The following is part of Cornell Contemporary China Initiative Lecture Series
under the Cornell East Asia Program. The arguments and viewpoints
of this talk belong solely to the speaker.
We hope you enjoy.
Welcome everybody back to the Cornell Contemporary China Initiative
for April 15th, 2019. Today we're very happy to welcome Zhang Taisu,
an associate professor of law at Yale University Law School
in mid-promotion, or newly promoted, and a member of the global faculty
at the Peking University School of Law. He's a comparative legal historian
working between China and Europe and his research centers around economic
and property law especially the origins of those laws in the early modern period.
He's also a Public Intellectual which is how I first came to know his work.
His commentaries appear on Foreign Policy in Chinafile on Tea Leaf Nation
He's a current Public Intellectuals project fellow with the committee
on US-China relations, and, as I just found out today, has interned
at the Supreme People's Court of China which maybe we'll get him to talk about
later during the Q&A. We're very happy to have him
and let's give him a warm welcome.
Thank you Nick for the introduction and for the invitation.
Let me start off by explaining to you guys why you're stuck listening
to a lecture on Qing history despite the fact that this is actually
a contemporary China series. I think the honest answer is I just
messed up. I didn't really notice this was called the Cornell Contemporary
China Initiative until it was a little bit too late to actually change the topic.
So Nick kindly pointed this out to me last weekend. I think the way
that I'm going to try to salvage this is by explaining to you guys
over the course of the lecture why, even if you have absolutely no
general interest in Chinese history whatsoever, as long as you have
some interest in some core features of the current Chinese state
and economic system, you should still care about this thing.
This is I think I'm gonna be describing to you guys today
one of the single most important episodes in modern Chinese
history and one that has foundational impact on the way
the entire Chinese state economic system currently functions
and frankly has been functioning for the past 40, 50 years.
Now actually let me start on that point because I think this will
help you guys stay awake during the entire historical section.
As you guys probably know by this point given your interest
in China, China has an unusually statist economic system. So even after 1978
when we had the so-called opening up phase and we supposedly transitioned
away from a full-blown planned economy to a, in Chinese lingo, market economy
with Chinese characteristics or like a socialist market economy
with Chinese characteristics. It is still nonetheless true all the way
up to now, and the trends actually seem to be getting more distinct in the pro-statist
direction, that the state has always been at the center of the way the economy runs.
Even when we say we want some kind of market economy,
our state still plays a pretty large coordinating and policy-making role
in that kind of market economy that virtually no other, probably no other
state of this scale tends to play. You guys might think of the American
government as relatively interventionist and sometimes pretty active
in economic policy-making. Well compared to China that doesn't do nearly as much.
The easy way to understand all of this, the cheap and easy way
to understand of all of this is to say this is like a natural consequence
of China being a nominally communist or socialist state.
Communist and socialist states naturally have more governmental
involvement in the way the economy is run. The thing is that might seem tempting
to a large extent extent, and that is probably also partially true at least
to some historical extent, but the thing is well before
the Chinese state became communist in 1949, ever since 1900
or something around that time, the distinct characteristic
of the Chinese economy was the state envisioned itself
playing a hugely active role in it. And the size of the Chinese state
relative to the economy that's running, basically the size of the state
vis-a-vis the GDP of the economy, has been on this continuously
upward path for basically the entire 20th century
and continuing even now. So essentially the statist tradition
of the Chinese economy, the state-centered management-oriented
economic policy-making did not really start with the PRC.
In fact the PRC took on a large number of institutional elements
that were passed down on to it by the previous nationalist governments
in the republican era. So essentially if you really want to trace the origins
of this relatively statist view of the economy you have to go
all the way back probably to the late 19th century
and to at least the early 20th century. The argument that I'm gonna present
to you guys today is that all of this was a backlash,
or at least back in the early 20th century it was a backlash
against what was probably one of the most unusual phases in Chinese
state building and economic regulation across China's 3000 year history.
So the common view of Chinese history pre-1912 is that it's a series of cyclical
dynasties. You guys have probably heard this. The dynastic view
of Chinese history. It's like one dynasty after the other and most dynasties
seem to resemble one another in terms of how they look.
They have a similar government system, they have a similar legal system.
They're technologically, to the uninitiated it probably seems pretty similar
from something like 800 AD all the way to 1900.
The notion is that China, whereas the West after something like 1400 - 1500,
after the Black Death, the West was on an upward trend,
you go from relatively undeveloped to highly developed over the course
of a few centuries. Chinese history until 1912 moved in circles.
