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The Asia-Pacific Journal | Japan Focus Volume 6 | Issue 1 | Article ID 2630 | Jan 01, 2008 1 Historical Perspectives on States, Markets and Capitalism, East and West Giovanni Arrighi Historical Perspectives on States, Markets and Capitalism, East and West Giovanni Arrighi Giovanni Arrighi, an authority on the political economy and geopolitics of world social change, here reflects comparatively on states and markets East and West at the dawn of capitalism. Ranging widely across Smith, Marx, Weber and Braudel, he assesses the logic and interplay of China’s tribute trade system and Europe’s emerging capitalism. This article draws on and extends a chapter from his new book, Adam Smith in Beijing. Lineages of the Twenty-First Century (http://www.versobooks.com/books/ab/a-titles/a rrighi_g_adam_smith_beijing.shtml) , which looks across the last five hundred years to consider the emerging position of East Asia in an epoch that marks the end of US hegemony. MS The Five-Hundred Years’ Peace One of the great myths of Western social science is that national states and their organization in an interstate system are European inventions. In reality, except for a few states that were the creation of European colonial powers (most notably, Indonesia, Malaysia and the Philippines), the most important states of East Asia–from Japan, Korea, and China to Vietnam, Laos, Thailand and Kampuchea–were national states long before any of their European counterparts. What’s more, they had all been linked to one another, directly or through the Chinese center, by trade and diplomatic relations and held together by a shared understanding of the principles, norms, and rules that regulated their mutual interactions as a world among other worlds. As Japanese scholars specializing in the China-centered tribute trade system have shown, this system presented sufficient similarities with the European interstate system to make their comparison analytically meaningful. [1] Both systems consisted of a multiplicity of political jurisdictions that appealed to a common cultural heritage and traded extensively within their region. Although cross- border trade was more publicly regulated in East Asia than in Europe, since Song times (960-1276) private overseas trade had flourished and transformed the nature of tribute trade, the main purpose of which, in Takeshi Hamashita’s words, “came to be the pursuit of profits through the unofficial trade that was ancillary to the official system.” Analogies can also be detected in the interstate competition that characterized the two systems. The separate domains that were held together by the tribute trade system centered on China were “close enough to influence one another, but... too far apart to assimilate and be assimilated”. The tribute trade system provided them with a symbolic framework of mutual political-economic interaction that nonetheless was loose enough to endow its peripheral components with considerable autonomy vis-a-vis the Chinese center. Thus, Japan and Vietnam were peripheral members of the system but also competitors with China in the exercise of the imperial title awarding function, Japan establishing a tributary type

Transcript of Historical Perspectives on States, Markets and Capitalism ... · Giovanni Arrighi Historical...

Page 1: Historical Perspectives on States, Markets and Capitalism ... · Giovanni Arrighi Historical Perspectives on States, Markets and Capitalism, East and West Giovanni Arrighi Giovanni

The Asia-Pacific Journal | Japan Focus Volume 6 | Issue 1 | Article ID 2630 | Jan 01, 2008


Historical Perspectives on States, Markets and Capitalism,East and West

Giovanni Arrighi

Historical Perspectives on States, Marketsand Capitalism, East and West

Giovanni Arrighi

Giovanni Arrighi, an authority on the politicaleconomy and geopolitics of world socialchange, here reflects comparatively on statesand markets East and West at the dawn ofcapitalism. Ranging widely across Smith, Marx,Weber and Braudel, he assesses the logic andinterplay of China’s tribute trade system andEurope’s emerging capitalism. This articledraws on and extends a chapter from his newbook, Adam Smith in Beijing. Lineages of theT w e n t y - F i r s t C e n t u r y(http://www.versobooks.com/books/ab/a-titles/arrighi_g_adam_smith_beijing.shtml), whichlooks across the last five hundred years toconsider the emerging position of East Asia inan epoch that marks the end of US hegemony.MS

The Five-Hundred Years’ Peace

One of the great myths of Western socialscience is that national states and theirorganization in an interstate system areEuropean inventions. In reality, except for afew states that were the creation of Europeancolonial powers (most notably, Indonesia,Malaysia and the Philippines), the mostimportant states of East Asia–from Japan,Korea, and China to Vietnam, Laos, Thailandand Kampuchea–were national states longbefore any of their European counterparts.What’s more, they had all been linked to oneanother, directly or through the Chinese

center, by trade and diplomatic relations andheld together by a shared understanding of theprinciples, norms, and rules that regulatedtheir mutual interactions as a world amongother worlds. As Japanese scholars specializingin the China-centered tribute trade system haveshown, this system presented sufficientsimilarities with the European interstatesystem to make their comparison analyticallymeaningful. [1]

Both systems consisted of a multiplicity ofpolitical jurisdictions that appealed to acommon cultural heritage and tradedextensively within their region. Although cross-border trade was more publicly regulated inEast Asia than in Europe, since Song times(960-1276) private overseas trade hadflourished and transformed the nature oftribute trade, the main purpose of which, inTakeshi Hamashita’s words, “came to be thepursuit of profits through the unofficial tradethat was ancillary to the official system.”Analogies can also be detected in the interstatecompetition that characterized the twosystems. The separate domains that were heldtogether by the tribute trade system centeredon China were “close enough to influence oneanother, but... too far apart to assimilate andbe assimilated”. The tribute trade systemprovided them with a symbolic framework ofmutual political-economic interaction thatnonetheless was loose enough to endow itsperipheral components with considerableautonomy vis-a-vis the Chinese center. Thus,Japan and Vietnam were peripheral members ofthe system but also competitors with China inthe exercise of the imperial title awardingfunction, Japan establishing a tributary type

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relationship with the Ryukyu Kingdom, andVietnam with Laos. [2] Sugihara explicitlymaintains that the diffusion of the besttechnology and organizational know-how withinEast Asia makes it “possible to think of thepresence of an East Asian multi-centeredpolitical system... with many featuresanalogous to the interstate system in Europe.”[3]

These similarities make a comparison of thetwo systems analytically meaningful. But oncewe compare their dynamics, two fundamentaldifferences become immediately evident. First,as argued elsewhere, the dynamic of theEuropean system was characterized by anincessant military competition among itsnational components and by a tendency towardthe geographical expansion both of the systemand of its shifting center. [4] Long periods ofpeace among European powers were theexception rather than the rule. Thus, the“hundred years’ peace” (1815-1914) thatfol lowed the Napoleonic Wars was “aphenomenon unheard of in the annals ofWestern civilization.” [5] Moreover, evenduring this hundred years’ peace Europeanstates were involved in countless wars ofconquest in the non-European world and in theescalating armament race that culminated inthe industrialization of war. While the initialresult of these involvements was a new wave ofgeographical expansion which dampenedconflicts within the European system, theireventual result was a new round of wars amongE u r o p e a n p o w e r s ( 1 9 1 4 - 1 9 4 5 ) o funprecedented destructiveness. [6]

In sharp contrast to this dynamic, the EastAsian system of national states stood out forthe near absence of intra-systemic militarycompetition and extra-systemic geographicalexpansion. Thus, with the exception of China’sfrontier wars to be discussed presently, prior totheir subordinate incorporation in theEuropean system the national states of the EastAsian system were almost uninterruptedly at

peace with one another, not for one-hundred,but for three-hundred years. This three-hundred years’ peace was bracketed by twoJapanese invasions of Korea, both of whichprecipitated a war with China–the Sino-Japanese wars of 1592-98 and 1894-5. Between1598 and 1894 there were only three brief warsthat involved China–the 1659-60 and the1767-71 wars with Burma, and the 1788-89 warwith Vietnam, and two wars that did not involveChina–the Siamese-Burmese Wars of 1607-18and of 1660-2. Indeed, in so far as China isconcerned, we should speak of a five-hundredyears’ peace, since in the two-hundred yearspreceding the 1592 Japanese invasion of KoreaChina was at war against other East Asianstates only during the invasion of Vietnam in1406-28 to restore the Tran dynasty. [7]

The infrequency of wars among East Asianstates was associated with a second crucialdifference between the East Asian andEuropean systems: the absence of any tendencyamong East Asian states to build overseasempires in competition with one another and toengage in an armament race in any waycomparable to the European. East Asian statesdid compete with one another. Sugihara, forexample, detects a competitive relation in twocomplementary tendencies typical of TokugawaJapan (1600-1868): its attempt to create atribute trade system centered on Japan insteadof China, and its absorption of technologicaland organizational know-how in agriculture,mining and manufacturing from Korea andChina. Through these tendencies, as HeitaKawakatsu put it, “Japan was trying to becomea mini-China both ideologically and materially.”[8] This kind of competition, however, drovethe East Asian developmental path towardstate-and-national-economy-making rather thanwar-making and territorial expansion–that is inthe opposite direction of the European path.

