(Translated from Chinese by Sherwin Lu)

EDITOR’S NOTE: This is the second piece in Mr. Zhai’s series of essays on Taoist-Legalist classical thought tradition (the first one being on classical Chinese philosophy). Though a condensed version of a much longer one in original Chinese, this essay has retained the most essential ideas in classical Chinese economics, covering the most representative thinkers and literature and also with comparative or contrasting references to recent historical happenings both in China and in the world. From this succinct summary, the reader will find a rich treasure house of ideas on economics, which are still relevant today.

THE two years 1123 BC and 1937 AD witnessed two important events in the development of human economics: the former, King Wen of Zhou (周文王) instituting the State Storage System and issuing CRC (Commodity Reserve Currency) for the first time in human history, while the latter, publication of Storage and Stability: A Modern Ever-Normal Granary by Benjamin Graham, “the father of value investing”. Obviously, in this vital area of macro-economic management, classical Chinese economics anticipated its modern Western counterpart by 3160 years!

The revelation of this simple fact might be frowned upon by those who have lost confidence in Chinese culture ever since the defeat in the first Sino-Japanese war over a hundred years ago. They would say things like: This is national chauvinist or ultranationalist ignorance and boasting, is the same kind of most hackneyed platitude as “judging the political economy of Tierra del Fuego and that of modern Britain by the same rule”, is a too far-fetched comparison out of such ignorant belief as “Everything can be traced back to antiquity”…

Fortunately, Benjamin Graham added a subtitle to his book to remind the reader of the Chinese origin of his ideas: “A modern ever-normal granary”, i.e., a modern copy of an ancient China’s institution. (Translator’s note: “ever-normal granary” is a not very accurate translation of the Chinese “常平仓”, meaning “granary (仓) for keeping prices in constant (常) balance (平)”. A preferable translation, which is both accurate and terse, could be “Regulatory Granary”, as has been used somewhere else by this translator.)

Long, long before the appearance of environmental economics in the West, classical Chinese economics already incorporated ecological concerns into economic management and national economic accounting system. While Western neo-classical economics stubbornly sticks to its predecessor’s blind belief in spite of reality that the market would automatically bring about a balance, classical Chinese economics has long, long ago presented in mathematical formulation the theory of balance of interests between different social groups. When some outstanding economist in the West is hoping to have his name recorded in human history as “originator of the commodity standard currency project”, the Chinese people have put it into practice for thousands of years already.

To recover classical Chinese economics, we have to first of all find the genes of ancient Chinese civilization. So far, no credible records are available from Shang dynasty and before. It has been over a hundred years since Carapace-bone-script was first found but most of the content is fragmentary oracle inscriptions. What credible historical literature is available today is from the West Zhou period, of which the earliest is The Classic of History (or Shangshu, 《尚书》). Since its Old Text version, much valued by Soong and Ming Confucianists, was discredited as a fake by Qing dynasty scholars, the New Text version has come up in the public opinion.

As the New Text version of The Classic of History has also been pruned down by Confucianists according to their doctrinal standard (“义理化”), that part entitled Anecdotes of Zhou Dynasty, thus dumped, is all the more valuable now. Its credibility has been much enhanced ever since the date of King Wu of Zhou’s overthrowing of Shang dynasty as recorded in Anecdotes of Zhou Dynasty• Capturing of the Ancient House (《逸周书•世俘》) was confirmed by the astronomical software used in the “Xia-Shang-Zhou Dynasties Dating Project”. Today, when re-editing The Classic of History, people have incorporated into it Anecdotes of Zhou Dynasty • Capturing of the Ancient House as the authentic version of that part which had been originally subtitled “The Successful Completion of the War [on Shang] (《武成》)”. This means that Liu Xiang (刘向，77 - 6 BC, West Han Confucianist scholar,  man of letters, and bibliographer) has been proved credible in saying that Anecdotes of Zhou Dynasty is the very part Confucius dumped from the hundred pieces he worked on. It is The Classic of History in its original form, and is the embryo of the Chinese civilization at that, from which we can find out the complete gene of classical Chinese economics.

In the spring of the year 1117 BC, King Wen of Zhou in his deathbed imparted to his son Prince Fa, later King of Wu, the general principles for managing state affairs, including economic activities. According to the Anecdotes of Zhou Dynasty • King Wen’s Antemortem Remarks (Chap. 25), the three basic principles of classical Chinese economics are: “harmony with Nature”, “balance of interests”, and “storage by the state”.