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Do Daoist Principles Justify Laissez Faire Policies? A Critical Examination of "Market Daoism"

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International Journal for Field-Being, Vol. 6, No. 1 (2007)
Do Daoist Principles Justify Laissez Faire Policies?
A Critical Examination of “Market Daoism”
Silja Graupe
Introduction
Over the last decade, neo-liberal economists have proposed “Market Daoism” as the most
suitable path of economic development for China. The term implies that part of China’s own
ancient culture, the Daoist philosophical tradition, shares with classical and neoclassical eco-
nomics the vision of a natural and harmonious order and, thus, not only justifies the estab-
lishment of free markets but also “provides the doctrine of laissez-faire with another substan-
tial philosophical leg on which to stand.”1
While conceding that Ken McCormick’s argument is based on a possible reading of Daoist
texts, in this paper, I propose to show that it is based on a certain form of interpretation only,
as are similar attempts to integrate Daoism into neo-classical economics. McCormick, at least
implicitly, identifies ‘Daoism’ with a certain interpretation of Daoism without stating any
reason for doing so. What has probably escaped McCormick’s attention is the fact that many
different interpretations of Daoist texts exist. Historically, Chinese philosophy has been an
interpretative tradition. Various philosophers have developed different explications or even
radically different meanings of certain key concepts. This is still true today, as controversies
within Chinese philosophy come about primarily over matters of interpretation. At the risk of
oversimplifying matters, we can distinguish two different forms of interpretations here:2 The
first is a rather Westernized form of interpretation (WI), which makes use of philosophical
concepts that are not endogenous to Chinese philosophy itself; thus, these interpretations are
thematically dependent upon concepts foreign to Chinese culture. The second form of inter-
pretation does attempt to maintain an indigenous vantage point, explaining Chinese philoso-
phy in the context of China’s own history and language (II). In the case of “Market Daoism,”
I take economists to have made use of the former form of interpretation only. However, given
the foreignness of this interpretation to the Chinese cultural context, we can hardly tell if this
context itself really provides us with concepts that converge with those of laissez faire poli-
cies, as the proponents of Market Daoism claim. To see if that claim is valid, we should ex-
amine whether indigenous forms of interpretations are conceptually close to classical and
neoclassical economics. In this paper, I am going to argue that this is hardly the case. Indige-
nous interpretations of the Dao De Jing and the Zhuangzi, the most important Daoist texts,
develop a completely different understanding of both the social order and human activity, ar-
riving at social implications far apart from those of the Market Daoist economists.
The Different Visions of Order
McCormick’s main reason for arguing that Daoism justifies the establishment of free markets
and the policy of laissez faire is “that the vision of a spontaneous and harmonious natural or-
der that lies at the heart of Taoist thought is conceptually very close to the natural order envi-
sioned by Classical economics.”3 But does the validity of McCormick’s claim depend on WI
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assumptions? In order to answer this question let me first highlight some of the basic charac-
teristics of the concept of the natural order as it has been used by economists in order to ex-
plain social structures and processes.4 This concept usually does not warrant much attention,
because classical and neo-liberal theories are supposed to be thoroughly individualistically
orientated. Thus, economists themselves often overlook the fact that their concept of a ‘natu-
rally ordered’ society regards individuals not as independent and self-determined but as com-
ponents of a pregiven structure. Classical economists in particular claimed “that there is an
order in the universe independent of humans.”5 More specifically, market society seemed
governed by the all-ruling providence of a wise God. Every single event was regarded as a
necessary part of His plan. Here, God is conceived of as an external agency, which imposes
mechanical patterns of behavior upon humans that are considered as part of a unitary cosmic
design. In this way, the harmony of God’s laws rule society. “As He has forever and immuta-
bly predetermined the paths of the planets by the laws of gravitation, He has predetermined
for all eternity and invariably for all men the patterns of their social existence by the laws
governing the power of their enjoyment.”6 As Adam Smith explains, God’s guidance is to be
compared to a Great Mechanic, who purposefully designs social order:
The wheels of the watch are all admirably adjusted to the end for which it was made, the point-
ing of the hour. All their various motions conspire in the nicest manner to produce this effect. If
we were endowed with a desire and intention to produce it, they could not do it better. Yet we
never ascribe any such desire or intention to them, but to the watch-maker, and we know that
they are put into motion by a spring, which intends the effect it produces as little as they do.7
Accordingly, Classical economists considered human acts as derivative and secondary exer-
cises of power, thus following in the Judaeo-Christian tradition, in which “God is the primary
causal agent–perfect and unchanging–existing independently of His actions. And human be-
ings are shaped by Him in His own image. .... The perfection of the universe and the unity of
the Logos or knowledge that defines it is guaranteed by the unchanging perfection of its
Maker.”8
In modern economic literature, especially in the works of neoclassical economists, the market
itself is referred to as the predetermined natural order of society.9 The harmony of social life
appears as a consequence of the market’s laws: Market forces and material laws (material
constraints) are recognized as a condition for the harmonic development of the economy.
Here, the existence of a pre-established market order is simply presupposed without question.
As nature is ruled by natural laws, so, too, is the economy “ruled by a secret law leading to
coordination and alliance.”10 This idea comes into particularly sharp focus when the market
is imagined as a machine, whose mechanisms integrate the many individual parts into a har-
monic whole.11 Here, the market appears as “the anonymous rulings of a depersonalized
communication and sanction system,”12 following its own laws independently of social rela-
tions and history.
