Expert answer:Critical Review
Expert answer:Choose one or two reading from the reading list, read them carefully and write a critical review based on the readings. The course I take is about Late Industrialization and Social Change(not essay topic). 6 – 8 pages, double spaced, 1 inch margins. I will upload a good sample review later. (Read the sample plz)Tease out what question you have after reading.First you have to understand what the author(s) tries to say, and think about it to see if you agree with the author(s).Try to think why you disagree in case you do not agree, and in case you agree is what the author says enough? What can you add your own thoughts and ideas to those of the author? Is there enough evidence to support the arguments? Is there logical consistency in the arguments?All in all, I am looking for how much thinking you put into critical review, not a summary of the readings.The paper should be organized with a clear and strong thesis/argument(with a question). Be sure to focus on Critical Thinking about the author and its work in your review.Be original, and remember to cite.Reading List：China*Andrew G. Walder, Communist Neo-Traditionalism：Work and Authority in Chinese Industry(Berkeley：University of California Press, 1986), Ch. 4 & 5. (Recommended reading)*Jean C. Oi, State and Peasant in Contemporary China: The Political Economy of Village Government(Berkeley: University of California Press, 1989), Chapters, 1, 6, 7, 10.*Vivien Shue, The Reach of the State: Sketches of the Chinese Body Politic (Stanford: Stanford University Press, 1988), Ch. 2 & 3.*Yusheng Peng, “Kinship Networks and Entrepreneurs in China’s Transitional Economy,” American Journal of Sociology, Vol. 109, No. 5 (March 2004), pp. 1045-1074.*Sun Liping, “Societal Transition: New Issues in the Field of the Sociology of Development,” Modern China, Vol. 34, No. 1, The Nature of the Chinese State: Dialogues among Western and Chinese Scholars, I (Jan., 2008), pp. 88-113.
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Kinship Networks and Entrepreneurs in China’s Transitional Economy
Author(s): Yusheng Peng
Source: American Journal of Sociology, Vol. 109, No. 5 (March 2004), pp. 1045-1074
Published by: The University of Chicago Press
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Kinship Networks and Entrepreneurs in
China’s Transitional Economy1
Yusheng Peng
Chinese University of Hong Kong
This research draws insights from two theoretical traditions: one is
new institutionalism, which emphasizes the role of institutions, both
formal and informal, in economic growth; the other is social network
analysis, which highlights the role of interpersonal relations in producing and enforcing informal norms. Integrating these two approaches yields the thesis that social networks affect economic
growth via enforcing informal institutions. The article focuses on
the economic payoff of kinship networks in the context of China’s
rural industrialization to argue that kin solidarity and kin trust
played an important role in protecting the property rights of private
entrepreneurs and reducing transaction costs during the early stages
of market reform, when formal property rights laws were ineffective
and market institutions underdeveloped. Data from 366 villages
show that the strength of kinship networks has large positive effects
on the count and workforce size of private rural enterprises and
insignificant effects on collective enterprises.
INTRODUCTION
Economists have long concurred that institutions matter for economic
performance because they reduce uncertainty and lower the costs of transaction and production (e.g., Coase 1960; Williamson 1985; North 1990).
For instance, North and Thomas (1973) attribute the rise of the Western
world to the creation and evolution of an efficient property rights institution that, supported by a central state, brought the private rates of
return close to the social rates of return.
1
This research was partly supported by the South China Program, Chinese University
of Hong Kong. Thanks go to Jacqueline Adams, Alisa Lewin, Lucie Cheng, Deborah
Davis, Philip Huang, James Kung, Gina Lai, Danching Ruan, Alvin So, Wang Feng,
Min Zhou, Xueguang Zhou, and the AJS reviewers for their helpful comments. Direct
all correspondence to Yusheng Peng, Department of Sociology, Chinese University of
Hong Kong, Shatin, NT, Hong Kong. E-mail: yushengpeng@yahoo.com
䉷 2004 by The University of Chicago. All rights reserved.
