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The Reforms of Shang Yang

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  • Zhou, Haiwen

Abstract

Shang Yang is regarded as the chief architect of the Chinese state. This paper interprets the Reforms of Shang Yang from the perspective of economics and analyzes the Reforms in a mathematical model. Shang Yang tried to rationalize government administration and to organize the economy more efficiently. Those reforms laid the foundation of Qin’s unification of China. In this paper, the ruler chooses incentives for soldiers, the degree of adopting the county form, and the level of military spending to handle internal rebellions and external threats. The existence of institutional complementarity between the adoption of the county form and the use of strong incentives for soldiers is established. It is shown that an increase in the level of external threats induces the ruler to adopt stronger incentives for soldiers, to choose a higher degree of military spending, and to choose a higher degree of adopting the county form. An increase in the power of clans leads the ruler to choose a lower incentive for soldiers and a lower level of adopting the county form.

Suggested Citation

  • Zhou, Haiwen, 2024. "The Reforms of Shang Yang," MPRA Paper 121608, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:121608
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    References listed on IDEAS

    as
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    8. Haiwen Zhou, 2011. "Confucianism and the Legalism: A model of the national strategy of governance in ancient China," Frontiers of Economics in China, Springer;Higher Education Press, vol. 6(4), pages 616-637, December.
    9. Haiwen Zhou, 2023. "Unification and Division: A Theory of Institutional Choices in Imperial China," Annals of Economics and Finance, Society for AEF, vol. 24(1), pages 13-37, May.
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    More about this item

    Keywords

    Institutional reform; history of China; political economy; national strategy of governance; principal-agent model;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • N45 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Asia including Middle East
    • P40 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - General

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