VOLUME III, SEMESTER 1, CHAPTER 6, SECTION 2
Sang Hongyang’s Side, and the Side of the Worthies and Men of Learning
The last section pushed open the door of that court floor. This section spreads both sides out on the table, one line at a time. Sit as a listener sits, and do not rush to take a side. Listen to the end, and you will find a strange thing. Both sides are right.
First, the side for the state going down into the ring
The one at the head is Sang Hongyang. This man rose from keeping accounts as a boy, and the whole set of Emperor Wu’s financial policy came out of his one hand. His root claim is one line. The gain of salt and iron is held so as to pull the common people through in their straits, to fill the cost of the armies, to prop up the root that is farming and press down the branch that is trade, and not so any one merchant should skim a profit from the middle.
In plain speech. The state holds the gain of salt and iron in its hand, so as to give a pull to the common people when they are in dire need, so as to fill the outlay of the army, so as to steady farming, the root, and hold down trade, the branch, and not so as to let some merchant fatten on it.
Sang Hongyang has a great account book in his heart. Outside, the Xiongnu press the border, war year on year. Inside, a huge state machine has to be fed. Where does the money come from. Only two roads. Either lay more tax on the heads of the people, or the state goes down itself and takes into its hand the trade in things like salt and iron that every household must use, a sure and unfailing profit. He chose the latter road. His reason is simple. Of two harms, take the lighter.
The several arguments his side spread out
From this root claim, Sang Hongyang’s side spread several arguments.
Salt and iron are strategic resources bound up with the livelihood of the state and the people, and the state has good reason to run them itself. The money the monopoly earns can stand in for the heavy taxes that press on the people’s heads, and go to support the public business the state ought to do. Leave the market wholly unmanaged, and on necessities like salt and iron that no household can do without, great disorder will break out. Once private wealth is heaped into the hands of a few great merchants, it will turn back and warp the governing itself. The unified allotment the state undertakes can ease the unevenness of rich and poor between one region and another.
Set these several arguments into any book of public finance today. Not one is out of date. Not one is absurd. Every one of them stands.
Now the side of the criticism
Seated across from him are those more than sixty men of learning put forward from the regions, called in the histories the worthies and men of learning.
Their rebuttal throws no empty punch. It strikes at the very ailments that grew, solid and real, once this set of measures came down to the ground. The county officers turn on a whim, they say, and at a word shut the gate of the market and make the trade their own alone, and so all goods are swept up together, and once all goods are swept up together, the prices leap.
In plain speech. The county officer changes his face the moment it suits him, and at one command he shuts the market’s gate, and the buying and selling is his house’s alone, and every good is swept into the office’s hand in one grab. And once the goods are swept up in one grab, the price flies up on the spot.
Mark what they are saying. They are not reasoning with Sang Hongyang on paper. They are telling of what happened, last month, in their own county.
The several arguments their side spread out
From this root rebuttal, this side too spread several arguments.
When the state runs the economy itself, it feeds the officials a whole body of corruption. Under the monopoly, the quality of goods falls and the prices climb. Once the state sets its mind on raking in money, the governing itself turns rancid. The private market is indeed imperfect, but it has competition, and competition of itself breeds a kind of discipline, forcing a man to make his goods good. And administrative control gone to excess will crowd out, bit by bit, the little room for self-standing that a society ought to have.
Set these several arguments into any book that criticizes central planning today. Not one is out of date. Not one is absurd. These too, every one of them, stand.
Two thousand years on, two Europeans go on quarreling
Now pull the lens forward two thousand years.
Sang Hongyang’s several arguments, that strategic sectors ought to be held by the public hand, that the state’s income can stand in for direct taxes, that the market may fail on necessities, that unevenness of wealth turns into political power, that unified allotment can steady regional differences, these later appear, in a more systematic shape, in the line of stabilization theory that runs with Keynes, in the arguments for that mid-twentieth-century wave of nationalizations.
The men of learning’s several arguments, that administrative power draws out abuse, that the monopoly drags down efficiency, that on the state as a player there is no discipline of competition, that economic control may swell all the way into political domination, these later appear in Hayek’s books, in the many liberal criticisms of central planning.
A Hayek on the one side, a Keynes on the other, and what they quarrel over is still the quarrel Sang Hongyang and the worthies fought two thousand years ago.
Where is the difference. What those two ancients held in hand was an account book checked by several decades of real policy. What these two of the modern age held in hand was a theoretical frame built up only later, its arguments finer and more systematic. That labor of wringing observation into a frame is the solid professional work of their trade, and the merit goes honestly onto their account.
But the position is the same position.
Why both sides are right
Now the layer that matters most in this section.
Go back to the root of this volume. Position is only a difference in the division of work.
What position does Sang Hongyang stand at. He stands at the treasury end. He opens his eyes and sees the soldiers on the border waiting for their pay, the Yellow River dyke waiting to be mended, the granary waiting to be opened in a lean year. He has to lay hands on money. And the danger he sees is real. Let the market run loose, and salt can climb until the poor cannot eat, iron can climb until the farmer cannot afford a plow.
What position do the men of learning stand at. They come from the regions, and back they must go, to that county. They open their eyes and see the office’s storehouse, the price the office fixed, the iron pot the office issued that cracks at one knock. And the danger they see is real too. Let power reach into the trade, and there will surely be a hand reaching in from the middle.
Two men stand at two positions, and each has seen the truth of his own end. They are not one good and one bad. One has seen fire, and one has seen water.
And fire and water are there both at once.
What this section set up, and the turn to the next
This section spread both sides out. It set up three things.
The first. Sang Hongyang’s several arguments all stand. The market will fail, on necessities lives will be lost, wealth heaped high will turn and bite the governing.
The second. The men of learning’s several arguments all stand too. Power reaching into trade, the officials grow corrupt, the goods turn bad, the prices climb, and the control will grow on into domination.
The third. Both sides are right, because they stand at two positions and each has seen a real danger at his own end. This is not one right and one wrong. It is one who has seen fire and one who has seen water.
Then what did this quarrel finally come out to. Did one side press the other down. Neither. And that is the finest thing in this chapter. The next section goes to look at that ending where no one won, that ending which is exactly the best ending.
Credit to the ancestors; the mistakes are mine: Tiger Lyon.
SECTION 3. Quarreled to the End, It Came Out a Workable Balance