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Commercial Civilization: Footstone of Human Progress
--- An Interview with Mr. Zhai Yuzhong, Sinology expert
The New Legalist EDITOR’S NOTE: Commercial civilization is the footstone of human progress, and it has been built up by the efforts and sacrifices of all working people, including those who contribute labor in the broadest sense (manual, mental, productive, technical, managing, and product and enterprise developing, etc.) as well as who contribute labor-originated capital. But the domination of politics, communitywide, statewide and global, by the cancerous big capital interest groups has been severely interfering and hampering human progress. If not checked in time, human civilization might very probably be ruined sooner or later. Action must be taken urgently by all humanity to save it from destruction.
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Introduction
by Pan Guoyao and Li Zhao, journalists with Global Fortune
The human development process goes from agricultural civilization to industrial civilization and further to ecological civilization. During this process, product exchanges based on human production and life have always existed. From ancient times to modern times, it has been changing only in quantity, location, and ways of exchange. The essence of commercial civilization has remained the same, namely, being supported by material wealth production, creating spiritual culture and developing an ecological civilization.
In order to have a deeper understanding of the influence of commercial civilization on human progress, journalists with Global Fortune had an interview days ago with Mr. Zhai Yuzhong, contract research fellow and financial commentator with the China and World Affairs Research Center of Beijing University. Mr. Zhai talked about the development of commercial civilization and its influence on the international society.
Medici family and commercial civilization
Mr. Zhai Yuzhong found that human business operation pattern changes with the progress of times, and has done so many times in history. For example, before the appearance of railways, the main transportation vehicle for people to travel in was the carriage. However, this was only a change in appearance, while the essence of commercial civilization has been everlasting and will not change with that of business operation patterns.
The social conditions for the rise of modern Western commercial civilization were very special. It is hard for the Chinese to imagine the backward and closed nature of the European mind in the Middle Ages before it. The Chinese have not experienced that kind of closed environment; in contrast, in China’s Sung and Ming Dynasties at about the same historical time, her commercial civilization has reached quite a high level.
The Middle Ages is considered to span from the fifth to fifteenth centuries. After the tenth century, on the ruins of ancient Rome, some tradesmen began to settle temporarily there. They moved to live there in winter, and when it turned warmer, they set off to look for customers. Those merchants, like the itinerant traders in Chinese history, were the earliest activists in the budding European commercial civilization.
Mr. Zhai explained that the Renaissance directly promoted the rise of modern commercial civilization, and one obvious sign was the appearance of bankers as a class. Take the Medici family in the times of Renaissance as an example. The ancestors of this family were farmers of Tuscany, who made a fortune by engaging themselves in industrial and commercial business later. They became aristocrats in the 13th century and participated in the government of Florence. With the help and support of the Medici family, Florence became the origin and center of the European Renaissance movement, with outstanding achievements in poetry, painting, sculpture, architecture, and music. Besides, in history, philosophy, political theories, etc. it also stood at the top among the states of Italy.
The Medici family controlled Italian politics, economy and culture during the period from the 13th to 17th centuries, and started to form the core ideology of Western commercial civilization, centering round an effort to prove that business activities has legitimacy. People nowadays see business activities as natural, but it was somehow questionable in Europe during its Middle Ages. At that time, the Christian Church did not allow businessmen a chance to go to Heaven after death. The Medici family tried to prove ideologically that businessmen could also go to Heaven. To do this, they began to get rid of some medieval preaching. For example, they first of all supported the views of Platonists and built the Platonic Academy. They tried to create a new culture to prove the validity of secularity, that of pleasure-seeking and finally that of consumption and commercial business. During the entire Renaissance, almost all the famous Italian scholars, including Galileo, were patronized by the Medici family.
Mr. Zhai thought that the extremely unstable financial environment at that time shaped the basic features of modern commercial civilization. By the end of the 13th century, the major banks were closed, not because of business reasons but because the king did not pay back their loans for war. In such an environment, the Medici family made deliberate efforts to get control of politics, and thus the domination over politics by commercial forces has become an everlasting pattern till today in modern Western societies.
