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Vision and
Calculation
Economics from
China’s Perspective

Sheng Hong
Vision and Calculation
 Sheng Hong

Vision and Calculation

Economics from China’s Perspective
Sheng Hong
Unirule Institute of Economics
Beijing, Beijing, China

ISBN 978-981-15-2897-2    ISBN 978-981-15-2898-9 (eBook)

https://doi.org/10.1007/978-981-15-2898-9

© The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer
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 Preface to Vision and Calculation

As an author who has published several books, I have always felt that pub-
lishing books is amazing. Suddenly one day, a person will say to you, “I
read a book of yours many years ago, and it had a great impact on me.” In
reality, this situation is very rare. More often, you do not know who reads
your book and what impact it had on him or her. For instance, I have read
the books of the human sages. They have passed away and do not know
what kind of impact they have had on me, how they have inspired my
thinking, and how I wrote out those inspired thoughts and shared them
with others. However, this is the mysterious mechanism of the develop-
ment of human culture.
This book, Vision and Calculation, is a collection of my papers. The
papers were originally written in Chinese, and now they have been col-
lected and published in English. Although I have published several books
in English, they have all been research reports for the Unirule Institute of
Economics. It is only because I am the leader of the research team and the
main writer that I use my name and the name of the collaborator as the
authors’ names for those reports. However, this book is composed of all
of my own papers. This gives me the feeling of facing my English readers
directly. I will not know who reads my book or what magical results it will
have for them. However, I feel obliged to make it easier for my English
readers. Therefore, herein, I’d like to introduce my own academic and
cultural background and explain what I think ordinary English readers
may find difficult.
The title of this book, taken from one of the articles, is called “Vision
and Calculation.” Economics has always posited that people are rational

v
vi PREFACE TO VISION AND CALCULATION

economic people and that they will make rational judgments through
cost-benefit comparisons. However, we often see irrational behavior. In
2010, a sensational event occurred in China. A young man, Yao Jiaxin,
hurt a woman while he was driving. Instead of saving her, he killed her
with a knife. This, of course, was morally reprehensible. Nevertheless,
from an economic point of view, it was also wrong according to rational
calculation. Yao Jiaxin’s reason for killing the woman was that the injured
women would pester him. Nonetheless, there was a high probability of his
crime being uncovered by police and of him being sentenced to death.
There have been many explanations given in psychology and economics
about calculation errors. My explanation is that the calculation is wrong
because of the limited field of vision. A person’s calculations depend on
the information that he or she obtains. The more comprehensive the
information, the more accurate the calculation. Additionally, the amount
or comprehensiveness of the information depends on the field of vision.
The larger the field of vision of space and time, the more abundant and
comprehensive the information and the more accurate the calculation. In
this regard, I quote a Chinese idiom that says, “The mantis stalks the
cicada, unaware of the oriole behind.” This idiom comes from a story
from the Spring and Autumn period (770–221 BC). The story tells that
the King of Wu wanted to attack the state of Chu and refused to listen to
criticism. At this time, a young man went several times to the garden
behind the palace with a slingshot. The King of Wu asked him curiously
what he was doing. The boy said, “I saw a cicada chirping in the tree, but
it did not know that there was a mantis behind it; the mantis wanted to
catch the cicada, but it did not know that there was an oriole behind it;
and the oriole wanted to eat the mantis, but it did not know that I wanted
to shoot it down with a slingshot.” After hearing this, King of Wu decided
not to attack Chu. This story vividly illustrates the importance of vision to
calculation.
Therefore, why are people (let alone other creatures) limited in their
field of vision? The first reason is that it takes attention resources to observe
and pay attention to external things, and natural evolution makes crea-
tures save their resources as much as possible. For most of the millions of
years of evolution, humans were hunter-gatherers. They only needed to
pay attention to the range of a few hundreds of meters and the current
time. Beyond this range, the direct threat to their survival was greatly
diminished. Thus, applying more observation and attention was a waste of
scarce attention resources. Thus, nature automatically limits human
 PREFACE TO VISION AND CALCULATION vii

attention to a smaller area. The second reason that people are limited in
their field of visions is that when people and other creatures find a benefi-
cial target (such as prey), they are more likely to focus on this target and
automatically ignore other targets. This is what I call a “win a little game,
lose a big game” mistake. However, with the rapid development of human
civilization in the most recent thousands of years, the cooperation between
human beings has made the factors that affect a person’s costs or benefits
far beyond his or her physiological field of vision, which may be at the
other end of the earth or in another period of time. This requires that
people’s vision extend beyond the past. Nevertheless, when the psycho-
logical structure cannot be quickly evolved and adjusted, overcoming the
mistakes of having too small of a vision depends on learning, education,
religion, and other cultural traditions.
The subtitle of this book is Economics from the Viewpoint of China. I
think there are two difficulties for ordinary English readers. The first is
“economics,” and the second is “China.” Regarding the difficulty of
understanding “economics,” my book can be regarded as a collection of
economics papers. Because my academic major is economics, I am myself
an economist. Generally, economics is not hard to read, but I have included
some papers herein that contain many mathematical formulas and geo-
metric charts. Their interpretation will not be a problem for readers with
an economics background, but they may bring difficulties to ordinary
readers. However, I would like to say that these formulas and charts are
not the most important part of these papers. If you find it difficult to inter-
pret them, you can skip them and only look at nonmathematical parts and
conclusions. I included mathematics in this book mainly because I was
influenced by some examples of neoclassical economics and because my
research at the Unirule Institute of Economics required the inclusions of
some numbers to express judgment and persuade readers; thus, I devel-
oped a slight habit of using mathematics.
As an economist, I can be regarded as an economic liberalist. My aca-
demic background is mainly in new institutional economics. I think that I
inherited the tradition ranging from Adam Smith to Friedrich Hayek. I
can still remember the excitement of reading Hayek for the first time. To
date, I am still studying Hayek’s Law, Legislation and Liberty. Obviously,
there is no mathematical formula in Hayek’s book. The so-called new
institutional economics refer to the economics tradition created by Ronald
Coase. In the late 1980s, I read Coase’s “The Nature of the Firm” and
“The Problem of Social Cost.” I not only applauded his theoretical insights
viii PREFACE TO VISION AND CALCULATION

