Chinese transformation Between varieties of capitalism and communism

Chinese transformation: Between varieties of capitalism and communism Maria Csanádi MTA KRTK SVOC Conference November 26 -27, 2015.

Content • • Puzzles regarding the Chinese system specifics Multiple interpretations and common assumptions Questions regarding interpretations Missing factors: § § The structure of the system The dynamics of the system The „Chinese specifics” Specifics of Chinese transformation • Conclusions on comparability and multiple interpretations

Puzzles: what kind of system prevails in China? • While most of the counterparts collapsed – in China thirty years of reforms and double digit growth • A communist regime – developing liberal market • Expansion of private ownership – continuing preference on large state-owned enterprises • Creation of stock market – radical state intervention in and clamp down on financial experts after stock market crisis • Authoritarian political regime – flourishing local developments and private sphere • What kind of system is it?

Multiple interpretations of the „Chinese style” • A specific „Chinese style”? Approaches from different perspectives: § The kind of political regime: predatory, socialist, developmental, neoliberal, centralized developmental autocracy, post-socialist developmental state, § The kind of economic system: state capitalism, socialist market economy, emerging system, hybrid system, fragmented capitalism § Subnational varieties: variegated capitalism, polymorphous state, entrepreneurial state • Common assumption: China’s economic system is a variety of capitalism

Questions regarding interpretations • Why are so many concepts attributed to the Chinese system? • Is the Chinese system capitalist or communist? • Is the Chinese system in the process of transformation or is it post-communist? • Can suggested varieties be comprehensively interpreted? • What should be the basis and targets of comparison?

The missing factors for comprehensive interpretation • The general characteristics of the party-state systems • The specific characteristics of the Chinese party-state • The characteristics of transformation of the Chinese party-state • The state’s role in the transforming party-state context

What interpretations do not consider: the structure of party-states Ø Ø Ø Ø Party hierarchy monopolizing the political subfield State hierarchy monopolizing the economic subfield and resource extraction and distribution Party’s instrument of power overlapping positional, orgnizational and activity structure and individuals in non-party organizations Closed channels Uni-directional but multi-threaded dependencies Direct connections of party and non-party fields Atomized actors (weak horizontal connections) Multi-threaded interest promotion Structural inequalities in dependency, interest promotion and resisting capacity through interlinking lines (D 2; I 2) and Short-cuts/feedbacks (I 3) Bargaining capacities and formal positions differ Different bargaining positions will provide the distribution of power of the structure Patterns of power distribution may vary

Self-similarities in the system’s dynamics • An interactive network is born from the intertwined relationship of actors in the party, the state and the economy where dependencies, interest promotion and resource extraction and distribution are politically monopolized • Elements, connecting and operating principles of the network are self-similar in space, in time and different levels of aggregation • Structural self-similarities bring about self-similar dynamics through actors’ behavior: § Politically rational selection criteria in resource distribution priviledging large, state-owned enterprises deeply embedded in the network, and § Politically rational economic behavior in resource attraction: drive for growth, hoarding of resources and accumulation of connections and positions within the network, § no matter the time, space or the levels of aggregation • No efficiency only resource constraints in self-reproduction

The specific pattern of power distribution in China • Decentralized pattern of power in the network on national level and different varieties of party-state power structures on local levels • Partially decentralized resource extraction and redistribution, • • • decentralized inter-linking threads and economic feedbacks – Result in: Selectively strong resource attracting capacity and resisting capacity to interventions in a decentralized institutional and functional setting Consequence: Frequently hardening constraints of self-reproduction of the network – loss of cohesion – Reaction: Escalation of decentralizing reforms within the network, insufficient extraction owing to resisting capacities and politically rational distribution Resource creating reforms outside the nework Economic expansion outside the network provides resources for the self -reproduction of the network and keep Party legitimacy Determines the sequence, speed and conditions of transformation

Pattern-conforming system transformation in China Sequence - economic transformation is first Speed - retreat and emergence is gradual Conditions – • economic transformation under authoritarian regime, • macroeconomic growth • conserved Party legitimacy Expansion of the emergent field Retreat of the network Transformation: Retreat of the network from monopolized sub-spheres, expansion of the emergent new sphere outside the network

The factors of absolute retreat Decentralizing the network Emptying of the network Weakening of the network Withdrawal of the network Cut-off the network The network is gradually, and spatially differently retreating from the economic sub-sphere at different levels of aggregation

The factors of emergence (relative retreat) • Dual-track pricing, • Allowing the increase of the number of economic units and capital outside the net • Privatized enterprises • Transferred (stripped off) convertible capacity • The increase of the overlapping segment The emerging and expanding path-dependent and geopolitically influenced market economy is strongly tied to the politically monopolized network on national and local levels

Interaction and constant move • There is strong interaction between the retreating network and the emerging market sphere at national and sub-national levels while adapting to internal and external pressures, that provide their changing dynamics during different periods of transformation. • Consequently, speed and conditions of transformation are constantly in move in time, space and at different levels of aggregation. • In this transformation process the role and actions of the state is institutionally embedded in the power network both on national and local levels • The consequence of its actions in the transforming systemic context is similarly complex -- both system and patternconforming --- either during the „normal” process, or while reacting to external and internal shocks.

Conclusion: system and comparativity • The characteristics of the Chinese system: China is a transforming party-state system with characteristics of decentralized pattern of power distribution and respective sequence, speed and conditions of transformation that may differ in time, in space and at different levels of its aggregation • Comparability: the Chinese system is comparable to the structure and dynamics of other former and present party-state systems with similar or different patterns and patternconforming sequence, speed and conditions of transformation and respective state role and behavior • Identification: the transforming Chinese party-state system should not be identified with any variety of capitalist systems, or a centralized pattern of communist systems, or with concluded system transformations of post-socialist countries

Conclusion: how should varieties be interpreted? • State: Role and behavior of the state at central and local levels in China should be interpreted in the context of the transforming politically monopolized decentralized power network, and its dynamics both at „normal” times and at crisis situations • Market: Expanding or shrinking market at any level and time should be interpreted in strong interaction with the dynamics of the retreating or expanding network and domestic and external pressures • Varieties of capitalism: attributed to the Chinese pattern of power – be they approached from political, economic, central or local dimensions -- should be interpreted in the context of China’s transforming structural and dynamic party-state specifics at all aggregation levels

Thank you for your attention! Questions?