Therefore, the “new commercial civilization” mentioned by Ma Yun (a contemporary successful Chinese entrepreneur) is actually only a change in business operation patterns. For example, electronic business has seriously impacted the traditional service industries such as publishing, retail and hotel business. However, only operational patterns have been changed, not the essential nature of consumers and commercial goods. Nor has business ethics, which calls for compliance by all involved in the consumption process.
Consequences of business class’s domination over politics
Modern commercial civilization was created by the Western world. It started from the Renaissance and has developed into the current state of affairs through hundreds of years. “In the past 500 years, commercial activities have achieved huge success in terms of promoting the legitimacy of material desires. But at the same time, excessive consumption has also caused grave negative results. For example, the idea of stimulating consumption has also stimulated greater greed in the field of financial bonds, which has eventually developed into financial and credit crises. What’s more, the industrialization movement propelled by consumerism has caused severe ecological damages, etc. This was not expected by the early founders of commercial civilization”, emphasized by Mr. Zhai Yuzhong.
Mr. Zhai explained that an important factor that gave rise to Western capitalism was the spirit of diligence and thriftiness in Puritanism, which was the foundation of the United States of America when it was first established. However, current American consumption is supported by deficit, and U.S. economy has become a virtual one. The foundation of the nation has sunk for long. The outbreak of American subprime mortgage crisis in 2008 has enabled us to see that there has no longer existed credibility in modern American business culture. Wall Street Bankers have conspired to cheat by using junk bonds. At first, the subprime mortgage crisis happened in the field of house loans. Real estate agents forged documents for people who could not afford a house at all. The subprime mortgage crisis was not created by a single individual, nor should be attributed only to the greed of financial giants. Ordinary American people also added fuel to the flame in this matter. The entire American society was caught in a commercial fraud. Everyone knew that there will be crash sooner or later, but all would rather take a chance. Before the crisis of 2008, some conscientious scholars had noticed subprime mortgage was a dirty commercial fraud, which would collapse sooner or later. But people turned a deaf ear to their warnings.
Mr. Zhai held that if commercial civilization is viewed in a broader historical perspective, we can see that Americans have played a negative role in the last decade. Only the few bankers on the Wall Street have benefited while a large number of diligent businessmen, including Chinese entrepreneurs, lost a great deal.
“We need to reflect on Western commercial culture as a whole. The banking law for limiting speculations sponsored by President Roosevelt in the 1930s has been ignored, which has caused excessive expansion of the banking sector. The risk of a crash had been brewing for long behind the seemingly more and more prosperous security market.” Mr. Zhai pointed out: This destructive force actually comes from Western commercial civilization itself, namely the terrible social structure with the business class dominating over politics since Renaissance, as Western commercial civilization has been based on the mind being governed by the bottom, so to speak, instead of the mind governing the entire body.
Mr. Zhai indicated that everything should have limits in its development, including market freedom. Overstepping the limit would often lead to disasters. It is dangerous for a minority of people to control the entire financial system and manipulate national financial policies. The Asian financial crisis in 1998 and the American financial crisis in 2008 shock the whole world. Only China was least affected, and many countries admire the Chinese government for its regulatory control of the economy. This is because the Chinese government is different from those of the Western countries in organizational framework, and the Chinese business circles cannot wield power over politics. When economic crisis happens, the government would adopt forceful measures to regulate the market and is less hampered by interest groups. Actually the Chinese government in its organizational structure is a relatively neutral one, roughly representing the interests of the whole people. Therefore, it can adopt various methods including policy adjustments and currency regulation, etc. when problems occur to the market, in order to avoid even more serious problems for the entire national economy.
Affected by the international financial crisis, currencies such as the U.S. dollars and Japanese Yens have sped up their devaluation recently. This severely impacts the global economy. Over supply of money is very dangerous because currency was created to facilitate human consumption and circulation. To pump excessive cash into the market risks great danger, just like quenching a thirst with poison.
