Elite Reproduction and Class Politics in Early Modern China

The Transition to Capitalism Debate Revisited*

Ho-fung Hung
Assistant Professor
Department of Sociology,
1020 E. Kirkwood Ave., BH 744
Indiana University
Bloomington, IN 47405

E-mail: hofung@indiana.edu
Tel: 812-856-0282

Paper submitted for Panel Transitions to Capitalism: Past and Present

ASA Annual Meeting 2007

* This research is funded by a Dissertation Improvement Grant from the National Science
Foundation and an International Dissertation Field Research Fellowship from the Social
Science Research Council, with funds provided by the Andrew Mellon Foundation. I am
grateful to these sponsors for their generous support
Elite Reproduction and Class Politics in Early Modern China
The Transition to Capitalism Debate Revisited

Ho-fung Hung

INTRODUCTION

Macro-historical sociologists since Marx and Weber have long been puzzled by the

question of why industrial capitalism, as defined by an economic system based on private

ownership of means of production and self-sustained, self-transforming growth, emerged

spontaneously in England and then in other European nations.1 Every single effort to explain

Europes transition to capitalism must be comparative in nature, as it has to be able to account

for why capitalism had not emerged in civilizations outside Europe, with the exception of Japan,

as well. Theories of capitalist transition are recurrently revised or replaced whenever social

scientists unearth new evidences from European or non-European societies that contradict

existing theories.

Since the 1970s, most prevalent theories of capitalist transition have focused on the

special conditions that enabled early modern England, as well as other successful late

industrializers like Japan, to attain a great leap in agricultural productivity and hence to generate

ample agricultural surplus that fueled the capitalist-industrial takeoff in the eighteenth and

1
Different definitions of capitalism abound. As Marx and Weber are primarily concerned with the drastic socio-

economic change unleashed by the industrial revolution at the turn of the nineteenth century, their definition of

capitalism, the one I adopt in this article, is a relatively narrow one that focuses on industrial growth. Later theorists

of capitalism ground their discussion on broader definitions such as capitalism as a system of international division

of labor or capitalism as an activity of ceaseless profit seeking, and they date back the rise of capitalism to earlier

periods (Wallerstein 1974; Arrighi 1994). Though these discussions and definitions are useful for our understanding

of different significant aspects of modern life, they could not deny the uniqueness of the phenomenal great

transformation of the world beginning in the nineteenth century. To deal with this transformation, the narrow

definition of capitalism is still the most pertinent.

1
nineteenth century, with agricultural surplus defined as agricultures total output less the amount

of output necessary for the subsistence of the population (e.g. Brenner 1976, 1982; Wallerstein

1974; Lachmann 2000; Smith 1959; Collins 1997; Wrigley 1985; cf. Wrigley 1988). This

agrarian origin school of capitalist transition, however, is challenged by recent discoveries

about Chinas high agricultural productivity that compared favorably with England in the early

modern period (Pomeranz 2000; Wong 1997; Li 1998). 2 These new findings lead us to a new

conundrum, that is, if Chinas agricultural productivity on the eve of the nineteenth century was

as high as England, then why the vast agricultural surplus thus generated there had not fuelled a

capitalist transition as Englands and others surplus did.

In this regard, China becomes an interesting negative case a thorough investigation of

which can refine or revise existing theories of capitalist transition (For a discussion of negative

case method, see Emigh 1997a and Skocpol 1979: 99-111). By reviewing and systematically

comparing these existing theories, I argue that they, while focusing on how substantial surplus

was produced in the agrarian sector as a necessary condition for a capitalist-industrial takeoff,

pay insufficient attention to how this surplus was distributed. I contend in the first part of the

article that the central reason for Chinas non-transition to capitalism despite its agrarian wealth

lies in its lack of centrally organized enterprises capable of concentrating the agrarian surplus

and investing it in industrial innovation. Rather than invalidating the existing theories, the

inconvenient new findings about China show that these theories have not yet exhausted all

necessary conditions leading to capitalism. In the second part of the article, I explore why

hierarchically organized and resourceful enterprises did not emerge in Qing China (1644-1911). I

argue that it was not a result of the perennial repression of commerce by a conservative

confucianist state, as traditional orientalist historiography suggests. Alternatively, I explain the

2
Throughout this article, the early modern period refers to c.a. 1500-1800.

2
restrained reproduction of entrepreneurial elite in terms of the particular pattern of interplay

between elite politics and class politics in Qing China.

A methodological note is that against some historians suggestion that China should be

compared with the whole Europe rather than individual European countries provided with

Chinas continental size (Pomeranz 2000; Wong 1997), I insist on using nation-states as units of

comparison. Though it may be reasonable to compare China and Europe as two integrated

economies, it is more sensible to compare China, England, Japan, etc. as individual political

economies characterized by distinct political constellations in our inquiry about capitalist

transition. This comparative strategy is particularly apposite provided that most independent

variables identified by different theories of transition, like pattern of state formation, class

conflict, and elite conflict, are political processes played out in the national arena.

FROM URBAN TO AGRARIAN ORIGINS OF CAPITALISM

Most classical sociological theories about Europes transition to capitalism postulate that

the key to such transition is how and why a group of urban bourgeoisie managed to break away

from the feudal order to become an autonomous and then a dominant social group (Pirenne 1952,

Marx [1848], Weber 1930, 1958; Anderson 1974; see also Hilton ed. 1978). Albeit they focus

differently on the role of dynamic class struggle, the role of medieval cities as autonomous

institutions, or the role of Protestant asceticism in fostering a distinct and intact community of

entrepreneurs, they all agree on the urban origins of modern capitalism. Corresponding to this

urban-centric explanation of Europes capitalist transition is the view that capitalism did not

emerge in China because the despotic imperial state, under the influence of conservative

Confucianist ideology that despised commerce, was constantly ardent in suppressing urban

3
mercantile activities (Wittfogel 1957; Anderson 1974: 462-549; Jones 1981: 202-24; ZGRMDX

1957).

But this urban-centric theory was later overshadowed by the agrarian origins school,

according to which the urban-centric explanation failed to account for the timing and location of

capitalist breakthrough: Why did not the transition take place in medieval northern Italy, when

mercantile activities and long distance commerce based in city-states were most vibrant, but

much later in England during the late eighteenth and early nineteenth century?3 Alternatively,

this school sees industrial capitalism as first and foremost the result of an agricultural revolution

in early modern England. Without this revolution, urban entrepreneurial activities could at best

be isolated mercantile islands surrounded by the ocean of feudal order, short of primary products

and free laborers as the necessary preconditions for any industrial expansion.

For Robert Brenner (1985 a&b), English peasant resistance in the medieval period

permanently ended the system of serfdom, forcing the landowning class to resort to less coercive

form of exploitation such as fixed monetary rent. But at the same time, the peasants were not

strong enough in stopping the landlords from consolidating their absolute private property right

of the land through enclosure, during which landlords expanded their landholdings and deprived

the peasants of their right to subsistence to attain economy of scale. The consequence was the

incessant investment by entrepreneurial landlords or tenants in farming technology and the

phenomenal growth of agricultural productivity. It was the abundant agricultural surplus thus

generated that fuelled Englands capitalist-industrial takeoff. For Wallerstein (1974), the

expansion of the European division of labor through international trade since the sixteenth

3
The classical theories are flawed also because they were misinformed by the Orientalist scholarship of their times,

which provided a distorted description of the historical development of non-Western societies as a contrast to

European development. See Marsh (2000) and Hung (2004) for a discussion of how this orientalist scholarship

impaired the classical theories of macro-historical social change.