You would have a dynasty come into power, grow rapidly,
become really powerful and influential and wealthy. You start to have crises
in the dynasty, it would eventually crumble under its own weight,
and by the end what you have is a political system in shambles.
That triggers political collapse, there's a new dynasty that replaces it,
and things go in circles. The argument that I want to make
is that that may well be true on the dimensions that I care about today,
which is I'm gonna talk to you guys about fiscal policy-making.
You guys may not care so much about taxes right now but trust me
once you actually start working for a living, once you get past your student phase
you're gonna care a lot about your tax policies. So the claim
is that the fiscal policy of these various Chinese dynasties
is at the core of what actually determines
their relationship vis-a-vis the economy and also what determines
how the economy actually functions. And then the argument is that
China's very last dynasty before 1912, before this massive revolutionary phase,
which is the Qing dynasty, was distinctly different
from every previous dynasty that had come before it.
And also the unusual tendencies of the Qing dynasty in terms of fiscal
policy-making laid the groundwork for the intellectual and political backlash
that happened after 1912 which then led to the current shape
of the Chinese party-state and the overall Chinese state,
the state-run economy that you actually see nowadays in China.
So let me begin by giving you a sense of what Qing fiscal
policy-making was all about. Pretty much every single human
society before like the early 20th century insofar as fiscal policy-making
the fiscal apparatus you're talking about, like where the taxes come from,
is an agrarian fiscal policy. The number one source of income is always you tax land,
you tax peasants, you tax agriculture, and you use that money to fund
other things. The thing is, I don't know how many people
are actually from China in this audience but if you are from China you went
to the Chinese high school system like I did. The conventional Chinese
understanding of Chinese fiscal policy-making was that the vast majority
of Chinese dynasties were bloodsuckers. They wanted to suck every little bit
of blood from the peasants as they could possibly manage and usually
because of that what usually caused their eventual collapse at the end
of the dynasty was they taxed the peasants too heavily and the taxed would rise up
and revolt and eventually kill off the dynasty. That is all false.
But let me explain to you why it's false and how it's false
and how that helps you understand why the Qing was so unusual.
It is generally true of all previous Chinese dynasties up until the Qing
that starting from around mid-dynasty the weight of their fiscal extraction,
like how many taxes you actually charge you population, starts to grow
at a pretty rapid pace. The reason for this generally speaking is you can understand
this in a very simple Malthusian cycle. Usually a dynasty comes into power
after a period of turbulence and chaos, after civil war. That usually means
the population is very low at the start of the dynasty because usually 30%
or more of the population has been killed off in the previous couple decades
of turmoil. When the dynasty comes into power it enforces stability,
it calms everything down. The economy starts to grow again,
people start having kids in greater numbers,
and eventually by mid-dynasty the population and the economy grow
to a much larger scope than what it was at the start of the dynasty.
This has been true of every single regime in Chinese history, including the PRC.
Around mid-dynasty because you are now facing a much larger population to govern
you tend to come to the realization that your previous bureaucracy
is usually not gonna be large enough. So you're you're going to want
to expand the bureaucracy, and if you want to expand the bureaucracy
you got to pay for the bureaucrats. If you want to pay for the bureaucrats,
you have to expand taxes. And because, up until like 1912,
all the previous dynasties were predominantly agricultural
in economic characteristic, when you say raise taxes
you mean raising taxes on peasants. This actually does not usually kill off
the dynasty because for the most part the peasants weren't taxed that brutally
even after the tax hike. But it is generally true of all previous Chinese dynasties,
and it is generally true of pretty much every other comparative regime
in human history, that somewhere in the middle of their existence
they tend to raise taxes on peasants. This is true of every Chinese dynasty,
it's true of the French, the Germans. If you look across the entire world
in the early modern era, this period up until 1700-1800, this entire 300 years
during which the world was first beginning to industrialize
and international commerce was first a thing, global connections were first made
between Europe and various parts of Asia, and the new world and so on and so forth.
Around this entire period, for the most part, in terms of fiscal policy-making,
every single state is expansionist. The states, because of the growth
in population, the expansion of the economy, they have a pretty
reasonably strong incentive to make themselves larger
so that they can actually keep up with the economy and the population
they're governing. In this context the Qing dynasty, which is this Manchu-run
dynasty, they govern China from 1644 to 1912 and this is China's last
imperial dynasty, was an extreme outlier.
