ABSTRACT
Concomitant with China’s rise as an economic power, we observe an increasing impact of China on economic thinking. Currently, this happens mostly by the force of example. China’s rise questions some established standards in economic theory, especially in contrast to certain basic assumptions of the so-called Washington consensus in development economics (Rodrik 2006). China’s experience was an important input into the careful revision of certain ideas about strategies of development, summarized in the Growth Report (Commission on Growth and Development 2008), which has been also recognized by theWorld Bank, the major foreign adviser to Chinese economic policy after 1978. This special role of China was also reflected in the appointment of a Chinese economist asWorld Bank Chief Economist, Justin Lin Yifu, who is currently promoting a ‘New Structural Economics’ as an innovative framework for development economics (Lin 2010). Beyond this power of example, recently, China also has begun to submit proposals for reforms of the international economic order, especially with regard to the international monetary system. These observations raise the question of whether China can also emerge as a
major source of ideas about economics and economic policy in the near future. This question can be framed in two different ways. One is to ask whether Chinese economists will contribute to the development of economic science, as it stands. This will necessarily happen, and certainly already happens, reflecting the increasing internationalization of Chinese scholarship as a result of the past history of the massive ‘studying abroad’ phenomenon, among other factors. The other perspective on the question refers to the deeper level of the underlying philosophy and ideology of economics. For a long time, this question would have been seen in the light of the traditional and now obsolete contrast between modern economics and Marxism. Today, the ideological foundations of modern Chinese economic development are obscure and mostly seen as non-existent, in the sense of the diagnosis of endemic pragmatism and, possibly, even political cynicism, since what seems compatible with maintaining the current political system also appears to be acceptable as economic policy, as long as the policy fosters economic growth. In this chapter, I wish to focus on this second perspective, yet at an even deeper
level. This is the question how far Chinese culture could be a source of novelties
in modern conceptions about the fundamentals of economics and economic policy (for my approach to Chinese culture in general, see Herrmann-Pillath 2006, 2009a). This inquiry is different from the search for specific economic ideas emerging from reflections on the rise of China, because it refers to both the domain of economic and philosophical thinking and the domain of general values and conceptions of economic life as embedded into society (for an anthropological view on this relation, see Gudeman 1986). The latter dimension is of interest in the context of economics, because one of the commonplaces of cultural analysis in economics is the assignment of China to the set of so-called ‘collectivist’ cultures in the world. The distinction between ‘individualism’ and ‘collectivism’ is standard lore in the management sciences (Hofstede 1991) but has been also introduced into economics, especially in the context of research into the long-run determinants of economic development (Greif 1994, Greif and Tabellini 2010). This notion does not refer to ideological components of Chinese culture but mainly to behavioral patterns, in the sense of a confluence of social-psychological tendencies and socialstructural facts. Behavioral patterns have been in the focus of many theories about economic development, such as Max Weber’s famous protestantism hypothesis. Very often, they are seen as building blocks of general sets of cultural values which ultimately also find expression in ideologies, such as economic liberalism, which emphasizes the importance of individual liberty and entrepreneurship. Recently, many economists are therefore inclined to highlight long-run legacies of past endowments with institutions, such as different patterns of colonial rule, and therefore tend towards a theory of cultural determinism in economic development (La Porta et al. 1997, Acemoglu et al. 2001, Acemoglu et al. 2002, Guiso et al. 2006; with reference to China: Landes 2006). There is no doubt that China is undergoing landslide social changes, which will
also affect those behavioral patterns, and that there is a lively exchange of ideas between China and the world. In this chapter, I wish to explore the potential of these changes as far as China’s role as a source of inspiration in economic thinking is concerned, in the sense of basic conceptions of economic policy and the relation between the economy and society (that is, I do not talk about economics specifically as a scientific discipline). So, I do not venture to identify the existing impact of China but I explore the field in a creative way, as a project in transcultural communication and synthesis. My question is whether we can imagine a ‘third culture’ in economics, in the sense in which this term is used in the theory of crosscultural communication (Casmir 1999; for an earlier attempt, see Herrmann-Pillath 2010). However, this creative exploration builds on a series of facts about China that seem to be neglected especially in those approaches, which emphasize collectivism as a major cultural feature. I put together two perspectives on China. One is the behavioral perspective on collectivism. This mainly refers to fundamental conceptions about economic behavior and social interaction in Chinese popular culture, especially in the rural society; that is, the ‘little tradition’ in anthropological parlance. Considering social change in China today, the dominating force is urbanization and rural change, which will also increase the impact of traditional ways of life on the modern economy; for example, in the context of family business
(and not just trigger the modernizing force of urbanization, to which rural society would passively adapt) (for a programmatic statement on this, seeYang 2008). The other perspective sheds light on the ‘great tradition’; that is, in a very broad sense, the meaning of Confucianism in the context of the economy. There is a revival of Confucianism in China today but this might mostly reflect political expedience and the search for national identity after Marxism lost its legitimacy. My interest in classical Chinese thinking flows from my project of creative interpretation: Can we imagine to make sense of certain Confucian principles in the modern world? This exercise is similar to Amartya Sen’s (2009) approach to employ terms from classical Indian philosophy to build a modern theory of justice. Such an approach aims at writing a de-centered intellectual history of the world that does not claim actual lines of impact in the history of ideas, but that reconstructs this history in search for commonalities, shared questions and the potential for future conceptual innovations that arise from those ideational discoveries. That being said, it is important to recognize that common views on ‘modernization as Westernization’ systematically misperceive the factual impact of flows of ideas from East to West throughout history (Hobson 2004). How can we succeed in both endeavours and establish a common framework?
