The Economic History of China: From Antiquity to the Nineteenth Century by Richard von Glahn
The Economic History of China is a survey of the economic outcomes and development in China throughout the past three millennia: from the Bronze Age (1045 bce) to the fall of the Qing dynasty (1912 ce). Richard von Glahn has arguably produced the best such comprehensive survey in English, and it is a must-read for scholars interested in Chinese economic history, the Great Divergence debate, and comparative economic history. This work challenges the false-yet-persistent notion that the Chinese economy was suffocated by an “oriental despot” state and its conservative inhabitants resisted markets. Instead, von Glahn depicts a dynamic market economy in which the state promoted markets and economic agents pursued market opportunities. China’s technology, economic activities, and institutions constantly evolved in response to policy and market prices.
Another goal of this book is to establish the historical continuity of many of China’s economic and political institutions. Von Glahn promotes interpretations of such institutions in light of the historical contexts and circumstances in which they arose and, at times, compares them with contemporary European institutions. He maintains prudent objectivity on issues that are subject to active debate by presenting a wide range of scholarly opinions.
This ambitious volume examines the economic and political history of preimperial China (prior to 222 bce) and of every imperial [End Page 576] dynasty from the Qin (221–206 bce) to the Qing (1644–1912). One of its key strengths lies in its extensive coverage of the preimperial period and the early empires of the Qin and Han. This period receives relatively little attention in the currently fashionable quantitative economic history literature due to the scarcity of numerical data. Von Glahn draws instead on qualitative historical sources and archaeological findings to fill in some missing pieces in our comprehension of early China.
Chapters 1 and 2 of The Economic History of China reconstruct the political and economic landscape of the Zhou dynasty by masterly combining evidence from inscriptions, habitation sites, and classical texts. The chapters then discuss the patrimonial and ritual elements of the Western Zhou administration (1045–771 bce), examine China’s transformation from a patrimonial to a bureaucratic state between 770 bce and 221 bce, and present evidence regarding industrial production, circulation of money, and city structures. The discussion highlights that during the Warring States period, important and persistent components of the Chinese political order emerged. Among these were bureaucratic institutions and the Legalist and Confucian conceptualizations of the ideal state. Similarly, it was then that the conjugal household became the basic unit of production, taxation, corvée labor, and military conscription.
Chapter 3 analyzes the impact of this institutional legacy during the Han empire (202 bce–220 ce), and chapter 4 examines changes in farming techniques that were important for the transition from agricultural production based on family farms to production based on a manor system. In particular, the policies of Emperor Wu of Han 漢武帝 (r. 141–87 bce) favored large estates and promoted agricultural techniques that “required substantial investments in tools, livestock, and water control” (p. 133). The discussion does not mention that at this time regulatory restrictions on households’ land ownership were abolished.1 The rise of wealthy landowners negatively influenced the authority of local state officials and was a main factor causing the period of disunion from 220 to 589 ce. Families holding large estates gained the power to select state officials. Powerful magnate families [End Page 577] became hereditary officeholders through the end of the Tang dynasty (ca. 907 ce).
Chapter 5 focuses on political stabilization and state rebuilding, particularly during the Sui (581–618) and the Tang (618–907) dynasties. It first discusses how the institutional reforms undertaken by the Northern Wei dynasty (386–534) facilitated the reunification of China by the Sui in 589. The most important reforms include the equal-field system and the garrison militias, which lasted through the early Tang period.
Chapter 6 examines the Tang–Song economic transition from 750 to 1250. After the devastating An Lushan 安祿山 rebellion, the Tang lifted its restrictions on the purchase and sale of land and instituted a progressive tax on the land in order to secure fiscal income, leading to privatization of landholdings and growing inequality. At the same time, improved cultivation techniques and the rise of the rice economy in southern China led to population growth, commercialization, and monetization. This chapter also examines the fiscal and economic policies that the Song emperors adopted in response to the military and administrative challenges they faced. For example, their response to the threat from the north led to the creation of state monopolies on commodities such as salt, tea, and liquor.
Chapter 7 presents a synopsis of economic development and fiscal reforms from 1127 to 1550. Trade and commerce continued to flourish in the Jiangnan region, leading to development in financial and credit services and the use of private contracts to organize business relationships. Although a wide range of new taxes were imposed to finance national defense, no evidence suggests that these taxes caused sizeable disruptions to the private economy. Particularly important were fiscal reforms during the Ming dynasty (1368–1644), which introduced new features such as taxes paid in kind (instead of in cash) and the intra-county lijia 里甲 system of taxation. A low land-tax rate caused the state to “[generate] a low level of income compared to the Song” (p. 287).