So generally speaking I think the common historical perception
of Chinese governance pre-1900 or perhaps even pre-1949
was, or at least the the version of it that the Communist Party
really wants to sell people, is that it was unusually oppressive.
It was unusually brutal. It was very oppressive. It was large and governing.
It was the kind of nearly totalitarian state that a republican government
would justifiably rise up against and try to overthrow.
The thing about the Qing is nothing could be further from the truth.
when it came to this one dynasty. You may say the totalitarian, authoritarian
label, the expansionist label, the heavy governance label may apply
to virtually every previous Chinese dynasty except the Qing.
But the Qing was a unique governmental system in human history.
And to illustrate this let me give you two kinds of comparisons.
One is horizontal. Compare the Qing with its peers roughly at the same point
in time. Comparing with other kinds of governments in the 18th, 19th,
and early 20th centuries. And the second is vertical.
As a matter of horizontal comparisons, if you looked in something like 1850
at the size of the state relative to the size of the economy and the population
it governed. The basic measure that you have of this, for example,
would be something like the government's tax income every year relative to the GDP.
So just as a basic curiosity how many of you guys know how much of your income
the US government taxes every single year? What's the total ratio of the US
government's fiscal intake vis-a-vis the overall size of the American economy?
Anyone know this? Guesses?
35%? That's pretty close.
It's around 40%. For European governments it's more like 50%.
That's what a modern state looks like. In the pre-modern phase states were
of course much smaller because they didn't have the technological
apparatus to actually collect that high a tax level. But that said most governments
were reasonably sized vis-a-vis their population. So England at this point
in time collected roughly 25% of GDP. Japan collected something like 20 to 25%.
Continental European powers were usually between 10 to 15%.
Large land-based Asian empires were somewhat smaller than that
but usually they were still between 5 to 10%. So that's the norm for early modern states.
The larger you are, the more land-based you are, the ratio of the government
vis-a-vis the economy shrinks a little bit but it still stays above 5%.
It usually goes up to as high as 10 in the vast majority of cases.
Up until the Qing every other Chinese dynasty had always also fell into that box
So the Ming was roughly a 10% state, the Song was a 20% state, the Tang
before that was a 10 to 15% state. So in line with every other early modern
or pre-modern empire or state that you could actually find in human history
that was about as large and sophisticated to be a reasonable comparison
to the Chinese state. So compared against all of that the Qing is this extreme outlier.
After 1800 the size of the Chinese state in terms of how much taxes it collected
vis-a-vis the economy was 1%. Wrap your heads around that for a moment.
I'm a comparativist and I studied all kinds of historical societies.
I do not know of a single other society where the tax rate was that low.
And not only is it that low it's dramatically lower than every other state that you can
actually find in human history. So this in fact is the major characteristic
of the pre-1912 Chinese state. It was the complete opposite
of the usual Chinese communist discourse about some kind of large oppressive,
expansionist, totalitarian imperial state, rather, the main characteristic and problem
with the Qing states was that it did not exist. If you lived in a Chinese locality,
if you live in the county in the middle of China you couldn't feel the government's
presence at all in your daily life. Everything was more or less regulated
by local lineages, social groups, guilds, all kinds of commercial organizations.
It was self-governance by local social groups for the most part. The state,
I mean it existed. There was a county magistrate. There was a court
that you could use to sue and settle disputes. But for the most part
apart from the government coming in every single year and asking for 1%
of your income as their fiscal intake you didn't see these guys at all.
And you might think that sounds great. God knows most of us especially
after I started having an actual job I've really come to appreciate lower taxes.
But trust me 1% percent taxes isn't safe. It means the government is completely
non-functional for everything from military expenditures to economic regulation
to any kind of industrial policy. So now that means that you have
the perfect Laissez-faire, completely decentralized -- not completely
but almost completely decentralized -- economy in this Qing economy.
It's probably the best example of a non-centrally regulated economy
that you can get not only in Chinese history but I'm pretty willing to bet
across human history as well. Again that sounds great if you're
a full blown capitalist. But the problem is that again everybody knows markets
can fail. And there are all kinds of collective action problems,
there are transaction cost problems with economies, and so on and so forth.
And if you let an economy completely run without governmental intervention
there are going to be certain kinds of problems. And the major problem
that I care about, that I care about in my research, is industrialization.
