A deep dive into economic history

Looking back through the dynasties with Professor James Kai-sing Kung

An economist (generally speaking) uses quantitative data to draw empirical conclusions; a historian (generally speaking) uses qualitative sources to draw literary narratives about the past. Professors of economic history are concerned with both quantitative data and qualitative research. They apply economic theory to periods of history to make better sense of the world we live in.

For instance, Professor James Kai-sing Kung, head of economics at HKU Business School, has applied his economic historian glasses to write papers about China’s civil exam system (keju), examining how—over 600 years, or two dynasties—this system has influenced education outcomes and the social capital of the Chinese population, today.

In January 2023, the University of Melbourne will welcome Professor Kung as the inaugural Griffin Chair in Economic History at the Faculty of Business and Economics. It’s a post he is extremely excited to take up, having connected with several members of the Faculty in Melbourne in 2008. “The city left a wonderful impression on me,” Professor Kung said, “When the opportunity presented itself to jump hemispheres, I thought ‘Why not?’”

Man in suit smiling
Professor James Kai-sing Kung

The Griffin Chair in Economic History position was made available through a $5 million dollar gift from the Peter Griffin and Terry Swann Foundation, who trusted the faculty to expand this lesser-known area of teaching. For Peter Griffin AM, he hopes his donation will help to educate future generations on the mistakes of their predecessors, to mitigate similar economic missteps in the future. "I am passionate about Economic History and am very keen that students leave the University of Melbourne with a good understanding of business and finance, and also a deep awareness of previous mistakes made by governments, industry and the banking sector,” he said.

An international search for the position was undertaken in 2021 and Professor Kung proved the perfect fit. With a Bachelor of Arts from the University of Guelph in Canada, a Master of Philosophy, and Ph.D. in Economics from the University of Cambridge in the UK, Professor Kung’s academic background is expansive. He has lived and worked across three continents and is eager to make Australia the fourth at the start of next year.

“My work as a professor is no different from the works of many other professors, I suppose,” he says. He teaches, he manages the unending administration of being a Department Head, he supervises a handful of PHD candidates, and he also finds time to conduct his own research.

As a teacher, Professor Kung is driven by the purpose of uncovering his students’ intellectual passions. “They might be interested in something one week, and then move on to something else three weeks later. And that is fine. You have to help them strike a balance between what they say they are interested in, and the feasibility of being able to acquire the necessary data to work on a particular project.”

With the increasing availability of data, and the continued advancements in computing, there’s no shortage of material for Professor Kung’s students to analyse. Finding a topic that sustains their interest to endure the rigorous and lengthy economic analysis required, however, is often the hardest part. The trick to success, he says, is to “read and read and read”. Read as much as you can and see what sticks and why, he explains.

Professor Kung first became interested in Economic History around 20 years ago. “My sense at that time was that historians made very powerful and very strong claims about certain views.” He often found the work of historians deeply inspiring, but not sufficiently supported by data – not to mention the analysis of that data. “I was trained as an economist, so you have to back your argument up with good data and with good analysis.” However, the issues being researched by his historian colleagues were usually more alluring, he clarifies. “With the past, nothing is going to change; things have already happened the way they did. So, it's up to the economic historians to take out the data and perform the analysis to work out why.”

Professor Kung also wears a political economist hat. In 2019 he published a paper on political connections in China, specifically looking at corruption at a senior level of government. This paper, Busting The “Princelings”: The Campaign Against Corruption in China’s Primary Land Market was easily the “scariest” paper he’s ever worked on, he says.

Published in one of the world’s top journals, Harvard University’s Quarterly Journal of Economics, Professor Kung and his co-author and former student, Ting Chen, used the data of more than a million land transactions in China during 2004–2016 to uncover widespread corruption. Through their careful sifting and analysis of these records, they discovered “where local governments [were] the sole seller, firms linked to members of China’s supreme political elites—the Politburo—obtained a price discount ranging from 55.4% to 59.9% compared with those without the same connections. In return, the provincial party secretaries who provided the discount to these “princeling” firms are 23.4% more likely to be promoted to positions of national leadership.”

The evidence was staggering. Professor Kung and Associate Professor Chen had the results ready for two years before they published. “When we started, we wanted to look at corruption committed by the top echelon of the political elites in China. We constructed a dataset that linked the politburo and traced their heirs and relatives, and the companies that they ran. We then used another dataset of land sales–what’s called the primary land market in China–a market where local government are the sole seller; so, a kind of monopoly structure.”

