A Theory of Power Structure and Institutional Compatibility: China vs. Europe Revisited∗ Ruixue Jia† Gérard Roland‡ Yang Xie§ April 9, 2021 Abstract We synthesize two differences in the power structure of society between Imperial China and Premodern Europe: the Ruler’s absolute power was weaker in Europe, while in China the People were more comparable with the Elites regarding their power and rights. Why was a more symmetric Elite–People relationship compatible with a stronger, not weaker absolute power of the Ruler? We analyze a model of autocratic stability, where we read a stronger absolute power of the Ruler as conditioning more power and rights of the ruled on the Ruler’s will. We show that the stronger the absolute power, the more a more balanced Elite–People relationship will stabilize the autocratic rule, and the greater the Ruler’s incentive to promote such balance, thereby answering the question.
Discussion and stylized facts support the theory’s relevance. The theory helps understand the relationship between components of inclusive institutions and the logic behind autocratic stability. Keywords: absolute power, Elite–People relationship, autocratic stability, inclusive institution, rule of law, access to elite status ∗ We are grateful to Avner Greif and Joel Mokyr for their thorough and constructive feedback. We have also benefited from thoughtful comments from Gary Cox, Wei Cui, Patrick Francois, Mark Koyama, Ling Li, Weijia Li, Zhao Liu, Zhaotian Luo, Pietro Ortoleva, Albert Park, Jean-Laurent Rosenthal, Jared Rubin, Larry Samuelson, Tuan-Hwee Sng, David Stasavage, Guido Tabellini, and Xueguang Zhou.
We also thank participants in online seminars hosted by Fudan, Harvard, Tsinghua, UBC, UCSD, and USC, the economic history reading group at Monash, and the 2021 ASSA meeting for their valuable comments. We thank Ming Zhang for his excellent research assistance. We appreciate the support from the EDI grant “Endogenous Political Fragmentation: The Role of Property Rights in Historical Perspective” and the valuable feedback from EDI. An earlier version of the paper has been listed as NBER Working Paper 28403 and CEPR Discussion Paper 15700.
† UCSD and LSE, CEPR, and NBER; rxjia@ucsd. ‡ UC Berkeley, CEPR, and NBER; groland@econ. § UC Riverside; yang. 1 1 Introduction The very influential literature on institutions and development has taught us a general les- son: there is a strong interdependence and synergy between institutional arrangements that are conducive to sustainable political, economic, and social development, such as on one hand rule of law and property rights and on the other hand more open access to elite sta- tus (e., North, Wallis and Weingast, 2009; Besley and Persson, 2011, 2014; Acemoğlu and Robinson, 2012).
When we compare Imperial China and Premodern Europe, however, a contrasting image arises: rule of law and property right protection were stronger in Europe relative to China, but elite status was determined by hereditary nobility in Europe, whereas in China access to elite status was more open via the exam-selected, non-hereditary bureau- cracy. Between the two societies, why was stronger rule of law and property rights negatively correlated with the openness of access to elite status? In this paper, by examining rich comparative historical narratives, we find that the aforementioned institutional differences reflect more general differences in the power structure of society, i., how power was allocated across the Ruler, the Elites, which included primarily the lords in Europe and bureaucrats in China, and the People, and these differences were the most prominent during the 9th–14th centuries, with persistence beyond. The difference in rule of law and property rights reflects the fact that the absolute power of the Ruler was weaker in Europe, whereas the difference in the openness of access to elite status reflects the fact that the Elite–People relationship in terms of their power and rights was less unbalanced in China. We thus read the question about the negative correlation between the specific institutions as a more general question about the compatibility between the two dimensions of the power structure: Why was a more symmetric Elite–People relationship compatible with a stronger absolute power of the Ruler as in Imperial China, whereas a less symmet- ric relationship was compatible with a weaker absolute power as in Premodern Europe? Based on the narratives, we build a simple game-theoretical framework to analyze how the power structure can shape the stability of an autocratic rule.
This leads to a comparative institutional theory where the stronger the Ruler’s absolute power, the greater his incentive to promote a more symmetric Elite–People relationship. Finally, we provide further discussion and stylized facts on the historical relevance of our theory. The difference in the Ruler’s absolute power between Imperial China and Premodern Europe has been well recognized by the political economy literature that emphasizes stronger rule of law and property rights in Europe (e., Acemoğlu and Robinson, 2019; Stasavage, 2 2020; Greif, Mokyr and Tabellini, Forthcoming). It was also reflected in the different degrees of the Ruler’s ultimate ownership and control over land and population in the two societies (e., Bloch, 1962a; Chao and Chen, 1982; Levi, 1988; Finer, 1997b).
Historical narratives suggest that the essence of the absolute power of the Ruler concerns how much of the power and rights of the ruled, i., the Elites and People, is conditional on the Ruler’s will. The difference in the Elite–People relationship in terms of power and rights has been largely ignored by economists and political scientists, while historians and sociologists have provided useful insights. For instance, elite status was predominantly hereditary in Eu- rope, while it was governed by the civil service exam in China, more meritocratic, and non-hereditary (e., Finer, 1997b; Tackett, 2014); as serfdom gradually prevailed in feudal Europe, peasants in Imperial China were mostly free and enjoyed de facto land user rights (e., Chao and Chen, 1982; Wickham, 2009); partly because China had early adopted part- ible inheritance while primogeniture spread in Medieval Europe, land ownership in China was also less concentrated and thus less unequal (e., Goody, Thirsk and Thompson, 1976; Goldstone, 1991; Zhang, 2017). The co-existence of these two differences motivates the setting of our theoretical frame- work.