It turns out that industrialization, that massive technological leap
you make from a largely human labor based pre-industrial economy
to a machine-based post-industrial economy, that's the kind of thing
that usually takes very large amounts of, in our economic historian lingo
we call it capital accumulation. Capital accumulation means
what you really need for a country to industrialize, for an economy
to industrialize, is that you need the major economic players in that economy,
whether it's large entrepreneurs, businessmen, or sometimes the state,
to have tons and tons of capital to actually invest in these new technologies.
The reason why you need this is that most of these technologies,
the steam engine, the spinning wheel, and so on and so forth, were not actually
cost effective, especially in their earlier phases, unless you could actually
invest in them at very large scales. The steam engine is the perfect example.
of this. If you only have one engine and doing some kind of thing it's usually
much more cost effective to just buy oxen or have human beings do the job.
The only cases in which it's actually cost effective to have steam engines
do certain kinds of jobs is when the job is of a sufficiently large scale
that employing that many human beings would not be terribly effective.
So essentially industrialization is the kind of thing that takes a ton
of capital accumulation. The thing is one of the single most
important sources of capital accumulation usually is the state.
It is possible for you to get capital accumulation through other means
and much of my other work is involved in explaining why the Chinese economy
could not have that kind of privatized capital accumulation.
But there are plenty of societies in the world that industrialize
because of aggressive state investment. So the paradigmatic example of this
are two countries. Germany and Japan. In terms of success stories
vis-a-vis industrialization, these are the two probably most
successful examples of industrialization process that you can actually find
in modern history. They expanded the fastest, their economic standing
across all countries in the world grew most rapidly over the shortest period.
Both of those countries the process was driven by governmental investments.
China tried to industrialize at about the same time as Japan did.
Those of you who know some Chinese history will know that China and Japan
entered into an arms race around 1860. And they were aware
of each other's attempts to industrialize and build a modern military.
So it really was a parallel arms race between those two countries.
Of course everybody knows Japan won by a huge amount and it smashed
the Chinese navy and military in a series of wars in the 1890s. And then eventually
it got so powerful they basically colonized half of China during World War II.
But the foundation of all of that, the major cause for why the Japanese
economy was able to industrialize so much faster than the Chinese economy
was the Japanese state had even in absolute terms something like
3 to 4 times the actual fiscal capacity of the Chinese state. And in terms
of per capita terms it had roughly 25 times the capacity of the Chinese state.
So in terms of how much money you could actually spend on industrial policy-making,
on investments, on banks, on factories, just in absolute terms, despite the fact
the Japanese economy started off being only 1/3 of the size
of the Chinese economy, the amount of money the Japanese government
had at its disposal to actually throw into industrialization was something like
5 to 6 times larger than the Chinese government.
Unsurprisingly because of that kind of stuff you won the arms race.
So the reason why you care about the size of the state in this kind of context
is in the context of industrialization in this early modern global arms race
that eventually decided the shape of the modern world,
having a powerful state really matters So in that general context the fact
the Chinese state, the Qing state, was so much smaller than all of its peers,
all of its predecessors in Chinese history, was a massive problem.
This is one of the single most important problems in all of Chinese history
and it's one of the most foundational things you have to look at
if you want to understand how China came to be what it is right now.
Because the starting point for modern Chinese history, why you have
an anti-imperial backlash after 1912, why you have a communist revolution,
is this overwhelming perception of Chinese weakness vis-a-vis Western powers,
vis-a-vis Japan, et cetera et cetera. And all of that to a very large extent
starts with the fact that the Chinese state was too small.
So the question then is why was the Chinese state too small?
This is the part that's completely historical and I don't want to bore
you guys too much with the details. So let me give you a 5 to 10 minute
bare bones explanation.
Very often historians when faced with this problem say
of course the Chinese state didn't tax too heavily, it's Confucian.
I don't know how much you guys know about Confucianism
but there's a common perception that Confucian states are states
that have this innate moral anxiety, some kind of innate moral suspicion
of taxation. Starts off with Confucius himself who at one point said
that the gentleman, the truly morally upright person is not the kind of person
that talks about material profit.
[Chinese]
If you believe in that, a morally just person must not pursue material gain,
this leads to all kinds of possible interpretations
including this very long-standing argument in Chinese history
about whether Confucian states were tolerant of merchant behavior
or commercialization. And the argument was that because Confucius said
that the morally upright gentleman does not speak of material profit,
any person who pursues commercial profit has to be an asshole.
