(Translated by Jiangyue Zhai)
EDITOR’S NOTE: Chaptors 68 – 86 (with Chaps 70, 82, and 86 lost), which was added to the book Guanzi by an anonymous author of either Han dynasty or the Warring States period, are known for the rich ideas contained in them on economic matters and as a separate and self-contained unit under the title of Qing Zhong Shi Liu Pian. This unit constitutes the most important piece of classic literature on the history of ancient Chinese economic thought. While attaching primary importance to a stable agricultural economy, it advocates developing commercial buiseness at the same time to build up a prosperous and powerful state and proposes a theory for the regulation of economy by weighing from time to time the comparative market value of the currency versus those of the commodities and taking due measures accordingly. This theory still bears topical relevance today and is worth studying earnestly.
68.On keeping Financial Balance
Duke Huan asked Guanzi,“Would you please tell me something about the economic policy of the nation?’’Guanzi replied，“If a state does not have any savings，this happens because it has issued wrong edicts．”Duke Huan asked, “What did you mean by saying that?”Guanzi replied，“Set up a standard to make sure that one farmer can have one hundred mu of land and that both the spring ploughing and planting must be finished within twenty－five days．”
Duke Huan asked，“The spring ploughing and planting must be finished within twenty－five days．what did you mean?” Guanzi replied，“Sixty days after the Winter Solstice，icy places exposed to the sun start to thaw．And seventy－five days after the Winter Solstice，icy areas not exposed under the sun start to thaw．Millet should be planted immediately when the icy areas not exposed under the sun start to thaw．And it should not be planted one hundred days after the Winter Solstice．Therefore，the spring ploughing and planting should be finished within twenty－five days．Now you are building the Fu Tai and people all over the state have been summoned for the construction work． According to your instructions，construction has taken the whole spring season，and it is not finished yet．The common people have missed these twenty－five days，so that fields all over the state are put in disuse．When one man is drafted for forced labour，one hundred mu of land cannot be cultivated．When ten men are drafted for forced Iabour，one thousand mu of land cannot be cultivated．When one hundred men are drafted for forced labour，ten thousand mu of land cannot be cultivated．When one thousand men are drafted for forced labour，one hundred thousand mu of land cannot be cultivated．These twenty-five days of the spring season have already been missed，however，the building during the summer season continues．As a result，the fields have not been ploughed in spring and the crops are not weeded in summer．But the forced labour will continue endlessly during the autumn season．Thus，it can be regarded as losing cultivated land and grain products several times in a row．The right time for planting crops is missed．Nevertheless，you are levying taxes upon the people constantly．The common people should consume about half of their harvest．However，you will collect nine tenths of it．Moreover，the people are ordered to pay in…cash only．That accounts for the fact that thieves and violent people have committed so many crimes，so numerous penalties are used by the state and lots of people are executed．And if you use suppression by force，it will lead to civil war．” Duke Huan said，“Fine．”
(Guanzi said further) “In this case，the right economic policy has not been adopted．Sovereigns who are able to unify the whole world will not use the people for large－scale constructions or military activities during the busy seasons of farming，so that the harvest of all kinds of crops will be good．And when the harvest of all crops is good，intellectuals will look down on salaries and the common people will not attach much importance to awards．A sovereign who is good at governing his state will let the farmers plough during the cold season，weed during the hot season and then，he will keep the products of their work for himself．He will also let the females weave assiduously and their products will be collected by the state too．It is not that he wants to hurt the feelings of the common people or act against their will，but he is forced to do so because of the price differences among various commodities．”
Duke Huan asked，“How can that be done?’’Guanzi said，“The state of Yu knows how to adopt the right economic policies．”Duke Huan said，“What does adopting the right economic policy mean?”Guanzi said，“Issue an order to people with one hundred mu of 1and as follows：Plough your fields and plant the crops during the next twenty—seven days．And you can get a loan from the state．When the autumn season comes and the harvest is good，the state grain price will reduce by a half．And then they tell the farmers：‘People who have borrowed money from the state can return it to the government of the zhou in the form of grain．’Thus，the sovereign can keep one half of the grain produced in the state．And then the price of grain will be increased．．．ten times higher．After that，another order is issued to officials of xian，li and yi all over the state to ask them to present all kinds of utensils to the central government as follows：‘Our state is short of cash，so that you can trade grain for cash．’Thus，an interest rate of ninety percent can be gained for the store of grain by the state．They purchase grain at a low price and sell it out at a much higher one，so，all utensils of the state can be sponsored this way and they do not need to count on the common people any more．That is the economic policy taken by the state of Yu．”
69．Ways of Keeping Financial Balance
Duke Huan asked Guanzi,“The state of Yu has successfully adopted the right economic policy．I am going to do so too．What do you think I should do to achieve that? ” Guanzi replied，“The warring states are engaged in building protective walls and moats so that the grain products are often lacking in these states．However，states being able to unify the world will take suitable actions at the right time．”
