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From Expo to Chinese philosophy

2010. 17 July

by Andrew Sheng
( I just spent two days at the Shanghai 2010 Expo, enjoying not only cool weather, but also the intense debate on the world in the midst of crisis and the G20 Summit in Toronto.

At the airport, I bought the latest book by Yi Zhongtian, arguably the most popular narrator of Chinese philosophy of this generation. His new book The Stone of My Hill is a conversational but important narrative of how the pre-Qin philosophers, Taoist, Confucius, Mozi and the Legalist schools of thought competed to explain the chaotic period during the Warring States (BC 480-221) and what solutions they brought to bear to save the times. Of course, the Taoist felt that the whole system was wrong and that after chaos, things will return to their natural order. Being a conservative, Confucius felt that things should return to the old Zhou feudalistic order where people respected their social rituals and respective place in society. Mozi was the most daring, asking for a socialist society of equals. All these three schools were rejected by the political elite who were grabbing power from the dying Zhou empire and readily adopted the Legalist philosophy, which advocated the realpolitik idea of the concentration of power to final unification under the Qin Dynasty (BC 221-206). But by being ruthlessly successful as the Qin Dynasty was cruel, the Legalist school was rejected as immoral for adoption by popular sentiment. It is the irony of history that Confucian philosophy was not successful in its time, but was adopted as the basic moral foundation of Chinese culture, whereas Chinese officialdom has practiced Legalism.

What I found most interesting about Yi Zhongtian's explanation of complex philosophy was the use of modern but simple example of a holding company (kingdom), the leading subsidiaries (feudal lords), second tier subsidiaries (bureaucrats) and then the people, who had little say in the pre-Qin period on their own political and economic future. The debate during the Warring States period was whether there should be more decentralization (flattening of the social order) or greater centralization. In the end, centralization won under the First Emperor, but quickly collapsed and was again unified under the Han Dynasty (206 BC - 220 AD).

Lord Mandelson, former EU Trade Commissioner and Minister of Trade under the UK Labour government, posed the question well in his speech on Western perception of the rise of China at the Lujiazui Forum in Shanghai in June. After the subprime and then the European debt crisis, is the Western free market capitalism still superior to the state capitalism practiced in China?

After reading Yi Zhongtian, I am inclined to equate the pre-Qin debate between the Taoists and the Legalists as a parallel to the current debate between the free market philosophers and the state market practitioners. Free market philosophers are like Taoists, who believe that there is a natural rhythm to markets and that the state intervenes in free markets to their peril. State capitalists are Legalists, who believe in incentives and regulation.

The trouble with Economics as a science is that it is not possible to replicate theories in laboratories.

When I talked with US free market conservatives, they seem remarkably Taoist to me. Some of them felt that if only the Fed had allowed Bear Stearns to fail, the crisis would have been less severe and the purity of the market would have been preserved.

But since the Fed has intervened heavily to reduce interest rates to zero and assumed a large part of toxic risks on to its own balance sheet, the days of free market idealism are gone forever.

Lord Mandelson was surely being diplomatic when he said that no Western nation can dictate China's rise as the ascendency of state capitalism, but neither can anyone ignore it. It was important to engage China, but also to understand China, whilst China must also understand the West. But during that engagement, it is clear that there can be many misunderstandings, because Westerners assume that only their societies seem to have legitimacy.

Each society has its own sense of history and legitimacy. You only have to read Yi Zhongtian's brilliant analysis of pre-Qin philosophy to realize that much of the modern debate about governance and legitimacy was already actively considered 2,500 years ago.

Pre-Qin philosophical debate was not about a hundred schools of thought, but essentially three or four main models. Today, it is also about three or four main models of market economy, basically whether the state has more say or whether the market has more say. All we can say is that no school is right forever and no other school is wrong forever.

The author is adjunct professor at Tsinghua University.

(China Daily)