Bayesian Investor Blog

Ramblings of a somewhat libertarian stock market speculator

Commodifying Communism

Posted by Peter on December 15, 2004
Posted in: Book Reviews, China. Tagged: trust.

Book Review: Commodifying Communism : Business, Trust, and Politics in a Chinese City by David L. Wank

This book does a good job of describing typical small business activity in a city that the author lived in for a couple of years.

I have long been puzzled by the reports that China has a booming economy in spite of widespread corruption and hardly any rule of law, when those problems seem to ensure poverty elsewhere.

This book does a good deal to resolve this mystery. It suggests that Fukuyama’s claim that “there is a relatively low degree of trust in Chinese society the moment one steps outside the family circle” is misleading because the Chinese notions of family ties aren’t as rigid as in the west. Family-style trust is more like a commodity that can be readily acquired by most people who have decent reputations, via friend of a friend type connections between people. And the networks of reputation do well at ensuring the reasonableness of corrupt or arbitrary actors.

It would be nice if we could copy the good parts of these aspects of Chinese culture, but I suspect that’s as hard as copying the social capital that Fukuyama describes in his book Trust.

Here’s one isolated provocative comment to which I haven’t figured how to respond:

The premise that inequalities stemming from differential access to political capital are reprehensible, while those stemming from imbalances in access to economic capital are not, is a value judgment that elides how political power is always implicated in the structure of markets.

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