4
century enabled the landed aristocracy in Europes core zone, which specialized in exporting

high value added rural industrial or farm products, to adopt less coercive mode of labor control

and invest more in the improvement of agricultural productivity. Englands industrial revolution

was in fact a continuation of this long rise of productivity in the countryside.

Despite their cogent analytic framework, this first batch of agrarian origins theories is

found to contradict many historical nuances of European development. In response to this flaw,

Richard Lachmann (1989, 1990, 2000) recently developed an elite conflict theory to provide a

more accurate agrarian-origin explanation of capitalist transition. Defining elite as a group of

rulers with the capacity to appropriate resources from nonelites and who inhabit a distinct

organizational apparatus, he argues the agricultural revolution of early modern England was but

an unintended consequence of the establishment of a private property regime, which was

established by the landowning gentry elite as a means to fend off the claim on agricultural

surplus by rival elites from the state and the church. In a similar vein, Rebecca Emighs (1997b;

2003; Hopcroft and Emigh 2000) study of late medieval Tuscany as a negative case of capitalist

transition shows that how resourceful landowners, who were mostly urban-industrial elites and

regarded their agricultural investment as secondary to their urban investment, fostered an

agricultural revolution but at the same time impeded the autonomous development of agriculture

through instituting an urban domination of rural interests. With the absence of rural autonomy,

Tuscanys agricultural revolution failed to sustain, as agricultural productivity ceased to grow

when Florences industrial-commercial sector declined in the beginning of the early modern era,

in contrast to Englands sustained agricultural revolution under the auspices of autonomous rural

gentry elite.4 These actor-centric studies show that the transition or non-transition to capitalism

4
Emighs study makes another distinct contribution by showing that high agricultural productivity is not strictly

associated with any particular kind of land tenure (e.g. fixed rent leasing), as many Marxist or neo-institutionalist

economists suppose (see Emigh 1999 in particular; see also Allen 1992 and Hopcroft 1994). Sharecropping or other

5
was neither a result of any inherent logics of some grand system nor a result of purposeful

actions by actors conscious of their own class interest. Rather, it was always an unintended

consequence of concatenations and interaction of tactical moves of elites in the unpredictable

field of elite conflict and short-term interests maximization (see also Adams 1996, 2005; Shin

1998; Hopcroft 1994).

Corresponding to the theories about the agrarian origin of European capitalism is a spate

of theories about the stagnation of Chinese agricultural development over the early modern

period. For example, the high level equilibrium trap thesis asserts that Chinas agriculture had

been strained by a lack of new ecological frontiers and a rapidly expanding population since the

fourteenth century. The diminishing per capita natural resources made new technological

breakthrough impossible (Elvin 1973). Another standard explanation is the agricultural

involution thesis, according to which unchecked demographic growth in early modern China

led to a continuous diminishing per capita agricultural productivity and lack of incentive in

innovating labor-saving technology, provided with the abundant supply of zero-cost labor

(Huang 1985, 1990). With a stagnant or even deteriorating agrarian sector, early modern China

could only marginally feed its population. A capitalist-industrial takeoff was simply out of the

question. In addition, the agrarian origin school also inspired a number of studies which find that

Tokugawa Japan (1603-1867) did experience an agricultural revolution similar to what early

modern England witnessed. In this regard, Tokugawa Japan was closer to England than to China,

and this accounts for Japans capitalist-industrial takeoff in the nineteenth century (Smith 1959;

Collins 1997).

land tenures which were supposed to be unfavorable to agricultural investment could indeed motivate investment

and raise agricultural productivity under particular circumstances. This finding is important to the Chinese case too,

as we can no longer derive from the lack of large-scale commercial farming in early modern China that agricultural

productivity there was stagnant.

6
 The agrarian origin theories about the transition to capitalism in eighteenth-century

England and nineteenth-century Japan, as well as the non-transition in eighteenth- and

nineteenth-century China, are recently challenged by a group of socio-economic historians who

find that early modern China did in fact witness an impressive agricultural revolution as early

modern England did. These new studies show that since the sixteenth century, China had been

closely connected to the global trade network, through which it absorbed a huge amount of silver

originating in the Americas and used by European merchants to purchase Chinese products such

as silk, ceramics, and tea. The influx of silver fomented Chinas transition to a silver standard as

well as a rapid expansion of commerce (Atwell 1998; von Glahn 1996; Rowe 1998; Frank 1998;

Hung 2001; Myers and Wang 2002). On the one hand, commercialization led to the dissolution

of the agrarian-coercive order based on manorial estates, creating a new agrarian economy

grounded on free alienation and transaction of land and labor (Elvin 1973: 235-67; Rowe 2002:

493-502; Huang 1985: 97-105; Jing 1982: 169-81; Buoye 2000; Ye 1983; see the discussion

below). On the other, it stimulated the growth of large-scale interregional division of labor, under

which some areas (such as the Lower Yangzi Delta) came to specialize in producing high value

added products like cotton and silk textiles and import most of their food from areas specializing

in grain production (Li 1999; Marks 1996, 1998; Wu 2001: 201-88).

Continuous innovations in farm management and production technologies by free peasant

producers, coupled with deepening inter-regional division of labor, enabled long-term growth in

per capita and per acre agricultural productivity as well as standard of living in the early modern

period (Li 2003, 1998; Bray 1986, 1997; Wong 1997: 1-70; Lee and Wang 2000; Lee and

Campbell 1997). The following comparison of various socio-economic indicators shows that

Chinas agrarian-commercial economy fared better than England/Europe in the eighteenth and

7
early nineteenth century in many respects. It shows that the agricultural revolution is not unique

to England and Japan, and it was shared by Qing China as well.

(Table 1 about here)

These inconvenient new findings unsettled the agrarian origins theories and triggered a new

wave of scholarly efforts to look for new explanation for Englands capitalist-industrial takeoff

and Chinas non-takeoff.

BRINGING URBAN ENTREPRENEURS BACK IN

The new explanation that attracts most attention is Kenneth Pomeranzs ecological

argument (2000). He asserts that the divergence of developmental pattern between England and

China did not occur until the turn of the nineteenth century. Before that, both economies were

experiencing parallel growth of commerce, population, and agricultural productivity. Toward the

end of the eighteenth century, development in both regions reached the limit that the available

and diminishing ecological resources, like timber and cultivable land, could allow. Whence

Chinese development was trapped, England successfully circumvented the ecological constraint

and leaped forward to industrial revolution. The key to Englands success lies in its access to

vast American resources like raw cotton and sugar, together with the coincidental proximity of

Englands largest coal deposit to the most economically advanced region in the country.

This revisionist explanation is neat but problematic on many counts. First, it cannot

explain why England did not capitalize on their advantage of easy access to American resources

and coal deposit to foster capitalist-industrial development earlier, but waited until the very last

minute at the turn of the nineteenth century. Second, the availability of American resources to

England vis--vis their unavailability to China is an exaggeration. The cost of American

resources in eighteenth-century England were far from cheap, and many of them were in fact

8
sold to England at higher than average world market prices (Vries 2001). Provided with Chinas

huge silver reserve originating at several centuries of trade surplus, it would not be difficult for

China to purchase the New World resources from the world market if needs arose (see Goldstone

2004: 279). Third, the coal deposit in northeast China, though not close to the economically most

advanced Lower Yangzi Region, was not terribly inaccessible, provided with the plausibility of

sea transportation along Chinas eastern coast (Li 2000: 539-42). Fourth, and most important,

Japan also had no colonies and accessible coal deposit initially, but it did industrialize

successfully in the nineteenth century through purchasing most of the raw materials essential to

an industrial takeoff from the world market (Howe 1996: 90-137).

