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Confucianism and the Legalism: A model of the national strategy of governance in ancient China


  • Haiwen Zhou



The Confucianism school emphasizes family value, moral persuasions, and personal relations. Under Confucianism, there is a free-rider issue in the provision of efforts. Since national officials are chosen through personal relations, they may not be the most capable. The Legalism school emphasizes the usage of incentives and formal institutions. Under the Legalism, the ruler provides strong incentives to local officials which may lead to side effects because some activities are noncontractible. The cold-blood image of the Legalism may alien citizens. By exploiting the paternalistic relationship between the ruler and the ruled under Confucianism and the strength of institution-building under the Legalism, the ruler may benefit from a combination of Confucianism approach and the Legalism approach as the national strategy of governance. As each strategy has its pros and cons, which strategy of is optimal depends on factors such as the minimum enforceable level of public service and the level of institution building costs.
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Suggested Citation

  • 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.
  • Handle: RePEc:spr:frecch:v:6:y:2011:i:4:p:616-637 DOI: 10.1007/s11459-011-0150-4

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    References listed on IDEAS

    1. Haiwen Zhou, 2004. "The division of labor and the extent of the market," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 24(1), pages 195-209, July.
    2. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
    3. Haiwen Zhou, 2012. "Internal Rebellions and External Threats: A Model of Government Organizational Forms in Ancient China," Southern Economic Journal, Southern Economic Association, vol. 78(4), pages 1120-1141, April.
    4. Lin, Justin Yifu, 1995. "The Needham Puzzle: Why the Industrial Revolution Did Not Originate in China," Economic Development and Cultural Change, University of Chicago Press, vol. 43(2), pages 269-292, January.
    5. Haiwen Zhou, 2009. "Population Growth And Industrialization," Economic Inquiry, Western Economic Association International, vol. 47(2), pages 249-265, April.
    6. Shiue, Carol H., 2004. "Local Granaries and Central Government Disaster Relief: Moral Hazard and Intergovernmental Finance in Eighteenth- and Nineteenth-Century China," The Journal of Economic History, Cambridge University Press, vol. 64(01), pages 100-124, March.
    7. Carol H. Shiue & Wolfgang Keller, 2007. "Markets in China and Europe on the Eve of the Industrial Revolution," American Economic Review, American Economic Association, vol. 97(4), pages 1189-1216, September.
    8. Lazear, Edward P, 1989. "Pay Equality and Industrial Politics," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 561-580, June.
    9. Rosenthal, Jean-Laurent & Wong, R. Bin, 2011. "Before and Beyond Divergence: The Politics of Economic Change in China and Europe," Economics Books, Harvard University Press, number 9780674057913, December.
    10. Elster, Jon, 1989. "Social Norms and Economic Theory," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 99-117, Fall.
    11. Hanming Fang, 2001. "Social Culture and Economic Performance," American Economic Review, American Economic Association, vol. 91(4), pages 924-937, September.
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    Cited by:

    1. Zhou, Haiwen, 2013. "A Model of Institutional Complementarities in Ancient China," MPRA Paper 74697, University Library of Munich, Germany, revised Oct 2016.

    More about this item


    Confucianism; Legalism; national strategy of governance; ancient China; incentive provision; culture; N45; H10; A10;

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • N45 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Asia including Middle East


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