By Lianlong

The strategist Guan Zhong said: “The administration of the country must take it the first priority to enrich the people.” How to enrich its people? Economic development and trade, according to Guan Zhong.

To solve the problem of people’s food and clothing, the ancient economists stressed the importance of production of foods and materials. Foods refer to the goods that can be eaten, like grains, meats, fruits and vegetables, salt, oils, and sauces. Materials refer to necessities for life and production, like clothes, cookwares, tools for farming, wood, and steel for building houses. Due to limitations, it is difficult for one person to produce all things that life needs, thus some people grow rice and raise chicken, some make pottery and cookwares, some make clothes and shoes. Thus there is the exchange of goods and means for transport. That is the economics and trade, the basics of social life.

According to the Foods and Materials Chapter of the Historical Records of the Han Dynasty, the five grains and cloth formed the basics of life necessities and all these started in the time of Shen Nong, the God of Farming. The White Tiger Chronicle stated that ancient people mostly relied on the meats of birds and animals. Only until the time of Shen Nong, people began to know about the law of the seasons. Shen Nong told the people what kinds of land were suitable for the growing of different grains; he made such farming tools as the plow and taught the people how to do farming. He knew the reasons of farming and made farming an easy and happy thing for the public. That’s why he was honored the God of Farming. According to the Book of Changes, after the death of Shen Nong, the Yellow Emperor and other rulers improved the articles and instruments that Shen Nong had invented. They were able to make comfortable and warm clothes for the people. The society was in prosperity and good order.

Ancient Chinese sages knew the importance of foods for the people and put lots of efforts in farming, making it the top agenda annually in government administration. When farmers worked hard, the country would have a good harvest. As a ruler, the kings and emperors must be committed to farming and never be lazy to inform the season changes. Without proper peasantry, the farmers would not do their job well. Good farming brought about riches and prosperity, as well as peace and stability. Emperor Taizong of the Tang Dynasty told his ministers, “There was a severe drought in the 14th year of the Sui Dynasty when most of the population suffered hunger. In that year, the official warehouses were actually full of grains but the emperor refused to save his people by giving out foods for relief. Emperor Wendi loved his grains instead of his people, and his succeeding son was even worse with his arrogance and extravagance that finally brought the country to destruction. Actually, during their reign, the storage of foods in their warehouses was enough for fifty to sixty years of consumption. We must learn from their lesson.”

With the development of agriculture, there shall be the secondary industry and the tertiary industry. Agriculture is only to solve the problem of food and clothing; only the development of industrial production, trade and commerce can revive the people’s livelihood. At all times, it is important to satisfy the people’s needs and wants. Their desires and aspirations drive the country to advancement. When you give the people something, they will feel happy, but when you take something away from them, they shall be angry. That is common sense, human nature. Rulers should know this, and thus the taxes he imposes can not be too heavy. Take the middle way. Lack of expenditure is not good for social projects; too much spending is not good for the environment. So rational planning is essential. To build a clean government of moral officials is a blessing for the people, which would surely bring about prosperity and stability. Commitment to agriculture and balancing other industries like commerce can help build a strong and wealthy country. The above constitutes the philosophy of Guan Zhong in terms of economics.

A country shall promote the development of trade. The society needs the division of labor, with farmers, craftsmen, businessmen, and others. Merchants are needed for the flow of goods. The Historical Records of the Han Dynasty said: “Gather the people of the world, gather the goods of the world, develop trade and the people will live in order.” In other words, there must be a market for trade. Grains are the most important for people’s life. Currency is the means of trade. And market shows the status of supply and demand. If the government can control the grains, the currency, and understand the market supply and demand, it will be able to control the country’s economic lifeline. It is necessary to enrich the people, but also to prevent polarization. People shall not be made too rich or too poor. It’s hard to ask a rich person to work for you. And if a person is very poor, he shall not behave well. So let the rich buy luxurious things and the poor have employment. In this way, the people will work hard and live in stability.

At the same time, attention should be paid to international trade. The development of international trade can help regulate the relationship between supply and demand, promote the reorganization of production factors, put a country’s comparative advantages into full play, and resolve many domestic problems. In the past, Emperor Zhou of the Shang Dynasty kept more than three thousand girl singers in his palaces, their annual need for silk clothes was enormous. This consumed a great amount of the country’s wealth and brought about the destruction. In the Western Han Dynasty, after Zhang Qian who opened the Silk Road, the export of silk and tea to the west earned great wealth for the country. The capital cities of the Song and Yuan dynasties were all international trade metropolis. Before the Opium War, the British shipped large quantities of opium to China and plundered large amounts of silver from China. Over the past three decades in this century, China has sold vast quantities of cheap industrial products to the world, while taking grains and mineral resources back.

In the early fifteenth century, when the Renaissance was at the early stage, mercantilism rose in Europe. The geographical discoveries opened up a world market that gave businesses, nautical and related industries great excitement. The commercial capital was the momentum for the unity of the domestic markets and the formation of the world market which helped promote the development of foreign trade.During this period, major countries in Western Europe established their authoritarian centralized states and used national power to support the development of commercial capital. Their aristocrats became businessmen.

