China's Economic Culture

The Ritual Order of State and Markets

Carsten Herrmann-Pillath

• Publisher: Routledge
• Year: 2016
• Print ISBN:
  9780415711272
• eBook ISBN:
  9781134651092
• Topic: Social Sciences
• Subtopic: Regional Studies
• Index: Social Sciences

China's spectacular rise challenges established economic moulds, both at the national level, with the concept of "state capitalism", and at the firm level, with the notion of indigenous "Chinese management practices". However, both Chinese and Western observers emphasise the transitional nature of the reforms, thereby leaving open the question as to whether China's reform process is really a fast catch-up process, with ultimate convergence to global standards, or something different. This book, by a leading economist and sinologist, argues that "culture" is an exceptionally useful tool to help understand fully the current picture of the Chinese economy. Drawing on a range of disciplines including social psychology, cognitive sciences, institutional economics and Chinese studies, the book examines long-run path dependencies and cultural legacies, and shows how these contribute crucially to the current cultural construction of economic systems, business organisations and patterns of embedding the economy into society and politics.

1 Culture, ritual and economic style

The complexity of culture: culture as sense-making

The topic of this book is China’s economic culture. This term is ambiguous. We can either read it as ‘the culture of China’s economy’ or as ‘China’s culture is economic’. This ambiguity tells us something very essential about culture and economy: We cannot unequivocally separate the two concepts in the sense of referring them to two distinct social domains. As I will demonstrate in this theoretical chapter, this is not unique to the case of China, but applies for cultural analysis in economics generally. Yet, in the Chinese case this insight has a distinct slant. As we will see, in many respects specific aspects of Chinese culture such as particular values and beliefs indeed relate to economic activity implicitly or explicitly, such that we can say that China’s culture is ‘economic’. Just think of the ubiquity of the ‘God of Wealth’ in popular religion, which is a far cry from religious attitudes that distance themselves from the pursuit of profit. This observation goes back to the fact that Chinese society in Late Imperial times was a market society in structural and institutional terms, and that these traditional patterns have seen a revival in the recent period of ‘reforms and opening up’, which is reflected in the cultural framework. It also means that this cultural framework is essential in determining the nature of the Chinese economic system past and present. Thus, this book makes the special claim of a peculiar ‘fit’ between economy and culture in China. Chapter 2 will lay the historical foundations for this claim.

I argue that this relationship between economy and culture is constituted via the role of the state in mediating this relationship. This relates the ongoing process of ‘economic reforms’ (i.e. the transition to the market economy) to the secular process of building a modern state in China, which started in the second half of the nineteenth century as a response to the challenge of Western imperialist nation states. In this process, the linkage between the past and present is constituted by what Foucault calls a particular form of ‘governmentality’ in his analysis of the evolution of the state and structures of power in Western European history. With this term, Foucault encapsulates the fact that systems of ruling large societies encompass much more than legal institutions or mechanisms of enforcement of power, but include, for instance, hegemonial structures of knowledge or, in particular, internalized systems of disciplining the self. Therefore, in his view, modern market economies based on liberal doctrines are part and parcel of modern states and their systems of governing large-scale complex societies.¹ In China studies, this idea has been very influential in recent attempts to grasp the paradoxical ‘neo-liberal’ nature of emerging Chinese capitalism combined with a socialist state. Indeed, what appears as a paradox to many Western observers, namely the combination of authoritarian one-party rule with rampant capitalist practices, may be understood as a specific form of governmentality: the market is part and parcel of the system of rule in China. Thus, understanding the longue durée of evolving Chinese governmentality can start out from considering the role of markets in Chinese society and culture, past and present.² In this book I will develop the idea that this linkage may be best understood in using the analytical lens of a particular term that played a central role in the traditional form of governmentality in the Chinese Empire, namely ‘ritual’. This term, I claim, encapsulates a particular form of governmentality that manifests many family resemblances with forms of governing and governance in contemporary China which centre on the relationship between state, market and society.

