a debate about the moral economy of frugality versus luxury, which for the subsequent millennium was dominated by the position that limited resources require frugality. Hence, China adopted a most complex system of sumptuary laws. This attitude changed during the last two dynasties, the Ming and the Qing, when market dynamism produced unprecedented prosperity in the most developed Jiangnan region (Shanghai today and the neighbouring provinces). During Ming-Qing transition, which led to the establishment of Manchu rule over Han Chinese, leading Confucian thinkers extolled the virtues of markets against autocratic intervention, now represented by foreign rule. But on the eve of Western Imperialist aggression, China ran into a severe ecological crisis with Malthusian dimensions.

I think the Chinese narratives of growth and markets presage many themes that we also discuss today. In particular, this is the question whether markets must be embedded into a moral economy of local society. Confucians were deeply concerned about the combination of markets and state power: One reason was that they argued that markets, once actively used by government, would corrupt the body politic. Government should stay aloof from markets for moral reasons. This includes the call for low taxes to leave the prosperity generated from economic activity to the people. Government should exclusively rely on taxing the only source of wealth, agriculture, the ‘root’ (‘ben’) of the economy, distinct from the ‘branches’ (‘mo’), that is commerce and other market activities. This implies that growth is limited by natural constraints, which also limits government expansion.

Much more can be said about these extremely stimulating thoughts and discussions. Confucians could be seen as early thinkers of ‘degrowth’, while emphasizing the role of local markets and grassroots level communities, a view much more radicalized in the other important intellectual tradition of China, Daoism. The degrowth maxim was already contained in their idea that consumption must be governed by moral norms of frugality. If you substitute ‘agriculture’ by ‘biosphere’, their concerns about ‘boundaries’ sound strikingly relevant today. Considering the current craze for ‘Green New Deals’, their worries about ‘big government’ heed attention: The more government gets involved in the economy, the more room for collusion with powerful economic interests. For Confucians, growth is associated with the expansionism of the state. This correlation is often neglected in modern critiques of capitalism and neoliberalism.

One intriguing question is what the precise meaning of the moral economy of degrowth would be, along Confucian lines. This moral economy was defined by ritual and hierarchy, with everyone fulfilling her and his role in society (including, for example, a deeply gendered division of labour). Ideally, this hierarchy would be one of moral excellence, with elites assuming moral leadership in society. The failure to achieve this goal in the real Chinese Empire was a major reason of the secular depression and moral angst of Confucian literati.

The Confucian notion of hierarchy stays in deep tension with Western ideas about individual autonomy and freedom. Yet, the fundamental point remains valid: Degrowth means that markets would no longer necessarily work as disruptive forces on social order, or, would be combined with a stationary state as envisaged by John Stuart Mill. This state, in Confucian terms, would allow for moral and spiritual growth, but would not allow for disruptive social change driven by boundary-breaking entrepreneurial vision, prowess and aspiration. I am not sure whether this is what we should pursue as agenda of transformation. But the discourse must be widened to including the rich intellectual resources of non-Western thought.

Key sources on Chinese economic thought:

Tamara T. Chin, Savage Exchange. Han Imperialism, Chinese Literary Style, and the Economic Imagination, Harvard UP 2014.

Margherita Zanasi, Economic Thought in Modern China. Markets and Consumption, c. 1500-1937, Cambridge UP 2020

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