VOLUME III, SEMESTER 1, CHAPTER 3, SECTION 3
Light and Heavy, the State Store, the Economy Is a Tunable Manageable Set of Workings
The end of the last section ran into a threshold. Making the people rich, everyone approves it, but where does the money come from. Guanzi does not shout slogans, he goes and works the accounts. This section is about the account he worked. That account ran in China for two thousand years and more, and twenty five centuries later, an Englishman wrote the same logic into a formula.
First, the strange picture Guanzi saw
Guanzi, in the piece called Light and Heavy, wrote the grain market out of balance about as plainly as it can be written. In a good year the grain goes to market with no taker, cheap to the point of a giveaway that no one takes, and pigs and dogs eat the food of men. In a bad year a single potful of grain costs ten strings of cash, and there are starved people lying along the road.
Take it in plain speech. A good year, the harvest is in. The grain goes to the market and no one will have it, so cheap it might as well be given away. Pigs and dogs eat the grain that people eat. A bad year, a lean year. To buy one potful of grain takes ten strings of cash, dear past all reason. Along the roadside lie the ones who starved.
Set the two pictures side by side. In the fat year, grain so plentiful the pigs eat what people eat. In the lean year, grain so dear that people starve by the road. The same thing, the same place, a few years apart.
This is the market. It is not evil, it simply does not mind whether a person lives or dies. It knows one thing only. More is cheap, less is dear. It makes the glut at the one end and the starving at the other, both at once, and feels nothing of it in itself.
The remedy Guanzi wrote
Guanzi’s answer is just as blunt. In the fat year the state buys in, in the lean year the state sells out. With the strength of the state, run against the cycle of the market.
The reasoning is not hard. In the fat year grain is cheap, cheap to where the farmer has worked the whole year for nothing, and the state steps in here and buys the grain up, and the price holds, and the farmer can live, and the state store fills. In the lean year grain is dear, dear to where the poor cannot buy, and the state lets the grain in the store back out here, sells it at an even price, and the price comes down, and people are not left to starve by the road.
Mark the measure of Guanzi’s hand. He is not out to do away with the market. He never said grain may no longer be bought and sold. He lays one hand on each of the market’s two far ends, and shaves the two sharpest points down a little. The market turns on, and at the step where its turning would cost a life, the state puts out a hand and catches.
This move has a name, light and heavy. When the price of grain goes light, lift it up. When the price of grain goes heavy, press it down. The stock of capital the state holds for it has a name too, the state store.
This method really ran for two thousand years and more
This method is no paper talk. It took its first rough shape in the price leveling of Li Kui in the state of Wei in the age of the Warring States, and in the Han it was set up in full by Geng Shouchang as the ever normal granary. The two words ever normal mean just that, to keep it always even. In the fat year the office buys in at an even price, in the lean year it sells back out at an even price, and irons flat the great rises and falls of the grain price.
These granaries, patched and used from age to age, ran all the way to the Qing, two thousand years and more from end to end. There were stretches when they were run well and stretches when they were run into the ground. Officials lining their own pockets, grain in the store rotting to dust, these happened too. But the frame of the mechanism did not break in two thousand years.
Hold on to this. It is not a notion. It is a machine that truly turned for two thousand years.
Twenty five centuries later, the same logic
Keynes, in the General Theory of Employment, Interest and Money in 1936, put forward the counter cyclical fiscal policy, taken as one of the most important contributions of twentieth century economics. What he tells is this. When the economy runs too hot, the state draws in. When the economy sinks into slump, the state lets out. With the hand of the state, run against the cycle.
Set that line beside Guanzi’s, and read them together. Fat year buy in, lean year sell out. Too hot draw in, slump let out. It is one and the same logic.
This volume holds Keynes in the same respect. The share of the work he did is solid and real. He took modern money, banking, the labor market for his frame, and made this ancient logic mathematical, made it theoretical, wrote it into a body of learning that can be taught and can be reckoned. That is the professional work of his trade, a heavy merit, not to be wiped away.
This volume only wants to point at one thing. The basic logic of running against the cycle, that the market swings out of balance in cycles and the state can buy low and sell high to iron it flat, was not the first thing he felt out. It was already being done in the state of Qi in the seventh century before the common era, took systematic form as an argument somewhere around the fourth century before the common era, and then ran, by way of the ever normal granary, for two thousand years and more. If a training in economics leaves the student thinking that running against the cycle is an invention of the twentieth century, that telling has quietly skipped the two thousand years and more that came before.
The line this chapter is really out to set
Now Guanzi’s three sections can be gathered into one line.
The ancestors, looking at the economy, never took it for a doctrine, never took it for one slab of solid iron. They took it for the material floor under the governing of a state, for a set of workings that can be tuned and can be managed.
Making the people rich, light and heavy, the state store, the four callings each kept to its trade, running against the cycle, the land tax, everything Guanzi speaks of is workings, not a stance. He does not ask what surname this set of methods goes by. He asks one thing only. Does it turn, and can it let people live.
Set this layer against the map of the whole volume. The four institutions run alongside one another, and not one of them was ever pure to begin with. This country today uses a little market, that country tomorrow uses a little steering, and this is not a betrayal of some doctrine, it is the tuning of that machine. To take a dispute over workings and shout it into a dispute over doctrines is one of wei’s successes. It sets people fighting over two names, and forgets the thing they set out to do in the first place, which was to get people fed.
But the workings can be taken and turned to other ends
Here one line has to be added, or the chapter comes out too sweet.
The same machine can be taken and turned to other ends. The state holds in its hand the power to buy in and to sell out, and this hand can be used to guard the farmer, and it can be used to wring the farmer dry. In the fat year press the price down and buy, in the lean year lift the price up and release, and with that in and out the treasury grows fat and the people grow thin. Such things happened, once and again, through history.
Go back to the word wei. The art of light and heavy is wei. It is a set of things made by man, and neutral. It can be made into an ever normal granary, and it can be made into a tube that draws off blood. The machine has not changed. What changes is the hand that works it.
So this volume, from end to end, says one line only. The responsibility is in the operator, not in the tool. Looking at an institution, do not look at the signboard it hangs out. Look at what it does, brought down onto the person at the very bottom, whether it has lifted him up, or pressed him down.
What this chapter set up, and the turn to the next chapter
This chapter is walked through, and the third meaning stands steady.
The first section, full granaries and then propriety. Matter first, mind after, and the whole tree of civilization grows on top of the grain store. The second section, first make the people rich. The life of a regime hangs on the belly of the people, and rich is not how many coins are in hand but how much room is left in hand. The third section, light and heavy, the state store. The economy is not a slab of doctrine, it is a set of workings that can be tuned and managed, and the workings are wei, their good or bad in the hand that works them.
What Guanzi set up for this volume comes down, in the end, to this one line. Settle people first, and the rest can be spoken of after.
Then settled to what degree counts as settled. How much must a man have in hand before his heart can stand steady. There is an ancestor who put this order of first and after more fiercely than anyone. He said, with no steady holding, there will be no steady heart.
The next chapter, let Mencius take the stage.
Credit to the ancestors; the mistakes are mine: Tiger Lyon.
Chapter 4. Steady Holding and Steady Heart, the Order Mencius Set