To summarize, both Classical and Neoclassical theories generally assume a sort of given
whole, an independent and absolute ‘One’ (God) behind the multitude of economic processes
to which the structure of society can be causally related. The proponents of “Market Daoism”
believe this notion of the ‘One’ to be central to Daoism as well. As McCormick explains:
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Fundamentally, the Tao is the Way behind all ways, the principle underlying all principles, the
fact underlying all facts. In this sense, the Tao refers to the original unity, “the One,” the name-
less and ineffable which existed before the creation. The Tao is also the source of all creation.
(...) The Tao is not only the source of creation, but it is also the power that sustains it.13
But can we really speak of “The Tao of Adam Smith”14 in terms that translate to II? To begin
with, many Western interpretations of Daoism proceeded by assuming that the translation
“Tao” (or “Dao”) as “the Way” is unproblematic; for these interpretations, Daoism posits the
existence of some permanent reality behind appearances, some unchanging, abstract One be-
hind change.15 To speak of “the Way” is to suggest a “One-many” metaphysics similar to the
one implied by Classical economics, because the demonstrative and possessive pronoun
nominalize “the Way” and isolate it metaphysically as the “One” source of order in the uni-
verse. In a similar vein, the use of the capital “W” invests “Way” semantically as a metonym
for the transcendent and Divine.16 However, indigenous interpretations criticize such an un-
derstanding of dao as unjustified, because it locates the term squarely within a worldview
more familiar to Western readers than relevant to Daoism itself.17 It makes use of Western-
ized interpretations, which introduce “some concepts of the transcendent and eternal that are
not part of the sui generis character of Chinese philosophy.”18 If one, on the contrary, main-
tains an indigenous vantage point and tries to interpret dao in its own cultural context, an en-
tirely different picture emerges. Here, most importantly we have to challenge the wisdom and
accuracy of proposing a ‘one-for-one’ equivalency for translating dao from Chinese to West-
ern languages. Dao simply has a wider range of meaning, which precludes us from translating
it simply as “the One.” First of all, dao lacks any single principle of individuation; it can
mean both ways and way and is thus not to be treated as being entirely singular. Further, dao
is understood by Daoist philosophers as both having parts and being part of a greater whole.
Each partial dao has its own parts and each is seen as part of a greater dao. Thus Dao is not
only the entire course of life but also the particular role someone plays within this course.19
Dao is both absolute and relative, ineffable and dependent.20 In addition, dao is not only a
noun, but also a verb. It isn’t so much a thing, but rather a process or an ongoing event. Here,
dao isn’t a ‘Way’ nor even ‘The Way’ but rather way-making. It is the “leading-forth, guiding
and manipulating of experience,” in which everything participates in an ongoing process of
events.21
As this range of meaning indicates, dao can hardly be reduced to a single uniform principle
underlying human experience. On the contrary, its character is to be seen as processual and
dynamic.22 This insight, among others, has led philosophers to speak of the absence of ‘the
One’ in the sense of an external and independent agency within Chinese thought. Tu Wei-
Ming, for example, claims, “Since the conception of the Creator as the ultimate source ... is
not even a rejected possibility, there is no appeal to the ‘wholly other’ as the real basis of
human perfectibility”23 Ames and Hall concur with Ming:
The Daoist does not posit the existence of some permanent reality behind appearances, some
unchanging substratum, some essential defining aspect behind the accidents of change. Rather,
there is just the ceaseless and usually cadenced flow of experience. (...) The Daoist have no
concept of cosmos at all insofar as that notion entails a single-ordered, coherent world which is
in any sense enclosed or defined.24
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This is not to say that the idea of the ‘One’ is entirely absent in indigenous interpretations of
Daoism. But it is given an entirely different meaning in that it is not singled out as an Abso-
lute Being which is intrinsically external and independent of the world. Also, indigenous in-
terpretations of Daoism do not reject the idea of the many as such, but define it differently
than do the economists. The point I am making here is that Classical and Neoclassic econom-
ics implicitly presuppose a kind of substance ontology, which defines the many as independ-
ent, mutually exclusive substances or entities, that cannot be read into the processual world-
view of Daoist philosophy. Let me briefly explain. It is commonly assumed that economic
theory treats the individual as a given prior to any theoretical investigation. This has come to
be known as methodological individualism. While there are various construals of methodo-
logical individualism in economics,25 there is one important commonality worthwhile men-
tioning: each individual is regarded as an independent entity acting in accordance with his or
her own, unchanging preferences alone.26 “The ‘I’,” as the economist Ludwig von Mises puts
it, “is the unit of acting men. It can neither be questioned nor pervaded by any thought.”27
However, even though this form of individualism has been lauded by economists, philoso-
phers, and politicians alike, it should not be overlooked that economics equally presupposes
an independent universal in order to explain the establishment of unity among otherwise
completely unrelated individuals. Precisely because economists think of each individual as an
independent entity, they necessarily have to assume a universal, predetermined and law-like
‘One’, in order to create order among them from the outside. As we have already seen,
economists leave this task to either God or the mechanisms of the market. In either case, the
organization of ‘coordinated activity’ upon which the individuals’ separate acts depend is at-
tributed to an outside self-determining force which arises out of impersonal necessity: Social
reality is subject to a mechanical natural causality which is ultimately beyond the influence of
society’s members, individual human beings. Obviously, there is a major contradiction in-
volved here: In order to explain how the many substantial individuals coexist, economists as-
sume a substantial unity, the ‘One’, to integrate them into a coherent whole. In the process of
theoretically constructing such unity, however, the individuals lose their (economically de-
fined) individuality. They are ultimately negated as autonomous selves because they are sub-
jected to a mechanical law determined from above, which rules independently of their will or
intention.28
Contrary to the precepts of methodological individualism, Daoism does not view humans as
independent, individual substances.29 There is no importance invested in the notion of dis-
crete human agency, which is replaced by the notion of the situational self. Each particular
human being is seen as radically and resolutely embedded in a natural, social and cultural
