Public Goods Provision in the Early Modern Economy

Front matter

COMPARATIVE PERSPECTIVES FROM JAPAN, CHINA, AND EUROPE

IN THE EARLY MODERN ECONOMY

MASAYUKI TANIMOTO R. BIN WONG

PART I: PUBLIC FINANCE AND REGIONAL SOCIETY IN EARLY MODERN JAPAN Part I Introduction Masayuki Tanimoto

2. From “Feudal” Lords to Local Notables: The Role of Regional Society in Public Goods Provision from Early Modern to Modern Japan Masayuki Tanimoto

3. Samurai and Peasants in the Civil Administration of Early Modern Japan Kenichiro Aratake

4. Outsourcing the Lord’s Finance: An Origin of Local Public Finance in Early Modern Japan Kazuho Sakai xi vi

CONTENTS

PART II: COPING WITH POVERTY AND FAMINE Part II Introduction

Mitsuo Kinoshita

Sanctions, Targetism, and Village Autonomy: Poor Relief in Early Modern Rural Japan

Mitsuo Kinoshita

Coping with Risk in the Seventeenth Century: The First Age of the English Old Poor Law: A Regional Study

Jonathan Healey

Coping with Poverty in Rural Brandenburg: The Role of Lords and State in the Late Eighteenth Century

Takashi Iida

Coping with Poverty and Famine: Material Welfare, Public Goods, and Chinese Approaches to Governance

R. Bin Wong

PART III: BUILDING INFRASTRUCTURE Part III Introduction

The Development of Civil Engineering Projects and Village Communities in Seventeenth- to Nineteenth-Century Japan

Junichi Kanzaka

Rulers and Ruled in Flood Protection during the Eighteenth Century: The Prussian Example

Heinrich Kaak

Infrastructure Maintenance in the Jifu Region, Beijing Metropolitan Region during the Eighteenth Century

Takehiko To

Provided for Public Welfare: Traffic Infrastructure and “The Bonum

Commune Topos" with Examples from Fifteenth- and Sixteenth- Century Brandenburg Electorate

Sascha Bütow

CONTENTS

PART IV: MANAGING THE FOREST Part IV Introduction Takashi lida

Lords Forestry for People’s Basic Needs: Evidence from Prussia's Royal Domains and Forests during the Eighteenth and Nineteenth Centuries

Takashi lida

The Role of Villagers in Domain and State Forest Management: Japans Path from Tokugawa Period to the Early Twentieth Century

Takeshi Aoki

Forests as Commons in Early Modern China: An Analysis of Legal Cases Yoshiyuki Aihara

Public Goods and Economy in the Early Modern Era—New Perspectives on Modern Economies and Contemporary Environmental Concerns

R. Bin Wong

Contributors Index vii

315 319

ILLUSTRATIONS

FIGURES

The Changing Patterns of “Tribute Rate”: Shogunate, Domain, Village 18 Expenditure for Civil Engineering Work by Public Finance 31 Hiroshima Organizational Formation of 1753 and 1862 46

Outstanding Long-Term Debt 64

The Conceptual Diagram of Lord Tsudas Finance 65

The Quarterly Balance of the Cash Flow on the General Account

River Irrigation Rate in 1907 152

Sufficient Irrigation Rate in 1907 153

Increase of Paddy Acreage of Tokugawa Japan 155

Increase in Paddy Acreage in Kaga, Noto, Etchü, and Higo Provinces 160

. Organigram: The Hierarchy of the Dike Control (Upper Oderbruch) 190

MAPS

Japanese Archipelago 14

Colonization of the Oderbruch during the Reign of Frederick II 182-3 The Flood Control System of Yongding River 207

Range of Important Cities of Trading and Traffic between Elbe and Oder River 217 x ILLUSTRATIONS

TABLES

Breakdown of the Expenditure of Tokugawa Shogunate 20

Number of Project under the Scheme of Otetsudaibushin 21

Hiroshima in 1715: Output, Population, and Government Officials 48

The Financial Statement ofthe IRF 67

Development of Public Finances of Prussia, 1713-1806 — 119

Number and Life Circumstances of Lodgers in the Rural

Settlements in the Royal Domain of Alt-Ruppin, 1771-1783 124

7. Dike Assignments in the Upper Oderbruch, in Rods/Feet 187

8. Development of the Social Structure of Rural Settlements That in 1800 Belonged to the Royal Domain of Alt-Ruppin, 1687-1831 241

