Capitalism Without Democracy: The Private Sector in Contemporary China [Hardcover]

Kellee S. Tsai (Author)

Book Description

ISBN-10: 0801445132 | ISBN-13: 978-0801445132 | Publication Date: August 2007

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 The famous images from 1989 of China's new capitalists supporting the students in Tiananmen Square are, Tsai finds, outdated and misleading.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." She 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.

Editorial Reviews

From the Back Cover

"In Capitalism without Democracy, Kellee S. Tsai argues that China's entrepreneurs are unlikely by themselves to push for democratic change. In this very well-written and richly detailed book, Tsai offers a convincing critique of the common perception that privatization is leading to democratization in China. It should be widely read in the academic and policy communities"-Bruce J. Dickson, The George Washington University

"Kellee Tsai's exciting new book challenges the conventional wisdom about the role that entrepreneurs play in a reforming authoritarian state. Burrowing deeply into the informal practices of Chinese capitalists, Tsai questions mechanical, agent-less theories of democratization and reminds us that a term like 'middle class' obscures as much as it explains. With this book, Tsai takes her place at the forefront of those who study the relationship between marketization and democracy."--Kevin J. O'Brien, Bedford Professor of Political Science, University of California, Berkeley, coauthor of Rightful Resistance in Rural China

"China may not be about to democratize, but--according to Kellee Tsai's impressive book--it is nevertheless experiencing significant political change. In showing how Chinese private entrepreneurs, through 'adaptive informal institutions,' have promoted fundamental ideological and institutional transformation, Tsai makes an important contribution both to our understanding of contemporary Chinese political economy and to larger comparative debates."--Elizabeth J. Perry, Henry Rosovsky Professor of Government, Harvard University

About the Author

Kellee S. Tsai is Professor of Political Science at The Johns Hopkins University. She is the author of Back-Alley Banking: Private Entrepreneurs in China, also from Cornell.

Product Details

• Hardcover: 268 pages
• Publisher: Cornell University Press (August 2007)
• Language: English
• ISBN-10: 0801445132
• ISBN-13: 978-0801445132
• Product Dimensions: 9.2 x 6 x 0.9 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.7 out of 5 stars  See all reviews (3 customer reviews)
• Amazon Best Sellers Rank: #2,065,801 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

10 of 11 people found the following review helpful:

5.0 out of 5 stars Comprehensive Analysis of Adaptive Informal Institutions in China, July 3, 2008

By 

Hubert Shea (Shanghai, China) - See all my reviews
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This review is from: Capitalism Without Democracy: The Private Sector in Contemporary China (Paperback)

The book refutes the prevailing modernization theory that capitalism can lead to democracy. Findings from the study of private entrepreneurs in different regions in China supports Professor Tsai's proposition that the relationship between economic liberalism and political freedom is not definitely correlated.

Putting it in a nutshell, this book has contributed to three major findings in the study of political economy in China. First, economic liberalization in China since 1976 has not resulted in the emergence of democratic regime or the decline of the authoritarian state. According to Professor Tsai, private entrepreneurs in China are not nuts about democracy and researchers cannot view private entrepreneurs as a homogeneous class because of their diverse identities, interests, and values in politics. Second, widespread apathy amongst private entrepreneurs in China towards democracy does not mean that they have an acquiescent nature. They tend to adopt different coping strategies rather than instigate virulent opposition against the regime or demand regime transition when various formal institutions constrain their business activities. The so-called "coping strategies" result in a variety of "adaptive informal institutions" being established in different economic regions in China. Based on hundreds of in-depth interviews and nationwide survey of private entrepreneurs, Professor Tsai divides them into five key types; namely Wenzhou model, Sunan model, Zhujiang model, state-dominated model, and Limited development model. For instance, private entrepreneurs in Wenzhou engaged in a variety of innovative financing practices to set up and expand their businesses which were outside of the state banking system. Private entrepreneurs in Guangdong province sought to establish fake foreign enterprises in order to enjoy policy advantages including tax breaks and preferential access to land. Third, the near ubiquity of adaptive informal institutions becomes an endogenous force that has prompted the government to generate institutional change without regime change. However, such institutional change to react to the existence of adaptive informal institutions cannot be likely to become sources of democratization. Professor Tsai maintains that private entrepreneurs in China show no intention of agitating for democracy but capitalism can exist without democracy, provided that the Chinese government can attend to adaptive informal institutions that complement endogenous institutional change.

This book is highly recommended to readers who are interested in political economy and the development of private enterprises in China.

2 of 2 people found the following review helpful:

4.0 out of 5 stars Good Insights -, July 26, 2010

By 

Loyd E. Eskildson "Pragmatist" (Phoenix, AZ.) - See all my reviews
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This review is from: Capitalism Without Democracy: The Private Sector in Contemporary China (Paperback)

Conventional wisdom says that China's economic revival will eventually lead to democracy. Others see the rise of income inequality and increased corruption as rallying points. However, don't expect a "No taxation without representation" protest in China, says Tsai. The bulk of the book relies on over 300 interviews with Chinese entrepreneurs (peddlers to CEOs on the Forbes list of the wealthiest in the world), officials, intellectuals, and local bureaucrats over the 2001-2005.

Some of the outside hope for democracy is based on stores of private entrepreneurs helping out demonstrators at Tienanmen Square. Those instances, however, haven't grown or been sustained. Tsai believes that because Chinese entrepreneurs are such a diverse group (some were former farmers, others previously government officials) they will not likely unite on this issue. Further, they have proven much more likely to use informal channels for solving problems than the legal system or political participation. Only 5% regularly rely on more assertive modes of dispute resolution such as "appealing to local government or higher authorities" or "appealing through judicial courts."

Capitalists are now encouraged to join the CCP, and many have. Flexibility to overlook rules also relieves potential pressure for change from business people. Those with the resources to fund change, China's 106 billionaires, are diversifying overseas with both their investments and children's' education - eg. sending them to the U.S. with hopes that they will become white-collar professionals or government officials rather than continuing the family work as business owners.

The only movement that posed a potentially serious challenge to the regime was the short-lived China Democracy Party (CDP). In 1998 local party committees of the CDP were established in 24 provinces and cities. But authorities promptly detained, arrested, or exiled CDP leaders, which effectively thwarted further efforts to establish a central-level CDP. Similarly, the crackdown on Falun Gong in 1999-2000 and the repression of Tibetan protesters in 2008 provide compelling evidence that the CCP will control and eliminate political opposition.

Only 22% of Tsai's sample think the pace of reform in China has been too slow, while 51% think it has been just right.

Bottom Line: The belief that all regimes will at some point become liberal-democracies is a fantasy.

3 of 8 people found the following review helpful:

5.0 out of 5 stars very good book, October 9, 2007

By 

Brian Azarcon - See all my reviews
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This review is from: Capitalism Without Democracy: The Private Sector in Contemporary China (Paperback)

this book is a must read and goes in-depth into the emerging underground economy in China. I also recommend the first book Back-Alley banking by the same author.