flux, from which it cannot be abstracted.30 “His identity is not that of an individual, as under-
stood in Western individualism, but that of a participant in the flow of life.”31 Since human
relationships necessarily form part of this unfolding process, they are considered as intrinsic
and constitutive of human beings. Accordingly, mutuality and interdependence are regarded
as defining characteristics of human beings, in contrast to the independence and absolute
subordination to a mechanical, unifying process posited in classical and neo-liberal econom-
ics. Underlying this perception is a process worldview, in which everything is not conceived
as a subject or substance in the sense of an inert underlying substratum but as an ongoing
process. Here, even humans are considered as ‘events’ rather than ‘things’ or ‘beings’. “A
human being is not what one is, it is the compounding narrative of what one does–an always
unique field of experiences, beliefs and feelings.”32 Or, stated in somewhat different terms:
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“There are no things, there are no entities. There is only activity! The so-called things or be-
ings in our ordinary experience are really enduring centers of activity.”33
If individuals are, in this way, theorized as necessarily interrelated and interdependent proc-
esses, events, or activities, then there is no need to imagine any independent principle, which
establishes order among them. In the absence of any overarching arche or ‘beginning’, social
order is seen as the outcome of human activity, rather than its pre-condition, a priori. It is
nothing more than a non-coherent sum of patterns of behavior, residing within the world as
the rhythm and cadence of a living stream. As a creative expression of human activity, per-
petually being subject to change and creation itself, the patterns of life may sometimes be
predictable. However, these patterns are never causally imposed upon the world by some ex-
ternal agency; instead, they emerge within the flux of events. Social order can thus not be de-
fined in any final or absolute sense, but only in terms of activity, processes and change.34 It is
never de-contextualized or detemporalized, but always dynamic, site-specific and provisional.
Because of this, order is never external to and imposed upon the processes and subjects in its
domain: it does not causally determine human actions but it is ultimately created by those ac-
tions itself. “Order is always reflexive, entailing the agent within the action itself.”35 In Dao-
ist thought, accordingly, both the notion of substantial individuality and the notion of sub-
stantial universality are absent. There isn’t any prime mover located either within human be-
ings or outside of them. Neither the One nor the many in any sense of discrete agency are
given priority. Rather, an inseparability of one and many, of continuity and multiplicity is
considered as being prior to either of these notions. It is the process of (subjectless) activity
out of which both individuality and order simultaneously and interrelatedly arise. “The proc-
ess produces the events; the events produce the processes.”36 I’ve shown elsewhere how such
a process worldview leads to an entirely new understanding of economic processes, instead of
providing the natural order of economics with another philosophical rationale.37
The Different Visions of Human Activity
Given the processual worldview of Daoism, can we really accept McCormick’s claim that the
Daoists favor a “total receptiveness” on the side of human beings, who must themselves “be
lived” by the natural forces of the market?38 In order to answer this question, we first have to
understand the differences in the notion of spontaneity as they appear in Daoism and eco-
nomic theory. In economics, “the idea that a harmonious economic and social order can
emerge spontaneously from individual action”39 is widespread. However, we have to care-
fully notice that ‘spontaneity’ is not attributed to individuals, here, but to the economic or so-
cial order itself. Spontaneity is believed to reside on the side of the order itself, which estab-
lishes itself of “its own accord40 independently of any human interference. The market sys-
tem, so to speak, is created ex nihilo; it is made by an Omnipotent Other, whose forces hu-
mans can, at best, weaken, but not paralyze.41 Hence, there is no real spontaneity and creativ-
ity on the human side. Quite the contrary, in fact: the notion of spontaneous order implies a
strong sense of human passivity. Because this order is thought of as self-creating and self-
sustaining, there is nothing left for humans to do than act in harmony with it. The ‘natural
order’ of society acts through and guides human beings, while the latter’s role is only con-
fined to discovering its nature and trying not to get in its way. As there are other forces in
control for optimum efficiency, there can only be a total compliance on the side of human
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beings. A different way to put this, is that the market forces human beings to behave like cogs
in the wheels of giant machine. As Schumpeter explains: “For mankind is not free to choose.
... Things economic and social move by their own momentum and the ensuing situations
compel individuals and groups to behave in certain ways.”42 No one can actively change his
environs himself.
While economics, thus, contrasts the ‘spontaneous order’ to the spontaneity and creativity of
human intention, Daoist philosophy, on the contrary, considers spontaneity and creativity as
expressions of human activity itself. Ames and Hall point out that rather than being intro-
duced from the outside, it is an activity performed by human beings:
A ... presupposition of Daoist cosmology is that we are not passive participants in our experi-
ence. The energy of transformation lies within the world itself as an integral characteristic of
the events that constitute it. There is no appeal to some external efficient cause: no Creator God
or primordial determinative principle. In the absence of any preordained design associated with
such an external cause, this energy of transformation is evidenced in the mutual accommoda-
tion and co-creativity that is expressed in the relations that obtain among things.43
For the Daoist, creativity is a transformative power of society expressed by the interdepend-
ence of all unique particulars.44 It is an ongoing process of the interrelated transfiguring of all
things; a self-creative and co-creative process, which functions at its best when freed of coer-
cion and outside constraint. Understood in this sense, creativity has to be more primordial
than any given, ‘natural’ form of social order. Chad Hansen comments on creativity, “It is
neither a mere, inert cognition of some external force nor a surrender to a structure already
innate in us.”45 While for economic theory creativity remains a secondary and derivative ex-
ercise of power only, which cannot be directed at changing the structures of social order, the
Daoist concept of creativity implies that it is continuously shaping and redefining those struc-
tures themselves. Social order is thus provisional rather than predetermined; it is contextually
dependent on and interrelated with human creativity. Given this, a total receptiveness on the
side of individuals cannot be read into Daoist philosophy.
