This undirected experimental dynamic from below also formed the basis for another debate that will now be briefly outlined.
Innovative Entrepreneurship and Marketization
In order to attempt to understand the paradox of unleashing market forces amid a communist-run country, market- or corporate-centered approaches describe the advent of a new entrepreneurship as the essential catalyst for change. The prerequisite for successful growth was and still is, first and foremost, the creative entrepreneur. Accordingly, creative entrepreneurship had found a new home—particularly in parts of rural China of the 1980s—and was rapidly spreading to the cities (see, for example, Yasheng Huang 2008).
In line with this, China’s rigid political system was seen as incompatible with the needs of a market system. China experienced two diametrically opposed development logics—political power and control logic versus economic growth and profit logic. With regard to the resultant development trends, either an inevitable democratization (Rowen 2007) or a collapse of the system (Pei 2006) has been and indeed continues to be predicted (for an overview of this, see Heberer and Senz 2009). In the case of democratization, this would lead to the development of a market economy with liberal characteristics akin to those found in other parts of the world. Especially in recent political economy studies, however, this forecast is justifiably challenged, as shown below.
The Debate over the Adaptive and Regulatory Capacity of the Party-State
A number of studies emphasize the need for a proactive central government and/or subnational political authorities in order to achieve a favorable growth path (see Heilmann 2008, 2009; A. Hu 2010; C. Lin 2006; Perry 2007; D. Yang 2004; Zheng 2010). The Chinese party and state elite is regarded as a pragmatically forward-thinking political power that—similar to the case in other developmental states in East Asia—acts as a driver of modernization.4 Seen from this perspective, the authoritarian system in China, which still leaves the elites with some freedom for debate, is regarded as a highly beneficial political driver of economic development. In addition, a relationship structure developed that triggered competition between the political authorities that were subordinate to the central government, boosting economic growth (Oi 1995; see also Montinola, Qian, and Weingast 1995). According to China researchers, the post-1970s party-state had the extraordinary ability to adapt to an ever-changing environment. In the unfolding reform process, moreover, orientation toward national sovereignty was of the utmost importance, as was state control over key areas of the economy and public infrastructure planning.
For this reason, the proposition that China was seeing the emergence of a type of “crony capitalism,” which, as in other developing and newly industrialized economies, encumbers economic growth, has been challenged. On balance, the political leadership’s capacity for learning and adapting in fact helps stabilize the system. Accordingly, party rule is expected to remain in place, albeit by merely “muddling through” more than anything else, even as the process of market expansion continues.
In the course of the present work, repeated reference will be made to these studies. However, I believe they tend to have shortcomings that imply the existence of market/state dualism. While the policy-centered approach indicates that the Chinese government has an astute capacity for foresight—something that does not appear congruent with the anarchic reality of the Chinese reform process—the market or corporate-centered approach (introduced above) is too one-sided in its description of the forces at play in the reform processes. Moreover, the continuing legacy of elite-centered research on totalitarianism may well reinforce the abrupt juxtaposition of state and economy, and, by extension, society, where the state still is largely seen as an external regime of control and not as an actor in society (see Lieberthal 1995, 292–304).
Before addressing this problem in more detail, however, allow me to touch on another discourse that explores the character of the Chinese economy.
China as a Socialist Market Economy and/or Hybrid Model
Until very recently, the prevailing system in China was seen as a form of socialism known as Maoism. In the early 1990s, once even the Chinese government began officially speaking of the transition to a socialist market economy, cracks appeared in this argument. With the party continuing to play a commanding role and areas of the economy remaining in state ownership, however, some authors continue to assume the foundation of the noncapitalist society to be relatively intact (N. Lin 1995; Robins 2010). This was in line with the official position of the Chinese government. Some authors even agree with the government’s belief that the policy of opening up and marketization are transitional stages toward more developed forms of a socialist society and democracy (see Itoh 2003; X. Li 2008).
However, even authors who employ theoretical tools that show a market socialist society to be conceivable in an ideal-typical scenario remain skeptical about these assumptions (Lippit 1997). One line of criticism is that in none of the existing Chinese business types do the workers have more democratic powers than those in capitalist systems. On no level of society, corporate or otherwise, are solidarity-oriented behavioral patterns of disproportionately greater significance in China than in other countries. Moreover, market allocation is not merely an appendage of a system governed mainly in the interests of needs-based production.
Or has a new hybrid form perhaps emerged in China? Does the economy have to be subdivided into capitalist private sectors and quasisocialist state sectors? Or should China be referred to as a “noncapitalist market economy”? According to Arrighi, a capitalist market economy differs from a noncapitalist market economy “in the greater power of capitalists to force their class interests onto others at the expense of national interests” (Arrighi 2008, 120, my translation). It is not the “presence of capitalist institutions and dispositions” that defines “the capitalist character of market-oriented development but the relationship between state power and capital” (Arrighi 2008, 412, my translation; see also Smith 1993). As long as the state is not subordinate to capitalist class interests, the market economy remains noncapitalist.
A stark juxtaposition between market economy and state economy or communist state is flawed, however. As state theorists have discovered, the term “national interest” used by Arrighi cannot be seen as an objective category. According to Arrighi, the state is an apparatus that is an expression of general social interests except when the capitalists impose their restricted interests onto market development. “What this inadequate definition does not take into account is the specific organizational approach taken by a capitalist state and definitions of state functions relating to the safeguarding of property and ownership rights, the reproduction of relations between workforce and capital as well as the preservation of accumulation” (Panitch 2009, 20, my translation). In contradiction with the expectation that the almost unstoppable market dynamics would undermine or even topple the bureaucratic balance of power, the bureaucracy has, to a certain extent, proven capable of reconciling market and plan during the reform process.
It is clearly difficult to establish a theoretical basis for the development of a capitalist economy within the framework of a “socialist” state and society. Consequently, it would appear that many authors are content with continuing to describe the development in China in reference to the transition factor alone, in other words, the hybrid transformation character that is not yet completely formed (see Meyer 2011; Hartmann 2006, 10; Taube 2001, 167–68). Without questioning the appropriateness of an approach that seeks to represent the complexity of linking various institutional forms in China, the term “hybrid” nonetheless appears to be an unfortunate expression to use. After all, every social entity is hybrid or, in other words, made up of different forms. In addition, the word “hybrid” does not reveal which institutional forms are more dynamic than other parts of the complex whole.
It was not until the 2000s that more authors began to use the term “capitalism” when describing China’s development, albeit often more fleetingly than systematically, as pointed out by McNally (McNally 2007c, 3–7). For example, the term is often found in the titles of studies without its being