but also clearly realized how powerful his theory is in explaining and the
practical value of the market-oriented reform in China at that time. I later
corresponded with Professor Coase and edited and organized the transla-
tion of his selected work The Firm, the Market and the Law. When we
heard that Professor Coase had won the Nobel Prize in economics in
1991, the Chinese version of the selected work had just been published.
In 1993, I was invited by Professor Coase to be a visiting scholar at the
University of Chicago Law School. For half a year, I had discussions with
Professor Coase almost every week. I had read Professor Coase’s main
articles before I went to Chicago, so what I learned while I was there was
more about his thinking methods and academic style. Regarding his think-
ing methods, he urged me to pay attention to experience and oppose
“blackboard economics.” He once took me to the Chicago Board of
Trade to see trading scenes and told me to “learn the real world.”
Regarding his academic style, he encouraged me to form academic con-
cepts and theories by using communication and argument. For example,
when I asked him to define “institutions,” he said that the definition
should be formed by the interaction and competition of different defini-
tions. Additionally, he had excellent intuition and the proper judgment of
unfamiliar things. He did not come to China, but when we talked about
China’s rural reform, he said that China’s success was due to the fact that
there were still families remaining after the dissolution of the people’s
communes, while Russia’s failure in a similar reform was due to there
being only individuals left after the dissolution of the collective farms.
Then, I did not see Professor Coase for 14 years. In 2008, he proposed
to hold an academic conference on China’s 30 years of reform and open-
ing up at the University of Chicago. He used his Nobel Prize to fund the
conference attendance of dozens of Chinese economists, entrepreneurs,
and officials, and he invited me to attend. “To struggle for China is to
struggle for the world,” he said in his closing speech. In 2010, Professor
Coase organized another academic conference in Chicago. This time, he
did not need to fund the travel of the Chinese attendants. On December
29, 2010, to celebrate his 100th birthday, we held a large-scale academic
conference in Beijing called “Coase and China” and invited Professor
Coase to give a speech via the Internet. “Just as China has Confucius,
Britain has Adam Smith,” he said. In 2013, while he was planning to visit
China, he unfortunately fell ill and died. I cannot help but feel sorry for
him when I think that he once said, “I intend to set sail once again to find
 PREFACE TO VISION AND CALCULATION ix

the route to China, and if this time all I do is to discover America, I won’t
be disappointed.”
Professor Coase founded two schools of thought by himself. In the
field of law, it is called “law and economics,” while in the field of econom-
ics, it is called “new institutional economics.” I am an economist, so I am
closer to the new institutional economists, such as Professor Douglas
North. His Structure and Change in Economic History helped me to
understand Coase’s theory. Professor North visited China many times,
and he also attended the Chicago conferences organized by Professor
Coase in 2008 and 2010. Therefore, I have had many opportunities to
meet and discuss with Professor North. The other new institutional econ-
omist to whom I am close is Professor Harold Demsez, who, either
together with Professor Armen Alchian or independently, published papers
on property rights, which are important classics through which we can
understand the theory of property rights. When I met Professor Demsez
in Chicago in 2008, he was a humorous old man. In addition, I heard
Oliver Williamson’s lecture on “transaction cost economics” at the
Institute of Industrial Economics at the Chinese Academy of Social
Sciences in 1988. Another person I should mention is Steven Cheung.
Compared to Coase, in terms of age, he is a next-generation scholar.
However, his contributions and influence are so great that he could inspire
Coase himself, as well as North and others. More importantly, he is
Chinese. Cheung introduced new institutional economics to China and
attracted the attention of new institutional economists to China. I first
read his paper “The Contractual Nature of the Firm,” and then later, I
read his doctoral dissertation The Theory of Share Tenancy and his other
early papers. I increasingly feel that his theory is one that can explain the
Chinese phenomenon better by using new institutional economics.
Therefore, it can also be said that my economics papers are mainly
those of new institutional economics. For example, “When Public Goods
Become Private Goods” is a chapter that further studies the theory of
property rights. In 2002, when I was commissioned by the Ministry of
Water Resources to study water rights, I found that the default allocation
principle of river water resources in traditional China is that whoever has
the ability to dig the canal has the right to the water. However, in modern
society, the cost of digging canals has greatly decreased, and there is no
water distribution rule established for rivers. In fact, all regions compete
for water resources by digging canals, which is known as the “upstream
first” principle; this approach resulted in the total reservoir capacity of the
x PREFACE TO VISION AND CALCULATION

middle and upper reaches of the Yellow River exceeding the annual runoff
of the Yellow River, which, in turn, resulted in the scarcity of water
resources in the Yellow River Basin as a whole. Thus, the Yellow River was
cut off for several years. I think that when the cost of obtaining a certain
resource is quite high, it may not be a scarce resource because scarcity
means that the demand is greater than the supply. What determines
demand is not only the scarcity of resources themselves but also the cost
of their acquisition. Thus, when the cost of obtaining resources is lower
than a certain extent, the resources that are not scarce will become scarce.
Only when resources are scarce is it necessary to establish property rights.
Therefore, with the development of technology, it seems necessary to
establish water rights for water resources without original property rights.
The institution of property rights is related to the physical characteris-
tics of resources. Water is a liquid that flows and is boundary-changeable.
To establish property rights, it is more difficult to define the physical
boundaries of water than it is those of solid objects. From solid to liquid
to gas, to sound, to landscape, and to intangible assets, such as digitality
and creativity, they can be considered as a continuous pedigree. An effec-
tive property right, first of all, must be “held” by its owner and then must
be “exclusive.” However, if you want to hold this right, you have to pay
the cost or the “exclusive cost.” The physical characteristics of a resource
will affect its exclusive cost. A liquid is more difficult to hold than a solid,
and a gas is more difficult to hold than a liquid. Only when a solid con-
tainer, such as a reservoir, a bottle, or a balloon, has been created can a
liquid or gas be effectively held. Regarding idea-related products, due to
the development of printing and the Internet, it is difficult to define their
physical boundaries, which can only be protected by an artificial property
right system, that is, the intellectual property system. Thus, the concrete
form of the institution of property rights, in a dimension, is related to the
physical characteristics of resources.
Regarding the difficulty of understanding “China,” I include several
aspects. The first aspect is China’s reform and opening up. This is the field
in which I have invested much energy in the past years, and I think it is
also the focus of my English readers. The second aspect is the history of
China, especially the economic history. Understanding this is necessary to
understanding China, including modern China. The third aspect is
Chinese culture. This is an important aspect of understanding why Chinese
people think in the ways that they do and why China is different from the
English-speaking world. The fourth aspect focuses on the problems
 PREFACE TO VISION AND CALCULATION xi