There is another important difference between the Daoist and the classical / neo-classical
economic worldviews, which is concerned with the notion of change. In mainstream eco-
nomic theory, change is usually conceived of as being causally induced by an isolated agent,
who, although he is relative to process of change, does not change himself. This can be gath-
ered from the fact, cited by von Mises, “that all changes are to be comprehended as motions
subject to the laws of mechanics.”46 Such laws assume that change is only to be measured
against something stable, which relative to everything else does not change itself. Change has
to be accompanied by invariance: Only when change is specified by contrast to something
invariant standing outside of the process of events is it to be perceived as predictable and
computable in the sense economic theory suggests.47 At first sight, it might seem that Daoist
philosophers define change in a similar way. For example, chapter twenty five of the Dao De
Jing speaks of dao as “standing alone and unchanging.” However, as Hall and Ames point
out, this translation is hard to square generally with everything else that is said about dao in
Chinese literature. For example, even in the same chapter of the Dao De Jing, dao is also
called “ever present and in motion.” What seems to be asserted by the Dao De Jing is thus
not that dao never changes at all, but that it changes in a specific way: It is not being altered
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on the basis of some external and independent standard. Dao is not open to the alteration by
appeal to something other than itself. It cannot, so to speak, be made to change.48 Rather
changes occur within dao itself, without any thing being invariant to it. Everything within dao
changes, and so does dao itself. Within this process, there is no abstraction of an eternal prin-
cipal of change. Hence, contrary to the economic perception, change is not considered as
computable. It is the ongoing process–irregular, indeterminate, ambiguous and vague–of
transformation.
Social Implications
Given the marked differences in the underlying philosophical worldviews of Daoism and
Economics, what are we to make of McCormick’s idea that Daoism and economics share a
“complete agreement” on the subject of laissez faire policy?49 While our above analysis
shows a divergence between the presuppositions of neo-liberal economics and the principles
of Daoism, there is another important reason for assuming Daoism to favor the policy of lais-
sez-faire: its negative attitude towards state intervention. The case for ‘Market Daoism’ in-
vokes the Daoist opposition to state rule, which is believed to automatically imply a “devo-
tion to laissez faire.”50 The passage most commonly referred to here includes parts of chapter
fifty seven of the Dao De Jing:
But in ruling the world be non-interfering in going about its business. (wushi)
The more prohibitions and taboos there are in the world,
The poorer the people will be. (...)
The more prominently the laws and statutes are displayed,
The more widespread will be the brigands and thieves. (...)
Hence in the words of the sage: (...)
We are non-interfering in our governance (wushi)
And the common people prosper themselves.
This passage has usually been interpreted by economists as a stricture against state interven-
tion and being in favor of the market order. From the fact that the passage speaks out against
prohibitions, taboos, laws and statutes economists like Dorn conclude that it favors the mar-
ket as the only possible alternative available:
The ... passage implies that the more the state intervenes in everyday life, the more corruption
will occur. Alternatively, if people are left alone to pursue their own happiness, a spontane-
ous market order will arise and allow people to create prosperity for themselves and their
country.51
The Market Daoist position presumes that the passage should be interpreted within the prem-
ises of the distinction of the public (the state) and the private (the market order): if you are
not in favor of the state you necessarily have to be in favor of the market. Within this “grand
dichotomy,”52 there seems to be no ‘third’ or ‘middle’ way left. The implicit, and apparently
self-evident premise is that only the ‘visible hand’ of the state and the ‘invisible hand’ of the
market are given to us as the possible key solutions for safeguarding the social order. What is
left completely out of sight is the possibility that this dichotomy might not be a culturally
neutral conception; furthermore, it may be one drawn from a specific point of view, which as
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such is foreign to Chinese thought. Daoism might well favor neither the state nor the market
simply because it operates in an entirely different universe of discourse as both the theory of
the market and the theory of the state. I take exactly this to be the case: While both the pro-
ponents of the state and the market order implicitly argue within the same universe of dis-
course, only drawing different conclusions from the same premises,53 Daoism draws different
conclusions from different premises; conclusions that can neither be called ‘public’ nor ‘pri-
vate’ in the economic sense.