That led to low social status for merchants and so on and so forth.
That's one of the things people point to for saying this is why the Chinese economy
fell behind. That turns out not to be true. The position of merchants in Chinese
society was perfectly high for most of Chinese history and especially
in the later stages. But what was true was that most Chinese bureaucrats
and Chinese officials throughout Chinese imperial history, when you ask them
what's your position vis-a-vis taxation, they'll at least make a show of saying
I'm not morally comfortable with this, I think the morally just state
should be a state that taxes as lightly as it can and it's not morally good
for you to tax it heavily because of all these things that Confucius once said.
That seems pretty intuitive. That kind of thing seems to feed into
an explanation for why the Qing state was so small. They couldn't tax
because it was Confucian and Confucian states have a tendency to undertax.
The problem with all that of course is the fact that Confucius said
all this stuff, did not stop any of the previous dynasties in Chinese history
from growing taxes eventually. When they really had to grow their tax base
they did so. And they might've made a moral show of feeling bad about it
but in the end they were like well whatever, we have to have a larger tax base,
we have to have more money, we have to have a larger military,
we have to have more bureaucrats, even if it's morally questionable to do
all these things we're going to do it anyway. This is I think a general phenomenon
in human history. I don't know how much faith you guys have in your bureaucrats
in Washington DC or in Albany or whatever. I really don't think
there really has ever been a major historical example of moral norms
really constraining governmental behavior when it comes to taxation.
Bureaucrats are bureaucrats. They're pragmatic people who know
what kinds of fiscal income levels it actually takes to run the government.
And if you starve yourself of taxation, not only is it against the government's
interest, it's also against their personal interest. Against that really strong
material incentive, no one really cares about morality all that much.
It's a sad thing, but moral commandments have never stopped governments
from raising taxes.
So what was different about the Qing? Why was it the only dynasty
in Chinese history that once it sets a reasonably sustainable tax level
around 1720 it stuck to that tax level for, at least for peasants, for agriculture,
it stuck at that tax level for the next 200 years without any growth even
in absolute terms. This is unprecedented. I don't know of a single other human
example where the absolute volume of fiscal intake in some large states
stays completely the same for that long. If you're a civil society of even if you're
a war-torn society there usually will be some incentive
for the government to raise taxes at some point. So every government
raises taxes if you give them that long a time horizon. The Qing never
raised taxes on agriculture. And that was what eventually killed off the dynasty
and wrecked the Chinese economy. So the question is why do you not do this?
It turns out that if you look at the broader scope of Chinese history,
we talk all the time about peasant rebellions killing off Chinese dynasties
Every good Chinese person who has been through high school
can rattle off a series of major peasant rebellions that seem to end a lot
of dynasties. The interesting thing is up until the Ming not a single one
of those peasant rebellions have actually killed off a dynasty before.
Sure they caused some trouble but usually the elites of that dynasty
usually had no trouble putting down those peasant rebellions.
The Qing was different in that it came directly after the only
Chinese state in imperial Chinese history to really be killed off by a peasant
rebellion. The peasant rebellions at the end of the Ming were,
they were the only example of a peasant rebellion sacking the capital, killing off
the emperor, and come to the verge of completely establishing a new dynasty
based off of a peasant rebellion. None of the previous peasant rebellions
ever came close to that. The one example the one exception might be the rebellions
against the Mongols at the end of Mongol rule. You guys may or may not care
about this but usually the conventional interpretation of that was that
that was not a peasant rebellion at all. That was an ethnic Han uprising
against the Mongol conquerors and that had very little to do
with how grieved the peasants actually felt.
The only really major, like in the consciousness
of Chinese political elites, the late Ming peasant rebellions that started
around 1630 and eventually killed off the dynasty in 1644 are the only example
of a peasant rebellion really killing off a major dynasty.
And let me put it this way. That kind of thing leaves intellectual scars
that is simply unfathomable to people who haven't actually lived through that.
So to give you a modern equivalent. So this is the equivalent of the changes
to modern Western political elites in terms of their ideological orientation
or the way that they think about the world, the way they think about economic
policy-making, And the role of the state after something like World War II.
But that was probably one of the more appropriate comparisons to how big
a seismic shock this actually was. Up until that point dynasties came and went
but the ruling elite itself never actually completely lost power to the peasants.
