Medieval Chinese Economic Progress: Acceleration and Stagnation
This is a transcript of a talk I gave at the Progress Conference at Lighthaven in 2024, lightly edited for clarity and readability. I’ve identified audience speakers where I’m able to and they’ve given permission. The audio recording is available here.
Thanks to Roots of Progress’s Jason Crawford and Heike Larson for hosting, to the attendees for asking illuminating questions, to Eli Tyre for recording, and especially to Jean Colson and Oberon Dixon-Luinenburg for accompanying me in the study group where I conducted most of this research.
Ben
Hello everybody, thank you for coming. I'm Ben Landau Taylor. I work at Bismarck analysis. We're a consulting firm that does a lot of institutional analysis. How does this company work? How does this government agency work? And I also spend a lot of time studying society and especially industry to try to figure out how it works.
Medieval China is a really interesting piece of that. I consider it to be the most understudied period in history, because you have this centuries-long period of very rapid technological and industrial progress, massive increases in wealth, to an extent never seen before in human history, basically the second biggest build-out of this stuff that's ever happened. It goes from about 600 to 1200 AD, and then it slowly peters out, and by 1400 is just completely stopped, and then you get basically 500 years of stagnation, and very little change in technology and wealth and so forth, until the Europeans show up, having by then gotten way ahead of the Chinese despite having started very far behind.
As someone who lives in a civilization that has been industrially expanding for several hundred years, the fact that the only other time this happened, it eventually stopped, is something that I find existentially horrifying. So I've been looking into that to try to understand what was going on. And this will largely be about my present picture of that.
I've talked about there being a lot of progress. What do I mean in particular? There’s some famous, easily understandable technologies from this period. This is when you see the invention of gunpowder, and its first use as a military weapon. You don't see anything like the sort of sophisticated artillery that the Turks later build, or the handguns that come out of Europe, but all of that stuff traces back to the Chinese invention of gunpowder and their crude rockets in this time. This is when you see the compass first start being used for navigation, which is a huge deal for ocean-going commerce.
What’s most impressive to me is the canal network, where they build this incredible, incredible, basically an interstate highway system of canals across the entire country. The most important is the Grand Canal, which connects the Yellow River and the Yangtze River. In my opinion it’s the most impressive human construction before the industrial era. There is also this massive, massive, massive network of subsidiary canals, which are the backbone of agriculture and the backbone of commerce, that connect pretty much all of the major population centers in China. You'll be hearing a lot more about the canals.
Is China unified at this time, or is it a bunch of little tiny states?
Ben
Both at different periods. It's unified for most of it. Later I'll jump into a very brief overview of a thousand years of political history. It always seesaws, and this is no exception.
You also see a massive increase in population. Estimating population is always quite hard, especially when it's a long time ago, so don't take these as super confident. But according to the estimates I've seen, in 600 the population was about 45 million, and in 1200 about 140 million, so basically tripling over quite a long period of time.
There was a massive increase in wealth. You see a lot more trade, and more use of tea and oil and luxury goods like that, often shipped from quite a long way. Robert Hartwell estimates that the per capita iron production goes from half a pound in 806 to three pounds in 1078, so a sixfold increase. For comparison, he estimates in 1700 in Europe, it was about four pounds, so a little bit ahead of where the Chinese were in about 1100. To oversimplify, you will see that most European technology catches up and surpasses medieval Chinese technology around the 1600s and early 1700s. There are some exceptions, because it's not all uniform.
You see massive increases in the amount of arable land, just huge amounts of terraforming, to take random swamps or deserts and turn them into incredibly productive rice farms. A lot of new rice varieties are introduced, with higher yields or growing cycles better suited to the climate, and this ends up being a big factor in the increasing population. There’s better mechanical sophistication, especially for hydraulic technology. There’s many other things, but this will give you a bit of a sense.
What's the most sophisticated technology that the average peasant would have interacted with?
Ben
Probably a pump for irrigation of their farms. They had these pedal-powered pumps for raising water, either over the next dike or drawing it out of the well.
Eli
Okay, so I should be thinking most of the population is agrarian peasants, and there's these sophisticated supply networks, basically, right?
Ben
Yes. They are paying their taxes via these canals, they're growing their crops with hydraulic tech that require the massive capital investment in the canals, they are importing salt and maybe some tea and oil and wood for the coffin for their father, all of these things in a way that they would not have been able to afford in 400 AD.
