and party-run labor unions.
(2a) To respond in more detail to the question as to the causes, contexts, and repercussions of the country’s economic dynamics, I propose an interpretation of the modernization of China that does not see the turning point at the end of the 1970s as a complete break with the past, but rather as a gradual, albeit ultimately profound, process of restructuring. Contrary to the notion of a sudden leap from a command to a market economy, I believe that a transition took place from one form of national modernization in classical Maoism to a unique form of capitalist modernization. The aforementioned modernization under Mao already imitated capitalist mechanisms although market forms were largely not included (“protocapitalism”). After the 1970s, China’s key institutions were undergoing a process of change that led to a novel polycentric mixture of plan, market, and other forms of coordination. The subsequent market expansion was not exclusively funded by the new private sector. The figure of the risk-taking, rule-breaking entrepreneur, who, over time, increasingly became symbolic of expertise, moral authority, professionalism, and commercial success also maintained an important position in the state-owned enterprise sector and in government institutions.
(2b) Another factor that is of paramount importance when endeavoring to explain economic dynamics is the existence of favorable global economic circumstances. As well as a number of advantageous domestic institutional and sociostructural preconditions for growth in national income, a range of external factors come into play here. These include the dynamic East Asian economies, “patriotic” ethnic Chinese, and, in the second phase of reform beginning in the 1990s, the transfer of capital from the major OECD economies.
(2c) I also make the assumption that the relative continuity of the economic and political elites secured the reform process. According to economic criteria, this process was a success but the dynamics of the process were uneven and combined and driven by crisis rather than predictable planning. Yet the public-private power elite seen in various segments proved to be a contributing factor in maintaining the status quo. Here, capital valorization processes as key determinants of government policy initiated a series of bureaucratic restructuring measures. At the same time, China’s political system was reorganized to facilitate institutional learning. This was implemented via processes of institutional layering through, for example, new entrepreneurs circumventing formal rules. Up until the 2000s, we frequently heard assumptions (founded on theories of democracy) of a probable regime change in China. Counter to these opinions, on the whole, there is evidence of a continuity of power elites and the political system that have ensured a relatively stable reform path and fostered economic growth. According to a different hypothesis, a key basis for this is the segmentation of the working class and the segregation of the labor market.
(3a) The restructuring of government institutions in the context of a reconfigured yet stable power elite and a rigid political environment contributed to a situation where the Chinese central government and its local counterparts were equipped with greater capacity than in other emerging countries to process the paradoxes of capitalist development. At the same time, however, the discrepancies in the country’s regional development and the multiscale government apparatus have created a social structure that is not free of conflict. The Chinese central government has only temporarily and partially succeeded in gaining control of the internal competition to attract business and investment. Associated with this are the high-risk growth and fiscal policies of the country’s subnational governments, and in the financial system and corporate sector. Hence, the steering capacity of the heterogeneous party-state cannot be hypostasized, and contradictory macroeconomic lines of development as well as limitations of political regulation can be discerned. I will therefore identify factors that have recently contributed to destabilization. In order to attenuate the effects of capitalist modernization, the Chinese central government has been pushing for a comprehensive restructuring of the economy and a reinforcement of domestic consumption. In normative terms, this is motivated by the objective of achieving a “harmonious society” (hexie shehui). As I will attempt to demonstrate, this endeavor is rather difficult to realize in practice, however, also under the Xi Jinping administration.
(3b) In addition to the paradoxical effects of market expansion and political macroregulation, the mechanisms of conflict resolution within the labor system are flawed. There are limitations to Chinese-style labor subordination, which puts the rule of the party-state under considerable strain.
The present work11 pursues two further objectives: first, my intention is to target readers with an interest in the social sciences and, at least to some degree, help them to decipher China’s path to a modernity, which is shaped by capitalism. My second aim is that the research framework developed here and some of the findings resulting from this study may also arouse interest in political economy considerations. For me, the optimal outcome would be for my account and explanations of the fundamental dynamics of China’s capitalist development to act as a preliminary work and an aid for further, more specialized empirical analyses of individual sectors of the economy or policy areas that could then substantiate more specific causalities.
At this juncture, I think it is important to comment on the limitations of this study. The present work does not examine all dimensions of China’s process of capitalist modernization. For example, it does not cover in any detail the emergence of a consumer society, the development of the welfare state, the evolution of new middle classes, or the agriculture issue. I also only sporadically refer to the valorization of the environment and the long-term costs of the exploitation of natural resources. The same applies to the colonization of the lifeworld and the development of gender relations. The study also tackles the global implications of the rise of China only to a limited degree and, with regard to the political system, only selectively discusses the role of the Chinese People’s Liberation Army (PLA) and the security apparatus. Finally, the role played by ideational orientation, motives for social upward mobility, and the question of normative integration and leadership legitimacy are also not adequately acknowledged.
Outline
In Chapter 1, I develop a research framework based on insights, gaps, and desiderata in China research and using theoretical tools from, inter alia, the fields of CPE and IPE. In order to avoid a state/market dualism, I combine insights from various disciplines and approaches that I feel benefit the analysis of China’s new capitalism. I refer here to the notion of a capitalist-driven modernity and an international variegated capitalist world system. To help me describe the unstable dynamics of China’s process of development, I draw on a global perspective, the notion of uneven, combined and interconnected development, and a concept of institutions that takes account of targeted human action. To operationalize the research framework, I introduce five dimensions of capitalist economies:
1. unstable dynamics of markets and enterprises;
2. types of industrial relations;
3. the financial system;
4. interaction between economic and political actors; and
5. the integration of political economies in global economic structures.
On the basis of these five areas, the main part of the study examines the characteristics of China’s socioeconomic order and its dynamics. Against this backdrop, Chapter 2 reconstructs the historically relevant processes that, because of the effect of the drivers of capitalism, mean we can plausibly refer to a capitalist development in China. Here, I describe how the reform process led to a new mixture of market, state, and other coordination mechanisms.
The first section in this chapter summarizes the period from 1949 to 1978. Here, I attempt to already address the phenomenon of the relative continuity of power elites after 1978. To do so I refer to the mechanisms of protocapitalism in classical Maoism, a change in the country’s social structure, and the embedding