So the rulers could tell themselves that our policies work. The peasants may
sometimes rebel but it's controllable and we can bring things back under control
through some pretty tried and true methods. Expanding the military, giving off
some kind of economic relief, making sure we have enough
family relief for the peasants. By this point around 1600 in the later Ming
people were thinking we have a pretty nice playbook for dealing
with peasant rebellions. We know how to manage them. Then the late Ming
rebellions come along, they kill off the dynasty, and this completely shifts
the way that elites think about peasants. Up to this point you could talk mainly
about tax policy and you could talk about the state-peasant relationships
largely in the domain of morality. You could say raising taxes was
morally questionable but it's not the kind of thing that we really think
is likely to kill off the entire dynasty. It's not likely to be the kind of thing
that fundamentally threatens the entire existence of us the political elite.
That all changes after the end of the Ming. Because for the first time you actually have
a dynasty that's killed off by the peasants. And so right after the Ming collapse
during the Ming-Qing transition governmental thinking about
what the appropriate size of the state actually is completely changes.
Instead of arguing that raising taxes is immoral anymore, for now
the overwhelming argument being presented by the elites is well actually
it's not that raising taxes isn't moral anymore. We knew that it was immoral
all along but we were willing to bear with the moral consequences
as long as there was some other greater good to be gained. But now we have
an actual example we know for sure that given our current economy if taxes
go beyond a certain level the peasants are gonna rise up and kill us.
And that triggers a massive sea change in the way that they deal with fiscal policy.
'Cause again morality is a constraint against governmental behavior
but it's a weak constraint. You can reason yourself out of moral problems all kinds
of ways. You can in your head engage in all kinds of dumb trolley problems
to talk yourself out of pretty much any possible moral conundrum.
When that kind of logic hardens into self-survival the mental concerns
become much harder. Saying that peasant rebuttals are going to kill you if you
raise taxes is a vastly stronger political constraint against governmental
behavior than saying raising taxes are immoral. Honestly I tend
to think of this as just innate human nature. When I tell my kids, who are 7 and 5,
that it's wrong for you to do x, 5 out of 10 times they might actually pay attention
to me but I'm pretty lucky if 2 out of 10 times they actually listen to me.
Moral persuasion works sometimes with toddlers but usually they'll think
whatever, dad is writing off about morality again, who cares.
That said when I say do this and you will go to your room for 20 minutes,
that works so much better than saying do this and it's immoral.
Of course the best kind of parenting usually is the kind that uses both.
You have to have a moral carrot and you have to have a stick as well.
But in this case only until the Qing did the stick actually really emerge
in Chinese political thoughts. Up until then it was only the moral carrot,
and the moral carrot didn't really work for most of Chinese history.
Now you have the stick and all of a sudden governmental policy completely firms up.
The interesting thing in all of this is the historians. The interpretation
of Ming collapse, the Ming collapsed because it raised taxes too heavily
on peasants, is actually kind of ridiculous. 'Cause late Ming taxes, as far as we can
tell didn't really have much to do with peasant rebellions at all.
Rather the problem with the late Ming, the reason why you have so many
peasant rebellions in the late Ming is actually the opposite. Because of
this little ice age, temperatures plummeted across the globe in the early 1600s
Because of that, because of climate change -- climate change right --
because of climate change there were massive famines in Northwestern China.
The state at that point was so strapped of cash that it didn't have the resources
to offer famine relief to peasants who are suffering because of the famines.
When peasants starve they revolt and want to sack their landlords' households
and want to sack estates to get food. The famine goes on long enough,
they will want to sack governmental granaries to get grain and so on
and so forth. So the real problem with the peasant rebellions actually
was the complete opposite of the state taxing too heavily.
Rather the problem really was the state was taxing too little
from non-famine stricken areas so that it didn't have the cash
to actually offer family relief to the peasants. Which begs
the question, if that was the case, which is what historians believe now
it is, why did Qing elites actually buy completely into the "we raised taxes
too heavily therefore the peasants killed us off" kind of narrative of late Ming collapse.
This is something that draws upon a branch of cognitive theory,
a branch of psychology. I don't know if there are any psych majors
in the audience today. Human beings tend to interpret facts according
to their a priori normative worldview.
There was an example a couple years ago done by a bunch of people
at Harvard. So if I had to tell you I bring a bunch of right-wing Republicans
and a bunch of left-wing Democrats and I give them the same kind
of information about climate change, based off of your intuitions do you think
that will make them move towards the middle, come to a consensus
about climate change or do you think it's going to make them more polarized?