In the 1960s, U.S. President Eisenhower pointed out that the excessive power of certain commercial forces was a threat to the nation. Nowadays the financial crisis created directly by the Wall Street does not only affect the U.S., but also involves too many other countries. Over-issuance of money by the government has continuously shrunk the wealth of the ordinary people. If this is done by an ordinary nation, it only affects the people of that country. But if this is done by a major economy in the world, it may affect the development of the global economy. Therefore, the U.S. must behave as a responsible big power.
So, when a country is issuing more money, it has to consider if it has in reserve physical assets equivalent in value. This is common sense regarding the maintenance of a stable and balanced market. “At present, the dominance of the U.S. dollar still exists, and the total volume of U.S. economy is still very large. But if the American politicians make wrong judgments about the whole American or even the global economy, and focus on the financial bond market by adopting the quantitative easing policy, it would be very dangerous,” Mr. Zhai said.
The current era is endowing commercial civilization with new meanings
Mr. Zhai pointed out that the Western countries are obsessed with an objectionable mindset, which dictates that any other country should be regarded as a backward one if in international communications it fails to conform to one’s own country’s standard. Actually, when comparing two civilizations, we cannot use either of them as the standard, just as in comparing traditional Chinese medicine and Western medicine we cannot say that one is totally good while the other totally nothing.
There is a close relation between the formation of commercial civilization, or business culture, and the history of political and economic development in one country. So, there is a huge difference between Japan and Germany on one side and the U.S. on the other in their business culture. The earliest rise of Germany started in the 19th century. Compared with other countries such as Italy, France, Britain and Netherlands, Germany was a late-developing country. At that time, Liszt, a German economist, emphasized in his book that an underdeveloped country should absolutely not adopt a free market in order to become strong, because free market economy would only benefit part of the German population such as those in the coastal region, who would easily profit from free trade. A late-developing country must maintain high tariffs to nurture its high quality industries. Germany made huge successes in the 19th century under the guidance of Liszt’s policy. Today Germany has become the leader of the EU, thanks to her highly-developed manufacturing industry. Overshadowed by a debt crisis, many European countries are in economic depression, but Germany is faring tolerably well right now.
Mr. Zhai went on to say that human resources are limited and therefore commercial goods are limited as well. Ancient China was for long an agricultural society. Mishandling of resources caused serious disasters as early as 4000 to 5000 years ago, or even still earlier. As shown by environmental archaeology, an ancient civilization in Gansu (甘肃) area 6000 to 7000 years ago was destroyed by the deterioration of its ecological environment. Therefore, traditional Chinese business culture laid stress on a dynamic balance in and between the society and the ecological system. This practice should be carried on by modern people.
Mr. Zhai added that commercial civilization also has something to do with philanthropic sentiments of the rich. Since the time of ancient Rome, the rich in the West has nurtured a tradition of helping the poor, or pleasing the poor by acts of charity. It has been a good tradition, somewhat related to its political-commercial ecology of that time. Later, the Medici family also did quite well in this respect.
A catch phrase in rogue recently in the West has been “social responsibility of the enterprise”. For example, the French State Electric Power Corporation has appointed special personnel to take charge of this concern. The Angel Investment company chooses its investment projects according to their possible contribution to the society in their growth stage, besides the possibility of growth itself, including their job-creating ability and impact on the ecological environment, etc.
In a word, an entrepreneur will face the issue of how to consume his wealth on achieving success in pursuing it. He has to learn how to give as well as how to get. Those entrepreneurs who only know how to acquire but not how to contribute are not high-minded ones.
（Originally published in the journal Global Fortune, Hong kong）
About the Interviewee
Zhai Yuzhong, Contract Researcher with the China and World Affairs Research Center, Beijing University; researcher with Creative Industry Research Institute, Overseas Education College, Shanghai Jiaotong University; Sinology specialist; and finance and economics commentator. He was the director of the international department in CIEN and director of the news department of Legal News attached to the Hong Kong-China News Publishing Agency. Now he is general editor of The New Legalist website (in both Chinese and English). Among his major writings are The Daoist-legalist China: revival of the Chinese civilization in the 21st century, The Way to Create National Wealth: Classical Chinese economic thoughts and the thirty-six strategies, China saves the world: Chinese culture for coping with human crises, etc.
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