9. Number of Livestock Pastured in the Royal Forest District of Alt-Ruppin, 1847-1854 248

10. Areas of State Forest in Traditional Use in 1935 266

Preface

Many of our expectations regarding patterns of historical change in global history continue to be based upon understandings of the significance of what William McNeill called “The Rise of the West” in the title of a seminal work he first published in 1963. Marx and Weber are the nineteenth- and early-twentieth-century intellectual ancestors of this basic approach to human history. For many social scientists who provide us contemporary approaches to economic development and state building, the readings of history that inform their approaches to contemporary political priorities and economic possibilities continue to be based on a tradition of grand social theories. The metrics they employ for evaluating times and places beyond early modern Europe and the modern West remain anchored in European history and its connections to modern historical transformations of the nineteenth and twentieth centuries, however irrelevant those intellectual foundations appear to them.

Anxieties over the extreme simplifications that considerable numbers of scholars writing between the late 1960s and early 1980s utilized in their approaches to economic development and political change led a generation of scholars across the humanities and social sciences to question the limitations of metrics for historical change predicated on traits found in European societies and their white settler society offspring in other world regions. But as our empirical knowledge has subsequently expanded dramatically regarding other world regions we have done surprisingly little to begin the formulation of reworked metrics of evaluation that seek to retain elements of earlier understandings that appear applicable in other world regions at the same time as we formulate new measures of understanding xii PREFACE the significance of practices not seen or underappreciated in early modern Europe and the modern West.

Scholars continue to be attracted to intellectually opposite poles of perception. There are those who persist in stressing the similarities and commonalities to any processes of change they deem desirable and positive. There are others who proclaim the significance of differences, as often cognitive as material, that signal distinctive and even incommensurate practices that separate the modern West from the experiences of many people in other world regions. These competing conceptual or even theoretical centers of gravity hinder the development of methodologies for navigating the force fields these ideas have created.

This book seeks to formulate elements of a methodology sensitive to these problems of similarities and differences in early modern Eurasia for the specific topic of public goods, especially those significant to economic performance. The challenge of confronting both similarities among and differences between places is a more general one that concerns many humanists and social scientists toiling in very diverse fields of inquiry and often deploying different tools for research. We will argue for an expanded definition of “public goods” to include all those created through nonmarket processes. In the modern era it was easy to see most such goods to be provided by government. But neither in contemporary times nor in the early modern era was this the case. Understanding our contemporary choices regarding public and private goods and the variety of “public-private partnerships” created to bridge the divide between them might well benefit from an awareness of early modern practices.

Since our expectations about how both markets develop and government provision of public goods expands are derived from European historical experiences, we are unlikely to look for practices in other world regions absent in Europe. In contrast, in this volume we will begin from an alternative empirical frame of reference, early modern Japan. We will propose the subject of an expanded definition of public goods to include those non-market-produced goods not limited to people with strong personal connections, which we find in early modern Japan. We believe the intellectual payoff can reach scholars with interests well beyond early modern Japanese history and generally will concern those with curiosity about the larger patterns of historical change that created possibilities in the modern era at least in part from the practices of early modern ancestors, both one’s own and those of others.

The organization of the book, explained in more detail in chapter 1, invites the reader to first learn some basic practices responsible for public goods provision in early modern Japan and then takes us through three substantive areas of activity—poor relief and famine relief, infrastructure building, and forestry management—typically leading with Japanese examples and then adding both European and Chinese examples, which the reader can then compare. For European cases we deliberately choose Prussian cases (to be precise, cases that fall within

PREFACE xiii the eighteenth-century boundaries of Prussia even if the practices themselves include those of earlier centuries) in all three case studies and offer far more limited evidence for the paradigmatic Western European case of England, providing a full case study only for poor relief. The addition of China allows multiple forms of comparison between Japan and both European cases and Chinese cases. From these comparisons can emerge multiple dimensions of variation and difference as well as an appreciation for what kinds of issues were conceived in similar ways even if addressed with somewhat different practices. These exercises can become elements of a methodology of analysis that aims to build a common framework for understanding public goods formulation and provision that doesn't depend solely on understandings derived from a selection of European practices made according to what was a crucial dynamic of state formation in that world region, namely, war making, that neither was uniformly important across Europe nor played the same crucial role in other world regions. Those possibilities will be further explored in chapter 16, the concluding chapter of this book. We hope potential readers of the studies to follow will have enough curiosity to make their way through a time and place foreign to most of us in order to discover guidance toward problems that should be of concern to all of us.

