Military strategy and unproductive entrepreneurship in warring states China

Abstract

Institutions play a vital role in allocating entrepreneurial talent in society. Specifically, the payoffs to different kinds of innovation influence the allocation of entrepreneurial talent between productive, unproductive, and destructive behavior. I apply this insight to the case of the military classics of China’s Warring States period, 475–221 BCE. The Warring States witnessed political centralization and incessant conflict that helped inspire numerous economic and social innovations. Among these are the appearance of many texts pertaining to governance and public policy, particularly writings on military strategy. Excellence in strategy and planning were highly rewarded during this period, and competing states even developed an interstate market for military talent. However, success in commerce was often not only frowned upon, but harshly punished. This tendency was reinforced by the rise of Legalist policies, which often recommended suppressing the merchant class relative to agricultural production and militarism. These institutional conditions limited the amount of ‘productive’ market entrepreneurship in the period, which was often instead channeled into ‘unproductive’ entrepreneurship, especially the areas of military organization and strategy.

Keywords:

• Institutions
• unproductive entrepreneurship
• military strategy
• Warring States period
• Legalism

Notes

1. See, for instance, the special issue of Business History (2016) on the ‘History and Evolution of Entrepreneurship and Finance in China’.

2. This definition serves for the purposes of this paper, although it is important to note that there is more to entrepreneurship than (productive, unproductive, and destructive) innovation (see the Discussion section below). An anonymous reviewer points out that the Schumpeter–Baumol theory is biased in favor of manufacturing processes, to the exclusion of services. However, Douhan and Henrekson (2010) show that this oversight is not necessarily a problem for the theory, which they extend to include both manufacturing and services.

3. This classification raises the important question of whether agricultural production is entrepreneurial. For the purposes of this paper, I argue that it is not, for three reasons: first, Warring States peasant farmers did not always own their land (and thus, hazard it in the market), even after Shang Yang’s reforms; second, they cannot be said to have created wealth for themselves or earned significant profits, as they were usually extremely poor; and third, the innovative technologies they used during this period were mainly introduced to them through public works projects rather than through their own initiative.

4. See the discussions about dating the texts in Yates (1988) and Sawyer (2007a). For convenience, I use the names of the traditional authors, and list their texts in the bibliography along with the works of the translator. For an overview of primary Warring States sources (including the military classics) and the difficulties in using them, cf. Lewis (1999, 588–593). For the military classics in particular cf. Sawyer (2007a, 2012).

5. It is also plausible that the military writings reflect the sorts of ideas the authors believed would be appealing to the rulers they advised; if so, this adds further support to the main argument of this paper. Sterckx (2015) makes a similar argument regarding the proponents of anti-merchant ideologies in the Warring States.

6. That is, research can appreciate ‘radically different contexts, while learning to accept radical contextual differences, [thereby] overcoming simplistic and “presentist” obsessions’ (Zan 2016).

7. The early development of Chinese political theory and practice is discussed further in Pines (2009). To put this history in comparative context, Warring States China is sometimes likened to Europe during the Renaissance (Hui 2005). One philosopher suggests that,

8. In the process of bureaucratizing government, rulers sometimes used the army as an ideal model of organizational control (Kiser and Cai 2003). Similar ideas can also be found in the military writings. But cf. Methods of the Sima, which emphasizes the need to separate the civil and the martial (Sawyer 2007c, 131, 132).

9. Yates (1987) briefly mentions the low social status of merchants during the Qin and Han dynasties, which Sterckx (2015) argues was actually lower during these periods than in the pre-Qin era. Along similar lines, Kakinuma (2014, 122) suggests that one important problem for these later merchants was that they were not allowed to exit to other states. As a result, they may have faced strong incentives to becoming politically active, e.g. as altering entrepreneurs.

10. Zhao makes a similar argument with respect to many of the great technological innovations of the Warring States, which he explains were mainly driven by the need to expand the state’s war machine (Zhao 2015, 214–221).

11. He goes on to advise that, ‘Husbands work at weeding and plowing, wives at weaving. If the people do not have secondary occupations, then there will be goods accumulated in the storehouses. The men should not engrave nor make decorative carving; the women should not embroider nor do decorative stitching’ (Sawyer 2007e, 260). Cf. also Kakinuma (2014, 118, 119) on the ‘Male Plowing, Female Weaving’ policy.

12. Another common theme of the period is the trend of peasants leaving agriculture to become outlaws and bandits (Hsu 1965, 115, 116). This is another example of evasive unproductive entrepreneurship.

13. In the words of one commentary,

14. For further teachings of Shang Yang similar to those of Wei Liaozi, cf. Pines (2009, 201, 202).

15. Sawyer (1995, 128–131) and McCaffrey (2016) discuss possible economic interpretations of this passage.

16. One difference between the advice of the military classics and that of Shang Yang is that the former stress the importance of large rewards in addition to strict punishments (Sawyer 2007a, 235, 236).

17. The same sentiment is expressed in Wei Liaozi (2007e, 245).

18. For contemporary discussions and extensions of Legalist ideas, cf. the March 2011 special issue of the Journal of Chinese Philosophy.