Where Is the AI Revolution Driving Us? Polarization vs Shuzhi (術治)

1) The AI Revolution Is a Double-Edged Sword: Rising Productivity and Widening Polarization

We are now in the midst of the AI revolution. Setting out a few situations, we must grasp the nature of the fundamental problem that has come upon human beings. The problems much discussed are the scenario in which AI replaces human beings, or the scenario in which humans who control AI rule other humans. What must be considered in connection with these problems is human nature. Only with an analysis of the human nature we have as Homo sapiens can we approach them.

In discussing human nature we must look at the thought of Descartes (1596–1650), called the father of modern Western philosophy. At the height of his thinking he published two works: the Discourse on Method (Discours de la méthode, 1637) and the Principles of Philosophy (Principia Philosophiae, 1644). In them, through the proposition “I think, therefore I am,” he took the human mind as the certain starting point of all thought. He stressed that nature can be explained by mathematical and mechanical laws, and that human beings can master nature through reason. He defined the material world as a substance distinct from the mind, whose attribute is extension (res extensa), and explained nature as an object moving by mechanical laws. He held that the human mind, modeled on God’s perfection, has the capacity to understand and control nature. So he put forward a mechanistic worldview as the core of his view of nature. He explained that nature is like a complex machine, and that if one knows its principles it can be manipulated and controlled. Further he interpreted, in anthropocentrism, that human reason has the power to imitate God’s order, and therefore holds the right to master nature.

So Descartes contributed greatly and positively to the development of modern science, and at the same time contributed negatively to opening the anthropocentric humanism of the age of ideology. Here we must note how Descartes’s analysis of human nature led modern Western philosophy as “rationalism.” His rationalism appears to have overwhelmed in the West the thinkers who opposed it, such as Spinoza and David Hume, despite their importance. But as the anthropocentric humanism of the age of ideology drove human society to the brink of ruin, the mind-centered Western system of thought came under serious challenge. Despite these twists and turns, Descartes’s rationalism still remains deep in the minds of Westerners. Those who rely on it keep thinking that nature, or human nature, can be remade by human power.

The AI revolution is a question of humanity’s mental functions. The Industrial Revolution is a “muscle revolution”; the AI revolution is a “mind revolution.” The Industrial Revolution was the event in which machines replaced human physical labor and expanded productive power explosively. The steam engine, electricity and systems of mass production came to drive industry in place of the human ‘muscle.’ The power of industry came to replace the muscles of humans and beasts that humanity had relied on since the appearance of Homo sapiens. The AI revolution, by contrast, is a “mind revolution.” As artificial intelligence assists or replaces human intellectual and cognitive activity, it is creating innovation of a new dimension. The AI revolution is a current that extends the mental capacities unique to human beings while fundamentally changing society, the economy and culture as a whole. It brings about data and computing infrastructure, autonomous decision-making, integration with the physical world, and changes in the human way of life. How shall we see the AI revolution?

However far AI develops, it will move within the human nature that created it. The danger facing Homo sapiens does not lie in an AI that replaces human beings, that is, one that remakes human nature. If AI could reconstruct human nature, the history of Homo sapiens would end there. Every religion, ethics, theory of evolution, science and philosophical system Homo sapiens has built up would become void. Not Homo sapiens but the history of a new kind of human being would begin afresh. For all the existence and thought of Homo sapiens to vanish together with human nature would be the same as the death of Homo sapiens. As Homo sapiens we should recall the philosophy of Confucius and Spinoza: “There is no need to think about death. Our wisdom comes from contemplating not death but life.” So the hypothesis that AI will replace human beings should be handed over not to the domain of philosophy but to the field of science fiction.

The scenario in which humans who control the AI revolution come to rule other humans must also be analyzed with human nature at the center. Even as AI develops, it will move within the system of human nature. Powerful selfishness and weak altruism, and the ethics and laws that seek to manage them: this system will still govern the AI revolution. No revealed religion, metaphysical logic or ideology in human society so far has ever ruled the human world by escaping the natural law of human nature. AI too will stay within this system. So the possibility that human beings could thoroughly rule human beings through AI is also better left not to the domain of philosophy but to the field of science fiction.

More than these possibilities, the problems the AI revolution brings may be ones we have not foreseen. The Industrial Revolution brought climate change, which no one had foreseen, and it is having wide effects on our lives. The Industrial Revolution is the remote cause (遠因) of climate change. Without the Industrial Revolution, climate change would not have happened either. The Industrial Revolution that began in Britain in the late eighteenth century explosively increased the use of fossil fuels such as coal and oil, and so the concentration of greenhouse gases in the atmosphere rose sharply, becoming the structural starting point of global warming and the climate crisis. But no human being planned this or used it to rule other human beings. The possibility that climate change alone will drive humanity wholly extinct is low, but the risk of bringing about the collapse of civilization and a large-scale fall in population amply exists. As the environment for survival worsens, habitable areas shrink through sea-level rise, heat waves, droughts and floods. And the possibility of large-scale famine grows with falling agricultural productivity and water shortages. At the same time, as climate change allows the vectors of infectious disease to spread, pandemics can break out at any time.

Let us approach climate change from human nature. Climate change lies in the failure to control human nature, in which human greed seeks to increase wealth without end. Had human beings had that capacity, human society would have managed it before the whole world was covered over by industrialization and trade and reached the process of plundering nature. With the Industrial Revolution, as human desire and selfishness were amplified through capital and technology, they bred the illusion that nature could be exploited without limit, and in the end led to the result called climate change. Despite repeated warnings about climate change over recent decades, and the problems that have actually come upon us, humanity is turning away from its responsibility to secure the chances of survival of future generations.

The AI revolution is becoming a stage on which human nature again shows itself powerfully. The point is that the Industrial Revolution and the AI revolution are mirrors that show human nature and amplifiers that enlarge it. The Industrial Revolution brought many benefits to human beings. Likewise the AI revolution will bring many benefits to human beings. But at the same time, just as the Industrial Revolution amplified human greed beyond human beings’ own control, the problem is that the AI revolution will show human attachment to wealth and lust for power ever larger and more nakedly. Will the AI revolution make human beings freer, or more dependent?

At the time of the Industrial Revolution we experienced the Luddite movement (1811–1816). The Luddites were textile workers who followed a figure called “Ludd,” who may or may not have been real, said to have begun breaking textile machines. The movement was the machine-breaking movement of English workers early in the Industrial Revolution. More than a mere riot, it was a working-class struggle for the right to live. Those who took part in the Luddite movement were people whose first worry was unemployment and deepening poverty, that is, the polarization of society. They are judged to have laid the groundwork for the later labor-union and democratic movements. At the same time the negative side kept growing. Despite the labor-union and democratic movements, the problem of the gap between rich and poor in fact deepened after the Industrial Revolution. The greed and polarization inherent in human nature grew that much larger.

The direction the Industrial Revolution and the AI revolution take is decided in the end not by human mental designs or metaphysical discoveries but by human nature. The past example of how human nature worked through the Industrial Revolution shows well which direction the AI revolution will take. We should look positively at, and enjoy, the many advances the AI revolution will bring. There are opposing voices too: “Blow up all the AI and go back to the old days.” It is in the same vein as the Luddite movement that appeared in the Industrial Revolution. But just as we could not ignore the Industrial Revolution, we cannot ignore AI. It is the great tide of the future, so we must not fall behind. But how shall we manage the instability within and between nations caused by the widening gap between rich and poor, that is, by the shrinking of the middle class?

The Industrial Revolution and the AI Revolution: Polarization Arises from Pursuing Private Interest While Ignoring the Public Interest

Polarization arises because the pursuit of private interest is justified while the public interest is ignored: the theory of the convergence of private and public interest. It is the theory that even if giant corporations pursue private interest, their private interest in the end comes back as the public interest and helps everyone. But what the Industrial Revolution and the AI revolution show is a situation contrary to this hypothesis. They show the rich growing richer, the poor growing poorer, and the middle class weakening. In the end the essence of polarization lies in a political-economic system that violates the public interest and permits the pursuit of private interest.

Let us look at the essence of polarization. As a result of the Industrial Revolution a capitalist class was formed. They were the entrepreneurs and factory owners who invested in the new industries, steam engines, looms, railways, and they amassed enormous wealth. Textile manufacturers, steelmakers and railway entrepreneurs rose as the “new rich” after the Industrial Revolution. Before, the nobility and landowners had been the upper class of society, but after the Industrial Revolution the “industrial capitalist” took its place as the new upper class. As a result of the Industrial Revolution millionaires appeared, bringing about the polarization of society and climate change.

As a result of the Industrial Revolution the “millionaire” was born. After the Industrial Revolution, as the paradigm among nations shifted from plunder to trade, “billionaires” (holders of a billion dollars or more), with a thousand times the wealth of a millionaire, are multiplying. Then, with the AI revolution, those with a hundred billion dollars or more, “centibillionaires,” are appearing. How many centibillionaires are there? As of the mid-2020s, around sixteen are counted in the world, most of them Westerners. It arises in a political-economic system in which private and public interest are said to converge.

According to recent reports by the international relief and development organization Oxfam and the World Inequality Lab (WIL), the wealth held by the ten richest people in the world exceeds the wealth of the bottom 40% of the world’s population (about 3.1 billion people) (Oxfam, 2022). This shows that global inequality has reached a historic peak. This ratio of inequality is accelerating every year. And the gap keeps widening. Polarization is reaching a state where it can grow no larger. The greed and dominance inherent in human nature keep expanding.

They become the “AI capitalists” who handle the capital of the future. The industries that benefit most from the AI revolution include semiconductors, the building of data centers, power equipment and battery materials. Before these AI capitalists, the industrial capitalists, textile manufacturers, steelmakers, railway entrepreneurs and the like, lose their power. AI capitalists come to monopolize data. If in the Industrial Revolution land and machines were the core of capital, now data and algorithms are. They come to hold platform dominance, because global platform companies take control of markets through AI technology. Above all they strengthen the concentration of wealth. A few entrepreneurs and investors accumulate astronomical assets, deepening social polarization. The power of their wealth is so astronomical that they come to take political and social influence. AI capitalists rise not as mere holders of economic power but as a new ruling class that sways policy, ethics and even culture.

Behind the billionaires lurk unemployment and deepening poverty. More than the technology itself, the backlash against unfair distribution and the lack of a social safety net becomes the center of social problems. The problem becomes the possibility that corporations, governments and power groups that use AI will use it, for private interest, as a means of ruling society. In the United States, which has the most centibillionaires, there are also those who see this as the greatest problem and seek to correct it. When a society or a state collapses, the giant corporations in the end collapse with it. These are people with the broad insight to see the reality of this “relationalism.”