present in China, which is an important reason why Chinese scholars put

forward such problems. The fifth aspect is looking at what has happened
in foreign countries from the perspective of China and to give an explana-
tion for these events from the perspective of China.
Let us talk about my cultural background first. Although I am a
Chinese, in the early years of my education, I basically did not touch the
traditional Chinese culture, which herein mainly refers to the Confucian
and Taoist culture. In the middle and late periods of the Cultural
Revolution (1966–1976), I worked as a worker in a factory. What I know
about “Confucian culture” is a few words of Confucius that were criti-
cized in the movement of “criticizing Lin and criticizing Confucius.”
After I was admitted to the People’s University of China in 1979, I mainly
studied economics. In addition to Marxist economics, I also studied west-
ern economics. I think that culturally, I am a citizen of the world. However,
ironically, it was my first visit to the United States in 1987 that made me
feel connected to Chinese culture, because the United States is not a
country without cultural color. At the same time, Chinese in the United
States also respect Confucius. After returning to China from the United
States, I began to read many books about Chinese culture, including Feng
Youlan’s History of Chinese Philosophy, which was recommended by Mr.
Li Shenzhi, and Hou Jiaju’s Free Economic Thought of Confucianism in
the Pre Qin Period. Of course, the most important thing was to read the
original scriptures, including The Great Learning, The Doctrine of the
Mean, The Analects of Confucius, Works of Mencius, and Tao Te Ching.
In the tradition of Confucianism and Taoism, what I first agree with is
a thought similar to those found in economic liberalism. Confucius said,
“Does heaven speak? Yet the four seasons run their course and all things
come into being. Heaven does not speak!” Lao Tzu said, “Tao often does
nothing but does everything.” This kind of expression of natural order
philosophy seems more wonderful than Smith’s “invisible hand.” There
are still “hands” in Smith’s theory, but there is no “mouth” in Confucius’
theory. When I was at the University of Chicago, I borrowed Lewis
Maverick’s China: A Model for Europe from the library. This book
includes an English translation of Quesnay’s Despotism of China and the
author’s own description of how European missionaries’ letters about
Confucianism affected Quesnay and Smith. Later, I read Zhu Xi’s collec-
tion of Confucian maxims in the Song Dynasty, Jinsilu (Reflections on
Things of Hand), and Wang Yangming’s Chuanxilu (Instructions for
Practical Living) with conscience as the core value; influenced by Jiang
xii PREFACE TO VISION AND CALCULATION

Qing’s Introduction to Gongyang Theory, I paid attention to the political

system of traditional China. Because of the consideration of the problems
after the rise of China, I also paid attention to the thought resources about
cosmopolitanism in the Confucian literature and to the Confucian ideas
and traditions about family, including the Book of Filial Piety. Having
comprehensively combed the Confucian literature, I thought that I could
use economics to give a reasonable explanation of them, and I began to
teach a course called “Economic Explanation of Confucianism” at
Shandong University in 2008, and I published the revised lecture notes in
2015. I can call myself a Confucian.
Understanding Chinese history and culture, it is easy to find the key
differences between China and the west, such as the attitude toward the
family. There are families in the west, but there is “familism” in China. In
my chapter “On Familism,” I put forward that familism mainly refers to
the economic calculations based on the family. This is very different from
calculations based on individuals. There are at least two differences
between the family and the individual. The first difference is that the indi-
vidual has a limited life, while the family has an unlimited life, in theory.
The second difference is that individualistic individuals are independent of
each other, while familial individuals are dependent on each other. Once
economics changes the basic research unit, the conclusion may be quite
different. For example, a family-oriented society is more inclined to sus-
tainable development because the family life is infinite and its discount rate
is zero. If we start from the maximization of family welfare, then succes-
sion is more important than the current interests because, if the family is
terminated, no matter how great the current interests, the family’s utility
is zero. As Mencius said, “There are three ways of being unfilial, and the
worst one among them is having no descendant.” Moreover, because the
interests of family members depend on each other, their individual deci-
sion-making cannot be independent. However, if we look at the Chinese
family tradition from the perspective of individualism, we will mistakenly
think that the individual’s behavior in the family is very irrational.
Another misunderstanding is about the institution of property rights in
traditional China. Among the foreign scholars whom I have contacted,
some believe that China has no property rights tradition at all. Many
Chinese scholars agree. This belief is caused by the long-term misunder-
standing of Chinese intellectuals. Since modern times, especially after the
Opium War between China and Britain, China’s military failure has led to
the extreme emotions of many Chinese intellectuals. When they criticize
 PREFACE TO VISION AND CALCULATION xiii

the Chinese tradition, they believe that nothing is right in China, that is,
“everything is inferior to other nations.” This naturally includes the insti-
tution of land property rights. In my article “How Should the Institutions
Change?,” I noted that China has had a formed institution of land-free
sale since at least the Han Dynasty. After the Song Dynasty, and until the
Ming and Qing Dynasties and the Republic of China, the land property
rights institution became increasingly mature, forming permanent ten-
ancy. Regarding the permanent tenancy, I made a more detailed discussion
of this concept in another chapter, “The Economic Nature of the
Permanent Tenancy.” The right of permanent tenancy not only refers to
the forever tenancy right but also includes some property rights. This is
the inevitable result of permanent tenancy and fixed land rent. Therefore,
the land property right can be divided into two levels, namely, the surface
land right and the undersurface land right. Moreover, these two types of
rights are both independent and complete property rights. When either of
them is sold to a third party, the consent of the other party is not required.
It is strange that this kind of perfect land system, which is close to text-
book, has been the object of Chinese Revolution since modern times.
Why is this so? I have made a preliminary discussion in the article “How
Should the Institutions Change?” Advocates of the Agrarian Revolution
believed that the land was too concentrated at that time. For example,
Mao Zedong thought that approximately 70–80% of the land was concen-
trated in the hands of landlords. However, later researchers posited that he
also regarded public land as land owned by the landlords, so he thus over-
estimated the land concentration. Du Runsheng, another Communist,
thinks that the land concentration is only 40%. Zhao Gang’s research
notes that the Gini coefficient of the land distribution in the period of the
Republic of China is only 0.3–0.5. If the surface land right is also regarded
as a property land right, then the land distribution is more average. The
second accusation of the advocates of the Agrarian Revolution is that the
landlords seriously exploited the peasants. However, this was also denied
by later research. For example, Gao Wangling’s research notes that since
the Ming and Qing Dynasties, the paid-in-rent ratio had been continu-
ously reduced from 80–90% to 50–60% in 250 years because the landlords
did not have the compulsory means to collect the land rent, and the gov-
ernment did not intend to help the landlords collect the rent. Therefore,
the nominal rent rate had been adjusted downward several times.
In “How Should the Institutions Change?,” I also compared the land
institutions and their changes in England. In the period of the Industrial
xiv PREFACE TO VISION AND CALCULATION

Revolution, Britain’s land system was still the land tenure system estab-
lished by William the Conqueror. If a person wanted to buy a piece of land
from a peasant, he had to replace the peasant’s serfdom status and be loyal
to the Lord when he received the land; thus, a land transaction costs
3–5 years of land revenue. Therefore, the land resource reallocation at that
time mainly depended on land leasing with convenient procedures, thus
completing the transfer of land resources to industries and cities during
the Industrial Revolution. In China, the Agrarian Revolution deprived
landlords of their land by violence. After land was distributed to the peas-
ants, it was then concentrated in the hands of the government through
collectivization. The Agrarian Revolution destroyed the better allocation
between the land and the farmers, and because the people’s communes
were allocated agricultural resources by the government; thus, there was
no incentive. Consequently, from 1952 to 1978, China’s agricultural
labor productivity never exceeded that of the 13th year of Guangxu
(1887), and the year of the most severe famine in three years (1961) was
only 67% as productive as that of the 13th year of Guangxu; additionally,
this period did not promote industrialization or urbanization. This com-
parison tells us that China’s mistake was not only the wrong judgment
regarding the nature of the land institutions but also the mistake of the
format of the institutional change, that is, the institutional change pro-
moted by violence.
Thus, even if the direction of a reform is correct, the key factor for the
success of that reform is whether it can take a peaceful form. This is exactly
what happened when China began its reform and opening up in 1978.
After three years of famine, Mao Zedong made a small concession, that is,
he allowed farmers to have a small amount of private land. Later, it was
found that the yield per mu of the private plots was four, five, or even ten
times that of the collective lands. This was clearly the result of the incen-
tive. This message was brought to the top of the Communist Party by Du
Runsheng, who later became known as the father of China’s rural reform.
The choice the officials faced at that time was whether they could change
the so-called collective land into private land. If the property rights institu-
tion should be changed, then the law should be changed. The ideological
inertia formed in the Mao era made China not have the political condi-
tions to change the law at that time. Later, the actual choice made was a
“land household contract system.” The implementation results were obvi-
ous to all. From 1978 to 1988, China’s agricultural output value increased
by an average of 15% per year. Interestingly, the success of this institutional
 PREFACE TO VISION AND CALCULATION xv