Another popular revisionist explanation is the chronic war thesis (Wong 1997: 71-151;

Arrighi 1994). It stipulates that the chaotic international military conflict in early modern Europe

urged European states to ally with the mercantile elite, who thrived under state protection and

through financing government war efforts. Like the above ecological argument, it does not

explain why the chronic war condition, which dated back to the collapse of the Roman empire,

led to Europes capitalist-industrial takeoff at the turn of the nineteenth century but not earlier.

Emphasizing the positive effect of war on capital accumulation, this thesis neglects the

devastating effect of war on accumulated surplus and gains in productivity. In many times, the

positive and negative impacts simply cancelled out each other (Vries 2002). At last, this thesis

does not explain why capitalism broke out in Japan during its most peaceful period but not

during its warring period from the fourteenth to the sixteenth century, nor can it explain why

capitalism does not break out in fourteenth- and fifteenth-century Italy, when interstate conflict

was widespread and chronic.

Table 2 below summarizes the factors conducive to capitalism as identified by existing

theories of capitalist transition and their absence or presence in Europe, China, and Japan.

9
 (Table 2 about here)

The rise of capitalism, which occurred in a unique place in a unique time in world history, must

be the result of a contingent concatenation of multiple factors (Collins 1980). Though one cannot

deny the contribution of each of the above factors to the rise of capitalism, the table clearly

shows that these factors, either taken individually or collectively, cannot adequately explain the

capitalist transition in eighteenth-century England and nineteenth-century Japan as well as

Chinas non-transition throughout the eighteenth and nineteenth centuries. A factor X must be

missing. To offer a sufficient explanation for the variation in the developmental pattern of

England, China and Japan, this factor X must manifest a positive value in eighteenth-century

England and nineteenth-century Japan, but a negative value in eighteenth- and nineteenth-

century China.

Recently, Jack Goldstone (2000, 2002, 2004; see also Carroll 2006) develops an

engineering culture theory to explain the China-England divergence. It stipulates that the key

to Englands capitalist-industrial takeoff at the turn of the nineteenth century is the

popularization of a unique engineering culture, which motivated entrepreneurs to turn preexisting

scientific knowledge to practical improvement of commercial venture. A question to follow is

whether there was any historical-structural process that contributed to the diffusion of this

engineering culture, on top of the contingent historical events that accounts for the initial rise and

survival of this culture in seventeenth- and eighteenth-century England as identified by

Goldstone (2001). According to Robert Allens theory of collective invention, application of

abstract scientific knowledge to innovative practical use during the industrial revolution was

always conducted through recurrent and costly experimentation by capital-intensive firms and

mutual-diffusion of the subsequent knowledge among these firms. This argument is reaffirmed

by Lachmanns observation that a process of forced draught, which drastically centralized the

10
vast economic surplus from the agrarian economy into the hands of urban entrepreneurs, was

necessary to turn the gains of the agricultural revolution into the fuel of industrial innovations

and investments that finally led to the industrial revolution as a spontaneous combustion. This

centralization can be carried out via various routes such as landowners investment in urban

companies or urban-rural commercial exchange with the terms of trade in the formers favor

(2000: 199-203).

In other words, collective invention, or diffusion of an engineering culture in production,

is impossible without a critical mass of resourceful and centrally coordinated corporations,

capable of concentrating the vast surplus from the agricultural sector and utilizing this

concentrated surplus to execute the costly trial and error development of productive technology.5

Given that Japans successful industrialization in the nineteenth century was exactly attributable

to its success in fostering large western-style corporations as well as importing the engineering

culture during the Meiji reform, in contrast to Chinas futile attempt to do so (Westney 1987; Ma

2004; Hamilton 2004: 16-20; Goldstone 2000: 190-91; Kirby 1995), an urban entrepreneurial

elite equipped with resourceful and centralized business organizations should be the factor X,

which manifests positive values for eighteenth-century England and nineteenth-century Japan,

but a negative value for eighteenth- and nineteenth-century China.6

A caveat is that by bringing the urban entrepreneurial elite, who are taken for granted by

most agrarian school theorists, back to the picture is not to simply go back to the classical urban

origin school. The existence of powerful entrepreneurial elite alone could never bring about

capitalism in the absence of a large agricultural surplus ready to be centralized into their hands.

5
For a discussion of relation between centralized, large-scale firms and technological innovation, see also Landes

(1969, 1986).
6
For a revived interest in the role of corporate organizations in the rise of capitalism in early modern Europe, see

Adams (2005), Carruthers (1996) and Brenner (1993) for example.

11
As we have seen in the case of fifteenth-century Tuscany, the strength of urban elite, coupled

with a particular urban-rural linkage that retarded autonomous rural development, obviated a

sustained agricultural takeoff. The combination of strong urban entrepreneurial elite and the lack

of a lasting agricultural revolution had not generated any transition to capitalism there. Both

abundant agrarian surplus and strong, highly organized urban entrepreneurial elite are necessary

for a capitalist-industrial takeoff.

(Table 3)

Establishing the presence of strong, organized urban entrepreneurial elite as the factor X

leads us to a deeper question of why strong entrepreneurial elite did not emerge in eighteenth-

and nineteenth-century China, in contrast to their dominant position in eighteenth-century

England and nineteenth-century Japan. As the traditional oriental despotism thesis

presupposing the imperial states constant dislike and repression of commerce can no longer

stand up to the evidence (see the discussion in the next section), an alternative explanatory

framework needs to be constructed. In what follows, I will build upon the insights from

Lachmanns elite conflict theory and Julia Adams (1996; 2006) elite family analysis, which

discusses how strategies of elite familial reproduction shaped state formation and commercial

organization development in early modern Europe, to delineate the trajectory of reproduction of

entrepreneurial elite against the backdrop of inter-elite politics in Qing China.7 We shall see that

the contour of elite politics alone does not suffice to explain the constrained reproduction of

Chinas mercantile elite. I will then extend Lachmanns and Adams analysis, which pays little

attention to class politics or regards pattern of class politics as consequence rather than

determinant of the contour of elite politics, to elucidate how class politics shaped inter-elite

relations and Chinas elite reproduction strategy in comparative perspective.

7
Throughout the discussion, I define elite reproduction as a process in which a certain group of elite continuously

expand their size and power over time.

12
THE CONTOUR OF ELITE POLITICS IN QING CHINA

Symbiosis of State Elite and Gentry Elite

After securing their rule over China in the mid-seventeenth century, the Manchu emperor

immediately stripped the Manchu noblemen, or the so-called conquest elite, of their

autonomous political power and reestablished a bureaucratic system after the model of earlier

Chinese dynasties to govern the Han area of the new empire (Crossley 1999: 221-80; Gao 2002).