There are few theoretical approaches that fuse intellectual history and behavioral analysis, in the sense of historical anthropology and social history. One of them is the work by the sociologist Norbert Elias (1969), who argued that changing patterns of behavior in Western Europe eventually also resulted in principled ideological conceptions about the separating line between the individual and ‘society’ as an abstract idea. Once those conceptions were established, they also gave rise to corresponding narratives about large-scale social and intellectual changes, which have always come close to teleological ideas about progress towards modernity, liberty, individualism, and democracy. In this context, global intellectual history was also implicitely truncated to reflect this self-conception of the West. A foremost example is Adam Smith, whom I also put in the center of this
chapter, for that very reason. In doing this, my argument is a companion to Arrighi’s (2007) book, provocatively entitled Adam Smith in Beijing. However, whereasArrighi emphasizes certain structural characteristics of China’s ‘Smithian’ economic system, past and present, I concentrate on the cultural dimension. Smith is regarded as the father of modern economic thinking, especially in terms of its ideological foundations of individualistic liberalism. At the same time, Smith was a behavioral scientist, and his ideas about the economy were rooted in empirical observations about human behavior, especially of the moral kind. Recently, economists have revived their interest in Smith as a behavioral scientist, and have therefore rediscovered his magisterial Theory of Moral Sentiments (Ashraf et al. 2005; Smith [1759] 1976). Indeed, in the history of economic thought, we notice a bias, if not a distortion in claiming Smith as the father of economics, as he was a moral philosopher in the first place. The complexity of his behavioral theory stays in stark contradiction with his reception in economics, and was perceived as the ‘Adam Smith problem’ for a long time (finally settled in the 1976 Glasgow
edition; see Raphael and Macfie 1976). I interpret the history of the ‘Adam Smith problem’ as an indicator of the fundamental issue of how far the reception of past ideas is actually a part of the narrative that renders current developments meaningful. If that is the case, a new question looms large: How far can we reach a reassessment of Western intellectual history if we see it in the light of an entirely different and mostly autonomous culture? In other words, reading Smith through the lense of Confucius, what do we see? And how far can what we see contribute to conceptual innovation in the future? Especially, what are the implications for the idea of a liberal economy and society? Classical Chinese thinking was mainly moral philosophy, and so we may ask
what are the commonalities and differences between Confucianism and Smith, the moral philosopher? The results of this inquiry are also important for analyzing the behavioral aspects of Chinese culture. As a first step, we can ask in which way Smith’s notions of morality were compatible with related conceptions in Chinese popular culture. In the second step, we have to notice the complex interaction between ‘little tradition’ and ‘great tradition’ in China. Here, the meanings of the term ‘Confucianism’ are ambivalent, reaching from certain elements of popular culture to the philosophical viewpoints of different groups of scholars and eventually to the official ideology of the Chinese empire. On all levels, Confucianism is a construct which in fact synthesizes different ideas stemming from Daoism, Buddhism or the ancient doctrine of Legism with different weights and emphasis, respectively. Official Confucianism adapted elements from popular culture, but often also stood in contrast to it, aiming at the moral transformation of society (for example, regarding the family, see Ebrey 1991). These tensions were part and parcel of Chinese folk religion and popular beliefs about society (see, for example, Feuchtwang 1992). At the same time, Confucian ‘social engineering’, especially with regard to the extended family and its underlying values, was a major force in shaping the homogeneity and resilience of traditional culture in China, ultimately showing the way to an indigenous, yet close to modern national identity already in Ming times (Faure 2007). In this chapter, owing to the limited space available, I can only sketch a rough
argument. I begin with an inspiring, although controversial, recent contribution by a Chinese economist and intellectual, who argues that China’s rise may be linked with the global transition to cosmopolitanism, and that this has historical roots in classical Chinese thinking, which he sees as a direct precursor to modern economics as it has been seminally shaped by Adam Smith. In the next section, I put these reinterpretations of classical Chinese thought in the context of our current revisionist view on Chinese economic and social history, which describes Imperial China as a market economy and society sui generis. I then sketch the cultural legacy of this historical structure salient in the ‘little tradition’ of rural China today. Finally, I pull all the threads of the argument together in a synopsis of family resemblances between Confucianism and Adam Smith. I conclude with some observations about the emerging ‘third culture’ in economics that can be discerned from these observations.