Eli
Okay, cool.
Do you know what the urbanization percentage is?
Ben
Not off the top of my head, and it's going to vary over this period, but pretty much all of the major cities trace back to either earlier than this, or to this period. Many of the Yangtze cities, especially, were established in this period. So presumably it’s increasing, but I don't have those numbers.
And then all this slowed down, especially after the 1200s.There's not a super sharp point when it abruptly stopped. It was more of a gradual thing. And then by the 1400s we can say that it was definitively over. Every historian I've read is like, yeah, 1400 to 1900 is a super stagnant period. The point you can put a pin in it and say, okay, now it’s definitively over, is Zheng He’s fleet. Some of you may have heard of this. It was a massive trade and military fleet that the Chinese sent over the Indian Ocean. They did, I think, seven trade voyages, and also military shows of force, intimidating all little states in the area into paying tribute to the Chinese emperor. They did a bunch of these and made a ton of money. Lots of incredible exploration, many say it was one of the greatest feats of navigation until the discovery of the Americas.
And then, because of infighting between different factions at the imperial court, in 1430 this was just shut down. The fleet was destroyed, and they started becoming incredibly isolationist, and not letting in foreign traders. They dismantled the greatest fleet that had ever existed in the world for political reasons. And that kind of set the tone for the next 500 years, as the society sort of slowly started crumbling. And then eventually the Europeans showed up and sort of lightly blew on the Jenga tower and sent it the last way over, which is how most civilizations end.
Eli
I mean, 500 years is a pretty long, stagnant period.
Ben
It sure is.
Eli
Maybe you'll get to this, but are things getting worse over that period, or is it, are they mostly stable at the level of technology and organization they have?
Ben
Mostly stable. There are political crises, but there is not a lot of lost technology, and living standards are approximately the same,
Eli
Okay. That's surprising to me. I would guess it's either going up or going down.
Ben
It’s going a little bit down, but less than you might expect.
Eli
Okay.
Vaniver
So when I think about capital flows, about as many scholars are buried as graduate every year, basically?
Ben
Population does continue to rise, and you see an intensification, but per capita, that's probably right.
Vaniver
Okay.
Ben
So that's the very, very big technological and industrial picture. There's a couple of pieces of background I want to give before I start getting closely into the economics. To give a very, very brief political history, this is going to be filled with incredible oversimplifications, because I'm trying to put a thousand years into several minutes.
Briefly, China, as was mentioned, goes back and forth between being a unified empire, and carved up between a bunch of kings or warlords or dukes or whatever they're calling them this century. Before all this happened was the Han dynasty, widely perceived as a golden age. And then in the 200s AD, they start disintegrating. There’s civil wars and the Three Kingdoms period. And then eventually it totally falls, and the horse barbarians from the north overrun what’s left, and set up what is called the Five Barbarians period, because of the five barbarian kingdoms that get carved out of what had been the Han dynasty.
This goes on for a while, and then in the late 500s, it’s reunified by the Sui dynasty, a very short-lived dynasty, which is most notable for being the ones who build the Grand Canal connecting the northern Yellow River and the southern Yangtze River, but this bankrupts them and makes everyone really angry at their incredibly draconian policies. And so there's a coup, and they are replaced with the Tang dynasty, which is running basically the same state, but there's a new guy in the chair. And they keep this going for a couple hundred years before eventually it fragments again.
You have the Five Dynasties and Ten Kingdoms, which lasts a little less than a hundred years. It's not a total disintegration, like the fall of the Han, it's more of just a political separation. Around 900 it’s reunified into the Song dynasty, which then rules for quite a long time. After a few hundred years, the northern part of the Song dynasty is conquered by another wave of horse barbarians, but the Song continue ruling southern China. Historians talk about the Northern Song dynasty, which means the ones who ruled all of China, and the Southern Song, which rules just the rump in southern China.
And then the Mongols come. First they conquer the northern part that's being ruled by one of the barbarian dynasties, and they keep going and also conquer the Southern Song. That's the Yuan Dynasty, around 1200, which is the end of the period I'll be talking about.
So this is mostly a period of unification with interruptions, the main interruptions being the fragmentation between the Tang and the Song, and the bifurcation when the northern part of the Song is conquered.