0002-9602/2004/10905-0001$10.00
AJS Volume 109 Number 5 (March 2004): 1045–74
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American Journal of Sociology
Institutions can be either formal or informal. A large part of our social
and economic life is governed by informal norms (North 1994; Ellickson
1991; Posner 2000; Nee and Ingram 1998). Criticizing Coase’s exclusive
focus on formal laws of property rights, Ellickson (1991) argues that informal norms in everyday life interactions subsume a large part of the
costs of formal policing and enforcement. North (1994) emphasizes that
informal rules provide legitimacy to formal rules. Whether a formal institution can achieve hoped-for results depends to a large extent on
whether it is supported by informal institutions such as customs,
traditions, and codes of behavior. Study of reform economies should pay
particular attention to informal institutions because—unlike formal institutions, which are deliberately designed and can be transformed relatively rapidly—informal norms are much more impervious to deliberate
designing and take time to change.
While acknowledging the importance of informal norms, economists
are less unequivocal about their genesis and enforcement. For sociologists,
informal norms emerge spontaneously out of social networks and their
enforcement is the by-product of ongoing social relations (Nee and Ingram
1998). It follows logically that social networks matter for economic performance. The diagram in figure 1 illustrates the causal connections.
This line of argument points to a promising crossbreed of new institutionalism and social network analysis. Such crossbreeding calls for reorienting network analysis from an individualistic perspective that views
social relations as individual resources to the group perspective that focuses on the normative control aspect of social networks. At the individual
level, the effects of network ties, weak or strong, on status attainment
and mental health have been thoroughly examined (Granovetter [1974]
1994; Burt 1992; Coleman 1988; Lin 1988, 2001; Bian 1997). Comparatively, aggregate level analysis of the role of social networks in supporting
informal institutions and promoting economic growth (or political democracy) is only beginning to generate momentum. Theorizing of social
capital at the group level is pioneered by Coleman (1990, 1994), Woolcock
(1998), and Putnam (2000). Empirical evidence is scanty (e.g., La Porta
et al. 1997; Knack and Keeper 1997).
Coleman (1990) analyzed two conditions for the genesis of effective
social norms. The first (necessary) condition is the existence of “externalities of an action that cannot be overcome by simple transactions that
would put control of the action in the hands of those experiencing the
externalities” (p. 251). Externalities exist when an action has consequences
for actors other than the focal actor who typically calculates only his/her
own benefits or costs. Combined action among those who experience the
externality is necessary to attain a social optimum. Yet, combined actions
are often not feasible because self-interested individuals tend to free ride
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Kinship Networks and Entrepreneurs
Fig. 1.—Explaining the economic payoffs of social networks
on each other’s contribution. Olson (1965) calls this the collective action
problem.
This first condition necessitates a prescriptive or proscriptive norm to
capture positive externalities or avert negative externalities. However,
enforcing an informal norm incurs a second-order free-rider problem because rational individuals tend to free ride on each other’s sanctioning
effort. Thus, the second (sufficient) condition for the genesis of norms is
that norm beneficiaries will be able to overcome the second-order freerider problem or generate enough second-order sanctions to render norms
effective (Coleman 1990, p. 273). Within the framework of new classical
economics, the genesis of a norm is inexplicable because the second-order
free-rider problem is unsolvable (Axelrod 1984, 1997; Nee and Ingram
1998).2 Methodological holism in sociology simply avoids the question by
starting with the sui generis nature of the social fact.
Coleman’s methodological individualism derives social order from individual dynamics but differs from economics in its emphasis of social
relationships. Coleman underscored two aspects of social relationships as
important for generating effective sanctions. One is the communication
that enables coordination among the norm beneficiaries. The second is
obligations and expectations that subsume the cost of sanctioning (Coleman 1990, pp. 270–73). A third aspect, which is increasingly emphasized,
is the emotional dimension. Lawler (2001; Lawler, Thye, and Yoon 2000)
argues that emotions are the unintended but inevitable side effects of
social exchanges. Individuals include irrational emotions in their rational
calculation. The innate need for social approval and social companionship
renders the withdrawing of social networks an effective sanctioning mechanism (Homans 1961; Nee and Ingram 1998).
This article will explore the economic payoffs of one particular type of
2
There are many proposals to solve the second-order free-rider problem. For example,
Axelrod (1997, pp. 52–57) postulates a metanorm of second-order sanctioning, i.e.,
“punishing those who do not punish a defection.” There are other proposals to solve
the second-order free-rider problem. Posner (2000) proposes a signaling theory to explain conformity to effective norms: people adhere to norms to signal that they are
the cooperative type in order to capture future gains in cooperation. Gould (1993)
argued that the norm of fairness helps to produce collective goods: when one member
contributes, other members may match this out of fairness considerations.
