Sun Bin, a very well-informed and intelligent blog on contemporary Chinese political economy, has a post today that suggests that Legalism, an ancient school of thought that emphasizes strict application of clearly defined rules, could provide a market-based answer to contemporary China's legal and economic problems. The key problem, as Sun Bin sees it, is not that there are not enough laws in China, but the laws that do exist are not consistently implemented. He has a good point here, and Legalism is certainly known for emphasizing consistent application of the law. But I think there are two problems with his argument.
[UPDATE: Allan at A Touch of Ancients, enters the discussion with more on Shang Yang and Legalism.]
First, we should be careful to characterize Legalism as a market-based philosophy. While there may be ways it is consistent with markets (i.e. providing a clear legal framework for economic transactions), we should keep in mind that it was Legalists who advocated state monopolies in salt and iron. The prime directive for Legalists is the preservation of the ruler's power. If markets serve that end, then markets are tolerable and fine; but if state power has to be used to regulate markets for the purposes of maintaining the ruler's position, then markets will be regulated. Legalists are far from economic liberals.
Secondly, Sun Bin mentions that Confucianism does not allow for the punishment of officials:
One of the reasons Chinese are reluctant to punish the bureaucrats is the general tolerance of mistake for the learned and authority, perhaps thinking these people are rare treasures(!). This can be traced to the Confucius teaching of 'the non-punishability of the authority (刑不上大夫-礼记), and of course conveniently defended by those in power, especially those who do not deserve to be in power. This MUST be changed.
I don't think this is quite fair to Confucius and, especially, Mencius. Perhaps Confucianism, over the centuries degenerated into a defense of authority for authority's sake. But in the original texts themselves, and again, especially Mencius, we get a clear picture that bad rulers should be held accountable for their actions, and even be removed from office:
If the sovereign is making grave mistakes, they admonish him. If they have to admonish him over and over, and he still refuses to listen - they replace him. (193).
This is the historical legacy that needs to be carried forward in the People's Republic.