Also, to give a very brief geographical background, at this period the core of China consists of the two river valleys. There's the Yellow River in the north, and there's the Yangtze in the south. The southern coast of China is a very big deal for the core of China now, but it was kind of hinterlands then.
An important thing here is that the Yellow River is weird. It is not like other rivers. There's nothing like it in European experience. It is prone to huge, huge, huge, megafloods. I won't get into the reasons why that is, but you may have heard how the Mississippi River changes its course and will burst its bank and go somewhere else. The Yellow River is like that times ten. When it changes course—there's the Shandong Peninsula, this mountainous peninsula in the northeast of China. Sometimes the Yellow River hits the ocean north of that, sometimes it hits the ocean south of that. Like, it'll really wildly change. When it changes, you'll get these massive floods that will drown thousands of people, and hundreds of thousands will die of starvation. This is what we mean when we talk about floods on the Yellow River. It's not like any flood of any river that has ever happened in European history. The Yangtze River is a much more normal river and works the way you are used to thinking of rivers.
So the earlier civilization, what I think of as Ancient Chinese Civilization, the period ending with the Han dynasty and their fall, was based around the Yellow River, which is where all the action was. It was the economic heart, it was where most people lived, and the Yangtze was this relatively unimportant frontier. Later on, in what I think of as medieval Chinese civilization, which I put at about 600 to 1900, the center of gravity moves down south to the Yangtze River, which becomes much, much more populous and the core economic center of gravity, where most of the action is happening.
The canals have a bunch of purposes. There's transport, which includes commerce, and also tax extraction. An important thing politically is that, unlike, say, the Romans, or the medieval English, the central government mostly isn't taking taxes in money. Mostly, they're taking taxes in grain. Their capital is in the north, and you can't really get all of the grain from the Yangtze River to the northern capital over land. This is probably the main reason why, when the Sui dynasty reunifies China, they build the Grand Canal, so now they can use the canal to ship the tax grain from the southern Yangtze River up to the Yellow River where the capital is.
There’s also irrigation. And especially on the Yellow River, there’s also flood control. You have to maintain the dikes. If you don't maintain the dikes, well, you're going to get a megaflood. This is a flood where tens or hundreds of thousands of people will die, and it will discredit you the way Chernobyl discredited the Soviet Union. You messed up the maintenance, and now everything's ruined. Those are the three big things that people have to balance when they're looking at all of the water infrastructure.
All right, so that's some of the background. Now we're ready to start actually talking about the economics of why the progress was happening in this 600ish year period.
The theory here I'm drawing on is from a scholar named Caroll Quigley. He has a book called The Evolution of Civilizations. I'm not going to go over the whole thing. It's a great book, but I'm just going to take one idea from it, of what he calls the instrument of expansion. I think of it as the economic engine, a term I like better. In any expanding civilization, there is going to be a class of people and a social process of how wealth is accumulated. A particular social class of people accumulates the surplus, and reinvests that surplus into the creation of more wealth. Any society is going to have a lot of different things going on, but in any expanding civilization, there will be one that is the main game in town. For us today, it’s industrial capitalism. People operate machines at a profit, and then they use this to get more machines. And that's been the big story for the last quarter of a millennium.
In medieval China, there were two instruments sequentially, one after the other. This isn't to say there was nothing else happening. We've still got agriculture and things today, but that’s not the big driver of progress.
In the ancient Chinese civilization, during the Han and earlier, the instrument is this imperial state bureaucracy, mobilizing vast, vast numbers of people, because we need to build this huge new canal to connect these two river valleys, or something. It's a common type of river valley state you also see in, say, the pharaohs, or the Mesopotamians. It's a type that recurs. The ancient Chinese were the most advanced of these river valley imperial bureaucracies. They made bigger works and were marshaling more people than any of the others.
And then after around 600, you see this newer medieval Chinese civilization, and they're using a different instrument of expansion. There are still some of these really big top down projects where the emperor is mobilizing a huge number of people. Most famously, of course, is the Grand Canal itself, connecting the two major river valleys. But much, much, much more of the waterworks projects are being done in a decentralized way that didn't happen during the Han. It’s organized by local landlord families and local provincial officials, who are often in the same clan or sometimes just the same guy. I'm the big landlord and I’m going to make a spur from the river to my little area. My cousin is the prefect so he's going to draft a bunch of corvee labor, and I'm going to pay for some labor, and we're going to use that to drain the swamp, or build a new set of dikes and sluices to extend the canal over here and turn that into more agricultural land, so we can make more money, and so on. And this decentralized provincial-level thing ends up being the main process by which it goes from a few river valleys and a small number of big imperial projects to this vast interstate highway system that goes pretty much everywhere. This is not an overnight process. It takes a couple hundred years throughout the Tang dynasty.