Officials in the bureaucracy were appointed by the emperor and were mostly degree holders

emerging from the imperial examination, another traditional institution that the Manchus

resurrected (Elman 2000). Lower degree holders not eligible for bureaucratic posts usually

stayed in their home areas and became local gentry elite, serving as informal and hegemonic

leaders in local communities and based their influence and reputation on their education as well

as good deeds (Jing 1982).8

In the countryside, the manorial order of medieval times had disappeared by the

eighteenth century. Since the last few decades of the Ming dynasty (1368-1644),

commercialization and population growth had led to the decline of the serf-based manors. When

the serf population expanded alongside the rest of the population, estate owners were

increasingly strained as their estates were fixed in size. The pressure of feeding an increasing serf

population, together with the commercialization of land and labor as well as the growing

recalcitrance of servile workers, impelled many estate owners to dismantle their estates by

8
I define gentry elite as those who obtained imperial degree but did not have a bureaucratic career. It is a little

different from others definition of gentry as the group of degree earners at large. In the latter definition, the

bureaucratic state elite would become a subset of gentry elite. But in fact, government officials and informal local

leaders differed widely in their means of livelihood and roles in the body politic. In this light, the definition adopted

here helps us distinguish the two as distinct elite groups and is therefore more useful analytically.

13
selling and renting them out in small lots or hiring waged laborers to till the land. The decline in

manorial order somewhat reversed during the dynastic transition in the mid-seventeenth century,

when the incoming Manchu rulers redistributed large tracts of land confiscated from Ming

loyalists in North China to Manchu aristocrats. But these aristocrats, confronting renewed

demographic and commercial expansion in the eighteenth century, likewise dissolved their estate

and turned to more commercial methods to manage their land (Elvin 1973: 235-67; Rowe 2002:

493-502; Huang 1985: 85-96; Mi 1980).

With the decline of manorial lords, local gentry, who enjoyed tax privileges on their

landed property and could therefore easily expand their holdings, became the dominant

landholders in most local communities. Over the eighteenth century, lay landlords, who held no

imperial degree, increased in number and occupied an ever larger proportion of the whole

landholding class (Li and Jiang 2005: 369-88). But most individual lay landlords owned only

small tracts of lands, and they were dependent on the local gentry for communications with the

government and many other services such as rent collection. Many of them even registered their

land under the name of local gentry to partially enjoy the tax privileges. They were therefore in a

subsidiary position and never constituted a major elite group (Brook 1990).

By the eighteenth century, Chinas elite circle had been reduced to state bureaucratic elite

and gentry elite as two distinct elite groups. Even though the gentry would occasionally employ

their local hegemony to organize petition or protest against local state elite to advance local

community interests or to protect their community from the appropriation of local resources by

the state (Hung 2004), the two elite groups were collegial and intertwined, similar in their

ideological outlook, and linked by kinship or other social ties. Local bureaucracies, usually

understaffed, heavily relied on local gentry for a wide range of affairs such as dike maintenance,

arbitration of disputes, granary and school management, and even tax collection. In return, the

14
gentry secured a share of the local governments revenue as remuneration of their services, on

top of their tax privileges (Chang 1962: 43-73; Chu 1962). It is estimated that income from

services to the government and from land holdings each constituted about 40% of the total

income of all non-official gentry elite (Chang 1962: 197).

While in early modern England, inter-elite conflict over their rights to agricultural surplus

led to the institutionalization of private property of land that accounted for the agricultural

revolution (Lachmann 2000), elite symbiosis in Qing China was at least as effective in raising

agricultural productivity. Throughout the eighteenth century, Chinas state elite and gentry elite

were never as coercive and predatory as the conventional oriental despotism thesis suggests.

On the contrary, their joint efforts in managing and investing in local infrastructures like

irrigation system, dikes, transportation routes, and granaries, in addition to their eagerness in

promoting new techniques in agricultural and handicraft production, were key to the high

agricultural productivity and living standard in mid-Qing China (Li 1998; Rowe 1998, 2002;

Myers and Wang 2002; Will and Wong 1991; Will 1990).

Emergence of Urban-Entrepreneurial Elite and its Limit

Besides these two major elite groups, a nascent group of entrepreneurial elite also

emerged in concert with the rapid commercialization of the economy. They normally operated in

merchant groups bounded by native place identities and shared dialects. Built upon the webs of

native-place associations, these merchants constructed extensive commercial networks to

conduct their highly profitable long-distance trade and finance, facilitating the circulation of

grains, salt, textiles, credits, etc., across the empire (Hamilton 2006: 43-7; 56-70; 93-126). The

most common origins of these mercantile elite were lay peasants or landlords who diverted their

15
savings to commerce, in addition to gentry elite lineages which invested part of their wealth into

commerce.

In contrast to the traditional view that the Qing government was always hostile to

mercantile activities and was persistently eager to curb commercial growth for fear that it would

threaten its control of the society (ZGRMDX 1957; Wittfogel 1957), recent studies converge on

the view that the Qing seems perhaps the most pro-commercial regime in imperial Chinese

history (Rowe 1998: 185). The assumption that the Confucianist orthodoxy constantly despised

commercial activities also turns out to be flawed (Taylor 1989; Munro 1980). By the eighteenth

century, the tenet of industry and commerce are also the pillars of the world (gongshang yiwei

ben) had replaced the anti-commercial variant of Confucianism, which stressed the

uncompromising primacy of agriculture over commerce, as the dominant ideology among the

educated class (von Glahn 1996: 215-24; Chen 1991). The pragmatic idea that the best way to

warrant the prosperity and stability of the empire was to let the economy run by itself under the

heavenly-mandated laws of commerce (maoyi zhi chang) and to protect the private property

(ye) of the subjects had become the standard conviction of the Qing bureaucracy (Rowe 2001:

155-287; Wu 2001: 20-50; von Glahn 1996; Hung 2001:497-501). This favorable disposition

toward commerce is reflected in the bureaucracys increasing reluctance in micro-managing the

economy and their increasing reliance on private merchants and the free market in securing local

grain supply, completing infrastructure projects, and even procuring logistical supply for military

campaigns (Rowe 1998; Perdue 1996). Newly unearthed archives on local governments

handling of legal disputes reveal that the Qing bureaucracy was always proactive in advancing

commercial interests through enforcing private contracts and property rights (Zelin et al. eds.

2004). The gentry elite were rarely hostile to mercantile activities either, as they saw them as an

opportunity to diversify their income and reduce their dependence on the state for their

16
livelihood. Covert or open investment of the gentry elite constituted large portion of the

operating capital of many successful commercial ventures in Qing times (Pomeranz 1997).

Above all, it is not uncommon for a prestigious lineage to produce gentry leaders, state officials,

and successful merchants at the same time (Rowe 1990).

As the state elite and gentry elite were supportive to, or even overlapping with, the

emergent entrepreneurial elite, one would expect the latter to expand continuously and coalesce

with the former two to constitute a three-way symbiotic, inter-penetrating, and mutually

strengthening elite formation, comparable to the patrimonial merchant-regent nexus that

accounts for the dual rise of state and mercantile power in early modern Dutch and other

European countries (Adams 2005). But in reality, the reproduction of the entrepreneurial elite

was severely limited, and they never became a major and independent elite group on equal

footing with the other two groups.

Throughout the Qing times, there were a number of conspicuous merchant groups which

were successful in establishing and maintaining their monopoly of certain trades, such as the

Shanxi financiers monopolizing the banking sector and Yangzhou merchants monopolizing salt

trade and production. Despite the strength of these groups at large, they were mostly no more

than decentralized networks constituted by individual merchant families which rose and fell

successively (Hamilton 2006: 43-7; 56-70). These individual families rarely thrived over

generations. The common pattern is that a certain successful entrepreneurial family, after

accumulating sufficient initial fortune, pulled out from commercial activities and turned

themselves into gentry or state elite via investing their wealth in preparing its next generations

for imperial examination. Sustained, organized, and powerful merchant dynasties that abound in

early modern Europe, and to a lesser extent Tokugawa Japan, were far from prominent in Qing

China (Braudel 1992: 585-94; Grassby 2001; Brenner 1993: 51-91; see also Landes 2006).

