Lessons in how to use an economic surplus.

Listener: 2 October, 2010.

Keywords: Globalisation & Trade; Political Economy & History;

More than one tourist has asked how much it cost to build Beijing’s Forbidden City, a complex of 980 surviving buildings covering three-quarters of a hectare. Better to ignore the monetary cost and think about the resources for maintaining the workers. Each would have required a ration of rice.

The Yongle Emperor of the Ming Dynasty took 14 years to build the Forbidden City (from 1406 to 1420), allegedly using a million workers, although we don’t know how long each worked. Whatever – it still meant a lot of bowls of rice. So, where did the rice come from?

The short answer is it came from the peasantry. At that time, the population of China was nearly 100 million, most of whom would have been peasants. (Western Europe’s population would have been half that.) From about the time of the Hongwu Emperor, Yongle’s grandfather, there had been a major abundance of rice arising from renewed irrigation and improved varieties.

So the surplus – the rice above that needed for sustenance – was large. The emperor would have to capture only a small proportion of it to have much at his disposal. (This surplus enabled Yongle to build not only the Forbidden City but also his tomb outside Beijing. The tomb is impressive despite its walls having gone and the central mound remaining unexcavated – it is not overrun by tourists, and the forest setting makes it more peaceful than European equivalents.)

It’s easy to argue that seizing the surplus was exploitative, but some of it was used to maintain the river works at the heart of the Chinese economy, which boosted economic productivity – and hence the surplus. Levying the surplus (for example, through taxation) can make it go the other way, such as when it is used for warfare, which usually reduces economic productivity. The great monuments are often built during peacetime. What is one to do with the surplus if the army isn’t fighting? It can be used to build the Great Wall, in turn reducing military needs in the future.

Qin Shihuang unified China following the era of the warring states (475-221 BCE), declaring himself the first emperor. (The word “China” comes from “Qin”.) He built a precursor of the Great Wall, but he also had the “terracotta army”, about 8000 slightly larger than life statues, apparently to protect his tomb (which is also yet to be excavated). Each soldier is different; one wonders if they were constructed by Qin’s soldiers on standby, and whether they portrayed themselves, or perhaps their fathers, brothers and sons killed in battle. This is about the time of Hannibal of Carthage; I can’t think of any European monument of those times that so honoured the ordinary man of the realm. The Qin Dynasty was soon replaced by the Han Dynasty (most Chinese refer to themselves as Han). Sic transit gloria mundi, although the Qin has done better than Ozymandias.

Qin’s capital was Xi’an (about 1000km inland) at the end of the Silk Road from India to China. It was not only a trading route but a connection with the world, nicely captured in the fate of the Giant Wild Goose Pagoda, built by the Tang Emperor Gaozong in about 650 to honour his mother. Today it is a part of a Buddhist monastery that commemorates Xuanzang (c.602-664), the monk who spent 17 years in India before bringing back and translating the sacred texts, which were stored in the pagoda, thus founding Chinese Buddhism. Religion (including scholarship and contemplation) is another way to use up the surplus.

However, trade – which adds to the surplus – involves a more complicated economic model than the rice one I have just used (200 years ago English political economist David Ricardo used corn rather than rice – his later models were more complex). But the model remains useful to remind us of the central role of the economic surplus, including how it comes about, who shares it and what they do with it.

If one use of the surplus is investment, another is tourism.