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State, Peasant, and Merchant in Qing Manchuria, 1644-1862

Author(s):Isett, Christopher Mills
Reviewer(s):Vries, Peer

Published by EH.NET (August 2007)

Christopher Mills Isett, State, Peasant, and Merchant in Qing Manchuria, 1644-1862. Stanford: Stanford University Press, 2007. xiv + 418 pp. $65 (hardcover), ISBN: 0-8047-5271-0.

Reviewed for EH.NET by Peer Vries, Institute for Economic and Social History, University of Vienna.

Christopher Mills Isett is associate professor of history at the University of Minnesota and a specialist in the economic history of Manchuria, Taiwan, and China during the Qing dynasty. His book consists of three parts. The first one deals with the ideological, political and economic interests of the Qing rulers in their ‘homeland’ and with their actual policies. The second one shows what property and labor relations evolved in the region. The third part presents an analysis of the way in which those relations limited possibilities for economic development. By Qing Manchuria Isett basically means the provinces Heilongjiang, Jilin and Liaoning, especially the southern parts of these last two provinces. The period covered is from 1644, the establishment of Qing rule in most of China Proper, to 1862, the opening of the Manchurian port at Niuzhang.

The underlying, I am almost tempted to say ‘real,’ subject matter of the book, in my view, is how to characterize the economy of China ? for which Manchuria by and large simply functions as a pars pro toto ? as compared to that of Britain. Two models of economic (non)development act as points of reference, one that is called ‘Smithian’ and one that is called ‘Malthusian’ or rather ‘Malthusian-Ricardian.’

In line with a long tradition, Isett claims that the economy of early modern Britain operated according to Smithian principles. That means that it could and did grow via extension of the market and increasing specialization. Quite recently some historians, in particular Kenneth Pomeranz, have toned down this optimist view by claiming that Britain’s growth was not very impressive and certainly finite, and that Britain on the very eve of its industrialization was heading for a Malthusian cul-de-sac just as much, if not more so, than China. When it comes to characterizing the economy of China in early modern times, authors like, again, Pomeranz, Wong and Li Bozhong, have also urged for revision. In the case of early modern China too there is a long tradition, in this case to consider its economy as a clear example of a Malthusian economy in which a sustained increase of the population was bound to lead to over-population and crisis. While not denying that in the end China was heading for a Malthusian crisis, Pomeranz cum suis claim that its economy was just as ‘Smithian’ as Britain’s and in that way opt for a more optimist perspective on China’s pre-industrial economic history. According to them, the increase in its population, at least until the end of the eighteenth century, overall, had no negative effects on China’s wealth. If the revisionists are right, the two economies would have been strikingly similar in the early modern era, the only difference being that Britain had the ‘luck’ to be saved by its Industrial Revolution.

Isett clearly does not agree. For him the Smithian model, as he defines it, is a model of development, and English. The Malthusian-Ricardian model, as he defines it, in the end stands for non-development and it nicely fits most of the characteristics of the economy of early modern China, including Manchuria. In his approach he clearly is inspired by Robert Brenner. That means that he thinks the dynamism associated with a Smithian economy does not occur in a vacuum but only in specific social and political settings in which, in particular, the existing property relations are essential. To have a Smithian market economy, as he interprets it, the sheer presence of buyers and sellers does not suffice. When it comes to analyzing Malthusian dynamics one has to be aware that those too are not simply the result of the ratio between available resources and population, but have to be placed in a broader social and political context as well.

But let us first discuss the actual empirical content of the text. How did things actually work out in Manchuria? Basically the Qing wanted to keep Manchuria to themselves as a place that provided land, income and a ‘home’ for Manchu aristocrats and banner men. Their livelihood was supposed to be taken care of by a labor force primarily consisting of bonded labor. In an extensive and detailed analysis Isett shows that and how this policy failed: by far the biggest part of Qing land in Manchuria came in actual possession of commoners who worked it. The Qing state’s presence in the villages was not strong enough to maintain the agrarian regime it initially implemented. The bailiffs in charge of the manors did not heed official policy very much, and although the region from 1689 onwards was officially closed to permanent settlement, new settlers kept on coming in. What emerged was a peasant-dominated agriculture in which wage labor was quite exceptional. Manchuria in that sense became a replica of Northern China.

