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CREATING MARKET SOCIALISM
How Ordinary People Are Shaping Class and Status in China
By Carolyn L. Hsu Duke University Press
Copyright © 2007 Duke University Press
All right reserved. ISBN: 978-0-8223-4036-2
Chapter One
HOW NARRATIVES SHAPE INSTITUTIONAL CHANGE
The most dramatic story of the end of the twentieth century was the decline of socialism. From a social science perspective, it can be seen as a tale of massive de-institutionalization. Socialist states were probably the most intrusive in the history of the world, creating and controlling institutions that penetrated every aspect of life. They also constructed a huge cultural apparatus to disseminate a belief system designed to support those institutions. The story of post-socialism is the story of the wholesale retreat of the state from that active role and the concomitant dismantling of the structural institutions and moral underpinnings of society. This situation has given social scientists the unprecedented opportunity to study how new institutions and belief systems are formed.
In the USSR and east central Europe, it was the collapse of the socialist regimes which precipitated the collapse of institutions. In the People's Republic of China, it was the party-state itself which initiated the destruction of socialist institutions and undermined its own cultural apparatus. The discrepancy between these two paths has led to two divergent conceptualizations of the post-socialist transition. In Europe, formerly communist states were interpreted by researchers and bureaucrats alike through the lens of "transition culture," which assumed that Marxist regimes were defective and destined for collapse, and that their damaged citizens and flawed institutions would be cured to normalcy (i.e., democracy and capitalism) by the intervention of Western experts. By contrast, in China, the cathartic collapse never happened, which meant that the dysfunctional party-state was leading the transition, rejecting the rightful place of Western expertise. Consequently, the scholarship on China focused on evidence that the Chinese state would fail in its effort to develop adequate institutions for successful marketization and finally yield to the revolution which should have succeeded at Tiananmen Square in 1989.
The weight of that evidence against the Chinese party-state certainly seemed formidable, at least according to Western scholarship. Researchers pointed out that, by the mid-1990s, state-owned enterprises were operating at a loss, yet they still employed 65 percent of the urban workforce (Weston 2000:247-48). Capitalist reforms had disemboweled workers' rights, replacing the famed "iron rice bowl" with "plastic cups" (Rosemont 2000). The decollectivization of the countryside led to a "floating population" of up to 100 million peasants flooding into the cities. Academics claimed that, confronted with what seemed to be the worst of socialism combined with the worst of capitalism, the Chinese party-state was incapable of effective action. It had relinquished the socialist mechanisms of controlling its cadres and citizens, but failed to find alternative methods (Walder 1994). It was fending off accusations of systemic cadre corruption (Lu 2000).
Within China, intellectuals had once been the reform movement's most ardent supporters, but by the late 1980s they also expressed their own bitter disappointment with the regime. In the 1980s, the Sinologist Perry Link was taken aback by the depth of their despair, as they listed China's major problems: "entrenched, pandemic corruption; a state led by doddering men still trapped in the ways of the 1930s-1950s, their formative period, and opposed to basic freedoms and any shifts towards democracy; an economy stalled halfway through a critical reform program; an educational system crippled by a serious lack of funds and flawed even in its basic conception, producing a populace that was ever more mercenary, illiterate, and uncivil ..." (Link 1992:5-6).
China scholars and Chinese intellectuals debated what would be the tipping point to the collapse of the entire system-would disgruntled workers ally with intellectuals in a protest movement which would dwarf the massive demonstrations of 1989? Or would corruption and infighting tear the Party apart from the inside?
As I arrived in China in 1997 to embark upon the research for this book, I expected to chronicle a crisis of institutional disintegration and cultural demoralization resulting from the collision of an incompetent state with an amoral market. I chose the Rust Belt northern city of Harbin for my case study, to avoid being blinded by the atypical wealth of China's coastal boomtowns. In some ways, I did find evidence to back up my initial expectations. The "iron rice bowl" institutions of the socialist workplace were being weakened and undermined, but they were not being adequately replaced. Workers at state organizations found themselves losing their pensions and access to medical care as the state phased out its responsibility for these services. Yet no one seemed to know how private firms could (or should) provide these services, nor were personal retirement accounts or private medical insurance widely available from trustworthy sources. State sector layoffs forced people out into the market, but the state failed to institute sufficient regulations to protect workers from exploitation at private firms. Nor was it possible for most urbanites to obtain bank loans to start their own businesses. More and more goods and services were available on the market, but the lack of regulatory agencies meant that falsified products and other scams were ubiquitous.
