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Morality and the Market in China: Some Contemporary Views

Published online by Cambridge University Press:  23 January 2015

John J. Hanafin
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Abstract:

A significant effect of China’s rejection of a planned economy for a free market is the stimulus this has given to discussion of the relationship between morality and the market. Some Chinese believe that the introduction of a market economy has had a negative effect on public morality. Others disagree and maintain that it has had only a positive effect. Besides this particular debate there are two others. In the first of these debates, it is maintained on the one side that conduct in the market is amoral and essentially contractual or transactional in nature: a boundary must be drawn between economic conduct and conduct in other spheres of social life. Against this it is argued that ethical norms apply equally to all aspects of social life including the economy. In the second debate one side holds that the market engenders its own “ethical” norms. In opposition it is argued that the moral categories articulated in moral philosophy are applicable to behaviour in the market.

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Articles
Information
Business Ethics Quarterly , Volume 12 , Issue 1 , January 2002 , pp. 1 - 18
Copyright
Copyright © Society for Business Ethics 2002

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References

Notes

An earlier version of this paper appeared in Chinese in the Chinese Academy of Social Sciences’ journal Zhexue Yanjiu (Philosophical Research), 4(1997), 78–81. I would also like to thank Professor C. A. J. Coady, Head of the Melbourne Division of the Centre for Applied Philosophy and Public Ethics for his advice in preparing this paper.

1 Wang Hujiong and Li Shantong, Industrialization and Economic Reform in China (Beijing: New World Press, 1995), 113 and 160.

2 Ibid., 160 and 162. Gao Shangquan and Chi Fulin, eds., Theory and Reality of Transition to a Market Economy (Beijing: Foreign Languages Press, 1995), 1. Dai Yuanchen, “The Problem of Combining Planning and Marketing in the Reform of the Socialist Economy,” in Social Sciences in China, 1 (1991): 70.

3 Wang Hujiong et al., op. cit., 160 and 162. Gao Shangquan et al., op. cit., 1.

4 Ibid., Dai Yuanchen, op. cit., 70.

5 Wang Hujiong et al., op. cit., 160 and 162.

6 Ibid., Gao Shangquan et al., 1.

7 Chinese economists claim that the notion of a socialist market economy is a new economic category not found in the classic works of Marxist writers. In the sense that a market economy is based on resource allocation according to market forces, a socialist market economy is a modern market economy. Technically, at least according to some Chinese economists, a socialist market economy is different from a capitalist market economy in that it is comprised of a contemporary market economy, macro-control (the planned sector), and socialist public ownership. Despite this, other Chinese economists are of the view that in its operation a commodity economy is neutral, that is, neither capitalist nor socialist.

8 As is the case in English where the terms morality and ethics, as well as morals and ethics, can generally be used interchangeably, the equivalent terms in Chinese—daode and lunli—can also be used interchangeably. With regard to the disciplines of moral philosophy and ethics the corresponding terms are daode zhexue or lunlixue and daodexue or lunlixue respectively. They can also be used interchangeably.

9 There is some confusion, overlap, and lack of clarity amongst Chinese theorists in distinguishing between the moral norms developed or articulated in traditional philosophy and general social morality. Consequently, it appears that supporters of the “identity thesis” and “external relations thesis” are fundamentally arguing the same point, namely, that there is a general social morality based on the norms articulated in traditional Chinese moral philosophy that is applicable to all areas of social life. The term “identity thesis” simply means that identical moral norms apply equally to all aspects of social life including the economic. The term “external relation” means that the moral norms of the market are related to what is external to them, that is, to those of society in general. There is another term used by Chinese theorists that can be used interchangeably with wailian (related to the external). This is the term waiguan, which literally means “irrigated from without.” However, what distinguishes the “identity thesis” from the two “externalist theses” (wailian and waiguan) is the particular perspective they give to the positions of their proponents in terms of the arguments they are countering. For instance, the former is concerned with rejecting the view that market activity is amoral whilst the latter is focused on opposing the view that the market engenders its own specific “moral norms.”

10 In addition to articles in learned journals, the debate on the effect of economic reform on public morality was the subject of numerous newspaper articles and ethics conferences.

