ABSTRACT
This chapter focuses on the relations between the Qing dynasty and Shanxi piaohao before 1895. It replaces the state-market dichotomy with a trichotomy of Shanxi piaohao as private financiers, provincial bureaucrats, and the central government as the chapter’s analytical framework. The year 1895 marked a watershed in the Qing government’s shift from decentralized to centralized fiscal governance, which also served as a historical divider between this and the following chapters. The significance of applying a three-level system to the political economy of the Chinese hinterland capitalism is threefold. First, it affirms the crucial role of a liberal market in the independent emergence and development of piaohao. Second, the growing inconsistency between the Qing’s centralized political governance versus decentralized fiscal management reflected through the complex roles played by provincial bureaucrats better explains the reason for the economic divergence between China and the West. Third, it demonstrates the decisive role played by the state’s fiscal governance in shaping and reshaping private finance. Overall, the chapter serves as a critique of economic and business histories, which often reduced the study of capitalist development in non-Western countries to a static dichotomy of the state as a monolithic whole and an abstract market immune to state intervention.
