Introduction

China has developed a unique political and economic model with Confucianism in its long history of civilization. In this model, the state assumes responsibility for economic management, and the economy has always been a part of the country’s overall governance. This article will first analyze the guiding ideology of the Confucian political economy, and then introduce how the traditional political and economic model of ancient China operated under this idea; finally, it will analyze the practical significance of this ideological legacy for contemporary China.

Guiding Ideology of Confucian Political Economy

Confucianism’s doctrine of accession to the world is based on the values of public ownership. Guided by this core value, Confucius stated that the essence of Confucian political economy thought is to achieve social equity (Yao, 2000:56). For example, Confucius believes that the way to achieve social stability is not to increase the wealth of society but to whether society can produce a fair mechanism that benefits every social individual (Yao, 2000:32-34).

In the context of fairness theory, “fairness” is the meaning of equality, and it can also refer to the fair ratio between an exchange, income, and expenditure, output, and return. This shows that Confucianism does not advocate living in poverty or curbing the number of people and goods. On the contrary, in “the Analects of Confucius”, Confucius proposed to support the people (reproduction and prosperity), enrich the people, and teach the people (Yao, 2000:26-30).

That is, what Confucius wants to express is that even if the country is poor, there will still be problems of injustice, and even if the country has a small population and very few goods, there will still be problems of discord and instability. In other words, equity does not come from “public poverty”, and harmony and stability cannot be achieved with a small population. Regardless of the size of the population, the key issue is how to maintain fairness and how to create stability.

In a practical sense, if we want to maintain stability and fairness, the country can only achieve it by developing the economy. Actually, the level of human economic development is gradually developed with the development of science and technology.

The level of technology is determined by the level of science and technology and productivity, while the equality and disparity are determined by the political and economic ownership system and the distribution system. The political economics thought of Confucius’ social equity is the clear political economics guiding thought of the Confucian mainstream of Chinese traditional culture.

The original Confucian political economy system revolves around the core values of public ownership and social ideals. In the economic system, in order to realize the social ideal of public ownership, Mencius proposed the principle of public ownership of state land to avoid privatization by bureaucratic interest groups (Yao, 2000:71-75). For instance, the JinTian system is an economic land system designed in the early days of Confucianism. This system evenly distributes national land to the people for farming and collects a certain amount of land rent as government operating funds (Yao, 2000:178).

Correspondingly, in the design of the political system, Confucianism takes the monarchical destiny as the core, and monarchy as the centralized representative of the scattered individual power of the people restricts the power of the bureaucracy and develops a three-outline, five-permanent, and eight-ethics etiquette legal system (Yao, 2000:30-34). The Confucian political system itself serves the maintenance of the Confucian economic system and is the guarantee of the state’s political system of social equity economic guidance.

Economic Management Operation under the Thought of Social Equity

 Under the concept of social equity, Chinese civilization has never regarded the economy as an independent field. To be precise, the economy has always been an effective means of state governance. The importance of the economy to the governance of the country is discussed in the ancient Chinese economic literature, “Guanzi” (Rickett, 1998). During the Spring and Autumn Period and Warring States Period, a phenomenon of “school ideological explosion” appeared in China. There was no objection to the economic role of the government.

Each school had different opinions on the degree of the relationship between the government and the economy (Yao, 2000:49-52). Since the Han Dynasty, China has basically reached a consensus on the government’s economic responsibility and how the government assumes this responsibility.

According to today’s view, since the Han Dynasty, ancient China has been implementing a “national capitalism” to perform government economic functions under the guidance of Confucian social equality.

In reality, China has always had a large structure of three-tier markets or three-tier capital coexistence. The top-level is always state capital; the bottom level is free private capital, like today’s small and medium-sized enterprises; there is also an intermediate level, which is the part of state-civilian interaction and cooperation.

In this structure, some areas related to the pillars of the national economy must be dominated by the state, but a large amount of economic space will be released to private free capital; and at the middle level, the government and private capital actively interact with each other, with cooperation and competition.

Through this three-tier capital structure, the government maintains a balance with the market and fulfills its responsibility for economic management. In China’s long history, only four short periods have gone to the extreme of economic nationalism, that is, the country completely dominates and the market is almost eliminated: the first is the period of Wang Mang’s reform between the Han Dynasty, It was the period of the Anshi Reform of the Song Dynasty, the third was the reform of Zhu Yuanzhang in the Ming Dynasty, and the fourth was the planned economy period before reform and opening up (Yao, 2000:81,105,178).

Except for these four periods, China’s state-market relations are basically relatively balanced. It should be noted that even in these four periods, the starting point of the government’s monopoly economy is still to conduct economic management more effectively and promote economic development. It is consistent for governments to assume responsibility for the development and social equality.