Many of the papers contained in this volume were presented at the conference held at the Graduate School of Economics, the University of Tokyo, in March 2015. We are grateful to Fabian Drixler, Koji Yamamoto, and Toyoo Yoshimura for their inspiring presentations, and Eisaku Ide, Linda Grove, Kojiro Taguchi, and Osamu Saito for their constructive comments. The overall result at this conference was presented at the session in World Economic History Congress 2015, held in Kyoto, August 2015, in which we also received stimulating feedback from participants. In improving the contents for publication, we are greatly indebted to two reviewers of this project for their invaluable suggestions. We also would like to thank Linda Grove for her superb English editing work.

This research project was supported financially by Japan Society for the Promotion of Science (JSPS), KAKENHI Grant Number 25285104 and 17H02548. Papers in part 4 were financed by MEXT-Supported Program for the Strategic Research Foundation at Private Universities 2014-2018 as well. We are most grateful for their generous support.

June 2018 M. Tanimoto and R. B. Wong

Toward the Public Goods Provision in the Early Modern Economy

WHY “PUBLIC GOODS”?

Historically, to sustain and reproduce their economic lives, people have obtained goods and services in various ways. Although market transactions have taken a central position in the present economy and historical research has tended to stress this feature of economies due to an interest in economic growth, we must consider the possibly significant roles of nonmarket activities in the economy in order to grasp the entire picture of peoples lives in history as well as the present world. How did people tackle issues that the market did not handle well? To what extent did their approach to finding solutions to their economic challenges reflect their political and social institutions as well as the structure of their economy? The present volume explores these questions by investigating efforts made for the provision of “public goods” in early modern economies from the perspective of comparative socioeconomic history.

The concept of “public” in this volume denotes the sphere in which people obtain goods and services for their lives through neither market transaction nor direct provision based on “personal” relationships. The latter, “personal” relationships, includes the relationships between a lord and his subject as well as family or kinship ties. Thus, this concept of publicness is defined in contraposition to “market” as well as “personal” relationships, not in relation with the specific characteristics of providers such as government or state. The reason why we introduce the term “public goods,’ which originated in economics, is owing to the fact that this concept is useful in identifying our intention to use “public” in this manner. Economists conventionally define “public goods” according to their attribute of exhibiting nonrivalry and nonexcludability, traits that hinder proper provision through the market since providers are unable to obtain appropriate rewards due to free riders who enjoy benefits without incurring costs. As we discuss later, many of the cases we address in the present volume fail to fulfill fully the requirement of this definition, showing the attributes more of, in economics vocabulary, “club goods" (nonrivalry but excludable), “common pool goods” (nonexcludable but rivalry), or goods with positive externalities. Such expressions are cumbersome to use frequently and they share with the economist's definition of "public goods" the trait of being ill suited to market transactions, thus deserving to be regarded as “quasi-public goods” in the economist array of more conventional concepts. The aim of this volume is to investigate how and to what extent "public goods" (hereafter without quotation mark and including “quasi-public goods”) were provided to satisfy the needs for people's ordinary lives and reproduction. They are public in the sense that they are produced and distributed neither by market mechanisms nor through personal relationships, but in a political-social space including government actors and other social entities. The early modern period is suitable for considering this subject since these three components, markets, personal relationships, and a political-social space in which we find public goods (hereafter “public social space”), were sufficiently active to identify their functions in the economy, in addition to being sufficiently diverse in terms of the ways each component was weighed. The volume tries to disentangle the functions of these three components in order to identify the diversity of public goods provision across different early modern societies.