17
 Based on his study of the genealogical record of a number of the most prominent

Yangzhou salt merchant families, Ping-ti Ho (1954) finds that nearly all of the later generations

of these families left commerce and became government officials or gentry leaders. With the

recurrent departure of the most successful members from commerce, capital accumulation and

further expansion of the Yangzhou merchant network was severely limited, though the

sustenance of the network at large was warranted by the continuous entry of new members from

modest backgrounds. A parallel example can be found in the case of the Pan family from

Huizhou. As a member of the Huizhou merchant network, the family thrived in the seventeenth

century in salt and condiment trade. In the late seventeenth century, it resettled to Suzhou, the

most vibrant commercial city in the empire, to expand their business. But after the resettlement,

the family started shifting their resources from commercial investment to education. By the late

eighteenth century, only one minor household in the extended family was left in the family

business, while all other Pans managed to obtain high imperial degrees and become the leading

gentry elite in the Suzhou area. Some of them even made it to become the highest rank officials

in the central government. Their political power was so overwhelming that their mercantile

origin was nearly forgotten later on (Xu 2004: 195-246).9

Whereas many prominent mercantile elite chose to reproduce their elite status through

quitting commerce and transforming themselves into gentry and state elite, gentry and state elite

who attempted to capitalize on the empires expanding commerce by engaging in private

entrepreneurial activities never let these activities become their main source of income. For

9
There were some merchant families who continued to be actively engaged in their family business after their shift

to bureaucratic careers, but it is also evident that they became ever more hesitant and more reticent about their

commercial involvement when they climbed further up in the bureaucracy. More importantly, these cases are mostly

based on studies of nineteenth- and early twentieth-century sources. It is dubious to project the conclusions from

these cases backward to earlier centuries (see Pomeranz 1997; Zelin 1988).

18
example, according to the genealogical record of the Luo family, a long-standing gentry lineage

in the entrepot city of Hankou and its vicinity, only about one-third of their members moving

away from home were listed as merchants as their primary occupations for the eighteenth and

nineteenth century (Rowe 1990: 63-5). The record only listed the occupations of those who

emigrated, and the proportion among the Luos who stayed in the local area must be much

smaller. For another example, Chung-li Changs (1959: 197) classic study shows that income

from commercial activities constituted only about 20% of the total income of the gentry class in

the late nineteenth century, a period when China was already closely connected with the world

capitalist system and the imperial examination system were considerably weakened. This figure

must be much lower in the eighteenth century.

Successful entrepreneurial families high propensity to transform themselves into gentry

and state elite, together with gentry and state elites low propensity to transform themselves into

entrepreneurs, limited the self-reproduction of entrepreneurial elite as an elite group, though

merchant networks survived and developed as their departing members were always replaced by

newcomers. This process constricted the possibility of continuous buildup of individual

organized enterprises. As a result, Qings commercial economy was marked by weak firms in

strong networks, as compared with the firm-based economy grounded on hierarchically

organized enterprises in eighteenth-century England and nineteenth-century Japan (Hamilton

1999: 16-25; Reddings 1986, 1991). With the absence of resourceful and centralized

entrepreneurial organizations, China was short of an agent that was capable of centralizing the

abundant agrarian surplus and diverting this surplus to costly productive innovation.

As state elite and gentry elite in Qing China were in fact favorable to commerce and the

anti-commercial variant of Confucianist ideology among the elite was replaced by a pro-

commercial variant, it is puzzling why the entrepreneurial elite failed to develop into a strong

19
elite group in Qing China. To seek a satisfactory explanation for this paradox, we need to look

beyond the realm of inter-elite politics. In the next section, we shall see that the solution can be

found in the interplay between elite politics and class politics.

CLASS POLITICS AND THE STRAINED REPRODUCTION OF ENTREPRENEURIAL

ELITE

Recent studies show that class politics in Qing China was characterized by the states bias

toward the lower classes in handling class conflict in rural and urban areas. In most of the

eighteenth century, the paternalistic government was lenient to tenant peasants and was active to

protect their livelihood against landlords abuse, contradictory to the traditional Marxist

assumption that the Chinese imperial state was but a repressive apparatus of the exploitative

landowning class (Huang 1996; Buoye 2000; Gao 2005: 17-76, 147-69; Brenner and Isett 2002).

Chinese landlords were forced by the state to accept a politically set low rent level and were not

able to expel tenants at will. Second, the Qing state, which was increasingly active in intervening

into civil disputes over the eighteenth century, prioritized the protection of tenant farmers when

it came to arbitrate landlord-tenant dispute, though it was more impartial as far as tenant-tenant

and landlord-landlord disputes were concerned. Rich but not benevolent (weifu buren) became

a derogatory phrase frequently used by the government to criticize the privileged class

indifferent to the suffering of the poor (Gao 2005 151-2). The general paternalistic disposition of

the Qing state can be explained in part by the Qing conception of benevolent rule and in part by

the Manchus fear of recurrence of large scale class warfare such as organized uprising of tenant

farmers and worker uprisings that proliferated in the late Ming period and helped topple the

Ming dynasty (Masatoshi 1984; Yuan 1979).

The weak political position of Chinese landlords under the states paternalistic protection

of the peasants stood in sharp contrast to the English landlords, who, under the backing of the

20
state, were able to charge high rent and to increase their farms economy of scale through

enclosure. But this weak position of Chinese landlords did not lead to stagnation in agricultural

development, as many historical sociologists emphasizing the significance of high rent level and

large farm size in stimulating agricultural investment would suggest (Brenner 1985a; Brenner

and Isett 2002). As we have seen earlier, Chinese agriculture did experience impressive

development under continuous innovation of farming technique by small peasant households

over the early modern period.10

Though the states paternalistic sympathy with the underprivileged did not forestall an

agricultural revolution in early modern China, this disposition, when applied to urban context,

did contribute to Chinas non-transition to capitalism by constricting the self-reproduction of

urban entrepreneurial elite.

The 18th-Century Moral Economy From Below and Above

Legal historians who focus on urban China in the Qing period find that local governments

often arbitrated class conflict according to the same logic that I just outline for landlord-tenant

disputes. In Suzhou, the most commercially and industrially advanced city of the empire, the

local government frequently invoked the metaphor of landlord-tenant relation to justify its

rulings on legal disputes between textile workshop owners and laborers, as well as those between

large workshops and their subcontractors. These rulings compared workers and subcontractors

duty of timely submission of finished products to tenants duty of punctual rent payment. They

also compared workshop owners obligation of warranting employment and contract stability to

10
These findings are in line with the revisionist economic historians who reveal that most technological innovation

in early modern English agriculture was in fact made in small and medium yeomens farms, not in large-scale

capitalist farms owned by powerful landlords (Allen 1992; Hopcroft 1994).

21
their workers and subcontractors to landlords obligation of not expelling their tenants at will

(Chiu 2002: 82-3).

The local government was also diligent in preempting the outbreak of dispute by urging

workshop owners to make preemptive concession, like raising wage level and shortening labor

time, whenever a capital-labor conflict was imminent. This conflict containment strategy

crystallized in the aftermath of several large-scale labor unrests in the city during the late Ming

and early Qing period, and it unintentionally elevated the transaction cost that workshop owners

would have to bear if they had attempted to upgrade their operations into large-scale factories

hiring lots of workers. It constituted a bottleneck for the development of Suzhous textile

industry, which had been based on a decentralized putting out system, into more efficient and

profitable big factory production based on internalization of production processes, despite the

existence of all favorable conditions for factory production, including available technology,

abundant labor power, and existence of a mass market for Suzhou textiles (Chiu 2002; Xu 1999;

cf. Li 2000). Furthermore, the state was not always in support of major textile workshop owners

when it came to handle disputes between these owners and their subcontractors, fearing that

rulings against the latter would force them out of business and cause unemployment (Chiu 2002:

82-6).