The professors compiled data on the exact price, location and address with longitude and latitude, who the buyer was and how much they paid on a sample of over one million. “By doing a systematic analysis and merging together these two sets of data, we discovered that firms connected to the politburo were paying systematically less, compared with someone without those political connections.”

“So, what do you do? Do you publish the paper?” Professor Kung asks. “Of course, we were nervous. We were basically suggesting that there was probably a great deal of corruption going on at this high level – not with the politburo members themselves, but with people they were closely related to.”

The authors sat on their research while they contemplated; one week saying ‘yes’, the next ‘no’. With relatives living in mainland China, the risks of releasing their work felt immense. Then one day, Professor Kung had a lightbulb moment. “I thought, why don’t we extend the period of analysis to 2016?” This would incorporate data from the period when General Secretary, Xi Jinping, launched his anti-corruption campaign starting at the end of 2012.

An unprecedented anti-corruption campaign began after the conclusion of the 18th National Congress of the Chinese Communist Party held in Beijing in November 2012.

“We wanted to see if his campaign had some dampening effect, and low and behold, it turned out that it really did. So, we turned the focus of the paper from ‘corruption’, to ‘anti-corruption.’ Although people in the know would realise, you can’t have anti-corruption without corruption in the first place.” Eventually the duo published their work, to widespread commendation. “But if you asked me, was I nervous? Before, during, and even after we published it? Yes, I was nervous,” he says. Professor Kung rejected interviews with several prominent media outlets after the paper was released, claiming the work was entirely academic in nature and could speak for itself.

“Some people hold the view that ‘it’s nothing new; we all know there’s corruption.’ But how do you systematically prove that? How do you measure it? We held a non-cynical view that this is an economic issue…I think it’s an important paper and it certainly required a fair amount of courage,” he says.

More recently, Professor Kung’s paper “Long Live Keju! The Persistent Effects of China’s Civil Examination System”, published in The Economic Journal, won the 2020 Royal Economic Society Prize. With his co-authors (and former students), Ting Chen and Chicheng Ma, Professor Kung set out to explain how the system of keju created China’s distinct group of intellectual elites and—over the course of ten centuries (c. 960-1911AD)—fostered a ‘cultural trait’ that has persisted long after the exam was abolished. Judges praised the “important contribution to the understanding of why education, rather than material wealth, is considered important as a transfer to the next generation in some cultures, but not in others.”

Professor Kung and his colleagues unpacked how the institution of keju created exceptional prestige, and saw generous rewards conferred to those who had attained the highest qualification. And it created a distinct culture of valuing education and yearning for academic success. But at what cost, he asked?

“Over 1000 years, this civil service exam rewarded the winners so generously, both in terms of how much they got to earn, but also, their name would go down in history. If you go to Beijing today, you can still see the names carved on the plates of the so-called Confucian Temple. So, this is literally how the names and reputations are going down…they are carved in stone.”

Candidates gathering around the wall where the results are posted. This announcement was known as "releasing the roll" (放榜). (c. 1540, by Qiu Ying)

In modern-day Beijing, the government have recently introduced a new department in the Education Ministry to regulate the industry of cram schools amid fears young pupils are suffering under the pressure of their education. These regulations are also attempting to mitigate China’s falling birthrate – the cost of additional tutoring on regular Chinese families is said to be impacting the natality of the nation.

Even in Australia today, we’ve seen high schools clamping down on private tutoring and enforcing Saturday sport in a bid to help international students better socialise with their peers. At the selective Melbourne High School, a statement on their website reads: “It is concerning that some of our students receive so much tutoring out of school hours that they do not have the time to pursue other interests, or to develop important relationships.”

Cultures are shaped by the centuries that precede them, and Professor Kung’s research has been able to provide an explanation for the centuries-old traditions associated with this academic rigour. His paper goes further to explain the regional differences in educational attainment around modern-day China, based on the history of keju.

“It's a great example of how and why history matters,” Professor Kung explains.

Professor James Kai-sing Kung commences at the University of Melbourne as the Griffin Chair in Economic History in Semester 1, 2023. Are his future students lucky to learn from him? “I should hope so,” he says laughing.