Vries on Isett, _State, Peasant, and Merchant in Qing Manchuria, 1644-1862_

[eh.net-review at eh.net]

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

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