Chapter 8 focuses on the economic revival during the late Ming and the development of markets, business partnerships, and financial services during the Qing dynasty. The discussion builds on multiple data sources to depict the economic conditions in China during the eighteenth century, covering aspects such as tenancy systems, land-holdings, [End Page 578] coin production, grain prices, and trade networks. It crucially identifies corporate lineages as important economic actors that facilitated coordination of productive and commercial activities. The rivalry between Shanxi and Huizhou merchants and the case of the Wanquantang 万全堂 medicine shop vividly illustrate the details of business transactions, the trading of shares, the separation of investor and managerial roles in lineage businesses, and the clans’ growing engagement in different sectors of the economy.
Chapter 9 engages the Great Divergence debate. It first surveys studies that compare the Chinese and European economies of the seventeenth and eighteenth centuries. There has been little scholarly consensus on issues of economic performance, agricultural productivity, and household income. The chapter makes painstaking efforts to objectively evaluate competing studies. It carefully delineates underlying assumptions, evaluates merit and drawbacks, and shows that some conclusions—such as the involutionary model of economic behavior—have limited applicability. The broader conclusions are that “efforts to analyze the size and structure of GDP in premodern China can only be regarded as heuristic exercises” (p. 358) and that the most promising approach, as suggested by Kenneth Pomeranz, is “comparing the most advanced economic regions of roughly equal size” (p. 359) from both continents. China fell behind in the nineteenth century due to internal revolts, imperialism, and the failure of political reforms (p. 397).
Von Glahn’s remarkably extensive survey of Chinese economic history sums up decades of research and thereby highlights how it can be further advanced. The survey implicitly adopts the currently dominant social-scientific theory of economic development. This theory asserts that economic development is the default in the sense that it would spontaneously occur unless derailed by either anarchy, a despotic state, or hostile culture. Accordingly, von Glahn’s book emphasizes the important role of the Chinese state in maintaining order, its nondespotic nature, and the promarket attitude of premodern Chinese economic agents. In other words, China’s political economy and culture were conducive to development.
Clearly, order, a nondespotic state, and promarket culture facilitate development, but they are insufficient to bring it about. Development predicates on the incentives provided by the social organization [End Page 579] of cooperation—namely, the basic social unit whose members feel the moral obligation to contribute to it and who are therefore responsive to social pressure to do so. The social organization of cooperation impacts economic and political outcomes because it determines who can effectively cooperate with whom, as well as why and for what purpose.2 In particular, the social organization of cooperation matters for development because it determines incentives with respect to the provision and governance of public goods and social service. Due to the comparative advantage of these organizations in supporting cooperation, they also influence choices by the state. In choosing policies, states take into consideration the prevailing social organization of cooperation.
Did premodern China and Europe differ in their social organization of cooperation? As is well known, during the last millennium, clans became important units of cooperation in China while corporations assumed that role in Europe. Greif and Tabellini provide a recent contribution from the perspective articulated here.3 They combine data, qualitative historical evidence, and a formal model to trace the rise of the clan and cooperation, both modeling their self-enforcing and self-reinforcing nature and reflecting on their impact.
The Chinese clan is best defined for the purpose here as a kinship group composed of (some or all) the households of patrilineal kin who trace their origin to a (self-proclaimed) common male ancestor. Although clan members live in many households, they share a genealogy delineating their relations.4 The clan was based on the “idea of self-government and mutual reliance for the benefit of the group” and it was cemented by strong moral obligation toward kin.5 Clans provided their members with public goods (such as dispute resolution and [End Page 580] enforcement mechanisms) and social services (such as education and poor relief). Interactions among members were generally frequent, continuous, and multidimensional, and these qualities reinforced the human disposition to be altruistic toward kin. More generally, moral obligations to kin were enshrined in Confucianism and promoted by the family, by social custom, and by law. Kin morality and clan mores were supported by law because the Chinese state increasingly relied on kin-based organizations to provide social safety nets and to reduce administrative costs.
In contrast, clans played a marginal role in Europe over the last millennium while corporations became central. Corporations are “intentionally created, voluntary, interest-based, and self-governed permanent associations.”6 Corporations emerged in Europe circa the tenth century and subsequently became the epitomizing unit of cooperation. Corporations were formed in the pursuit of many interests. Some corporations (such as city-states, self-governed communes, and parishes) governed a territory and advanced their collective interests within it, some (such as guilds and mutual-aid societies) served the specific economic and social needs of their members, and others (such as universities and organizations to assist the poor) were established to provide a specific public good or service.
Moreover, the medieval Church’s emphasis on universal moral obligations fostered the rise of corporations in Europe. This universal moral obligation was broad in scope and did not depend on family ties. European morality, however, was also weaker compared to the Chinese moral obligation toward kin that was fostered by Confucianism and reinforced by the universal human disposition to care for genetically related individuals. Corporations therefore found it necessary to rely on intracorporation legal enforcement to motivate members to contribute to public goods.