change can be explained by the Coase Theorem and other institutional

economics theories. In my chapter “Contracts Matter: Toward a More
Developed Explanation of History,” I discussed this issue in detail.
The Coase Theorem states that if a judge makes an arbitrary decision
regarding property rights, then as long as the transaction cost is zero, the
parties can optimize the allocation of resources through free transaction.
An extension of this theorem that is close to the fact is that “even if the
mistakes of government intervention cannot be corrected temporarily due
to political or ideological factors, people have a way to correct them. This
is the way of contract, which avoids the difficulty or cost of correcting the
mistakes of government at present.” This suggests replacing property
rights reform with contract reform. The contract theory is Steven Cheung’s
greatest contribution to the new institutional economics. In his Theory of
Share Tenancy, he noted that different contracts would bring different
efficiencies in the same situation under the same property rights institu-
tion. Changing contracts changes efficiency. The institution of property
rights can be resolved into contractual rights, that is, the right of use, the
right of income, and the right of transfer. The key to the success of China’s
rural reform is the changing of the contract between the farmers and the
state and the collective from fixed wages to fixed taxes and fixed rent with-
out changing the land property rights institution. The former means that,
no matter how hard they try, the income of the farmers will remain
unchanged; the latter means that as long as farmers pay a fixed amount of
tax and of rent, the output increased by their efforts will belong to the
farmers themselves.
Another explanation for the success of China’s reform made by
Professor Steven Cheung is described in his paper entitled “The Economic
System of China” presented at the 2008 Chicago conference. He noted
that the success of China’s reform mainly depends on competition among
county governments. The object of competition is capital and human
resources. The means of this competition is the reduction of the price of
land. To win firms’ investment in locality, land price can be reduced to
zero or even negative values. The county government’s revenue depends
on taxes. In 2011, Steven Cheung held a conference on the “Economic
System of China” in Shenzhen. My chapter “On the Homology, Separation,
and Substitution of Tax and Rent” was written for this conference. I
appreciate Professor Steven Cheung’s deep understanding of the relation-
ship between rent and tax. I think this understanding is probably related
to his permanent residence in Hong Kong, because Hong Kong is a zero
xvi PREFACE TO VISION AND CALCULATION

tariff-low tax-high land price area. The local government’s finance mainly
depends on the income from land leases. If an economic agent is both the
landowner and the tax collector, there will be some substitution made
between rent and tax. A low tax rate means a high rent rate. If the county
governments in mainland China have both land rights and tax power, it is
a reasonable choice for them to reduce the land price and seek taxes.
However, Professor Steven Cheung has made a small mistake here, that is,
according to the constitution, rural land is not owned by the government,
and the low-cost land provided by the county government to enterprises
has been seized from the hands of farmers by force. When the property
rights institution is destroyed, the price of land is distorted, and his theory
appears as a miscalculation.
The other two important phenomena leading to China’s miracle are
the emergence of specialized markets and urbanization. I have discussed
these phenomena in two chapters, “The Economic Logic of Specialized
Markets” and “Transactions and Cities.” The specialized market is espe-
cially developed in Zhejiang Province. I have been to Haining’s leather
clothing market, Taizhou’s plastic small furniture market, Yongjia’s
bridgehead button market, Liushi’s electrical appliance market, and the
like, which are all specialized markets covering the whole country of
China; the market radius of Yiwu’s small commodity market extends
beyond China’s borders. Why can specialized markets exist? It is because a
specialized market is specialized in selling a certain kind of good, so that
various designs, styles, varieties, and brands of this kind of good can be
sold in one market. This will bring consumers the utility of variety, that is
to say, the selection range of commodities will be increased so that they
can be closer to the consumers’ own preferences. For this extra utility,
consumers are willing to go further to visit markets. This is the main rea-
son for the existence and development of specialized markets. Due to the
huge demand brought about by the specialized market, enterprises gather
around the market for production so that the specialized market drives the
industrial development of the surrounding areas. This is one of the impor-
tant characteristics of the economic development in Zhejiang Province.
The development of China as a whole is an enlarged version of this
specialized market model. Large cities along the coast and in mainland
China are formed by the aggregation of many specialized markets, whose
market radius is as large as the world. The huge demand flowing into the
huge cities attracts a large number of Chinese and foreign enterprises to
invest in these cities and their surrounding areas, which in turn drives the
 PREFACE TO VISION AND CALCULATION xvii

expansion of these cities. Therefore, with China’s decades of economic

take-off, this is a rapid urbanization process. The urbanization rate (the
proportion of urban population to the total population) has increased
from 30% in 1996 to 60% in 2018, with an average of 17 million farmers
entering the cities every year. According to William Lewis, urbanization is
one of the two main driving forces of modern economic development, and
the other is industrialization. Urbanization brings a huge demand for
municipal infrastructure investment and housing investment; it also brings
a substantial increase in the income of rural residents after they become
urban residents, and it brings important changes in their consumption
habits to form a new permanent consumption demand. According to my
estimation, in recent years, China’s annual investment in the municipal
infrastructure has been approximately 2.5 trillion yuan. If the target of
China’s urbanization rate is 80%, then the promotion of urbanization to
China’s economic growth will still last for more than ten years.
In 2010, the Qianhai Cooperation Zone of Shenzhen invited us to
develop urban industrial planning, which enabled me to think more deeply
about this issue. In this regard, Krugman and Masahisa Fujita are pioneers.
They believe that the scale economy of production makes people gather
into cities. However, there seems to be a gap. In my opinion, cities are
based on transactions. Because the trade brings the trade dividend, people
will gather for the trade and then bring the market network externality;
that is, the growth of the trade opportunity is faster than that of the popu-
lation density, which will bring more trade dividends and further promote
the agglomeration of people. Therefore, the process circles and repeats in
this manner. At the same time, agglomeration will also bring the external
costs of congestion. The trade dividends minus the external costs of con-
gestion is considered the “agglomeration rent.” When the population
density reaches a certain degree, the agglomeration rent reaches the maxi-
mum value, and the size of the city is also determined. Here, the transac-
tion is the basic unit of research. Coincidentally, institutional economics is
also based on using transactions as the basic unit of research; thus, here,
spatial economics and institutional economics connect with each other.
According to this principle, I have developed a planning model that com-
bines spatial economics and institutional economics, which is a general
equilibrium model considering spatial and institutional factors. It can not
only help local governments plan but also test institutions and policies.
This kind of city-based research model can also be used in research on
the Internet. The two aspects have a common feature, that is, the gathering
xviii PREFACE TO VISION AND CALCULATION

