Condensed translation from Chinese by Sherwin Lu
(including quotations from classics if not noted otherwise)
EDITOR’S NOTE: Guanzi, an ancient Chinese masterpiece on political economy, surpasses all modern Western economics in its deep concern for and orientation towards the wellbeing of all peoples under heaven without favoring special interests of any priveleged classes. This long essay, to be posted in instalments, is an important contribution to the revival of traditional Chinese learning, which will help end the general crisis confronting world capitalism – but not “end of history”.
THE TEXT
I. Guanzi and Non-Hegemonic Political Economy
[The translator’s note: The word “non-hegemonic” here is a free translation of the original Chinese term “王道”, which literally means “the royal way” and was a term initiated by Confucianists as opposite to “hegemony” (霸道) . According to them, the basic implication of “王道” is “benevolent rule”, or “rule of benevolence and righteousness” (仁义). As different schools of thought may mean differently by the words “benevolence” and “righteousness”, for instance, Confucianists might not think of Guan Zhong, or Guanzi the person, as “benevolent” or “righteous” (see this translator’s comment on a quote from Analects (《论语》) at the end), hence it would not be proper to translate “王道” as “rule of benevolence and righteousness”. But as, according to Guanzi the classic book, Guan Zhong was definitely opposed to hegemony (霸道) as the opposite of 王道, therefore, this translator has opted tentatively to use the least ambiguous word “non-hegemonic”.]
According to world economists, the greatest masterpieces in economics are: The Wealth of Nations by Adam Smith; Capital, by Karl Marx; and The General Theory of Employment, Interest, and Money, by John Maynard Keynes. No classical Chinese economics has ever been recognized in world academic circles. But actually as early as over two millennia ago, i.e., the Spring and Autumn Periord, when China already had a mature market economy with a three thousand years long history of development since the times of Shengnong, or Patron of Agriculture (神农), she had given birth to the earliest great political economist, Guan Zhong (管仲), and the earliest masterpiece on political economy, Guanzi, which is no less great than the above three.
1. Guan Zhong and Guanzi
Guan Zhong (725 BC - 645 BC) was a Chinese statesman in the Spring and Autumn Period. He did not only put forward a systematic non-hegemonic theory of political economy at such an early date of human history, but, as the Prime Minister appointed by Duke Huan of Qi (齐桓公) in 685 BC, also adopted in practice an economic model, which required the government to appropriately intervene in the market, so that, during his term of office, the state of Qi became one of the most powerful of that time. He achieved what Adam Smith, Marx, and Keynes did not -- he put his own theory into practice with great success.
His academic thoughts were recorded in the great masterpiece Guanzi during late Warring States period over two hundred years later, compiled by scholars of the Jixia Academy (稷下學宮). It covers almost all the major issues in political economy, with germs of ideas on labor theory of value and utility theory of value, revelation of the function of market as what later was called “the invisible hand” by Adam Smith, also recognition of the government’s role in economy as, so to speak, the “visible hand”, and extensive discussions on market, division of labor, property right, capital, resources, finance, money, credit, bond, employment, industry, macroeconomic control and adjustment, distribution of social wealth, class relations, social welfare, social stability and harmony, and rule of law. In some of the above areas, it contains quite profound and systemic thoughts, while In some others -- e.g., the principles and mechanisms of market economy, the relation between private capital and social capital, commodities vs. money, and macroeconomic management of the market -- the expositions in these areas, though possibly not so detailed and systematic as contemporary Western economics, are, however, more profound, more comprehensive, and nearer to truth than the latter. For instance, the idea about two-way adjustment between money and commodities is definitely more advanced and more effective than modern Western theory about management of economy through the one-way control of money. Especially, the principles contained in it, i.e., that all economic activities should be people-oriented, that prosperity of the people given first priority in running the state, that the security of one’s high position lie in sharing benefits with the people, and that benefits obtained in ways running counter to the Supreme Way (Heavenly way) be rejected – all these, being far more humane, reasonable and progressive than those in contemporary Western economics, are among the most scientific and advanced political-economic thoughts in human history.
2. China’s Market Economy in Guan Zhong’s Time
Market economy started in China in the times of Shengnong, who taught people to “open the market at noontime for all under heaven to come bringing along all kinds of commodities and make exchanges to get what they each need before leaving” (《易》系辞下传), and, after 3000 years’ development, had grown to be quite mature in the Spring and Autumn periord, although the whole economy was on the whole still a subsistence one. The maturity of the market economy of that time was evidenced in the following ten ways:
(1) There were commodity exchange markets all over the state.
(2) Division of labor was already at an advanced stage, with clear distinction between public and private ownership of property.