This contention may seem to be at odds withthe long series of wars that China fought on itsfrontiers during the closing years of Ming rule

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and in the first 150 years of Qing rule. As PeterPerdue has noted, the history of the China-centered system appears in a different lightwhen seen from a “frontier perspective.” Thepresence of nomadic horsemen who raided theborders and sometimes conquered the Chinesecapital made military activity particularlyprominent in the history of China’s north andnorthwest frontier. Military activity becamemore prominent when northern conquerors in1644 established the Qing dynasty and set outto ensure that other northern invaders wouldnot do to them what they had done to the Ming.

In the north and northwest, Chinafaced much more powerful andmore sharply distinctive peoplesthan on other frontiers. Here itwas very clear that the threat offorce undergirded the trading-ritual order. The Qing could onlys e r i o u s l y c l a i m t o b e t h euncontested central pole of atribute system focused on Beijingafter they had created militarya l l iances wi th the EasternMongols, exterminated the rivalWestern Mongols, conqueredXinjiang, and secured formalsuzerainty over Tibet. [9]

The territorial expansion that ensued, and themilitary activities that sustained it, fixed theboundaries that all subsequent Chineseregimes would struggle to preserve. Their mainpurpose was the transformation of a hard-to-defend frontier into a pacified periphery and abuffer against raiders and conquerors fromInner Asia. Once the objective had beenattained, as it was by the 1760s, territorialexpansion ceased and military activities turnedinto police activities aimed at consolidating themonopoly of the Chinese state over the use ofviolence within the newly establishedboundaries. Although quite substantial, this

territorial expansion paled in comparison withthe succes s i ve waves o f Europeanexpansion–the earlier Iberian expansion in theAmericas and southeast Asia; the contemporaryRussian expansion in north Asia and Dutchexpansion in southeast Asia; not to speak of thelater expansion of Britain in South Asia andAfrica and of its offspring in North America andAustralia. Unlike these successive waves, theQing expansion was strictly limited in spaceand time by its boundary-drawing objectives,rather than a link in an “endless” chain ofconnected expansions.

The difference was not just quantitative butqualitative as well. China’s territorial expansionunder the Qing was not embedded in the kindof “self-reinforcing cycle,” whereby thecompeting military apparatuses of Europeanstates sustained, and were sustained by,expansion at the expense of other peoples andpolities of the earth. [10] No self-reinforcingcycle of this kind could be observed in EastAsia. Qing China’s territorial expansion wasneither driven by, nor did it result in,competition with other states in extractingresources from overseas peripheries. The logicof political economy associated with this latterkind of competition had little in common withChina’s practices. “Rather than extractresources from peripheries, the Chinese statewas more likely to invest in them. Politicalexpansion to incorporate new frontierscommitted the government to a shift ofresources to the peripheries, not extractionfrom them.” [11]

These different dynamics of the European andEast Asian systems were closely related to, andin key respects determined by, two otherdifferences–a difference in the distribution ofpower among the systems’ units, and adifference in the degree to which the primarysource of power was internal or external to thesystem. Even before the “extended” sixteenthcentury in European history (1350-1650) andthe Ming era in East Asian history (1368-1643),

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political, economic, and cultural power in EastAsia was far more concentrated in its center(China) than in Europe, where a center properwas much harder to identify. But the differencebecame sharper with the defeat in 1592-98 ofJapan’s attempt to challenge militarily Chinesecentrality by conquest in Korea and theinstitutionalization of the European balance ofpower by the Treaties of Westphalia in 1648.

The balanced power structure of the Europeansystem in itself contributed to the disposition ofEuropean states to wage war on one another.As Polanyi has underscored, balance-of-powermechanisms–the mechanisms, that is, whereby“three or more units capable of exertingpower... behave in such a way as to combinethe power of the weaker units against anyincrease in power of the strongest”–were a keyingredient in the organization of the nineteenthcentury hundred years’ peace. Historically,however, balance-of-power mechanisms hadalways attained the objective of maintainingthe independence of the participating units“only by continuous war between changingpartners.” [12] The main reason why in thenineteenth century those same mechanismsresulted in peace rather than war is thatpolitical and economic power came to be soconcentrated in the hands of Britain as toenable it to transform the balance of power,from a mechanism that no individual statecontrolled and functioned through wars, into aninstrument of informal British rule thatpromoted peace. [13]

The nineteenth century association between anincrease in the imbalance of power and adecrease in the frequency of war within theEuropean system suggests that the imbalanceof power typical of the East Asian system was areason for the infrequency of wars among EastAsian states. However, the fact that thenineteenth century concentration of power inBritish hands was accompanied by anescalation of interstate competition both in theproduction of ever more destructive means of

war and in the use of these means to gainaccess to extra-systemic resources, suggeststhat a greater imbalance of power cannot initself explain the virtual absence of these twokinds of competition in the East Asian system.Some other ingredient had to be present in theEuropean and absent in the East Asian “mix” toproduce this divergent pattern of interstatecompetition. The most plausible candidate isthe greater extroversion of the Europeandevelopmental path in comparison with, and inrelation to, the East Asian path.

Although trade within, between, and acrosspolitical jurisdictions was essential to theoperations of both systems, the economic andpolitical weight of long-distance trade relativeto short-distance trade was far greater in theEuropean than in the East Asian system.International trade in general, East-West tradein particular, was a far more important sourceof wealth and power for European than for EastAsian states, especially China. It was thisfundamental asymmetry that had made thefortunes of Venice and induced the Iberianstates, instigated and assisted by Venice’sGenoese rivals, to seek a direct link with themarkets of the East. [14] It was this sameasymmetry, as we shall see, that underlay thelow returns, relative to costs, of Zheng He’sfifteenth-century expeditions in the IndianOcean. Were it not for this asymmetry, ZhengHe might very well have sailed “around Africaand ‘discover[ed]’ Portugal several decadesbefore Henry the Navigator’s expeditionsbegan earnestly to push south of Ceuta.” [15]Columbus’ accidental ‘discovery’ of theAmericas, while seeking a shorter route to thewealth of Asia, changed the terms of theasymmetry by providing European states withnew means to seek entry in Asian markets, aswell as with a new source of wealth and powerin the Atlantic. But even two centuries after thediscovery, Charles Davenant still claimed thatwhoever controlled the Asian trade was in aposition to “give law to all the commercialworld.” [16]

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This extroversion of the European powerstruggle was a major determinant of thepeculiar combination of capitalism, militarismand territorial ism that propelled theglobalization of the European system. [17] Theopposite dynamic of the East Asian system–inwhich a growing introversion of the powerstruggle generated a combination of politicaland economic forces that had no tendencytowards “endless” territorial expansion–can betaken as counterfactual evidence in support ofthat contention. But just as the emergence ofthe extroverted European path could only beunderstood in light of the diffusion of thestrategies of power pioneered by the Italiancity-states, so the emergence of the introvertedEast Asian path can only be understood in lightof the success of Ming and Qing policies indeveloping by far the largest market economyof their times.