11 The two articles that initiated this particular phase of controversy first appeared in Zhexue Yanjiu (Philosophical Research), the journal of the Philosophy Institute of the Chinese Academy of Social Sciences. The debates that followed were principally conducted in learned journals by academics who were either ethicists or economists.

12 For example, professor Luo Guojie, chairman of the Chinese Ethics Research Society believes that in developing its commodity economy China has “disregarded its negative effects.” In the same vein, Wang Wei, vice-director of the Ethics Research Institute of the People’s University of China considers that policy makers were too late in taking into account “money worship” (baijinzhuyi), which he saw as an unavoidable product of economic development. Li Xia, “Money Makes a Difference,” in China Today, November, 1993, 16.

13 Ian Maitland, “Virtuous Markets: The Market as School of Virtues,” Business Ethics Quarterly, 7 (1): 17–31.

14 For example, in November 1993 at a meeting held in Guangdong on the topic of the socialist market economy and value, participants stressed that the market economy has a twofold effect on people’s notion of value. Zhexue Yanjiu, 2 (1994): 79.

15 Although some of what are described as socially (or morally) negative phenomena were prevalent under the planned economy, there is a consensus among those who view the effect of the market economy on public morality negatively that the market economy has either given rise to new forms of unethical behaviour or compounded pre-existing forms of it. Some of the most frequently mentioned behaviour in the Chinese press are as follows: tougongjianliao (shoddy work with inferior products, jerry-built); zhizao panmai jiaoyao (the manufacturing and peddling of bogus medicine and drugs); jiamao zhuanli (bogus patents); weizao jiamao shangpin (counterfeiting commodities); jiamao shangbiao (fake trademarks); weizao gongwen zhengjian yinzhang (the counterfeiting of official documents, certificates, credentials, and stamps [seals]); zhizao panmai yinhui wupin (manufacturing and trafficking in pornographic items); touji daoba (engaging in speculation and profiteering); xingyou shouyou (the giving and receiving of bribes); tanzang wangfan (perverting justice for a bribe); youchang xinwen (remunerated news); jia gong ji si (using public office for private gain); hetong zhapian (contract fraud); zousi (smuggling); kangshui (refusing to pay tax); toushui (evading tax); taohui (the illegal remittance of foreign exchange for a profit derived from the discrepancy between official and black market rates of exchange), etc. The principal environmentally (shengtai) based corruption obviously involves activities that contribute in one way or another to the degradation of the environment and consists of: wurao huanjing (pollution of the environment); daofa lanfa senlin (unlawful felling and denudation of forests); pohuai shuichan ziyuan destruction of aquatic resources); pohuai kuangchan ziyuan (destruction of mineral resources).

16 Liao Shenbai, “Shichang Jingji yu Daode Taolun zhong de Jige Wenti” (A Number of Questions Regarding the Discussion on the Relationship between the Market Economy and Morality), in Zhexue Yanjiu, 6 (1995): 16.

17 Ibid.

18 Ibid.

19 A. Smith, Lectures on Jurisprudence, ed. R. Meek et al. (Oxford: Clarendon Press, 1978), 538.

20 J. S. Mill, Principles of Political Economy, Collected Works, Vol. II, ed. J. Robson (Toronto: Toronto University Press, 1965), 281.

21 G. W. Smith, “Markets and Morals” in Philosophy and Politics: Supplement to Philosophy 1989 (Cambridge: University of Cambridge Press, 1990), 15–17.