Just show of hands, how many of you think it's going to make them come
to a consensus?
I show them extensive neutral objective scientific research about climate change.
How many people think that's going to generate political consensus
on climate change?
Okay you guys are more jaded than I thought but this is good.
So the experiments show that if you show people with a priori biases
against a certain kind of thing information about that thing,
they're not going to interpret the information neutrally.
They're going to interpret the information in whatever way best conforms to their
normative or psychological priors. So the thing about the Chinese elites
in the late Ming period was they have a normative prior telling them taxation
is morally bad. So when a peasant rebellion comes along and kills off the dynasty
their natural inclination given that kind of worldview is to think
finally the fates have caught up with us. We were tempting fate for so long
by raising taxes even though we knew it was morally bad and now finally
the peasants have come along to punish us. When you have
that kind of normative worldview lurking in the background and something
catastrophic happens that semi-reasonably lends itself to a certain kind of empirical
interpretation that reinforces your normative priors, most likely you're gonna
embrace that kind of interpretation. And that's exactly what happened
in the Ming-Qing context. So because they had this normative prior
that taxation was bad, once the peasant rebellions came along they completely
bought into the narrative that was initially pitched by a couple of people that raising
taxes killed off the previous dynasty. Once they bought into that and once
the moral commandment becomes a pragmatic self-survival kind of common
sense, that's when the entire behavioral foundations of the Qing political elite
completely shift against taxation. And so for the next 200 - 230 years
you operate under a constant living fear of raising taxes too high that the peasants
are gonna kill you off.
So how does this finally come to an end at the end of the Qing?
At the end of the Qing the state runs into an extremely severe fiscal crisis
for a number of reasons. It keeps losing battles to foreign powers.
There are again a number of other famines, but the main problem was losing battles
to foreign powers, especially losing battles to the Japanese.
Back then if you lost the war against the foreign nation, the foreign nation usually
charged you massive amounts of indemnities. You saw this in
the Versailles Treaty after World War I and that was an argue of the main cause
for the rise of the Nazi Party in Germany. So China got slapped with massive
war indemnities that it owed to various kinds of foreign powers --
Japan, England, France. And by 1900 because of all that it had gone completely
bankrupt. Once the state finally goes completely bankrupt, despite all this
incredibly strong fear of peasant rebellion, it has to raise taxes no matter what,
otherwise it's going to kill itself. So finally it raises taxes. And guess what,
because it had kept the tax rate, the absolute volume of taxes
completely unchanged, for 200 years, during that same period, the economy
and the population both tripled. Taxes were unprecedentedly low in Chinese history
at this point in time so if you raise taxes, well I mean the peasants won't care so much.
If you raise taxes from 1% to, I don't know, 2%, well yeah they're going to grumble
but honestly it's not that big a dent in their overall financial circumstances.
So after 1900 when they're finally forced out of complete desperation to raise taxes
they finally discovered, oh my god, we can raise taxes and not have
the peasants kill us. So that sets off a series of tax hikes going past the end
of the dynasty after 1912, going into the republican era, going into the PRC,
where the tax rate on agriculture goes from 0.8% in 1900 all the way up to 12-13%
in the early PRC. So once the government finally realizes that contrary to this
dominant Qing political ideology of low taxes, we can actually raise taxes
and not die from it, once it realizes it can do that it gets the taste of things
and just never stops doing it all the the way across most of modern Chinese history.
Until by the mid-20th century, by the mid-PRC like by the 1960s, China actually
had one of the most aggressive agricultural tax regimes in the entire world.
The interesting thing is because of that raising taxes, because of the fiscal
surplus that brought to the Chinese state, China was actually finally
able to industrialize in the 1950s and '60s. So up until that point you starve yourself
of taxes, you treat your people leniently and nicely, you don't raise taxes,
everything's fine. But you can't industrialize because the state's too small.
Once you finally, after the early PRC, once the communist regime completely
ditches all caution to the wind and thinks we're just gonna tax the hell out of
these peasants, we're gonna tax them up to the point where they're nearly
on the verge of breaking, we're gonna maximize our fiscal income,
we're gonna maximize the size of the state because we really want to industrialize.
It turns out they can actually get away with that. And even despite the fact that
that kind of policy was arguably partially responsible for massive peasant suffering
during the Great Leap Forward, all kinds of peasant famines in the early PRC,
despite all that the peasants still don't rebel. Because honestly rebellion
is a hugely costly thing for peasants. Like why would you want to risk
a 50% chance of death in a rebellion when you have any reasonable shot
of staying alive as usual peasants. Peasants don't rebel unless they're
completely desperate. So it turns out you can tax them really heavily.
