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The Book Club

Minxin Pei’s “China’s Crony Capitalism”

Taken from https://images-na.ssl-images-amazon.com/images/I/51SJWsECJrL._SX329_BO1,204,203,200_.jpg.This is part of my “A Book A Week” endeavour, an extension of The Book Club I started on this blog when I was completing my National Service.

For what appears to be the intractable problems of corruption and crony capitalism in China, Minxin Pei’s “China’s Crony Capitalism” is very much a first step in the overall attempt to diagnose and to document them. And while definitions and offered and the thesis that these problems are the result of incomplete reforms from the post-Tiananmen era – the decentralisation of power and poorly-designed property rights reform, in particular – is compelling, three things are missing: First, a dataset which goes beyond the 260 cases distilled from news articles; second, a better-articulated framework to also account for the ramifications of institutional crony capitalism; and third, an accounting of the changes or reforms needed, even if corruption is thought to be endemic.

Using “collision among elites” as the analytical concept to study crony capitalism, and in turn defining crony capitalism as “a system in which capitalists gain valuable rents from politician” (or “an instrumental union between capitalists and politicians designed to allow the former to acquire wealth, legally or otherwise, and the latter to seek and retain power, Pei explained – across seven chapters – how the property rights reform decentralised control over assets without properly clarifying their ownership. Having developed a framework to explain the collusive corruption of elites, he first elaborated on the historical context in China, before detailing different forms and practices of crony capitalism: The buying and selling of public office, the exchange of favours for bribes, systematic theft in SOEs, the protection of organised crime by legal enforcement agencies, as well as the spread of collusion to judiciary and regulatory agencies.

The broader argument in this vein – summarised as such, that “crony capitalism is far more likely to prosper in a country where the state itself is deeply corrupt and a large number of its agents resort to bribery to advance their careers” – is that crony capitalism reflects a greater corruption malaise in the Chinese state. That the author is pessimistic is an understatement, and “China’s Crony Capitalism” is therefore not optimistic about the future of the Communist Party of China, or the ability of the party to reform its political and economic institutions. One, however, would get this conclusion from the first and final chapters, without necessarily ploughing through the case studies in the book.

About guanyinmiao

A man of knowledge lives by acting, not by thinking about acting. Carlos Castaneda.

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