A History of Wealth and Poverty: Why a Few Nations are Rich and Many Poor, by John P. Powelson.

Appendixes for Chapter 11

Appendix 11.1: Historical References to China's Despotism and Centralization of Power

During virtually all of its history, the Chinese Empire/Republic/People's Republic has kept a tight control over business enterprise, either monopolizing it, denigrating and insulting it, taxing it heavily, or organizing it centrally. The only exception is perhaps the Republic (1912-49), with even more liberalism by its successor on Taiwan. There, financial control has centered on a small number of investors rather than the government.

Out of 143 historical references that I have placed in my computer, below are a few representative, in chronological order by centuries:

  1. "[T]he Western Chou kings [beginning 1028 BCE] exercised very powerful control over a remarkably wide territory. [T]he king and his officials could and sometimes did intervene in the affairs of feudal states." [199]
  2. "[T]he goal of the Legalists' action [fourth century BCE] was to solve a major crisis in Chinese society, a situation of growing anarchy, by using an all-powerful State to create a social order of which the functioning would be perfectly controllable and predictable. No social mobility would be allowed." [200]
  3. "The factories of Suzhou are part of the system of offices assigned to the supply of goods necessary to the life of the imperial court, and in particular of the section for the supplies of textiles and ceremonial dresses. This system goes back to the Qin and perpetuated itself under various names during the whole imperial period." [201]
  4. The Yunmeng texts [third century BCE] show that "the agricultural overseer was rewarded when on the occasion of the four annual inspections the oxen used in agricultural work were in good condition, and punished if they were thin." [202]
  5. In his book, The Chinese Emperor, Jean Lévi evokes the atmosphere in the third century BCE "of an archaic and murderous bureaucratic state that destroys the individual in its search for an impossible precision where all deviance from the state's norms will be obliterated." [203]
  6. "[N]ot only was the conduct of trade in the towns bound by regulations [in the second century BCE], for instance, for the concentration of shops or the official supervision of markets; restrictions were also imposed on the free export of certain wares. . . . At the northwest frontier a sharp watch was maintained to prevent the export of contraband goods and specially controlled markets were established for dealing with foreign traders." [204]
  7. "[W]ithin the urban centres, economic activity was tolerated only if strictly regulated. By the time of the T'ang Dynasty a Director of Markets, with a number of assistants, regulated the area, time, and prices of all market activities." [205]
  8. "The ruler in China had the ethical right and duty, in order to secure economic justice, to intervene in the activities of the market. The urban centres (cities and towns, but not villages) were economically and otherwise fully under his control. Thus the free township, with a corporate charter and independent activity, did not arise in China. In Japan however, as in western Europe, the freedom of the market and the formation of independent corporate towns were distinctive features of feudal economic life." [206]
  9. "Chu's [first Ming emperor] conception of an emperor was that of an absolute monarch, master over life and death of his subjects; it was formed by the Mongol emperors with their magnificence and the huge expenditure of their life in Peking." [207]
  10. "The Hongwu Emperor (1368-98), who came from the lowest levels of China's agrarian world, did inaugurate the tone of despotism. He grew from village hunger through warlord experience to an imperial pride of universalistic style." [208]
  11. The Ming and Qing imperial factories were "dependent on the ordinary tax revenue both for expenses and for the purchase of raw materials, such as yarn." [209]
  12. "High officials used to sit with the emperor during the Tang; they stood in front of the sitting emperor during the Song; and they had to prostrate themselves and kneel in front of the emperor during Ming and Qing." [210]
  13. In the sixteenth century "an agreement was arrived at with [Mongol ruler] Anda for state-controlled markets to be set up along the frontier, where the Mongols could dispose of their goods against Chinese goods on very favourable terms." [211]
  14. Yuan (first President of the Chinese Republic, 1912) "was unprepared by experience or tradition to countenance a 'loyal opposition'." [212]

The following are twentieth-century newspaper reports of decisions made centrally in China which, in more-developed countries, would have been made largely in a free market. In China, they may have created inefficiencies in the allocation of resources or end products.