However, eventually, any instrument of expansion is going to decay and become corrupt. The way that that happens with this one is that these landlord families and local gentry clans, which are driving this, as they’re getting richer, they're also becoming more politically powerful, and they start turning more of their attention away from increasing their material output and trying to settle new lands and so forth, and more attention into political competition and trying to displace the older aristocrat families from the north.
You've probably heard how the medieval Chinese had the civil service exams and the scholar-bureaucrat social class. This is when that system gets instituted, which is a big win for these smaller landed gentry families, and they end up displacing the older aristocrat-scholar families. Your dad had been the chief minister before, but my son scored slightly higher on the test, so sorry, my clan will be taking the position from your clan. This move to meritocracy is part of how the previous elites are displaced. More and more of the landlord class’s energy and effort goes from tending the economic engine to infighting and political competition, and growth gradually slows down.
Audience
Did they run out of land that could be improving?
Ben
No. You were seeing more land being claimed and expanded as late as the 1700s and 1800s. A lot of the best land gets settled early, and then population increases, and so they have to cultivate it more and more intensely. You start seeing those insane terraced rice paddies as they're like, okay, we're out of flat land, but we know how to turn the horrible mountains into something you can actually farm. That takes a huge amount of well-organized labor. They keep expanding into additional land for centuries after this process I'm describing has ended. They're not using new techniques, but they are applying the older, known techniques to more and more land for quite a long time.
Audience
Are you gonna speak to a system of land tenure? Like, if you're some landlord and you're like, I'm gonna clear out this space that presumably nobody has a claim, to is it like homesteading, or…?
Ben
That depends on exactly when you're looking. Usually that sort of thing is technically illegal, but frequently done anyway. The officials are frequently worried about all of these vagrants, which means people who had to sell their land and then move south, and now they don't have any land. And people are like, we can't have landless itinerant workers. We need to get them settled on land and get them officially into the system. And so there will be all of these amnesties for, well, they weren't really supposed to clear that land, but they did, so now let's settle some people there and put them on the household tax rolls. So this gray legality process keeps happening.
Audience
What's the cultural through line? Like the religion that centralizes, or what they prioritize or value at that time?
Ben
The big thing is the family, clan, ancestor worship stuff. Daoism has been around and is popular. Buddhism is just taking root in this period and is becoming popular. The government and the big aristocrats are funding a lot of those monasteries. But the load bearing thing in most people's minds is the ancestor worship. These are the bones of my father and the bones of his father, etc, etc. When the population gets big and they cut down basically all of the trees, one of the big reasons people are upset about this is like, Oh no, I can't make the coffin out of the right ritual wood anymore because the trees are all gone.
Audience
Can you speak to the original shift from these large state or imperial projects, to this more decentralized agricultural expansion? What caused that initial shift and what this historical story tells us about the role of the state?
Ben
Basically, the big imperial projects kept happening at about the same rate as they had previously, and then this new thing also started happening. Because there are so so many more local provinces and local landlords and there's only one emperor, this means that by quantity, most of the individual projects, they'd be smaller, but most of the projects are done locally in a way that wasn't happening in 200 AD. If you want to get deep into this, there's a book by Chi Ch'ao-ting that covers the transition in great detail. I can look it up after this, but I'm blanking on the name right now. It's a wonderful book. [Key Economic Areas in Chinese History]
Last question for right now.
Audience
During this period, is this just low intensity agricultural expansion, or is there a commensurate increase in urbanization too?
Ben
In absolute terms, the urban population is definitely rising. I'm not sure about the percentage. I would guess it's probably rising, but the urban population statistics are just so bad, it's hard to be sure. The best censuses are tax rolls of agricultural households. The city tax system was not done in a similar household-based way, so they just weren't looking at it as closely.