Does it matter that China and Europe had different social organizations of cooperation? As von Glahn’s survey reflects (esp. chap. 8), the literature so far has mainly focused on a narrower question: Were the clan and the corporation—as business enterprises—similarly responsive to [End Page 581] changing market conditions during the late Qing period?7 The broader questions are yet to be rigorously addressed. Did the clan and corporation imply distinct patterns of economic interactions, institutional development, and the activities and organization of the state? Was this difference a factor in the Great Divergence?
The promise of addressing these questions by considering the social organization of cooperation is evident from some recent contributions. For example, Taisu Zhang examines the impact of clans on the development of agricultural capitalism in China.8 He argues that the clan’s hierarchical nature (specifically, respect for elders) prolonged the practice of conditional land sale (dianmai 典賣). The persistence of conditional sales curtailed the spread of agricultural capitalism in China. By contrast, England’s development was fostered by the elimination of similar practices that were part of its feudal heritage.
More generally, the clan and the corporation seem to have influenced the evolution of distinct legal systems in China and Europe. In China, the strong intraclan moral obligation and limited social mobility, due to the innate membership rule, implied relatively low gain from investment in legal (coercive) enforcement in noncriminal matters. In Europe, the opposite held, due to the weaker intracorporation moral obligation and the higher intercorporation mobility associated with general morality.9
Consider, for example, the distinct development of financial markets in China and Europe. As is well known, the development of financial markets was slower in China than in Europe. In China, as late as the nineteenth century, credit in long-distance trade was largely personal and often extended via membership in a clan network. Conflicts were generally mediated in the shadow of the law. In Europe, from the late medieval period, impersonal credit was routinely extended by long-distance traders, and disputes were regularly resolved in court. [End Page 582] Greif and Tabellini consider the role of the corporation and the clan in leading to these distinct paths of financial development.10 Although clans and corporations formally regulated the activities of their members and adjudicated disputes, the relatively weaker moral obligation within corporations required them to rely on legal enforcement.
In Europe, since the medieval period, territorial corporations (communes) developed internal court systems to regulate the relations among their members. These intracommune legal systems also fostered impersonal exchange in late medieval Europe based on the community responsibility system. This institution enabled a trader from one community to credibly commit to his contractual obligations in impersonal exchange with a member of another commune, even when their relations were not expected to repeat in the future and past personal conduct was not known to the parties involved. The community responsibility system relied on the principle that if a cheater’s communal court did not administer impartial justice in a case involving an alien, the alien’s community court was expected to retaliate by holding each and every member of the cheater’s commune liable. Thus, failure to adjudicate impartially implied losing the value of future gain from trade for all members of the community.
Why did a similar system not emerge in China to support interclan impersonal exchange? Clans were clearly concerned about their collective reputation. Clans’ regulations in general specified that “a clan should always watch its reputation by preventing its members from harming outsiders and by refusing its offenders clan protection.”11 At the same time, the moral obligation to kin seems to have limited the credibility and effectiveness of intraclan punishment for interclan transgressions. “The punishment of a member who misbehaves against a non-clan member is usually oral censure,” while “the punishment for siding with outsiders in an aggression against fellow clan members is, however, much more severe. . . . the group interest is placed higher than [interclan] community solidarity.”12
The clan in China and the corporation in Europe have also influenced the functions and organization of the state in these regions. The [End Page 583] community responsibility system illustrates how the state became involved in legally supporting impersonal exchange characterized by separation between the quid and the quo. The system was based on a community reputation and the ability to verify one’s communal affiliation. The growth in the number, scale, and diversity of these communities and the increasingly easier intercommunal mobility undermined the system. Seeking options, the state, at least in England, provided an alternative based on collateral, individual liability and enforcement by the state. The Chinese state did not have the need to do so, given the efficacy of long-distance trade based on intraclan relations.
More generally, European territorial corporations, such as self-governed cities and English rural parishes, became integrated into the administration of the state, and it was through them that the middle class gained political voice, power, and rights. In China, although the state relied on clans for various purposes, they were not integrated into the administration of the state.13 The economic implications of this distinction in the structure of the state were probably large but are yet to be examined. Similarly, the role of distinct social organizations of cooperation in scientific and technological development has only begun.14
In sum, Richard von Glahn’s The Economic History of China is a book of immense importance as it offers the most comprehensive overview of economic development in China to date, and it is likely to remain as such for years to come. With a balanced mix of historical accounts, institutional details, theory, and quantitative evidence where possible, the author presents a compelling depiction of a long-lived [End Page 584] empire that is full of complexities, heterogeneities, and dynamism. The extraordinary range of studies cited in the book acknowledges that its accomplishments are inseparable from the collective wisdom of generations of scholars.