  1. [The Chinese newspaper Chungkuo Chingnien Pao reported that] Peking intends to have "more and more young people" go directly to college or into jobs in factories or offices, [so that] the number to be resettled in rural areas "will inevitably diminish.". . . However, "some young people will still be settled in the countryside," at least for temporary periods. [213]
  2. [The People's Daily demanded that all projects] "should be stopped where buildings will not have necessary supplies of fuel, raw materials, or water or where there will not be means of transport on completion." [214] [Presumably these projects should not have been started in the first place.]
  3. Professor [Nicholas] Lardy says that official grain figures that showed steady growth during the 60s and 70s were misleading. They obscured the fact that peasants were ordered to concentrate on planting grain and neglected other important food, including meat, edible oils and peanuts. [215]
  4. "[H]igh forced savings . . . were plowed into heavy industry, like steel, and produced glamorous statistics of rapid increases in the gross national product. Peking found it had neglected other important areas, especially energy, transportation, housing and consumer goods. China had millions of tons of steel that couldn't be transported and no one could use it." [216]
  5. [Prior to 1983, the government took all the profits from state-owned enterprises, leaving no incentive for managers to improve production. To correct this condition, the government decided in 1983 to take only half the profits.] [217]
  6. A woman living with relatives in Sichuan province recalls how commune officials swooped down last year, demanding that villagers immediately buy new furniture because a foreign delegation would be passing through. In a letter to the English language China Daily, writer Chan Yunhao complains of officials requiring peasants to buy television sets and painting village girls with rouge and lipstick to impress foreigners. [218]
  7. [P]rices for many Chinese products have remained unchanged since the 1950s and 1960s. Because of constant shortages, these administrative prices are generally lower than market prices would be. The gap is particularly wide for coal, iron ore, and other raw materials." [219]
  8. [In response to rampant inflation in 1988, the government announced sweeping cuts in investment.] The current situation is a result of Beijing's success in decentralization. Given a freer hand, factory managers began investing in plants geared to growing consumer demand. . . . But central planners contend that these industries are creating bottlenecks in energy and raw materials. [220] [In another country, the factory managers might have been restrained by the interest rate. In China, only the central planners could hold them back, and only by fiat.]
  9. Beijing announced that to save scarce resources, manufacturers of soft drink cans must immediately cease production. [221]
  10. In a sweeping nationwide crackdown on nonstate enterprises, China has shut down more than a million rural industrial collectives and forced the demise of 2.2 million private enterprises, the Government announced today. [222]

Appendix 11.2: Historical References to the Abundance of Land, Migratory Nature of Labor, and Small Amount of Communication among Social Classes in China

