VOLUME III, SEMESTER 1, CHAPTER 6
The Salt and Iron Debate, the First Meeting of State and Market
Start on a court floor in the year 81 before the common era, in the city of Chang’an. Emperor Zhao of Han has not long been on the throne, and more than sixty men of learning, called up from every region, stand facing the high official over the state’s finances, to fight out one question to each other’s faces. Should the state hold salt and iron and the other great trades in its own hand, or should it not. That room is where this chapter begins, and it begins there because the three chapters before were about how the ancestors set positions down, while this one is a quarrel that truly broke out, its record set down line by line and edited by Huan Kuan into the Discourses on Salt and Iron, a thing few civilizations ever left behind.
The chapter comes in three sections.
The first section pushes the door open and shows why the quarrel broke out. Across the reign of Emperor Wu, to pay for his wars, the state had gone down into the economy itself, salt and iron made monopolies, ale controlled, prices leveled, goods allotted, which is nothing but the enlarged version of Guanzi’s light and heavy. Several decades on, it had piled up treasury income, a swelling apparatus, and heavy discontent, and the court faced a solid question, keep it, mend it, or scrap it. What makes this quarrel unlike so many later ones is that every argument in it was an account book checked by decades of real policy, not a deduction in a study. And the subject under it is one only, whether the hand of the state should reach into the market and up to where, the same subject Hayek and Keynes fight over still. The volume sets its position here, that neither side is right or wrong by birth, that each stands on a real position and has seen a real thing, and so it hands down no verdict, because the two are not one right and one wrong but two hands each pressing one end, one end that a market failing costs lives and one end that a power reaching in rots.
The second section spreads both sides on the table. Sang Hongyang, risen from keeping accounts, holds that the gain of salt and iron pulls the people through their straits and fills the cost of the armies, of two harms the lighter, and his side’s arguments, that strategic sectors want the public hand, that state income can stand in for taxes, that the market fails on necessities, that heaped wealth warps governing, would sit in any book of public finance today with not one out of date. The worthies and men of learning strike at what the policy grew on the ground, the county officer who shuts the market’s gate at a whim so the prices leap, and their side’s arguments, that power draws out corruption, that the monopoly drags down quality, that on the state as player there is no discipline of competition, that control swells into domination, would sit in any book against central planning today with not one absurd. Two thousand years on a Hayek and a Keynes go on quarreling the same quarrel, the moderns holding a theoretical frame where the ancients held an account book, and the volume names the moderns’ real work of framing while marking it the same position. Both sides are right because they stand at two positions, one who has seen fire and one who has seen water, and fire and water are there both at once.
The third section looks at the ending, and the ending is the point. The court scrapped the ale monopoly, pulled some iron offices, and kept salt and iron in the main, a compromise so unclean that many a reader is let down, and yet it is exactly the best result. Push each whole win to its end, and Sang Hongyang wholly winning gives a full treasury and an empty people, the men of learning wholly winning gives a live market and dead people, because one side grown sole and great brings the trouble at the other end. So the two sides are two hands, each pressing one end, and neither may be let go, which is not splitting the difference but a structure that keeps both pulling on each other, the very shape of this book’s law that the four run together and do not collide, drawn from the Doctrine of the Mean, all things growing together without harming one another. Run together and do not collide is not not quarreling, it is quarreling and quarreling and holding the balance up, and a court floor with only one voice left is not peace but danger. The deepest layer goes back to wei, that monopoly and transport and market rules alike are all wei, neutral, the same machine an ever normal granary or a tube that draws off blood, so the quarrel was never over whether state or market is good but over whether this pair of hands lifts the person at the bottom or presses him down.
That is the method this chapter hands you. When you meet a fight over the state’s hand and the market’s hand, over medicine or grain or housing or schools, do not ask which side is right. Ask three lines. This time, is the fire the greater or the water. This hand, up to where does it press. And after it has pressed, the person at the very bottom, is he lifted up or pressed under. What you carry away is that a quarrel with no winner can be the best outcome there is, and that the balance holds only so long as both hands keep pulling.
SECTIONS:
SECTION 1. The Year 81 Before the Common Era, the Quarrel That Broke Out in Court
SECTION 2. Sang Hongyang’s Side, and the Side of the Worthies and Men of Learning
SECTION 3. Quarreled to the End, It Came Out a Workable Balance
Credit to the ancestors; the mistakes are mine: Tiger Lyon.
SECTION 1. The Year 81 Before the Common Era, the Quarrel That Broke Out in Court