We can see the impact of Christianity in the formation of the western economic system. The Germans generally believe that, as long as the ethical necessity of an act is found, they would take the lead with religious fanaticism, recklessly. Although Karl Marx’s economic theory did not become the mainstream in Germany, his personality was very popular. Expelled by many countries, and always in exile, Marx claimed to be a world citizen. In London, he spent the most difficult days of his life. In five years, because of poverty, three of his four children died. But during this period, Marx wrote his most important book, “Capital”, revealing the greed of human nature and the fact of how capitalists exploited the surplus value of workers to get rich.

A state needs taxation to develop its economy. Taxation is an important economic policy of any government. James Stuart talked about the reasons for taxation. He held that the rich of ancient society lived on the labor of their subordinates; society was not open. The  liberation of thought changed the subordinating relationship and slave owners then had to pay for labor. This led to the formation of a new industrial and commercial order and, consequently, to the realization of modern prosperity. Their commercial wealth was built on law and order. And in order to maintain law and order, to protect power, security and independence, adequate taxation and armament were necessary.

Adam Smith was the founder of classical economics, the Wealth of Nations his masterpiece. He believed that in the commodity economy, everyone is in pursuit of their own interests and under the guidance of an “invisible hand”, each person makes his own choices through the regulation of a market mechanism. And this would naturally make the best allocation of social resources. The Wealth of Nations was the result of his dissatisfaction with the aristocracy during his employment as a tutor for the son of a British Duke. He said to his boss: “You have bread, wine and meat to eat, not by good intentions of the bakers, winemakers, and butchers, but their pursuit of self-interest.” He believed that people’s engagement in economic activities was for the pursuit of personal interests, not for public good. And when a person was in pursuit of personal interests, he needs help from others, and therefore should not disregard the interests of others.

The purpose of the state to set up the customs is to levy tariffs on international trade. The famous Adam Smith was born in a customs officer’s family, he also served as tax director for the Scottish customs. The British were good at trade, London the trading center of England, the Thames always busy with ships. The British colonial expansion made London a world trade center and financial center. Because of international trade, a steady stream of tax revenue was created, which once made Great Britain a great empire with no sunset.

When western economics was born as a science, almost all economists were amateurs, including Adam Smith. At that time, there was not a department of economics in universities, and governments did not have economic research and advisory bodies to engage in economic study. A researcher who studied economics should have to feed his own stomach first. The British classical economist David Ricardo was good at feeding his own stomach. As the richest economist ever, Ricardo worked first for his father, an affluent stockbroker. Although Ricardo was not a regular student in his childhood, his father had the money to give him the best education. At the age of 12, he was sent to the Netherlands to study business.

Few people could be as lucky as David Ricardo. Thomas Robert Malthus concluded from his research that most people were destined to live in poverty and on the brink of hunger, and in the long run no technological advance could change that trend. We normally believe that when you do something, you shall be very good at it. To be an economist, one shall have the capacity to make lots of money and live a wealthy life. Karl Marx was an exception.

In the field of economics, utilitarianism was once very popular. Williamson held that in economic life, people always did their best to protect and increase their own interests. That is to say, people in the economy are selfish, making profits at the expense of other people. David Hume believed that happiness and interests were consistent. His view of social history was based on the study of human nature. It was human nature to pursue wealth, pleasure, and power. And this nature of humans never changes. David Hume held that the role of history laid in the discovery of human nature and provision of experience in this respect.

Alfred Marshall was to study physics, philosophy, and social sciences. Later, witnessing the social injustice in England, he felt that theology, mathematics, physics and ethics were not able to bring the gospel to humanity, so he turned his attention to political economics. He hoped to understand society in the study of economics, and thus analyzed the causes of social injustice from the economic perspective. He saw economics as a science that would promote social welfare and eliminate human poverty.

There are economists in theory as well as economists in practice. Frequently the subject of conspiracy theory, the Rothschild family possesses the largest private fortune in the world with the establishment of a banking business during the 18th and 19th centuries, and the diversity of investments in financial services, real estate, mining, energy, farming, wine and charities in modern times. Rockefeller, through the monopoly of oil, became more powerful than the United States President. His son was also a famous businessman advocating trade to bring peace to mankind, very active in exporting capitalism and philanthropy. The DuPont family made their fortune during World War I making gunpowder for bombs. Later they supplied stockings to women to grab more wealth. When they smelt the coming of another World War, they immediately resumed their weapon production. For a long time, the Ford family supported the Nazis in Germany, with its supply of tanks and armored military vehicles. The Morgan family, in addition to the monopoly of the financial industry, issued war bonds to become the richest in the world.