Manchurian peasants, buying and selling products and, very occasionally, services, clearly and increasingly were integrated in markets. In absolute terms we are talking about a substantial amount of exchange. But for Isett that does not suffice to call Manchuria’s economy ? and for that matter the economy of China Proper ? a real Smithian market economy or to claim it would have known real Smithian growth. Firstly, this is because for him commercialization is a matter of relative and not of absolute amounts and his analysis of the main trade of Manchuria, that in soy beans, has convinced him that, relatively speaking, market exchange was fairly small and much less relevant in Manchuria than in Britain. Even a superficial reading of existing literature suffices to show that China Proper too was far less commercialized than Britain.

Secondly, however, quintessential to withholding the adjective ‘Smithian’ is the fact that Manchuria’s agricultural producers did not depend on the market. They were not forced to maximize their price-cost ratios and could ‘afford’ to think in terms of risk aversion. Manchurian peasants did not, to loosely paraphrase Smith, need to continually exert themselves to find out the most advantageous employment for what capital or labor they could command. The reason is simple: they were not, or at least not completely, deprived of means of subsistence. It therefore, according to Isett, need not surprise us that before long in Manchuria, as in most of China Proper, a process of ‘involution’ set in, with labor inputs by households increasing and the productivity of their labor decreasing.

Such a ‘peasant’ strategy of intensifying production as a rule is associated with small farms. In Manchuria, however, at least for Chinese circumstances, plots continued to be fairly big. Again, the broader context has to be taken into account. In the footsteps of Philip Huang, Isett claims that opting for intensification was not just, and not even necessarily, a matter of the land to labor ratio. It also was a result of a specific rationality of the peasant and his household. Overall, peasants tend to not systematically regard extra input of household labor in terms of calculable extra costs. When, as was the case in Manchuria, there simply are no opportunities to earn income outside the household, they are even less likely to behave in a ‘calculating’ way. But that is not all. What according to Isett also played a role, is the fact that, in Manchuria as well as in China, there was no primogeniture. This tended to diminish the size of the existing farms and, with state support, actually precluded the formation of big estates.

In the end, Manchurian peasants were integrated into the market under conditions that facilitated merchant extraction of their surplus instead of promoting ways of increasing their labor productivity. Capital costs were too high for the peasants. Direct investment in agriculture by people with capital was very scarce. The return on their capital was rather unsafe. It was easier to earn money by providing loans to peasants. In contrast to the tiny group of well-informed ‘monopsonistic’ merchants, peasants lacked sufficient knowledge and information to make the most of market conditions. Merchants were increasingly used by government to provide all kinds of services. In return they received significant powers over the market, which further weakened the position of the small producer and made the entire setting in which he operated even less ‘Smithian.’

Having read Isett’s book, no one can doubt that in Manchuria, as in China Proper, the elimination of the subsistence peasant ? which Marxist and ‘Marxisant’ historians like Isett and Brenner tend to regard as conditio sine qua non for the emergence of modern, full-blown capitalism ? did not take place. Britain, where the peasantry no longer existed as a major social class, developed in a completely different direction. Just think of its commercial farms whose survival as productive units depended on their success on the market; its massive proletarianization; the very substantial increase of labor productivity in the agricultural sector; the relative decrease of the number of people working in it; and the big increase in specialization. According to Isett, Smithian mercantile capitalism in Britain ‘worked': at the end of the eighteenth century the country still was not even near a Malthusian crisis.

Let us come to a general evaluation and start on the positive notes. Isett is quite explicit, not to say somewhat repetitive, about his goals and results. His description and analysis of developments in Manchuria are detailed, clear and convincing. He clearly is keener on confirming his and Brenner’s points of view than on falsifying them. Reading this book, one would not suspect that ‘the Brenner thesis’ has engendered a fierce ‘Brenner debate.’ All this, however, does not detract from the fact that he clearly shows the existence of major differences between the relations of production and exchange in Britain and in China and offers a sensible explanation for those differences. His claim that the actual development of an economy along Smithian lines requires a very specific and persistent kind of behavior, that of the homo oeconomicus of (neo) classical economics, certainly is to the point. In all these respects Isett’s book simply is a good book.

But Isett clearly wants more in his book: he wants to engage the ‘California School.’ I cannot help thinking, however, that in a way he is fighting a bit of straw man. Much hinges on the concept ‘Smithian growth’ and how it is interpreted. The Californians use the term ‘Smithian’ in a much less strict sense than he does. For them, so it seems, the term refers to any situation where legally free people engage in substantial market exchange in conditions of (fairly) free and fair competition. In the specific context they are discussing, i.e. the organic economies of the pre-industrial world, they add the very important caveat that this market exchange as such, without technological breakthroughs and without a new energy-regime, can only lead to finite growth.