We start with a Ruler, who prefers to maintain a particular status quo of autocratic rule, and a Challenger, who could try to alter it. Since the Challenger can be an outside aggressor, a conspiring elite, or a rebellious population, since the Challenger’s goal does not necessarily involve dethroning the Ruler, and since the challenge can be armed or nonviolent, our framework is sufficiently general to cover a wide range of threats that would destabilize the autocratic rule. In the model, we assume whether the challenge would succeed to alter the status quo depends on whether the Elites and People would choose to side with the Ruler. In the model, more symmetric power and rights between Elites and People is represented by less unequal payoffs, if they have not defied the Ruler; we model a stronger absolute power of the Ruler as a greater reduction in the payoffs of the ruled after they unsuccessfully defy the Ruler.
Analysis of the model yields our comparative institutional theory. It starts from our reading of the absolute power of the Ruler as about the conditionality of power and rights of the ruled on the Ruler’s will. Given any non-zero level of such conditionality, the more power and rights the People enjoy when they have not defied the Ruler, the more they will lose if they defy the Ruler, and, therefore, the more they will be willing to side with the Ruler during a challenge. We call this the punishment effect of more power and rights of the People.
Knowing that the now stronger alliance between the Ruler and People has worsened the prospect of a challenge to the Ruler, the Elites will be more willing to side with the Ruler, 3 too. We call this the political alliance effect.1 The Challenger would then be deterred from challenging the status quo, stabilizing the autocratic rule and thus creating an incentive for the Ruler to promote a more symmetric Elite–People relationship. Since a stronger absolute power of the Ruler implies a greater aforementioned conditionality, it will make the initial punishment effect and, therefore, the total stabilizing effect stronger. The Ruler’s incentive to promote a more symmetric Elite–People relationship will thus be greater when the Ruler has a stronger absolute power.
We can thus explain the compatibility between a stronger absolute power of the Ruler and a more symmetric Elite–People relationship in power and rights. In the theory above, the level of the Ruler’s absolute power is exogenous. A few additional implications arise when we endogenize it. For example, because a more absolutist Ruler can take away more of the power and rights of the People once they unsuccessfully defy him, he is more willing to grant more power and rights to them in the first place.
Therefore, the People may prefer the Ruler to enjoy a stronger absolute power if they can choose, defying less often and enjoying their granted power and rights under a more stable autocratic rule. In another extension, we allow the current political stability to influence the future power structure. We then show that two societies that differ slightly in their power structure or autocratic stability could diverge into different steady states – one with a stronger absolute power of the Ruler, a more symmetric Elite–People relationship, and a higher stability of autocratic rule than the other. Given these analytical results, we further explore the historical relevance of our theory.
We first discuss how our theory can help understand specific institutions. For example, we can interpret the bureaucracy with the civil service exam in China and the important role of cities in Europe as the Ruler’s efforts to reduce the Elite–People asymmetry.2 Second, we examine the auxiliary predictions from our model about the impact of the power structure on the stability of autocratic rule. We systematically compare Imperial China and Premodern Europe in the frequency of wars, the risk for a Ruler to be deposed in a given year, and the resilience of unified autocratic rule. Consistent with the predictions of our model, the data show that autocratic rule was more stable in China than in Europe over the 9th– 14th centuries, when the differences in the power structure were the most prominent, with persistence in later centuries.
1 As remarked by Orwell (1947, p. 17), this idea of the Ruler and the People “being in a sort of alliance against the upper classes” is “almost as old as history” in Europe; in China the same idea can be traced to not later than Han Feizi (Watson, 1964, p. 87) from the 3rd century BC, which has been the most representative text in the Chinese Legalist tradition since then. 2 To be sure, the development of cities in Europe was to a large extent based on autonomous factors and exogenous shocks, but as we show below, various kings acted to help it.
4 Our main contribution is to provide a perspective to understand different dimensions of the power structure and how they matter for autocratic rule. We build on the political econ- omy literature on institution and sustainable development by investigating the relationship between major components of the inclusive or open-access institution in the literature (e., North, 1989; North and Weingast, 1989; Acemoğlu, Johnson and Robinson, 2001, 2005a,b; North, Wallis and Weingast, 2009; Besley and Persson, 2011, 2014; Acemoğlu and Robinson, 2012, 2019; Mokyr, 2016; Cox, North and Weingast, 2019). The literature often analyzes a society by categorizing it into two estates (e., the ruler vs. ruled, state vs.
society, elites vs. mass, those with vs. those without access to political and economic resources and decision- s). We extend this two-estate framework into a three-estate one, helping us understand the power structure in a richer way.
By that, we show that the more repressive an institution is in the dimension of the Ruler’s absolute power, the more inclusive it may be in the dimension of the power and rights equality between the Elites and People, and this pattern may well persist.