Kellee Tsai’s Capitalism without Democracy: The Private Sector in Contemporary China (2007) is essentially an economic history of China since the Communist takeover. It is rich in sociological and every other kind of data, all very accessibly presented. A broader takeaway from the book, however, is that a transition to democracy, especially liberal democracy, is unlikely in China on a timescale that is relevant to most of us.
To start at the beginning. After the Communist victory in 1949, it was decreed that there would be “three years of recovery”—essentially a Chinese New Economic Policy—and then ten years of development. Larger corporations were expropriated to become state-owned enterprises (SOEs), and great pressure was brought against all businesspeople, who were forced to confess to corruption in public show trials at the village level, forced into “struggle sessions” (public self-criticism), shipped off to forced labour camps, and driven to suicide or executed—sometimes in that order.
By the time of the First Five-Year Plan in 1953, private operations had fallen from three-quarters of the economy to under-one-third of the Chinese economy and private markets were now banned in rural areas. The Second Five-Year Plan or “Great Leap Forward” (1958-62) is one of the great crimes of the Communist movement, causing inter alia a three-year famine (1959-61) that killed forty-five million people. Whatever slight recovery of private markets there had been in the early 1960s was destroyed by the onset of the Cultural Revolution in 1966 and private enterprise was essentially eliminated until the death of Mao Zedong in 1976.
In the power struggle that followed, the “excesses” of the Cultural Revolution were thrown on the “Gang of Four”, including Mao’s wife Jiang Qing, who were purged, opening the way to a leadership that allowed the private sector to revive. This “reform era” stopped, politically speaking, in the mid-1980s, but the informal private sector was first accorded some piecemeal recognition in the late 1980s and then, in 2004, the Chinese constitution was dramatically amended to make private property “inviolable”.
CAPITALISTS IN CHINA
Tsai argues that the model many have in mind, including in academia, of capitalism building a middle class that then applies pressure on the state for democratization, is a myth based on just a few, exceptional case studies, namely Britain, America, and France. The recent empirical examples—in Spain and Argentina, where the business leaders had become dissatisfied with the regimes, and Brazil and South-Korea, where “industrial elites were quite loyal to the bureaucratic-authoritarian regimes”—did not show the capitalist class as the leading force pushing for democracy; that class’s role amounted to not thwarting the transition.
In the case of China, there is no reason to suppose the “class” of entrepreneurs or businessmen or capitalists will—no matter how large it gets—break with this recent mould and drive a democratic transition.
First, China’s capitalist “class” is too diffuse, diverse, and divided against itself to act as a unitary class even if it saw itself that way—which it does not. This capitalist layer is very young and, so Tsai argues, retains its older identities: social class, regional origins, former occupations, and so on.
Second, and very much related, the capitalist layer in China has shown no ability to exert pressure on state policy. Tsai has a detailed section on the organic ways the private sector revived, as an interplay between local state representatives and private individuals, who collaborated to effectively subvert Communist institutions so they performed a function people actually wanted—and these changes were then granted formal status retrospectively, or allowed to continue as they were in any case, by the state. (Not always, of course; some deviations were harshly “corrected”.) Many Chinese Communist Party (CCP) officials were put on the payrolls of various entrepreneurs, a collaboration that continues, though entrepreneurs can simply join the Party themselves now.
The implications are two: it refutes the top-down schema of enlightened rulers in Peking instituting reforms that is believed by so many, and it shows that the capitalist layer acts in no sense cohesively to advance “its” interests. Even the early 2000s decision to legalise private property saw no lobbying effort by entrepreneurs; the CCP made the change for reasons of its own related to its political needs.
Third, when Tsai canvasses opinion among the individuals who make up China’s capitalist class, he finds precious little support for democracy. To the contrary, almost none of them have grievances they think require systemic changes and most worry that democracy will destabilise property rights and the business environment they need to make money.
Where Tsai did find democrats among China’s capitalists, they were the exception that proved the rule: they were people who felt “they have been deeply wronged” by the CCP system—a dynamic similar to what happened in Iran after 2009, where someone like Mir Hoseyn Musavi, a warden of the big prison the theocracy has built, becoming a democrat after the “election” was blatantly stolen from him by the Supreme Leader.
CAPITALISM WITHOUT DEMOCRACY
Rather than settling on any one answer, Tsai more presents the options when it comes to why dictatorship endures in China. One parallel Tsai notes is with “rentier states” like the oil regimes in the Middle East. While China does not have a natural resource of that kind, its economic growth serves to dampen calls for regime change in a similar way. An argument Tsai clearly favours is the capacity of the CCP to co-opt emergent elites, a similar argument to that made by Minxin Pei in China’s Trapped Transition (2006), which was similarly bleak about the prospect of the CCP regime transitioning to democracy.