(Translated from Chinese by Sherwin Lu)

This principle is not the same thing as the Confucianist equalitarianism to be realized by inhibiting commercial activities and pushing an otherwise laissez faire policy to bring about an ideal society with a small population and based on small-scale peasant economy. The Confucianist motto is: “It is not poverty, but wealth inequality, that should be the concern.” The Analects • The Jis (Chap. 16) (《论语•季氏篇第十六》) records the following remarks by Confucius himself: “I have heard that, for state rulers and chieftains, it is not poverty, but wealth inequality, not the small size of a population, but peace among people, that should be the concern. If wealth is evenly distributed, poverty would not matter; if people get along peacefully, the small size of the population would not matter; if people feel at ease, there would be no danger of social unrest. This being so, if people in remoter regions are not willing to join, then civil virtues should be cultivated to attract them. When they do come, they will settle down contented.”

Classical Chinese economics advocates a dynamic balance between the interests of different social classes, just as the Yellow Emperor’s Four Canons, the classic of ancient Chinese political thought, says: The way to deal with changes is to guide them towards balance and moderation; loss of balance means deviation from the Tao.

The principle of balance can be realized through a series of economic and political means, such as regulation of prices, equalization of taxes, and equal access to natural resources. Its purpose is to prevent exploitation, to prevent people from enslaving or subjugating one another even within the same rank (Guan Tzu • State Reserve (Chap. 73)《管子·国蓄第七十三》; Guan Tzu • Contingency Financing Strategies (Chap. 75),《管子·山权数第七十五》; The Book of Lord Shang• Establishing Laws,《商君书•错法》).

Anecdotes of Zhou Dynasty• King Wen’s Antemortem Remarks says that only when the interests of different social groups are kept in balance can the society develop harmoniously: “All walks of life can share the benefits equally; merchants can trade commodities, handicraftsmen keep their jobs; peasants keep up with the seasons – This is called the virtue of harmony. If there is more land than people can till, then the extra land means nothing to him [i.e., the chieftain] as if not his; if there is not enough land for people to till, then people will leave him. Therefore, if there is extra land to be tilled, he should issue calls for people to come and join from remote areas in all four directions; if there is not enough land to feed the people from, then allow people to work in neighboring lands after making proper arrangements for their kin at home. As said in Teachings of King Yu of Xia (《夏箴》), ‘If people’s interests cannot be accommodated in the home country, they will move to other places.’ And in Kai Wang (《开望》), ‘If there are not enough people to defend a spacious territory, invaders can attack here and there; if there is not enough land to produce enough food for the whole population, the enemy can impose a blockade and wait for the besieged people to give in when food runs out. Both dangers are induced by the imbalance between the size of territory and that of the population.’”

In ancient China as an agrarian country, it was the goal pursued by wise rulers in all dynasties to distribute the land among households in proportion to their different strengths of manpower, as this would put human and material resources into full play. Guanzi • State Economy Management (Chap. 5) (《管子•乘马第五》) argues: If land is distributed to households in proportion to their manpower, people will take the initiative to do their farm work at the right times. They will be mindful about the change of seasons so as not to miss it. They will know that, if they miss the time, they will suffer from starvation. Therefore, they will get up early and go to bed late and spare no pains to do a good job; whole families, fathers and sons, elder and younger, will all pull together to strive for a good harvest. If the land were not thus divided and assigned to each family, neither the land nor manpower would be brought into full play.

Before East Han, this policy of equal access to land for all families had been successfully implemented and, so, equal distribution of land was not a political objective for peasant uprisings in that early period.  After that, with Confucianist influence getting the upper hand in government policy-making, large-scale land annexation happened sometimes, but not during the Ming and Qing dynasties. The last two dynasties were not overthrown by peasants because of land issue, as dogmatically alleged by some scholars before. Their collapse was mainly due to the fact that the governments had failed, as a result of the Confucianist laissez faire economic policy, to mobilize necessary resources for defense against invasions from outside. A more objective study of China’s economic history has shattered the ideological foundation for the sweeping statement that in Chinese history all dynasty changes were brought about by revolting peasants who were driven to despair for loss of land.

Though distribution of land in proportion to manpower, as a traditional policy goal in China before, of course no longer applies to the agriculture of the industrial age today, however, the idea for everybody to have equal access to all natural resources will never be outdated.

The Book of Xia (《夏书》) says “Only when taxes are equally apportioned, can the royal treasury be full.” (as quoted in Guoyu • Duke Mu of Shan’s Admonition  to King Jing of Zhou Against Making High-Value Coins, 《国语•单穆公谏景王铸大钱》). For an equal and fair apportionment of land and taxes, our ancestors have developed a mathematical formulation system centering on The Nine Chapters on the Mathematical Art (《九章算术》), which is structured on the balance-of-interest principle.

During the West Zhou era, a special government post called “balancing officer” was set up, whose duty was to see that allotment of land taxes, other natural resources taxes, business taxes, human labor service, animal labor service, and transportation vehicle service were all fair. Take human labor service for example. The number of days allotted to each person for such service depended on whether the crops were good or bad in that specific year: three days per year if good, two days if ordinary, and one day only in a bad year. If there was starvation or an epidemic, all labor services and taxes would be waived. And an all-round major adjustment of all taxes and service assignments was done every three years to ensure fairness.

The balance of interests also included that between producers and consumers, especially between the peasants and business people with a view to prevent monopolization of state power by the latter. If prices of agricultural products were too low, it will hurt the peasants’ interests and also lower their purchase power for commercial products. If grain prices were too high, it will hurt the interests of consumers of farm products. Therefore, classical Chinese economics advocated state adjustments of grain prices to ensure that “both peasants and merchants earn their worth”. For instance, a minister of the state of Yue named Ji Ran in the Spring and Autumn Period is quoted in Records of the Grand Historian • Famous Traders as saying: If one dou (斗, a traditional Chinese dry capacity measure) of grain is sold at 20 qian (钱, a traditional Chinese monetary unit), the peasants cannot get their worth; if at 90 qian, the merchants would lose. If merchants lose, money would not be able to circulate in society; if the peasants lose, lands will lay waste. If the price is set at no higher than 80 and no lower than 30, then both the peasants and merchants will benefit. If grains are sold at parity prices and other prices are also adjusted accordingly, then neither tolls and taxes nor market supplies would be deficient.

This price regulation policy in the interests of both producers and consumers later became a basic one in China’s agricultural management all through her history. The idea was also adopted by the US Agricultural Adjustment Act passed in 1933, which took as “parity prices” those of farm products against industrial goods during 1909-1914, the years of agricultural abundance.

In the present-day world, however, the international trade of agricultural products is still being carried out on the Western principle of free market economics, resulting in severe imbalances between different social classes. Starbucks can make $232 profit out of one kilo of coffee beans while an Ethiopian peasant who produces it can sell that much for $0.30 only and the price is still falling at that. Ethiopian peasants are still suffering from starvation,  and also from lack of education for their children due to the shortage of financial resources for building schools in many areas. According to UN statistics, at present 40 of the world’s countries are facing a shortage of food in various degrees; 854 million people are suffering from malnutrition; and 5.6 million children die young every year from starvation and malnutrition. In developing countries, the problem of food shortage is especially serious – about one fifth of the population cannot get enough food.

On reading these shocking numbers of statistics, the reader will get a sense of what stark economic exploitation is, and how the savage reality under the beautiful cloak of modern Western economics looks like. One would wonder when the classical Chinese economics could become the guiding theory for sustainable human development.