For a century, at those famous American universities, professors in economics told nothing more than the above cases. History seems to prove that no country can achieve great economic success without crazy economists and entrepreneurs. The United States made a fortune during the two World Wars and used the strong dollar to plunder the world for resources. Due to the full development of the domestic free market, free entrepreneurial spirit and the world of talents the country maintains the status of an economic superpower. Will the United States lose its leadership in the near future? A survey by the Associated Press and the NORC Public Affairs Research Center found that 54 percent of Americans expect life in the United States to go downhill until 2050 when more than 50 percent believe that life in the United States is now worse than 40 years ago. The Nobel Prize winner Vernon Smith once said: “It took me a long time to understand that the textbook is wrong, and the students are right.”

Economic liberalism stresses the importance of market mechanisms and was against government intervention in the economy. It is impossible for this theory to become the mainstream theoretical strength, especially in countries like China. On the contrary, more attractive is Keynesian economics that encourages government intervention with policies to increase demand for economic growth.

Lin Yifu studied China’s rural areas. In his view, the rural areas create the most critical issue in the process of China’s modernization. To a great extent, solving the problem of poverty among Chinese farmers will also solve the problem of poverty in the world. If Mr. Lin had the chance to visit Africa, he might have changed his view. Reinventing Prosperity, a report recently released by the Club of Rome, argues that, despite more than 30 years of economic growth, the well-being of much of the global population has not improved. The report offers radical yet optimistic solutions to the world’s inequality, unemployment and climate change. Yang Xiaokai’s economic contribution may be derived from his study of ancient Chinese labor division of aristocrats, peasants, craftsmen and merchants. His view that “the division of labor is the driving force of economic development and growth” has been recognized by mainstream Western economists.Yang’s concern over China’s fate has led him to criticize China’s household registration system, state-owned enterprise monopoly, and rural land problems.

The monopoly of industries existed before the Qin Dynasty. Sang Hong Yang presided over the implementation of the salt, iron, and wine monopoly system for the rule of the Western Han Dynasty. The state-owned enterprises in petroleum, telecommunications, finance and other monopolistic business are an important feature of China’s economic system. The development of international trade and multinational companies play a great role in promoting monopolized operation worldwide. Thirty-third vice president of the United States Henry Wallace believed that“ it is those multinational corporations who now control the world economy, not governments.” “There is growing concern about the social responsibility of multinationals in their historical growth stages,” said Keiji Isao, a Japanese economist.

In the information age, global economic integration and free trade further develop. Wu Jinglian, who represents the official Chinese mainstream economics, argues that the sources of economic growth are mainly three: application of science and technology, the service industry, and information technology. Therefore, China’s “world factory” method is unsustainable. The country’s enterprises must undergo a process of technical innovation and the Go-Out strategy is necessary. Mao Yushi argues that in the global economic integration environment, China must aim at the international market. In recent years, globalization has met an increasingly strong opposition. Protesters argue that globalization is a proliferation of economic, cultural, and political hegemony employed by superpowers to conquer the world. Some activists labeled globalization as a reactionary utopia.

It never happened in history that so many world leaders meet frequently to negotiate deals on trade. More and more people believe that the elite clubs have closed-door meetings in an attempt to build the so-called “New World Order”. Conspiracies occur, it must be admitted, in aspects of politics, economics and religion. “Nothing happens by accident, nothing is as it seems, and everything is connected”, as political scientist Michael Barkun pointed out.

Greed is human nature, and everyone is a villain in front of profits. The development of the world economy is affected by factors such as politics, history, cultures and natural disasters. Crisis is inevitable. Lang Xianping said: “No one can not escape the financial crisis; the Chinese government has become bankrupt.” In fact, in terms of income and expenditure, not only China, the United States, Australia, Brazil, Greece, Iceland, Venezuela, are deeply in debt crisis. Luckily, the governments of the United States and Australia are able to pay interests while others went bankrupt. The housing bubble and the mortgage crisis are due to the greed of governments, besides greed of humans.”Developing countries can easily fall into the vicious cycle of economic corruption, inequality, violence and social unrest, and even civil wars, where corruption is a key factor,” said an economist Zhou Hengpu when he actually wanted to criticize China where corruption is the most serious.

China’s political corruption has been apparent and moral degradation obvious simultaneously with its economic development. Despite that fact that governments at all levels have joined in statistics fabrication, the country is sure to achieve its economic success. And the country is now the world’s second-biggest economy and largest trader. “The rapid development of China in the reform and opening-up in recent decades is a significant event in the history of the economics,” said Paul Samuelson, a famous American economist. “Nobody has foreseen this. Now, almost no one will doubt that by 2050, more than one billion Chinese people will create the world’s highest national GDP. ”

The aim of the One Belt One Road strategy is to restore China’s glory in international trade. The Silk Road was once a major thoroughfare of the East and West civilization; Zheng He’s voyages used to gather the world’s strongest fleet of cargo ships. That glory needs to be revitalized. As China signed more and more free trade agreements with its neighboring countries, TTP initiated by the United States is doomed to fail, not because of the lack of money, but because of Obama’s narrow-mindedness to exclude China. Columbus discovered the New World of Americas, but his intention was to look for wealth in China. The export of opium by the British was tragic; the world would like to see how China stretches its muscle on the landscape of the globe.

Picture: Australian gold rush


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