Market Economy and China’s “Natural”Path to Opulence

National markets are no more a Westerninvention than national states and interstatesystems. As Adam Smith knew very well butWestern social science later forgot, through theeighteenth century by far the largest nationalmarket was to be found not in Europe but inChina. [18] This national market had been longin the making, but its eighteenth-centuryconfiguration originated in the state-makingactivities of the Ming and early Qing.

Adam Smith

During the Southern Song period (1127-1276),the heavy mil i tary expenditures andreparations involved in the wars with Mongoland Tungusic peoples on China's northernfrontiers, along with the loss of control over thesilk route, and the weakening of such profitablegovernment monopolies as salt, iron and wineproduction, induced the Song court toencourage private sea trade as a source ofrevenue. Particularly significant was theencouragement of navigation technologythrough the provision of financial and technicalsupport to shipbuilders. Having pioneered theuse of the compass in navigation, the sharp-head, flat-rear and sharp-base design ofChinese junks enabled them to navigate at highspeed in turbulent seas like no other vessel inthe world. Military pressure and territoriallosses in the north provoked also massivemigrations toward southern regions, which

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were especially suitable for high-yielding wet-rice cultivation. Since under this kind ofcultivation additional inputs of labor couldincrease significantly the productivity of land,the population of these regions grew rapidly,achieving densities far higher than in Europe.Moreover, the efficiency of wet-rice cultivationin guaranteeing surpluses of food abovesubsistence enabled farmers to increase thequantity and variety of products cultivated andmarketed and to engage in non-agriculturalactivities. [19]

Under the joint impact of maritime trade andthe development of wet-rice cultivation, thecoastal regions experienced a long economicupswing based on advances in navigationtechnology, the consolidation of the “sea silkroute,” and the flourishing of Guangzhou,Quanzhou, and smaller port cities on thesoutheastern coast as centers of tributarytrade. At the same time, Chinese settlementsthroughout insular Southeast Asia boostedprivate sea trade, which surpassed officialtributary trade as the main form of economicexchange between China and maritime Asia.[20] Continuing state support for private seatrade and migration to southeast Asia underthe Yuan (1277-1368) led to the formation ofoverseas Chinese trading networks across theSouthern Seas and the Indian Ocean asextensive as any contemporaneous Europeannetwork. Under the Song and the Yuan,tendencies which would later become typical ofthe European developmental path were thusalready present in East Asia. [21]

In East Asia, however, these tendencies did notlead to interstate competition in buildingoverseas commercial and territorial empires asthey did in Europe. On the contrary, under theMing they were brought under control throughpolicies that prioritized domestic trade and, attimes, proscribed foreign trade. The shift of thecapital from Nanjing to Beijing by the Ming in1403, to protect more effectively the northernfrontier from Mongolian invasions, extended to

the north the circuits of market exchange thathad formed in the south. Moreover, in order toguarantee the supply of food to the capital andsurrounding region, the Ming repaired andextended the canal system that connected therice growing southern regions to the northernpolitical center, thereby promoting the furthergrowth of the market economy and “canalcities” in the lower Yangzi region. Alsoimportant was the early Ming’s promotion ofcotton growing in the north. The ensuingspecialization of the north in the production ofraw cotton and of the lower Yangzi in themanufacturing of cotton textiles furtherexpanded the national market by fosteringnorth-south trade along the grand canal. [22]

While promoting the formation and expansionof a national market, the Ming sought tocentralize control over revenues, by imposingadministrative restrictions on sea trade and onChinese migration to southeast Asia. AdmiralZheng He’s seven great voyages to southeastAsia and across the Indian Ocean between1405 and 1433 were also meant to extend statecontrol over foreign trade. The expeditions,however, turned out to be exceedinglyexpensive; and as the Ming became morepreoccupied with immediate military threats onthe northern frontiers, they were discontinued.For more than a century after that the Mingregime turned inward: it continued to promoteinternal trade but circumscribed privatemaritime commerce, cracked down onunauthorized external trade with maritimeAsia, restricted the number of tributarymissions, and even banned the building ofseagoing ships. [23]

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Zheng He

Janet Abu-Lughod claims that Ming China’swithdrawal from the Indian Ocean hasp e r p l e x e d – i n d e e d c a u s e d d e s p a i ramong–serious scholars for at least the pastone hundred years.” More specifically,

Close to exercising dominationover a significant portion of theglobe and enjoying a technologicaladvantage not only in peacefulproduction but in naval andmilitary might as well... why did[China] turn her back, withdrawher f leet, and thus leave anenormous vacuum of power thatMuslim merchantmen, unbackedby state sea power, were totallyunprepared to fill, but which theirEuropean counterparts would bemore than willing and able to–aftera hiatus of some 70 years? [24]

The previously noted asymmetry between thepursuit of wealth and power in the East Asianand European contexts provides a simpleanswer to this question. European states foughtendless wars to establish an exclusive controlover sea lanes linking West to East, becausecontrol over trade with the East was a criticalresource in their pursuit of wealth and power.

For the rulers of China, in contrast, controlover these trade routes was far less importantthan peaceful relations with neighboring statesand the integration of their populous domainsinto an agriculturally based national economy.It was therefore eminently reasonable for theMing not to waste resources in trying to controlEast-West sea lanes and concentrate instead ondeveloping the national market, opening upwhat Smith later took as the exemplar of his“natural” path to opulence. [25]

Indeed, even China’s “tribute trade”–the scopeof which Zheng He’s expeditions sought toexpand and the Ming subsequent l ycurtailed–had greater economic costs thanbenefits. Ever since the establishment of aunified taxation system under the Qin and Handynasties more than a thousand years earlier,tributary relations between the Chineseimperial court and vassal states did not involvethe collection of a tax. On the contrary,especially after the Tang dynasty, and with thesole exception of the Yuan dynasty, vassalstates offered the Chinese imperial court onlysymbolic gifts and received in return muchmore valuable gifts. Thus, what was nominally“tribute” was in fact a two-way transactionwhich enabled the Middle Kingdom to “buy”the allegiance of vassal states, and at the samet ime to contro l f l ows o f peop le andcommodities across its far flung frontiers. [26]

The routes of Zheng He’s expeditions

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The sustainability and efficacy of thispractice–which, world-historically, provides themost important illustration of the validity ofHobbes dictum that “Riches joyned withliberality is Power, because it procurethfriends, and servants” [27]–depended onseveral conditions. The Chinese economy hadto generate the resources necessary to buy theallegiance of the vassal states; the Chinesestate had to be in a position to command theseresources; and surrounding states had to bepersuaded that attempts to seize resourcesfrom the Chinese state and economy by meansthat challenged the authority of the Chinesegovernment (such as raids, conquest, war, orjust illegal trade) would not pay off. Despite, orpossibly because of , their success inconsolidating and expanding the nationaleconomy, by the early sixteenth century theinward-looking policies of the Ming facedincreasing difficulties in reproducing theseconditions. Widespread corruption, mountinginflation, and increasing fiscal shortfalls on thedomestic front, were accompanied by growingexternal pressures, from the expansion of theJurchens in the north, and from the expansionof illegal trade that bypassed Ming taxcollectors along the southeastern coast.Carried out by armed Chinese and Japanesetraders, the illegal trade was activelyencouraged by Japanese warlords, who soughtto use the profitable trade in Chinese productsto finance their mutual struggles. With thefinancially strapped Ming cutting back on thecostly tributary trade, and unable to exerciseeffective military control over southern coastalareas, private trade became once again themain form of economic exchange in the region.[28]

Internal degradation and external pressuresreinforced one another leading to explosivesocial disturbances. Faced with the growingungovernability of the empire, the Ming soughtto solve the crisis by easing peasant grievancesthrough tax reforms and the exploitation of theflourishing private trade. Corvée labor and

taxation in-kind –two of the main causes ofpeasant hardship and unrest–were largelyreplaced by a single tax payable in silver. Thecrippled paper currency was abandoned infavor of a silver standard, and in order toexpand the silver influx from overseas, in the1560s restrictions on trade with Southeast Asiawere relaxed and licensed seafaring merchantswere taxed. [29]