So eventually that instrument of expansion decays. And in Caroll Quigley's theory of civilizations, which I think is right, when your instrument of expansion decays, it can go one of two ways. Either you can continue your society's slide and enter a long period of stagnation, or you can circumvent it with a new instrument of expansion, which is unusual, but does happen. And what it looks like to me is that, in this case, you had this initial stagnation and which led to a lot of conflict, you have the An Lushan rebellion, and then later the fragmentation of the Tang dynasty.
But then eventually, a new instrument of expansion arose, and a different class of people was accumulating surplus and directing it. And it looks like this was the merchants who were doing long distance commerce via the canal network. They would move grain, luxury goods, metal over very long distances and make profits by buying it cheap over here, selling it for a profit over there, getting these big fortunes and putting those into things like craft guilds and weaving houses, or the largest iron foundries that had ever been built, the most sophisticated and centralized foundries that had ever existed up to this point in time.
There's less recorded about these merchants, because the society at the time really disdained the merchants and thought the farmers and landlords were the heart of the people, so I found less good stuff written about them. But this seems to have been the driver of the economic expansion and the technological improvements throughout the Song dynasty, 900 to 1200 ish. These craft guilds existed before, but they seem to be really exploding as everything is continuing to rise and get bigger, even as the manorial landlords seem to be driving less of it.
Eli
What's the relationship between the merchants and the improvements in technology? Are they bringing the technologies?
Ben
They'll be like, Okay, I just made a bunch of money shipping stuff around, and I'm looking for durable things to put that in. Sometimes I'll just buy land. But I also might set up a ceramics workshop and make really fine porcelains. And then, oh, maybe there's a better way of making porcelain. Or I'm going to make an iron foundry and, oh, if we centralize things and have one really big foundry here, then it becomes worthwhile to build this new type of forge. And so they have the capital accumulated that they can pay for the setup costs of these new industries, many of which are being done in the way they always were, but some of which are done in a more sophisticated way.
Eli
Okay, this is somewhat interesting to me, insofar as the industrial revolution in Europe is preceded by a rise of a merchant class.
Ben
I strongly suspect that for the European industrial revolution, a bunch of cultural things that were put in place by the commercial capitalist period in European history seem to me like prerequisites. I'm getting a little bit out of scope.
Bob
You mentioned that they formed craft guilds. What is a craft guild?
Ben
A craft guild is a guild of people who practice goldsmithing, or blacksmithing, or glazing, or weaving, or some other craft that produces manufactured goods. And you'll be organized into a group that has master-apprentice relationships, and we teach them, and here's how we provide the working capital for the young people, and here's the duties they owe to us as the old people. And in both European and Chinese history, they also end up with a bunch of legal privileges and sort of being deputized by the state for a bunch of tax collection things.
I'll just jump ahead and get to this now—one of the really important differences between how the guilds work in medieval European history and in Chinese history is, in Europe, they also become politically very powerful in the Middle Ages. They end up running a bunch of cities, basically as republics that are being led by guildmasters. And then the cities have some political independence, and the Holy Roman Emperor has to negotiate with the city and to grant them these privileges, and you can have a militia, but you have to pay me these taxes in return.
Nothing like that ever happens in medieval China. They are politically inert. They are never in a position to make demands in the way that the European guilds are doing at a slightly later date than this. They are always much more subordinate to the scholar-bureaucrat class that is in the local administrative role.
Another interesting difference is that the Europeans, you'll see much more among the merchants, not among the craft guilds, but among the merchants, you'll see much more specialization in Europe, where it'll be like, Oh yes, this is the family of cloth merchants. This is the family that specializes in pearls. Whereas all the accounts I've seen of the Chinese merchants, they're much more opportunistic wheeler-dealers. Oh, this trip, it seems like cloth is cheap. And then when I'm going, I hear a rumor that pearls are really cheap in that city, so I'm going to go over there. It seems much more fragmented and much less “this is the thing that I do”. And the development of credit markets ends up being much more primitive in China. The European commercial capitalists are inventing double entry bookkeeping and some really complex banking arrangements. And in China it stays much more like, I'm going to borrow a bunch of money from my cousin because he's really rich, or the guildmaster likes me and so I can get a loan there. So they never really cohere as a social class which is able to wield political influence in the way that the European one did. And I suspect that this is not the only necessary feature, but one of the necessary features for the industrial revolution in Europe later on. But I'm not totally sure about that, that's a tangent I won't get into right now.
Eli
Do you have a sense of why in China, they didn’t become politically organized?
