Explaining the economic transformation of Chinese societies
Over the past 30 years, Gary G. Hamilton has often questioned the usefulness of Western social and political theories for understanding the economic transformation of Chinese societies. In the 1980s, Hamilton and his colleagues argued that Western theories of modernization, with their emphasis on the rise of the democratic nation-state, the rule of law, and the institutionalization of property rights, seemed strikingly inadequate for explaining the growth and stability of strong capitalist economies in the East Asian context. This book, which is in large part a collection of his previous publications, provides a comprehensive overview of his argument that the economies of Chinese societies need to be understood on their own terms.
Weberian influences and the ‘civilizational' approach
Positioning himself as a ‘thoroughgoing Weberian', Hamilton claims that Weber's key insight into understanding the emergence of capitalism was to show how ‘civilizational worldviews' influence spheres of life, such as the economy, through forms of authority and domination which, in the West, led to a type of capitalism based on rational action and rule-based bureaucracy. From this starting point, many Western social theorists, Hamilton claims, run into a ‘problem' when explaining East Asian capitalism because while they accept Weber's analysis of Western capitalism, they overlook his methodology, or Verstehen¸ which, broadly speaking, refers to the ability of outsiders to relate to cultures other than their own ‘from the inside out', rather than through ‘importing' concepts and explanatory frameworks developed in entirely different cultural contexts. Thus, Hamilton asserts, explanations of Chinese capitalism have tended to focus on looking for differences in relation to Western models of economic development. China is all too often turned into a ‘negative case' with the emphasis placed on what China lacks, in both historical and contemporary terms, in relation to ‘normal' Western economies.
In the four chapters of Part 1 of the book Hamilton introduces and expands on his theoretical framework using both comparative and historical research. Here, he emphasises the need to focus on the continuity of civilizational norms in various capitalist economies, and shies away from the usual theoretical practice of understanding modernity in terms of ‘breaks with the past'. In a rather general sketch of the Confucian world view, Chinese civilization is characterized as one largely free of monotheistic religious beliefs and based, instead, on a set of principles which prioritise natural harmonies and hierarchies in relationships. From this proposition, it is only a short step to the now taken-for-granted assertion that in East Asia organizations are more fundamentally ordered around relationships, whereas in the West they are largely controlled by abstract laws (inherited and modified in form from the cultural norm of an ‘absent God'). If Western capitalist economies are firm-based, Asian capitalist economies are network-based. An empirical example of these points emerges from a study of both the practices of merchants and the nature of commerce in the late Qing period. Hamilton shows how Chinese ‘clannishness' in this era needs to be understood not from the neo-classical economic perspective as a form of constraint on free market development, but, rather, as the foundation of market stability which provided merchants with opportunities to perform, with integrity, their social roles in relation to their tongxiang (defined as ‘home town' associations based on moral ties and reciprocal obligations).
Forms of capitalism in Chinese Societies
Part 2 of the book develops the networking theme by reference to more detailed empirical studies of Asian capitalism in the post World War Two period. Many different cases are introduced, including chapters on Hong Kong and the rise of capitalism in Asia; the relationship between US retailers and Asian manufacturers; Taiwan's integration in the global economy; Asian business networks in transition; the organization of Chinese family-owned conglomerates; competition and organization in Chinese business practices; and the changing role of the Chinese in Thailand. One interesting research example shows the way in which investments in family-owned businesses are often based on both ‘centralized patriarchal control' (nei) as well as external gaunxi networks (wai). Other notable points made in the collection include the tendency of studies of economic development to neglect the importance of demand side forces such as commerce and retailing. In a chapter on ‘Remaking the global economy' (co-authored with Misha Petrovic and Robert C. Fenstra), an in-depth study of Wal-Mart's investments in China shows how retailers are all too often overlooked as intermediaries between producers and consumers. Emphasis is placed on the role of retailers and Chinese entrepreneurs as active creators of both supplier and consumer markets, ‘embedded' in the socially constructed norms governing family, friendship and economic life. Finally, a chapter on Asian business networks in transition is worthy of note. In a critique of the normative assumptions underlying the term ‘crony capitalism', famously cited by Alan Greenspan as a major cause of the1997 Asian financial crisis, Hamilton develops his argument that East Asia should be viewed as a positive case to be understood contextually. He suggests that a better explanation for the financial crisis was the shift in the global economy from ‘producer driven manufacturing systems to demand-responsive reflexive manufacturing'. In Japan and South Korea, this change disrupted the internal relationships between the state and business groups and consequently left a number of East Asian economies in a perilous position. The key point in most of these chapters is that in East Asian societies, it is family, friendship and colleague networks, not the state and abstract notions of law, that are the principal modes for organizing economic activity.
As indicated earlier, the book is, in the main, an assemblage of work conducted by Hamilton and his colleagues over the last three decades and much of the material has already appeared in published form elsewhere. Indeed, in the acknowledgements there is a note that some chapters have not been up-dated since they were originally published. As the collection spans the period 1977 to 2006, this means that certain sections of the book, particularly those written in the 1980s and mid-90s are showing their age. East Asian ‘network capitalism' is now well understood by scholars in this area and there has been considerable discussion of the concept in recent years, little of which is referenced here. Moreover, while the general point is made throughout the volume that Chinese capitalism needs to be ‘taken on its own terms', the theoretical debates outlined in the introductory chapters are never fully realised in later discussion. Both of these flaws - a need to reference more recent debates and to establish firmer links with theoretical assertions - could have been partially addressed by the inclusion of a concluding chapter. This is noticeable by its absence. That said, this remains an interesting and engaging overview of Hamilton's work to date, and is a useful introduction to the economic sociology of Chinese societies.
Jane Nolan
Nuffield New Career Research Fellow
University of Cambridge
jpn23@cam.ac.uk