In sum, Chinas entrepreneurial elite were prevented by the state elite from treating their

workers and subcontractors too harsh, just as landowners were prevented from exacting too

much from their tenants. Profitability of mercantile activities was therefore curtailed. The Qing

governments paternalistic and concessionary approach to labor unrest stood in sharp contrast

with the eighteenth-century English state, which was ever more aggressive in aiding industrial

development through repressing labor unrest. As Hobsbawn notes, as the [eighteenth] century

progressed, the voice of the manufacturer increasingly became the voice of government, and

22
state support enabled the innovating entrepreneur [to] succeed in imposing himself despite

the bulk of public opinion against him (1952: 66-7). For instance, the state had helped early

industrial capitalists to enforce labor discipline by penalizing workers who refused to work as

long as their employers wished and by regularly raiding workers home to look for plausible

embezzlement since the mid-eighteenth century (Marglin 1974). Though Englands central

government might be biased toward landed elite when handling conflict between rural gentry and

urban entrepreneurs (an example is the Corn Law legislation), it never hesitated to protect urban

capitalists from any resistance from below.

The case of Suzhou textile industry is far from isolated. The Qing states paternalistic

sympathy with the underprivileged is also reflected in its handling of food crises in the empires

urban centers over the 1740s, a decade marked by rapid commercial expansion, runaway

inflation, and the highest rate of demographic expansion in the eighteenth century (Quan 1996;

Rowe 2001: 179-83; Lin 1989: 299). To maximize profit, food merchants typically respond to a

food crisis by selling their stock incrementally, or by exporting their stock to places with even

greater food shortage. But lower classes in local communities often answered these profit-

maximizing activities by storming commercial storehouses, forcing merchants to sell their stock

locally at just prices, and barricading or looting outbound commercial grain boats (Wong 1982).

To minimize the eruption of food riot, the Qing government was always intolerant to

merchants profit maximizing activities at times of subsistence crisis, though it recognized and

encouraged merchants role in securing food supply in ordinary times. In the 1740s, the Qianlong

emperor repeatedly reminded the bureaucracy that local food crises were always exalted and

sometimes caused by food hoarding wicked merchants (jianshang). One of the best ways to

cope with a food crisis emergency, therefore, was to employ moral and administrative persuasion

to urge the merchants sell their stocks at unprofitable, lower than market prices (QSL-QL juan

23
193: 13-4, 273: 26-8; see also Rowe 2001: 180-81). While at some places local officials

successfully executed the emperors policy and solved local crises uneventfully (see Rowe 2001:

167-83), food deficiency in many other places deteriorated into escalating class conflict.

The biggest urban class conflict triggered by a food crisis was the food riot of Suzhou in

1748. In 1747, in response to the skyrocketing grain price and signs of imminent social unrest,

the provincial governor of Jiangsu forced local merchants to sell their rice at rock-bottom price

with the threat of executing whoever refused to comply. Most grain merchants sold out their

stocks in a panic as a result. But this left these merchants little to sell the next year, when another

bad harvest in the adjacent areas elevated grain price even more. Large-scale protests and riots in

the city followed suit. Besides the seizure of food, the rioters also demanded the government to

impose further price reduction in grain sale, and they requested the comeback of a trusted and

respected ex-local official who was believed to be more sympathetic with the peoples demand.

Grain wholesalers were looted and local government offices stormed. The angry citizens were

pacified only after the central government gave in to the protesters demand and let the populist

ex-official go back to the area and handle the situation according to the popular will (QSL-QL

juan 314: 25-6, 31-3; 315: 7-8; KYQ, p.583-4; QSL-QL 316: 19-20; SZFZ 149:6).

Another example was the salt riot in the city of Hankou in 1740. Encountering a shortage

of salt supply in Hubei province, the provincial governor adopted a merchant friendly policy that

encouraged salt merchants in Hankou, a wealthy commercial city in the province, to export part

of their abundant stock to the neighboring regions hit hardest by the inflation to stabilize salt

price there and to boost their profit at the same time. But this exporting activity elevated salt

price in Hankou and unleashed a riot. Thousands of angry citizens encircled and smashed major

salt houses in the city. They held a number of leading merchants hostage and forced them to sell

their stocks locally and at lower price. Despite the scale of disorder, the government ordered no

24
suppression or arrest. The emperor saw the rioters simply as stupid people (yumin) who did

not have the patience to wait for the proper handling of the situation by the authority (bu

jingting banli). Local officials were told to consolate the angry citizens and to make them

content with their lots (gean benfen). Also, local officials should urge the merchants to sell

their salt fairly, so that both the merchants and the people could get a fair deal (liangde qiping).

After a lengthy investigation of the event in the central government, the merchant-friendly

provincial governor of Hubei, who was identified as the culprit responsible for the riot as he

encouraged the Hankou merchants to export their salt in the first place, was demoted. To prevent

the recurrence of conflict, the central government introduced a series of measures aimed at

lowering salt price and cutting back merchants profit margins by clamping down on their

stockpiling activities (QSL-QL juan 117:7, 117: 20-21, 118: 6-7, 120: 28, 122: 16-7, 123: 5-7;

137: 15-6).

The cases of class conflict in Suzhou and Hankou, the two most commercially advanced

cities in the empire, were emblematic of the pattern of class conflict and governments response

throughout the eighteenth century. In these two cases and many other similar cases, the state was

not particularly enthusiastic in repressing the anti-merchant contenders. On the contrary, it often

blamed the merchants and asked them to sacrifice for the sake of retaining social peace (e.g.

QSL-QL juan 185: 6-9, 193: 13-4, 273: 26-9, 291: 17-9; Wong 1982). Local food crises and the

subsequent food riots were not specific to China. They also proliferated in eighteenth-century

England and France in the context of rapid commercialization of food supply and demographic

expansion (Tilly 1975; Rud 1964: Ch. 1, 2, 7; Thompson 1991: Ch. 4). But the way European

authorities handled food crisis diverged significantly from China. In the early eighteenth century,

local governments in England, like the Qing state, were sympathetic with the rioters. They often

urged the merchants to lower food price to soothe the angry contenders. But when

25
commercialization of food supply and centralization of the state advanced over the century, the

central government increasingly marginalized paternalist local authorities and relentlessly

repressed food riots to defend merchants legitimate rights in making profit at the expense of

peoples livelihoods (Thompson 1991; Wong 1997: 222-9).

While the entrepreneurial elite in Europe benefited from the protection by the state,

which fended off the moral economy of the crowd for them over the eighteenth century, the

entrepreneurial elite in China was simultaneously pressed by the moral economy from below and

a paternalist state echoing this moral economy from above. Undoubtedly, the state elite never

saw the mercantile elite as their antinomies and were supportive to them most of the times. But

when confronted with the dilemma between advancing entrepreneurial interests and protecting

the livelihoods of the poor, the state elite always sided with the latter. The insecurity that the

contentious poor incurred on the mercantile elite and the lack of state protection against this

insecurity constituted an unintentional institutional milieu that shaped the reproduction trajectory

of the entrepreneurial elite. Viewed in the light of this milieu, the propensity of the

entrepreneurial elite to transform themselves into gentry or state officials, who had more secured

and stable income, as well as the reluctance of the gentry and state elite in diverting too much of

their energy to risky mercantile activities, is no longer incomprehensible.

