Research Papers

The Economic Policy and Culture of Tang and Song Dynasty

The Tang and Song Dynasties were a period of high prosperity for ancient commerce in China. At that time the bureaucracy had fully understood the relationship between commercial prosperity and national finance and security. Therefore, many suggested that the country should increase the social status of merchants and business owners, encouraging people to pursue individual wealth. During the Song Dynasty, what used to be a state-owned trading system became a relatively free market, and the government published a series of policies to encourage the growth of the market. Those policies further promoted the advancement of national social economy, setting the scene for the prosperity and development of philosophy and social science during the Song dynasty. 

During this period, the scale of commerce, business varieties, business methods, and the number of merchants all developed immensely compared with the previous time period.  Lin Yan believes that “the business prosperity in the Tang and Song Dynasties was another peak in the history of China’s commercial development after the Spring and Autumn Period and the Warring States Period. The Tang Dynasty scholar Cui Rong once described the domestic water transport system during the reign of Wu Zetian as such: “All streams and the boats come together, bypass Bahan, and navigate toward Mingyue. All the numerous lakes and rivers lead the way for the commercial ship, and no matter its size, thousands of boats come then leave, trading their goods with each other. And this was the case for every single day.”

The Tang Dynasty historian Du You also depicted the prosperous land transportation at the time: “From Song Bian in the east to Qizhou in the west, along the road were welcoming guests and drinks are overflowing…. There are shops for business travelers. No matter how far the trip is, thousands of miles, there is no need to bring anything with you.”

Highly developed and flourishing commercial water transportation system naturally reflects the prosperity of commerce. Du Fu, a renowned poet in the Tang Dynasty, manifested this vividly in his “Remembering the Past”: “I remember during the prosperous years of Kaiyuan reign, even small towns had ten thousand households each. The rice flowed with oil, the millet was white. Private and public granaries were filled to ceilings.” By the time of the Song Dynasty, there were substantial developments compare to the Tang Dynasty. More advanced business management methods such as pre-buying and selling on credit have become quite common. “Capital’s Dream Life” and other books on the economic life of the capitals of the Song Dynasty realistically reflect the prosperity of commerce at that time.

As a response to the gradually booming commerce, the business ideas and finance policies of the Tang Dynasties also changed accordingly. Lin Yan and Meng Jianwei believed that the imperial courts in the Tang and Song Dynasties focused on the establishment of a new fiscal system, formulating new economic policies and other major strategies. While the research on business thoughts during this period appeared to be weak compared with business practices, but through the excavation and analysis of the thoughts of Su Shi, a writer in the Northern Song Dynasty, he explained Su Shi’s idea of ​​opposing the state’s excessive suppression of commerce. Through her book, Wu Hui also focused on analyzing the business thoughts of Liu Yan, one of the few politicians with anti-business thoughts after the Han Dynasty, and believed that Liu Yan “thought in the scope of economic interventionism”, but “it is not purely focusing on official business and suppressing private business, but advocating that while developing government-run business is beneficial for state’s economy, it is important to pay attention to the enthusiasm of private business to operate properly in order to keep the circulation channels open.” 

Wei Xiangyuan believes that although the concept of merchants being low-class in the Tang Dynasty did not completely change, but in general, the government’s attitude towards business and the policies it implemented were more enlightened. In the Song Dynasty, a group of thinkers who defended the right of merchants emerged as a result of movement that treated merchants as valuable resources for the state. For example, Chen Liang, a representative of the Yongjia School in the Southern Song Dynasty, believed that business owner’s wealth can be used to support the country: “If the rich can’t accumulate their wealth and businessmen can’t make a profit, the country will be in trouble.” Another example of those reformer is Ye Shi, who suggested that the “rich business owners” should  be offered special treatments; since they are the “states and counties’ and the rest of the country depends upon them. The thoughts and propositions of the scholar-officials in the Song dynasties on business was similar to Chen’s. The scholar-officials at that time had fully realized the relationship between commercial development and the imperial finances and even national security; for which they advocated that the state should take measures to improve the social status of private business owner. Making them a position that encourages people to pursue individual wealth and a higher quality of life. From the aspect of establishing a supportive policy on small businesses, the institutionalization of regulated commerce and taxation to change the government commercial policy fostered the country’s social and economic progress and laid a solid material foundation for the development of social civilization in the later ages. 

