Guido Tabellini

“We add to this perspective of a unitary state versus a fragmented society by arguing in our book that a key difference between Europe and China is also the internal organization of society. In China, these local arrangements were mostly within clan-like structure, dynastic organizations defined by patrilineal descent. Whereas in Europe, because of the role of the church, dynastic ties had been weakened and the cooperation took the form of associations between unrelated individuals who got together for a purpose, like monasteries or in universities or eventually in self-governing towns.”

“In the second half of the first millennium, the church in Europe took a deliberate decision to dismantle tribal traditions and reduce the importance of extended families and facilitate the emergence of nuclear families. The Church did this in part for ideological cultural reasons, to emphasize the importance of universalistic values and being fair and good towards everybody, not just towards your friends and relatives. Perhaps in part also for material reasons, having smaller families made it more likely that if there was no heir, the Church would appropriate the inheritance of the rich families. They did so by emphasizing, discouraging second-cousin marriage, by accepting celibacy, by discouraging adoptions.”

“Chinese society became organized in clans, in large lineages, which performed the same functions as the European corporation, but they were different in that the same organization produced sustained cooperation in many domains. So, you had a single clan that settled disputes, organized the religious ceremonies to honor your ancestors. It provided this settlement of disputes, it facilitated trade, and provided a variety of public goods. Whereas in Europe, you had a plethora of different corporations, once one for each purpose.”

“The accumulation of knowledge was controlled by the state, not only because it was a unitary state, but also because it had chosen a very meritocratic procedure for selecting public administrators, the bureaucracy, which is a good thing. But the meritocracy took the form of a centralized exam. The state tested you on your knowledge of classical Confucian doctrine. So the knowledge that was diffused and accumulated in China was not useful scientific knowledge. It was really produced in order to pass this exam.”

“Wage labor was the dominant form of production in agriculture in England on the eve of the Industrial Revolution. If you think about an entrepreneur who pays wages and who decides on how and on what to invest, clearly he has strong incentives to invest in labor-saving innovations, because if he can enact these labor-saving innovations, he can substitute workers with machine and produce at a lower cost. In China, instead, the production was organized not through farms, but often through within extended families. Because if I introduce a machine that replaces workers, I still have to take care of the survival of these family members that are employed as workers.”

“After his death, you see a re-emergence of clans, a re-emergence of ancestor worship. And in fact, clans were instrumental in helping China to grow in an environment of weak property rights protection. Nevertheless, despite the weaker property rights, after the death of Mao, China was able to function as a market system and in part as a capitalist system, because it exploited the clan structure, the re-emerging clans that involved the often local politicians to make sure that the new enterprises would not be abused by local politicians. In Europe, we are used to think of politically run enterprises as inefficient. In China, the enterprises that somehow could be linked to local politicians were actually doing better than others.”

“And this is particularly true under Xi Jinping. I think before the emergence of Xi Jinping as a leader, China was not as hierarchical, not as closed. The choice of leadership was really meritocratic, also at the very top level. Now the system has become much more personalized. There will be a succession problem when Xi Jinping has to give up, and for age-related reasons, his control over China. And in a system where control remains so personalized, the possibility of mistakes becomes higher, and the visibility of radical innovation, of course, is diminished.”

“So the legal system in Europe emerged very much bottom up. The new state in force emerge when they're still very weak, in an environment in which corporations already existed, and conventions and norms had already emerged, as part of these private arrangements. And so the legal system in Europe codify and systematize a system of civil rules that had already emerged the spontaneously within European society. And so that explains why the principle of the rule of law emerges so naturally in Europe, because the rule of law does not arrive in a vacuum, but emerges in a society that has already a tradition that has to be respected.”