Warren Buffett’s efforts are a good example. Buffett is a figure who has opposed ‘tax cuts for the rich’ and has strongly argued instead for raising taxes on the rich. Criticizing the reality that his employees pay a higher tax rate than he does, he stressed that the ultra-high-income class must pay more taxes. In a 2011 contribution to The New York Times, “Stop Coddling the Super-Rich,” he urged higher taxes on the rich to solve America’s fiscal deficit. He pointed out that the income tax rate he paid (17.4%) was lower than the rates of his office staff (33–41%). He criticized the fact that the average tax rate of the top 400 had fallen from 29.2% in 1992 to 21.5% in 2008. He added in his piece the thought that “higher tax rates do not stop investment and job creation.”

His argument led, under the Obama administration, to a policy proposal called the “Buffett Rule”: the principle that the ultra-high-income class with annual incomes of a million dollars or more should pay at least the same tax rate as the middle class. It was an attempt to reduce tax cuts for the rich and strengthen tax fairness. It did not come about, because of the Western political-economic system grounded in individualism. Its opponents, holding up the so-called trickle-down effect, kept arguing for the creation of wealth through individualism. In the end the Buffett Rule failed to become law. Beyond the United States, a “global wealth tax” came to be discussed worldwide. With the G20 agreement (2024), a plan to apply an international minimum tax rate to “ultra-high-net-worth individuals” was discussed, with the aims of preventing tax avoidance, easing inequality, and funding responses to climate and poverty. The global minimum tax (最低限稅, Global Minimum Tax) on corporations, at 15%, entered the stage of implementation. But the crucial common global taxation of individual wealth fell through for want of political agreement. All this happened within the Western system of individualism. Their ideas, despite much effort, failed because they did not lead to government policy. It is an effort hard to survive within the Western philosophical system, with its logic of individualism and the convergence of private and public interest.

In connection with the AI revolution, the issue U.S. Senator Sanders pays most attention to is precisely the widening of polarization. He sees the problem not in the AI revolution making the reconstruction of human nature possible and working positively, but in the expansion of dominance, the expression of the selfishness of human nature. On deepening economic inequality, he warned that AI could bring about large-scale job loss, and that its benefits are likely to be concentrated in a few large corporations and “the billionaire class.” This expresses concern in that it could further widen existing economic polarization. He pointed out that AI could change not only the economy but politics, education, the environment and even the way of war. In particular he sees military uses such as “robot soldiers” as liable to deepen social unrest and the concentration of power. Sanders, while acknowledging that AI is a “revolutionary and transformative technology,” criticized Congress and society for lagging too far behind in discussion and regulation. He even argued for a temporary halt (moratorium) on building data centers, stressing that social agreement and regulatory systems must catch up with the speed of AI development. Sanders’s view is that the AI revolution is not simply a matter of technological progress, but a dangerous catalyst that can enlarge the structures of social power and inequality. Just as the Industrial Revolution widened the gap between the working class and the capitalist class, the AI revolution too can enlarge a similar mechanism of polarization.

The way to deal with polarization lies in the distribution of wealth. It leads us to the proposition that the pursuit of profit and greed must be distinguished: the question of how to guarantee the pursuit of profit and manage greed. This question leads us once again to the question of public and private interest. If the public interest is guaranteed, polarization shrinks, that is, the middle class is protected; but if the pursuit of private interest is permitted, polarization grows and the middle class shrinks. A shrinking middle class is the mark of the West. Polarization appears as stagnant middle-class wages and a rising cost of living. Productivity has risen steadily, but wages have not risen as much. As housing, education and medical costs rise sharply, the real purchasing power of the middle class shrinks. In the West, because of automation and globalization, jobs in manufacturing and traditional industries move abroad or are replaced by automation. As the stable “middle-skill jobs” that supported the middle class disappear and are replaced by precarious service work and low-wage labor, the wealth gap widens.

Rising asset prices, in property, stocks and the like, benefit only the upper class that holds assets. The middle class finds it hard to accumulate assets and comes to depend more on debt (student loans, mortgages). In policy and the tax structure, tax and welfare policies are designed in favor of the upper class, or fail to protect the middle class adequately. In the United States in particular, the burden of medical and education costs is so great that the middle class is easily pushed down into the lower class. Since the 1970s the share of the middle class in the United States and other Western countries has been declining steadily. It appears as deepening polarization: a structure emerges in which the upper class grows richer, the lower class more precarious, and the middle class gradually disappears. Its social effects lead to political polarization, social unrest and the weakening of the foundations of democracy. In the West the middle class is collapsing as four axes work at once: changes in economic structure (automation and globalization), the rising cost of living, the wealth gap, and policy failure.

2) “How Western Civilization Could Collapse”: The Disappearance of the Middle Class

The Western market-economy system achieved great success in dealing with the greed called statism. But as time passed, the greed of tribalism has come to threaten the Western market economy. Western tribalism is an extension of the Western philosophy of individualism. Western laissez-faire, in leaving individual autonomy unchecked, went through a process in which autonomy turned into freedom. This, combining with the theory of the convergence of private and public interest at the levels of individual and group, produces the phenomenon of private interest being put before the public interest. The theory of the convergence of public and private interest necessarily ends up deepening the gap between rich and poor in a country’s economic system. The phenomenon of statism, in which kings ran the nation’s economy for their own private interest and widened the income gap with the people, is now turning into a phenomenon in which the leaders of tribalism, in place of kings, pursue private interest and widen the income gap with the people.

An article titled “How Western Civilization Could Collapse,” looking ahead, introduced the problems facing Western political economy.⁴⁵⁴ It explains that Western civilization, built on values such as democracy, individual freedom and social tolerance, could face crisis within thirty years, a single generation. It gives two reasons: Western civilization could collapse through the destruction of the ecosystem, global warming included, or through neglecting a widening gap between rich and poor. When the elite groups of the developed countries aim only at continuing to pursue their own wealth and are indifferent to the lives of the rest of humanity, such a society in the end regresses. This problem does not stay a country’s internal matter. A widening gap between rich and poor within nations necessarily brings about a widening gap between nations. In the end it becomes a problem of the whole earth. The gap between rich countries and poor countries is growing wider day by day.

The developed countries, each absorbed in the widening gap between rich and poor within themselves, have no room to devote themselves to world problems. Even setting world problems aside, the developed countries are highly likely to meet a decisive crisis from domestic problems alone. Taking the United States and Britain as examples, if the present trend in the gap between rich and poor continues, by about 2050 the middle class will have disappeared in the United States and Britain, and their people will split into two parts: the rich and the very poor.

By about 2050 the United States and Britain will have turned into countries with, essentially, two social classes. A small elite group will live well, but most of the rest of the people will face increasingly hard living conditions… Living wrapped in discontent and fear, they will cling to religion, race or nation. The rich seize enormous wealth and resources and leave almost nothing to the commoners, who are far more numerous but hold them up with their labor, driving society into instability and collapse.⁴⁵⁵

Then in such a country the people standing at the two extremes fight each other fiercely, and it loses the capacity to function as a country. Values such as democracy, individual freedom and tolerance come to be increasingly neglected. It is the “developed-country trap” the West has fallen into. What the developed-country trap means is pointed out precisely in a remark by Jean-Claude Juncker, then prime minister of Luxembourg (prime minister for nineteen years, 1995–2013, and later President of the European Commission), before the euro crisis broke: “We all know what to do, we just don’t know how to get re-elected after we’ve done it.” Juncker’s words point above all to the enormous debts the developed Western countries carry, the social welfare costs linked to them, and the political systems that cannot improve them.

To avoid this, the developed countries must escape “a widening gap between rich and poor and the repetition of welfare financed by debt.” If the developed countries do so, they can avoid the collapse of Western civilization. But time does not wait indefinitely for human action. Many scholars foresee that unless the present situation changes, it will lead to collapse. Among them are those who hold that if Western civilization collapses, strong countries such as China will survive.⁴⁵⁶

Why can Eastern civilization survive even if Western civilization declines? We must look at the causes of how the East is achieving astonishing economic growth, has, as few on earth have, escaped the middle-income trap, and has successfully achieved a democratic market economy. In the essay “Culture Matters,” the American scholar Lawrence E. Harrison, taking the Eastern Confucian cultural sphere as an example, voices an insightful view on the close correlation between a country’s culture and its economic development.

Singapore, Hong Kong and Taiwan lie in the tropics… Their phenomenal economic development repeats the success in economic development of Japan and Korea in the Confucian cultural sphere… And the economic success of the Chinese minorities in tropical Thailand, Indonesia, Malaysia and the Philippines also shows the importance of Confucian culture. So too with the small Japanese minorities in Peru and Brazil.⁴⁵⁷

Latin American scholars used to put forward « excuses »: that economic development was hard because of climate, the colonial past, structures of domination (dependency theory), or racial discrimination. Professor Harrison explains that, looking at the East Asians in Latin America, Chinese, Koreans and Japanese, none of these can be the reason. He showed that economic development cannot be achieved with institutions or patterns alone; that is, it is culture that decides institutions and patterns.⁴⁵⁸

He explains that, looking at the whole earth, only the East has caught up with the West, and that apart from East and West no country has yet become developed, in economic development or in democracy. He points out that in the end only some 30% of humanity lives in developed democracies, and that the efforts for the remaining 70% have not succeeded despite more than half a century of effort.⁴⁵⁹

Only a handful of countries, such as Spain, Portugal, Korea, Taiwan, Singapore and Hong Kong, have joined the ranks of the developed countries according to Rostow’s plan of development. Of the roughly six billion people around 2000, only about one billion are in the ranks of developed democracies.⁴⁶⁰

In fact the economic development of the East Asian countries, led by Japan, then the Four Dragons, Korea, Taiwan, Hong Kong and Singapore, and China, is without precedent in history in its speed and breadth. Western scholars call it collectively “the Confucian Work Ethic” and compare it with the so-called “Protestant Work Ethic” the West had when Western capitalism arose.

As features of the Confucian work ethic they count industry, thrift, zeal for education, small government, the tradition of “deferred gratification” (deferment of present pleasure for greater future gain), and efficient legal and social welfare systems. In the end the “Confucian” countries proved that they have in full all the conditions for economy and democracy to succeed. This rise of East Asia puts to shame Max Weber’s view that it was impossible for the East ever to achieve economic development and catch up with the West.⁴⁶¹ It is a wholly Western prejudice, and distorts the essence of political-economic thought.

