ABSTRACT
To conceptualize the relation between the state and the market emerging in the 1980s, this book takes a longue durée perspective that acknowledges China’s distinct institutional legacy of price regulation through state participation in the market. Chapter 1 introduces the Guanzi as a core text in ancient Chinese economic thought on price stabilization. The Guanzi articulates the so-called “light–heavy” (轻重, qingzhong) principles, to distinguish the heavy, “important” or “essential” from the light, “unimportant” or “inessential.” Essential subsistence goods and production inputs are always “heavy,” while the relative importance of each commodity shifts with market fluctuations. According to this theory, the state’s participation in the market should be focused on “heavy” goods. The second part of Chapter 1 sheds light on the Salt and Iron Debate as the classic statement of two competing visions for the relation between the state and the economy. In this debate, merchant bureaucrats contest with literati on the question of whether the state should hold a monopoly over production and commerce of strategic commodities such as salt and iron. Two competing views on the role of state regulation and the market become apparent: idealist laissez-faire and pragmatist policy activism.
