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Deng Gang:Institutional Determinism in Chinese Economic History

On the afternoon of May 12, 2020, Professor Deng Gang of London School of Economics was present at Chen Daisun Theoretical Economics Lecture and Economic History Lecture at Tsinghua University and made a wonderful report for students through the online method.
Professor Deng Gang’s speech revolved around the reflections on his book The Premodern Chinese Economy: Structural Equilibrium and Capitalist Sterility. Before the lecture, Professor Deng Gang put forward the view that “System determines everything”. He pointed out that the quantitative economic history studies the consequences caused by economic systems, while institutional economic history studies the source of economic development. However, the formation of the systems in history is accidental, which also brings considerable difficulty to cross-regional system comparison.
Professor Deng Gang first introduced his understanding and experience of Chinese and Western comparative research paradigm. The comparison between China and western countries seems easy, but in fact it is quite difficult. In the comparison process, scholars tend to fall into the misunderstanding that others’ things are better than ours. Professor Deng pointed out that the comparison between China and western countries generally involves three levels. The first level is the “implements” level, namely, the comparison of specific social systems, such as slavery in ancient Rome and feudalism in the Middle Ages. These systems were formed under specific conditions, and it is not appropriate to compare them with Chinese systems directly. The second level is the comparison at the “molecular” level, such as property rights, government policies and entrepreneurship. These systems are relatively abstract, but there exists a problem that their formation conditions are different from those of China. Taking the land property right system as an example, China formed land property rights in the period of Shang Yang’s Reforms, while those in Western Europe were formed in modern times, namely, after the French Revolution of 1789 and Napoleon became emperor. This is more than 2000 years later than the implementation of private land property rights in the Shang Yang’s Reforms. D.C.North and other scholars ignored the property right systems in the non-European world, and only focused on the single perspective of “Eurocentrism”. The third level is the comparison at the “atom” level, namely, the micro level of comparison. After all, it is the “economic rationality”. What is economic rationality? It refers to the “opportunity cost”, together with some religious beliefs and ideological form. Taking the Italian Renaissance, the starting point of the rise of European civilization, as an example, no one can tell the origin of Italian aesthetic ability. Why did the Medici family actually create a Renaissance movement by themselves? After all, the medieval church of Western Europe banned usury, and the Medici family ran money laundering through artworks. With the continuous expansion of the business scale, a Renaissance movement occurred. Therefore, the Italian Renaissance was the result of money laundering. Why there was no Renaissance movement in China? In ancient China, usury was not banned. For the comparison between China and western countries, Professor Deng believes that it is not recommended to compare them from the implements level. The comparison conditions should be defined for the molecular level. The comparison at the atomic level is basically an analysis of “opportunity cost”, which is still very limited. Mr. Fei Xiaotong, China’s most famous sociologist, has received the best training at the London School of Economics. His famous “Differential Pattern Theory” does not center on the comparison between China and western countries.
Professor Deng also stated briefly the important misunderstandings in the study of ancient Chinese economic history. They stem from the influence of Darwinism, that “If you fall behind, you will be beaten”, known as “original sin complex of falling behind” of Chinese elites. Professor Deng redefined biological Darwinism and social Darwinism. He pointed out that the concept of biological Darwinism is that different species have their own place. Moreover, Darwin himself did not require that “all animals evolve into primates” and “primates evolve into wise men”. Different species can get their own place in nature. Britain’s original version of “social Darwinism” does not contain any views concerning the law of jungle between countries and nations. The representatives of social Darwinism in Britain in the 19th century were Thomas Huxley (1825-95) and Herbert Spencer (1820-1903). Huxley argued in his Evolution and Ethics that survival of the fittest was only applicable to nature, and that the evolution of human society was the evolution of morality. For this reason, Huxley has a famous saying: “survival of the morally best”, which coincides with Chinese Confucian’s “Self-cultivation, Family Regulation, State Governance, Bringing Peace to All Under Heave”. Social Darwinism advocated by Spencer directly points out that the government should not intervene in the market and advocates laissez-faire, so that people can live and develop freely as the biosphere. Strangely, we have a Chinese version of social Darwinism, proposed by Yan Fu. Yan Fu’s “Natural Selection and Survival of the Fittest” between countries and nations cannot be often found in the literatures on social Darwinism in Britain. Professor Deng further put forward that in human history, the concept of “If you fall behind, you will be beaten was replaced by the phenomenon that the laggards beat others, such as the conquest of the Roman Empire by the Germans, the conquest of the Persian Empire by the Arabs, the conquest of the Central Plains by the Mongolians and Manchus, the Japanese raid on Pearl Harbor, the expansion of the Nazi Germany towards Western Europe, and so on. Yan Fu’s advocacy of “being beaten if falling behind” and the original sin of backwardness made us misread the history.
Finally, Professor Deng talked about the writing methodology he used in his works, that is, “the unity of man and nature” --- a methodology suitable for Chinese reality. He defined “nature” as China-specific economic rationality. Based on such methodology, Professor Deng finally obtained a “Three-in-one” equilibrium model in traditional Chinese society: (1) agriculture became the most important sector of economic entities; (2) farmers were free people and had land property rights; (3) the empire abolished the feudal system and adopted the prefecture-county system. Such model was not formed in one day. The mixed economy of farming and animal husbandry existed in the Spring and Autumn Period and the Warring States Period (“a big country”). The transformation from “mixed economy” to “single product economy” with agriculture as the main body took place in the process of Qin’s extermination of the six states. The state of Qin used land as a means of payment, thus obtaining a stable source of troops. Through war, Qin could continuously obtain new land through expansion, so as to form a virtuous circle. However, the other six countries used cash as military payment, so the means to maintain war was limited. Qin used land as a means of payment, contributing to the alliance between farmers and the state. The policy of physiocracy and restriction of business is not comprehensive. In fact, the “physiocracy and restriction of tax” and “physiocracy and restriction of power” should also be included: the state reduces the burden of taxation and cost on farmers and restrict state power to enter village community directly. The alliance between the state and farmers was also reflected in the long-standing “charitable granary-regular granary” system. Indeed, “physiocracy” should be regarded as a two-way policy rather than a single state policy, and the landholders could enter state power system through imperial examinations. The imperial examination system was matched with the system of prefectures and counties. The imperial court selected talents for managing the prefectures and counties through the imperial examination system. Compared with the system of prefectures and counties in the Chinese Empire, the feudal system of Western Europe and Japan depended on “population growth of the noble”. The cost of this feudal system was much smaller than the social cost required by China’s imperial examination system. However, imperial examination enabled unlimited expansion of empire territory. This is precisely the noble system cannot achieve.
After the completion of Professor Deng Gang’s speech, Professor Long Denggao made a wonderful comment: Professor Deng Gang gave contemporary scholars considerable inspiration in methodology, and discussed the origin of the Chinese system from the source, which determines the historical orientation of China different from the West. Professor Zhou Jianbo, Professor Li Zhigang and other domestic and foreign scholars have also carried on the wonderful discussion.
                  (Contributed by Chen Yueyuan, School of Social Sciences, Tsinghua University)