Ben
I'm not sure. Joseph Needham claims that one of the big reasons for this is that in Europe, there was the memory of the city-state and the Greek polis as a political form, and that this caused people to be like, oh, yeah, that's a thing we can do, and so that that led to a bunch of the political consciousness of cities, and that was the vehicle through which the merchants expressed power, whereas the city-state just wasn't a concept in China. He's right that the city-state was not a concept in China. I'm not totally persuaded by the explanation. That's the least terrible explanation I've heard, and it's not a very good one.
Eli
Okay, you don't think it's just that Europe was a balance of power system with a bunch of different nations competing with each other, and so you had leverage, like a city could have leverage to negotiate with their ruler, because England is fighting France, and France is fighting Germany or whatever.
Ben
I don't think that's the case. You also don't see this during the Five Dynasties and Ten Kingdoms.
Eli
Fair enough.
Ben
So eventually this stagnates, as happens with any instrument of expansion. I want to do more research into the stagnation, both here and then in the half a millennium after. Take this as less confident than the rest of this talk, but my current best picture is that the means of it stagnating is largely through the scholar-bureaucrat class making more and more regulations and exactions, and siphoning off more and more, and more being like, “no, you can only do this in this way. You can't do that way, because it's new. You have to do it the way that everyone's done this for ten thousand generations.” Ten thousand generations means about a hundred and fifty years. It's a phrase they use a lot.
This sort of top-down administrative, we're going to shut down anything new—oh, your treasure fleet is empowering the wrong faction at court so we're going to shut that down, can't have that—seems to be the thing that locks it in place. I'm not totally sure. I want to read more about this.
When your instrument of expansion is getting corrupted and taken away from innovation and expansion, then sometimes you get a circumvention with a new one. Usually you don't. In this case, after the second instrument, there was no circumvention. And so they kept doing basically the same thing in pretty similar ways for about five hundred years.
You see a lot of intensification. You see a lot of them doing the same thing, but the population keeps going up. A lot of new, more marginal lands are brought into cultivation, but the techniques they're using here are basically the same. There's some small improvements, likely there's some small things being lost, harder to prove, because when it's lost then it's lost, but it seems like it's pretty much staying the same. That's pretty much my picture of what happens overall.
To briefly summarize, you have the decline of the previous Ancient Chinese Civilization. I have a blog post I argue for this being the correct way to cut up the civilizations, if anyone wants a little more detail on that. And then you get this new thing arising around 600 with the Sui and the Tang dynasty, where they have this local landlord-administrator class who is capturing the surplus, extracting all of it from their oppressed peasants and whatnot, and putting that into the decentralized expansion of the canal network, into this interstate highway system, massively expanding the arable land and the population along with that. And that gets corrupted.
It eventually gets displaced by the merchant class doing long distance trade, which gives you several centuries of expansion and innovation and rising wealth. And then eventually it gets corrupted.
And because there is no third circumvention, you then get the centuries of stagnation. You get a slowly ramping up political dysfunction and what we would now call decreasing state capacity. For any civilization, after you've had a long period of this stagnation and decline, you become unable to resist foreign invaders. And so then the Europeans show up with gunboats. The thing that had been sitting there on its own, there's now something that can push it over, the way the German tribes did for the Romans after their period of stagnation.
One of the reasons I'm interested in this, as I think about our own Western civilization—I think of our Western civilization having coming after the Classical civilization of the Greeks and the Romans and those guys, that one fell apart. You got a new one that arose. Its first instrument of expansion was feudalism, which is a manorial system of landlords. It kind of rhymes with the Tang dynasty, the first one from medieval Chinese civilization. It didn't have the canals, pretty important difference. Eventually feudalism got corrupted, and you've got people spending much more time jousting and making marriage alliances, instead of murdering the French and trying to set up a new manor and claim more of that land.
That got circumvented by commercial capitalism, very similar to the structure of the Song dynasty period. The cities were more politically powerful. The guilds were a bigger deal. But if you replace the canals with the Mediterranean or the North Sea, it looks quite close. Eventually that got corrupted into mercantilism, and people make money by restricting production instead of by expanding production. The European guilds become much more about making sure that we don't have too many people come in and become weavers, or too many people come in and become winemakers, and extracting the money to send to the state in return for all these privileges. The story of the East India Company is the government creating a monopoly and being like, no one else can trade with the East Indies. That’s becoming the main thing.