(3) There had appeared a whole class of free city dwellers, some of whom had accomplished big capital accumulation.
(4) Money was used in market transactions.
(5) State and private credit systems had been established.
(6) There were free trading of land, hired labor, and smooth flow of exchanges among a rich variety of commodities.
(7) There was free competition on the markets, which were regulated by the state under the rule of law.
(8) There were free trades among the states.
(9) There was two-way regulation by the government of the markets through control of the currency and grains.
(10) A preliminary financial system was established.
Explorations into policy options about state and social restructuring in the face of extensive and profound social changes during the Spring and Autumn and Warring States period (770 ～ 221 BC), brought about by the unprecedented development of a market economy, the rapid growth of the new merchant class, and fierce competition among states, had induced a free atmosphere and provided a variety of important topics for new thoughts and theories, thus having created a magnificent show of “a hundred flowers blossoming and a hundred schools of thought contending”, that was unique in human history. It was against this grand historical background that Guanzi emerged as a summary of historically significant answers to all the questions raised by the political economy of that time.
3. People-Oriented Non-Hegemonic Political Economy
(1) What school of thought does Guanzi belong to?
As Guanzi draws from all pre-Qin (秦) schools of thought and covers extensively, it does not belong narrowly to any specific school, or rather the school represented by Guan Zhong was itself a self-contained school of political economy.
Guan Zhong advocated the idea of putting people in the first place, i.e., giving first priority to the prosperity of the people in running the state so as to bring about stability all over under heaven, and was therefore opposed to the hegemonic way of acquiring wealth by using predatory force against other peoples, as is in contrast to modern Western liberalist economic theories, which aim at maximizing profits for competing individuals and, therefore, giving priority to efficiency in disregard of moral justice and accumulating capital through all forms of colonialist ways, inevitably resulting in social crises and world disorder. Hence, his system of theories can be called non-hegemonic political economy as embodied in Guanzi, the historically earliest masterpiece in this field.
(2) What is non-hegemonic political economy?
The Chinese classic Book of History says:
Avoid deflection, avoid partiality;
Broad and long is the royal way.
Avoid partiality, avoid deflection;
Level and easy is the royal way.
Avoid perversity, avoid one-sidedness;
Correct and straight is the royal way.
(《尚书 • 洪范》, Trans. by James Legge)
Here “the royal way” is a literal translation, but the context has provided its basic implication, that is, non-partiality, which, when referred to somebody with authoritative power, certainly means non-hegemony. And this explains the essential nature of Guan Zhong’s political economy.
According to Guan Zhong, what was meant by “the royal way” , or benevolent kingcraft, was a fundamental orientation towards the people, i.e., to make them prosperous first before taking care of other state affairs by the rule of law, as he said to Duke Huan of Qi:
“All-powerful leadership begins with a fundamental orientation towards the people. When this foundation is in good order, the state is stable, but when the foundation is in chaos, the state would be in danger.” (《管子 • 霸言第二十三》)
In other words, the people in its entirety is the foundation, i.e., both the purpose and the guarantee, for all political-economic activities of the society. With this in mind, Guan Zhong proposed, besides “storing wealth among the people”, to put the people’s prosperity before other concerns about the state:
“To make the people prosperous is the top priority in running a state. Prosperous people are easy to manage, while poor ones difficult to handle. Why is that? It is because, if they are prosperous, they will be attached to their native land; if they are thus attached, they will defer to their superiors and avoid committing crimes for fear of punishment; and if they are afraid of punishment, they are easy to manage. But if they are poor, they will not be attached to their dwelling place; if they are not thus attached, they will be defiant against their superiors and tend to rebel; and if they tend to rebel, they will be difficult to handle. Hence, a well-managed state must first be prosperous while one in disorder suffering from poverty. Therefore, a ruler good at statecraft must first make people wealthy before governing them.” (《管子 • 治国四十八》)
It has been generally believed that Guan Zhong assisted Duke Huan of Qi in pushing for hegemony. This is sheer misunderstanding. One major cause for this is their failure to distinguish between hegemony and the non-hegemonic “royal way”. Guan Zhong once said to the Duke:
“While Your Highness has the ambition for achieving hegemony, I am not a minister for a hegemony seeker.” (《管子 • 霸形第二十二》)
Where, then, lies the difference between the two? Guan Zhong said:
“Who is aware of the oneness of all existence can be the noblest ruler; who knows the supreme way to rule can build up an empire; who rules by virtue can win all under heaven; while who conquers by force can dominate as a hegemon. Using force is not the noblest royal way but a means to help the ruler achieve hegemony” (《管子 • 兵法第十七》)
“Who wins the heart of all people under heaven is the noblest ruler while who rules with the support of only half the population is a hegemon. Therefore, a noble ruler treats worthy men with courtesy and share wealth with all his subjects under heaven.” (《管子 • 霸言第二十三》)
These ideas were embodied in Guan Zhong’s policies regarding state economy and finance. Once when Duke Huan of Qi asked him about wealth management, he replied:
“The noble ruler stores wealth among the people; the hegemon among high-ranking officials, while who is about to ruin the state stores wealth in a money-locker.” “Please loan out the money stored in Zantai area to people at Chengyang and that in Lutai area to those at Jiyin and announce to the people that, as the sovereign would not be poor if the people are rich nor would he be rich if the people are poor, there would be no tax in money and no money stored in state treasury but all wealth will be stored with the people.”(《管子 • 山至数第七十六》)
In a word, Guan Zhong was opposed to hegemony and helped the Duke win the heart of the people by sharing wealth with them and govern the world in a virtuous way. This was “the royal way” and also the guiding principle of his political economy.