To clarify our approach in distinction to the existing literature, we first explain how we modify the concept of public goods, of the state, and of the demarcation of market and nonmarket to address features of the early modern economy. The discussions on economic development in history, specifically those linked to industrialization or modern economic growth, have paid great attention to the formation and development of the market economy as a set of institutions able to augment people's welfare, in theory by realizing the optimal resource allocation of the society. The literature that has been concerned with development in the early modern period, such as the proto-industrialization thesis* or the Smithian growth argument,’ has revealed that actually market activities were spreading across both urban and rural sectors of the economy. The role of specific nonmarket practices for promoting the economic development and welfare has been a distinct concern, typically involving the discussion of the states economic policies. In fact, there has been a long-standing debate regarding the role of mercantilism in early modern Europe, with recent literature reviving and even enlarging concerns about the state's roles in economic development in light of institutions and political economy (North and Weingast 1989, Acemoglu and Robinson 2012). In addition, the role of the state for augmenting the well-being ofthe subjects has been newly discussed in the early modern history and the fiscal state argument, apart from the viewpoint of mercantilism (Rosenthal and Wong 2011, Yun-Casalilla and O'Brien 2012, He

2013, Sng and Moriguchi 2014, Vries 2015). In much of this discussion, early modern states are expected to be the main provider of public goods, which, in light of the economic theory of “market failure,” were undersupplied through the market transactions. In short, the good workings of the market in the early modern economies were complemented by the contribution of the state providing public goods.

This volume looks at nonmarketed goods that only involved the government as one of several actors. Quite a few goods and services were supplied in early modern societies by various kin groups, communities, lords, and governments to sustain and reproduce the economic lives of ordinary people. It is impractical to confine our focus to the activities directly related to the state in paying attention to the role of nonmarket activities in economic life. By taking the following three fields up, all of which were apparently essential for sustaining people's lives and reproductions in the early modern economy, this volume relativizes the role of states and the market/state dichotomy present in the available literature discussing the state formation and public goods provision.

In part 3, the chapters deal with infrastructure projects such as dikes, roads, and water control facilities. If we take a dike as an example, it appears to qualify as a public good since inhabitants near the dike are to be protected equally against a flood (nonrivalrous), without excluding neighboring inhabitants (nonexcludable). Strictly speaking, however, nonexcludability is unclear, as the expected benefits from the dike are confined to the inhabitants within a specific geographical area. The smaller the area, the larger the excludability of goods provision is. Therefore, we should recognize that nonexcludability has been rather weak in most of the dike cases, and this attribute is applicable to other physical infrastructures such as roads and water control facilities, which deserve to be defined as "club goods.” In contrast, part 4 deals with cases that lacked the attribute of nonrivalry. Each chapter tackles the benefits obtained from the forest where the concept of "common lands” is often applied. The common lands are open to users (nonexcludable) and are zero-sum in terms of benefits (rivalrous), fitting the criteria of what Nobel laureate Elinor Ostrom labeled “common pool goods? Furthermore, goods and services with “external effects” are not provided optimally through market mechanisms despite the fact that they are excludable and rivalrous, since the benefits and/or costs are not properly paid for by the beneficiaries or imposed on the providers. The former case may result in an undersupply and the latter an oversupply of a good. For our discussion, the positive externalities are significant because the provision of non-market-produced goods can supplement the undersupply of goods in ways that may benefit people through their external effects. Poor relief, on which chapters in part 2 focus, can be discussed from this point of view, since it is beneficial for social order and peace at the same time as it enhances individual recipients’ well-being.

Thus, the attributes of goods and services discussed in the three main subjects of this book, namely, welfare policies for the poor, infrastructure construction and maintenance, and forest management, can be recognized under the name of public goods in a theoretically relaxed sense, requiring provision outside the market to avoid undersupply. This recognition not only allows us to weave together three subjects having their own distinct strands of literature into a common fabric of discussion, but also enables us to contextualize the role of “state” as a provider of public goods. There is a good reason that certain public goods, for example, dikes, were provided by a local governing body, not by the state, because the excludable nature of the goods could limit beneficiaries geographically. In contrast, military capabilities, a representative example of pure public goods in economics textbooks, are provided almost exclusively by states of one kind or another in the early modern period. In fact, the fiscal state argument, coined by John Brewer for England and applied by scholars to other early modern European countries, evaluates the capacity of the state mainly through its fiscal capacities to absorb major military expenses (Brewer 1989, Glete 2002, Storrs 2009). To understand more fully the role of public goods in early modern economies, it is therefore necessary to go beyond the specific subject of the state’s military expenditures in order to identify the goods and services affecting the economic lives of ordinary people.