That eventually gets circumvented by industrial capitalism, where it's not by long distance trade, it's by the operation of machines that the industrial capitalist class makes money, and is able to direct where that surplus goes. And that's been the story for the last couple hundred years.
It looks to me like it is in the process of corrupting. It is not fully done, but it looks like the rate of advance over the last hundred years is lower than that of the hundred years prior. And perhaps I'm right about this. Perhaps I'm not. If I'm not, I do think these things do get corrupted eventually. And so a big question in my mind is, one, how long can we keep this one going? And two, if and when this instrument also stagnates, will we circumvent it with a fourth, or will we enter our own long period of stagnation? That’s one of the things that I was thinking about a lot when I was looking over the Chinese case.
Thank you all, and we have fifteen minutes left for further questions.
Audience
So if I'm hearing your thesis right, you say the engines of progress, it's not that they sort of peter out on their own. They don't have enough land to intensify, or the capital deepening doesn't end because of depreciation.
Ben
Right. It’s a social process. It's not a physical limit.
Audience
Specifically, also, in each of the cases, also rent seeking. They switch from deploying the capital for further productive improvements, but in each case, it's can we rent seek off the existing things we have?
Ben
Exactly, yes. So if you want more detail on this, I'm taking this theory from The Evolution of Civilizations by Caroll Quigley. He goes into a lot more depth on this, and walks through the precursor civilizations to Western civilization, and Western civilization itself. Highly recommended. But yes, that is the theory of how this particular transition happens.
Vaniver
Expanding on that. If someone looks at America today, or the West today, or whatever, it says it's a service economy instead of a manufacturing economy. In the Quigley picture, is this just like, yep, that's all the rent seeking, and the machines are the economic story?
Ben
Yes. I think this is correct. Caroll Quigley thinks this is correct. There are some exceptions that are called “services” which I think of as being part of the real economic base, but not most of them.
Eli
And you would say the same thing about the computers. You can’t have an economy based on moving bits around.
Ben
There are exceptions, but a much larger proportion of that looks to me like extraction or consumption rather than the engine of progress. There are definitely exceptions, CNC machine tools being the most obvious, of like, oh, the robot is just building the engine.
Eli
Notably, that's physical.
Ben
Yes. A strong majority of the computer things that do not have a physical output, I would personally classify that way, yes.
Eli
Yeah, that makes sense.
Vaniver
I think there are two parts to your story that haven't clicked yet, or something about them feels slightly off. The first one is the end of the agricultural expansion. You called it an instrument of expansion?
Ben
Yeah, that's Quigley's term. I also call them economic engines, which, at least to me, is a clearer term, but yes.
Vaniver
I'm imagining there's whatever area, it has like a thousand peasants. Eight hundred of them are required to produce the food for a thousand people, and so the remaining two hundred, you can use a hundred of them to just go clear a marsh and set up more farms, or whatever. When you get the intra elite competition, where now I want to have my kids cram for the Imperial exam and get a better position or whatever, presumably I still have the surplus peasants that are still clearing marshes.
Ben
You still have the surplus peasants. So at t=1, you have a guy who spent his whole life learning how to run a farm, and he's got a bunch of surplus peasant labor, which he directs to improving the waterworks. At t=2, you have a guy who has spent his whole life learning to become a scholar-bureaucrat, and trying to rise through the bureaucracy and failing and being really frustrated, so he directs his surplus pleasant labor to joining the An Lushan Rebellion.
Vaniver
Okay, so it is mostly a lower management failure or something, where now, rather than directing their spare resources towards whatever environmental goals that would improve global productivity, it is directed against society.
Ben
Yes.
Audience
Something you just said made my ears perk up. How much of this is just a problem of people with not enough resources to fully self actualize, but enough resources and frustrated ambitions to actually cause problems?
Ben
When you're looking at how exactly, psychologically, the corruption of an instrument happens, this looks like a fairly large factor. I don't think it's the single biggest, but in all the cases, it's not how it starts, but once it gets underway, this is how the snowball gets bigger.
Audience
So not just elite overproduction.
Ben
Yeah. It goes from working well to moderate problems because of more economic reasons. Then it goes from moderate problems to very bad because of this stuff.