(3) “Sharing benefits with all the people under heaven” – the highest level of nobility in non-hegemonic political economy
“Sharing benefits with all people” is the supreme way for managing a state and bringing about overall stability under heaven, according to Guanzi:
“Nobody would not wish to obtain benefits and avoid harms. Therefore, whoever shares benefits with all people under heaven will get all their support, whereas whoever usurps all benefits would be contrived against by all under heaven. Whoever should be contrived against by all under heaven would certainly fall even if he was in a supposedly secured position, whereas whoever is supported by all under heaven would be very secure even in a highest position. Hence it can be said that ‘the security of one’s high position lies in sharing benefits with all people under heaven’.” (《管子 • 版法第六十六》)
By applying Guan Zhong’s theories on political economy, Duke Huan of Qi brought about economic prosperity and political stability in the state. And this attracted many people from other states into Qi as immigrants, bringing along large amounts of money as capital, which further helped make Qi even more prosperous and powerful as a leading state. About this, Sima Qian (司马迁) the great historian said:
“After Guan Zhong was appointed as the top minister for Qi, Duke Huan achieved hegemony over all feudal lords under heaven. This should be accredited to Guan Zhong’s resourceful strategy.” (《史记 • 管晏列传第二》)
This comment is to the point but not quite accurate, as Guan Zhong did not advocate hegemony. As a matter of fact, Duke Huan did insist on pushing for hegemony at first, though opposed by Guan Zhong, and met with failure after failure until he adopted Guan Zhong’s advice.
With Guan Zhong’s advice, Duke Huan of Qi first used military force to stop Chu (楚) from attacking Zheng (郑) and Song (宋), but only after Chu rejected Qi’s exhortation against its high-handed treatment of its weaker neighbors. “Then he met with the sovereigns of Chu (楚) and Yue (越) in the south and went to attack Qin (秦) in the west and Di (狄) in the north, and, on his way back to the east, he left alone the Duke of Jin (晋) in the south but attacked Guzu (孤竹) in the north, while, on his way back, leaving alone the Duke of Yan (燕). Altogether he met with other dukes or princes for six times in a chariot and three times in a carriage, and found himself in a dominant position on return from all these nine meetings.”(《管子 • 霸形第二十二》)
The above shows that it was not by exploiting the people at home or abroad with force or by playing off other vassal lords against one another and then fishing in the troubled water, but by putting people in the first place and making them rich before the state, that Guan Zhong succeeded in obtaining the comprehensive national strength and prosperity for Qi. In his foreign policy meant to unify all states, military force was only used to stop clashes and wars, that is, a non-hegemonic means for bringing about stability and peace under heaven.
About Guan Zhong’s success in stopping wars and achieving peace under heaven by non-hegemonic means, Confucius highly praised as the most benevolent and most righteous feat, as he said:
“The Duke Hwan [Huan] assembled all the princes together, and that not with weapons of war and chariots: -- it was all through the influence of Kwan Chung [Guan Zhong]. Whose beneficence was like his? Whose beneficence was like his?” (《论语 • 宪问》, Analects • Xian Wen, Trans. by James Legge)
[This translator (Lu)’s note: Obviously what Confucius said about Duke Huan as recorded in Analects is not the same as what was recorded in Guanzi: “[Duke Huan] met with other dukes or princes for six times in a chariot and three times in a carriage” (see further above) , not always “not with weapons of war and chariots” and, if Guanzi is true to history, then, according to the author of Analects, Confucius would not consider Guan Zhong’s influence as “beneficence” (“大仁大义”, translated by some others as “benevolence and righteousness” ).]
(To be continued.)
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