A work of fiction I came across the other day was talking about the many unspoken norms of Chinese businessmen today. But that got me to thinking: Didn’t Mao Zedong and the Chinese Communist Party do everything in their considerable power to annihilate the private sector 1949-1978? What did Chinese business culture regrow from?
I’m not an expert, but my understanding is that a lot of the resurgence in the private sector after Mao came from Overseas Chinese businesses, especially Hong King and Taiwan.
A lot of business “culture” went underground into the Communist Party. By that I mean corruption, rampant use of family connections to advance status, etc. Which are still very much part of Chinese business culture today.
So under Mao the ambitious folks were “entrepreneurial” at playing the game of the time: climb the party ladder & amass (secret) wealth through graft and the pyramid scheme of mandatory ass-kissing.
Then when Deng Xiaoping took power and began to loosen the ideological reins, many well placed upper apparatchiks quickly added real businesses to their prior underground assets & incomes.
But yeah, a lot of capital (and advice) also came in via overseas Chinese.
While I vehemently reject the notion that good businessmen are innately good politicians, I can’t deny that a good politician, more often than not, makes a good businessman.
Agreed overall. I might substitute that as
that a
goodsuccessful politician, more often than not, makes agoodsuccessful businessman.
They will successfully make money and acquire power for themselves, and perhaps some cronies and shareholders. Whether that is in fact a “good” thing is a more nuanced discussion.
Better.
There’s research that there was underground business activity in the form of a thriving black market.
In this article we develop and analyse novel datasets to retrace the persistence and scale of underground market activity in Maoist China. We show that, contrary to received wisdom, Chinese citizens continued to engage in market-based transactions long after “socialist transformation” was ostensibly complete, and that this activity constituted a substantial proportion of local economic output throughout the Maoist era. This helps to explain, in part, why, when markets were officially reopened in China, private economic activity took off.
This post summarizes the study:
China’s socialist prohibitions on private transactions were neither complete enough to truly stamp out market-based activities, nor did they last long enough to for the population of people with experience running businesses in a market economy to die off. Once the state began to tolerate markets again, the hidden traditions of private enterprise could come out into the open.
Deng Xiaoping’s opening of the economy was critical to unleashing the Chinese business class. Two big waves of “下海” or “leap into the sea” came out of that.
One, many military officers, went into business. Usually supplying entertainment and or supply chain goods to the military. Some leading enterprises like Huawei were created by the military.
Two, any outcasts had to go entrepreneurial. Tons of city kids got sent to the countryside during the cultural revolution. A lot of those became outcasts, were put into “reform through labor” gulag camps for very petty crimes, and returned back to the home city uneducated, penniless, no job prospects. These people were the core of small businesses.
Sure, overseas chinese brought in investment money, and more international management/operational skills. This helped but I’d say the jury is out on how significant this was?
I thought this NPR story about farmers secretly de-collectivizing in 1978 was interesting.
https://www.npr.org/sections/money/2012/01/20/145360447/the-secret-document-that-transformed-china
At one meeting with communist party officials, a farmer asked: “What about the teeth in my head? Do I own those?” Answer: No. Your teeth belong to the collective.
It’s saying something that the Chinese Communist Party managed to make Ayn Rand look right.
The 19th century French novel, Le Rouge et le Noir (The Red and the Black), is about an entrepreneurial guy wants to move from the peasant class up to a level that matches his wits and financial desires, so he decides that he needs to join the church since this is the best way to gain power and influence.
I’d presume that this is the general course of most history. Capitalism mostly just gave this urge a more positive outlet - managing the generation of goods for others.
I recall reading somewhere how wives of government bureaucrats would meet wives of businessmen for friendly games of mahjong. A little money involved, just to make it keen. Actually, a great deal of money, that the wife of the bureaucrat would always win.
What about the more recent successes, like Lenovo, BYD, Dalian Wanda, Tencent, Alibaba, Xiaomi, etc.?
Did those also arise out of Deng’s policies, or were they the result of more recent changes?
I found it really interesting that at some point in the past 10 or 20 years, they started buying up a ton of US companies in film, video games, and agriculture. In a sense, the CCP now directly or indirectly owns some of US capitalist outputs and redirects profits to their own needs, some of which presumably flow back to the citizens… “socialism with Chinese characteristics” seems like a hybrid economic model that’s both experimental and so far pretty successful, all things considered?
Some critics have categorized the current Chinese economic system as “meeting the textbook definition of fascism”; that is, private enterprise is allowed as long as it’s subservient to the needs of the Party and the state.
The end goals of communism and fascism are supposed to be different, but I guess historically they have a tendency to end up with just a few people controlling much of the economy. Not that different in our system, either… the rest is propaganda, I suppose.
That was interesting! Thank you for sharing.
I read somewhere that the spoken or unspoken agreement was that the Chinese Communist Party would allow people to get rich as long as they didn’t make waves about personal freedoms or democracy.
I don’t think the line is that clear-cut. Jack Ma was severely reprimanded, fined billions of dollars, and possibly forced to step down from his company because he criticized the financial sector there. He reappeared a few years later. Alibaba founder Jack Ma returns, 5 years after largely disappearing from public view : NPR
They also used him to try to pressure another Chinese national living in France to return and testify against an official who had fallen out of favor with the CCP: Alibaba co-founder Jack Ma implicated in intimidation campaign by Chinese regime | China | The Guardian
I think it’s more accurately “you’re allowed to get rich as long as you toe the line and agree to everything the Party requires of you, subject to change at any time…”.
It’s sorta both.
@Dewey_Finn correctly recalls the slogan for the deal under Deng as quasi-capitalism-by-another-name got going.
By the time of uber-tycoons like Ma, the subsequent Chinese leaders had come to realize that a guy like Ma had massive power even if he wasn’t using it. Which power also meant that Ma could potentially change his mind at any time and start using it. The CCP had to stop that and Ma & his ilk got slammed.
A similar dynamic happened in the early Putin days with the so-called oligarchs. The early deal was “get rich but stay out of politics or else.” The later deal was “That much rich is too much (potential) power. So prepare to be crushed now just in case you might get uppity later.”
Historically there’s a tendency to end up with just a few people controlling much of everything. It 's been formally described as the Iron Law of Oligarchy.