Comparative economic history is a young, growing, and important field that devotes much effort to quantitative evaluations of economic performance, political economy, and markets. It is now possible to build on its many accomplishments and to examine the institutional, social, and cultural foundations of past economies. In this review, we highlight the benefit of conducting such an extension through a comparative analysis of the predominant forms of social organization whose moral and social foundations give them a comparative advantage in supporting cooperation. We suggest considering further the multiple implications of the distinct social organization of cooperation in China and Europe, namely, the clan and the corporation respectively. The study of social cooperation presents a unique and powerful perspective for understanding the driving forces behind economic development and intersocietal differences in economic growth. Von Glahn provides a solid basis for such comparative analysis by articulating the details of China’s economic history.
1. Wang Aiqing 王爱清, Qin Han xiangli kongzhi yanjiu 秦汉乡里控制研究 (Jinan: Shandong daxue chubanshe, 2010), p. 163.
2. Avner Greif, “Contract Enforceability and Economic Institutions in Early Trade: The Maghribi Traders’ Coalition,” American Economic Review 83.3 (1993): 525–48; Avner Greif and Guido Tabellini, “Cultural and Institutional Bifurcation: China and Europe Compared,” American Economic Review 100.2 (2010): 135–40. See also Avner Greif, “Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies,” Journal of Political Economy 102.5 (1994): 912–50; Avner Greif, Institutions and the Path to the Modern Economy: Lessons from Medieval Trade (Cambridge: Cambridge University Press, 2006).
3. Avner Greif and Guido Tabellini, “The Clan and the Corporation: Sustaining Cooperation in China and Europe,” Journal of Comparative Economics 45.1 (2017): 1–35.
4. Greif and Tabellini, “The Clan and the Corporation.”
5. Hsien-Chin Hu, The Common Descent Group in China and Its Functions (New York: Viking Fund, 1948), p. 13. The definition above is broader than the conventional one. It does not differentiate between kinship groups with and without property. The literature on kin-based organizations in China is vast; see Greif and Tabellini, “The Clan and the Corporation,” for discussion and references.
6. Avner Greif, “Family Structure, Institutions, and Growth: The Origins and Implications of Western Corporations,” American Economic Review 96.2 (2006): 308.
7. See also Teemu Ruskola, “Conceptualizing Corporations and Kinship: Comparative Law and Development Theory in a Chinese Perspective,” Stanford Law Review 52.6 (2000): 1599–1729.
8. Taisu Zhang, The Laws and Economics of Confucianism: Kinship and Property in Pre-industrial China and England (Cambridge: Cambridge University Press, 2017).
9. Avner Greif, “Coercion and Exchange: How Did Markets Evolve?,” in Institutions, Innovation, and Industrialization: Essays in Economic History and Development, ed. Avner Greif, Lynne Kiesling, and John V. C. Nye, pp. 71–96; Greif, “Cultural Beliefs,” p. 942; Greif, Institutions and the Path, chap. 9; Greif and Tabellini, “Clan and the Corporation,” pp. 47–48.
10. Greif and Tabellini, “Clan and the Corporation,” pp. 47–48.
11. Hui-chen Wang Liu, The Traditional Chinese Clan Rules, Monographs of the Association for Asian Studies, no. 7 (Locust Valley, NY: J. J. Augustin, 1959), p. 152.
12. Hui-chen Wang Liu, Traditional Chinese Clan Rules, p. 152.
13. For example, William T. Rowe, “Ancestral Rites and Political Authority in Late Imperial China: Chen Hongmou in Jiangxi,” Modern China 24.4 (1998): 378–407.
14. Some recent works include Avner Greif, Murat Iyigun, and Diego L. Sasson, “Social Institutions and Economic Growth: Why England and Not China Became the First Modern Economy?” (working paper, November 12, 2012), available through the Social Science Research Network (SSRN), http://dx.doi.org/10.2139/ssrn.1783879; Avner Greif, Murat Iyigun, and Diego L. Sasson, “Social Organizations, Risk-Sharing Institutions, and Economic Development,” in Institutions and Comparative Economic Development, ed. Masahiko Aoki, Timur Kuran, and Gérard Roland (London: Palgrave Macmillan), pp. 48–63, available at https://link.springer.com/chapter/10.1057/9781137034014_3; Klaus Desmet, Avner Greif, and Stephen L. Parente, “Spatial Competition, Innovation and Institutions: The Industrial Revolution and the Great Divergence” (working paper, February 28, 2017), available through SSRN, http://dx.doi.org/10.2139/ssrn.2927147. See also David de la Croix, Matthias Doepke, and Joel Mokyr, “Clans, Guilds, and Markets: Apprenticeship Institutions and Growth in the Preindustrial Economy,” Quarterly Journal of Economics 133.1 (2018): 1–70; Joel Mokyr, A Culture of Growth: The Origins of the Modern Economy (Princeton, NJ: Princeton University Press, 2016).