This shift in fiscal, monetary and trade policieswas made possible and encouraged by themassive silver influx from overseas trade,initially with Japan (the major silver supplier inthe region) and subsequently with Europe andthe Americas. [30] Although Spanish shipmentsof much of their American silver to China viaManila eased the fiscal and social crisis, Mingfinancial difficulties skyrocketed owing to thecostly war with Japan in the 1590s, theoutbreak of full-fledged warfare with theManchus in the 1610s, and mountingcorruption at court and throughout theadministration. Japan’s imposition of restrictivetrade policies in the 1630s, combined with asharp decline in European silver supplies in the1630s and 1640s, was the straw that broke thecamel’s back: by driving up the price of silver,it increased the burden of taxation on thepeasantry and led to the resurgence of empire-wide unrest that culminated in the collapse ofthe Ming in 1644. [31]

With the consolidation of Qing rule, the earlyMing’s policy privileging domestic over foreigntrade resumed with greater vigor. Between1661 and 1683, the Qing re-imposed the ban onprivate sea traffic and pursued a scorchedearth policy that transformed China’s southeastcoast from a crucial link connecting theChinese and the world markets into a no-man’s-land that kept the two apart. The sea ban waslifted in 1683, but strict regulations wereimposed on the shipbuilding industry,restricting the size and weight of all tradingjunks, and firearms on board were outlawed. Anew era was thus inaugurated in which trade

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was legal, but maritime China lost its fragileautonomy. Moreover, in 1717 Chinese subjectswere once again forbidden to go privatelyoverseas, and in 1757 the designation ofGuangzhou as the sole legal port for foreigntrade sealed the fate of the whole southeastcoast region for nearly a century. [32]

While foreign trade was discouraged, theincorporation of borderlands on all sides didnot just increase the scale of the nationalmarket; it also reduced protection coststhroughout the empire–a reduction that Qingrulers passed on to their subjects in the form oflow and stable taxes. Low and stable taxationwas accompanied by vigorous state actionaimed at stamping out bureaucratic corruptionand tax evasion, through empire-wide landsurveys, fiscal reforms, and more effectiveinformation-gathering systems. Equallyimportant was the promotion of landredistribution and reclamation. In order toconsolidate their power vis-a-vis Han landlords,the early Qing encouraged the ongoingpartition of large estates into small plots andthe conversion of indentured labor into tenants.At the same t ime they launched landreclamation programs aimed at reestablishingthe fiscal base without raising taxes. [33]

The double “democratization” of landtenure–through the breakup of large estatesand through land reclamation–called forthmassive state action to maintain and expandthe hydraulic infrastructure. As the influentialofficial Chen Hongmou put it,

When poor people bring new landunder cultivation, it is up to theadministration to provide timelyassistance in development of localirrigation systems. If the cost is toohigh for the local society to bear,funds should be provided out ofofficial accounts. [34]

Government involvement in agriculturalimprovement, irrigation and waterbornetransportation was integral to Qing action incountering the spat ia l and temporalunevenness of economic development. Aspreviously noted, spatial unevenness wascountered through policies that encouragedmarket tendencies toward the economicuplifting of internal peripheries. These includedthe encouragement of migration toward lesspopulated areas through the provision ofinformation, infrastructure and loans; efforts tospread new crop varieties and craft skills;heavy infrastructural investments to securesubsistence in ecologically marginal areas; andland tax policies that favored poorer areas. [35]

The centerpiece of Qing action to overcomeperiodic famine was a major expansion andunprecedented coordination of the “ever-normal granaries” system. The Qinggovernment relied on market mechanisms tofeed China’s huge and expanding population noless, and probably more, than any of itspredecessors. It nonetheless surpassed them allin protecting the population from thevicissitudes of the grain market through asystem of granaries that enabled it to buy andstore grain at times of abundance and lowprices, and to sell the grain back at sub-marketprices at times of scarcity and unusually highprices. High-level officials coordinated flows ofgrain among local granaries to ensure thateach could promptly counter excessive cyclicalfluctuations in prices. [36]

The joint outcome of these policies was theremarkab le peace , prosper i ty , anddemographic growth which made eighteenth-century China the exemplar of Smith’s“natural” path to opulence, as well as a sourceof inspiration for European advocates ofbenevolent absolutism, meritocracy, and anagriculturally based national economy.Although no eighteenth-century Chinesethinker theorized the contribution of self-interested enterprise to the national economy,

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notes Rowe, the previously quoted ChenHongmou esteemed the market as aninstrument of rule no less than Smith, Hobbes,Locke or Montesquieu.

Chen has no hesitation whatsoever in appealingto the profit motive to get local populations tofall in line with his various developmentprojects such as bui lding new roads,introducing new commodities for regionalexport, founding community granaries, and soon. In a formulation not too distant from AdamSmith’s “invisible hand” Chen contends thatsuch projects will bring profit to all... preciselyto the extent they bring profit to oneself. [37]

Neither Chen, nor any of his Chinesecontemporaries, however, “rejected theConfucian ideal of social harmony in favor of aview of unfettered struggle in the marketplace... and a blanket policy of laissez-faire.”[38] Although Smith was no Confucian, thedevelopmental priority that the Qinggovernment assigned to agriculturalimprovement, land redistribution andreclamation, and the consolidation andexpansion of the domestic market, is preciselywhat Smith advocated in The Wealth ofNations. [39]

The problem with Chen’s and the Qing’sconception of development is not the rejectionof a blanket policy of laissez-faire but itsblindness to the gathering storm that wasabout to hit the Chinese shores. Like Smith,they fai led to see that the seemingly“unnatural” European path to opulence was re-making the world through a process of creativedestruction that had no precedent in worldhistory. “European ships”–in McNeill’swords–“had in effect turned Eurasia inside out.The sea frontier had superseded the steppefrontier as the critical meeting point withstrangers, and the autonomy of Asian statesand peoples began to crumble.” [40] IfSmith–who was sitting at the epicenter of thestorm–did not see it coming, we may excuse

Chen and the Qing for not seeing it either.What they al l missed, as many of ourcontemporaries still do, is the fundamentaldifference between capitalist and non-capitalistmarket-based development.

Capitalists in a Non-Capitalist MarketEconomy

In concluding his classic study of the formationof “the world’s largest enduring state,” Elvinsuggests that China’s entrapment in a high-level equilibrium was a result of its verysuccess in developing a huge national market.Rapid growth of production and populationmade all resources except labor scarce andthis, in turn, made profitable innovationsincreasingly problematic.

With falling surplus in agriculture,and so falling per capita incomeand per capita demand, withcheapening labor but increasinglyexpensive resources and capital,with farming and transporttechnologies so good that nosimple improvements could bemade, rational strategy for peasantand merchant alike tended in thedirection not so much of labors a v i n g m a c h i n e r y a s o feconomizing on resources andfixed capital. Huge but nearlys ta t i c markets c rea ted nobottlenecks in the productionsystem that might have promptedcreativity. When temporaryshortages arose, mercantileversati l i ty, based on cheaptransport, was a faster and surerremedy than the contrivance ofmachines. This situation may bedescr ibed as a “h igh- leve lequilibrium trap.” [41]

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There is some ambiguity in this account onwhen, exactly, China was caught in this high-level equilibrium trap. Elvin nonetheless makestwo claims that help, not just in resolving theambiguity, but in identifying the nature ofmarket-based development under the Ming andearly Qing. The f irst claim is that thedisappearance of serfdom and serf-like tenancyunder the Qing led to “the rise of an essentiallynew type of rural society.” And the second isthat “technological innovations and inventionsduring the period 800 to 1300 producedchanges so great that the result can onlyreasonably be described as a ‘revolution,’ andthat Chinese growth thereafter slowed downnot only relative to an accelerating Europe butalso to its own earlier performance.” [42]

