Thursday, April 16, 2015

Ancient Chinese capitalism

An interesting post on Quora by an old China hand

If I could only share one thing from China I think it would be the Chinese philosophy of Daoism. A lot of people think that capitalism has no respectable political theory behind it but the philosophy of Daoism is over 2500 years old and articulates the theory of libertarian government and laissez faire economics a mere two millennia before Adam Smith.

The political philosophy of an Emperor governing by doing as little as possible, by dismantling all government programs like rice storage and irrigation works. The economic theory that if left alone, farmers will grow what is needed, by responding to climate and soil and market prices. Goods in excess in one place or period, will be transported or stored so as to fetch a higher price where they are more needed. Without the government lifting a hand, goods in excess in a place of plenty will be transferred by merchants to a place of drought or shortage. Without the government building stores and compulsorily seizing crops against a bad winter, merchants will buy the cheap grain and store it to be sold when supply runs out.

Hence the complete lack of need for the traditional strong central government prescribed by the Confucian system. It was tried in the Early Han and worked brilliantly, but the scholars hated the idea of a rich merchant class which could compete with them for privilege and status, so they had a big meeting and got the Emperor to abandons Daoist economics for government monopolies which they could control for their own benefit.

Just think, if the Emperor had seen through the scheming scholars, China might have become capitalist half a millennium before Europe!

Posted by John J. Ray (M.A.; Ph.D.).

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