-- From The Economic Principles of Confucius and his School, Book VIII, Chap 27
EDITOR’S NOTE: Over a century ago, a Chinese scholar, named Chen Huan-Chang (陈焕章), wrote the book in English The Economic Principles of Confucius and his School as his PhD thesis at Columbia University and had it published in the USA. The book has had great impact on several generations of masterly Western scholars in economics and economic policies in the West. For instance, the idea of changpingchang (常平仓, or regulative storage), which had been practiced for thousands of years in ancient China and was mentioned in the book, was adopted by the US parliament in its 1933 Agricultural Adjustment Act, sponsored by Henry A. Wallace (USDA secretary, 1933-1940), who had learned of it from the said book.
As the book is focused on only one of the several major ancient Chinese schools of thought, some other essential content in traditional Chinese economics, therefore, could not be covered, such as those of Guan Zhong (管仲), the Legalist chancellor and reformer of Qi state and, according to the author of this book, the first person who had put forward a complete system of thought on economics. However, many important ideas and practices discussed in the book had actually been shared by some other major schools of thought. That of changpingchang mentioned above is one typical example.
While this book is a comprehensive treatment of the topic as indicated by its title, whole six chapters are devoted to “socialistic policies” in ancient Chinese economy, which practice might not be expected by contemporary readers. We will post excerpts from these chapters in installments. Hope it will shed some light on how today’s world economy should be reformed.
PREVIOUS INSTALLMENTS
Socialistic Policies of Ancient China [1]: The Tsing Tien System:
(I) History of the Tsing Tien System
(II) The Tsing Tien System of Confucius
(III) History of the Destruction of Tsing Tien ... VII. Conclusion
THE TEXT
Chap 27: Monopoly
I. Condemnation of Monopoly
Confucius hated monopoly; but monopoly was condemned before the time of Confucius. In 298 B. K. (849 B. C.) , when Chou Li Wang loved gain and was going to employ Duke Yung, Jui Liang-fu gave him a warning as follows:
Profit is the product of all things, and the fruit of heaven and earth. If one monopolizes it, he will cause much hatred. Since all people are getting profit from heaven and earth and all things, why should it be monopolized? ... Even when one of the common people makes monopoly, he should be called a robber. If your Majesty practices it, there will be very few people who come to you.
Li Wang did not heed this admonition, and employed Duke Yung as minister. The result was that he was banished by the people. 1
The theory of Jui liang-fu is harmonious with that of Confucius. It will be convenient to treat Confucius’ theory in accordance with modern categories, and we may classify monopoly first into two grand divisions, private and public. We may classify public monopoly as fiscal and social; private monopoly as personal, legal, natural, and business. Let us consider them in this order.
1. Naratives of Nations, bk. i.
II. Public Monopolies
By public monopoly, we mean monopoly by the public at large, not by the ruler of any government. The ruler himself not only should establish no monopoly, but should make no profit at all. According to the principles of Confucius, if public monopoly is called for, in order to regulate production, distribution, or consumption, it would be approved. For example, the nationalization of land and the control of natural resources are principles of his. Judging from his ideas, all
Natural monopolies, such as wagon-roads, streets, canals, docks, bridges, ferries, water-ways, harbors, lighthouses, railways, telegraphs, telephones, the post-office, electric lighting, waterworks, gasworks, etc., should be public monopolies, either municipal, or national, or even universal.
If the public monopolizes a thing simply for fiscal reasons, however, Confucius would not approve it. The government monopolies of salt and iron, originated by Kuan Tzu [or Guan Zhong管仲], would not conform to the ideal of Confucius, because prices are thereby raised. In short, public monopoly for social reasons is good, but public monopoly for fiscal reasons is not.
As to ordinary business, Confucius thinks that the state should control prices, but should not monopolize the whole market. So far as there is no natural monopoly, and competition is possible and desirable, Confucius will not let the state establish monopoly. Although the state should be the regulator of prices, such action is not monopoly, but simply helping to free competition and destroy private monopoly. These are the general principles of Confucius in regard to public monopoly.
III. Private Monopolies
1. Personal Monopolies
Confucius opposes private monopoly, with few exceptions. Take personal monopoly first. Confucius is very glad, indeed, to give special honor and wealth to men who possess extraordinary virtue or ability. Therefore, honoring the virtuous and employing able, and putting the distinguished men in high positions, is a principle of Confucius. But such a temporary personal monopoly is not for the sake of the individuals, but for that of society at large. Confucius says: "Employ the upright and put aside all the crooked; this way can make the crooked upright."1 Therefore, to grant rewards to the individuals who hold personal monopoly is not only doing them justice, but also giving all others inspiration Even personal monopoly, however, Confucius does not let alone, but he makes the people acquire it by education. Hence the system of universal free education arises, and the power of personal monopoly is diminished by popular education.
