Thayer Watkins
Silicon Valley
& Tornado Alley

The Debate on the Salt and Iron Monopolies:
An Ancient Chinese Commentary on Public Policy

In ancient China the Emperor Wu instituted new vehicles for raising funds. He established government monopolies for the production and marketing of salt and iron. Previously these commodities had been produceeed and marketed by private industry. The Emperor Wu also established a government monopoly in the trade in grain. The government grain agency would buy up grain where it was cheap and transport it to areas where the price was high. The government grain agency would also buy grain in the years it was relatively cheap and sell it in years when the price was relatively high. This agency's purpose was not only to gain a profit for the government but also to discourage the private pursuit of profit from speculation. In addition, the government imposed an excise tax on liquor.

The Emperor Wu died in 87 BCE and about six years later his successor had the Imperial Chancellor and Chief Minister issue a call for the scholars who opposed the Emperor Wu's policies to come debate the issues.

The debate was recorded and published as The Debate on Salt and Iron. This debate is a valuable window on the social philosophy and public policy beliefs in ancient China.

For the modern economic analysis of the social loss involved with the creation of protected monopolies see Monopoly.

One aspect of the thinking of the time, 81 BCE, was the general distrust of private markets and the pursuit of profit. This thinking is remarkably close to the beliefs in the twentieth century socialist states. Collectivist intellectuals treat such correspondences of attitutdes in feudalistic and tribalistic societies with so-called modern socialism as some precociousness on the part of these backward societies. In actuality it is more evidence for the feudalistic nature of socialism.

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