of people. On the Internet, this is seen as virtual agglomeration. The rise of

Internet giants such as Alibaba and Tencent after 2000 is the continuation
of the Chinese miracle on the Internet. However, their business models
have some puzzling points. Specifically, the marginal cost of online transac-
tions or social platforms is zero, so according to the microeconomics doc-
trine, the price of their services should be zero; however, according to this
method, they will have no money to earn. This is very similar to the “utility
pricing problem” discussed by Coase many years ago, which stated that the
marginal cost of public utilities with the nature of natural monopoly is
lower than the average fixed cost. Thus, if such goods are priced according
to the marginal cost, they will bring losses. Harold Hotelling advocated
that the government should subsidize the loss, while Coase proposed two-
part pricing, that is, consumers should pay both the marginal cost and the
average fixed cost. Still, there is no subsidy from the government, and the
ordinary consumers of Taobao or WeChat have not paid a cent for their
services. Thus, how can Alibaba and Tencent make money?
I explain this in the chapter “Zero Marginal Cost and Virtual Rent.”
When Alibaba and Tencent provide free services to consumers, then these
consumers gather, of course, within the virtual space of the Internet.
However, that is enough. As long as they can communicate with each oth-
er’s willingness to buy and sell and actually close deals, then they have an
experience similar to meeting in the real market, but the congestion exter-
nalities are almost gone. The previous discussion has noted that as long as
people gather, there will be agglomeration rent. Because the agglomera-
tion is created by Alibaba and Tencent’s free services, they have reason to
collect rent. The objects of rent collection are those who want to occupy a
more central position in the virtual space; the formats of rent collection can
be platform royalties, transaction commissions, bidding for a more central
position, and so on. As it turns out, the rents they receive not only offset
the costs but also generate surpluses. This is their business model.
There are some additional papers that I also think are very valuable.
However, I think the Preface should not be too long, so I would like to talk
about them briefly. Not counting the recent trade war, in the process of
China’s marketization, there are two relatively large external influences: the
Asian financial crisis and the American financial crisis. In my two chapters,
“Hedge Funds, Financial Markets, and Nation-States” and “The Institutional
Factors of the Financial Crisis in the United States,” I discussed these crises
from the perspective of China. It is worth emphasizing that I put forward
“loss equilibrium” in my later chapter to describe the situation in which
people are willing to accept losses to obtain the possibility of huge profits.
 PREFACE TO VISION AND CALCULATION xix

In my chapter “A General Theory of Rent-Seeking: Rent Dissipating, Rent

Keeping, and Rent-Seeking,” I mainly discussed the rent brought about by
government regulation in China and the various ways that people, enter-
prises, or government officials try to retain rent when they see that the rent
values may dissipate. Another chapter, “Medical Insurance Paradox: A
Hypothesis on Medical Price Increases in Proportion to Copayment Rate
Decreases and Verification in China,” is a byproduct of my research at the
Unirule Institute of Economics. We found that the rapid growth of medical
expenses in China seems to be closely related to the popularity of medical
insurance; thus, we put forward a hypothesis that the price of medicine is
inversely proportional to the copay rate. Our research generally supports
this hypothesis.
The last two chapters, “Religious Person and His or Her Implication in
Institutions” and “On the Theological Coordinate of Economics,” are
two chapters that go beyond the scope of economics. The real world must
be beyond the scope of economic explanation. In the past two decades,
some masters of economics have also paid attention to this problem. For
example, when discussing the constitution, James Buchanan proposed
that the term of the rational economic person alone could not explain why
the U.S. Constitution drafters would consider the interests of future gen-
erations, and he explained it with “ethics of constitutional citizenship.”
The Santa Fe School proposed that a society would collapse if there were
only economic persons and no strong reciprocators. Compared with eco-
nomic men, religious men do not care about interests; thus, they either are
strong reciprocators of society or have ethics of constitutional citizenship.
By God’s measure, even if human beings no longer existed, He would still
be doing something toward the rebirth of human beings or intelligent
creatures similar to human beings hundreds of millions of years later. This
is a matter that can only be understood if we get rid of the current utilitar-
ian computing. If we only see the immediate utility, then human beings
could have neither become human beings nor developed today’s civiliza-
tions. In contemporary China, familism has disintegrated, but most of the
people we see are individuals without faith. Only when a group of elites
has emerged consisting of those who have transcended utilitarianism and
who firmly believe that the natural order is good under any circumstances
can Chinese civilization be truly revived.

Beijing, China Sheng Hong

November 16, 2019
 Contents

1 On Familism  1
1.1 A Family Model  2
1.2 The Maximization of Family Interests  5
1.3 The Reinforced Family Institutions of China  9
1.4 The Moral Education of Familism and Transcendence
Beyond Beyond Life and Death 11
1.5 The Border of Family and Competition Between Families 13
1.6 The Family-Based Political Structure 19
1.7 The Familist Constitutional Framework 25
1.8 Conclusion: The Research Approach on Familism and
Individualism 29
References 33

2 Vision and Calculation 37

2.1 The Scope and Results of Calculation 38
2.2 Why Is Vision Bounded? 41
2.3 Big Games and Small Games 44
2.4 Treat Vision as a Variable 46
2.5 Vision, Human Instinct, and Human Society 48
2.6 Conclusion 50
References 50

xxi
Another random document with
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players. The IBM 704 computer has been programmed to inspect the
results of its possible decisions several moves ahead and to select
the best choice. At the end of the game it prints out the winner and
thanks its opponent for the game. Rated as polite, but only an
indifferent player by experts, the computer is much like the checker-
playing dog whose master scoffed at him for getting beaten three
games out of five. Chess may well be an ultimate challenge for any
kind of brain, since the fastest computer in operation today could not
possibly work out all the possible moves in a game during a human
lifetime!
As evidenced in the science-fiction treatment early machines got,
the first computers were monsters at least in size. Pioneering design
efforts on machines with the capacity of the brain led to plans for
something roughly the size of the Pentagon, equipped with its own
Niagara for power and cooling, and a price tag the world couldn’t
afford. As often seems to happen when a need arises, though, new
developments have come along to offset the initial obstacles of size
and cost.
One such development was the transistor and other
semiconductor devices. Tiny and rugged, these components require
little power. With the old vacuum-tubes replaced, computers shrank
immediately and dramatically. On the heels of this micro-
miniaturization have come new and even smaller devices called
“ferrite cores” and “cryotrons” using magnetism and supercold
temperatures instead of conventional electronic techniques.
As a result, an amazing number of parts can be packed into a tiny
volume. So-called “molecular electronics” now seems to be a
possibility, and designers of computers have a gleam in their eyes as
they consider progress being made toward matching the “packaging
density” of the brain. This human computer has an estimated 100
billion parts per cubic foot!
We have talked of reading and translating. Some new computers
can also accept voice commands and speak themselves. Others
furnish information in typed or printed form, punched cards, or a
display on a tube or screen.
 Like us, the computer can be frustrated by a task beyond its
capabilities. A wrong command can set its parts clicking rapidly but
in futile circles. Early computers, for example, could be panicked by
the order to divide a number by zero. The solution to that problem of
course is infinity, and the poor machine had a hard time trying to
make such an answer good.