Yet there was no crisis (except for the 1997 Asian Financial Crisis, which China weathered surprisingly well). Instead, as we know now, the PRC's transition to post-socialism can arguably be seen as a success-if success is defined as an 8 to 10 percent annual economic growth rate and unexpected political stability. Harbiners complained about the government with enthusiasm, but they neither expected nor desired the regime to fall. Although they could provide astute critical analyses of social problems in urban China, they were generally optimistic about their futures. Far from being demoralized, atomized individuals struggling with uncertainty, the people I studied were building moral, meaningful lives within vibrant networks of friends and acquaintances.
Neither neoliberal nor neo-institutional theories offered a satisfying explanation for China's relative success. Scholars who operated on neoliberal assumptions insisted any economic problem was due to insufficient marketization. If post-communist Russia or Bulgaria or Slovakia were in crisis, it must be because they were being held back by state intervention, either in the form of rent-seeking state elites or incentive-dampening state institutions (Aslund 2002). Yet China, with its interventionist state and lingering socialist institutions, demonstrated higher rates of growth than any other post-communist country, year after year.
Neo-institutionalists, in contrast, point out that post-communist states are not blank slates, but instead are forced to use the detritus of their former institutions to construct new ones. David Stark and Laszlo Bruszt illustrate this with a wonderful image of Hungarian children attempting to play a capitalist game (Monopoly) from memory, using the pieces from a game designed to teach socialist values (Stark and Bruszt 2001). However, if we look at China's socialist institutions or at the reform-era institutions cobbled from their spare parts, neither appear to be any more conducive for marketization than, say, Russia's. For example, scholars have argued that entrepreneurs were impeded in Russia by inadequate institutions, unfriendly policies, irrational regulations, hostile (and exploitative) local officials, and unavailable capital (Barkhatova 2000; Barkhatova et al. 2001; Radaev 2002). Yet similar conditions also plagued China in the 1990s (Wu 2001; Tsai 2002). Even so, entrepreneurship flourished in China, growing year by year until 8.7 percent of those in the labor force (10.9 percent in urban areas) were running their own businesses in 1998 (State Statistical Bureau 1999). Meanwhile, in Russia, self-employment hovered under 2 percent and actually declined between 1991 and 1996 (Gerber and Hout 1998:15).
Neo-institutionalists are correct in their view that the post-socialist transition should not be viewed as a liminal state between two stable systems, but that instead social actors are constantly constructing and reconstructing institutions with available resources. Yet neo-institutionalists are hobbled by their tendency to focus on elite actors, as though they were the only players taking part in this process. In Harbin, neither market forces nor state elites were able to create adequate institutions and the moral underpinnings for the local inhabitants, so who was doing it? The answer, to a surprising extent, was that Harbiners were doing it themselves. The ordinary people of the city, in dialogue with the state and market forces, were collectively shaping the economic institutions of market socialism as well as a moral discourse to support it. They were doing this through their practice of everyday life, specifically by constructing collective narratives which made sense of the economic opportunities brought about by the market reforms. These shared stories determined the collective moral criteria used to frame and judge them. This is not to elide the contestation and conflict involved in the process, which will be evident throughout the following chapters. However, I argue that contestation and conflict result in a shared repertoire of dominant, even hegemonic, stories. These collective narratives shape the strategies of social actors, thereby affecting patterns of participation in various practices, which in turn influences which practices will become institutionalized.