The 19th-Century Rise of Military-Predatory Elite

The insecurity of urban entrepreneurs incurred by popular contentions and the lack of

state protection against these contentions only worsened in the nineteenth century, when the

Qing society witnessed a deepening socio-economic crisis and escalating social unrest, and the

Qing state was substantially weakened by a deteriorating fiscal crisis aggravated by its

successive wars with imperial powers since the 1840s (Zelin 1984: 264-308; Guo 1996; Lin

26
2007). The nineteenth century was also a time when the moral-economy-inspired resistances

against mercantile activities, though continued to grow, were overshadowed by a rising wave of

more protracted and more violent heterodox religious uprisings against the state and the wealthy.

These uprisings were mostly inspired by the White Lotus religion, which prophesized the total

destruction of the existing corrupt world and the coming of a new one free of inequality and

poverty. This religious tradition can be traced as far back as 1100 C.E., and uprisings by

different White Lotus sects were responsible for the fall of the Mongol empire in the fourteenth

century and accelerated the breakdown of the Ming empire in the seventeenth century. In the

eighteenth century, White Lotus sects, despite assiduous repression by the Qing state, never

ceased to grow underground. They ramified rapidly by recruiting the swelling rank of landless

vagrants displaced by commercialization and demographic pressure (Overmyer 1976, 1981:

Harrell and Perry 1982: Yu 1987 a&b; Liu 1988; Kuhn and Mann 1978).

Religious rebellions erupted sporadically over the eighteenth century, but were mostly

put down swiftly. Toward the end of the eighteenth century, the frequency, scale and intensity of

these uprisings escalated when the Qing states capacity in maintaining social order declined and

when the strength of heterodox sects increased with the growth of the class of landless vagrants.

It culminated in the White Lotus Rebellion of 1796-1805 that heralded a century of recurrent

large scale rebellions, with the Taiping Rebellion of 1851-64, which was ignited by an

amalgamation of White Lotus sectarianism and newly imported Biblical teaching, as the most

disruptive one (Kuhn 1986). These rebellions further constrained the reproduction of

entrepreneurial elite, both directly and indirectly.

The sectarian rebels, with a strong egalitarian impulse, were enthusiastic in attacking and

confiscating accumulated wealth of all kinds along their way. The intense battles between the

imperial army and the rebels always interrupted local commercial and agricultural activities.

27
While this direct impact on mercantile activities was transient when the rebellion was in full

force, the indirect impact of the rebellion was more endemic and devastating. Finding the large,

corrupt and immobile imperial army not reliable in the eradication of heterodox rebels during the

White Lotus Rebellion of 1796-1805, the Qing state came to open the Pandora Box of local

militarization, encouraging local gentry elite to collaborate with local bureaucrats to organize

local militias. Amid growing social disorder, local militias proliferated in all corners of the

empire over the nineteenth century. In the midst of the Taiping Rebellion, many of them even

merged to become larger and more formal military structures and finally led to the rise of

provincial armies highly autonomous from the imperial center. Short of financial support from

the central government, these military organizations financed themselves by levying heavy

special taxes on local market towns and agricultural producers (Kuhn 1970: 87-92). Gentry elite,

the main agents of local militarization, reaped handsome profits from the process, as they usually

managed to appropriate 20%-30% of all fund raised for military purpose as their remuneration.

Running militia was so profitable and so legitimate, as the central government constantly

extolled it as an altruistic effort of the gentry to defend the imperial order that militia operation

had become the single most important source of service income among the gentry elite by the

late nineteenth century (Chang 1962: 69-73). Many prominent merchant families also joined this

lucrative bandwagon by abandoning their businesses, as well as their efforts to pursue

bureaucratic or gentry career, to turn themselves into militia organizers (McCord 1990, 1993: 17-

45).

The militarization process entailed the transformation of part of the gentry, state and

mercantile elite into a nexus of military-predatory elite. While nineteenth-century China was still

in lack of any potent entrepreneurial elite capable of concentrating the vast agricultural surplus to

foster a capitalist-industrial takeoff, this new military-predatory elite siphoned vast surplus off

28
the economy, not for productive investment, but for the accumulation of means of violence.

Consequently, Chinas countryside slipped back to an agrarian-coercive order over the century.

In the 1870s, the Qing state initiated a top-down industrialization program to nurture an array of

state-sponsored industrial enterprises in the wake of a series of humiliating defeat by western

industrial powers. But this industrialization effort was impeded by the ever expanding nexus of

military-predatory elite, who consumed a large portion of economic surplus which could

otherwise be mobilized by the state to finance the growth of new enterprises.11 It is not surprising

that this industrialization program ended in a spectacular failure. It fell far short of the goal of

creating a critical mass of efficient and productive modern industrial firms. To say the most, it

achieved nothing more than creating merely a few isolated pockets of growth scattered across

the empire (Wright 1981; Perkins 1967; Wang 2003).

Comparing the capitalist-industrial takeoff in nineteenth-century Japan and Chinas

retrogression to an agrarian-coercive order is telling. In the early nineteenth century, the

advantages and limitations of Japans economy was similar to, if not worse than, China.

Subsequent to the agricultural revolution in the Tokugawa period (Collins 1997, Smith 1959),

the Japanese economy was rife with agricultural surplus decentralized among peasant cultivators.

Japan was not short of resourceful mercantile elite, but they were far from widely dominant.

They were also checked, at least in part, by growing popular contention from below when the

commercialization process increasingly put commoners livelihood at risk (Vlastos 1986: 92-

141; Walthall 1994; Ikegami and Tilly 1994). After the Meiji Restoration of 1868, the new Meiji

11
This can be illustrated by the implementation of lijin, which was a new tax imposed on almost all commercial

transactions after the 1850s. Rather than going all the way up to the central government, the lijin collected was

mostly used by local governments to finance local militarization, in addition to paying war indemnity to imperialist

power. Lijin substantially increased the tax burden of the society. But it mostly benefited local military strongmen

and did not enhance the financial capability of the central government in any way (Mann 1987: 94-144).

29
state elite successfully built a highly centralized government that was effective and brutal in

repressing all kinds of popular contention, clearing the moral economy from below (Bix 1986:

189-214). It managed to centralize vast economic resources into its hands through heavy

agricultural tax. It employed these concentrated resources to construct infrastructure ranging

from railroad to telegraph system necessary for industrial growth, and it channeled a substantial

portion of its revenue to finance or subsidize the development of large, vertically integrated

private corporate conglomerates know as zaibatsu, with Mitsubishi and Mitsui as well known

examples (Hamilton 1999: 18-25; Smith 1959: 201-13; Westney 1987; Howe 1996: 90-200).

This kind of pro-capitalist centralized political structure, which was efficient in concentrating

and utilizing the vast agricultural surplus to jump-start a capitalist-industrial takeoff, was simply

non-existent in nineteenth-century China. Whence the expanding military-predatory networks in

China eroded the states financial capacity and thwarted its effort in cultivating a vital and self-

expanding urban entrepreneurial elite from above, a new, formidable, state-sponsored strata of

corporate elite took shape in Meiji Japan, laying the groundwork for Japans capitalist expansion

in the century to come.

The interplay of class and elite politics that accounts for constrained reproduction of

entrepreneurial elite in eighteenth- and nineteenth-century China in comparative perspective is

summarized in the following table.