Aeronutronic Division, Ford Motor Co.

This printed-circuit card contains more than 300 BIAX memory elements. Multiples
of such cards mounted in computers store large amounts of information.

There are other, quainter stories like that of the pioneer General
Electric computer that simply could not function in the dark. All day
long it hummed efficiently, but problems left with it overnight came
out horribly botched for no reason that engineers could discover. At
last it was found that a light had to be left burning with the scary
machine! Neon bulbs in the computer were enough affected by light
and darkness that the delicate electronic balance of the machine had
been upset.
Among the computer’s unusual talents is the ability to compose
music. Such music has been published and is of a quality to give rise
to thoughtful speculation that perhaps great composers are simply
good selectors of music. In other words, all the combinations of
notes and meter exist: the composer just picks the right ones. No
less an authority than Aaron Copland suggests that “we’ll get our
new music by feeding information into an electronic computer.” Not
content with merely writing music, some computers can even play a
tune. At Christmas time, carols are rendered by computers specially
programmed for the task. The result is not unlike a melody played on
a pipe organ.
In an interesting switch of this musical ability on the part of the
machine, Russian engineers check the reliability of their computers
by having them memorize Mozart and Grieg. Each part of the
complex machines is assigned a definite musical value, and when
the composition is “played back” by the computer, the engineer can
spot any defects existing in its circuitry. Such computer maintenance
would seem to be an ideal field for the music lover.
In a playful mood, computers match pennies with visitors, explain
their inner workings as they whiz through complex mathematics, and
are even capable of what is called heuristic reasoning. This amounts
to playing hunches to reach short-cut solutions to otherwise
unsolvable problems. A Rand Corporation computer named
JOHNNIAC demonstrated this recently. It was given some basic
axioms and asked to prove some theorems. JOHNNIAC came up
with the answers, and in one case produced a proof that was simpler
than that given in the text. As one scientist puts it, “If computers don’t
really think, they at least put on a pretty creditable imitation of the
real thing.”
 Computers are here to stay; this has been established beyond
doubt. The only question remaining is how fast the predictions made
by dreamers and science-fiction writers—and now by sober
scientists—will come to be a reality. When we consider that in the
few years since the 1953 crop of computers, their capacity and
speed has been increased more than fiftyfold, and is expected to
jump another thousandfold in two years, these dreams begin to
sound more and more plausible.
One quite probable use for computers is medical diagnosis and
prescription of treatment. Electronic equipment can already monitor
an ailing patient, and send an alarm when help is needed. We may
one day see computers with a built-in bedside manner aiding the
family doctor.
The accomplished inroads of computing machines in business are
as nothing to what will eventually take place. Already computer
“game-playing” has extended to business management, and serious
executives participate to improve their administrative ability. We
speak of decision-making machines; business decisions are logical
applications for this ability. Computers have been given the job of
evaluating personnel and assigning salaries on a strictly logical
basis. Perhaps this is why in surveys questioning increased use of
the machines, each executive level in general tends to rate the
machine’s ability just below its own.
Other games played by the computer are war games, and
computers like SAGE are well known. This system not only monitors
all air activity but also makes decisions, assigns targets, and then
even flies the interceptor planes and guided missiles on their
missions. Again in the sky, the increase of commercial air traffic has
perhaps reached the limit of human ability to control it. Computers
are beginning to take over here too, planning flights and literally
flying the planes.
Surface transport can also be computer-controlled. Railroads are
beginning to use the computer techniques, and automatic highways
are inevitable. Ships also benefit, and special systems coupled to
radar can predict courses and take corrective action when
necessary.
Men seem to have temporarily given up trying to control the
weather, but using computers, meteorologists can take the huge
mass of data from all over the world and make predictions rapidly
enough to be of use.
We have talked of the computer’s giant strides in banking. Its wide
use in stores is not far off. An English computer firm has designed an
automatic supermarket that assembles ordered items, prices them,
and delivers them to the check stand. At the same time it keeps a
running inventory, price record, and profit and loss statement,
besides billing the customer with periodic statements. The
storekeeper will have only to wash the windows and pay his electric
power bill.
Even trading stamps may be superseded by computer techniques
that keep track of customer purchases and credit him with premiums
as he earns them. Credit cards have helped pioneer computer use in
billing; it is not farfetched to foresee the day when we are issued a
lifetime, all-inclusive credit card—perhaps with our birth certificate!—
a card with our thumbprint on it, that will buy our food, pay our rent
and utilities and other bills. A central computer system will balance
our expenses against deposits and from time to time let us know
how we stand financially.
As with many other important inventions, the computer and its
technology were spurred by war and are aided now by continuing
threats of war. It is therefore pleasant to think on the possibilities of a
computer system “programmed” for peace: a gigantic, worldwide
system whose input includes all recorded history of all nations, all
economic and cultural data, all weather information and other
scientific knowledge. The output of such a machine hopefully would
be a “best plan” for all of us. Such a computer would have no ax to
grind and no selfish interests unless they were fed into it.
Given all the facts, it would punch out for us a set of instructions
that would guarantee us the best life possible. This has long been a
dream of science writers. H. G. Wells was one of these, suggesting a
world clearinghouse of information in his book World Brain written in
the thirties. In this country, scientist Vannevar Bush suggested a
similar computer called “Memex” which could store huge amounts of
data and answer questions put to it.
The huge amounts of information—books, articles, speeches, and
records of all sorts—are beginning to make it absolutely necessary
for an efficient information retrieval system. Many cases have been
noted in which much time and effort are spent on a project which has
already been completed but then has become lost in the welter of
literature crammed into libraries. The computer is a logical device for
such work; in a recent test such a machine scored 86 per cent in its
efforts to locate specific data on file. Trained workers rated only 38
per cent in the same test!

The Boeing Co.

Engineers using computers to solve complex problems in aircraft design.