Chinese development before 1300 falls beyondthe scope of our investigation. For ourpurposes suffice to say that available evidence,including Elvin’s, gives credibility toChristopher Chase-Dunn’s and Thomas Hall’scontention that capitalism “nearly occurredfirst” in Song China. [43] As previously noted,tendencies that became typical of the Europeancapitalist path in the “extended” sixteenthcentury were already present in China underthe Song and the Yuan. Be that as it may, theslowdown in Chinese growth after 1300 can beinterpreted as a first entrapment in a high levelequilibrium–as Smith himself appears to dowhen he claims that China “had perhaps, evenlong before [Marco Polo’s] time, acquired thatfull complement of riches which the nature ofits laws and institutions permits it to acquire.”[44]

This interpretation, however, clashes with theremarkable economic growth that Sugiharacalls the “Chinese miracle” of the eighteenthcentury. Major differences in the man-landratio between the core regions of East Asia andthose of Western Europe before 1800—claimsSugihara—were both cause and effect of anunprecedented and unparalleled East AsianIndustrious Revolution. By developing labor-

absorbing institutions and labor-intensivetechnologies in response to natural resourceconstraints (especially scarcity of land), EastAsian states experienced a major increase inp o p u l a t i o n a c c o m p a n i e d , n o t b y adeterioration, but by a modest improvement inthe standard of living. This escape fromMalthusian checks was especially remarkablein China, whose population had previouslyrisen several times to a ceiling of 100-150million only to fall, whereas by 1800 it rose tonearly 400 million. “This was clearly a worlddemographic landmark and its impact on worldGDP far outweighed that of post-industrialrevolution Britain, whose share of world GDP in1820 was less than 6 percent.” The “Chinesemiracle” was replicated on a smaller territorialscale in Japan, where population growth wasless explos ive than in China but theimprovement in standard of living moresignificant. [45]As figure 1 shows, the East Asian share ofworld GDP did in fact increase further foralmost half a century after the beginning of theBritish Industrial Revolution. If China hadentered a stationary state ca. 1300 or earlier,what accounts for this new upswing ofeconomic growth? Did the state-and-national-economy-making activities of the Ming andearly Qing, and the rise under the latter of “anessentially new type of rural society,” not helpat all in freeing China from the high-levelequilibrium trap?

Figure 1: Combined GDP as aPercentage of World GDP: US + UKvs China + Japan

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*GDP in millions of 1990 International Geary-Khamis Dollars

Based on Maddison (2007)

E n l a r g e t h i s i m a g e(https://apjjf .org/data/Figure1.gif)

Three considerations help in answering thesequestions. First, the tendency of labor-intensiveeconomic growth to get stuck in a high-levelequilibrium trap does not rule out the existenceof even higher equilibria, attainable throughsuitable changes in the geographical andinstitutional environment in which the economyis embedded. Second, the eighteenth-centuryChinese economic “miracle” can best beinterpreted as a shift of the economy from ahigh to an even higher equilibrium, dueprimarily to changes in the institutional andgeographical environment brought about byMing and Qing policies. Third, despite thisupward shift, market-based development inChina moved in a different direction than inEurope, becoming less, rather than more,capitalist in orientation.

The capitalist character of market-baseddevelopment is not determined by the presenceof capitalist institutions and dispositions but bythe relation of state power to capital. Add asmany capitalists as you like to a marketeconomy, but unless the state has beensubordinated to their class interest, the marketeconomy remains non-capitalist. [46] FernandBraudel himself takes imperial China as theexample that “most opportunely supports [his]insistence on separating the market economyand capitalism.” Not only did China “have a

solidly-established market economy... with itschains of local markets, its swarmingpopulation of small artisans and itinerantmerchants, its busy shopping streets and urbancenters.” In addition, the merchants andbankers of Shanxi province and the overseasChinese originating from Fujian and othersouthern coastal provinces closely resembledthe business communities that constituted thepreeminent capitalist organizations of sixteenthcentury Europe. And yet , the state’s“unmistakable hostility to any individualmaking himself ‘abnormally’ rich” meant that“there could be no capitalism, except withincertain clearly-defined groups, backed by thestate, supervised by the state and always moreor less at its mercy.” [47]

Braudel exaggerates the extent to which underthe Ming and the Qing–not to speak of earlierdynasties–capitalists were at the mercy of ahostile state. It remains nonetheless true thatthere is no parallel in East Asia for thesequence of ever more powerful states thatidentified themselves with capitalism as inEurope–from the Italian city-states, through theDutch proto-nation-state, to a national state,Britain, in the process of becoming the centerof a world-encircling maritime and territorialempire. It is this sequence more than anythingelse marks the European developmental pathas capitalist. And conversely, the absence ofanything comparable to this sequence is theclearest sign that in the Ming and early Qingeras market-based development in China andthroughout East Asia remained non-capitalist.Closely related to this was the absence ofanything remotely resembling the incessantarmament race and overseas territorialexpansion typical of European states. As R. BinWong put it,

Much European commercial wealthwas tapped by needy governmentsanxious to expand their revenuebases to meet ever-escalating

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expenses of war.... Both Europeanmerchants and their governmentsbenefited from their complexrelationship, the former gainingfabulous profits, the latter securingmuch-needed revenues. The lateimperial Chinese state did notdevelop the same kind of mutualdependence on rich merchants.Lacking the scale of financialdifficulties encountered in Europebetween the s ixteenth andeighteenth centuries, Chineseofficials had less reason to imaginenew forms of f inance, hugemerchant loans, and the concept ofpublic as well as private debt. [48]

Within China, large business organizationscontrolling extensive networks of commercialintermediaries and subcontractors developedas integral components of the nationaleconomy. But entry even in trade over longdistances was far more open and accessible topeople from all over the country than inEurope. [49] As a result, Chinese capitalistsremained a subordinate social group with littlecapacity to subject the general interest to theirown class interest. Indeed, the best chances forcapitalism to develop in East Asia were notclose to the centers, but interstitially, on theouter rims of the system’s states. The mostprominent embodiment of this developmentwas the overseas Chinese diaspora, whoseresilience and enduring economic importancehas few parallels in world history. Despite Mingrestrictions, periodic reverses and challengesfrom Muslims and other competitors, theoverseas Chinese diaspora made extraordinaryprofits and provided a steady flow of revenuefor local governments and of remittances toChina’s coastal regions. [50]

The seventeenth-century transition from Mingto Qing rule even created the conditions for adevelopment that resembled what was going on

in Europe: the establishment by the Zhengfamily of a commercial empire comparable tothe Dutch. By deploying European-stylewarships and firearms, the Zhengs eliminatedPortuguese competition, successfully defiedMing tax collectors and naval forces,monopolized the silk and ceramics trade, andbuilt a sphere of influence that stretched fromGuangdong and Fujian to Japan, Taiwan, andsoutheast Asia. By 1650, they had also createda rebel state on the southeast coast of China.Having failed to defeat the Manchus on themainland, in 1662 they retreated to Taiwan,expelled the Dutch, and founded their ownkingdom. As Chumei Ho concludes, “[t]heZheng networks of commercial and politicalintelligence must have been at least as effectiveas those of either of its main enemies, theManchus and the Dutch... Arguably, the Zhengorganization had some of the same traits as theVOC.” [51]

Equally important, the Zhengs were notinsignificant players in the dynastic transition.A respected ally of the Ming in the early stagesof the struggle–when many members of theZheng family became officers and generals ofthe Ming army–after the Qing army enteredFujian in 1647, Zheng Zhilong attempted toswitch sides. The attempt failed and the Qingjailed and eventually executed him. And yet,under Zheng Chenggong the power of theZhengs reached new heights. Through the1660s and 1670s their regime in Taiwanremained a de facto independent kingdom,exacting tribute and conducting trade with theSpanish Philippines, the Ryukyus, and variousk ingdoms o f Southeast As ia . ZhengChenggong’s successor Zheng Jing repeatedlyrejected Qing offers of a semi-autonomousstatus, proposing instead recognition as atribute vassal of the Qing based on Korean andRyukyu precedents. The Kangxi Emperor,however, insisted that “the thieves in Taiwanare Fujianese, Taiwan is not comparable toKorea and Ryukyu.” The Zheng regime wasterminated by military defeat in 1683. [52]

