Ducks and Economics

From Salt and State: An Annotated Translation of the Songshi Salt Monopoly Treatise, by Cecila Lee-fang Chien, p. 3-4:

The Guanzi, one of the first great works on political economy in China, provided an ideological basis for monopoly that persisted for two thousand years, from the Han dynasty to the end of the Qing. This treatise, probably collated by adherents of GuanZhong (?-645 BC) a major figure inthe establishment of Qi as the first hegemon among the Chinese states, asserted that because everyone needed salt, increasing its price even incrementally would reap huge returns.

If you were to announce a head tax on all adults and children, everyone would certainly complain and oppose it. But if you implement a salt tax policy, one hundred times the profits will accrue to you, the ruler, while the people will be unable to escape it. This is what is meant by managing finances.

According to the Guanzi’s logic, thecost of salt to consumers would effectively include a tax, yet spare them a separate payment. By controlling both the production and distribution of salt, the state could prevent disparities between rich and poor, as well as increase state revenues.

While statesmen before the Qin unification (221-206 BC) recognized the fiscal value of sale, the nature of China’s monopoly came to be premeditated on a united empire. In contrast to other powers across Asia and Europe at other periods, where governments had to content themselves with charging transit tolls (France) or merely regulating the sale or some other stage of the industry (Venice), China’s centralized bureaucracy could tightly monitor the sources of salt as well as the stages of production and distribution.