This observation leads us to consider more carefully the nature of early modern states that are understood to be both centralizing their rule by growing their capacities and exhibiting features of what the social theorist Max Weber called “patrimonial states.” The evolution of absolutism in Europe, the transition from the declining Ming to the rising Qing dynasty in China, and the establishment of the Tokugawa regime in Japan all occur during the sixteenth and seventeenth centuries. In many parts of Europe, as well as in China and Japan, central governments emerged that acquired wider governing ability over their territories and provided the geographical foundations of subsequent modern national states. On the other hand, it is also apparent that a specific ruling family whose household economy was closely related to its public finance dominated the “state” in this period. Inevitably, the government’ behavior tended to be influenced by the ruler's arbitrary motivations, which might be different from that of the modern fiscal or tax state, as Joseph Schumpeter argued a century ago (Schumpeter 1918/1991). For Schumpeter, the relationship between a ruler and the subject in the case of a "patrimonial state" was a personal relationship between kings or lords and ordinary people, most often farmers. If people were provided with any goods or services based on their mutual personal relationship, it is hard to apply the concept of public goods to this "transaction" even though they were provided by a patrimonial state. Thus, this influential characterization of the historical nature of the state in the early modern period prevents us from conceiving naively the state as a main provider of the public goods specifically other than military affairs.‘

To open up our abilities to understand public goods provision in early modern times, we can consider how the demand side for public goods to sustain and enhance peoples economic lives can be met within the social and political space beyond familial and personal relationships. In fact, there were diverse ways of providing for the poor, from the use of lineage ties in China to the promulgation of the Poor Law in England, that is, from the usage of personal relationship to creating space for public goods provision. Even though poverty has been a universal phenomenon throughout history, demand for public goods was triggered under specific conditions in which the poverty emerged as a problem to which social responses were deemed possible and desirable. Similar aspects can be observed in terms of the existence of common lands, as they could alternatively be enclosed to form a self-sufficient economy such as lords’ landed estates or thrown into the market by establishing exclusive private property rights on each plot. Thus, it is important to notice that the magnitude of the need for public goods depends heavily on the historical context determining the width and depth of nonmarket activities organized outside of self-sufficient entities. With a consciousness of the theoretical sense of publicness, the role of public goods provision in early modern economy should be explored by identifying specific historical and sociopolitical contexts in which they emerge.

COMPARATIVE APPROACH SETTING JAPAN AS A BENCHMARK

The present volume explores the public goods provision and their diverse providers by comparing the cases in East Asia and Europe. In doing so, we have selected Japan, Germany (using early modern Prussia as a key ancestor of the late-nineteenth-century German state), and China to show three kinds of public goods provision quite different from Britain, which is conventionally understood as the paradigmatic case. This is an approach different from the major family of approaches to early modern global history that extends the tradition of comparing European historical practices to those of other world regions found in Marx and Weber and in much early modern economic history, the field in which this volume is most centrally located. In this approach to the early modern era, there are competing clusters of causal mechanisms intended to explain how Europeans came to achieve their political dominance and economic leadership in the nineteenth-century world, a situation that moved into a twentieth-century era of American political and economic prominence and created a longer modern era dominated by Western power and wealth. Within these accounts of economic and political change the subject of public goods provision doesn't occupy a very salient position. The subject is brought up both implicitly and explicitly in the fiscal state literature by historians recounting what European states spent their revenues on, but the subject is only sometimes connected to how these expenditures affected the economy. Because Great Britain was the first industrial economy and its fiscal state focused so heavily on building an eighteenth-century navy, which was the foundation of its global reach politically and supported its economic ventures into other world regions, the analysis of other public goods has not seemed so important to economic change of the early modern period.