The above-mentioned three-tier capital coexistence structure also determines that in China, the market must obey the regulations of state governance. The market exists, but it is not a completely free market like early Western capitalism, it is a regulated market. Although in modern Western countries, markets are regulated, capital is still dominant, and even the government must obey market principles.

In this sense, China’s best ancient economics book is “Guanzi”. If people want to explain China’s economic history for thousands of years, “Guanzi” is more effective than any western economic theory. Although “GuanZi” is not from Confucianism, Confucian culture has referenced a lot of economic ideas in the book. For example, Western economics talks about supply and demand, but supply and demand are mainly regulated by the market.

Keynesian emphasized that the government must also play a role in this process, but the market is still the main body. “Guanzi” does not talk about “supply and demand”, but rather “priority”. And this concept of priority emphasizes the right of the country to prioritize resources in economic activities. The role of regulating “priority” and achieving social equity is the government, not the market (Rickett, 1998). Under the Confucian political and economic thoughts, universal consciousness is that it is the government’s responsibility to promote economic development. Although there are different views on how the government promotes economic development, no one doubts the economic responsibility of the government. One consensus is that developing and achieving social equity is the last word.

This has also led to the emergence of economic governance in the Chinese dynasties, where the country completely controlled the economy and few social self-regulation. In the management process, the government attaches great importance to agriculture and suppresses business. The management logic considers that the majority of the Chinese population is farmers, and a stable and bumper harvest in agriculture is a prerequisite for national stability to address the basic needs of a large population.

However, commerce cannot meet people’s basic needs. On the contrary, if strong business development will lead to a large number of people doing business, agricultural production in a stable society will shrink due to insufficient population, which is not conducive to social stability and will lead to a disparity between the rich and the poor (Yao, 2000:266-270). This result is not what the Confucian ideal of social equality would like to see.

Legacy of Confucian Political Economy

The greatest legacy left by traditional Confucian political economics is China’s political values of public ownership. It is the guidance of this kind of values that all previous Chinese governments take economic development as the responsibility of the government, which will not only not give up, but also be more consolidated, because this is the necessary condition for realizing social equity under the current situation (Yao, 2000:279). All are aimed at achieving social equity, but the goal is to achieve the goal of balancing the three-tier markets mentioned in the foregoing.

Achieving this balance requires joint efforts at all levels of property rights, the rule of law, and policy. For property rights, the definition and protection of private property rights are far from enough. The property rights of state-owned enterprises, state-owned and private cooperation, and private property rights also need to be clarified. For the rule of law, the law must be equally applicable to three levels of capital. In this regard, there is an urgent need to translate the protection of existing politics and policies into the protection of the rule of law. For policy, the government needs to support and develop different capitals when necessary according to the development of three-tier capital, especially the imbalance.

It is necessary to further study and clarify which areas need to be dominated by state-owned enterprises, which areas can be largely transferred to private enterprises, and which areas are suitable for cooperation between the government and private enterprises. The government needs to promote state-owned enterprises to pursue their own development capabilities, rather than through existing methods (such as monopoly, policy rent-seeking, etc.). The government needs to give more power to the society itself, cultivate the development ability of the society itself, and make the society have the ability to balance the power of capital, rather than just rely on the government to balance (Yao, 2000:160-165).

Conclusion

 Traditional Chinese Confucian political economy emphasizes the simple social concept of social equity, which advocates that the government plays an economic role to manage the economy to achieve social equity, which is essentially different from the separation of politics and economics in the West. On the basis of this concept, the idea that the government has the responsibility to develop the economy and realize social equity has become the core of China’s national ideology. This is why the ancient Chinese central government attached great importance to agriculture.

In the pre-industrial society, the development of agriculture meant the satisfaction of social needs and was the source of national and social stability. Meanwhile, the collapse of a dynasty began with the decline of agriculture. The legacy left by the Confucian political economy in China is to provide the government with the ideological and institutional basis to realize the ideal Datong society in Confucianism. And this idea of social equality as the core provides a reference for China’s development.

At present, the only way to achieve economic development and realize the concept of public ownership is to solve the relationship between the three levels of capital (i.e. top-level capital, bottom-level capital, and intermediate capital). The ruling party can continue to transform around the legacy left by the traditional Confucian political economy, with economic development as the core, explore new legitimacy basis; and at the same time, reshape China’s social structure and promote social stability through economic development.

Reference

Rickett, WA, Guanzi: Political, Economic, and Philosophical Essays from Early China, Princeton University Press, 1998:26-30,32-34,49-52,56,71-75, 81,105,160-165,178, 266-270,279

XinZhong Yao, An introduction to Confucianism, Cambridge University Press, 2000