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Ma Debin: Great Divergence and Modernization of Chinese Economic History

On the afternoon of January 29, 2021, the 104th Session of Chen Daisun Theoretical Economics Lecture and Economic History Lecture at Tsinghua University invited Professor Ma Debin from Hitotsubashi University in Japan to give a wonderful lecture to teachers and students. Professor Debin Ma worked at University of Missouri St. Louis, National Graduate Institute for Policy Studies and The London School of Economics and Political Science since he received a doctorate in Economics from the University of North Carolina System in 1998. He also served as Secretary-General and Director of International Economic History Association in 2012-2015. He is one of the initiators of Asian Historical Economics Society and domestic quantitative history research, mainly focusing on the long-term economic growth of China and East Asia, impacts of institutions and laws on economic growth, comparison of long-term economic development between China and other countries in East Asia and European countries and the comparison of their international living standards.

Before the lecture, the moderator, Professor Long Denggao from School of Social Sciences, Tsinghua University briefly introduced Professor Ma Debin’s research direction and achievements. Professor Ma Debin’s speech revolved around his new book named Great Divergence and Modernization of Chinese Economic History, which was published by Zhejiang University Press in June 2020 and was recommended by the Beijing News in 2020. It was the only economics work on the 2020 Annual Reading Recommendations. Professor Ma tried to lead readers to have a comprehensive understanding of this book through this lecture.

First of all, Professor Ma Debin introduced the main contents of the first part of this book from the grand perspective of China’s great unification and centralization system. The great unification and political system of China involved in the first chapter were rarely studied in previous discussions on “great divergence”. Previous researchers, such as Olson and other neoclassical economists, often assumed that the government’s objective function was revenue maximization. In fact, the goal of the Chinese government is not so. Compared with the division of Europe, the fact that China has long maintained unity is particularly prominent. Under the unified state, China has eliminated the boundaries of the original regimes, and the government’s objective function has shifted from extracting taxes to preventing civil strife, staying in power and extending unification duration. This led to a paradox: on the one hand, the power of the emperor was nominally infinite; on the other hand, there were fewer taxes that can be levied, which was particularly clear from the perspective of international comparison. The second chapter revolves around the above “paradox of centralization”. According to the data of silver reserves recorded in the wars of the Qing Dynasty, Professor Ma Debin pointed out that the finance of the Qing Dynasty was very fragile in dealing with emergencies such as wars. Tax problems in traditional China were often not reflected in the lack of tax itself, but in the lack of emergency capacity. This resulted in the unlimited expansion of state power in the emergency state, which destroyed the property rights and other systems. Chinese centralization presented us a contradictory phenomenon of coexistence of strong power and weak government. Accordingly, western modern countries established an effective public debt system under the constraint of power, which could better centralize a large number of resources in emergency situations.

The third chapter focuses on the laws of traditional China. Professor Ma Debin first introduced Weber’s concept distinction between formal justice and substantive justice. Formal justice refers to a series of universally applied rules and procedures that are definitely stipulated in advance in which rules for making rules are particularly important, but these are often ignored by domestic scholars. In fact, the western legal traditions not only include the legal systems, but also contain a series of systems concerning lawyer groups and law schools. The western legal system has the ability of self-growth, and this growth has its inherent logic. Therefore, this inherent historical nature of the law gives it the power to transcend political power, so that rulers are also subject to the law. It is worth noting that British common law is different from civil law. The independence of the British legal system is rooted in the independence of the guild, that is, the independence of the lawyer association. Without the identification of the lawyer association as the only way to obtain the qualification of ordinary court lawyer and judge positions and even the royal judicial position, the power of professional legal groups will be lost. In contrast, the law of traditional China itself is “jurisprudence”, and cannot exist independently of political power. The fourth chapter describes the monetary issues. Similar to the West in the early modern times, traditional China also had the problem of chaotic monetary system. There is also a paradox: China’s monetary system is both unified and diversified. Nominally, China’s monetary units are consistent. In fact, there are large differences of monetary units and exchange rates among different regions.

The second part mainly introduces the empirical analysis of great divergence. Professor Ma Debin and his collaborators showed the international comparisons of China’s per capita wages, prices and living standards since the 18th century through detailed data. The data presented by Professor Ma indicate that since 1750, the per capita wage in Beijing has remained relatively stable, but lagged behind the growing per capita wage in Western European countries. They also creatively used height data to compare the living standards between China and Britain and the United States in the 18-20th centuries. The third part discusses the great divergence in Jiangnan region. By calculating the GDP of Jiangsu and Zhejiang Province from 1911 to 1937, the economic growth in Jiangnan region was investigated. Professor Ma pointed out that the per capita GDP in Jiangsu and Zhejiang in 1911-1937 was almost more than 1.5 times the per capita GDP of China, and their growth rate was twice higher than China’s total GDP, close to that of Japan, South Korea and Taiwan at that time.

The fourth part examines the differences between China and Japan in the process of modernization transformation by comparing their sericultural industry. Professor Ma made full use of the survey data of modern Japan to investigate the development of sericultural industry in China and Japan. Japan’s sericultural industry has developed rapidly in modern times, and its export volume has increased from one third in the 19th century to three times the volume of China in the 1920s and 1930s, which occurred around the 20th century. The reason is that Japan’s sericultural industry has made significant technological progress. Through the cultivation of new varieties of cocoons, Japan has greatly improved the cocoon production rate. If there is no breeding and development of new varieties, the gap between Japan and Jiangnan region will not be too large.

After the speech, Professor Long Denggao made wonderful comments. He thought that Professor Ma Debin has pushed the research on Chinese-Western comparison and great divergence to a new starting line. This lecture was conducted online by Tencent VooV Meeting. Nearly 500 teachers and students from universities at home and abroad participated in the lecture and discussed the different development paths of European countries, the comparison of tax systems between China and Britain and the formulation of laws and rules.

(Contributed by Chen Yueyuan)