Underlying the common universe of discourse of the ‘public’ and the ‘private’ is the idea that
there has to be one abstract agency or principle which creates and nourishes harmony among
the many on its own accord. The proponents of the market think that the quasi-natural regu-
larity of the social order will turn action into a mechanically calculable process. The propo-
nents of the state, on the contrary, believe in a planned order that rules independently of the
individuals.54 In both cases, we are asked to think of a universal that, standing absolutely
above or beyond human interaction, causally defines social order. As our elucidation of the
absence of such a notion of the ‘One’ shows, we can hardly consider Daoism to share the
economist’s universe of discourse. Rather, the social ordering of the people is understood as
an open and creative process within the field of activity itself. People are not ruled from ‘no-
where’, but rule themselves. The Daoists do not favor the idea of any independent entity gov-
erning society from the outside. Rather, they deny the legitimacy of all top-down and super-
venient governance while favoring a bottom-up, emergent and undetermined approach to rul-
ing in which the people themselves define the terms of social order. Here, every heavy-
handed rule is considered counterproductive, because it generates problems proportionally to
the degree of interference in the authentic lives of the people.55 The complex tension of the
world is not to be disciplined into order by any external controlling hand, imposing its con-
sidered design upon experience56–neither by the ‘invisible hand’ of the market or the ‘visible
hand’ of the state. People’s freedom, for example, does not simply consist in helping markets
to develop and “grow on their own,”57 but in deciding creatively and spontaneously on the
patterns of harmonious coexistence within each unique situation of human encounter. Dao
(way-making), as the Dao De Jing expresses in chapter 34 is an “easy-flowing stream which
can run in any direction. ... It does not assume any proprietary claim.” It is an ongoing stream
of experience, which has a disposition and propensity, but no predetermined direction. There
is no efficient agency within that stream that could claim a controlling ownership over the
process.58 In this, dao differs from the market, the advantageous feature of which, according
to Dorn and other proponents of “Market Daoism,” is its natural course of optimum effi-
ciency in any given social context–“a course that will be smoother the wider the path the
market can take and the firmer the institutional banks that contain it.”59
The doctrine of laissez faire not only presupposes the existence of a ‘natural order,’ but also
insists that this order is beneficent. The latent forces of the market are claimed by McCormick
to work automatically toward “prosperity and perfection”:
All one needs to do is allow them to operate, to not get in their way. These forces are so power-
ful that they can even ‘educe good from ill’. This is the point of the famous invisible hand. If
we follow a policy of laissez-faire, even selfish behavior on the part of individuals will result in
prosperity for the society.60
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The natural order is believed to guarantee the pursuit of self-interest while equally promoting
the interest of society. Even in the face of endless human suffering provoked by avarice and
economic greed, we are to believe that all this is directed at the ‘good’ of society. Accord-
ingly, the policy of laissez-faire suggests refraining not only from state intervention but, in-
deed, from any activity which attempts to abolish self-interested behavior or lessen its harm-
ful effects. Given “the deep-seated belief in the power and goodness of that (the natural–SG)
order,”61 there is nothing left for people than to passively and receptively watch the transfor-
mation of all evil into good by some outside force. Put in the language of Adam Smith:
God himself is the immediate administrator and director. If he (man–SG) is deeply impressed
with the habitual and thorough conviction that this benevolent and all-wise Being can admit
into the system of his government no partial evil which is not necessary for the universal good,
he must consider all the misfortunes which may befall himself, his friends, his society, or his
country, as necessary for the prosperity of the universe, and, therefore, as what he ought not
only submit to with resignation, but as what he himself, if he had known all the connections
and dependencies of things, ought sincerely and devoutly to have wished for.62
Daoism, on the contrary, does not claim any social order to be beneficent, because it consid-
ers the notion of order, as far as it applies to any artificially instituted order of civilized soci-
ety, illusionary as such. There simply isn’t any outside force to rely on–beneficent or other-
wise. In the absence of any given order that compensates for particular instances of hatred
and egotistical behavior, humans are not encouraged to believe that they should “cheerfully
sacrifice their own little systems to the prosperity of a greater system.”63 Neither is there any
evidence that the Daoists believe the pursuit of one’s own (material) interests could automati-
cally promote that of the society. On the contrary, in both the Dao De Jing and the Chuang
Tzu, selfish behavior and endless desires are considered as the root causes of suffering. For
example in chapter 44 of the Dao De Jing we read: “Miserliness is certain to come at a huge
cost; the hoarding of wealth is certain to lead to heavy losses.” Given this, it seems unlikely
that Daoism should favor a “hands off approach” in the same sense as the doctrine of laissez
faire does. Rather than implying that people should adopt a passive and receptive approach to
the social order, the dao is to be understood as the creative ‘letting-go’ of any egotistic be-
havior. We are not told that we are to passively await the transformation of the results of our
self-interested behavior into good, but are to change such behavior actively ourselves. Again,
creative and spontaneous change is not attributed to some outer force, but to the field of our
own activities itself.
McCormick rightly admits that Daoists generally do not support material economic progress.
He also is right in stating that Adam Smith shares their view that happiness cannot be found
in material wealth. But is he right in saying “that neither one advocates a policy to stop peo-
ple from pursuing what they want?”64 Surely an important difference is being elided here.
While the Daoist and Smithian may both agree that materialistic and selfish desires cannot be
abolished by enforcing proper conduct, Daoism over and above this emphasizes the power of
self-transformation. Within mainstream economic thought, self-interest and endless desires
are usually considered as pre-given and unchanging characteristics of human nature. As such,
they are made into an unquestionable presupposition of economic theory: “The first principle
of Economics is that every agent is actuated only by self-interest.”65 This methodological
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International Journal for Field-Being, Vol. 6, No. 1 (2007)
principle has often been explained by the fact that economics deals with the lower elements
of human nature only.66 This position commonly grounds itself upon the thought that self-
interested behavior is ‘typical’ or ‘normal’ within the economical structures of today’s soci-
ety and that economics should focus on such patterned behavior only. Theorizing, here,
seems confined to exhibiting the essential aspects of human behavior only, and does not ex-
tend to the description of human conduct in all of its facets. Daoism, on the contrary, speaks
out against “the false layers of the extrinsic or socialized self, which is tied to an unques-
tioned acceptance of the conventional world and its institutions.”67 In a way, is also takes
common behavior guided by self-interested as its starting point. However, it does not con-
sider it as unchanging but aims at creatively moving freely “beyond the boundaries of the
conventional institutions and values of society.”68 Daoism involves forgetting conventions.69
Or to put it the other way round: “Those who abandon themselves in things and lose their na-
ture in convention may be called the wrong-way-around people.”70 As the three ‘wu-forms’
wuwei, wuzhi and wuyu indicate,71 it aims at changing precisely those conventional patterns
of activity, knowledge and desire which economic theory takes for granted.
