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Chinese Classic Economics

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Author: Zhong Yongsheng

ISBN: 978-1-84464-466-7

Ebook ISBN: 978-1-84464-467-4

Hardback-520 pages

July 31, 2016


£80 €100 $130



Modern economics come from western countries. They are the mirrors of the economic conditions of these countries and the way they talk about economic phenomena is under the logic of western philosophy. But in fact, as a culture of long history, China has its own “classic economics”, though it hides behind modern context. The author re-discovers the Chinese classic economics from scriptures and historical records. This book not only contains the academic explanation of a long forgotten economic theory system but also offers us a new prospect to understand the modern world. This area this book covers is unique and totally new. People always consider economics is rather young. But in fact, economic thoughts, which influenced by many different aspects, exist for a long time. This book tries to re-discover the long hidden economic thoughts in ancient Chinese culture. It provides us a new way to understand the model and the unique patterns of modern China’s economic behavior. Whenever we refer to economics, whether economics of Adam Smith, Keynes or even Karl Marx, we are always referring to something “western”. There are few books talking about the economic thoughts in ancient China. This book has few competitors. It will appeal to a worldwide audience of students and scholars of economics. This area this book covers is unique and totally new. People always consider economics is rather young. But in fact, economic thoughts, which influenced by many different aspects, exist for a long time. This book tries to re-discover the long hidden economic thoughts in ancient Chinese culture. It provides us a new way to understand the model and the unique patterns of modern China’s economic behavior. Whenever we refer to economics, whether economics of Adam Smith, Keynes or even Karl Marx, we are always referring to something “western”. There are few books talking about the economic thoughts in ancient China. This book has few competitors. It will appeal to a worldwide audience of students and scholars of economics.