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American Journal of Sociology
social relations—kinship relations. Lineage networks are a distinctive and
prominent feature of Chinese village life. I will examine their role in
defining the informal institutional environment and shaping rural industrial development in Chinese villages. The rapid growth and success of
rural industry during China’s economic reform have attracted much academic attention because of its many paradoxes and puzzles. One interesting paradox is that private entrepreneurs mushroomed in the early
stage of reform, when the formal property rights institution was in incubation and its enforcement ineffective. Were there informal norms in
Chinese villages that helped reduce uncertainty and encourage entrepreneurial initiatives? Did lineage networks have any role to play in this
process? I will argue that kinship networks function to protect private
property rights and facilitate the growth of private entrepreneurship in
China before formal property rights laws become effective. Using a village-level data set, I will demonstrate that lineage networks enormously
promoted private entrepreneurship but did not significantly affect collective enterprises.
KINSHIP NETWORKS AS SOCIAL CAPITAL
Sociological interest in kinship networks in China dates back to Max
Weber ([1927] 1981, 1951), who observed that while being driven to extinction in the West by the Protestant Reformation and the rise of the
modern state during the Middle Ages, clan organization was completely
preserved in China and developed to an extent unknown elsewhere in
the world. Below the county level, rural life in China was dominated by
a very well-organized and powerful “sib organization.” Weber observed
that the clan organization was the most important “corporate actor” in
the Chinese countryside, one that not only ran schools and built ancestral
halls but also owned land and operated handicraft industries, extended
cheap credit to its members, resolved conflicts, and administered justice
(1981, pp. 44–45). Given the scanty information that Weber had to work
with, this was a rather accurate picture, consistent with Chinese scholars’
portrayal based on firsthand materials (e.g., Qian 1994; Wang 1991).3
The landscape has been drastically transformed by the communist revolution. The Communist Party made deliberate assaults on the lineage
organizations. It confiscated clan communal land and properties, deprived
clan elders of their power, repealed clan codes, and injected the ideology
of class consciousness and class struggle to diffuse clan identity (Wang
3
There are three English terms for the Chinese concept of zongzu: lineage group, clan,
and kinship networks. I use the three terms interchangeably.
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Kinship Networks and Entrepreneurs
1991). From 1949 to 1979, the economic foundation and organizational
structure of the lineage system were systematically dismantled and replaced with collective farms and grassroots administration. Lineage
seemed to be reduced to a subterranean cultural phenomenon, a lingering
mentality. However, this dormant subterranean culture was to become
vibrant again during the market reform era.
Whyte (1995, 1996) observes that despite tremendous changes, such as
the shift from the extended to the nuclear family and the phasing out of
prearranged marriages, some features of Chinese familism persisted, such
as loyalty to the larger kin groups and sacrifice of personal interests for
the sake of the family. Whyte believes that the familism and kinship
loyalty are “the social roots of economic development” that distinguished
the successful Chinese reform path from the unsuccessful Soviet reform
experiences.4
Structural Features of Kinship Networks
To infer the social capital benefits of kinship networks, I will first examine
their structural features. Kinship networks in contemporary Chinese villages feature strong ties, cultural identity, leadership, and density.
Strong ties.—In Chinese cultural construction, blood ties (xueyuan) are
defined as the strongest ties, which can be further fine graded according
to closeness or distance, such as whether the ties are to family, close
relatives, or more distant kin. In traditional Confucian ethics, the norm
against failing one’s obligations to kin (liuqin buren) is so strong that it
is considered an act of inhumanity. If personal friendship grows strong
between nonkin, it is often overlain with fictive kin ties such as sworn
brotherhood, not in the Christian sense that we are all children of God
but in the sense that we are like siblings with blood ties. In the West the
intrinsic strength of consanguinity ties is preserved only for family members and the closest kin.