This is especially true in the case of wuwei. Far from meaning, as McCormick claims, passiv-
ity, receptiveness or unconscious action of which “some other force is in control,”72 it actu-
ally indicates autonomous and spontaneous response to the situation one is in, without any
socially induced, or learned, patterns of response. The implication of wuwei is that “we
should avoid any action based on artificially induced or learned purposes or desires–those
that result from deeming things to be such and such.”73 Wuwei is non-coercive and nonasser-
tive action–uncompromised by stored knowledge or ingrained habits. At least within the eco-
nomic sphere, this equals saying that wuwei is the letting-go of all rational-calculated action,
which is self-interested, planned, and goal-orientated.
Neoclassical theory presupposes the ‘objectivity’ of knowledge and the autonomy of the
knower.74 There is a discrete agent–a ‘knower’–knowing independently from the world
known. His preferences are constant and not influenced by any choices available to him; thus
inner and outer world are strictly separated. The individual is made into the (relatively) un-
changing background against which changes can be measured and forecast.75 Knowledge,
here, is always knowledge of an isolated experiencer; it is not situation-dependent. Wuzhi on
the other hand is knowledge that is situational and unprincipled. It is “without preferences,
ever changing, beyond even constancy”76 As one lets go of all previously fixed preferences,
one gets to know the world anew in each situation by getting involved in and being changed
by it. Knowing in this sense “entails a transforming act upon the self, to know ... is not only
to reflect and comprehend, but also to shape and create.” It is a self-creating and self-
directing activity77 in which all tendencies toward independence and self-sufficiency are
overcome.78 Additionally, wuzhi is always consciously perspectival. It sees through the illu-
sion that there can be a view from or of a higher reality.79 As we are all in the soup, there is
no privileged perspective from which we are to tell the direction we ourselves or society as a
whole is going to take. Instead, there is a need to enter into other perspectives that are inclu-
sive of the totality of situation; and this cannot be fulfilled by the operation of a calculative
rationality restricting vision to the narrow focal point of self-interest.80
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International Journal for Field-Being, Vol. 6, No. 1 (2007)
In theory, economists construe desires as ever increasing and endless. This is formulated ex-
plicitly on the assumption of non-satisfaction or non-satiation.81 The individual is never com-
pletely satisfied, but can, in principle, always think of an improvement through an increase in
the commodities it possesses. The individual desires to own as many objects as it can possi-
bly can. This manner of desiring is criticized by the Daoists. As Hall and Ames insist, desires
have to be deferential desires (wuyu):
Desire, based upon a noncoercive relationship (wuwei) with the world and a mirroring under-
standing (wuzhi) of it, is shaped not by the desire to own, to control or to consume, but by the
desire simply to celebrate and enjoy. It is deference. (...) In a world of events and processes in
which discriminations are recognized as conventional and transient, desire is predicated upon
one’s ability at any given moment to ‘let go’. It is in this sense that wuyu is a nonconstruing,
objectless, desire.82
There is another point worth mentioning here. The Daoist’s emphasis on creative self-
transformation does not only aim at the letting-go of the attitude that considers everything
around us as being useful according to our own fixed standards; it also aims at the letting-go
of the attitude that considers our own selves as being useful according to the standards of so-
ciety. From the economist’s standpoint, each human being’s contribution to our world lies in
the fulfillment of his social and, most importantly, his economic roles. Each of us has to
make a useful contribution to society–as, the expression “human capital” aptly expresses.
These contributions are to be made within the existing institutional frameworks of a society
dominated by economic activity and are to be measured and shaped by economic patterns of
behavior. Here, “everything has its uses, and everyone his or her functions.”83 But this is pre-
cisely the attitude that the Daoists consider dangerous and enervating: “The obsession with
utility and function is not only a matter of missed opportunity; it saps life and energy. (...)
The desire to be useful, although well intentioned and noble, is dangerous and possibly even
fatal.”84
Zhuangzi in particular does not want to enroll us into the framework of conventions shaped
by economic patterns of behavior, but, to the contrary, tells us to break through this frame-
work. In order to really act creatively and spontaneously, we have to transcend all pre-given
roles. In order to discover the secret of their craft, for example, Zhuangzi’s artisans must
leave behind all external and social pressures. This does not, of course, amount to being irre-
sponsible. All of Zhuangzi’s artisans are productive members of their society. What is differ-
ent is their attitude toward the demands of their job. They do not focus on their social and
economic demands, but mentally free themselves to concentrate creatively on the skill of
their craft. The orientation of the performance of the task transforms it from work to making
art. While such art might be useful, it is not attached to being useful.85
The forms of art Zhuangzi appreciates differ from the obsessive economic emphasis on util-
ity. Far from having “a wonderful ability to make a miserable life of usefulness,”86 it is the
art of uselessness which is, for example, celebrated by Zhuangzi:
[Hui Tzu said]: ‘I know a huge tree local folks call the trea, trunk so thick, so gnarled and
knotty that the carpenter can’t cut if for use, branches too twisted for compass or square. Al-
though it stands beside a busy road, no carpenter ever gives it a second look. Your words are
just as big, just as knotty and as worthless. Nobody has any use for them either!’ Chuang Tzu
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International Journal for Field-Being, Vol. 6, No. 1 (2007)
[Zhuangzi] laughed (...) ‘You think it’s terrible that no one can cut it for use. Why not let it be a
tree?–in the Village of No-Thing, where the wilds spread out in every direction toward No-
Place. Sit beneath it and master the art of non-doing. Wander freely, easily into dreams beneath
it. Forget the ax–nothing can harm it. Nothing can be possibly of use. Where’s the problem?’87
Conclusion
Given an indigenous interpretation of Daoism, Daoist thought has to be considered far apart
from classical and neoclassical economics. In the absence of any substantialist world-view,
which regards the ‘One’ as an external agency and the ‘Many’ as mutually exclusive, inde-
pendent entities, Daoism shares neither the philosophical assumptions nor the social implica-
tions of the doctrine of laissez faire. Far from providing this doctrine with another substantial
leg on which to stand, the Daoist worldview challenges the very foundations of economic
thought, asking us to consider economic activity and our place within it anew. Most impor-
tantly, according to Daoism economic development ought to be considered an open and ulti-
mately undetermined process. This does not deny the fact that the economy often appears as
mechanically patterned. Of course it does. Nevertheless, neither Lao Tzu nor Zhuangzi would
have considered such patterns as predetermined or simply given. Because the economy is not
an entity but a dynamic process, its order is interrelated and interdependent with human activ-
ity itself. With no ‘One’ behind it, it can not act upon us by any mechanism or outside force.