However, on the theoretical level I also pursue the idea that all economic activity is cultural. This differs fundamentally from the current approach to culture in economics. After a long time of neglect, in the past three decades of research culture has been rediscovered by economists. However, in this research the explicit assumption is made that the two domains of culture and economy are separable, which is methodologically reflected in the standard econometric approaches which treat certain cultural data as exogenous parameters. This exogeneity also follows from the general idea that ‘culture’ refers to a legacy of the past, which by definition cannot be changed by activities taking place in the present. In these approaches, culture often become devoid of any specific content, because it is defined only in terms of past identities of certain culturally demarcated populations. This means, for example, that economists show that third-generation immigrants still manifest differences in values and beliefs in the present compared to other groups, which is then explained in terms of a peculiar cultural heritage.³

These approaches stay in astonishing tension with methodological standards that are normally upheld by economists, in particular methodological individualism and rationality. In a hard-nosed economic approach, cultural phenomena in the present would have to be explained by rational choices of individuals facing certain contextual data, such that culture would appear to be strictly endogenous, thus eschewing any idea of an immutable legacy of the past.⁴ In fact, the economic interest in culture could even go back to the observation that cultural explanations therefore enhance and fruitfully modify these standard economic explanations without questioning their fundamental validity.

Indeed, if we look at the approaches to culture in the disciplines that originally deal with these phenomena, we meet the entirely different view that, to a certain extent, comes surprisingly close to the standard economic approach in emphasizing the endogeneity of culture and the role of the individual. This view posits that culture is not an external determinant of human action rooted in the past, but an activity of individuals interacting with other individuals. In this sense, cultural analysis always starts out from the individual, thus apparently coming close to methodological individualism in economics. The major difference lies in the notion of rationality, which ties up with other important notions such as ‘equilibrium’, and which is confronted with the idea of cultural creativity which would appear to be a non-equilibrium force by definition. In a first approximation, I therefore introduce culture as the ‘activity of sense-making by individuals staying in recurrent interaction with others’. The difference between the two views is then straightforward: for example, economics treats preferences as givens and irreducibly subjective, whereas cultural analysis asks how individuals create their preferences when interacting with others. This also implies, however, that there is no fundamental contradiction between economic notions of rationality and cultural analysis, even though rationality itself is seen as a procedure that is subject to creativity and hence as not universally binding.⁵

In this book about China I cannot explore these theoretical and methodological issues in great detail. Thus, I just posit my own position and elaborate on those methodological aspects that are necessary for deploying my empirical approach to China’s economic culture. As is well known, the definitions of ‘culture’ are multifarious. Thus, I pick out the one that is most directly related to my idea of culture as sense-making. This is the definition proposed by Beugelsdijk and Maseland: ‘we loosely define culture as those behavioral and ideational structures that are deemed essential to the constructed identity of a community.’ This definition introduces a new term, ‘identity’, which I regard as fundamental.⁶

The definition is remarkable in several respects. The first is that no reference is made to the past. Culture relates to ‘behavioral and ideational structures’ which can be inherited from past activities, but not necessarily are. The term ‘structure’ suggests that culture relates to phenomena which manifest a certain stability through time, which implies that there is a link between past and present. Yet, what counts is the activity of ‘constructing an identity’ which takes place in the present. Thus, for example, Confucianism may be regarded as an ‘ideational structure’ which we can identify via texts and speeches of individuals who activate these ideas in identifying themselves as ‘Chinese’. However, if we reflect upon this example, we immediately recognize the immense complexity of this notion of culture. To begin with, how can we demarcate the ‘community’ independent from the process of constructing its identity? This is done largely in a rather naive way, namely by referring to the borders of nation states today (such as the PRC), or to some historical link to populations of origin (such as the ancestors of contemporary Chinese immigrants in the USA). But if we proceed along this line, can we then assert that ‘Confucianism’ is a necessary element of the identity of these groups? What is the condition here? Do we need to show that people actually read Confucian classics? Would that imply that people who do not rely on Confucianism in identifying themselves as ‘Chinese’ are actually not Chinese? These are by no means moot issues, as is evident from the conceptual difficulties in demarcating ‘national minorities’ from the Han Chinese majority population in China today.⁷