All the East Asian countries share the Confucian values expressed as education, development, work ethic, meritocracy, and diligence and thrift. Their economic growth has revealed that what Max Weber argued in his book The Religion of China was forced. He argued that capitalist growth was impossible in China because it lacked “the tension that comes from uncertainty over whether one is among the elect,” seen in Calvinism.⁴⁶²

The Eastern Confucian work ethic is done for one’s own benefit. It is carried out from inner need, unrelated to changes in religious theory or the fate foretold by doctrines of the world’s end, so it can be seen as having a firm civilizational foundation. The Western press cites as East Asian values “education, diligence, thrift, and the attitude of deferring present pleasure for greater future achievement.”⁴⁶³ Western statistics too, taking Americans as the standard among Europeans, Americans and Easterners, say that Europeans work about 20% less than Americans and Easterners about 30% more, describing the Eastern work ethic as the strongest.

Many experts held that the reason economic development was not taking place in East Asia lay precisely in Confucian thought… This view was prevalent until the mid-twentieth century. But it came to be seen that in drawing out the elements needed for an economic leap in East Asia, strong education, a sense of achievement, meritocracy and diligence and thrift, the very same cultural and political leadership plays the decisive role.⁴⁶⁴

On the whole, studies of religion find that Protestant, Jewish and Confucian societies have more elements promoting economic development than Catholic, Islamic and Greek Orthodox societies, while the latter are found to show elements hindering economic development.⁴⁶⁵

In the end we can see that from the mid-nineteenth to the late twentieth century the West, without clear reason, simply strove to find in Eastern civilization only the faults that explained why the East had been overwhelmed by the West. Especially until the mid-twentieth century there was a strong effort to find the reasons the East lagged in economic development and democracy in the pre-modernity, irrationality, unscientific character and undemocratic character of Confucianism and Daoism.⁴⁶⁶ But noting the East’s continuing breakthroughs in economic development, democracy and social development, only in the early twenty-first century did the West too slowly begin to acknowledge the value of the political-economic thought inherent in the East’s spiritual culture: Confucianism (the tradition of valuing education and meritocracy, a culture of universal ethics, diligence and thrift), Daoism (low taxes and small government, guaranteeing individual economic initiative, harmony between nature and human beings), Buddhism (the idea of compassion, the value of non-possession) and more.

These strengths of the East did not arise by chance. Nor can they be made by some policy decision or resolve. They are steeped in history and tradition. The East has a deep and wide cultural background of its own, different from the West, and a philosophical foundation. That is, in political-economic thought the East is more firmly on guard against tribalism than the West. The character of the Eastern work ethic can be found in the patterns of economic development of East and West. The difference is that the East shows a pattern of pursuing economic development by managing the selfishness of human nature, and the West a pattern of pursuing it by leaving selfishness unchecked.

In the East, two thousand years ahead of the West in building nation-states, there is wisdom and policy to be found in the political-economic thought that appears together with the building of nation-states. The late Prime Minister Lee Kuan Yew of Singapore explains well the political-economic thought, different from the West’s, found in Eastern thought. He explains the political-economic problems the West is going through, which have come upon the United States with the passing of communism:

For a society to succeed, it must develop able people through competition while giving everyone opportunity too. That is, competition and cooperation must coexist. If everyone shares similar results, as under communism, there is no progress. That is why communism passed away. On the other hand, if one concentrates only on developing ability, so that those who succeed take everything and those who do not succeed have nothing, the gap between rich and poor grows ever wider. In the end, as in America, the balance and fairness of society break down.⁴⁶⁷

He holds that in these circumstances the way to achieve economic development while resolving the problem of the gap between rich and poor can be found in Eastern political-economic philosophy, and introduces the theory of yin and yang. In a country, support for the economically weak and fair reward for those who have achieved economic development must be harmonized according to the philosophy of yin and yang. That is, competition and cooperation must be made to coexist:

The best way can be found in the Eastern theory of yin and yang. Competition and cooperation must be pursued at the same time… This differs from what the Western liberals do. They stir up the people to throw off shame and keep claiming welfare as a right. In the end welfare costs in that country explode.⁴⁶⁸

In these circumstances we face the primal task of culture: how to keep the basic strengths of Eastern culture, the traditions of valuing education, meritocracy, diligence and thrift, and self-cultivation. It shows “the exclusion of ethics in the Western pattern vs the core role of ethics in the Eastern pattern,” and this becomes the most important factor dividing the political-economic realities of East and West in the twenty-first century. The Western political-economic system, which excludes ethics and relies mainly on law, opens the way for the military-industrial-congressional complex to pursue private interest.

Interest Groups’ Pursuit of Private Interest Threatens Minben

The legislature that makes law must pursue the public interest for the people. Before that there is one more important step: the people must elect as their representatives those who will strive for the public interest. This is the backbone of democracy and of minben (民本), government for the people. But if the legislature is filled with representatives who put their own reelection before the public interest, democracy and minben lose their meaning. In the end the people’s choice decides. Given a person who calls for diligence and thrift and a person who promises to guarantee results first through his political power, the people show a nature that chooses the latter. Without an emergency such as war, an invasion from another world or a planetary collision, the people elect the person who promises results right away.

The tendency of legislators to put private interest before the public interest, and the tendency of the people to prefer representatives who promise immediate private gain over representatives who put the public interest first: these two tendencies are two sides of the same coin. That coin is selfishness, the most powerful force in human nature. It is human nature for people and legislators alike to put selfishness, for self-preservation, before the public interest, which is altruism. When peace goes on, a situation unfolds in which private interest is pursued over the public interest, so the rule of law and liberal democracy come under threat. If one leg of the separation of powers collapses, the system cannot stand on two legs, and democracy loses its meaning.

The approval the people give their legislatures is very low. In Korea and in the United States alike it is around 20%. The people keep witnessing legislators concentrating first on private interest for reelection rather than on the public interest. In Korea donations from companies or organizations are illegal. But in the United States and other developed Western countries donations are freely allowed. In the United States in particular, indirect support through corporate political action committees (PACs) is institutionally allowed. The greatest factor in an American legislator’s reelection is the money needed for the election: donations from individuals or businesses. Legislators use the law to grow the gains their donors need, and donors supply the money legislators need for reelection. Many legislators, before being leaders with the character of a junzi (君子), the true leader are people faithful to the instinct of self-protection, that is, followers (xiaoren, 小人). The support of donors’ committees or business is direct for them. When business and the legislature unite, the executive in many cases has no choice but to follow. In the end the phenomenon grows in which business, legislature and executive, by tribalism, ignore the public interest and pursue private interest, surviving themselves first.

The phenomenon of tribalism harming the public interest flourished under the mercantilist system too. Adam Smith judged negatively the policies of Colbert (Jean-Baptiste Colbert, 1619–1683), counted the representative figure of mercantilist policy. Colbert served as finance minister under Louis XIV of France for eighteen years, from 1665 to 1683. He pursued protectionism and used it as a way of sharing gains between the king and entrepreneurs. In fact one of the first policies Colbert took as finance minister was to found a French royal glassworks to replace imports of glassware from Venice. Seven years later, when the works began producing passable glassware, he banned all imports of glassware from Venice. Under mercantilist policy every country saw its future in racing to cut imports and raise exports, so they pursued extreme protectionism and the growth of import-substituting industries. But under this political-economic system, naturally, tribal greed grew freely. That is, bodies such as the royal glassworks above received monopoly protection and favors from the state. And the state, that is, the royal house, forming a relationship of drawing income from such enterprises through taxes or other suitable forms, brought about a situation in which only the ordinary people were sacrificed in the end.

We cannot but think that most of the regulations, laws, edicts, decrees, and public ordinances of government, king or parliament for restraining, regulating and directing trade are, in the end, either political blunders, or made by cunning men for their private gain under the fine name of the public interest.⁴⁶⁹

The tendency of tribalism to harm the public interest grew stronger through mercantilism and then the Industrial Revolution. Adam Smith, Mancur Olson, President Eisenhower and recent financial economists express precisely this alarm about tribalism. Adam Smith held that the merchants and manufacturers within a country, since they could all pursue more profit through monopoly, sought to exclude foreign competitors, and that those sacrificed to such policies were in the end the ordinary people. So he began to argue for laissez-faire in the people’s economic activity, excluding state interference, and for free trade in the nation’s commerce instead of mercantilist protectionism.⁴⁷⁰ Adam Smith, while freeing each individual’s selfishness from statism, at the same time began to worry about tribal greed:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.⁴⁷¹

Going a step further, Adam Smith also makes clear that governing this tribal greed by law is very hard:

It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.⁴⁷²

Olson too warns of the possibility that the tribal greed he called “special interest groups” threatens democracy. He judges that the democratic system has well-made devices for preventing statism from pursuing private interest, but that preventing tribalism from pursuing private interest is very hard. That is, the separation of powers prevents the leader from pursuing private interest well, but plays little role against business and the legislature uniting to pursue private interest.

Olson also looked squarely at the fact that groups of individuals work for their private interest, not for the public interest. So he foresaw, and voiced concern, that the political-economic policies special interest groups make would harm the public interest:

The political-economic policies special interest groups make tend to be protectionist and opposed to the progress of science and technology. But by their nature such policies concentrate the gains in the interest group while all the people pay the costs equally. By this logic, popular resistance to the interest groups’ policies is not great. So as time passes such special interest groups grow ever larger, and in the end the country’s economy falls behind.⁴⁷³

This can appear in many forms. President Eisenhower, in office, found his conduct of state affairs, which sought the public interest, considerably affected by the close ties between the military and business, whose aim was to pursue only the interests of those groups. So on leaving the presidency after eight years, in a famous speech in 1961, he left a warning precisely about “the military-industrial complex”:

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes.⁴⁷⁴

Since this military-industrial complex in the end exerts its influence through the legislature, and so the power of the executive too must come into play, it also came to be called the “military-industrial-congressional complex.” This concern arising within democratic states shows well that we have reached a situation in which the public interest is not protected just because statist greed has been institutionally checked, but is damaged by the greed not of statism but of tribalism. Eisenhower’s time was the 1950s, before financial markets made the leaps they have today. The military-industrial complex that grew greatly during the Second World War has now yielded its place as the most important agent representing tribal greed to the “finance-government complex.” It is a change powerful enough to be called, after the Industrial Revolution, a financial revolution, moving the center of the economic system from manufacturing to services:

Over the past thirty years a true revolution has taken place in finance in most developed countries. In 1970 in the United States the ratio of total listed stocks to U.S. economic output was 0.66. By 2000 it had grown rapidly, and the total value of listed stocks in the United States reached 1.5 times gross domestic product (GDP).⁴⁷⁵

(In 2025 this ratio in the United States exceeded two.)