Han Yu, a well-known ancient scholar in the Tang Dynasty, believed that the material demands of life cannot be obtained by each person’s own production, but should be produced by a collective effort of people from all occupations in the society, including agriculture, industry, and commerce”, which is “the way of mutual growth and mutual support.” He said: “The millet, the crop is born. If cloth and silk, they must be silkworms, and then they will become successful. All other health-preserving tools need to be completed after manpower. I rely on it; but people cannot do it everywhere. It is appropriate for each to regenerate each other.” Han Yu affirmed the necessity of having different roles in the society, while assuring the important of agriculture at the same time. He thought that the traditional agriculture and modern commerce can be used to support each other, thus make both industries more productive than they were. In addition, he also had a positive attitude towards foreign trade, believing that foreign trade will not only bring considerable economic benefits, but also have the effect of securing borders and good-neighborliness in politics. This clearly lay the foundation of modern globalization in China and was contrary to the Chinese traditional belief of its closed-door policy.  

Han’s endorsement of foreign trade was certainly scattered throughout Chinese history, but those unconventional theories was relatively common considering the circumstances of the Song Dynasties. By 1067, the death of Yingzong emperor, the economy and culture of China’s feudal society had reached unprecedented prosperity, a number of outstanding economic thinkers put forward their own theory of profit and desire at this time. Especially for Li Mei, who believed that the people’s desire to pursue material wealth is natural, and that financial profit is the basis for the generation of rituals and justice. Li also emphasized the necessity of industry and commerce, but at the same time pointed out that “Although it is people’s natural intention to become wealthy, there must not be too many merchants in the society.” 

At that time, the famous writer and reformer, Wang Anshi, who despite advocated for state power, thought that “the method government chooses should not take too much power from small businesses”, because they contribute the most to national taxation than any other classes or occupations. He argued that the intervention of government to ensure a fair and healthy market is vital to the economy of the state.

In line with the prosperous commodity economy and ideas that emphasizes the role of business owners, the commercial policies of the Tang and Song Dynasties also undergone profound changes.

Firstly, it changed from government monopoly to focusing on soliciting businesses. The monopoly system began with Guan Zhong’s policy of “Guanshanhai” in Qi State, that is, the production and sale of salt and iron are government owned industries. By the Western Han Dynasty, salt, iron and wine were all included in the scope of the state monopoly. When Liu Yan in the Tang Dynasty carried out reforms, he changed the government’s mandatory intervention in economic activities into economic management. In the work of queuing salt, he implemented the operation mode of civil system, official collection, commercial transportation, and commercial sales. He also changed the idea of targeting merchants away from core industry to a certain extent that turns businessmen into assistants for the country to implement reforms. In the Song Dynasty Wang Anshi’s Reform, the issue of tea negotiation was also reformed. Wang Anshi advocated the official collection of tea taxes and “trafficking by the people.

Secondly, the prosperity of commerce in the Tang and Song Dynasties was also manifested in the government’s standardization and institutionalization of the commercial tax system. The Tang Dynasty set up a special organization for levying business taxes and the business tax field, which also showed the state’s tendency to recognize and protect private business, which further promoted the vigorous development of the commodity economy. By the Song Dynasty, the collection of commercial taxes had become a national economic policy. Compared with the Tang Dynasty, the commercial taxation field agency and its management system have been further improved. A complete and rigorous tax agency has been formed from the central to the local level.

In terms of foreign trade, during the reign of Emperor Xuanzong of the Tang Dynasty, a city porter was established in Guangzhou to encourage foreign trade. Han Yu once described the scene at that time as “the arrival of foreign goods, the scented rhinoceros, the tortoiseshell strange objects, overflowing in China, are uncountable”. In the four years of the opening of the Northern Song Dynasty, the city and shipping department was established in Guangzhou. With the development of overseas trade, the city and shipping department were successively established in Hangzhou, Mingzhou, Quanzhou, Mizhou and other places, while focusing on protecting the legal equality of foreign businessmen. The number of merchants from outside of China is unprecedented and import tax income has become an important source of fiscal revenue in the Song Dynasty. This shows that the government at that time attached great importance to foreign trade and commercial development.

Looking at the ideas regarding business owners and commerce policies of the Tang and Song Dynasties, it is manifest that it was the prosperous commerce during this period that gave birth to ideas that emphasized the rational development of business and protected the legitimate rights and interests of businessmen, which in turn led the government to formulate a series of  policies that encourages the accumulation of personal wealth. This series of policies to support business development in turn promoted the further development of national economy, and at the same time achieved the government’s goal of increasing fiscal revenue and solving social conflicts. From this point of view, as one of the four key factors of civilization of “government, agriculture, manufacture, and commerce”, the “commerce” factor also played an equally pivotal role in the development of civilization in China.  



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