 The science of communication is advancing along with that of
computers, and can help make the dream of a worldwide “brain”
come true. Computers in distant cities are now linked by telephone
lines or radio, and high-speed techniques permit the transmission of
many thousands of words per second across these “data links.” An
interesting sidelight is the fact that an ailing computer can be hooked
by telephone line with a repair center many miles away and its
ailments diagnosed by remote control. Communications satellites
that are soon to be dotting the sky like tiny moons may well play a
big part in computing systems of the future. Global weather
prediction and worldwide coordination of trade immediately come to
mind.
While we envision such far-reaching applications, let’s not lose
sight of the possibilities for computer use closer to home—right in
our homes, as a matter of fact. Just as early inventors of mechanical
power devices did not foresee the day when electric drills and saws
for hobbyist would be commonplace and the gasoline engine would
do such everyday chores as cutting the grass in our yards, the
makers of computers today cannot predict how far the computer will
go in this direction. Perhaps we may one day buy a “Little Dandy
Electro-Brain” and plug it into the wall socket for solving many of the
everyday problems we now often guess wrong on.
 Royal McBee Corp.

Students at Staples High School, Westport, Connecticut, attend a summer session

to learn the techniques of programming and operating an electronic computer.
 The Saturday Evening Post

“Herbert’s been replaced by an electronic brain—one of the simpler types.”

Some years ago a group of experts predicted that by 1967 the

world champion chess player would be an electronic computer. No
one has yet claimed that we would have a president of metal and
wire, but some interesting signposts are being put up. Computers
are now used widely to predict the result of elections. Computers
count the votes, and some have suggested that computers could
make it possible for us to vote at home. The government is
investigating the effectiveness of a decision-making computer as a
stand-by aid for the President in this complex age we are moving
into. No man has the ability to weigh every factor and to make
decisions affecting the world. Perhaps a computer can serve in an
advisory capacity to a president or to a World Council; perhaps—
It is comforting to remember that men will always tell the computer
what it is supposed to do. No computer will ever run the world any
more than the cotton gin or the steam engine or television runs the
world. And in an emergency, we can always pull out the wallplug,
can’t we?
“History is but the unrolled scroll of prophecy.”

—James A. Garfield
2: The Computer’s Past

Although it seemed to burst upon us suddenly, the jet airplane

can trace its beginnings back through the fabric wings of the Wrights
to the wax wings of Icarus and Daedalus, and the steam aerophile of
Hero in ancient Greece. The same thing is true of the computer, the
“thinking machine” we are just now becoming uncomfortably aware
of. No brash upstart, it has a long and honorable history.
Naturalists tell us that man is not the only animal that counts.
Birds, particularly, also have an idea of numbers. Birds, incidentally,
use tools too. We seem to have done more with the discoveries than
our feathered friends; at least no one has yet observed a robin with a
slide rule or a snowy egret punching the controls of an electronic
digital computer. However, the very notion of mere birds being tool
and number users does give us an idea of the antiquity and lengthy
heritage of the computer.
The computer was inevitable when man first began to make his
own problems. When he lived as an animal, life was far simpler, and
all he had to worry about was finding game and plants to eat, and
keeping from being eaten or otherwise killed himself. But when he
began to dabble in agriculture and the raising of flocks, when he
began to think consciously and to reflect about things, man needed
help.
First came the hand tools that made him more powerful, the
spears and bows and arrows and clubs that killed game and
enemies. Then came the tools to aid his waking brain. Some 25,000
years ago, man began to count. This was no mean achievement, the
dim, foggy dawning of the concept of number, perhaps in the caves
in Europe where the walls have been found marked with realistic
drawings of bison. Some budding mathematical genius in a skin
garment only slightly shaggier than his mop of hair stared blinking at
the drawings of two animals and then dropped his gaze to his two
hands. A crude, tentative connection jelled in his inchoate gray
matter and he shook his head as if it hurt. It was enough to hurt, this
discovery of “number,” and perhaps this particular pioneer never
again put two and two together. But others did; if not that year, the
next.
Armed with his grasp of numbers, man didn’t need to draw two
mastodons, or sheep, or whatever. Two pebbles would do, or two
leaves or two sticks. He could count his children on his fingers—we
retain the expression “a handful” to this day, though often our
children are another sort of handful. Of course, the caveman did not
of a sudden do sums and multiplications. When he began to write,
perhaps 5,000 years later, he had formed the concept of “one,” “two,”
“several,” and “many.”
Besides counting his flock and his children, and the number of the
enemy, man had need for counting in another way. There were the
seasons of the year, and a farmer or breeder had to have a way of
reckoning the approach of new life. His calendar may well have been
the first mathematical device sophisticated enough to be called a
computer.
It was natural that numbers be associated with sex. The calendar
was related to the seasons and the bearing of young. The number
three, for example, took on mystic and potent connotation,
representing as it did man’s genitals. Indeed, numbers themselves
came quaintly to have sex. One, three, and the other odd numbers
were male; the symmetrical, even numbers logically were female.
The notion that man used the decimal system because of his ten
fingers and toes is general, but it was some time before this
refinement took place. Some early peoples clung to a simpler system
with a base of only two; and interestingly a tribe of Australian
aborigines counts today thus: enea (1), petchaval (2), enea
petchaval (3), petchaval petchaval (4). Before we look down our
noses at this naïve system, let us consider that high-speed electronic
computers use only two values, 1 and 0.
But slowly symbols evolved for more and more numbers, numbers
that at first were fingers, and then perhaps knots tied in a strip of
hide. This crude counting aid persists today, and cowboys
sometimes keep rough tallies of a herd by knotting a string for every
five that pass. Somehow numbers took on other meanings, like
those that figure in courtship in certain Nigerian tribes. In their
language, the number six also means “I love you.” If the African belle
is of a mind when her boyfriend tenderly murmurs the magic number,
she replies in like tone, “Eight!”, which means “I feel the same way!”
From the dawn of history there have apparently been two classes
of us human beings, the “haves” and the “have nots.” Nowadays we
get bills or statements from our creditors; in early days, when a slate
or clay tablet was the document, a forerunner of the carbon copy or
duplicate paper developed. Tallies were marked for the amount of
the debt, the clay tablet was broken across the marks, and creditor
and debtor each took half. No chance for cheating, since a broken
half would fit only the proper mate!
Numbers at first applied only to discrete, or distinctly separate,
things. The scratches on a calendar, the tallies signifying the count of
a flock; these were more easily reckoned. The idea of another kind
of number inspired the first clocks. Here was a monumental
breakthrough in mathematics. Nature provided the sunrise that
clearly marked the beginning of each day; man himself thought to
break the day into “hours,” or parts of the whole. Such a division led
eventually to measurement of size and weight. Now early man knew
not only how many goats he had, but how many “hands” high they
were, and how many “stones” they weighed. This further division
ordained another kind of mechanical computer man must someday
contrive—the analog.
The first counting machines used were pebbles or sea shells. For
the Stone Age businessman to carry around a handful of rocks for all
his transactions was at times awkward, and big deals may well have
gone unconsummated for want of a stone. Then some genius hit on
the idea of stringing shells on a bit of reed or hide; or more probably
the necklace came first as adornment and the utilitarian spotted it
after this style note had been added. At any rate, the portable adding
machine became available and our early day accountant grew adroit
at sliding the beads back and forth on the string. From here it was
only a small step, taken perhaps as early as 3000 B.C., to the rigid
counter known as the abacus.
The word “counter” is one we use in everyday conversation. We
buy stock over the counter; some deals are under the counter. We all
know what the counter itself is—that wide board that holds the cash
register and separates us from the shopkeeper. At one time the cash
register was the counter; actually the counting board had rods of
beads like the abacus, or at least grooves in which beads could be
moved. The totting up of a transaction was done on the “counter”; it
is still there although we have forgotten whence came its name.
The most successful computer used for the next 5,000 years, the
portable counter, or the abacus, is a masterpiece of simplicity and
effectiveness. Though only a frame with several rows of beads, it is
sophisticated enough that as late as 1947 Kiyoshi Matsuzake of the
Japanese Ministry of Communications, armed with the Japanese
version—a soroban, bested Private Tom Wood of the U. S. Army of
Occupation punching the keys of an up-to-the-minute electric
calculating machine in four of five problem categories! Only recently
have Japanese banks gone over to modern calculators, and
shopkeepers there and in other lands still conduct business by this
rule of thumb and forefinger.
 The abacus, ancient mechanical computer, is still in use in many parts of the
world. Here is the Japanese version, the soroban, with problem being set up.