In the market economy, the tribal greed pursued by multinationals, international financial firms, or whatever we call them, has now come to threaten the market economy itself. Financial firms in particular, dealing with markets on a world scale through ingenious operating systems, have entered on the road of devoting themselves to the pursuit of profit and greed with no productivity at all. Their influence on the world market economy has grown ever larger, so that the political-economic system of the twenty-first century has come to be called “casino capitalism.” Rajan and other economists have held that when businessmen gather, they gather their strength toward plotting against the public interest and pursue private interest. These economists diagnose the irresponsibility of the state: very often, and in all too many countries, these conspiracies of businessmen to thwart fair competition end up receiving the help of the state.⁴⁷⁶

The military-industrial-congressional complex, that is, the special interest groups, has now grown beyond words in power and influence. Finance joined forces with government and developed into a “finance-congressional or finance-government complex” that harms the public interest called “fair competition.” Capitalism, that is, the market-economy system, is the most efficient way of production and distribution among the institutions human beings have made so far. And at its root lies competition. But because competition manages and checks the endless greed of businessmen, it becomes a nuisance to all existing businessmen.⁴⁷⁷ So interest groups, that is, tribalism, put every effort into restraining competition and pursuing each group’s interest. The greatest problem of tribalism appears as the polarization of society. The people suffer from the widening gap between rich and poor. The middle class shrinks, and the people divide into the rich, who enjoy extreme wealth, and the poor. If the state does not protect the public interest, whose responsibility does the public interest become?

The Trap of Laissez-Faire: “Who Will Watch the Watchmen?”

Laissez-faire freed the economic autonomy of the individual from statism. Relying on it, capitalism could defeat the controlled-economy systems of ideologies such as fascism and communism. But laissez-faire is showing its helplessness against tribalism, which pursues private interest through the union of business and legislature. By the basic principle of democracy, the parties that make up the legislature are supposed to pursue the people’s interest, that is, the public interest. But in many cases the world’s many parties are seen putting first the recapture of power, that is, the party’s interest, rather than pursuing the public interest. What they represent is not the people’s interest but a tribal greed that pursues the interest of the group they belong to, the party. They hold up Western laissez-faire and claim that their success appears as the public interest. But if the parties that represent the people leave their selfishness, or greed, unchecked, no one guards the public interest. It becomes a state with no watchman. Laissez-faire becomes the trap of the Western political-economic system.

The problems the Western political-economic system thus faces threaten the foundations of Western democracy and the market economy. This crisis comes down in the end to one question, the question the Roman poet Juvenal posed: “Who will watch the watchmen?”⁴⁷⁸ The basic premise of democracy is that the people, the voters, ultimately watch, assess and pass judgment on what those in power or the parties do. But just as in the Roman imperial era the emperor’s guard raised to the throne the commander or general who paid the most, if the people elect politicians who increase social welfare even by borrowing, so that the parties compete to increase social welfare to regain power, and the people fail to see the danger and prefer the welfare before their eyes, the basic premise of democracy collapses. In fact, during the euro crisis, what the leaders and peoples of the Western countries had to do was plain: to make known the nature of the problem, to appeal to the people to return to a basic work ethic, and for the people to elect such politicians as their leaders. But that did not happen. In that case questions arise about party politics, the starting point of Western democratic government.

In the East, an attempt at party politics and a debate over tribal greed unfolded in the eleventh and twelfth centuries. The Song reformer Ouyang Xiu (歐陽修, 1007–1072) attempted a series of reforms, including raising officials’ pay to make them faithful to public duty, making the enforcement of law effective, breaking down favoritism, and adding to the civil service examinations subjects needed for the practical running of government.⁴⁷⁹ In 1044 he sent a memorial to the emperor. His argument rested on his essay “On Factions” (朋黨論): “The leader forms factions by principle, and the follower forms factions for his own gain,” and he argued that the forming of factions should be allowed.⁴⁸⁰ That is, he proposed modern-style party politics.

In fact in the eleventh century, in the Song, policies that can be regarded as a modern-style socialism were carried out under the chief minister Wang Anshi (王安石, 1021–1086). Policies that can be regarded as conservatism, by contrast, were pursued by Sima Guang (司馬光, 1019–1086). There was competition and checking between the two forces. In the end Ouyang Xiu’s idea of forming factions, that is, of party politics, was not adopted. The reason was the judgment that those who can reach the level of the leader are very few, and since most people remain followers, party men too would in the end fall into private interest. The argument for party politics was finally buried decisively by Zhu Xi (朱熹, 1130–1200), the doyen of Neo-Confucianism. Zhu Xi strongly criticized the forming of factions, arguing that factions in the end pursue the private interest of the group rather than the public interest. (A thousand years later, cases arise in modern states that test this argument anew. The legislatures’ approval of around 20%, seen earlier, is an example.)

Whose responsibility is it to restrain the pursuit of private interest by the tribalists? In the end it falls to the government. This is why the concept of shuzhi (術治), governance by statecraft, becomes important in the government’s statecraft: because it is hard for the market to pursue the public interest of fair competition, and government management is needed. Economists point out that in the twenty-first-century world economy, marked by the financial revolution, everyone should benefit from fair competition, but this is hard to keep. They point out the paradox that the problem is that “there is little incentive for the important work of protecting the public interest of fair competition”:

Markets are not free, and in practice cannot be very free, because markets rest on a very fragile political foundation. Everyone benefits from competitive markets, but the crux of the problem is that no one gains much from the effort to keep the economic system competitive and the game fair. Even capitalists cannot gain from promoting fair competition. Regrettably, capitalists keep asking the government for protection from competition, and by doing precisely this they become capitalism’s greatest enemy.⁴⁸¹

The pursuit of private interest by big business has become the greatest concern of the market economy in the early twenty-first century. Reports never cease, day after day, of the greed of financial capital and financial firms in particular, which ignore the public interest and endlessly pursue only their own gain. The Western market economy has made no provision against this. In the West, rather than seeing tribal greed as a fundamental problem, it seems still to be believed, as basic philosophy, following market-economy thought since Adam Smith, that “the greed of tribes, even unintended, is led by the invisible hand to create the public interest.” The fundamental problems now being exposed seem to be recognized only as some exceptions to this basic principle, or as peripheral problems.

Apart from some legal checks, transnational giant corporations, especially financial firms, run their businesses in ways that are ethically unacceptable, and governments take no action. During and after the 2008 financial crisis, ordinary people witnessed giant financial firms surviving on government support, that is, on the people’s taxes, handing out huge salaries and bonuses among themselves. While governments take no particular measures, awareness of the social responsibility of big business has indeed been spreading in just the last few years, mainly around the United Nations. That is, movements such as “corporate social responsibility” (CSR), “creating shared value” (CSV), and “environmental, social and corporate governance” (ESG) are drawing some attention. These movements would have companies, though legally under no obligation, restrain their tribal greed of themselves with a sense of ethical responsibility. But such movements lose their force before the basic purpose for which companies are founded, the pursuit of profit. They can only stay at a secondary level. So these recent movements are sometimes judged to remain still at “the level of charity: let us help others where we can.”

In the end, with the financial revolution, the system of relations between mighty financial capitalists and the political world linked with them has emerged as the greatest enemy of the democratic market economy. Making the rules that govern it is as hard as finding and keeping the mean:

Competitive markets consist of a delicate mean between having no rules and having suffocatingly many rules. The state in which capitalism works best is very unstable precisely because the ground of this mean is very narrow. This state easily degenerates into a system of vested interests, by vested interests, for vested interests. Historically, the capitalism we have experienced has been capitalism of just this kind. And unfortunately such capitalism still flourishes in many places on earth.⁴⁸²

The West’s lack of philosophical provision against tribalism was a problem at the very beginning of laissez-faire, because the purpose of laissez-faire lay in guaranteeing individual freedom against mercantilism, with its thorough government interference. Laissez-faire is defined as “the economic thought that guarantees the individual’s freedom of economic activity as far as possible and excludes state interference as far as possible.” The philosophical system in which private interest creates the public interest through human nature comes to have influence. In the end Western laissez-faire, unlike the idea of wuwei (無爲, non-action), came to stress the pattern of giving “freedom” to individual autonomy. In the end we must hold a fundamental doubt about the laissez-faire Adam Smith argued for.

3) Shuzhi (術治): A Philosophy for Protecting the Public Interest from Private Interest

The theory of the conflict of private and public interest and the theory of their convergence arise from the difference between East and West in their philosophy of “human nature.” The East takes the position, in its theory of human nature, that since human nature is made up of powerful selfishness and weak altruism, it must be managed. The theory of human nature of Adam Smith and others in the West, by contrast, started from the philosophy that human nature is good, so it takes as its basis a laissez-faire that would leave things to human action. So the Eastern theory of human nature offers, at the level of managing human nature, a political philosophy opposed to Western political philosophy. This political philosophy becomes an element needed for the leader’s power to govern. This is precisely the concept of statecraft the East values. It is the idea that, in light of human nature, the public interest can be defended in a political-economic system only by using the philosophy of shuzhi (術治).

The Legalists of the Warring States period produced a thinker named Han Feizi, who left writings unifying Legalist thought. Over the centuries of the Warring States period, seven states tested ways to strengthen national power in order to survive. Rule by shi, by law and by shu, using shi (勢, strategic momentum), law (法) and shu (術, statecraft), came to the fore. In his book Han Feizi explained comprehensively the statecraft (術) by which the ruler, on the basis of his power (勢), can effectively operate laws and institutions (法). Han Feizi held that when a king governs the country and deals with his officials, he must keep in mind that the public and private interest conflict. He took up the concept of shuzhi, widespread in the Warring States period.

His philosophy of shuzhi was taken from the political thought of Shen Buhai (申不害). He held that when the king sets the law, the laws of the state must be set and managed in a direction that makes officials abandon, in their minds, the thought of taking private gain while carrying out the public interest. At the same time he stresses that the leader must set an example.