2. Legal Monopolies
As to Legal monopoly, Confucius would not approve it. When Chung-shu Yu-he, an officer of Wei, showed military ability (38 B. K.), Wei rewarded him with a city. He refused it, and asked for the right to use the suspended instruments of music disposed incompletely, and the saddle-girth and bridle-trappings. These things were legally used only by the prince of a state, but such a right was granted to him. When Confucius later heard of this, he said:
Alas! It would have been better to give him many cities. It is only peculiar articles of use, and names, which cannot be granted to others than those to whom they belong; to them a ruler has particularly to attend. By the right use of names he secures the confidence of the people. By that confidence he preserves the articles distinctive of ranks. In those articles the ceremonial distinctions of rank are hid. By those ceremonial distinctions justice is practiced. By justice, social profit is produced. By social profit the people are equalized. Attention to these things is the condition of good government,. If they are conceded where they ought not to be conceded, it is giving away the government to the recipients. When the government thus perishes, the state will follow it; it is not possible to arrest that issue. 2
If, according to the principles of Confucius, even the right to use certain articles should not be granted, there is no reason why the government should grant legal monopoly. The legal right of establishing monopoly is included in the word “names” used by Confucius. It is a part of the sovereign power, and should not be given to any private person. This is for the profit of the whole society and for the equality of the people.
In Chinese history, no legal monopoly has been given to private persons by the government, except in one instance. In 1837 (1286 A. D.), Yuan Shih Tsu granted the seals of paper money, on account of their service in sea-transportation. When their wealth was equal to that of the state, the government killed them on some excuse, because it was afraid that they would be a danger to the state. 3 Legal monopoly is generally not good for society at large.
A limited legal monopoly, such as copyrights and patents. however, Confucius would approve. Since his philosophy is based on a justice that is practiced by a system of rewards, he would grant a limited monopoly to the author or inventor, in order to reward him and to encourage others. But the Chinese did not develop such a monopoly. Hence the people had no encouragement for invention, and many inventions were lost. In old times, the people generally did not care to invent anything. Even the scholars who did invent things, did so, not for the sake of economic interest, but for the sake of curiosity, or to show their ability. Therefore their inventions died with them. In those times the people lived in an isolated way, communication and transportation were poor, and there were no newspapers and magazines, so that the people could not have known anything about new inventions had there been any. Moreover, even if they had known about them, how could they have understood the secret of the inventors and have duplicated them? Therefore, many old inventions are simply recorded in history, without producing and great effect, and many others, such as gunpowder, and the art of printing are by unknown inventors. There were many causes which retarded Chinese invention, but the absence of a patent system was a very important one.
There arises a question -- how did the ancients develop and preserve their inventions? Because they had a quasi-legal monopoly -- the hereditary right of holding office in different sciences and arts. For each profession and each line of workmanship, there was a government office which was hereditarily held, even thought different dynasties. Since their division of labor extended to details, and their specialization lasted for many generations, they would naturally invent new things or improve old methods. Even if it were not so, the old would scarcely have been lost, because the government was its preserver, even though the family should die out. Therefore, although the hereditary offices were a bad thing, they still produced some good effects.
Confucius, however, did not approve the inheritance of offices, and since the Han dynasty such a system has been destroyed. Because the people could not get legal monopoly, they resorted to secret monopoly, -- that is, when they invented or discovered anything, they kept it secret, as a natural monopoly. Professor Friedrich Hirth says:
It is a feature of Chinese social life that specialties in art and workmanship are treated as the monopoly of certain families on which no outsider is allowed to trespass. Such was the case under the Han dynasty with certain patterns of silk brocade. many trades, such as the superior lacquer industry in Foochow and the manufacture of bronze drums in Canton, Have been family secrets; and these secrets are so well guarded that a branch of art may die out with the last scion of the family that created it, as in the case of the celebrated Foochow lacquer, the secret of which was lost during the T’ai-ping rebellion. 4
Such a secret monopoly was not legally protected, but existed simply because there was no competition on the same level. It had no evils: First, the time of monopolization was unlimited, lasting from generation to generation. Second, the secret was easily lost, because the family did not teach it to outsiders. It is much better to create legally a limited monopoly. and let the monopolist teach others. That is the way to develop secret monopoly to open monopoly, and society will benefit from it much more than the monopolist. Since 2449 (1898 A. D.) the tendency in China is in this direction.