22 Quoted in Dorothy George, England in Transition (London: Penguin Books, 1953), 146.

23 Liao Shenbai, op. cit., 16.

24 George, op. cit., 134.

25 Liao Shenbei, op. cit., 16–17.

26 Ibid.

27 For example, an editorial in the Chinese Academy of Social Sciences journal Zhexue Yanjiu (Philosophical Research) made the following points with regard to moral philosophy and the question of market ethics in China: How is moral commentary to be conducted? What kind of intrinsic relationship exists between the market and morality, and between efficiency and fairness? What kind of strategy should be adopted to make morality practically relevant? On what basis should moral values be judged? The editorial went on to observe that in having to confront questions such as these, moral philosophers were feeling a certain pressure and their theoretical discussion was somewhat ineffectual. The editorial maintained that, to a certain degree, this had restricted the development of moral philosophy in China. There were a number of factors responsible for this situation: the difficulty of the issues; the inadequacy of the investigative strategies; and the lack of the necessary communication and cooperation between disciplines. The conclusion drawn was that the problem of the argumentation strategies employed in moral philosophy had not been resolved to any satisfactory extent. More specifically, the editorial attacked the ethical commentaries of moral philosophers for their impracticability, that is to say, for discussion of moral theories in terms of abstract concepts, formulae, and norms rather than in terms of ongoing developments. This kind of approach, the editorial believed, should be discontinued. What was needed was an approach that took into consideration a changing economic reality and was able to disclose the intrinsic relationship between the economy and morals (1 [1994]: 13).

28 Autopoietic systems are “systems that are defined as unities as networks of production of components that recursively, through their interactions, generate and realize the network that produces them and constitute, in the space in which they exist, the boundaries of the network as components that participate in the realization of the network” (Humberto R. Maturana, “Autopoiesis,” in Autopoiesis: A Theory of Living Organization, ed. Milan Zeleny [New York: North Holland, 1981], 21. Quoted in Niklas Luhmann, Essays on Self-Reference [New York: Columbia University Press, 1990], 3). In relation to human society, autopoietic systems are functionally differentiated, self-referential subsystems comprising system, medium, and code. For example, in the legal system, the medium is law and the code legal or illegal; in science the medium is truth and the code true or false; in politics, the medium is power and the code government or opposition; and in the economic system the medium is money and the code profitable or non-profitable (William Ossipow, “Niklas Luhmann’s Sociology of the Economic System: Some Moral Implications,” in Ethics and Economic Affairs, ed. Allan Lewis and Karl-Erik Warneryd [London: Routledge, 1994], 302). In other words, functionally differentiated social subsystems reduce and master complexity by constituting their own specific medium, binary code, working rules, and values. These media and codes have replaced the antique moral code in law, science, politics, and the economy (ibid., 307). One should note, however, that the Chinese translation of the term autopoiesis zichengxing or gongnengxing was not used by the ethicists looked at in this essay.

29 A consequence of the notion of autopoietic systems is that Luhmann advocates the amorality of conduct within social subsystems. Amorality has no relation to morality. Amoral conduct depends on rules that are distinct from moral rules: they are system-specific rules. To calculate or invest money is an amoral activity (ibid., 309).

30 For instance, it is argued that the traditional notion of morality now only has relevance when, outside of a functionally differentiated social subsystem, one regards a person as whole. In economics, investments are not decided on the basis of whether they are good for humanity but on whether they are profitable for an individual or company (ibid., 307).

31 Instead of moral justification, Gauthier proposes an amoral mode of justification that he terms deliberative justification. Moral and deliberative justification are directed at the same objects—one’s choices and actions. Moreover, deliberative justification does not refute morality; it does not offer morality the courtesy of a refutation, but ignores it and seemingly replaces it (“Why Contractarianism?” in Contractarianism and Rational Choice: Essays in David Gauthierjs Morals by Agreement, ed. Peter Vallentyne [Cambridge: Cambridge University Press, 1991], 20). For Gauthier, the features of deliberative rationality are that each person can see the benefit to themselves of engaging in practices with others in which each refrains from maximising their own utility when such mutual constraint is mutually advantageous. Each person will have no reason to accept unilateral constraint on their maximising behaviour. Each only benefits from the constraint exercised and accepted by the others. If one benefits more from the constraint exercised by others than one loses by the constraint exercised by oneself, one may “have reason to accept a practice requiring everyone, including oneself, to exhibit such a constraint.” This practice is capable of gaining unanimous agreement among rational persons “who were choosing the terms on which they would interact with each other.” For Gauthier, this agreement is the basis of morality (ibid., 23). Hence, for Gauthier, morality in the traditional sense has perished and been replaced by contractarianism. It seeks to arrive at an equilibrium of opposing interests through justifiable and rational constraint.

32 “Jingji he Daode” (Economics and Morality) in Guangming Ribao (May 30). Discussed in Zhongguo Zhexue Nianjian (Beijing, 1984), 230. In relation to the exchange of equal value, Hu Jian comments that it is not a question of gentlemanly morality. He illustrates what he believes to be an ingenious caricature of this type of gentlemanly morality by referring to the novel Jing Hua Yuan by the Qing author Li Ruzhen who applied the maxim of it is “better to yield than to contend” to behaviour in the economic sphere.