Shen Buhai was chief minister of the state of Han (韓) in the Warring States period, known as a master of xingming (刑名). He lived in the fourth century BC. A Legalist thinker who valued shu (術, statecraft), he held that when the ruler governs his ministers he can secure his power through xingming. He held that ming (名), which refers to the ruler’s orders or to offices, and xing (刑, also written 形), which examines whether the ministers carry them out well, were the core of running the state. It concentrates on the political principle of making what is actually done (刑, that is, 形) match office and word (名). The principle is that ministers must do the work fitting their posts, and are punished if their words and deeds diverge. By this the ruler set objective standards for assessing ministers, and could keep the initiative of power. The core of shuzhi lies, in the end, in this being most important: examining whether officials or ministers harm the public interest and pursue private interest, and setting it right. He argued that the shu (術) of xingming by which the leader handles his ministers is the shortcut to a rich country and a strong army. His thought of shuzhi led, through the Warring States period, to the establishment of personnel administration and bureaucracy in China and the East.

The core of Shen Buhai’s philosophy is to make the country rich and strong by making ministers abandon the constant temptation to pursue private interest and pursue the public interest. Shen Buhai stressed the agreement of ministers’ words and deeds and sought to achieve it through institutional and administrative management; he sought to establish a predictable order by assessing ministers’ conduct according to law and institutions, rewarding merit and punishing faults. Sima Qian’s Records of the Grand Historian judges Shen Buhai’s learning of xingming (刑名之學) to be grounded in Huang-Lao thought (黃老思想).⁴⁸³ He sought to govern the country by uniting Legalist and Daoist thought.

The role of shuzhi does not end just because the nation-state has been founded and bureaucratic and administrative institutions have been put in place. Since the core elements of shuzhi stem from the theory of human nature, they do not disappear from human society through institutions but go on working. Shuzhi planted deep in Eastern civilization a political-economic philosophy grounded in the theory of the conflict of private and public interest. Its importance grows rather in the course of the development of social institutions, because distinguishing private from public interest has become all the harder. As political economy becomes important, the responsibility of managing the greed not only of officials but of business falls to the government and the people, because cases of pursuing private interest through links between legislature and business multiply.

In the Eastern countries the culture of shuzhi is strongly maintained. Singapore can be cited as an example that especially valued shuzhi in running the state. Early in his rule, in 1960, Prime Minister Lee Kuan Yew took, before anything else, the shuzhi measure of forbidding public servants to pursue private interest. He promulgated the Prevention of Corruption Act. He gave the Corrupt Practices Investigation Bureau, set up by the British colonial government in 1952 to investigate corrupt officials, strong investigative and judicial powers. The Corrupt Practices Investigation Bureau (貪汚調査局) is Singapore’s specialist anti-corruption investigative agency. Reporting directly to the prime minister, it operates more independently than the police or prosecutors. It is the core body that investigates acts of corruption across society, by public servants, companies and individuals alike, and maintains a clean society. Singapore became one of the cleanest countries in the world. It ran the state successfully by forbidding public servants to pursue private interest while guaranteeing them some of the highest salaries in the world. It is a case of success in setting the direction the state should take by putting emphasis on the Eastern concept of shuzhi.

The concept of shuzhi is not confined to the East. In the West there was a leader who, pointing out the problems of the theory of the convergence of public and private interest, pointed out the vast negative influence the problem has on the state’s administration. President Eisenhower gave a farewell address on leaving the presidency on 17 January 1961. In it he openly warned that the tribal conduct of the military-industrial complex, in pursuing private interest, causes great problems for running the state in pursuit of the public interest. He was pointing out that the conduct of the military-industrial complex is tribalism ignoring the public interest and pursuing private interest, and the problem that government comes to feel powerless against it.⁴⁸⁴ He warned that the union of defense and business could erode democratic institutions and the people’s freedom.

This points out that the very phenomenon that, according to the Eastern civilization’s philosophy that “public and private interest conflict,” should be met with shuzhi is occurring in the West. The Western political-economic system, which believes in the philosophical theory offered by Adam Smith and others that “public and private interest converge,” stands basically defenseless on the question of shuzhi. So tribal conduct keeps spreading in the West. The global financial crisis of 2007–2008 and the euro crisis of 2009–2011 are not simple financial or economic problems. Beneath them lie fundamental and philosophical problems, at the level of political economy, concerning market-economy thought and democracy as the system managing the market economy. The West keeps repeating big government, heavy taxes, many regulations, a widening gap between rich and poor, and welfare expanded by borrowing. The 2007–2008 financial crisis was caused by tribalism: financiers, legislature and executive together pursuing their own interests. In the end the United States offered no solution to this financial crisis and passed it over with makeshift measures. This is the conclusion the bestseller Saving Capitalism from the Capitalists, published in 2003, had already reached, five years before the crisis: the greatest threat to the market economy is not a return to socialism, but comes from the tribalism that would pursue private interest within the market-economy system.

The philosophy of shuzhi also shows in how East and West handle the collusion between giant corporations and the press. In the United States and the West generally, giant corporations are freely allowed to buy and use media companies. We must examine carefully whether to see this, as the West claims, as “press control or damage to liberalism,” or as “managing the pursuit of private interest by tribalism.” Seen through the eyes of shuzhi, it is the pursuit of private interest by tribalism, which must be managed.

The military-industrial complex, knowing the importance of the press and public opinion for the tribal pursuit of interest between the military and industry, has an ever greater and more powerful desire to use them. Powerful giant corporations in the United States race to buy media companies. The West too has begun to take an interest in this problem. President Biden gave a farewell address very like President Eisenhower’s in January 2025. In it he pointed out the situation recently unfolding in the United States of giant corporations competing to own media companies, and pointed out that the tie between these giant corporations and the media exerts an astonishingly powerful influence, to the point of threatening democracy.

Analyses comparing the “Washington Consensus” and the “Beijing Consensus” on questions of political economy can also be seen as showing this other face of the civilizations of East and West. Generally the former puts forward a model of liberal democracy with economic development, and the latter a model of authoritarianism with economic development. Such comparisons of models can be Western-centered, since the present trend is grounded in Western liberal thought. But the models of political-economic development of East and West hold a civilizational side that would concentrate on the principle of self-preservation rather than analyzing by concentrating on freedom. The theories of the conflict and of the convergence of private and public interest become the important perspectives. In Western political-economic thought, which follows the latter, the perspective of shuzhi becomes a concept not valued. But shuzhi, which guards against officials and administrators harming the public interest and pursuing private interest, becomes an ever greater question as social structures grow complex.

Tribal conduct applies as it is to political parties, the core of democracy, and becomes a problem. In democracy it matters that the premise be kept that the people elect able persons as leaders, and these leaders work for the public interest, that is, for the people. But in Western political systems the premise of the public interest first is gradually fading. To solve the problem the West attempts improvements to political institutions, such as increasing transparency, and ways of drawing citizens to take more part in politics, because they think democracy keeps developing and so the problem can be fixed.

But considering the military-industrial complex, the financial crisis, and the tendency of legislatures to pursue private rather than public interest, the problem is not one that can be solved simply by improving the system. It must be seen as stemming, before any system, from the unavoidable problem of human nature. Since human beings, whatever they do, follow human nature in the end, politicians too are drawn in the end to self-preservation (in parliamentarism, reelection) rather than the public interest. For want of the concept of shuzhi, the West’s political economy and democracy are running into fundamental problems without knowing it. In the end it results in failing to control the ever-widening gap between rich and poor. The West feels no great sense of a problem about tribalism, that is, about each group, financiers and legislature and even the executive joining in, pursuing the tendency to enlarge its own interests.

Most Western countries have national debts so large relative to GDP that their economies cannot bear them. If things go on as they are, backwardness and decline are plain to see, yet in the West neither politicians nor voters show the resolve or vigor to set it right. This points to the core of the problems the Western countries hold at the level of political economy: precisely the developed-country trap the West is showing.⁴⁸⁵ It is directly linked to the “absence” of the concept of shuzhi developed by the Eastern theory of human nature.

Shuzhi and the Idea of Wuwei vs Laissez-Faire

The East, in following the West’s law-centered political system, seems to have forgotten the concept called “shuzhi.” But though no direct attention is paid to the word, nor is it cited, its importance lives on as it is in Eastern culture. The philosophy of shuzhi, that the public interest must be protected against private interest, is deeply lodged in Eastern culture through stories and lines of verse. Maxims and anecdotes cited earlier, such as turning from the private toward the public (背私向公) and the public first, the private after (先公後私), go on being used and respected.⁴⁸⁶

The concept of shuzhi appears as the protection of the public interest. Against the Western system that argues for the convergence of private and public interest, the East takes as the starting point of its political-economic system the philosophy of their conflict. The concept of shuzhi rests on the philosophy that human beings are ruled by a human nature found alike in individuals, groups and national leaders. That is, all human beings are born with a human nature that tends to pursue private interest over the public interest. So this human nature needs not leaving unchecked but management. The idea of wuwei represents the philosophy of managing the public interest that shuzhi pursues.

By the idea of wuwei, all political parties and special interest groups in this world are regarded as tending in the end to pursue a tribal selfishness. They come to show a tendency to aim, in the end, at extending their own greed as far as possible while evading what the law limits. In the end, as Professor Olson pointed out with outstanding insight, all human beings have as an instinct the nature of the “stationary bandit,” who seeks the greatest possible extraction, that is, to collect high taxes. This applies not only to the statist monarch but to the greed of parties and giant corporations expressed as tribalism. Only with a device restraining this instinct is the public interest maintained while protecting the economic autonomy of the individual.

Why did such different phenomena arise in the political-economic systems of East and West? Though it is true that Adam Smith showed early alarm about tribal greed, Western market-economy thought, as seen in Adam Smith, had from the start as its gist the argument for laissez-faire for the individual against the greed of the state, so it was hard for it to guard sufficiently against tribal greed. So it only pointed out that the greed of tribalism, of groups of individuals such as special interest groups, would be a problem, and raised no philosophical issue. That is, staying within the self-contradictory dichotomy that statist greed is bad and individualist selfishness good, it guarded against tribal greed only as a partial deviation from individualist selfishness, good in principle. But now, as the scale of the economy has grown and globalization has spread, transnational corporations and transnational financial firms have arisen whose influence is beyond comparison with that of most countries. The threat the greed of these transnational corporations poses to the market economy has become more serious than the greed of states in the past.

In the West, since individual selfishness had from Adam Smith on been seen as sound and positive, the greed of multinational corporations, an extension of individual selfishness, has been dealt with not as a fundamental problem but by symptomatic treatment, offering only local remedies as problems arise. That is the antitrust law and the like developed centered on the United States. A philosophical problem is involved here. By the early twenty-first century the harm of tribal greed had become so plain on two levels that it could no longer be ignored: one is the greed of transnational corporations in the economy, and the other the greed of parties to keep power in politics. The former threatens the market economy, and the latter democracy. And the two greeds are joined: two sides of a coin.

