Economics, politics and culture - the ternary category I mentioned in the last section to understand society is actually Max Weber’s creation[1]. Economics focuses on making more money, politics aims to chose the right people to reallocate money, and culture is about the values that could be measured by money or not.

It’s a most grueling job to synthesize all of them into one theory with high explanatory power across all human societies, especially to a neurasthenia patient like Weber, who had to stop work from 1898 to 1903. After his miraculous recovery in 1904, Weber, already aged 41, only have 16 years left to follow his vocation[2].

Which surprised everyone is that during such a short time Weber constructed a huge peak still very hard to surmount. By working from day to night, he closely researched diverse societies such as China, India and those shaped by Judaism, Catholicism, and Protestantism.

Unlike Pomeranz, Lal, Jones and Diamond, Weber placed significant emphasis on politics and its interaction with culture. He recognized that rulers' decisions are influenced by cultural norms, which in turn shape political structures and then affect the previous culture again, and ultimately impact economic development.

According to his research, Weber analyzed China’s case by three steps[3]:

Economics: Find the peculiarity of China’s medieval economy
Politics: Explain the institutional context in which Chinese officials run the economy
Culture: Grasp the key ideological elements that guide Chinese officials’ behavior.

His answer could be summarized like below:

Economics: China’s economy once lacked a rational administration and judiciary so it discouraged the development of a rational entrepreneurial capitalism[4].
Politics: This lack is because China’s officials were trained only to fulfill ethical and literary targets, without any requirement to possess scientific or technical skills[5].
Culture: What led to such an official character is the Confucianism, which asked people to adjust themselves to the outside world, instead of obeying their internal measure of value[6].

Weber's theory is not a simple conceptual determinism (though often misread as). He considered all three factors as responsible to China's past backwardness. In other words, as long as one of the three constraints is loose, the centralization process may completely changed.

It could be easily tested by what has happened recently. While China’s contemporary communist ideology are to some extent a modern version of Confucianism, still putting collective interests above personal interests, its political and economic spheres have undergone significant changes. China has cultivated a lot of high-tech bureaucrats and managed to provide a market environment more consistent with rational expectations, especially after its participating in WTO since 2001. These changes help China’s economy take off.

The theoretical edifice of Weber seems solid, but still there are many controversies around it, amidst which the Chinese family is one of the most representative.

In rural China, Weber argued that small families were organized into larger patriarchal sibs which governed by conservative elders, and he believed this organization became “fetters of the economy”[7].

Since 1970s, seeing the remarkable growth of Singapore, Taiwan and Hong Kong, which all deeply influenced by Chinese culture, many people begin to re-examine Weber’s argument. Sibs and patriarchal family values seem to act a positive role other than negative. This tendency is further reinforced by China’s own achievements in the past three decades.

At first glance Weber seems to be wrong, but upon closer inspection you will find that’s not the case. As a critic says, the potential of Chinese families would be fully expressed only when “a number of contingencies are present, including relatively secure property and contractual rights, open channels to upward mobility, government policies that foster entrepreneurial familism, and a world economy that creates niches that are suited to Chinese family-run firms.”[8]

Once again, economic changes must be viewed together with political changes and culture values to draw comprehensive conclusions. Weber remains right that no single factor can determine the overall change.

However, things are far from over yet. What does Weber have to do with decentralization and Web3?

The three-factor framework of Weber is a start, not an end. Weber's theory principally performs static qualitative analysis, but decentralization is a dynamic process. If we want to answer the three fundamental questions I raised at the very beginning, more attention should be paid to the dynamic interplay between economic, political, and cultural factors other than roughly checking them one by one.

Along this way can we learn more about how to balance centralization and decentralization, not only in history, but also in our present business world, including the dramatic trading market. And just as price usually fluctuates wildly in free markets, history itself exhibits a similar non-linear pattern of growth and decline.

Suppose you take a dynamic perspective to re-study the China’s economy, the non-linear growth of China’s economy in the past millennium will surely catch your eye. You will find it very strange that a Dynasty established one thousand years ago, the Song Dynasty (960-1279 A.D.), has the highest intensive growth (a rise in average per capita real income ), higher than any later dynasties of China. Eric Jones noticed this and was keenly aware that the more critical question is not why China fell behind in early modern times, but why China failed to repeat its own premodern success[9].

Jones' answer was still based on a single economic perspective, which attributed China's stagnation to the inability of later dynasties to reduce transaction costs[10]. However, we have learned that any single cause attribution is not sufficient. A better conclusion may be reached by using Weber’s three-factor model, and in a dynamic way.

Fortunately, we have access to far more high-quality information and better data retrieval tools than Weber did. This allows me (and all of you) to take on the challenge of re-examining the centralization process of China and unearth something new.

According to my plan, the next ten sections will consist of two pasts. The first five sections will delve into the core story of China’s transition from decentralization to centralization in the Song Dynasty. This transformation, arguably the largest, most influential centralization event in the world history, continues to resonate today. By examining this period, we can gain a deeper understanding of the importance of decentralization in contemporary society and the challenges it faces. And after that, the remaining five sections will discuss what we can do by knowing all these things.

Hope you will enjoy the journey.

*Heilanstalt für Nervenkanke Konstanzer Hof,* the sanatorium Weber once lived for years, was formerly a hotel, and then became a park (Büdingenpark), and now has been bought and used as a hotel again. To some extent, in the long run, the changes in human society have little to do with individual will and more to do with the environment. But what makes people human is that they live not only in the natural environment, but also in a specific cultural environment, and the latter is something we can try to change by ourselves.

Notes:

1 In Weber’s masterpiece Economy and Society (published in 1922, and translated into English in 1968), he firstly set two main chapters mentioning economic action and legitimate domination, which is roughly equivalent to economics and politics. Besides, he wrote many pieces on religions of the Western and the Eastern, which focus on the culture.

2 Jürgen Kaube, Max Weber: Ein Leben zwischen den Epochen (Rowohlt Berlin, 2014). The ninth chapter.

3 Max Weber, The religion of China, trans. Hans H. Gerth (The Free Press, Illinois, 1951). In this book Weber began with four chapters on China’s sociological foundations and then talk about the literati and ethics.

4 Ibid., p.104.

5 Ibid., p.121.

6 Ibid., p.235.

7 Ibid., pp.87, 96.

8 Martin King Whyte, “The Chinese Family and Economic Development: Obstacle or Engine? ”, Economic Development and Cultural Change , Vol. 45, No. 1 (Oct., 1996), p. 21.

9 Eric Jones, “The real question about China: Why was the Song economic achievement not repeated?” , Asia-Pacific Economic History Review, Vol. 30, Iss. 2, Jan.,1990, p.9.

10 Ibid., pp.20-21.

Prehistory of Web3: ② A Dynamic Three-Factor Framework