33 Liu Qilin, Gongchanzhuyi Daode Gailun. Discussed in Zhongguo Zhexue Nianjian (1984), 230–31.

34 He Zhonghua, “Shi Tan Shichang Jingji yu Daode de Guanxi Wenti” (On the Relationship between the Market Economy and Morality) in Zhexue Yanjiu, 4 (1994): 25–31; and “Zai Tan Shichang Jingji yu Daode de Guanxi Wenti” (Another discussion on the Relationship between the Market Economy and Morality) in Zhexue Yanjiu, 6 (1995): 8–15.

35 Ossipow, op. cit., 307.

36 He Zhonghua, “Shi Tan Shichang Jingji yu Daode de Guanxi Wenti,” 26.

37 These are public ownership as the principal component, the implementation of the principle of distribution according to work, more effective macro regulation and control, people’s comparatively high level of political awareness, etc. Ibid., 28.

38 He Zhonghua, “Shi Tan Shichang Jingji yu Daode de Guanxi Wenti,” 28.

39 Ibid., 28.

40 Ossipow, op. cit., 305.

41 He Zhonghua, “Shi Tan Shichang Jingji yu Daode de Guanxi Wenti,” 29–30.

42 Ibid., 30.

43 Ossipow, op. cit., 306.

44 Lu Peng, “Daode Xingershangxue yu Shixian” (Moral Metaphysics and the Actual) in Zhexue Yanjiu, 12 (1995): 14–15.

45 Ibid., 14.

46 Wang Shuqin, “Lun Shichang Jingji yu Daode de Guanxi” (On the Relationship Between the Market Economy and Morality) in Zhexue Yanjiu, 2 (1995): 23.

47 Ossipow, op. cit., 310.

48 J. Meade, Theory of Economic Externality: The Control of Environmental Pollution and Similar Social Cost (Sijthoff-Leiden, 1973), 52. Quoted in John F. Tomer, “Social Responsibility in the Human Firm: Towards a New Theory of the Firm’s External Relationship,” in Alan Lewis et al., 253.

49 He Zhonghua, “Shi Tan Shichang Jingji yu Daode de Guanxi Wenti,” 30.

50 Lu Peng, op. cit., 10–16.

51 He Zhonghua, “Zai Tan Shichang Jingji yu Daode de Guanxi Wenti,” 8.

52 Ibid.

53 He Zhonghua, “Shi Tan Shichang Jingji yu Daode de Guanxi Wenti,” 26.

54 Dong Fangshuo, “Shichang Jingji yu Daode Henglun” (On the Market Economy and Morality) in Zhexue Yanjiu (Philosophical Research) 1 (1994).

55 Ibid., 14–18.

56 Jeremiah L. Alberg, “Discussion Summary,” in The Good and the Economical, eds. P. Koslowski and Y. Shionoya (Berlin-Heidelberg: Springer-Verlag, 1993), 109.

57 Jean-Pierre Wils, “Economy Bounded, Reflections about Peter Kowloski’s Program of Ethical Economy,” in The Good and the Economical, op. cit., 90.

58 Ibid., 91.

59 Dong, op. cit., 14.

60 Ibid., 18.

61 Ibid.

62 Viktor Vanberg, Morality and Economics, De Moribus Est Disputandum (Bowling Green: Transaction Books, 1988), 30–33.

63 Ossipow, op. cit., 307.

64 Ibid., 309.

65 Dong, op. cit., 14.

66 Ibid., 14.

67 Francis Fukuyama has discussed how the shared Confucian heritage of the Japanese and Chinese has led to different economic consequences (Trust: The Social Virtues and the Creation of Prosperity [London: Hamish Hamilton, 1995], 171–83).

68 John Piderit, The Ethical Foundations of Economics (Washington: Georgetown University Press, 1993), 228.

69 George, op. cit., 146.

70 N. Luhmann, The Differentiation of Society, (New York: Columbia University Press, 1982), 200. Quoted in Ossipow, op. cit., 305.