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A Theory of Power Structure and Political Stability: China vs. Europe Revisited
Presenter: Yang Xie, Assistant Professor of Economics, UC Riverside (Co-authors: Ruixue Jia, UC San Diego; Gerard Roland, UC Berkeley)

Abstract:
A large literature in economics has emphasized the importance of rule of law and property rights for economic development. Yet, a comparative analysis of the historical trajectories of medieval Europe and imperial China raises puzzles that cannot be readily solved by the existing framework. Why was Europe, with stronger rule of law and property rights, mired in conflict during most of its history, while China experienced relatively higher political stability? We offer one answer by focusing on power structure: how power was shared among three estates: the Ruler, the Elites (lords or bureaucrats), and the People. Based on historical narratives, we emphasize two important differences: (1) the Ruler enjoyed less absolute power in Europe than in China; (2) the rights of the Elites and the People were more symmetric, i.e., less unbalanced in China than in Europe. Using a simple theoretical framework, we show that both differences led to higher political stability in China via two channels -- a generic punishment channel and a strategic political alliance channel. The coexistence of both above differences can be explained on the basis of the same political-economic trade-off faced by the Rulers in China and in Europe.

Oct 9, 2020 12:00 PM in Pacific Time (US and Canada)

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