Things become ever more complicated if we distinguish between behaviour and ideas. Can we approach ‘Confucianism’ exclusively in terms of behaviour? In other words, we would consider the possibility that certain individuals behave according to certain standards which we as observers identify as ‘Confucian’, without implying that these individuals ‘make sense’ of their behaviour in terms of Confucian ideas. For example, people may take special care of their parents without invoking the Confucian notion of ‘filial piety’, ‘xiao’ (孝). Yet we would not speak of a cultural phenomenon if these behaviours are not activated in the context of identifying themselves as a member of a ‘Chinese’ community (for example, in arguing that ‘the Chinese’ pay particular attention to their parents as compared to other ethnic groups). This means that we introduce a fundamental methodological distinction between two positions of observers – external and internal – which relates to the two methodological positions of emics and etics.⁸ The external observer may identify certain behaviours as being distinctive for a certain population, but whether these are ‘cultural’ phenomena can only be decided if we move to the position of the internal observer, and hence to that of the members of the supposed community, and show that those observers refer to that behaviour as an element in constructing their identity. This has important consequences for assessing the relevance of one of the most important areas in established research on culture, namely value surveys. Alleged differences in values across different populations can only count as ‘cultural’ if they are perceived by internal observers as being constitutive for distinguishing themselves from other communities.

This insight leads us to ponder another intricacy of culture. If there were only Chinese in the world there would be no ‘Chinese culture’, and, indeed, in ancient times ‘culture’ was perceived as being tantamount to ‘civilization’ that separates humans from mere ‘barbarians’. For example, the early Confucian thinkers considered the Chinese ritual as being the defining difference between human beings and animals. Thus, our definition of culture relates essentially to the mutual recognition of cultural differences in cross-cultural interactions. In this sense, we cannot approach culture as a property of a certain community which exists independently from cross-cultural encounters. Indeed, this would lead us into the trap of cultural essentialism, which, in my view, has happened to recent economic research on culture. On the contrary, culture is by definition a cross-cultural phenomenon and therefore a property of both external and internal observers in cases where they interact. We can even say that without this interaction culture does not exist as a phenomenon.⁹

This important observation has two methodological consequences. The first is that culture relates directly to the nested structure of communities. Thus, if as external observers we refer to ‘China’ as a certain geographical area and its inhabitants, we need to recognize the fact that this area is covered by a large number of different communities that have different identities, which, however, overlap and criss-cross in a complex fashion. Thus, there are Hakka communities within the ‘Chinese’ area, or there are cohorts of individuals who identify themselves referring to a shared experience, such as the ‘sent-down youths’ of the 1970s, and so forth. All culture is an agglomerate and mosaic of subcultures. Facing this bewildering complexity of culture, how can we extract a core meaning of ‘Chineseness’ that is shared among all observers, both internal and external? Anything that is not universally shared, in fact, identifies another community than ‘the Chinese’. Thus, when investigating Chinese culture in the sense of looking at cultural phenomena in the geographical territory of China, we need to recognize the diversity of Chinese culture as a basic fact. This is also a necessity in historical terms, as China throughout her history was a multi-ethnic state and was shaped by the experience of frontier societies during the centuries of migration and expansion. In this sense, Chinese culture has always been the culture of an empire, and one peculiar feature of the modern Chinese nation state is its fragile or even defunct grounding in a concept of national culture.¹⁰