In the West the problem of Adam Smith’s invisible hand grows ever larger as polarization. A problem has arisen with the theory that human selfishness creates the public interest through the invisible hand. Adam Smith wanted to define the invisible hand, the creation of the public interest from selfishness, as “a law of nature”: the theory that private and public interest converge of themselves even with no watchman. But if on the contrary selfishness is linked not to the public interest but to widening polarization, a problem arises in the whole Western political-economic system. If private and public interest conflict, as the Eastern idea of wuwei argues, making private interest lead to the public interest is the responsibility of the leader. But in the Western political-economic system the leader is powerless before the power of tribalism and cannot watch. There comes to be precisely no answer to the question of who will watch the watchmen.

The East’s way of dealing with statism differed from Western democracy. It relied on minben. The East, on the basis of the idea of wuwei, dealt with statism through law and ethics. But the king was in practice not subject to law. This did not change even in the eighteenth century, when the idea of wuwei entered the West as laissez-faire: the rule of law was lacking. Eastern thought, relying on the ethics of minben, had until the seventeenth century a political-economic system more favorable than Western mercantilism. But it had one essential problem: the question “who will watch the watchmen?” remained for the leader, because the checks on the leader relied on ethics alone. On this point the Western concept of law brought surer results than Eastern ethics in the change of government.

The East, holding to a system without an institution for replacing leaders, in which a hereditary leader keeps power by his abilities until his death, came to rely excessively on the leader. This system lasted thousands of years. So the concept of checks and balances by scholars relying on ethics ran up against its limits in the lawless tyranny of a hereditary leader when he was incompetent. Entering the twentieth century, the East imported from the West the institution of replacing leaders by law, and is attempting to bind the philosophical system of democracy onto minben. Most of the East seems to be succeeding in the peaceful replacement of leaders. Ethically it was prepared in part, having already in the fourth century BC offered Mencius’s concept of the change of mandate (易姓革命). He argued that if the ruler loses virtue he is no longer qualified to be ruler and must be replaced. Mencius stressed minben, that the people are the foundation, and the idea of serving the people, that the state flourishes only when it serves the people.

The West solved the institution of peacefully replacing leaders through law. The West has established the replacement of leaders through democratic institutions, and is conducting the experiment of leading through checks and balances among the executive, legislature and judiciary. But legally it is running into another problem, not the leader. Not the leader but tribalism is causing the phenomenon of destroying this system of checks and balances among the separated powers, because the business of giant corporations is colluding with the legislature. The pattern of leaving things unchecked in laissez-faire solved the problem of statism, but problems arise in tribalism, and it shows no remedy at all for them.

The idea of wuwei is a primal philosophical reflection on human conduct that goes beyond the conduct of the rule of law. It is on a different plane from the Western idea of laissez-faire. The idea of wuwei is the root idea of Daoism. In economics the idea of wuwei distinguishes the economic conduct of nature from the economic conduct of human beings. The economic conduct of nature concentrates on achieving balance: the principle of the ecosystem. But human economic conduct widens differences and makes the poor poorer and the rich richer. It points out that the conduct of nature and the conduct of human beings differ, because human greed, which does not exist in nature, is at work.

The Dao of Heaven takes from those who have much and helps those who have nothing. The Dao of man takes from those who have nothing and helps those who have much. (Daodejing 77)

Here East and West come to show a fundamental difference in political economy. The economic conduct of nature, as Mandeville showed, includes the world of bees and all the animal world. And the keynote of the philosophy fashionable in the eighteenth-century West was that human beings should follow the conduct of bees. Its keynote was the praise of selfishness: applying the economic conduct of nature as it is to human political-economic conduct. Here the West’s “invisible hand” comes to play its role: the idea that if human beings, like bees, follow individual selfishness, the public interest is created of itself by the invisible hand.

But seen from Eastern civilization, human nature does not follow the economic conduct of nature. Human nature goes on making human economic conduct. In the animal world “selfishness without greed” is at work, and so the principle of the ecosystem arises. But in the human world “selfishness with greed,” which no other animal has, is at work. Greed becomes “the grabbing hand” in the human economy. Wherever human beings exist in the economy, grabbing hands unavoidably arise everywhere. The West concentrated only on statism, but this grabbing hand becomes a hand that harms the public interest in the fields of statism, tribalism and individualism. But because the grabbing hand is inherent in human nature, it is not confined to statism, the government leader. It applies to tribalism and individualism alike.

Here the Eastern idea of wuwei differs in philosophy from Western laissez-faire. One of the cores of the idea of wuwei is that the public interest, which helps everyone, must be specially protected because it can easily be damaged by private interest, by individual greed. Judging by human nature, individual interest easily advances into greed and only exceptionally into altruism. So for the balance of society one must strive through “ethics” to lead individual interest not into greed but into altruism. Here the culture of ethics at the center of Eastern civilization arises. This is why Eastern civilization values the concept of “shuzhi, which guards against the pursuit of private interest under the pretext of the public interest.”

4) The Core of Shuzhi: How Are the Pursuit of Profit and Greed to Be Distinguished?

In human economic activity, the pursuit of profit and greed must be distinguished. The core of the philosophy of shuzhi, which would protect the public interest from private interest, lies precisely in distinguishing the pursuit of profit from greed. But law cannot distinguish them. The West has a strong tendency to separate the economic viewpoint from the ethical. But in the East the two viewpoints keep a deep relationship through syncretism. The core of Daoist and Confucian philosophy is a “political-economic” character that values ethics in economics. A leader, the sage of Daoism or the junzi (君子) of Confucianism, cannot be a leader without establishing himself ethically. “The leader seeks virtue; the follower seeks gain.” “A leader who understands the Dao is free from greed.” This ethical thought of Confucianism and Daoism becomes the first virtue of the Eastern leader. The West would manage the economy by law, keeping ethics at a distance. But from the standpoint of law there is a problem, because it is a field where law cannot determine where the pursuit of profit ends and where greed begins.

The pursuit of profit is the core of the economy. As Xunzi and Adam Smith declared, selfishness is the root of human economic activity. Locke expressed it thus: “Where there is no desire, there will be no industry.” So this desire, that is, selfishness and the pursuit of profit, must be justified. But selfishness harming the public interest and developing into greed must be prevented. Here lies the problem. Greed must be managed. In justifying the pursuit of profit, Western laissez-faire plays its proper role. But laissez-faire, having no watchman, falls prey to greed.

The tendency not to distinguish the pursuit of profit from greed often arises in the West, which values law over ethics. In the West the expression “Greed is good” appears. The Wall Street investor Boesky first used it, in the words “Greed is all right,” in a commencement speech at UC Berkeley in 1986. He explained that greed is healthy, and that you can be greedy and still feel good about yourself. The expression became famous as a line spoken by the character Gordon Gekko in the 1987 film Wall Street. In the West it is argued that greed contributes not only to individual success but to economic development. Since the 1980s this expression has taken its place as the phrase representing the spirit of American financial capitalism.

In the West the expression “Greed is good” has become a symbolic phrase quoted both to glorify greed and to criticize it. It holds the free-market capitalist logic that greed can promote economic dynamism and innovation. The claim that greed pursuing individual gain can raise corporate growth, competition and efficiency and increase the wealth of society as a whole runs in the same vein as Adam Smith’s theory of the “invisible hand,” in which private interest creates the public interest, and Milton Friedman’s logic that “the social responsibility of business is to maximize profits.” Greed is by origin excessive desire, and can do harm to others and to society. But at the same time human desire is the driving force of development and achievement, and so this confusion arises. It becomes an even more central problem in the West, which relies only on law rather than ethics.

The phrase “greed is good” stresses the positive side of capitalism, but is criticized in that excessive greed can bring about inequality, environmental destruction and social instability. But because both concepts, greed and profit-seeking, start from the desire of “wanting more,” the boundary is blurred. The same act can look like greed or like legitimate profit-seeking depending on context. For example, a company’s profit maximization is normal activity in economic terms, but if it ignores social responsibility it is criticized as greed. The distinction between greed and profit-seeking is not absolute, and varies with social norms and values. That is, it falls within the category of ethics.

The pursuit of profit, as the essence of business activity, is recognized as legitimate economic conduct. The basic purpose of a company is to maximize profit for shareholders and stakeholders. But when it becomes greed it must be prevented. Yet greed is an ethical and moral concept with no clear legal definition. So it is hard to punish or sanction anyone in court merely for being “greedy.” Law mainly regulates illegal acts (price-fixing, abuse of monopoly, fraud, unfair trade and the like), and does not directly regulate the motive called ‘greed.’ Legally ‘greed’ cannot be separately defined, and sanctions are possible only when an illegal result has occurred. But at the social and ethical level, when a company shows ‘greed’ beyond mere profit-seeking, criticism and demands for regulation grow. At the ethical level the pursuit of profit and greed can be distinguished. The public interest being damaged by the expression of an endless desire to own and dominate is the very type of greed. So greed is punished by law after the fact, when an illegal result has occurred. Before that, human society relies on “ethics.”

In Western civilization, which has the rule of law as its backbone, law is taken as the most important reference point of human conduct. In Korea too, much influenced by the West, calling for “the rule of law” has become something of a fashion. But ethics matters no less than the rule of law. We need to understand why Eastern civilization values ethics more than law. It is because the West’s theory of the convergence of private and public interest holds that everything can be solved by law, whereas the East’s theory of their conflict holds that social order is kept only by putting the emphasis on ethics. The West holds that in the expression of the selfishness and altruism of human nature, altruism in the end “wins of itself”; the East holds that only when powerful selfishness is managed by ethics and law can weak altruism strike a “balance” with it.

These traditions of law and ethics in East and West are not absolute. That is, one cannot give them the absoluteness that mine is right and yours wrong. It is more to the point to see them as reflecting the geopolitical character of each region. In East Asia the Daoist and Confucian ideal that the leader must be a person of “virtue (德)” and “moral legitimacy” emerged as ethical sense. Wealth was thought to be tied to private desire and to conflict with public leadership. There was the perception that “the rich, if they take part in politics, pursue private interest.” As virtues of the leader, rulers prized frugality and integrity, and excessive wealth instead bred distrust. Sima Qian makes clear the relationship between wealth and human nature in the Records (Records 129:29): as quoted earlier, when another man’s wealth is “ten thousand times” one’s own, “they become his slaves.” In the West too the saying “Behind every fortune there is a crime” is often repeated.⁴⁸⁷

In the West, by the geopolitical tradition of the culture of conquest, from Greek and Roman times the nobility and the wealthy often monopolized political power. Wealth was the very foundation of power. After the Middle Ages too, it was naturally accepted that wealthy classes, feudal lords, merchant capitalists, bankers, exercised political influence. Even in the age of modern democracy, with the development of capitalism, the reality that “wealth and power are not separated” was institutionalized. In the West political leaders depend heavily on large asset-holders and corporate backing. In a spirit of mutual aid, leaders back their interests with law. In political-economic philosophy, the theory of the trickle-down effect comes to protect the bond between wealth and power.