(Table 4 about here)

DISCUSSION

To recapitulate, prevalent theories of capitalist transition so far emphasize the role of

Englands and Japans agricultural revolution in the early modern period that enabled its agrarian

economy to generate sufficient surplus to fuel a capitalist-industrial takeoff in the eighteenth and

30
nineteenth century respectively. But the non-transition to capitalism in eighteenth and nineteenth

century China despite its vast agricultural surplus suggests that high agricultural productivity is

just a necessary but not sufficient condition for an capitalist-industrial takeoff. What China

lacked, and England as well as Japan possessed, was large-scale, centralized entrepreneurial

organizations capable of centralizing the agrarian surplus and of diverting this surplus to

productive innovation in urban industry.

In eighteenth-century England, the centralizing state actively shielded the entrepreneurial

elite against the moral economy from below through increasingly brutal repression of popular

contention. This attack on the poor was institutionalized in the successive legislation from the

Black Act of 1723 to the Combination Act of 1799 and the New Poor Law of 1834 (Thompson

1975; Somers and Block 2005). Under the unreserved protection by the state, the entrepreneurial

elite developed resourceful organizational apparatuses capable of experimenting on new

productive technology in enhancing their profits. In eighteenth-century China, in contrast, the

imperial state was not particularly predisposed to harshly suppress popular contention against

entrepreneurial activities. It was often sympathetic with the popular contenders in the midst of

class conflicts. The resulting insecurity among the entrepreneurial elite hampered their self

reproduction and contributed to their non-hegemonic position.

Early nineteenth-century Japan, like China in the same period, did not have a strong

urban entrepreneurial class. But following the Meiji Restoration of the 1860s, the powerful and

centralizing Meiji state managed to engineer the rise of such elite by mobilizing the vast rural

surplus via centralized agricultural tax and aggressively financing the growth of private,

hierarchical and western style corporations out of its revenue. The Meiji state was equally

effective in containing any resistance to this process from below. By the turn of the twentieth

century, Japan had emerged as a major capitalist-industrial power in the world. In the mid-

31
nineteenth century, on the contrary, Chinas imperial state faltered and millenarian uprisings

proliferated. Confronted with the growth of social disorder and incompetence of the imperial

army, state, gentry and merchant elites in many areas started building local militias and

increasing their levies on agricultural and commercial activities for this purpose, turning

themselves into a nexus of military-predatory elite. The subsequent vicious circle of coercion and

rebellion led to destruction of substantial rural surplus and the diversion of the remaining surplus

to the accumulation of means of violence. Not much surplus was left for the state to make use of

during its state-led industrialization program.

This study shows that centralized entrepreneurial organizations capable of concentrating

the surplus of a economy, as well as capable of diverting this surplus to investment in industrial

innovation, is as important as the existence of a sizable surplus ready to be concentrated. It also

shows that to explain the reproduction trajectory of a certain elite group, such as Chinas urban

entrepreneurial elite in this case, one may need to look beyond the sphere of elite politics and

examine how the interplay between elite and class politics shapes the reproduction trajectory in

question.

My finding about the indispensability of both abundant surplus production and

centralized surplus distribution in the making of a capitalist transition can offer us insights on

Chinas contemporary capitalist transition as well. As noted by many economic sociologists,

Chinas impressive economic expansion in the last 25 years has been grounded not on the ailing

state-owned enterprises, but on the dynamism and productivity growth of the numerous

decentralized, flexible, and suburban small firms connected with one another in strong networks.

It is more a continuation of than a break from Chinas entrepreneurial tradition of weak firms,

strong networks in the early modern times (Hamilton 2006; Lin 1995; Yeung 2004; Boisot and

Child 1996; Gold et al ed. 2002). On top of this layer of flexible small firms is a world of highly

32
organized and resourceful transnational corporate giants that reaped huge profits from their

subcontracting relations with these local enterprises. If the sea of small and medium industrial

enterprises were the main engines in the production of surplus in todays Chinese economy, then

the transnational corporations are the ones that concentrate most of this surplus into their hands.

Chinas domestic economy today is comparable to that of the eighteenth century in the

sense that it possesses strong capability in surplus generation, but is in lack of efficient home-

grown corporations capable of concentrating this surplus and utilizing it for continuous

technological upgrading. Technological transfer through foreign direct investment as a

compensation for this lack works well so far, but it is at best a temporary solution, as foreign

investors can leave at any time and are not enthusiastic in transferring the most advanced

segment of their technological know-how to China. Recent studies show that resourceful

transnational corporations in China have in fact been curtailing the formation and technological

upgrading of domestic capital. The excessive dependence of the Chinese economy on foreign

investment for its capitalist transformation is as detrimental to its long-term growth as it is

beneficial to its short-term expansion (Huang 2003; Lemoine and nal-Kesenci 2004;

Braunstein and Epstein 2002). Until China witnesses a serious growth of large, organized, and

efficient domestic corporations, its current development of capitalism, a system based on

ceaseless self-transforming innovation and growth, is vulnerable and its sustainability not

guaranteed.

33
Table 1. Select indicators of economic performance and living standard in early modern China and Europe
Land productivityaLabor productivitya average nutrient intakeb average life expectancyc annual grain trade volumed
(/acre) (d/day) (calories per adult male per day)(expected life at birth) (million tons)

China 26.18 51.3 2,651 39.6 2.6

England/Europe 3.30 60.9 2,000-3,000 31-34 0.22

a
data based on English Midlands c. 1806 and Yangzi Delta c. 1820, with constant price level at 1820 (Allen 2006: Table 5)
b
data based on nineteenth-century England and nineteenth-century China (Pomeranz 2000: 39).
c
data based on mid eighteenth-century England and select economically advanced regions in mid-eighteenth-century China
(Pomeranz 2000: 36-7).
d
data based on figures for all major trade routes in eighteenth-century China and the eighteenth-century Baltic trade, which accounts
for 80% of the total European long-distance grain trade (Shiue and Keller 2004: 9-10).

Table 2. Conditions leading to capitalist takeoff according to major transition theories

Sustained agriculturalAccess to American Interstate Factor X Capitalist takeoff
revolution resources conflict

Tuscany, 14-15C No No Yes Yes/No No

England, 18C Yes Yes Yes Yes Yes

China, 18C Yes Potentially yes No No No

China, 19C Yes Potentially yes Yes No No

Japan, 18C Yes Potentially yes No No No

Japan, 19C Yes Potentially yes No Yes Yes

34
Table 3. Synthetic theory on the dynamics of capitalist takeoff
Surplus production: Surplus concentration: Result:
Sustained agricultural Centralized capitalist-industrial
revolution entrepreneurial organizations takeoff
Tuscany, 14-15C No Yes No

England, 18C Yes Yes Yes

China, 18C Yes No No

China, 19C Yes No No

Japan, 18C Yes No No

Japan, 19C Yes Yes Yes

Table 4. Chinas class/elite politics and its impact on urban entrepreneurial elite in comparative
perspective
China England Japan

18C State sympathized with State repressed

popular contenders, popular contenders,
impeding merchants enhancing merchants
profit-maximizing profit-maximizing
activities and their self- activities and self-
reproduction reproduction

19C New predatory-military Successful erection of a

elite used up substantial
surplus in the economy,
leaving state finance in
limbo and causing state
cultivation of industrial
enterprises to fail
centralized political structure
capable of mobilizing vast
surplus through agricultural
tax and of financing the rise
of state- sponsored industrial
enterprises

35
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