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The very comparability of the Zheng and theDutch commercial empires makes theiropposite fates especially instructive. In theEuropean context, the Dutch became theleaders of the institutionalization of the balanceof power among European states; of theempowerment of capitalist strata within thesestates; and of the intensification of interstatecompetition in building overseas empires. InEast Asia, in contrast, the downfall of theZheng empire cleared the way for thedemilitarization of the Chinese merchants, theconsolidation of national-economy-making, bothin Qing China and Tokugawa Japan, and theprecipitous decline of the power of the overseasChinese vis-a-vis the region’s territorial states.As Kenneth Pomeranz notes, the Zheng empire“stands as an illuminating example of a kind ofactivity that successfully paralleled Europeanarmed trading and colonization but was not anormal part of the Chinese state system.” [53]

Despite their success in promoting the EastAsian Industrious Revolution and the furtherincrease in the East Asian share of worldproduction mentioned above, the inward-looking policies of Qing China and TokugawaJ a p a n – a s S u g i h a r a h i m s e l facknowledges–resulted in a sharp contractionof trade among Asian countries from the earlyeighteenth century. [54] Worse still, they left apolitical void in maritime East Asia, which thedemilitarized Chinese merchants were ill-equipped to fill. Gradually, the void was filledby European states, companies and merchantswhose capacity to dominate maritime East Asiaincreased rapidly at the turn of the eighteenthand nineteenth centuries. Critical in thisrespect was the internal disintegration of theQing and the decline of Chinese shipbuildingindustries and navigation technologies at atime of rapid European advances in both. [55]

In this respect, Smith’s assessment that a moreextensive foreign trade would have been inChina’s national interest (“especially if anyconsiderable part of [it] was carried on in

Chinese ships”) [56] had some validity, aboveall on grounds of national security–that is, ofChina’s capacity to monitor and meet thegrowing naval challenge posed by theEuropeans. For at least a century, however, thechief security problem for the Qing was on thenorthwestern frontier and within Han China,where the legitimacy of Manchu rule as foreignconquerors remained precarious. Under thesecircumstances, pouring resources intoshipbuilding, navigation, and the carrying tradenecessarily appeared as a luxury at best, andthe surest road to imperial overstretch atworst. Moreover, why risk such an overstretchwhen Europeans fiercely competed with oneanother to pour silver into China in exchangefor Chinese commodities? As a result of China’shighly competitive exports of silk, porcelainand tea, and a Chinese demand for silver thatdrove silver prices to levels twice thoseprevailing in other parts of the world, from thesixteenth until well into the eighteenth century,fully three-fourths of “new world” silver foundits way to China. [57] It is indeed hard toimagine how the success of China’s self-centered development–which so muchimpressed even Europeans–could not blind theQing to the new power that the aggressiveseaborne “barbarians” were bringing to theregion.

In short, the synergy typical of the Europeandevelopmental path between militarism,industrialism and capitalism, which propelled,and was in turn sustained by, ceaselessoverseas territorial expansion, was absent inEast Asia. As a result, East Asian statesexperienced much longer periods of peace thanEuropean states, and China could consolidateits position as the world’s largest marketeconomy. And yet, lack of involvement inoverseas expansion and in an armament race,European-style, eventually made China and theentire East Asian system vulnerable to themi l i tary ons laught and subordinateincorporation of the expanding Europeanpowers.

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Incorporation and Hybridization

The subordinate incorporation of East Asiawithin the European system, and the eclipse ofthe region in world production shown in figure1, were not due primarily to the competitiveedge of Western vis-a-vis East Asian, especiallyChinese, economic enterprise. Contrary toMarx’s and Engels ’ c la im that cheapcommodities were the “heavy artillery” withwhich the European bourgeoisie “batter[ed]down all Chinese Walls,” [58] even after Britishgunboats had battered down the wall ofgovernmental regulations that enclosed theChinese domestic economy, British merchantsand producers had a hard time competing withtheir Chinese counterparts. From the 1830s,imports of British cotton textiles did devastatesome sectors and regions of the Chineseeconomy. Yet, British cotton cloth was neverable to compete in rural markets with strongerChinese cloth. Moreover, as foreign importsdisplaced handicraft spinning of cotton yarn,the use of cheaper, machine-produced yarngave new impetus to the domestic weavingindustry, which not only held its own but evenexpand. [59] Western firms that set upproduction facilities in China could neverpenetrate effectively the vast interior of thecountry, and had to rely on Chinese traders inthe procurement of raw materials and themarketing of their products. Western productsand businesses did triumph in a few industries.But outside of railways and mines, the Chinamarket generally spelled frustration for foreignmerchants. [60]

Far from destroying indigenous forms ofcapitalism, the incorporation of China withinthe structures of the UK-centered capitalisteconomy led to a renewed expansion of theChinese merchant communities which haddeveloped in the interstices of the China-centered tribute trade system. As the OpiumWars and domestic rebellions shattered thecapacity of the Qing court to regulate flows ofgoods and people across China’s borders,

profitable opportunities for these communitiesproliferated. The opium trade was a majorsource of such opportunities; but the greatestopportunities arose in the "coolie trade"–in theprocurement and transshipment overseas ofindentured labor and in the f inancialtransactions associated with remittances backto China. The coolie trade made the fortunes,not just of individual merchants, but of theport-cities of Singapore, Hong Kong, Penangand Macao, which became privi leged“containers” of the wealth of the Chinesebusiness diaspora. It also increased Chinesesettlement throughout Southeast Asia, therebystrengthening the capacity of overseas Chinesecapital to profit from commercial and financialintermediation within and across jurisdictionsin the region. [61]

The fiscal and financial pressures engenderedby wars, rebell ions, worsening tradeconditions, and natural disasters forced theQing court, not only to relax controls on theactivities of the overseas Chinese, but to seektheir financial assistance. In exchange for theassistance, the Qing court granted themoffices, titles, protection for their propertiesand connections in China, as well as access tothe highly prof i table arms trade andgovernment loan business. This “politicalexchange” did not save the Qing. But, up totheir collapse in 1911, it was a major source ofenrichment for overseas Chinese capitalists.[62]

Throughout the first half of the nineteenthcentury–notes Joseph Esherick –opium was “theWest’s only feasible entree into the Chinamarket.” [63] In Britain’s case it was muchmore than that, because British sales of Indianopium to China were crucial in the transfer oftribute from India to London. As the head of thestatistical department at the East India Houseexplained,

India, by exporting opium, assistsin supplying England with tea.