Duke Huan asked， “What did you mean by saying taking suitable actions at the right time?” Guanzi replied．“Issue suitable orders to regulate the price of grain, do all kinds of farm work on time and treat the people reasonably，so that you can adopt open or closed financial polices as you want and do not need to resort to the common people any more．Sovereigns of the most powerful states control half of the wealth of their states，so that the wealth of these states is divided between the sovereigns and the people and thus they both will have enough to support all kinds of utilities．States being able to unify the world will stick to the basics：the agricultural industry．Thus，when the expenditure of the nation is short in one share，it can be reimbursed by one share (by farming)；when the expenditure of the nation is short in two shares，it can be reimbursed by two shares；when the expenditure of the nation is short in three shares，it can be reimbursed by three shares；when the expenditure of the nation is short in four shares，it can be reimbursed by four shares；when the expenditure of the nation is short in five shares，it can be reimbursed by five shares；when the expenditure of the nation is short in six shares，it can be reimbursed by six shares；when the expenditure of the nation iS short in seven shares．it can be reimbursed by seven shares；when the expenditure of the nation is short in eight shares，it can be reimbursed by eight shares；when the expenditure of the nation is short in nine shares，it can be reimbursed by nine shares；when the expenditure of the nation is short in ten shares。it can be reimbursed by ten shares．If the sovereign can take firm control over the price of grain，regulate it in timely fashion and saves one third of the grain output of the state every year, grain saved within ten years will be enough to support the nation for three years．When there are severe droughts or floods，the common people can no longer concentrate on farming；under such circumstances，palaces，platforms，kiosks and other kinds of buildings can be built，but make sure to hire the poor people who cannot afford to raise a dog or pig at home to do the work．So，palaces，platforms，kiosks and other kinds of buildings are built not for the sake of pleasing the sovereign but to enforce the economic policy of the state．For the contemporary sovereigns who do not know the importance of taking the right economic policy，they are engaged in undertaking large—scale construction to erect palaces，platforms，kiosks and other buildings endlessly during each of the four seasons．The common people cannot work in their fields．The sovereigns do not realize that they have missed the chance for administering the national finances during the spring season，and they are going to miss it during the summer and autumn seasons as well．The common people have no food to support themselves so that many of them are forced to sell their children for survival．Strong and brave people will exploit others，and the weak and sick ones will have to beg for a living．If the sovereigns suppress them according to the law，they will not be obedient even though they are punished or executed．That happens because the right economic policy has not been adopted．In order to keep financial balance，the pricing standards of goods of one state should be regulated like those of other states of the world．When prices of things of our state are lower compared with those of the other states。our goods will flow out to other states．When they are much higher，others states will dump their goods in our state．If this is the case，things and wealth will be transferred to hostile states，and business people will compete with one another for profits．As for states being able to unify the world，they will take firm control over the circulation of goods．”
Duke Huan asked，“What does taking firm control over the circulation of goods mean?”Guanzi replied．“In some places the harvest of one farmer is enough to support five people，in some places the harvest of one farmer is enough to support four people，in some places the harvest of one farmer is enough to support three people，and in some places the harvest of one farmer is enough to support two people，even though they all devote the same amount of effort to do the farm work．Make sure that policies on farming and those on regulating prices of things can complement each other．Thus，correct measures for keeping the financial balance of the state can be taken at the right time．If the sovereign does not take the right measures to regulate the circulation of commodities，some wealthy people will manipulate the prices．And thus the economic policy of the state will fail．”
Duke Huan asked，“Regarding economic policy on keeping financial balance，have you told me everything? ”Guanzi replied。“Set down standards for prices of fabric and other goods and make prices of other goods fixed relatively according to their value．Only the price of grain should be regulated separately．”Duke Huan asked，“What does regulating the price of grain separately mean?” Guanzi replied，“When the price of grain is high，prices of tens of thousands of other things will be low．And when the price of grain is low，prices of tens of thousands of other things will be high．”
The duke asked．“How can I enforce the economic policy to keep financial balance?” Guanzi replied．“Make investigations to make sure how much best，secondary and third—quality lands each county has．Hence，when taxes are levied according to the quality of the fields，the common people will not emigrate to other places．Help the poor and aid those who do not have enough to support themselves，thus，the people will be happy with their sovereign．So，use the surplus of the best fields to complement the deficiency of the third—rate fields，regulate prices of things during the four seasons on time。adjust the price policy reasonably according to the situation，thus，the common people will not leave for other places．They will be well settled as if they were a square put on the ground．That is the right economic policy on keeping financial balance of the state．”
71．A Few Anecdotes and Quotations
Duke Huan asked Guanzi，“Would you please tell me the best way to govern the state?”Guanzi said，“What do you mean the best way?”