In short, regarding legal monopoly, Confucius would give it for a limited time to those who contribute something to society, but not to those who are simply favorites of the court.
1. Classics, vol. I, p. 261.
2. Classics, vol. v, pt., I, p. 344.
3. Continuation of the General Research, ch. ix.
4. The Ancient History of China, P. 117.
3. Natural Monopolies
As to natural monopoly, Confucius positively does not allow any private person to hold it. According to the principles of the Spring and Autumn, the famous mountains and great meres are not conferred to the feudal princes. "Because they are the natural resources of heaven and earth, which are not produced by human power, they ought to be shared in common with all the people."1 This principle is also set forth in the "Royal Regulations."2 If such natural resources were conferred on the feudal princes, they would be their owners, and the people could not make use of them. Therefore, they are left as common property for all the people., and the prices are not allowed to hold such a natural monopoly. Since Confucius does not permit even the feudal prices to own the natural resources, how can any private person have the right to own them? Subject to this principle is the modern development of franchise monopolies, such as railways, waterworks, etc.
This principle is applied not only to local or national monopoly acquired by natural advantages, but also to international monopoly. Explaining this principle, the General Discussion in the White Tiger Palace says:
It makes all the people share the advantages, and does not allow any single nation to monopolize them. The riches of mountains and forests, the advantages of water and rivers, should be commonly distributed over thousands of miles. It is for the equalization between those who have something and those who have nothing, and for the fill of insufficiency.3
Since Confucius takes the whole world as an economic unit, he forbids not only private persons, but also individual nations, to monopolize the natural advantages. Indeed, if there is any natural monopoly affecting the whole world, it should belong to the government of the whole world-state. This is the basis of the free-trade doctrine of Confucius and that of his world-socialism.
During the Han dynasty, when Sang Hung-yang defended the government monopoly of salt and iron (471, or 81 B. C.), he referred to this principle, and said that the people should not be allowed to monopolize the natural resources. 4 When the Tsing dynasty (816, or 265 A. D.) and the Liang dynasty (1053, or 502 A. D.) distributed the feudal estates, the famous mountains and great meres were not conferred; and all the regions producing salt, iron, gold, silver, copper and tin, and bamboo-gardens, capital cities, public buildings and different parks were not included in any feudal estate. 5 These facts show the influence of Confucianism upon actual law.
4. Business Monopolies
Confucius does not permit private persons to have business monopolies, a principle which is thus indicated by Mencius:
In old times, the market-places were for the exchange of the articles which they had for those which they had not. There were simply some officers to keep order among them. It happened that there was a mean fellow, who looked out for a conspicuous mound, and got upon it. Thence he looked right and left, to catch in his net the whole profit of the market. The people all thought his conduct mean, and therefore they proceeded to lay a tax upon his business. The taxing of traders took its rise from this mean fellow. 6
Confucius does not allow any monopoly profit. If there is any, a tax on such profit is necessary, in order to discourage the monopolist and to equalize the distribution of wealth.
For the prevention of business monopoly, there are two great principles, the exclusion of the ruling class from the economic field and the government control of demand and supply. We shall discuss them in the following chapters.
The Chinese hate business monopoly. According to the Law Code of the Ts’ing Dynasty, any business monopoly is forbidden. For example, people are not allowed to open a general company to control completely a branch of trade in order to prevent the merchants from going to other companies; nor to divide up territory within which no competitor can stand; nor to control transportation either by shipper or by carrier. He who monopolizes the market either as a seller or as a buyer shall be punished with eighty blows of the long stick. If any has made profit through such monopolistic schemes, that profit shall be regarded as booty, and he shall be punished as a robber according to the amount of booty.
As a result of the taxation system, however, there are some businesses mixed with the element of monopoly. They will be discussed under the subject of taxation.
1. Annotation of Kung-Yang, 16th year of Duke Huan.
2. See Supra, p. 347.
3. Bk. iv.
4. The Debate on the Government Monopoly of Salt and Iron, bk. vi.
5. General Research, chs. cclxxi-ii.
6. Classics, vol. ii, pp. 227-8. Hence the Chinese sometimes use the two words, conspicuous mound, for the word monopoly.
7. Ch. xv. |