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China by consuming opium,facilitates the revenue operationsbetween India and England.England by consuming teacontributes to increase the demandfor the opium of India. [64]

The need to expand the India-China trade inorder to facilitate the “revenue operations”between India and England had been from thestart the main stimulus behind the expansion ofthe opium trade. As early as 1786, LordCornwallis, then Governor General of India,pointed out that the expansion of the India-China trade was essential to paying at least inpart for Chinese exports of tea and silk toBritain and other European countries and,above all, to transfer the vast tribute of Bengalto England without heavy losses throughexchange depreciation. [65] After the Indiatrade monopoly of the East India Company wasabrogated in 1813, the Company redoubled itsefforts in promoting opium smuggling intoChina. Shipments expanded rapidly–more thanthreefold between 1803-13 and 1823-33–andthe soundness of Cornwallis’ argument wasvindicated. In the words of a contemporaryaccount, from the opium trade

The Honourable Company hasderived for years an immenserevenue and through them theBritish Government and nationhave also reaped an incalculableamount of political and financialadvantage. The turn of the balanceof trade between Great Britain andChina in favour of the former hasenabled India to increase tenfoldher consumption of Bri t ishmanufacture; contributed directlyto support the vast fabric of Britishdominion in the East, to defray theexpenses o f H is Majes ty ' sestablishment in India, and by the

operation of exchanges andremittances in teas, to pour anabundant revenue into the BritishExchequer and benefit the nationto an extent of L 6 million yearly.[66]

The abrogation of the East India Company’sChina monopoly in 1833 intensified competitionin this lucrative branch of British commerceand emboldened British merchants to agitatefor “the strong arm of England” to bring downthe restrictions that the Chinese governmentimposed on the opium trade. Far from yieldingto British pressures, the Chinese governmentmoved to suppress a trade which was asbaneful for China and disruptive for its politicaleconomy as it was beneficial for Britain. Theproceeds of opium smuggling trickled down toChinese officials, whose corruption impairedthe execution of official policy in all spheresand, directly and indirectly, fed social unrest.At the same time, the trade caused a massivedrain of silver from China to India, which grewfrom 1.6 million taels a year in 1814-24 to 5.6million taels a year in the two years precedingthe first Opium War. [67] As the imperial edictof 1838 emphasized in announcing the decisionto destroy the trade, “the useful wealth ofChina will be poured into the fathomless abyssof transmarine regions.” [68]

In putting the vigorous and incorruptible LinZexu in charge of the suppression of opiumsmuggling, the Chinese government had noin tent ion o f thwar t ing commerc ia lopportunities in other branches of foreigntrade, such as silk, tea and cotton goods, whichit continued to promote. Lin himself wascareful in drawing a distinction between theillegal opium trade–which he was determinedto suppress with or without the cooperation ofthe British government–and legal forms oftrade, which he asked the British governmentto encourage as a substitute for the illegaltrade. [69] Having failed to persuade Britain to

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cooperate in the suppression of the traffic inthe name of international law and commonmorality, he proceeded to confiscate anddestroy smuggled opium and to incarceratesome smugglers. This police operation onChinese territory was denounced in the BritishParliament as “a grievous sin–a wickedoffence–an atrocious violation of justice, forwhich England had the right, a strict andundeniable right,” by “the law of God andman,” “to demand reparation by force ifrefused peaceable applications.” [70]

Evidently, two quite different views ofinternational law and common morality heldsway in Britain and China. But while theChinese claimed a right to lay down andenforce the law only at home, the Britishclaimed a right to lay down and enforce the lawnot just at home but in China as well. Toparaphrase Marx, between equal rights forcedecides. China had no answer to the steam-powered warship that in a single day inFebruary 1841 destroyed nine war junks, fiveforts, two military stations, and one shorebattery. [71] After a disastrous war, anexplosion of major rebellions, and a second,equally disastrous war with Britain (now joinedby France), China became a subordinate, andincreasingly peripheral, member of the globalcapitalist system. This peripherality was notmerely the result of the subordinateincorporation of East Asia within the Europeansystem. Equally important was the radicalchange in interstate relations within East Asiaprecipitated by Chinese and Japanese attemptsto follow in the footsteps of the Europeandevelopmental path.

As Kawaka tsu and Hamash i ta haveunderscored, Japan’s modernization andterritorial expansion of the late nineteenth andearly twentieth centuries were a continuationby new means of centuries-long Japaneseendeavors to re-center upon itself the EastAsian tribute trade system. [72] Nevertheless,the change in systemic context transformed

radically the nature of the interstatecompetition that had characterized the EastAsian system since the consolidation of theTokugawa and Qing regimes. In the newcontext, interstate competition within East Asiabecame inseparable from attempts to catch upwith Western proficiency in the capital goodsindustries, whose modernization (in East Asiano less than in Europe) was intimatelyassociated with the enhancement of militarycapabilities. The armament race which hadlong been a feature of the European systemwas thus “internalized” by the East Asiansystem. [73]

For about twenty-five years after they werelaunched, industrialization efforts yieldedsimilar economic results in China and Japan.On the eve of the Sino-Japanese War of 1894,“the disparity between the degree of moderneconomic development in the two countrieswas not yet flagrant.” [74] Nevertheless,Japan's victory in the war was symptomatic of afundamental di f ference between theindustrialization drive of the two countries. InChina, the main agency of the drive wereprovincial authorities, whose power vis-a-visthe central government had increasedconsiderably during the repression of therebellions of the 1850s, and who usedindustrialization to consolidate their autonomy.In Japan, in contrast, the industrialization drivewas integral to the Meiji Restoration, whichcentralized power in the hands of the nationalgovernment at the expense of provincialauthorities. [75]

The outcome of the Sino-Japanese war, in turn,deepened the underlying divergence in thetrajectories of Japanese and Chineseindustrialization. China’s defeat furtherweakened an already fragile national cohesion,resulting in deepening political chaos, markedby further restrictions on sovereignty, crushingwar indemnities, the final collapse of the Qingregime and the growing autonomy of semi-sovereign warlords, followed by Japanese

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invasion, and recurrent civil wars between theforces of nationalism and communism. Thiscatastrophic state breakdown is probably thesingle most important explanation for why ittook such a long time for China to regain theeconomic rank and status it held globally in themid eighteenth century.

Victory over China in 1894, followed by victoryover Russia in the war of 1904-5, in contrast,established Japan–to paraphrase Akira Iriye–as“a respectable participant in the game ofimperialist politics.” [76] The acquisition ofChinese territory–most notably, Taiwan in1895, followed by the Liaodong peninsula andthe securing of all Russian rights and privilegesin South Manchuria in 1905, and culminating inChina's recognition of Japanese suzerainty overKorea, annexed as a colony in 1910–providedJapan with valuable outposts from which tolaunch future attacks on China, as well as withsecure overseas supplies of cheap food, rawmaterials and markets. At the same time,Chinese indemnities amounting to more thanone-third of Japan’s national income helpedJapan to finance the expansion of heavyindustry and to put its currency on the goldstandard. This, in turn, improved Japan's creditrating in London and its capacity to tapadditional funds for industrial expansion athome and imperialist expansion overseas. [77]

This bifurcation of the Japanese and Chinesedevelopmental paths culminated in the 1930sin the eclipsing of Britain by Japan as thedominant power in the region. With theJapanese seizure of Manchuria in 1931,followed by the occupation of North China in1935, full-scale invasion of China from 1937,and the subsequent conquest of parts of InnerAsia and much of Southeast Asia, Japan seemedto be finally succeeding in re-centering uponitself the East Asian region. The Japanese bidfor regional supremacy, however, could not besustained. Stalemated in a fifteen year war withChina (1931-45) and facing the US-ledjuggernaut unleashed in response to Pearl

Harbor, Japan succumbed in a classic exampleof imperial overreach.. Once Japan had beendefeated, the formation of the People’sRepublic of China would contest Westernhegemonic drives in a struggle for centrality inEast Asia that has shaped trends and events inthe region ever since.

Giovanni Arrighi is Professor of Sociology atJohns Hopkins University. In addition to AdamSmith in Beijing: Lineages of the Twenty-FirstC e n t u r y(http://www.versobooks.com/books/ab/a-titles/arrighi_g_adam_smith_beijing.shtml), his booksinclude The Long Twentieth Century: Money,Power and the Or ig ins o f Our T imes(http://www.versobooks.com/books/ab/a-titles/arrighi_century.shtml).

This article was posted at Japan Focus onJanuary 10, 2008.