Neither are we to consciously plan and control the market according to our own egotistic
wills. Rather, we are both shaped and shaping. By engaging in economic activity, we change
the world just as we are changed by it. Within this interrelated process, there is no view from
‘no-where’, no superior perspective from which our activity could be coordinated. The ap-
propriate action is thus neither to unconsciously subordinate ourselves to outside forces nor to
consciously enforce our will according to our own plans. Rather, we should be conscious of
ourselves as inextricably interdependent on our fellow human beings and nature while spon-
taneously responding to the need of others.
NOTES
1. Ken McCormick, “The Tao of Laissez-faire,” Eastern Economic Journal 25 (1999), p. 331.
2. James D. Sellmann, “Transformational Humor in the Zhuangzi,” in Wandering at Ease in the
Zhuangzi, ed. Roger T. Ames (Albany, NY: State University of New York Press, 1998), p. 163.
3. McCormick, Ken , “The Tao of Laissez-faire,” p. 331.
4. In what follows, I am concerned with the term “natural order” only insofar as it is used by
economists in order to explain the functioning of society. My intention is thus to highlight the differ-
ent notions of social order as they feature in Daoism and economics and not any possible differences
in the perceptions of nature’s order.
5. McCormick, , “The Tao of Laissez-faire,” p. 334.
6. Hermann H. Gossen, The Laws of Human Relation and The Rules of Human Action Derived
Therefrom (Cambridge, Mass: Mit. Pr. 1983), p. 5.
7. Adam Smith, The Theory of Moral Sentiments (New York: Promotheus Books, 2000), p. 126.
8. Roger T. Ames, “Knowing in the Zhuangzi, ‘From Here, on the Bridge, over the River Hao’,”
in Wandering at Ease in the Zhuangzi, ed. Roger T. Ames (Albany, NY: State University of New
York Press, 1998), p. 226.
12
International Journal for Field-Being, Vol. 6, No. 1 (2007)
9. Silja Graupe, The Basho of Economics. An Intercultural Analysis of the Process of Econom-
ics (Frankfurt/Main: Ontos, 2007), pp. 150-55.
10. Adolph Lowe, Politische Ökonomik (Frankfurt: Europäische Verlagsanstalt, 1965), p. 47.
11.Karl-Heinz Brodbeck, Die fragwürdigen Grundlagen der Ökonomie (Darmstadt:
Wissenschaftliche Buchgesellschaft, 2000), p. 33-40.
12. Lowe, Politische Ökonomik , p. 47.
13. McCormick, “The Tao of Laissez-faire,” p. 332.
14. James A. Dorn, “The Tao of Adam Smith,” Wall Street Journal Asia, August 19, 1997.
15. Chad Hansen, A Daoist Theory of Chinese Thought: A Philosophical Interpretation (Oxford:
Oxford University Press, 1992), p. 27.
16. Roger T. Ames and David L. Hall, Dao De Jing, A Philosophical Translation (New York:
Ballantine Books, 2003), p. 12.
17. Ibid., p. 3.
18. Sellmann, “Transformational Humor in the Zhuangzi,” p. 163.
19. Hansen, A Daoist Theory of Chinese Thought, p. 84.
20. Thomas P. Kasulis, Zen Action: Zen Person (Honolulu: University Press of Hawaii 1981), pp.
29-36.
21. Ames, Hall, Dao De Jing, p. 58-59.
22. Ibid., p. 57.
23. Tu Wei-Ming, Confucian Thought: Selfhood as Creative Transformation (Albany, NY: State
University of New York Press, 1985), p. 19.
24. Ames, Hall, Dao De Jing, p. 14.
25. Graupe, The Basho of Economics, pp. 145-150.
26. Philip Mirowski, More Heat than Light: Economics as Social Physics, Physics as Natures
Economics (Cambridge: University Press, 1999), p. 371.
27. Ludwig von Mises, Nationalökonomie, Theorie des Handelns und des Wirtschaftens (Genf:
Union, 1940), p. 34.
28. Graupe, The Basho of Economics, pp. 153-155.
29. Chad Hansen, “Individualism in Chinese Thought.” in Individualism and Holism, Studies in
Confucian and Taoist Values, ed. D. J. Munro (Ann Arbor: University of Michigan, 1985), pp. 46-49.
30. Ames, “Knowing in the Zhuangzi,” p. 227.
31. Judith Berling, “Self and Whole in Chuang Tzu,” in Individualism and Holism, Studies in
Confucian and Taoist Values, ed. D. J. Munro (Ann Arbor: University of Michigan, 1985), p. 116.
32. Ames, “Knowing in the Zhuangzi,” p. 227.
33. Lik K. Tong, The Art of Appropriation: Towards a Field-Being Conception of Philosophy
(Fairfield: Fairfield University, 2000), p. 21.