The second consequence of treating culture as a cross-cultural phenomenon is that writing about culture becomes a part of the culture that is being analysed. There is no detached position which allows one to fix an ‘objective’ content of culture. Thus, in writing this book about China’s economic culture I am not simply doing empirical, descriptive or explanatory work. As a ‘German’, I take part in the activity of constructing the identity of ‘the Chinese’. This consideration applies to all levels of the nested hierarchies of culture, so that, for example, Hakka culture is nothing that is a given which is independent from who else in China observes Hakka culture and comments on it, and which foreigners observe Hakka and non-Hakka and perceive these differences relative to their own position. This also implies that there is no certainty as to whether ‘culture’ is perceived in the same way by different kinds of observers of culture. In fact, culture will look different from each of those different perspectives, and there is no presumption that behind this kaleidoscope of culture there is an immutable fixed point.

In the context of anthropology, this problem has been labelled the ‘orientalism’ phenomenon which describes the special effect that can emerge if Western observers construct an image of Asian societies and culture which also partly reflects their own context and cultural problematics. Orientalism gives rise to another phenomenon, namely ‘reverse orientalism’. This happens if Asian people start to describe themselves along the lines of the Western perceptions, which in turn feeds back on the Western discourse. These issues are not merely theoretical ones, but have been popping up in the context of studies of Chinese business and economy on several occasions, in particular following the rise of the ‘tigers’ in the Asia-Pacific. When, on the part of Western researchers images of ‘Chinese capitalism’ had been produced, many actors in the Chinese cultural domain began to perceive their own practices and beliefs in terms of the cultural constructions which were undergirded by cross-cultural settings especially in Southeast Asia, where the business success of the Chinese diaspora was also seen as a social issue. Thus, the ‘Chineseness’ of Chinese business became a narrative that was also told by Chinese entrepreneurs themselves, and who might not even be aware of the larger academic setting. As a result, Western perceptions of ‘Chineseness’ may be readily confirmed by the authentic actors. Critical observers pointed out, on the contrary, that Chinese business practices reflect nothing but the specific historical and structural circumstances of the dynamics of capitalist development in the Asia-Pacific, and that therefore the discourse on culture can actually be appropriated by attempts at giving legitimacy to what appear to be mere expressions of economic forces and social structures of dominance and power, reflected in the organization of Chinese entrepreneurship and business.¹¹

So, we need a methodological framework that allows for the analytical recognition of these interactions and the resulting complexity of culture. The challenge is to establish a systematic relationship between etic and emic approaches to culture, and to navigate between the Scylla of cultural essentialism and the Charybdis of the postmodern arbitrariness of culture. This is the principal task of this chapter.

Triangulating ‘culture’ in the mirror of culture

My approach to reconciling emics and etics starts out from the ‘mirror of culture’ (Figure 1.1).¹² The ‘mirror of culture’ encapsulates the fact that ‘culture’ as an object is something that is essentially embedded in processes of mutual observations and discourses about these observations among observers with different perspectives. Ideal typically, I distinguish between two roles of observers, namely ‘reflecting observers’ and ‘participating observers’, which can coincide for particular individuals, such as managers who write about their experiences for a business magazine. Observers may be ‘internal’ or ‘external’ to the culture being constructed in the process, and they communicate with each other. So, for example, a Chinese manager, an internal participating observer, may directly form perceptions about her culture in the context of an international joint venture (7). At the same time, she communicates with external participating observers; that is, Western managers who also form perceptions (5), such that the Chinese manager also starts to form perceptions that are mediated by Western observations (10). In order to adopt a professional approach, the Chinese manager may read academic work about cross-cultural issues which also impacts upon her view of Chinese culture (8). These academic works ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of figures
• Preface
• Introduction
• 1 Culture, ritual and economic style
• 2 The Chinese ritual economy as historical type
• 3 Institutions, ideas and ritual in the modern Chinese political economy
• 4 Local state, ritual and territorial competition
• 5 The ritual foundations of markets
• 6 Chinese enterprise, organization and ritual
• 7 Conclusion: deciphering the Chinese economic style
• References
• Index