[1] See Ikeda (1996) for an overview of thecontribution of these scholars. The Japaneseschool builds upon, and critically departs from,the earlier conceptualization of the China-centered system by Fairbank and his students(Fairbank 1968). On the relationship betweenthe two conceptualizations, see Perdue (2003).[2] Hamashita (1993: 75-6; 1994: 92; 1997:114-124).[3] Sugihara (1996: 38).[4] Arrighi (2007: chapter 8).[5] While between 1815 and 1914 there werewars among the European powers for a merethree and a half years (including the CrimeanWar), in each of the two centuries preceding1815 European powers were at war with oneanother for an average of sixty to seventyyears. Polanyi (1957: 5).[6] See Arrighi (2007: chapters 5 and 8).[7] Based on information contained in Gernet(1982); Freeman-Grenville (2002); “AncientBattles and Wars of Siam and Thailand(http://www.usmta.com/Thai-History-Frame.ht

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m ),” in Siamese and Thai History and Culture.( 1 9 9 9 ) ; “ C h i n a , 1 4 0 0 - 1 9 0 0 A . D .(http://www.metmuseum.org/toah/ht/10/eac/ht10eac.htm)” in Timeline of Art History, TheMetropolitan Museum of Art, New York,October 2004, and “Southeast Asia, 1400-1900A . D(http://www.metmuseum.org/toah/ht/08/sse/ht08sse.htm).” in Timeline of Art History, TheMetropolitan Museum of Art, New York,October 2001. This, of course, was a five-hundred years’ peace only in comparison withthe European hundred years’ peace, that is,excluding civil wars and China’s frontier warsto be discussed below.[8] Sugihara (1996: 37-8); Kawakatsu (1994:6-7).[9] Perdue (2003: 60, 65).[10] McNeill (1982: 143); Arrighi (2007:266-72).[11] Wong (1997: 148). This relationship isanalogous to the main difference betweenEuropean overseas empires and the Chinesetributary system which, as we shall see, for themost part involved a transfer of resources inthe form of gifts and preferential trade to theperipheries.[12] Polanyi (1957: 5-7).[13] On the British transformation of thebalance of power into an instrument of informalrule, see Arrighi and Silver (1999: 59-64).[14] Arrighi (1994: chapter 2). The East-Westasymmetry has a long history, which antedatesthe “extended” sixteenth century and the Mingera. See Lewis (1970: vii); Cipolla (1976: 206);Abu-Lughod (1989: 106-7). In this study,however, we are only concerned with theparticular East-West asymmetry that shaped,and was itself transformed by, developments inEurope during the “extended” sixteenthcentury and in East Asia during the Ming-Qingera.[15] Kennedy (1987:7). Alternatively, asMcNeill put it, “it is easy to suppose that if theChinese had chosen to continue sendingexploratory voyages overseas, a Chineseadmiral, riding the Japan current, might have

sailed into San Francisco Bay several decadesbefore Columbus blundered into the Caribbeanislands.” McNeill (1998: 229). With ships thatprobably displaced 1,500 tons, compared to the300 ton flagship of Vasco Da Gama, China’sseaborne capacity at this time had no peer. SeeMcNeill (1982:44).[16] Quoted in Wolf (1982: 125).[17] Arrighi (2007: 234-49).[18] Arrighi (2007: chapter 2).[19] Arrighi, Hui, Hung and Selden (2003:269-70); Lo (1969:77-91); Bray (1986: 119);Elvin (1973: chapter 9); Palat (1995: 59).[20] Lo (1969:57-58); Hui (1995:29-30).[21] Yang (1952); Elvin (1973: chapter 14);Shiba (1983: 106-7); Guan (1994: 57-60).[22] Arrighi, Hui, Hung and Selden (2003: 271);Hung (2001a: 491-7).[23] Wang (1998:316-23); McNeill (1982:47);Zhang (1991: 49-51); Hui (1995: 34-8, 53).[24] Abu-Lughod (1989: 321-2).[25] Smith distinguished between what hecalled a “natural” and an “unnatural” or“retrograde” path to opulence. In the “natural”path, which he attributed to China, “the greaterpart of capital . . . is , f irst, directed toagriculture, afterwards to manufactures, andlast of all to foreign commerce.” In the“unnatural” or “retrograde” path, typical ofHolland and European states in general,development proceeds in reverse order, fromforeign commerce, to manufacture, and last toagriculture. See Smith (1961: I, 403-6) andArrighi (2007: 57-63).[26] Cf. Gao (1993: 1-78).[27] Hobbes (1968: 150).[28] Tong (1991: 115-29); Wakeman (1985:chapter 1); Huang (1969: 105-23); Hung(2001b: 12-18); Wills (1979: 210-11).[29] Tong (1991); Atwell (1986); Flynn andGiraldez (1995); Wills (1979: 211); Elisonas(1991: 261-62); Hung (2001a: 498-500).[30] Atwell (1998:403-16); Brooks (1998: 205).[31] Atwell (1986 and 1998: 407-15).[32] Skinner (1985: 278-9); Wills (1979).[33] Wang (1973); Perdue (1987: 78-9); Hung(2004: 482-3); Bartlett (1991); Huang (1985:

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97-105); Jing (1982: 169-81). As Qing policiesresulted in explosive demographic growth, thepurpose of land reclamation shifted from thereestablishment of the central government’sfiscal base to the search for new sources offood to maintain the rapidly expandingpopulation. Rowe (2001: 56-7).[34] Quoted in Rowe (2001: 223).[35] Pomeranz (2000: 250); Mann (1992: 86);Wong (1997: 148).[36] Will and Wong (1991); Rowe (2001:155-185).[37] Rowe (2001: 201-2).[38] Rowe (2001: 204).[39] Arrighi (2007: chapter 2)[40] McNeill (1998: 231).[41] Elvin (1973: 314).[42] Elvin (1973: 318).[43] Chase-Dunn and Hall (1997: 47).[44] Smith immediately qualifies this statementwith another, which betrays an ambiguitysimilar to Elvin’s in dating China’s entrapmentin a stationary state: “China, however, thoughit may perhaps stand still, does not seem to gobackward.” Smith (1961: I, 80-1).[45] Sugihara (2003: 79, 82, 89-90; 94, 117 fn2)[46] Arrighi (2007: chapters 3 and 8).[47] Braudel (1982: 153; 588-9; emphasis in theoriginal).[48] Wong (1997: 146).[49] Hamilton and Chang (2003) and Wong(2004).[50] Hui (1995: 35-36); Wills (1998: 333); Wang(1991: 85-6; 1998:320-23).[51] Wills (1979, 1998); Wong (1983); Coyett([1675] 1903); Ho (1994: 44).[52] Hung (2001b: 33-37).[53] Pomeranz (2000: 204).[54] Sugihara (1996: 38-9).[55] Cushman (1993: 136); Hui (1995: 79-80).[56] Smith (1961: I, 106; II, 202).[57] Flynn and Giraldez (1999: 23-24).[58] Marx and Engels (1967: 83-4).[59] Johnson (1993: 171-74); Feuerwerker(1970: 371-5); Hamilton and Chang (2003).[60] Kasaba (1993); Chen (1984: 58-61); So

(1986: 103-116); Nathan (1972: 5).[61] Hui (1995: chapter 3); Northup (1995);Headrick (1988: 259-303).[62] Tsai (1993: 63); Hui (1995: ch.3).[63] Esherick (1972: 10).[64] Thornton (1835: 89).[65] Bagchi (1982: 96); Greenberg (1951:chapter 2).[66] Quoted in Greenberg (1951: 106-7).[67] Yen et al (1957: 34); Lin (1991: 11).[68] Quoted in Greenberg (1951: 143)[69] Waley (1958: 18, 28-31, 46, 123); Hao(1986: 113-15).[70] Quoted in Semmel (1970: 153); see alsoOwen (1934).[71] Parker (1989: 96).[72] Kawakatsu (1994: 6-7); Hamashita (1988:20).[73] By revealing brutally the full implicationsof Western military superiority, the OpiumWars awoke the ruling groups of China andJapan to the imperatives of accelerated militarymodernization. See Tsiang (1967: 144);Fairbank (1983: 197-8); So and Chiu (1995:49-50).[74] Feuerwerker (1958: 53).[75] So and Chiu (1995: 53, 68-72).[76] Iriye (1970: 552).[77] Peattie (1984: 16-18); Duus (1984: 143,161-2); Feis (1965: 422-23).


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