The Unwritten Rules; The Law of Blood and Payment

It was originally already written, but GitBook simply wouldn't let me submit it. Fortunately I had backed it up earlier, but the formatting was lost — just bear with the messy version.

The Unwritten Rules

Officials have a legitimate right to inflict harm; commoners must pay tribute to avoid being bullied. If you don't pay enough, they'll definitely go after you and set the rules.

Officials have the power to extract money, so of course they will extract heavily; if lower officials refuse to cooperate they will be ostracized. If the common people resist, they are killed; weighing the options, they can only obediently be slaughtered.

Lin Zexu also accepted the unwritten rules, giving and receiving bribes.

Local landlords and minor officials will corrupt the superiors sent by the central government.

Why does several thousand years of history keep repeating in cycles?

Although the imperial system was improved and developed in many respects, at the most fundamental relationship — between agricultural producers and the violent extraction groups — there was never an effective balance of power. As population increased, the land resources that agriculture depended on became increasingly scarce, and competition for land among the empire's classes grew fiercer. The imperial system went through more than ten cycles without changing its basic structure. The fundamental reason is that forces capable of breaking out of agrarian civilization never emerged. Therefore, it could neither solve the long-term problem of population versus resources, nor form social forces that could construct a new political equilibrium to resolve the cyclical degeneration of the ruling groups.

As long as the foundation of smallholder peasant economy remains unchanged, the interest patterns that would induce or coerce a fundamental change in the imperial system cannot form, and the dynastic cycle will not end. Europe developed forces that broke out of agrarian civilization. There, industry and commerce absorbed large numbers of people; industrial development also provided agriculture with new inputs such as chemical fertilizers and pesticides, thereby raising agricultural output levels. Developed commerce ensured external food supplies, supporting the deepening and prosperity of industrial and commercial division of labor. This interplay of division of labor and specialization, mutually promoting and supporting, gradually changed the economic and labor structures. This new civilizational system and its market-oriented incentive mechanisms transformed people's lifestyles and fertility desires, eventually achieving a basic balance between population growth rates and the capacity of production methods.

In Chinese history, the formation and development of industry and commerce were extremely closely tied to the government. In the early stages, larger-scale industrial and commercial specialization itself arose from the needs and directives of violent extraction groups and the administrative power they controlled. No matter how developed state-run industry and commerce became, they were always vassals of the empire, dependent on the surplus of the smallholder economy that sustained the political-military organization. They lacked independent life and dynamism. The state industrial production system also faced a hard-to-break boundary: as its own division of labor and specialization advanced, the finer the division and the more complex the system, the longer the agency chains and the higher the management costs, and the fewer the gains from specialization. When management costs exceed the benefits brought by specialization, the process of further specialization halts. To develop and defend themselves, private industrial and commercial groups continually bribed and courted imperial officials and even the emperor himself; they were forced to invest huge sums of money and energy in the political realm — through bribery and gifts, donating money to buy office, and preparing their children for the imperial examinations — to secure social status and political protection for themselves and their descendants. The empire, in earlier times, used the death penalty to deter merchants from entering office; later, under fiscal pressure, it relaxed policies, but the empire's formal protection of private industry and commerce never went beyond shepherding a flock of sheep — treating them as second-class sheep lower than peasants — the goal still being to extract as much mutton and hide as possible. As for private merchants' successful co-optation of certain imperial officials, it was like landlords' co-opting of officials: its effects were temporary and local, insufficient to shake the ruling position and overall decision-making of the violent extraction groups.

From the official ideological standpoint, the profit-seeking motives of private merchants and their bribery of officials were still seen as destructive forces against benevolence, morality, and the imperial order.

Why could Europe break the cycle? As dominant violent-fiscal entities, unified empires could decide matters themselves, adjusting relationships with other social groups according to their own interests and preferences and thereby determining the conditions for those groups' survival and development. Many European rulers also wanted to call the shots, but lacked the power to do so. In times of crisis, the unified Chinese empire simply raised taxes without yielding any of its powers; by contrast, the warring European monarchs had to trade monopoly or even taxation rights to taxpayers, ceding power to parliaments elected by taxpayers in exchange for their support for tax increases. European rulers' extractions could not exceed the cost of capital flight; any excess had to be exchanged for power, otherwise they would undermine their fiscal base and political stability. Even if existing capital was hard to remove, new capital would be discouraged, meaning rivals could surpass their fiscal base over time, leading to elimination or absorption. In contrast, the unified Chinese empire did not fear capital flight: the emperor's domain was universal and private capital had no bargaining space to withdraw — it could only be held down and shriveled in a corner by the empire. Capital had the opportunity to achieve local breakthroughs and experiment with building systems in which capital controlled violence, thereby providing more favorable political conditions for capital's operation and accumulation: stable and just judiciary, moderate taxation, protection of trade and property, and relatively clean government — in short, minimal transaction costs. Such institutions further promoted the evolution of more specialized and efficient division-of-labor systems, forming powerful industrial civilizations that opened development space globally.

Europe's violent fiscal entities also lacked successful integration with ideological organizations; an independent Church weakened the king's authority, and the king's authority, in turn, weakened the Church's power. Europe also lacked geographically relatively isolated regions of a single civilization and single ethnicity that could establish and maintain a highly adaptable, unified imperial system like China's. In The Blood Reward Law it is mentioned that Sichuan was once divided by warlords into several small kingdoms; because territories changed hands frequently, well-fattened peasants could be snatched away at any moment, so warlords drained them mercilessly. The question of why, under such circumstances, peasants and capital couldn't move elsewhere like Europeans and force rulers to compromise — is this due to the reason explained above?

After 1900, a group of British civilians were kidnapped by bandits and held for an extremely high ransom with ridiculous demands. The British begged, saying the government couldn't possibly pay such a high price for ordinary citizens. The bandits replied that if Britain didn't pay, the Japanese would. In the end the Japanese actually did pay. Why? Because by then Britain had already sent gunboats up the rivers and told the Japanese that if they didn't solve the problem, Britain would. To prevent Britain from using that as a pretext to come in and seize Japanese interests, the Japanese paid the ransom.