Once you do that though that finally gives the state the fiscal resources
to industrialize. So that process, the discovery that you can actually tax
and not die, the constant rewriting of the elite perception of what is
the fiscal limitation of the governing economy throughout the early 20th century,
that entire process fundamentally changes the government's imagination of what role
the state should actually play in the economy. Because throughout
the entire Qing, because the state is constantly shrinking vis-a-vis the economy,
it has no administrative capacity, has very little economic capacity,
the state basically plays no role. The economy self-regulates.
Everything is conducted on a market to market basis. Because of that
and a set of other reasons that we can talk about later, there is very little capital
accumulation in the overall economy. Finally once you start to change all that,
once you start to more aggressively tax, the state has the fiscal resources
to finally do something to the economy. And once it starts doing that and having
some moderate success, even in the pre-PRC republican era, of seeing returns
to that, seeing that the economy slowly beginning to industrialize, seeing China
slowly not quite pull even but pull closer to first world countries in terms
of economic capacity, that fundamentally shifts the entire policy orientation
of Chinese elites. And so in much the same way that the Qing
response to Ming collapse was never again, like never again
will we raise taxes so aggressively, the republican and the PRC response
to the Qing is also never again. Never again will we stick ourselves
with that weak a state apparatus. Look what it gave us.
It gave us a century of suffering, it gave us multiple decades of humiliation
and constant military defeats at the hands of foreign powers.
Never again will we actually put ourselves through that.
So what do we do now? The path towards national prosperity,
the path towards military power, the path towards modernization
runs through the state. The Chinese belief in the state, this incredibly strong
Chinese elite belief in the state playing the major role in the economy
starts off in the early 20th century as a backlash against what they perceive
to be Qing weakness. And it was, unlike the Ming perception, this was
an accurate perception. The Qing had indeed suffered because of the weakness
of its state. China's international standing had indeed plummeted and completely
caved because of the weakness of the Chinese state. And so once they
start to finally realize this the Chinese economy does start to take off
a little bit again. But more importantly as a matter of political ideology,
it completely locks the Chinese elite for the next century or so in this mode
of thinking that the state has to be king in the economy. And that precedes
socialism, it precedes communism, it's a constant theme of the Chinese elite
throughout the entire 20th century. It continues even today.
Because honestly right now if you ask the Chinese government honestly,
Xi Jinping's policy makers, if you ask Liu He, how much do you actually believe
in state planning? Well no one really believes in planned economies
according to the socialist ideal. None of these guys are really socialist
or communist in the way that they understand the economy.
But at the same time they remain completely committed to a statist notion
of the economy. To give you guys a sense of how this plays out in current affairs,
no matter what the Trump administration does China is never gonna give up
its industrial subsidies to firms. It's never gonna give up a state-run,
state-driven industrial policy. It's never gonna allow the Chinese economy
to completely be a relatively unregulated market economy in the American,
or perhaps I don't know Indian, model. That belief in the prominence of the state,
of the critical importance of the state to the economy is so deep in the Chinese
elite political psyche that honestly it would take something catastrophic,
perhaps like a deep deep recession that might overthrow the party,
to actually overturn that. So this is the way that intellectual
and political paradigms lurk, operates. As a general matter, human political
ideology is not continuous. No matter what scholars want you to think,
politics, ideology, your beliefs about how the world works as a matter of general
social and political belief, they don't operate in a continuous
rational fashion. No one is constantly reassessing their beliefs based on
empirical evidence. What tends to happen, the only way you get major paradigm shifts
is through major crises. Ming collapse, the collapse of the Qing, the collapse
of the imperial system. It would take something of that scale,
some fundamental economic catastrophe, the likes of which we have not yet seen
in modern Chinese history to probably force the Chinese elites
out of this statist mode of thinking that they entered after the Qing collapse.
And so that's I think why you should care about this part of Chinese history
even if you don't really care about Chinese history in general because this is the part
of Chinese history that directly explains one of the deepest political instincts
of the modern Chinese political elite when it comes to economic policy-making
and when it comes to designing the overall shape of the party state
or the Chinese economy.
So I hope I've at least made a reasonable case of that to you guys
and for now let's say we have 35 minutes of questions.
Okay, great. Thank you.