Think Out Loud

"We do not learn from experience, we learn from reflecting on experience." -John Dewey

Capitalist/socialist state actors in China: No more dichotomy

[The following comments offer a brief summary of a key component of Philip C. C. Huang’s 2011 article, “The Theoretical and Practical Implications of China’s Development Experience: The Role of Informal Economic Practices” in Modern China]

According to Huang, political scientists and scholars who study institutions from a political economy perspective tend to classify institutions categorically: an institution is capitalist, or it is socialist.  Capitalist institutions, of course, respond primarily to market forces with little or no state intervention.  By contrast, socialist institutions are defined by their subordinate relationship to the state and central planning mechanisms.

Contemporary China offers a unique challenge to this dichotomy.  Huang refers to informal governance networks in which local officials harness tax and other economic incentives from the central government and apply them toward seeking increased direct investment domestically and from abroad.  Although other scholars (Qian & Roland, 1998; Qian & Weingast, 1997; Montinola, Qian, & Weingast, 1995) have reasoned that this type of behavior implies that government institutions are functioning like capitalist firms, Huang contends that it is not that simple.  Especially in China, state-owned or integrated enterprises and government officials embody characteristics of both capitalist and socialist principles.

Huang’s 2011 article focuses on the “Chongqing/leftist” model of Chinese development.  The Chongqing experiment is a particularly important case study because this region of Sichuan has endured the brunt of the chaos caused by forced relocation of people living in the path of the Three Gorges Dam.  Chongqing’s officials’ ability to adequately manage the land, housing, and social service needs resulting from the upheaval make its unique policies a stimulating subject for research.

Leaving aside Chongqing’s specific policy innovations for now, the Chongqing model offers some exciting theoretical implications if Huang is right and informal local government actions follow both capitalist and socialist protocols.  Practically, such an effective blend of governance modalities might even show promise in other regions affected by mass migration or an otherwise increased volume of social services demand.

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