The Political Economy of the Great Divergence

1. Bureaucratization as a Bumpy Journey: The Rise and Fall of the Imperial Chinese State (JMP)

   Shuyi Yu

   PDF SSRN

   Abstract

   Historians have long documented the rise and fall of the Imperial Chinese state. This paper introduces bureaucratization as a potential mechanism underlying these processes. I model the principal-agent problem inherent in state administration and identify two groups of agents available to the ruler: elites and bureaucrats. Bureaucrats deliver higher returns to the ruler than elites because they can be monitored more effectively. Socioeconomic and technological developments allow the ruler to monitor an increasing share of administrative tasks and reassign them from elites to bureaucrats. Nonetheless, as bureaucrats gradually assume administrative duties, state capacity follows an N-shaped trajectory. It first rises and then declines because expanding opportunities for bureaucratic delegation eventually weaken the credibility of the ruler’s relational contract with elites, inducing them to withdraw effort and reducing the ruler’s aggregate payoff. Historically, this decline aligns with the major downturn experienced by the late imperial Chinese state. The model also predicts a resurgence of the modern Chinese state as bureaucratization reaches a more complete form. I further discuss the potential applicability of the model to the historical development of European states.
2. The Curse of the Mandate of Heaven: A Model of Power Centralization

   Shuyi Yu
3. Great Divergence and Great Convergence: A Theory of Power Dynamics and Social Evolution

   Shuyi Yu

The Political Economy of the Autonomous State

1. A Relational Theory of Power Alternation (Under Review)

   Zhaotian Luo, Zanhui Liu, Yucheng Qiu, Shuyi Yu

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   Abstract

   A long-standing thesis in political economy relates cooperation among rival elites to mechanisms for power alternation. What remains unclear is why ruling elites would voluntarily transfer power if they can instead sustain cooperation by granting political concessions. To resolve this puzzle, we study a setting without external enforcement in which two elite groups may cooperate repeatedly, and the party in power can both make concessions and transfer power. Incumbents cede power in equilibrium because power alternation disciplines concessions through continuation values under future incumbencies, rather than inefficient punishments such as breakdowns of cooperation. Efficient self-enforcing arrangements imply norms that maximize the stability of power, with alternation occurring only when necessary to sustain cooperation. Finally, as the cost of transferring power increases, alternation becomes more frequent and power stability deteriorates.
2. Aristocratic and Bureaucratic Norms in Political Agency Relationship

   Zhaotian Luo, Zanhui Liu, Yucheng Qiu, Shuyi Yu

Other Projects

1. Corrupt Meritocracy: A Model of Bureaucratic Politics

   Shuyi Yu