Tie strength matters in the Chinese context because trust and obligations are bestowed differentially according to its gradient. Contrary to
Granovetter’s (1973, 1994) weak-tie thesis, Bian (1997) finds that strong
ties are more important than weak ties in obtaining jobs in China because
influence as well as information matters. Data from Singapore, a city
imbued in traditional Chinese culture but with vastly different economic
4
Weber viewed such clan organization as an irrational force impeding the emergence
of capitalist business organization. Recently, Martin Whyte (1995, 1996) challenged
Weber’s analysis and argued that strong family and kinship ties may have facilitated
the rapid economic growth since the 1980s. The Weberian thesis and its recent reevaluation will be treated in full in a separate paper.
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American Journal of Sociology
institutions, confirm the strong-tie finding (Bian and Ang 1997), which
suggests a cultural explanation. The eminent Chinese anthropologist Fei
Xiaotong’s insight about the “differentiated mode of association” (chaxugeju) rooted in Confucian culture pinpoints the key difference between
Chinese and American cultures. Fei ([1947] 1992, pp. 25–33) observes
that, whereas American society is organized by voluntary associations
based on universalistic principles and qualifications, Chinese society is
organized by concentrical guanxi circles, extending from the family (the
core), to relatives, friends, and so on. Literally, guanxi means social connection and is a synonym for special favors and obligations. The “weaktie” phenomenon may reflect universalism and individualism, which do
not condone special favors to strong ties. Western universalism and individualism can be traced to the Protestant idea of equality before God
and, later, the ideas of natural rights and legal rights (Hamilton 1994). In
contrast, the core of Confucian teaching is differentiated attitudes toward
parents, children, siblings, kinsmen, and friends, and so on. The concepts
of universal rights and individual jurisdiction are imported and foreign.
The closest Chinese concepts are self-interest (li) and obligation to one’s
social ties (yi). A noble man would sacrifice self-interest to honor his
obligations, whereas a commoner would forsake his obligation to serve
his self-interest. The definition of “individual rights” in the Chinese context
is thus guanxi-specific and particularistic. It is not universal rights, but
ego’s obligation to the alter: no tie, no obligation, and no rights. Thus,
Westerners fight for rights and Chinese curry favor through guanxi ties
(Fei 1992).
Cultural practices.—The revival of the lineage culture since the 1980s
has been marked by a wave of reconstruction of ancestral halls (citang),
compiling of genealogy (zupu), and the redecoration of ancestral burial
sites (Wang 1991). The ancestral hall, the shrine where ancestors are
consecrated, is the symbolic center of a clan. Genealogy books reinforce
consanguinity ties and usually trace the clan pedigree back by hundreds
of years, often with obvious exaggerations. During the collectivization
campaign and the Cultural Revolution, ancestral halls were turned into
offices, schools, or storage rooms, if not destroyed; genealogy books were
burned as feudalistic remnants. With the more liberal atmosphere following the market reform, ancestral halls were rebuilt, genealogy recompiled,
and annual pilgrimage to the ancestral burial sites reactivated, usually
with the ardent support of clan members. These cultural practices help
reinforce the bond between clan members, create group identities, and
forge solidarity. As Weber (1951, p. 78) put it, “The cohesion of sib undoubtedly rested wholly upon the ancestor cult.”
Leadership.—The authority of the clan heads used to be absolute and
included meting out death penalties such as the caning or drowning of
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Kinship Networks and Entrepreneurs
serious offenders of clan codes. They lost their authority during the collective era but regained some after the onset of market reform. Without
economic resources, the clan is no longer a well-organized hierarchy with
a formal authority structure. Family remains the basic unit of action in
rural China. The authority of clan leaders is mostly symbolic and ritualistic, based primarily on personal charisma, seniority, and ability. Their
duties include presiding over marriage ceremonies and burial rituals, mediating conflicts within the clan, organizing collective activities, and occasionally making clan-related decisions (Wang 1991).
Density.—Comparatively, villages with strong kinship organization are
more densely networked than those without. Network density eases the
flow of information and engenders trust among members, enables them
to cooperate with each other, and solves collective action problems. Many
scholars (e.g., Gould 1993; Marwell, Oliver, and Prahl 1988) have demonstrated the effects of network density on producing solidarity and collective action.
Even though no longer a corporate actor, lineage remains the locus of
collective action and normative control in contemporary China. All its
structural features spell social capital benefits. Strong ties provide the
bonds and obligations, cultural identity generalizes bilateral bonds and
obligations into group loyalty, and leader …
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