34. Ames, Hall, Dao De Jing, pp. 14-15.
35. Ames, “Knowing in the Zhuangzi,” p. 227.
36. Ames, Hall, Dao De Jing, p. 116.
37. Graupe, The Basho of Economics, pp. 175-192.
38. McCormick, “The Tao of Laissez-faire,” p. 332.
39. James A Dorn, “The Primacy of Property in a Liberal Constitutional Order: Lessons for
China,” The Independent Review 7 (2003), p. 490.
40. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, vol. 2 (Oxford:
Clarendon Press, 1976), p. 687.
41. Gossen, The Laws of Human Relation, p. 5.
42. Joseph A. Schumpeter, Capitalism, Socialism and Democracy (New York: Harper Perennial,
1976), p.129.
43. Ames, Hall, Dao De Jing, p. 21.
44. Sellmann, “Transformational Humor in the Zhuangzi,” p. 171.
45. Hansen, A Daoist Theory of Chinese Thought p. 288.
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International Journal for Field-Being, Vol. 6, No. 1 (2007)
46. Ludwig von Mises, Human Action, ed. B. B. Greaves (Irvington: Foundation for Economic
Education, 1996), p. 25. Online edition, http://www.mises.org/humanaction.asp (accessed 6.07.2006).
47. Mirowski, More Heat than Light, p. 6.
48. Ames, Hall, Dao De Jing, p. 210-11.
49. McCormick, “The Tao of Laissez-faire,” p. 337.
50. Murray N. Rothbard, “Concepts of the Role of Intellectuals in Social Change Toward Laissez
Faire,” The Journal of Libertarian Studies 9 (1990), p. 46.
51. Dorn, “The Primacy of Property,” p. 492.
52. Jeff Weintraub, “The Theory and Politics of the Public/Private Distinction,” in Public and
Private in Thought and Practice: Perspectives on a Grand dichotomy, ed. J. Weintraub and K. Kumar
(Chicago: Chicago University Press, 1997), p. 1.
53. Ibid., p. 8.
54. Friedrich A. Hayek, Recht, Gesetzgebung und Freiheit: Regeln und Ordnung (München:
Verlag Moderne Industrie, 1980), p. 58-60.
55. Ames, Hall, Dao De Jing, p.166.
56. Ibid. p. 122.
57. Dorn, “The Primacy of Property,” p. 492.
58. Ames, Hall, Dao De Jing, p. 130.
59. Dorn, “The Tao of Adam Smith.”
60. McCormick, “The Tao of Laissez-faire,” p. 335.
61. Ibid., p. 337.
62. Smith, Theory of Moral Sentiments, p. 346.
63. Ibid., Theory of Moral Sentiments, p. 347.
64. McCormick, “The Tao of Laissez-faire,” p. 336.
65. F.Y. Edgeworth, Mathematical Psychics. An Essay on the Application of Mathematics to the
Moral Sciences (London: Kegan Paul, 1881), p. 16.
66. Ibid., pp. 52-53.
67. Berling, “Self and Whole in Chuang Tzu,” p. 102.
68. Ibid.
69. Donald J. Munro “Introduction”, in Individualism and Holism, Studies in Confucian and Tao-
ist Values, ed. D. J. Munro (Ann Arbor: University of Michigan, 1985), p. 13.
70. Henry G. Skaja, “How to Interpret Chapter 16 of the Zhuangzi,” in Wandering at Ease in the
Zhuangzi, ed. Roger T. Ames (Albany, NY: State University of New York Press, 1998), p. 116.
71. These forms are commonly translated as no-action (wuwei) no-knowledge (wuzhi) and no-
desire (wushi).
72. McCormick, “The Tao of Laissez-faire,” p. 333.
73. Hansen, A Daoist Theory, p. 214.
74. Compare for the concept of autonomy in the Western and Chinese context Munro, “Introduc-
tion”, p. 11-14.
75. Graupe, The Basho of Economics, pp.59-68.
76. Chuang Tzu, The Essential Chuang Tzu, trans. and ed. Sam Hamill, J.P. Seaton (Boston &
London: Shambhala), p. 51.
77. Wei-Ming, Confucian Thought, p. 19-20.
78. Ames, “Knowing in the Zhuangzi,” p. 220.
79. Sellmann, “Transformational Humor in the Zhuangzi,” p. 164.
80. Brian Lundberg, “A Meditation on Friendship,” in Wandering at Ease in the Zhuangzi, ed.
Roger T. Ames (Albany, NY: State University of New York Press, 1998), p. 214.
81. Kenneth J. Arrow, Frank H. Hahn, General Competitive Analysis (San Francisco, 1971), p.
78.
82. Ames, Hall, Dao De Jing, p. 42.
83. Berling, “Self and Whole in Chuang Tzu,” p. 105.
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International Journal for Field-Being, Vol. 6, No. 1 (2007)
15
84. Ibid., p. 106.
85. Ibid., pp. 107-114.
86. Chuang Tzu, The Essential Chuang Tzu, p. 31.
87. Ibid., p. 6-7.
International Journal for Field-Being, Vol. 6, No. 1 (2007)
16
... The Daoist totality accordingly is thus a fluid whole whose definition defies the scientific naturalism of the Enlightenment which instrumentalises nature to the ends of human interests or seeks to reduce natural phenomena to the limiting concepts and abstractions of empiricism and physical dynamics. By contrast Western 'Classical and Neoclassic economics implicitly presuppose a kind of substance ontology, which defines the many as independent, mutually exclusive substances or entities' (Graupe 2007: 4) in a way which does not cohere with the integrated fluidity of Daoist transformation. 15 The political implications of this mysticism, when looked at from a modern empirical point of view, are difficult to systematise and present a seemingly ineffable metaphysical foundationalism. ...
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