In order to relativize this influential approach, we take advantage of the rich scholarship on the Tokugawa era (1603-1868) to take Japanese public goods provision as our benchmark case. We devote part 1 of the book to a concentrated introduction to Japanese practices to form the frame of reference to consider poor relief, infrastructure, and forest management in parts 2 through 4. Under the Pax Manchurea (the peace under the Qing dynasty) and the Pax Tokugawa regime, early modern East Asia showed sharp contrast with contemporary Europe in terms of their respective military affairs. Therefore, it is true to state that the case of Japan is well suited for a focus on nonmilitary public goods provision. Moreover, our choice is made more attractive for the following reasons. Although the fine-grained local and regional histories that are available for Japan are lesser known than their counterparts for countries in Europe, there exists a considerable literature in Japanese that supplies the foundation on which we build our framework that takes Japan as the benchmark case. The archival sources that make this possible include village documents, which originally remained in the house of the village head's descendant, as well as the official documents kept in the rulers' archives. They provide us with rich information on the economic and social situation of ordinary people, and reveal the relationship between public goods provision and the reproduction of peoples lives. We think that the literature on Japanese rural history that is established on the solid archival foundation is one of the valuable resources for exploring early modern economy and deserves to be a benchmark that comparative discussion would rely on.

Regarding the village level documents, it is worthwhile emphasizing that they comprise basic administrative information such as "taxation" and the registration of residents and lands. Although no village was large in terms of area and population, comprising, very roughly, around one hundred households and five hundred individuals on average, the village was more the public governing body rather than just a private community, whose entitlement was delegated originally from the Tokugawa shogunate or daimyos, rulers of the Tokugawa regime. It means the validity of the literature on early modern Japan is not just based on the archival advantage. Rather, it is the function of the rural village that deserves closer attention in considering providers of public goods in the early modern economies and that is most significant.

Interestingly, the autonomy of the village in terms of being the governing body evolved under the Tokugawa regime» Because of the deterioration of its financial situation, the Tokugawa shogunate as well as other daimyo (domain) governments reduced outlays on social welfare and infrastructure maintenance in the latter half of the Tokugawa period. On the other hand, the village, which had been authorized as the basic unit for controlling peasants by "feudal" authorities, achieved a considerable level of autonomy in administration, accompanied by the formation of village-level “public finance” Although historians have conventionally used “public” to refer to certain activities of the warrior classes, we distinguish our focus on the economy from their focus on issues of social order involving the shogunate, daimyos, and their warrior vassals. The Japanese publicness developed among villagers as relations within a social space that made possible collective decisions to respond to demands emerging among themselves, as well as to those placed on them by the warrior class that ruled them.

Furthermore, the cooperative unit of villages emerged and even evolved to form a public social space beyond the administrative unit of the village. It was a loosely integrated area called Gunchü, or other name, substantialized by the development of the rural economy based on market-oriented agriculture and proto-industry. The wealthy peasant-farmers led this development and behaved as “local notables,” complementing or even substituting the task of public goods provision. The recent scholarship discusses this by using the term “regional society” defined in this historical context. We think this recently revealed trajectory is distinct in emphasizing the role of “regional society” for public goods provision, and is expected to work as a catalyst that may clarify the focal point necessary for the comparative approach to be fruitful.

Based on this observation for the Japanese case, we can identify in Prussia people’s dependence upon relationships between lords and subjects in which ordinary people had “personal” contracts with lords regarding the provision of necessities not provided through market transactions or their self-sufficient activities. The public social space emerged outside of this relationship. Here, the role of the Prussian state or its prototype in the Brandenburg Electorate mattered in the absence of a strong self-governing body such as the village present in the Japanese case. The Prussian generation of “common goods” from the ruler’s side, discussed in a chapter of part 3, can be recognized in this context. The public social space in this sense enlarged as population increased between the eighteenth and nineteenth centuries, reaching an even-higher level of abstraction and generality after German unification in 1871.

The early modern Chinese state is similar to Prussia in terms of lacking any formal and relatively independent local or regional governing bodies. In fact, the chapters dealing with Chinese cases of poverty and famine relief, water control, and forest management commonly focus on the roles of the emperor and bureaucrats, addressing their policy practices and in some instances addressing the ideas underlying their behavior. On the other hand, the market transactions were much more prevalent in China even in the rural level, distinguishing it from the case of Prussia, and perhaps from Japan. Perhaps unexpectedly, the Chinese case offers a kind of early modern public goods more similar to modern meanings of public goods. The eighteenth-century Chinese state organized and funded goods outside market channels, incorporating in varied ways the efforts of lower-level bureaucrats and local elites to achieve public goods provision, in some ways anticipating some features of public goods provision more generally present in the modern era.