The ethics of the East and the law of the West are the backbone of their political-economic systems. But the East, while putting ethics first, went on building a system that uses ethics and law together in suitable ways. Xunzi already argued before Christ that human nature must be managed by “ethics and law” for social order to be kept. This Eastern syncretism is the “Confucian outside, Legalist inside” and the Huang-Lao thought mentioned earlier. The West, however, under the influence of revealed religion, metaphysics, ideology and the like, relies too heavily on law and takes almost no interest in ethics, especially at the level of political economy. Human society has many problems hard to solve by the rule of law. Ethics must enter in.

Confucius and Jesus alike put resolution by ethics before taking problems to law. Both thinkers, one might say, held law to be the last resort, and that human society must first resolve problems by ethical agreement and moral practice. The thought of “ethics before law” holds because if society is run by law alone, only compulsion and punishment remain, and people’s voluntary morality disappears. This drags the whole society into a structure that makes problems harder still.

In questions of political economy, the pursuit of profit is guaranteed by law, and greed restrained by ethics. Adam Smith’s theory of the invisible hand comes to play the role of freeing human economic activity from ethics. Greed remains as it was. The theory of the invisible hand in the end brings about polarization through the union of business and legislature, because business and the leaders are in the same boat. But by the Eastern theory of the grabbing hand, the leader has as his greatest duty the ethical responsibility to prevent polarization. That is, he must concentrate on protecting the middle class rather than on polarization. In Eastern history too, when the king joined in polarization and enjoyed wealth, that dynasty fell and a new dynasty rose to replace it. The new dynasty began by concentrating on removing polarization, with measures that cut taxes sharply.

The management of human selfishness: between the two philosophical systems of East and West, the East’s grabbing hand and the West’s invisible hand, which philosophy creates and protects the middle class proves its validity. However large the national economy grows, a country in which the gap between rich and poor keeps widening cannot work properly. Only when the middle class is strong can the state show its full efficiency. Yet Western political economy is used to making the rich richer. The invisible hand, on the basis of individualism, makes the rich, and the logic is that the economic activity these rich create brings forth the middle class through the trickle-down effect and the like. Is that so?

Western values are founded philosophically on the individual. For Westerners religion, metaphysical truth, law and the like take priority over relationships with other people. But while the values inherent in these devices matter, we must beware that the desire to use these devices to rule others and enlarge oneself can also be at work. Analyzed in political-economic terms, many laws Western legislatures enact, while holding up many merits, also end by growing the wealth of tribalism and widening the gap between rich and poor. The rich grow richer, and the middle class shrinks and grows weak.

As we have seen several times, Western political economy is intellectually defenseless against individualist selfishness. Of course Christianity takes issue with human nature through the sense of original sin, and the Gospels clearly warn against material wealth and take issue with it at the ethical level. But most modern Western political-economic thinkers seem to have held that ethics has nothing to do with political-economic thought or individualist selfishness, because, as Adam Smith did, they start from a human nature held to be good.

Eastern Confucianism and Daoism, by contrast, take as their core vigilance toward, and management of, human nature and selfishness at the ethical level. Of human nature the most powerful part is selfishness. The leader must grasp the essence of this selfishness. “Free from selfish desire, one sees the source of the Dao. Within selfish desire, one sees only the Dao’s manifestations” (Daodejing 1). Xunzi, through his vigilance toward human nature, makes clear to leaders and people the starting point for keeping social order: “Human nature craves gain and pleasure, so following it leads to clashes and yielding disappears. Following human nature alone, people easily fall into envy and hatred, so sincerity and trust vanish” (Xunzi 23:1).

In the West, since individualist selfishness is not regulated by ethics, the logic applies that “everything not forbidden by law is legitimately permitted.” As a result individualist selfishness works all the more vigorously in the Western market economy. The whole of Confucian thought can be seen as an account of the ethics human beings need for social life and of the self-cultivation needed to take it to heart, and Daoism too stresses again and again the importance of ethics and morality. For this reason the civilizations of East and West posit very different prescriptions for human nature. The Analects explains precisely that ethics must be kept before law: “Lead them by laws and keep them in line by punishments, and the people will evade them and have no sense of shame; lead them by virtue and keep them in line by the rites, and they will have a sense of shame and set themselves right” (Analects 2:3).

In the West, even now, discussions of political economy concentrate on law. Ethics is left out in most cases. In the East, by contrast, ethics such as diligence, thrift and freedom from desire have their place at the core of political economy. The work ethic of Eastern political economy comes from vigilance toward selfishness. “A leader who understands the Dao is free from greed. He does not prize goods that are hard to get” (Daodejing 64). Such a leader holds that “in governing people and serving Heaven, nothing is better than frugality. Being frugal is following the Dao early” (Daodejing 59). In dealing with people the leader values three things: “Cherish three treasures. The first is compassion, the second frugality, the third modesty” (Daodejing 67). Daoism values the leader’s example most of all. If the leader enjoys wealth and takes pride in it, the people of that country abandon the spirit of diligence and thrift.

Human Nature and the Ethical Culture of Diligence and Thrift

The East’s civilization centered on ethics did not arise by chance. Nor can it be made by any policy decision or resolve. It is steeped in history and tradition. The difference between East and West stems from the difference in the concepts of Eastern relationalism and Western individualism in philosophical thought. In a human nature born with powerful selfishness and weak altruism, social order is kept only by putting first an ethical culture of diligence and thrift. Eastern ethical culture has a philosophical background different from the West’s. Max Weber (1864–1920) explained the Protestant work ethic in his work The Protestant Ethic and the Spirit of Capitalism, published in 1904. He valued the Protestant work ethic highly as the spiritual pillar of capitalism. But Weber’s work ethic differs greatly at its root from the Eastern work ethic.

The Protestant work ethic: the “attitude of diligence and thrift” of the Protestants that arose after the Western Reformation of the sixteenth century was believed to appear in the individual as a sign of having received God’s blessing (grace), as a qualification for going to heaven. So one and all, out of religious zeal, came to have “an attitude of diligence and thrift.”⁴⁸⁸ And the argument is that this spirit of diligence and thrift led to the accumulation of capital and the growth of investment, making Western capitalism possible. This thought seems to have a considerable relationship with the Western eschatology carried on from the Middle Ages into the early modern era. Since they believed that only the blessed would be saved when the end of the world came and Jesus returned, it is highly likely they sought to show the sign of working hard.

But now, even in the West, few seriously believe in a religious end of the world. Then the Puritan work ethic disappears, because the ground for believing that those who work hard receive God’s blessing and go to heaven disappears. In time this change coincided with the leaving unchecked of selfishness in modern economics, founded by Adam Smith, so that in the West, unlike the East, the attitude of “enjoying pleasure right away whenever possible” (instant gratification) arose together with consumer culture. Niall Ferguson, in his 2011 book Civilization: The West and the Rest, explains precisely the correlation between the work ethic and religiosity in the West. That is, he draws the conclusion that Europe has a far weaker work ethic than America, and that Europeans are also less religious than Americans. He offers statistics that Americans work about 20% more than Europeans, and that church attendance reaches 36% among Americans against about 10% among Europeans.⁴⁸⁹

The Eastern Confucian work ethic, by contrast, is done, as said before, for one’s own benefit, and so has a firm foundation. Ferguson too, in the book above, writes that Easterners work about 30% more than Americans.

Of the work ethic, what most directly affects political economy is diligence and thrift: how hard one works and how much one saves. In this the Eastern work ethic applies to individuals, tribes and the state alike, showing very high rates of investment and saving compared with the West. Ferguson compares in his book how very high Western national debt is, and its problems. The American economic journalist and author Paul Blustein points out that the United States keeps buying foreign goods with dollars it can print at will, and this accumulates as it is into American debt.⁴⁹⁰ Ferguson saw that U.S. debt, 32% of GDP in 2001, had soared to 66% in 2011, and foresaw that if the rate of increase of 2011 continued it would rise to 90% in 2021, 150% in 2031 and 300% in 2047. What makes the problem more serious in the United States is that this enormous national debt does not include some 100 trillion dollars of health insurance, social security and pension liabilities, so American national finances are very grave. He diagnoses them as in a worse state than Greece when it ran into trouble.⁴⁹¹

The so-called twin deficit, in which a fiscal deficit and a trade deficit occur at once, sets off an economic crisis a country cannot bear. Only countries with a reserve currency, like the United States, are the exception, because they can keep printing money. This is why the United States keeps its national strength while running twin deficits. How long can this state of affairs go on?

Concerning individualist selfishness, the West’s leaving it unchecked gave birth to the West’s culture of consumption and debt, and the East’s thought of managing and restraining individualist selfishness gave birth to the East’s culture of diligence and thrift. The East, in the ethics at the base of its civilization, has strengths in its fundamentals over the Western political-economic system. It appears as the sense of a work ethic. That the East has, at root, stronger competitiveness and a brighter future than the West stems precisely from this sense of a work ethic. This is why ethics matters in political economy. Diligence and thrift, or setting an example, cannot be laid down by law. They are the jurisdiction of ethics.

This work ethic has deep roots. Poivre, one of the French Physiocratic thinkers we looked at above, traveled in the East in the mid-eighteenth century and wrote of the Eastern work ethic as follows:

The idle were objects of the harshest contempt. An idler was treated as a member of society who ate away at it like a parasite. The government, too, did not leave such idlers alone… Traditionally everyone was supposed to work, and the idea was spread deep and wide among the people that if in one corner of the country someone did not work, in another corner someone would go hungry and suffer because of it.⁴⁹²

The deep-rooted work ethic that Poivre found and admired in the East in the eighteenth century values the East’s education, restraint and self-cultivation, with their emphasis on ethics. So the importance of education has been stressed in the East from early on. Confucius stressed, “By nature people are close to one another; through education they grow far apart,” and “In education there should be no distinction of classes.” Eastern education, grounded in human nature, concentrates on an ethical culture of diligence and thrift and on training leaders.