The name abacus comes to us by way of the Greek abax,

meaning “dust.” Scholars infer that early sums were done schoolboy
fashion in Greece with a stylus on a dusty slate, and that the word
was carried over to the mechanical counter. The design has changed
but little over the years and all abacuses bear a resemblance. The
major difference is the number of beads on each row, determined by
the mathematical base used in the particular country. Some in India,
for example, were set up to handle pounds and shillings for use in
shops. Others have a base of twelve. The majority, however, use the
decimal system. Each row has seven beads, with a runner
separating one or two beads from the others. Some systems use two
beads on the narrow side, some only one; this is a mathematical
consideration with political implications, incidentally: The Japanese
soroban has the single-bead design; Korea’s son pan uses two.
When Japan took over Korea the two-bead models were tabu, and
went out of use until the Koreans were later able to win their
independence again.
About the only thing added to the ancient abacus in recent years is
a movable arrow for marking the decimal point. W. D. Loy patented
such a gadget in the United States. Today the abacus remains a
useful device, not only for business, but also for the teaching of
mathematics to youngsters, who can literally “grasp their numbers.”
For that reason it ought also to be helpful to the blind, and as a
therapeutic aid for manual dexterity. Apparently caught up in the
trend toward smaller computers, the abacus has been miniaturized
to the extent that it can be worn as earrings or on a key chain.
Even with mechanical counters, early mathematicians needed
written numbers. The caveman’s straight-line scratches gave way to
hieroglyphics, to the Sumerian cuneiform “wedges,” to Roman
numerals, and finally to Hindu and Arabic. Until the numbers, 1, 2, 3,
4, 5, 6, 7, 8, 9, and that most wonderful of all, 0 or zero,
computations of any but the simplest type were apt to be laborious
and time-consuming. Even though the Romans and Greeks had
evolved a decimal system, their numbering was complex. To count to
999 in Greek required not ten numbers but twenty-seven. The
Roman number for 888 was DCCCLXXXVIII. Multiplying CCXVII
times XXIX yielded an answer of MMMMMMCCXCIII, to be sure, but
not without some difficulty. It required an abacus to do any kind of
multiplication or division.
 Indeed, it was perhaps from the abacus that the clue to Arabic
simplicity came. The Babylonians, antedating the Greeks, had
nevertheless gone them one better in arithmetic by using a “place”
system. In other words, the position of a number denoted its value.
The Babylonians simply left an empty space between cuneiform
number symbols to show an empty space in this positional system.
Sometime prior to 300 B.C. a clever mathematician tired of losing
track and punched a dot in his clay tablet to fill the empty space and
avoid possible error.
The abacus shows these empty spaces on its rows of beads, too,
and finally the Hindus combined their nine numerals with a “dot with
a hole in it” and gave the mathematical world the zero. In Hindu it
was sifr, corrupted to zephirium in Latin, and gives us today both
cipher and zero. This enigma of nothingness would one day be used
by Leibnitz to prove that God made the world; it would later become
half the input of the electronic computer! Meantime, it was developed
independently in various other parts of the world; the ancient Mayans
being one example.
Impressed as we may be by an electronic computer, it may take
some charity to recognize its forebears in the scratchings on a rock.
To call the calendar a computer, we must in honesty add a qualifying
term like “passive.” The same applies to the abacus despite its
movable counters. But time, which produced the simple calendar,
also furnished the incentive for the first “active” computers too. The
hourglass is a primitive example, as is the sundial. Both had an
input, a power source, and a readout. The clock interestingly ended
up with not a decimal scheme, but one with a base of twelve. Early
astronomers began conventionally bunching days into groups of ten,
and located different stars on the horizon to mark the passage of the
ten days. It was but a step from here to use these “decans,” as they
were called, to further divide each night itself into segments. It turned
out that 12 decans did the trick, and since symmetry was a virtue the
daylight was similarly divided by twelve, giving us a day of 24 hours
rather than 10 or 20.
From the simple hourglass and the more complex water clocks,
the Greeks progressed to some truly remarkable celestial motion
computers. One of these, built almost a hundred years before the
birth of Christ, was recently found on the sea bottom off the Greek
island of Antikythera. It had been aboard a ship which sank, and its
discovery came as a surprise to scholars since history recorded no
such complex devices for that era. The salvaged Greek computer
was designed for astronomical work, showing locations of stars,
predicting eclipses, and describing various cycles of heavenly
bodies. Composed of dozens of gears, shafts, slip rings, and
accurately inscribed plates, it was a computer in the best sense of
the word and was not exceeded technically for many centuries.
The Greek engineer Vitruvius made an interesting observation
when he said, “All machinery is generated by Nature and the
revolution of the universe guides and controls. Our fathers took
precedents from Nature—developed the comforts of life by their
inventions. They rendered some things more convenient by
machines and their revolutions.” Hindsight and language being what
they are, today we can make a nice play on the word “revolution” as
applied to the machine. The Antikythera computer was a prime
example of what Vitruvius was talking about. Astronomy was such a
complicated business that it was far simpler to make a model of the
many motions rather than diagram them or try to retain them in his
mind.
There were, of course, some die-hard classicists who decried the
use of machines to do the work of pure reasoning. Archytas, who
probably invented the screw—or at least discovered its mechanical
principle—attempted to apply such mechanical devices to the solving
of geometrical problems. For this he was taken to task by purist
Plato who sought to preserve the distinct division between “mind”
and “machine.”
Yet the syllogistic philosophers themselves, with their major
premise, minor premise, and conclusion, were unwittingly setting the
stage for a different kind of computer—the logic machine. Plato
would be horrified today to see crude decks of cards, or simple
electromechanical contrivances, solving problems of “reason” far
faster than he could; in fact, as fast as the conditions could be set
into them!