Capitalism without Democracy

Capitalism without Democracy: The Private Sector in Contemporary China

Kellee S. Tsai
Copyright Date: 2007
Edition: 1
Published by: Cornell University Press
Pages: 288
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  • Book Info
    Capitalism without Democracy
    Book Description:

    Over the past three decades, China has undergone a historic transformation. Once illegal, its private business sector now comprises 30 million businesses employing more than 200 million people and accounting for half of China's Gross Domestic Product. Yet despite the optimistic predictions of political observers and global business leaders, the triumph of capitalism has not led to substantial democratic reforms.

    In Capitalism without Democracy, Kellee S. Tsai focuses on the activities and aspirations of the private entrepreneurs who are driving China's economic growth. The famous images from 1989 of China's new capitalists supporting the students in Tiananmen Square are, Tsai finds, outdated and misleading. Chinese entrepreneurs are not agitating for democracy. Most are working eighteen-hour days to stay in business, while others are saving for their one child's education or planning to leave the country. Many are Communist Party members. "Remarkably," Tsai writes, "most entrepreneurs feel that the system generally works for them."

    Tsai regards the quotidian activities of Chinese entrepreneurs as subtler and possibly more effective than voting, lobbying, and protesting in the streets. Indeed, major reforms in China's formal institutions have enhanced the private sector's legitimacy and security in the absence of mobilization by business owners. In discreet collaboration with local officials, entrepreneurs have created a range of adaptive informal institutions, which in turn, have fundamentally altered China's political and regulatory landscape. Based on years of research, hundreds of field interviews, and a sweeping nationwide survey of private entrepreneurs funded by the National Science Foundation, Capitalism without Democracy explodes the conventional wisdom about the relationship between economic liberalism and political freedom.

    eISBN: 978-0-8014-6189-7
    Subjects: Political Science

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Preface
    (pp. ix-xii)
    Kellee S. Tsai
  4. List of Abbreviations
    (pp. xiii-xiv)
  5. Note on Conversion of Key Measures and Romanization
    (pp. xv-xvii)
  6. Map of China
    (pp. xviii-xviii)
  7. 1 The Myth of China’s Democratic Capitalists
    (pp. 1-16)

    In the summer of 1989, when college students were squatting in Tiananmen Square, demanding democracy, Beijing’s street vendors donated food and water to the students. Private copy shops operated their fax machines around the clock to spread the word. A brigade of private entrepreneurs on motorcycles dubbed the “Flying Tigers” spontaneously formed to deliver messages and patrol the perimeters of Beijing for signs of troop movement toward the square (Li et al. 1989, 189–193).¹ The privately owned Stone Corporation provided computer equipment and cash donations to the students. To domestic and international audiences, these accounts were quite moving. The...

  8. 2 Bypassing Democracy: Regime Durability, Informal Institutions, and Political Change
    (pp. 17-43)

    The political economy of China’s reform experience challenges conventional explanations of political development in two ways. First, contrary to the expectations of modernization theory and other classic theories of regime change, the People’s Republic of China remains authoritarian.¹ Despite over two decades of rapid growth and private sector development, China has not undergone a democratic transition, and its capitalists show no evidence of mobilizing to demand democracy. Second, the coexistence of significant institutional changes and regime durability presents an informative case of how major institutional transformations may occur in an endogenous manner. While most studies of authoritarian durability derive from...

  9. 3 The Unofficial and Official Revival of China’s Private Sector
    (pp. 44-71)

    In 1978, capitalists were official “class enemies” in the People’s Republic of China. On July 1, 2001, the eightieth anniversary of the Chinese Communist Party’s founding, however, they were publicly invited to join the party. Just a few years later, the National People’s Congress amended the PRC Constitution to protect private property rights. What happened? Some observers speculate that it was just a matter of time before China’s private entrepreneurs would form autonomous organizations and demand political representation to protect their material interests. But that was not why the most persecuted group in Chinese society was accepted into the country’s...

  10. 4 Private Entrepreneurs’ Identities, Interests, and Values
    (pp. 72-104)

    The revival of China’s private sector since the late 1970s has attracted considerable attention from both Western and Chinese observers because it has become an increasingly important part of the Chinese economy. By 2006, the private sector overwhelmingly dominated the retail and light manufacturing sectors, while even the more capital-intensive sectors that state-owned enterprises had monopolized through the 1990s were undergoing privatization. In light of these economic trends, observers tend to focus on the macrolevel effects of the private sector on the Chinese economy. Both existing research and my own, however, suggest that it would be misleading to discuss the...

  11. 5 Diversity in Private Entrepreneurs’ Coping Strategies
    (pp. 105-149)

    Although the policy environment for the private sector has improved significantly since the late 1970s, business owners nonetheless continue to experience a variety of operational and political challenges. Many industries remain off limits to private investors, domestic equity markets are dominated by state-owned enterprises (SOEs), and the legal system remains biased in favor of governmental entities. On a day-to-day basis, private businesses in China still face numerous obstacles that their counterparts in advanced capitalist economies have generally overcome. Yet many constraints on the private sector have in fact been alleviated since the late 1970s. Examining how private entrepreneurs have dealt...

  12. 6 Local Variation in Private Sector Conditions
    (pp. 150-199)

    The rapidity of China’s private sector growth in the last few decades suggests that the national policy environment has provided a permissive, if not hospitable, environment for business owners. Yet the actual experience of operating a private firm varies throughout the country. The local political economy mediates the relative availability and accessibility of capital, land, workers, distribution networks, and markets to nonstate entities. At the broadest level, this variation is reflected in regional differences in the volume and scale of private businesses. As of 2003, 69.3 percent of registered private enterprises (siying qiye) were concentrated in eastern China, while 17.1...

  13. 7 Changing China: Adaptive Informal Institutions
    (pp. 200-222)

    Calls for “democracy” in China date back to Sun Yat-sen’s Three Principles of the People (1905), which aimed to create a prosperous, powerful, and democratic nation. Arguably, the People’s Republic of China has achieved two of those three goals under the leadership of the Chinese Communist Party. China has one of the largest economies in the world.¹ Other countries fret about its military capabilities and intentions. But will the world’s most populous country become democratic? Efforts to address this big question are muddled by the fact that the Chinese government is committed to developing “political democracy with Chinese characteristics.” Although...

  14. Appendix A Research Methodology
    (pp. 223-228)
  15. Appendix B List of Interviews: 2001–2005
    (pp. 229-236)
  16. Glossary of Chinese Terms
    (pp. 237-240)
  17. References
    (pp. 241-262)
  18. Index
    (pp. 263-268)