Duke Huan said，“Qin She has told me something like that：‘If the sovereign does not decorate canopies and veils luxuriously or possess a lot of clothes，the needlecraft of the state will not develop well．If the sovereign does not follow the rules of propriety to offer livestock during ceremonies，for instance，the sovereign of a feudatory should use a cow as offering and a highest—ranked court official should use a goat，all the six kinds of livestock will not propagate well．If a sovereign does not heighten his platforms and pavilions or beautify his palace buildings，the timber of the state will not be dissipated．’What do you think of this point of view?”Guanzi said，“It is not right．”
Duke Huan asked，“Why did you say that it was not right?”Guanzi replied，“These methods should be taken by states with vast territories．According to the fixed rule，the Son of Heaven supervises a territory of one thousand square li．Feudatories of all other dukes and marquises are one hundred square li．Fiefs of the viscounts of the coastal areas are seventy square li．And manors of the barons are fifty square li．Thus，they can augment one another like chests and arms do．So，if the sovereign can regulate the prices，supply and circulation of goods，even though most of the supply of food and goods are controlled by the people，it will not cause any problem for the state．However，if the small states are going to compete with the big ones，they should ask the farmers to work hard to plough in spring when it is still cold，to weed on time in summer and then contribute their products to the state．They should also ask the females to be committed to spinning，weaving and then contribute their products to the state as well．These measures are not aimed at hurting the feelings of the common people or acting against their will．They are taken because the common people cannot be governed if the state does not have any store of grain，and the weakest or poorest people of the sovereign cannot be encouraged if the state does not have any savings．Therefore，this idea of Qin She cannot be adopted by the small states．”Duke Huan said，“Fine!”
Duke Huan asked Guanzi，“Yi Tian has told me：‘A sovereign who is good at governing his state will use things and manage people not belonging to himself．Why don’t you take advantage of the powers of sovereigns of other states to take control over the whole world?’”
Guanzi replied．“This viewpoint of Yi Tian is not right．For sovereigns who are good at governing their states always make sure that all the wastelands are reclaimed，so that the common people can settle there．They also make sure that all granaries and depots are full，so that the common people can pay attention to rules of propriety．Contrarily，if a state does not have any savings，it will be besieged by its enemy states，and if its protective walls are weak，it will be broken．When a state is not in peace，it can never unify and maintain the whole world．This expression of Yi Tian is unwarranted．”
Guanzi continued，“If one tenth of the harvest is stored every year，an amount equal to about one year’s output can be saved in ten years．If two tenths of the harvest is stored every year，an amount equal to one year’s output can be saved in five years．Let the common people keep one half of their harvest．If that is not enough，they can also consume some vegetables as a complement．Thus，the sovereign can keep the other half of it．Hence，grain should be saved according to the conditions of the yearly harvest．Thus，the store can accumulate year by year．If a state can store enough grain that can last for ten years，it can conquer poor states with its wealth，conquer the timid ones with its prowess，conquer the silly ones with its wisdom，conquer the imprudent ones with its prudence，conquer the unrighteous ones with its righteousness and conquer the mob with its well trained troops，thus，all decisive factors for winning any battle can be possessed．So，when troops are dispatched，they can move as swift as wind and rain do，act as formidably as thunders do，can advance or retreat at will，but no one can manage to stop or intercept them．Thus，it is no longer necessary to count on the support of the alliance．So，the expression of Yi Tian is wrong．”Duke Huan said，“Fine.”
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