  1. In the early Chou dynasty, around the tenth century BCE, the territory was "enormous," with foot paths connecting settlements. Cultivation was shifting. Serfs worked on one field for a year or more and then moved to others. [223]
  2. "There was [around the third century BCE], in spite of the growth of population, still much cultivable land available. Victorious feudal lords induced farmers to come to their territory and to cultivate the wasteland. This is a period of great migrations, internal and external. It seems that from this period on not only merchants but also farmers began to migrate southwards into the area of the present provinces of Kwangtung and Kwangsi and as far as Tonking." [224]
  3. In the Early Han dynasty, "institutions were found to operate sponsored agricultural settlements at the periphery of the empire." [225]
  4. "To maintain itself, the central government [of the Later Han dynasty] was forced to levy increasingly heavy taxes on the dwindling number of tax-paying peasants in North China. The burden eventually became unbearable, and many peasants fled to the less rigorously taxed South or into the estates of the great landowners, where the rents were less crushing than the taxes on free peasants." [226]
  5. "[Toward the end of the Han dynasty] huge numbers of Chinese, naturally, attempted to escape the depredations of the 'barbarians' and the generally chaotic conditions in North China, fleeing southward to the safety of Szechuan and the area south of the Yangtze. As a result, the Chinese populations in the South multiplied several times over between the third and fifth centuries, and the absorption of the non-Chinese peoples of the area was accelerated." [227]
  6. "The massacres [9-23 CE] had so reduced the population that there was land enough for the peasants who remained alive. Moreover, their lords and the money-lenders of the towns were generally no longer alive, so that many peasants had become free of debt. . . . During the period of Wang Mang's rule and the fighting connected with it, there had been extensive migration to the south and south-west. Considerable regions of Chinese settlement had come into existence in Yunnan and even in Annam and Tongking, and a series of campaigns . . . added these regions to the territory of the empire." [228]
  7. In return for armed aid, nineteen tribes of Hsiung-Nu were settled in Shansi between 180 and 200 CE. [229]
  8. "So long as there was still more land potentially available than the labour that could work it," no size limit was imposed on individual holdings, in the second century CE. [230]
  9. To support soldiers on duty away from home, the Later Han officials established sponsored farms, or military colonies. [231]
  10. In the third century CE, "the south lay relatively open, but at that time there were few Chinese living there." [232]
  11. The southern state of Shu Han, in the third century CE, did not maintain a population large enough to withstand incursions by the northern Wei dynasty. To secure manpower it raided the native tribes in present-day Yunnan. It also encouraged immigration from the north. [233]
  12. During the period of the three kingdoms (220-265 CE), "a wave of non-Chinese nomad dynasties poured over the north, in the south one Chinese clique after another seized power, so that dynasty followed dynasty." [234]
  13. After a general disarmament in 280 CE, "many Chinese soldiers, though not all by any means, went as peasants to the regions in the north of China and beyond the frontier." They were welcomed by the Hsiung-nu and the Hsien-pi, who needed them as farmers. [235]
  14. As war raged around the capital in the early fourth century CE, "there took place a mass migration of Chinese from the centre of the empire to its periphery," which remained relatively quiet. "This process . . . is one of the most important events of that epoch." [236]
  15. In the seventh century, the Tang adopted a land-equalization system developed earlier by the Toba and also used by the Sui dynasty. In this, small farms were allocated to all males between eighteen and sixty years of age. [237] Eberhard argues that the purpose of these allotments was to prevent further migration of farmers and to raise production and taxes. [238]
  16. In 629-30 "eastern Turks were settled in the bend of the Hwang-ho. . . . More than a million Turks were settled in this way, and many of them actually became Chinese." [239]
  17. From the late eighth century until the early eleventh, "a gradual shift of China's center of gravity [took place] toward the south and southeast, since now it was in the Yangtze valley and along the southern coasts that considerable economic expansion was taking place." [240]
  18. In the early Sung period (mid-tenth century), as the army was demobilized, peasants were settled in regions depopulated by the war, or in newly opened areas. [241]
  19. Many new Sung estates "came into origin as gifts of the emperor to individuals or to temples, others were created on hillsides on land which belonged to the villages. . . . Some tenants were probably the non-registered migrants, [who] depended on the managers who could always denounce them to the authorities, which would lead to punishment" [242]
  20. As provincial capitals shifted from place to place during the early Sung dynasty, "a complete reorganization appeared: landlords and officials gave up their properties, cultivation changed, and a new system of circles began to form around the new capital. . . . [T]he thinly-populated province of Shensi in the north-west . . . had no large landowners, no wealthy gentry, . . . only a mass of newly settled small peasants' holdings." [243]
  21. During the Liao (Kitan) dynasty in the north (937-1125), "the army commanders had been awarded large regions which they themselves had conquered. . . . [I]n order to feed the armies . . . the frontier regions were settled, the soldiers working as peasants in times of peace." [244]
  22. In 1239, Southern Sung officials appointed a "high commissioner for colonization" who built reservoirs in the Hubei plain, where he settled peasants. "This is said to have resulted in the creation of 170 'domains' and 20 'colonies' . . ." [245]
  23. In addition to their forces in the north, the Ming rulers kept armies in south China. To supply them, they "resorted to the old system of military colonies, which seems to have been invented in the second century B.C. and is still in use even today (in Sinkiang). Soldiers were settled in camps. . . . They worked as state farmers." [246]
  24. In the mid-seventeenth century, "in spite of laws which prohibited emigration, Chinese also moved into South-East Asia." At the same time, gentry families were sending "surplus" sons to Kwantung and Kwangsi to sell Chinese products to local peoples or to new settlers. [247]
  25. A great popular uprising was under way in western China when the Qing dynasty began in 1644. "[W]hen it was ultimately crushed by the Manchus the province of Szechwan, formerly so populous, was almost depopulated, so that it had later to be resettled." [248]
  26. In 1655, artisans fled from Suzhou and dispersed themselves over the countryside when the state factories did not have enough funds to pay them. [249]

Beginning with the eighteenth century, references to internal migrations diminish in Chinese histories. At the end of the twentieth century, China is "totally" populated, and virtually all farms consist of only a few acres.


Copyright © 1994 by the University of Michigan. First published in the USA by the University of Michigan Press, 1994.

Published on the World Wide Web by The Quaker Economist with permission from the University of Michigan Press, 2005.

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