Abstract
In a recent publication, Prof. Van der Spek (2011) made an intriguing comparison between the flows of silver in the Chinese economy at the end of the Ming dynasty and in Babylonia ca. 400-60 BC. He concluded that in China the expansion of the silver economy worked positively for economic growth, even though it may have had some negative social and local side effects. He then applied these findings to the Babylonian economy and found that here broadly similar developments led to uncertain, possible even negative, developments for the economy. He therefore ended with the conundrum as to why the effects of silver in both economies were so different.
The abovementioned contribution draws heavily on the work of Flynn and Giráldez (1995, 1997) who have positioned themselves as advocates of a positive and increasing role of silver in the Chinese economy in the seventeenth century. Yet, as of today, discussions are still continuing not only about the level of silverization in the Chinese society but also on its effect on the economy. Therefore, in this paper we systematically look at evidence of silverization in China and find evidence that, contrary to the Babylonian economy, the late Ming economy was only partially silverized, with a series of negative consequences for ordinary people who still largely made use of copper coinage. Neither can we find evidence that the large amount of silver flowing into China was indicative of a well-functioning economy. Flows of silver diminished in the second half of the seventeenth century, but still the existing streams were higher than could be absorbed by the economy, even an economy that was rapidly replacing other types of currencies with silver. In Babylonia, on the other hand, the economy had already been silverized at a much earlier stage. Since silver was thus a common means of exchange, the different ratio
between copper and silver did not affect the purchasing power of ordinary people. Neither do we find in Babylon evidence of significant changes in the amount of silver in circulation over time. Combined with an on average constant price level, this suggests a stable economy that did not require further inflows of silver to add to the stock of money in circulation.
The abovementioned contribution draws heavily on the work of Flynn and Giráldez (1995, 1997) who have positioned themselves as advocates of a positive and increasing role of silver in the Chinese economy in the seventeenth century. Yet, as of today, discussions are still continuing not only about the level of silverization in the Chinese society but also on its effect on the economy. Therefore, in this paper we systematically look at evidence of silverization in China and find evidence that, contrary to the Babylonian economy, the late Ming economy was only partially silverized, with a series of negative consequences for ordinary people who still largely made use of copper coinage. Neither can we find evidence that the large amount of silver flowing into China was indicative of a well-functioning economy. Flows of silver diminished in the second half of the seventeenth century, but still the existing streams were higher than could be absorbed by the economy, even an economy that was rapidly replacing other types of currencies with silver. In Babylonia, on the other hand, the economy had already been silverized at a much earlier stage. Since silver was thus a common means of exchange, the different ratio
between copper and silver did not affect the purchasing power of ordinary people. Neither do we find in Babylon evidence of significant changes in the amount of silver in circulation over time. Combined with an on average constant price level, this suggests a stable economy that did not require further inflows of silver to add to the stock of money in circulation.
| Original language | English |
|---|---|
| Title of host publication | Silver, Money and Credit. |
| Subtitle of host publication | A Tribute to Robartus J. van der Spek on the Occasion of his 65th Birthday on 18th September 2014. |
| Editors | Kristin Kleber, Reinhard Pirngruber |
| Place of Publication | Leiden |
| Publisher | PIHANS. Uitgaven van het Nederlands Instituut voor het Nabije Oosten te Leiden |
| Pages | 119-132 |
| Volume | 128 |
| ISBN (Print) | 978-90-6258-339-3 |
| Publication status | Published - 2016 |
Keywords
- silver
- China
- Babylonia
- economic growth