In both Britain and China market exchange between legally free people was the rule and in both this exchange was substantial, though relatively speaking much smaller in China than in Britain. When it comes to the kind of competition, the term Smithian becomes much more problematic … in particular for the British case! Let us only refer to the role of the state. After all the first word in the title of Isett’s book is ‘state.’ In the part of book dealing with migration policies and property rights in Manchuria that role is analyzed in detail. But considering the fact that Isett is so keen on comparing Smithian Britain and Malthusian China, opportunities are missed here. When one takes on board the role of the state, the use of the term ‘Smithian,’ by Isett as well as by members of the Californian School, is highly problematic for China and simply wrong for Britain.

All the talk about Britain’s Smithian growth not-withstanding, Britain’s government policies were fiercely mercantilist. Government interference in the market, in particular but not only in sectors of the economy that were relevant to foreign trade, was the rule rather than the exception. Even in agriculture, the sector that Isett focuses upon, there was tampering with the market, e.g. when it comes to the rules of strict settlement and entail. Britain at the time was a fiscal-military, highly interventionist state. The differences with China, where government policies can best be described as ‘agrarian-paternalist,’ were enormous, as for example shows in the fact that China’s government did hardly anything before 1862 to exploit the huge economic potential of Manchuria. But neither of the two governments can be described as a principled defender of the kind of ‘laissez faire’ that Adam Smith pleads for.

The California School focuses on (certain parts of) China Proper. The empirical research of Isett’s book deals with Manchuria. That also at least gives the impression Isett has a strange way of engaging with it. Is not all the information on Manchuria in that respect something of a detour? Personally I found the permanent switching from Manchuria to China and vice versa not always convincing and not always helpful. On top of that and finally, the ‘Californians’ focus on the ‘Great Divergence’ ? that is, the emergence of modern economic growth. In that respect Isett ought to have been more specific about the exact impact of the differences he has found. It would have been helpful had he distinguished between development, growth, and modern economic growth.

For Isett Smithian dynamics mean development and growth without any further specification. As such it is not difficult to imagine that a Smithian economy has more ‘potential’ than a Malthusian one. I think that nevertheless two comments are in order here. The first one is that, compared to Isett, Smith himself, with good reason, was much more of a pessimist and much more ‘Malthusian,’ as shows in his various references to the ‘stationary state’ of highly developed economies. Smithian development and growth, even in Isett’s definition, do have structural limits. In the long run they will inevitably peter out and hit a ceiling, as long as one is dealing with an organic economy. Both pre-industrial China-Manchuria and Britain were organic economies and both in that sense were ‘Malthusian.’ In that respect the Californians are right.

My second comment would be that in being so insistent that China’s economy was not ‘Smithian,’ it would have been natural for Isett to inquire – Consumption being the sole end of production, to put it in Smith’s own words ? whether that meant that China was poorer. This question is not extensively addressed, but everything in Isett’s texts suggests the answer must be yes. Neither is the question addressed of the connection between Smithian dynamics and so-called modern economic growth, i.e. the sustained and substantial increase, in real terms, of per capita income that is regarded as the product of the Industrial Revolution. Interestingly enough, Smith thought such growth to be impossible and in any case had no clue that an ‘Industrial Revolution’ was about to fundamentally change Britain’s economy. He, and most present-day economic historians, clearly would not claim such a revolution simply evolves out of commercialization. Isett is too optimist when he writes (on page 286) that England was already breaking free of Malthusian constraints in the early modern era. He may be right in claiming against the Californians that eighteenth-century Britain was not (yet) in a Malthusian cul-the-sac. But that does not imply that Britain had got rid of Malthus: it only had managed to keep him at some distance. Until industrialization its economy continued to operate according to a ‘Malthusian,’ organic logic.

The challenge ahead for Isett and other historians who are interested in the Great Divergence and who think its explanation resides in Smithian dynamics, is to look for the exact mechanisms by which these dynamics could have brought about a transition from a pre-industrial to an industrial economy. This is a major challenge, as that transition is not smooth or natural as Isett seems to suggest, while knowing that, for example, it did not occur in the Dutch Republic, nor a matter of sheer ‘luck’ as Californians claim. Isett has proven to be very qualified to take up that challenge.

Peer Vries is professor of global economic history, in particular for the early modern era, at the University of Vienna. Apart from various articles dealing with global economic history in that era, he published Via Peking back to Manchester: Britain, the Industrial Revolution and China (Leiden 2003). In the spring of 2008 his A World of Surprising Differences: State and Economy in Early Modern Western Europe and China will appear on the market. He is one of the editors of the Journal of Global History and one of the founders of the Global Economic History Network

Subject(s):Markets and Institutions
Geographic Area(s):Asia
Time Period(s):19th Century