Preface: The Meaning of Jing Ji I Self-Preface: Start University Life with The Great Learning III Contents VII Chapter I. Introduction: China Has Its Own Original Economics 1 1. Why China has its original economics? 4 1.1 Historical facts reveal the principles 4 1.2 Historical data disclose the principles 5 1.3 The marvelous principles originate from nature 7 2. Why recent Chinese people not know their original economics? 16 2.1 The historical reason 16 2.2 Reason of the unique cultural system 17 2.3 Reason of the unique learning way 20 3. What distinguishes Chinese classic economics from western economics? 23 3.1 Differences between Chinese classic economics and western economics 23 3.2 Significant meanings of Chinese classic economic in present day 25 3.3 A review of “common knowledge in western economics” in the framework of Chinese classic economics 29 3.4 Theoretical problems to be solved for rebuilding Chinese classic economics 39 4. Main ideas of the book 41 4.1 The meaning of “Jing Ji” in Chinese classics 41 4.2 Main theoretical clues of Chinese classic economics 45 4.3 Basic principles of Chinese classic economics 49 5. Some reading suggestions 57 Chapter II. Fundamental Concepts of Chinese Classic Economics 63 1. View of universe: Created from self-nature 65 1.1 The concept of self-nature in the Chinese classics 67 1.2 The concept of self-nature in modern physics 71 1.3 Interpretation from the perspective of general relativity theory 82 1.4 The process of “the One brings forth all” in historical culture 86 2. View of life: Nature and man are One 91 2.1 Life shaped by oneself 92 2.2 Ten qualities: Dao, virtue, benevolence, righteousness, propriety, wisdom, trustiness, bravery, strength and harmony 101 2.3 Ethical principles outside reflect the Five Elements inside 132 2.4 Explanation of life with the Integral Calculus 139 3. View of value: Wealth is the fruit of the virtue tree 141 3.1 Wealth and virtue are twins 141 3.2 One common misconception: “Of the honored and exalted there are none greater than he who is rich and noble” 146 3.3 The false proposition: Debates over righteousness and benefit 148 Chapter III. Fundamental Axioms of Wealth in Chinese Classic Economics 154 1. Axioms on the nature of wealth 155 1.1 Ethics originates from nature 155 1.2 Virtue is the root of wealth 157 1.3 Wealth is gained from good virtue 160 2. Axioms on the production of wealth 163 2.1 Self-nature embodies all 163 2.2 Minds and thoughts are the determinants 166 2.3 Giving is receiving 175 2.4 Accumulation of virtue changes destiny 177 2.5 The Heaven rewards the diligent 179 2.6 Harmony breeds wealth 181 3. Axioms on the phenomena of wealth 185 3.1 Different types of wealth 185 3.2 Wealth is not determined by the type of profession 187 3.3 Wealth collected in unrighteous ways will be lost in similar ways 188 3.4 Wealth in the past, present, and future lives 190 3.5 The ancestors’ good virtue benefits descendants 193 4. Axioms on the use of wealth 194 4.1 Luxurious enjoyment and waste reduce lifespan 194 4.2 Hoarding wealth keeps one away from Dao 195 4.3 Giving is receiving 196 Chapter IV. Theoretical Framework and Research Paradigm of Chinese Classic Economics 199 1. Logic premise and the starting point of analysis: Motivation, action and realization of altruism 200 1.1 Self and others as one: Self-interest, altruism and win-win 200 1.2 Private property, motivation of altruism and social equity 208 1.3 The nature of market price: A point achieved by both altruism and self-interest 213 2. The basic nature of economic resources: The consequences of virtuous deeds 216 2.1 “Nature and man are in one” and the law of cause and effect 216 2.2 The right man at the right time for the right technologies and resources 218 3. Government and market: The two intertwined natural orders 220 3.1 The nature of government and market 220 3.2 The driving force of market: Self-improvement rather than competition 224 3.3 The boundary of government behaviors: “Not to disturb” 226 3.4 “The invisible hands”: Morality rather than the market 236 3.5 Root causes of the market risk: “Lack of virtue in the past lives” and “losing virtue in the present life” 238 4. Virtue capital: The third form of capital 239 4.1 Physical capital: The tangible asset of virtue capital 240 4.2 Human capital: The transformed asset of virtue capital 241 4.3 Virtue capital: Accumulation of good deeds as capital 242 5. Methodology of unifying inner verification and outer practice: Interactive changes of Yin and Yang, movements of the Five Elements, and deductions based on the Eight Trigrams 244 5.1 The economic implications of The Yellow Emperor’s Inner Canon 244 5.2 Mathematical economics in the Book of Changes 254 5.3 The economic forecasts based on the Book of Supreme World Ordering Principles 258 5.4 Research approaches and methods: Inner verification, comprehensive perception and in-accord-with-known action 265 Chapter V. Interpretation of the Economic Phenomena Based on Chinese Classic Economics 267 1. Consciousness, behaviors and economic phenomena 267 1.1 Ethics, psychology and physiology 268 1.2 The Dao following nature, spontaneous order and the economic institutions 275 1.3 The hierarchy structure of Chinese classic economics 279 2. Eight aspects of economic phenomena 281 2.1 Essence, phenomena, and functions 282 2.2 Causes, consequences and conditions 284 2.3 Facts and principles 285 3. Ethics and morality determines the transaction cost of the economic institutions 286 3.1 Four standards: In accordance with Dao, virtue, principle and law 286 3.2 Contracts are substitute for ethics 289 4. The economic system and employment system of ancient China 291 4.1 Contracts of ethics: Follow the etiquette and act according to the position 292 4.2 Contracts of patents: Skills inheriting from family tradition 296 4.3 The employment contract: Names are carved to be truthful 297 Chapter VI. Historical Evidence of Chinese Classic Economics (I): Good Fortune Stems from Good Virtue 299 1. The “Grand Times” in Chinese history 300 1.1 The legendary saints: Governance by good virtue 302 1.2 Rule of Wen and Jing: Simple and modest, benefit all generations 307 1.3 Golden Years of Zhenguan Administration: Restrain oneself and follow the advices, practice good administration diligently 313 1.4 Prosperity of Kangxi and Qianlong: One employment supported ten persons 327 2. The “Resurgence Periods” in Chinese history 329 2.1 Yi Yin and Tai Jia: Introspection of emperor and trustiness of minister 329 2.2 Gou Jian restored his country: Enduring hardship with vigorous efforts 332 2.3 Resurgence by Guangwu: Cease military activities and promote culture and education, brighten the good virtues of ancestors 335 3. Ethical evaluation of reforms in Chinese history 337 3.1 Reform of Shang Yang: Strengthen the national power but hurt the human relationships 338 3.2 Reform of Wang Anshi: Win good time but lose harmony between people 341 4. Economists justified by Chinese classic economics and their theories 345 4.1 Guan Zhong: Establishment of the principles that match with the facts 347 4.2 Fan Li: A sage of business who retreated modestly to himself 362 4.3 Bai Gui:“Father of Business” who possessed wisdom, benevolence, bravery and strength 370 4.4 Yan Ying: Help people without singing his own praise, remedy the misbehaviors of three emperors without taking rewards 373 4.5 Xiao He and Cao Shen: Cao followed Xiao’s rules as they were both well aware of the principles of management 374 5. Be benevolent to achieve longevity: Virtues for century-old shop 378 Chapter VII. Historical evidences of Chinese Classic Economics (II): Losing Virtue Induces Bad Consequences 382 1. Bad virtue and bad deeds of the last emperors and the fall of the dynasties 383 1.1 Main aspects of bad virtue and bad deeds of the last emperors 383 1.2 Typical examples of the last emperors 387 1.3 Examples of emperors causing the state going from prosperity to decline 395 2. Bad virtue and bad deeds of ministers and the social unrest 400 2.1 Zhao Gao and the downfall of the Qin Dynasty 400 2.2 Yang Guozhong, Li Linfu and Rebellion of An and Shi 402 3. Bad virtue and bad deeds of people and the decline of their families or enterprises 403 3.1 Unrighteous behaviors induce the loss of wealth and the fall of family 403 3.2 Bad virtue is the root cause of the fall for century-old shop 407 Chapter VIII. The Crisis of Western Economics and the Rescue: From the Perspective of Chinese Classic Economics 412 1. Why western economics comes to an end 413 1.1 Groundless assumptions 413 1.2 Paradoxical logical systems 415 1.3 Self-righteous model designs 418 1.4 Half known explanations for the phenomena 419 1.5 Split of Macro and Micro 421 1.6 Theoretical defense lacks sincerity 422 2. Inner causes for the crisis of western economics: Away from ethics and reality 426 2.1 Marshall: Worry about the split of economics and ethics in the speak in Royal Economic Society 427 2.2 Hayek: The ultimate ends of the activities of reasonable beings are never economic 429 2.3 Coase and Steven Cheung:“Economics” has nothing to do with the real-world 430 2.4 Armartya Sen: Calling for bringing economics closer to ethics 433 2.5 Akerlof and Shiller: A “new findings” of animal spirits 433 2.6 Soros: Proposing “Theory of Reflexivity”, conclusively demonstrating the inadequacy of the Efficient Market Hypothesis 436 2.7 He Xin: Anti-mainstream economics 440 3. The original principles of western economics: Ethics and economics 442 3.1 Virtue and wealth in western history of thought 442 3.2 The original intention of Adam Smith and his limitations 444 3.3 Adam Smith founded the western economics with two books 447 4. The integration and development of Chinese classic economics and western economics 449 4.1 Renaissance of Chinese economics and rescue of western economics 449 4.2 Fundamental methodology to be learnt by western economics: The complete, perceptive and practical researches in China 453 4.3 From Confucius to Hayek: “Following the desire of his heart without breaking the laws” V.S. “Achieving freedom by self-discipline” 460 4.4 From Laozi to Adam Smith: “Act naturally as if taking no-action” in China V.S. “Night watchman” in the west 462 4.5 From Guanzi to Armartya Sen: “When the barn is full, man appreciate rites and etiquette” V.S. “A serious distancing between economics and ethics” 465 Chapter IX.A Balanced Economy: The Road to Harmony 467 1. The essential nature of a balanced economy: The ethics of Middle-way 469 1.1 The great law of nature: Act naturally as if taking no-action 469 1.2 The Middle-way economy: All are shaped by ethics 473 2. Four basic elements of a balanced economy 476 2.1 Ethical self-discipline 476 2.2 Freedom of contract 480 2.3 Self-conscious government 482 2.4 Leave wealth with the people 486 3. The “socialist market economy” is actually a balanced economy: A re-interpretation of China’s 30 years reform and opening-up from the perspective of Chinese classic economics 491 3.1 From planned to market: Free the mind and release the vitality 495 3.2 Watch out for an uncontrolled market: Risks and problems 496 3.3 A harmonious Middle-way economy: Past and future 498 Chapter X. Conclusions: New Economics, New School and New Education of Economics 502 1. Spring has returned: The rebirth of Chinese Classic Economics 502 1.1 A brief review of the main contents 504 1.2 What’s left 506 2. Awaken and act: The rising of School of Chinese Classic Economics 507 2.1 The establishment of School of Chinese Classic Economics 508 2.2 The tasks of School of Chinese Classic Economics 509 3. Behave in accord with what you have known and comprehended: Reforms in the education of economics following Chinese Classic Economics 512 3.1 Existing problems in current education of economics 512 3.2 Guidance for education in universities of finance and economics: Behave in accordance with what you have learnt 515 3.3 Policy suggestions 518 Postscript: More Is Left: A New Start Rather Than an End 521


About author:

Dr.Yongsheng Zhong graduated from Dongbei University of Finance and Economics in China. He dedicates his research to the influence of Chinese culture on China’s economy and finance.

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