Ep. 97 – Tang 15: Law & Order: XZU

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In the Justice System of the Tang Imperial Court, the throne’s interests are represented by two separate yet equally important groups: the Confucians, who argue for traditional ethics, and the Legalists, who argue for the unbending application of the letter of the law. These are their stories…

Time Period Covered:
731-740 CE

Major Historical Figures:
Emperor Xuanzong of Tang
Chief Minister Zhang Jiuling
Chief Minister Li Linfu
Eunuch Commander Gao Lishi
General Wang Maozhong

Major Sources Cited:
Herbert, Penelope A. “A Debate in T’ang China on the State Monopoly on Casting Coin” in T’oung Pao LXII
Twitchett, Denis. “Hsuang-Tsüng: The Middle Reign” in The Cambridge History of China, vol. 3
Sima, Guang. Zizhi Tongjian.

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4 thoughts on “Ep. 97 – Tang 15: Law & Order: XZU

  1. Great episode! This whole debate about private minting is very interesting for the history of economic thought. I don’t think any of my colleagues in economics know about it.

    I wrote a long response to the debate on my blog.

    Here are the grades I would give all the people in the debate if they were undergraduate students:

    Chang Chiu-lin, A-
    What he got right: The conclusion! Allowing private minting would have ended the economic crisis.
    What he got wrong: He thought more minting would benefit peasants by raising agriculture prices. What this misses is that it would also raise every other price!

    P’ei, Li, and Hsiao, B+
    What they got right: Their political economic analysis of private minting is on point. They thought that allowing people to mint coins would make them richer and less subservient to the state.
    What they got wrong: Ethics! Why would you want people to be poor and subservient?

    Ts’ui Mien, C-
    What he got right: He understood that some people would go into minting if it were legal.
    What he got wrong: He failed to see that this wasn’t a slippery slope. Some people would mint instead of farming, but only until the marginal payoff of minting equaled the marginal payoff of farming. This would stop long before anyone starved for lack of farmers!

    Liu Chih, A-
    What he got right: His argument that minting—being capital intensive—would be taken up by rich families thus increasing inequality, is thoroughly modern. He also made a political economy argument that inequality undermines the authority of the state. These are the kind of arguments Thomas Piketty or Joseph Stiglitz might make.
    What he got wrong: He leapt to the conclusion that this would necessarily make poor people poorer in absolute terms. This conclusion doesn’t follow from his argument. He also supported a state monopoly on copper, which would have been a disaster if enforced.

    Emperor Hsüan-tsung (Xuanzong), F
    What he got right: …
    What he got wrong: The emperor ordered that cloth should be used in large transactions. Unfortunately for him, you can’t make something a medium of exchange just by saying so. It has to suit the people making the exchanges, and cloth does not have the right properties to be useful in transactions. His solution didn’t fix anything.

    1. Very interesting response to the debate! It’s always very cool to see a different take on something like this… and just how differently we understand how largescale economics “work”, as compared to how people used to understand them. I think certainly from our own perspective there are a lot of very strange, “but wait, that’s not how econ works at all!” arguments presented… so it’s quite the task to see the effectively “alien” thought processes that were the arguments of the day in the 8th century imperial court.

      Thanks for the great writeup and link to your article!

      CS

  2. Chief Minister Zhang may have the “right” idea, though for a different reason from that behind the Fed. It is true that convention and government give legitimacy to any currency. But historically, natural scarcity, not just artificial scarcity, has been an important attribute of a currency. The crisis itself is caused by shortage of cast material, and privatization would not change this scarcity factor. Today, the Bitcoin movement is gaining momentum precisely because it picks up what is left out of the greenback. On the same note, I does Zhang Jiulin’s privatization plan also include a provision to control scarcity? After all, scarcity control is the central function of the Fed and all central banks around the world.

    On a separate note, that Li Linfu is considered a legalist gives me a pause. I wonder how Chairman Mao and his theorists played this episode. After Lin Biao’s death, Mao famously declared the entire Chinese history – at least since feudalism, an incessant line of struggles between the Confucianism and Legalism, with a clearcut attribution to Legalism of anything progressive and any force in line with the need of the populous. But despite Mao’s unorthodox views on history, I have to doubt if Mao would take the side of Li Linfu. (Unfortunately I didn’t pay much attention to these details back then. Still, if many revolutionary historians of the day played Li way up, it would have left an impression on me, I would like to think.)

    Mao’s view and Ouyang Xiu’s aside, in two fights presented in this episode, it seems that Zhang Jiulin is behaving like a carry-law-to-the-letter Legalist whereas Li Linfu behaves like a rules-bending Confucianist.

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