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Was Laozi the first laissez-faire economist? Why wu wei is not the invisible hand

Javier Morales Fellow
· 6 replies · 318 views
Power & the stateChineseModern EuropeanDaoismLegalismLiberalismAdam SmithConfuciusHan FeiziLaozi#false-friends#governance#laissez-faire#wu-wei
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I lecture in economics in Valencia, and every few years a student brings me a quotation from the Laozi with great excitement. "The more prohibitions there are, the poorer the people." "Governing a large state is like cooking a small fish": don't keep poking it. And the ruler who says, "I do nothing, and the people transform themselves." Some free-market writers have gone further and hailed Laozi as the first advocate of laissez-faire, two thousand years before Adam Smith.

I can see why. Wu wei, "non-action" or "non-forcing", applied to government sounds like a state that keeps its hands off and lets the economy organise itself.

But I've come to think this is a false friend, and a useful one to take apart.

First, Laozi's sage-ruler is not a neutral umpire presiding over free exchange. The same text has him keeping the people's desires few and their minds simple, filling their bellies and emptying their heads. Trade, markets and the pursuit of gain are not praised; they are among the things a well-ordered state does without. That is not Smith's world of self-interested exchange producing public benefit.

Second, the term had a later career that should make any liberal nervous. The Legalists adopted wu wei as a technique of rule: the ruler does nothing visible, reveals no preferences, and controls everyone else through laws, rewards and punishments.

Third, there is the Confucian use: Shun governed by doing nothing but holding himself with reverence. That is government by virtue and example, not by markets.

So: is there anything in the comparison, or is it pure projection? And how should we read wu wei in government, if not as laissez-faire?

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6 replies

  1. Chen Yuting

    Fellow

    The Legalist point deserves to be stated plainly, since I work on Han Feizi. In the chapter on the way of the ruler, the ruler is told to be empty and still, to show no likes or dislikes, so that ministers cannot flatter or manipulate him, and to let the standards and the system of rewards and punishments do the work. His non-action is the stillness of someone holding every string. It is about as far from laissez-faire as political thought gets.

    Helpful · 2
    1. Javier Morales

      Fellow

      Yuting, thank you; the image of stillness while holding every string is going in my lecture. Between the Legalist and the Daoist readings, I'm now more convinced the comparison with Smith tells us more about modern readers than about Laozi. What the two share is a distrust of rulers who meddle. What they want instead could hardly be more different.

      Helpful · 1
  2. Rohan Desai

    Fellow

    In startup culture I heard wu wei quoted by founders to justify being absent. "I'm practising non-action" usually meant "I'm not making the hard decisions". Javier's post makes me think that misreading has a long pedigree. Whether in a state or a company, "doing nothing" seems to work only when an enormous amount has already been done.

    Helpful · 3
  3. Liu Jianguo

    Contributor

    Rohan, that's the heart of it. My favourite chapter says the best rulers are those the people barely know exist, and when the work is done the people say "we did it ourselves". That isn't a ruler who does nothing. It is a ruler whose work is invisible because it never forces. In taiji my teacher says "don't use force" every morning, and beginners hear "go limp". Not forcing is the hardest thing in the form.

  4. Anand Pillai

    Fellow

    I work on wetlands, and I've always loved the line that the highest good is like water. People take it as an image of passivity, but hydrologists know water finds every weakness and, given time, cuts canyons. Applied to governance, I read it as patience and attention to how a landscape actually behaves, which is roughly the opposite of both heavy engineering and leaving things alone.

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  5. Ratna Wulandari

    Contributor

    Our batik workshop has twelve women and my mother rarely gives an order. A visitor once called her very relaxed. She isn't. She spent thirty years training every one of us until the motifs live in our hands, and now the workshop runs itself. If that is wu wei in government, it rests on cultivation, not on letting people do whatever they like.

    Helpful · 3