The value system inherent in the East’s spiritual culture takes as its core the ethical values Western philosophy neglects. In a word it is diligence and thrift. The work ethic stressed through education is a question not of law but of ethics. What ethics insists on is precisely vigilance against greed. The distinction between the pursuit of profit and greed can be approached through ethics. And such ethical sense cannot take root in society unless the leader sets an example.

The Leader’s Example: The Junzi (君子) and the Sage (聖人)

Eastern civilization concentrates on how to train leaders and have them govern the country. The Daoist idea of the sage resembles the Confucian idea of the junzi (君子). The Confucian idea of the junzi stresses the moral human being who fulfills moral cultivation and social responsibility, and the Daoist idea of the sage offers the ideal human being who becomes one with nature and realizes wuwei ziran (無爲自然), non-action in accord with nature. But both refer to the leader. Eastern thought, through the contrasts of Confucianism’s leader and follower (xiaoren, 小人) and Daoism’s sage and people, stresses the role of the leader in having people follow the leader or the sage rather than go along with followers and the common people, the masses. The emphasis on the ethical role of the leader in political-economic terms is especially important in Eastern education.

The ethical role of the leader is especially stressed in the system of relationalism, which contrasts the leader with the follower. The West, following individualism in education and human cultivation, stresses individual perfection. In ancient Greece too, as seen in Plato and Aristotle, the importance of education was stressed, but education put its emphasis on the individual’s acquiring of knowledge, the pursuit of happiness and the like. Aristotle’s ethics stresses virtues such as justice, courage, temperance, generosity and the doctrine of the mean, but it explains logically how these ethical values bring about individual happiness; it does not put its emphasis on how these ethical values can be cultivated through education and contribute to society. Spinoza’s Ethics, published in the West in the seventeenth century, likewise aims not, like the Confucian Analects or the Daoist Daodejing, at cultivating and educating individual virtue centered on diligence, thrift and service to society, but at “the free man” through inquiry into the nature of God and of human nature. The Eastern philosophical system, by contrast, aims not at revealing the “essence” of things but at “practice.” It concentrates on making good leaders.

Acting is better than understanding. Learning has its end in action. (Xunzi 8:9)

The thought that puts the emphasis of education on the cultivation of each individual’s virtue begins in the West with Locke. This Eastern philosophy of education, established in the fifth century BC, was first expressed in the West two thousand years later by Locke (1632–1704): “Of all the men we meet with, nine parts of ten are what they are, good or evil, useful or not, by their education.” And like Confucius he believed that “all human beings are born equal.”⁴⁹³ But there is an important difference between the Eastern philosophy of education and Locke’s. As a Western thinker, bound by Western philosophy, he underrated the importance of instinct, and there the limit of his theory of human nature shows. The problem with Locke’s education is that it does not acknowledge the role of instinct. Human beings are equal and education matters, but in his theory of human nature he overrated the possibilities of the mind and held that the mind goes beyond the limits of instinct, because values such as the freedom Locke prized cannot stand above the instinct of self-preservation. The freedom the mind gives human beings is very important. But freedom cannot go beyond the principle of instinct called survival.

In Eastern civilization the idea is to manage and guard against selfishness at the level of ethics. In the end the answer that resolved ethically the boundary between greed and the pursuit of profit, which law and rules cannot settle, is the very essence of the Eastern ideas of the leader and of wuwei. Eastern civilization established these very useful concepts 2,500 years ago and uses them. The junzi (君子) is precisely the image of the desirable leader: a leader who sublimates the people’s interest into his own, a person freed from personal selfishness. The follower, by contrast, refers to most human beings: a person who puts his own selfishness first wherever he stands. He is unfit to be a leader, but history shows that in many cases followers have held positions of leadership. The image of the ethical leader, portrayed in the East as the junzi and the sage, can make a great contribution to modern political economy. The leader’s best virtue becomes not wealth but ethics.

The leader thinks of what is right; the follower thinks of gain. (Analects 4:16)

The leader keeps virtue in mind; the follower keeps property in mind. (Analects 4:11)

The idea of the leader and the idea of wuwei are linked. They planted in Eastern civilization a political-economic philosophy that seeks to minimize the contrived part of human action. It warns especially against the leader’s interference. The Daodejing’s claim that “the leader has no plans of his own, and takes the people’s plans as his own” (Daodejing 49) aims at managing the leader’s selfishness. So the claim that “if the leader guides the state by wuwei, the people accomplish of themselves” (Daodejing 57) is precisely the management of the selfishness called statism. It runs in the same vein as the claim of Sima Qian’s Records (Records 129:1), quoted earlier. All are philosophies that took their place as Eastern political-economic thought before Christ; in the West such political-economic philosophy first appears in the early modern era, two thousand years after the East.

As we saw earlier, the boundary between the pursuit of gain and greed cannot be governed by laws or rules, and so ethics enters in. What matters is the leader’s example. However good the law, if the leader breaks it in all manner of ways, the law is of no use. What stands out most in a leader is the accumulation of wealth. There must be an ethical principle that the rich find it hard to become leaders, and leaders find it hard to become rich. Law can be circumvented in all manner of ways, but wealth is bound to show, and cannot be explained away ethically.

In managing selfishness, Daoism stresses the importance of the leader’s role. It explains that the state can be maintained and develop only when the leader takes altruism as the base of running the state. Ethics becomes enlightened self-interest.

The sage does not accumulate for himself. The more he spends on others, the more he embraces.

The more he gives to others, the more he has. (Daodejing 81)

Confucianism and Daoism alike see ethics and politics as inseparably one, and portray the ethical ideal as the junzi (君子) and the sage; applied to the twenty-first century, the junzi and the sage are precisely the desirable leader. The leader must put first not wealth but an example built on diligence and thrift. “The leader is zealous in building up what is true. He is not zealous in building up wealth” (Analects 15:31). So the leader does not accumulate his own wealth, and concentrates on sharing his abilities for others.

Thus for the Eastern leader ethical standards come before success or victory. In the East relationalism makes up a civilization that works in place of Western civilization’s individualism. The leader takes as his standards altruism (enlightened self-interest), along with setting an example and integrity. Such an image of the leader is not absent in the West either:

When Truman left public office in 1953 there was as yet no pension for former presidents (the Former Presidents Act came only in 1958), and all he received from the government was an army pension of a little over $112 a month. Large corporations offered him highly paid positions, but he turned them down, saying that he “could never lend myself to any transaction, however respectable, that would commercialize on the prestige and dignity of the office of the presidency.”⁴⁹⁴

This is precisely President Truman’s ethics. This spirit is greatly respected in the West too. Cincinnatus, revered as an exemplary statesman and citizen of the Roman era, is just such a figure. Having served with supreme power in Rome, on leaving office he returned home and lived out the rest of his life as an ordinary farmer. He is the legendary Roman who did not covet power and devoted himself to the public interest, a figure George Washington, the first president of the United States, revered. In 1790 a city named Cincinnati was formally founded in America. But this image of the upright, diligent and thrifty leader is not the general image of the leader in the West. From Alexander to Caesar, through the early modern dynasties to Napoleon, the ancient leaders of the West were victors and conquerors, and at the same time held enormous wealth. Following this image of the leader, modern Western leaders are wealthy. But as Mencius pointed out, if the leader is wealthy and pursues gain, his aides under him, and further the whole people, follow the leader and seek gain and wealth. In the end, following this image of the leader, all the people come to want “Wealth and Fame” rather than the pursuit of ethical ideals.

In the East the people still take diligence and thrift as virtues. And as yet this philosophy remains, in practice, general. In the United States, by contrast, the richest of the rich, such as Musk, Bezos, Murdoch and Ellison, own and expand major media. It is the background to the judgment that “whoever controls the media rules the world.”

In Eastern political-economic thought, ethics draws the boundary between the pursuit of profit and greed. A giant corporation taking control of a media company is, in the East, a greed that violates autonomy, and in the West a pursuit of gain that exults in freedom. The rich becoming leaders, or leaders becoming rich, is in the East a violation of autonomy that departs from wuwei, and in the West a laissez-faire that pursues freedom. Such distinctions are a range that law cannot govern within the West’s system of the idea of youwei (有爲, purposeful action). In the East’s system of the idea of wuwei they are the core of ethics.

The people’s spirit of diligence and thrift, and the tradition of the leader’s example of honest poverty: these must be kept. The phenomenon of climate change, bearing down on us so fearsomely all over the earth, comes from greed rooted in selfishness. The greatest problem the AI revolution brings upon us also springs from greed rooted in selfishness: the widening gap between rich and poor. Diligence and thrift, and setting an example, must be the core of ethics and the foundation of political economy. The Eastern political economy grounded in ethics can deal effectively with individualist selfishness, and precisely this is the point at which the East can keep its advantage over the West in the fundamentals of the market economy. In terms of thought, the leaving unchecked of selfishness inherent in the Western political-economic pattern leads toward an economic system of consumption and debt. The management of selfishness inherent in the Eastern political-economic fundamentals leads toward an economic system of diligence and thrift. In no society can everyone become rich. But society can cooperate to help the poor. In a society that cooperates so, the leader must defend the public interest and set an example of diligence and thrift. This is relationalism.

The Western economy, on the basis of individualism, argues the logic that when people become rich, the gap between rich and poor is resolved by the trickle-down effect. That is, the theory is that when benefits and resources are concentrated in the upper strata (the wealthy, large corporations and the like), they flow down through investment, consumption and employment in the end to the lower strata (ordinary people, small and medium businesses and the like) too, and the whole economy grows. But this is a theory that can be explained in the economy of the “conquest state,” which long sustained the Western economy from Greek and Roman times to the early modern age of world conquest. It cannot be explained once the West itself shifted in the early modern era to the economic system of the “nation-state.” Support for the upper strata leads to tribalism, and in the end only impoverishes the middle class and widens the gap between the upper and lower strata.

The political ethics and the political-economic pattern of diligence and thrift are deeply and widely inherent in Eastern civilization. In particular the tradition of the leader’s example, as a philosophical system grounded in relationalism, can be seen as far sounder and sturdier than the West’s. But if the East, while learning Western institutions and norms grounded in individualism, abandons its own culture and tradition of diligence and thrift, it will move from a nation of diligence and thrift to the group of nations of consumption and debt. Then the East will lose its future along with its work ethic of diligence and thrift. Conversely, if the East, while learning the West’s institutions of the democratic market economy, can keep its own spirit of diligence and thrift and its tradition of valuing education and meritocracy, it will have a political-economic cultural system it can hold up for the future. Further, the East will contribute to managing better the upheavals humanity faces: polarization and the AI revolution.