Audience
There was something you said in the way you described industrial capitalism that I'm not sure I agree with, and I'm not sure if you meant it or not. You described it as sort of, you have machines. You make money with machines. Use that to buy more machines. I would say the mechanism of industrial capitalism is little bit that, but is more technological progress, that you have ideas, and then you make money from the ideas and use that to develop better ideas, and these are embodied in better machines. But that most progress is not the capital deepening, but the idea deepening. And I'm curious if you agree with that or not.
Ben
Mostly yes. When you look at the reason why we are living better than people in 1924 it’s not because we have more of the machines that they had in 1924. It's because we have better machines. And if you look at where the investment for those better machines came from, it was from people who made the surplus by operating the machines and then invested it, not just into intensification and scaling up the thing they already knew how to do, but also into, oh, wait a minute, I think this other type of machine is going to be even better.
Audience
If I heard your story right about at least the second economic engine, they kept doing what they were doing, they did still operate workshops or so forth, but they did them in the same way they did them before.
Ben
So by the 1400s, 1500s, that was true. In like 1000 AD, 1100, they were doing quite new things. The ironworks is the one that I know the best, where they're building totally new types of forge that were unknown in 800.
Audience
And I guess what I'm asking is, when this ceases, is the failure of the engine of progress that it stops generating new ideas? Maybe the intensification continues, but without new ideas, it can't raise the standard of living?
Ben
Yes. Then there's the question of, what socially is happening to break the generation and implementation of new ideas? My strong guess—I haven't literally found this in the records, but I'd be surprised if it was wrong—is that in 1500 or whatever, people are still thinking of new ways of doing things, then they just can't be implemented because someone will stop you.
Audience
In your thesis, it seems like it's economics that's the driving force behind periods of expansion and stagnation. So it's when the class that's producing the economic engine starts rent seeking and trying to influence politics, that the political stagnation starts to happen as well.
Ben
Yes, it is. The idea is that the political stagnation is downstream of the stalling out of the economic thing. When the economic engine is working and growing, everyone can have more stuff and get the things they want by working together to keep the engine running. Then when it slows down, people are like, Wait a minute. I was told to expect that I would get more things, but that's not happening just by getting the same share of the growing thing, because it's growing slower now. So now if I want to get the stuff I was expecting, then I'm going to have to be doing more infighting, and I'm going to have to try to make sure I get it from that other guy. This is a self-reinforcing process. The other guys are like, Oh, I have to protect myself from all that. And you get more energy going into infighting and relatively less into expansion. A more modern term I've heard for this is the idea of embedded growth obligations. Your society is structured around the idea that you're growing at a certain rate, and when you are, everything's fine, and when you're not, people start looking around and being like, So then how am I going to get all the stuff I was obligated to get? And you can get it through infighting.
Audience
So I'm curious how you think about the the critiques of, at the turn century, people are trying to figure out in China why the Qing had stagnated, and the new cultural intellectuals identified the core problem to be cultural and political, with the conservative Confucian class not wanting to adopt new technologies and even going back to the Ming Dynasty, one of the common explanations for why the Ming Emperor stopped the Zheng He he treasure fleets was because these conservative Confucian scholars hate this. So I'm curious, in the Chinese telling of why things stagnated, it seems to be much more cultural and political. How does that square with this?
Ben
I think it is a reinforcing cycle. As it gets going, the political will then redound and push, push the economic in the similar direction, which will then have stronger effects on the political. I do think that the first cause looks to be more economic, but I would love to know more about especially the Qing Dynasty than I do. I have read less than I’d like.
It seems like we’re running into the next group, so I’ll stick around outside if anyone wants to ask me further questions. Thank you all for coming.
Selected bibliography
Mark Elvin, The Pattern of the Chinese Past
Chi Ch'ao-ting, Key Economic Areas in Chinese History
Joseph Needham, Science and Civilisation in China, volume 4: Physics and Physical Technology, part 2: Mechanical Engineering
Denis Twitchett, Financial Administration under the T'ang Dynasty
Shiba Yoshinobu, Commerce And Society In Sung China, translated and adapted by Mark Elvin
Robert Hartwell, Markets, Technology and the Structure of Enterprise in the Development of the Eleventh-Century Chinese Iron and Steel Industry
The Book of Swindles, Zhang Yingyu, translated by Christopher Rea and Bruce Rusk
Awesome, Ben!