We cannot understand the shape of post-socialist institutions without empirical research on people's words and actions-because their stories and participation help to shape the content of those institutions. The project of this book is to describe how that empirical research can be done. To this end, I use the techniques of narrative analysis and ethnographic observation to reveal the process by which ordinary people actively shape the institutions of stratification in market socialist Harbin.
The Institutions of Social Stratification
This book analyzes one set of institutions-those which make up the system of social stratification-and the ordinary people who helped to shape them. Institutions are social patterns or sets of social practices which are "chronically reproduced" (Jepperson 1991:145). In other words, institutions are the scripts social actors follow; they are "the way we do things," and the constituent rules of society. The institutions of stratification are the sets of social practices which produce and reproduce inequality in a given society. These would include, for example, the institutions which make up a system of education, such as the practice of rewarding symbolic credentials (degrees, grades, awards) to social actors who successfully follow certain rules and scripts.
I chose to focus on stratification institutions because they involve everyone and affect their daily lives, and yet they carry enormous implications for society. After all, stratification systems (by definition) shape the class structure, if not in Marx's sense of the term, at least in Pierre Bourdieu's. Stratification systems determine which social actors have access to power and resources. Ethnographic methods are very useful for examining the institutions of stratification; people think about them, talk about them, negotiate them, and act upon them in daily life, not just when a social scientist shows up with her list of interview questions. Last, but not least, I needed a non-sensitive, non-risky topic which people felt comfortable talking about in public, both with each other and with a foreign researcher armed with a tape recorder.
A social stratification system is comprised of three types of institutions (Grusky 2001a:3):
1) The institutions that determine the worth of various forms of capital: economic capital (money), social capital (connections), human capital (educational credentials and formal knowledge), and so on. In Marxist societies, social actors also strived for political capital, manifested in Communist Party membership and rank in the party-state bureaucracy. Bourdieu argues that different forms of capital can be exchanged, but that the "exchange rates" differ from society to society, so that a college degree (human capital) could be cashed into differing amounts of income (economic capital) depending on the local institutions (Bourdieu and Wacquant 1992:99).
2) The institutions that determine how those valued forms of capital are allocated across occupations and positions: the rules of the game. These institutions shape the hierarchy of occupations, defining the levels of capital adhering to the position of businessperson, government official, priest, "housewife," and so on. For example, high status occupations tend to require high levels of capital for entry, including impressive educational degrees (human capital), good connections (social capital), and money (economic capital) for tuition, handsome interview suits, and/or bribes. In socialist societies, Communist Party membership (political capital) was often necessary. But in these prestigious positions, social actors gain high levels of economic capital (generous compensation), social capital (connections), and more.
3) Those mechanisms that link individuals to different positions, thus generating unequal access to valued forms of capital. Sexist or racist practices at schools, for instance, may keep women and racial minorities out of desirable positions. Elite firms may judge job applicants as much by their tastes, fashion sense, and skill at small talk (cultural capital) as by their formal skills and educational credentials (human capital), a practice which favors the children of the upper class over their less well-born competitors (Bourdieu and Passeron 1979).
Stratification systems also must contain a moral logic or ideology which undergirds and justifies these institutions (Friedland and Alford 1991:248-53). Forms of capital are valued when they are associated with moral virtues. For example, in the United States, economic capital is highly valued and associated with the admired virtues of hard work, discipline, intelligence, and innovation. In contrast, in imperial China, economic capital was regarded as a byproduct of random luck rather than virtue, and was therefore considered less valuable than other forms of capital, such as human capital (Kuhn 1984:27). In order to be legitimate, a stratification system must also contain convincing moral arguments that some occupations and positions deserve greater compensation or status than others. When socialist states deliberately instituted new stratification systems in their societies, they were well aware that they needed to establish a new morality to accompany those institutions. They invested a great deal of energy into the institutions of propaganda and political education in order to convince people that political capital was valuable, and that cadres1 should be ranked highly on the occupational hierarchy while landlords deserved to be demoted to the bottom. Post-socialism, then, involves not only the dismantling of social stratification institutions, but the concomitant disintegration of the ideological underpinnings which supported them.
(Continues...)
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