Author(s)

Yiyuan Li

Corresponding Author

Yiyuan Li

ABSTRACT

At the behest of the emperor of the Northern Song (A.D. 960–1279), reformist intellectual Wang Anshi introduced policies that reflect a number of the fundamental concepts of economic theory prevalent in society today. His Green Sprouts Act sought to influence market price and trade volume by granting the government the power to adjust market supply, demonstrating Wang’s clear understanding and flexible use of the market supply and demand mechanism. The Service Exemption Act utilized the government as a hub for labor specialization; its division and designation of labor was consistent with the core concepts of the principle of comparative advantage. The Hydraulic Works Law shares similarities with the modern concept of economic externalities – it maximized total surplus while limiting the impact individual decisions had on societal efficiency. This thesis will examine and interpret the economic implications of the Green Sprouts Act from a microeconomics perspective, using present-day economic modeling. Through analysis of the program’s operating mechanism – the government’s purchase of grains in high harvest seasons and supplementation of market supply through grain loans in low harvest seasons – this thesis will demonstrate how the program stabilized grain price to support the poor while enriching the state without the need for higher taxes. While the reforms were not without their flaws, they were further hindered by resistance from those in power and profiteering from China’s feudal society at that time. Wang’s reforms may have failed, yet his ideas – over nine hundred years ago – were pioneering economic concepts. As a representation of Wang Anshi’s reforms, the Green Sprouts Act demonstrates the profound impact Wang’s reforms have had on China and the world, as well as how future generations can learn from the economic wisdom of ancient Chinese thinkers.

KEYWORDS

Wang Anshi; China; reform; Green Sprouts; microeconomics