A Forgotten System: The Sophisticated Bidding Practices of Imperial China

The Song Dynasty (960–1279 CE) is often celebrated for its artistic and technological achievements, but one of its most overlooked innovations was its remarkably advanced system of public auctions and bidding—centuries before similar practices emerged in Europe. Known as maipu (买扑), this system governed everything from liquor monopoly licenses to government land leases with a level of transparency and procedural rigor that rivals modern procurement methods.

Historical records reveal that the Song government employed two distinct auction formats:
– Sealed-Bid Tenders (“实封投状”): Anonymous bids submitted in locked wooden boxes, later opened publicly with the highest bidder winning.
– Open Auctions (“明状添钱”): Live competitive bidding events that were eventually discontinued due to reckless overbidding.

A surviving 12th-century manual details how magistrates:
1. Set reserve prices based on historical market data
2. Posted public notices in commercial districts
3. Required bidders to provide financial guarantees
4. Granted incumbent operators right of first refusal
5. Imposed 10% penalties on winning bidders who defaulted

When Ancient China Discovered Keynesian Economics

Eight centuries before John Maynard Keynes formulated his theories of economic stimulus, Song officials were already applying similar principles to disaster relief. During the 1050 Zhejiang famine, Governor Fan Zhongyan famously:
– Funded lavish dragon boat festivals to boost tourism spending
– Coordinated temple construction projects to employ 10,000 workers daily
– Faced (and survived) censorial investigation for his unconventional methods

Contemporary observer Shen Kuo noted this produced better outcomes than traditional grain handouts: “While other regions saw starvation migrations, Hangzhou remained orderly with full employment.”

The Free Market Famine Solution

In 1075, another economic innovator—Governor Zhao Bian—defied conventional wisdom during a rice shortage by:
1. Repealing price controls that had created black markets
2. Actively encouraging merchants to sell at market rates
3. Watching as increased supply naturally lowered prices

Ming Dynasty commentator Feng Menglong later praised this approach: “When goods abound, prices fall—Zhao understood what petty bureaucrats never grasp.”

Why These Innovations Disappeared

The Mongol conquest (1279) shattered China’s institutional continuity. While Yuan rulers retained some tax auction systems, the Ming and Qing dynasties abandoned most Song economic innovations—a historical regression that economist Angus Maddison called “one of history’s great productivity paradoxes.”

Lessons for the Modern World

These 1,000-year-old case studies remain relevant today:
– The 1050 stimulus mirrors modern infrastructure investment debates
– Zhao Bian’s price deregulation anticipates Milton Friedman’s critiques of government controls
– Song procurement rules still inform anti-corruption measures in developing nations

As we grapple with 21st-century economic challenges, the Song Dynasty’s experimental spirit—its willingness to test both market-driven and interventionist solutions—offers timeless insights about pragmatic governance.