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Kinship Networks, Village Industry, and Max Weber
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2
I
NTRODUCTION
100 years ago Max Weber (1930, 1951), in his endeavor to search for the genesis of capitalism in the West, systematically examined Chinese society (among other civilizations). In his book The Religion in China, Weber listed a number of factors that may have inhibited the emergence of rational capitalism in China, including the patrimonial bureaucracy, Confucian ideology as embodied by the humanistically trained literati/mandarin, prebendal tax system (tax farming), an absence of a formal and calculable legal system, and kinship organization as “sib fetters”. It seems that many of Weber’s original observations have been brought under critical scrutiny. Tax farming (fiscal contracting) were singled out as an important system promoting local economic growth (Oi 1999; Walder 1995); the Chinese ancient judiciary system was revealed as less irrational than Weber assumed (Huang 1996; Marsh 2000); patrimonial authority was shown to be adaptable to modern large corporations (Hamilton and Biggart); even Confucian ideology may be compatible with capitalist entrepreneurial activities (Berger 1980; King 1993).
This paper will focus on the relationship between kinship networks and industrial
growth in Chinese villages. Rural industrialization provided an ideal platform for examining the relationship between kinship networks, essentially a rural phenomenon, and industrial enterprises, which is usually associated with urbanization. Rural industry has made significant contributions to China's impressive economic growth in the past two decades. While China's Gross Domestic Product (GDP) grew from 362 billion yuan in 1978 to 7,478 billion yuan in 1997, at an annual growth rate of 9.5 per cent, rural industrial product increased at an annual rate of 27 per cent during the same period (State Statistical Bureau 1998, pp. 12, 99). Due to this rapid growth, the share of rural industry in the GDP changed from roughly 10 percent 1978 to 27.7 per cent in 1997 (TVE Bureau 1998, p. 3). Rural industry has been the most dynamic sector of the Chinese economy.
In this paper I ask: (1) Are kinship networks positively or negatively correlated
with the development and efficiency of rural enterprises Chinese villages? (2) Do kinship networks affect the development of collective and private enterprises similarly or differently? Using village-level data collected in 1993-1994 and firm-level data, I will show that kinship networks have a positive impact on the number of nonfarm enterprises in Chinese villages and the impact is much stronger on private ones than on collective ones; but that kinship networks do not seem to improve the efficiency of rural enterprises. K
INSHIP
N
ETWORKS
:
OBSTACLE OR
E
NGINE
When criticizing the methodological individualism in neoclassic economics, Biggart and Hamilton (1997) pointed out that social networks play an important role in the social and economic life of Asian countries. Actually social networks are important for both western and Asian economic life, as suggested by Granovetter (1985). Granovetter uses the image of social embeddedness to launch a critique on neoclassical economic theory in general and Williamson in particular. Williamson responded by incorporating the concept of embeddedness into the concept of “institutional
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2
I
NTRODUCTION
100 years ago Max Weber (1930, 1951), in his endeavor to search for the genesis of
capitalism in the West, systematically examined Chinese society (among other
civilizations). In his book The Religion in China, Weber listed a number of factors that
may have inhibited the emergence of rational capitalism in China, including the
patrimonial bureaucracy, Confucian ideology as embodied by the humanistically
trained literati/mandarin, prebendal tax system (tax farming), an absence of a formal
and calculable legal system, and kinship organization as “sib fetters”. It seems that
many of Weber’s original observations have been brought under critical scrutiny. Tax
farming (fiscal contracting) were singled out as an important system promoting local
economic growth (Oi 1999; Walder 1995); the Chinese ancient judiciary system was
revealed as less irrational than Weber assumed (Huang 1996; Marsh 2000); patrimonial
authority was shown to be adaptable to modern large corporations (Hamilton and
Biggart); even Confucian ideology may be compatible with capitalist entrepreneurial
activities (Berger 1980; King 1993).
This paper will focus on the relationship between kinship networks and industrial
growth in Chinese villages. Rural industrialization provided an ideal platform for
examining the relationship between kinship networks, essentially a rural phenomenon,
and industrial enterprises, which is usually associated with urbanization. Rural industry
has made significant contributions to China's impressive economic growth in the past
two decades. While China's Gross Domestic Product (GDP) grew from 362 billion
yuan in 1978 to 7,478 billion yuan in 1997, at an annual growth rate of 9.5 per cent,
rural industrial product increased at an annual rate of 27 per cent during the same period
(State Statistical Bureau 1998, pp. 12, 99). Due to this rapid growth, the share of rural
industry in the GDP changed from roughly 10 percent 1978 to 27.7 per cent in 1997
(TVE Bureau 1998, p. 3). Rural industry has been the most dynamic sector of the
Chinese economy.
In this paper I ask: (1) Are kinship networks positively or negatively correlated
with the development and efficiency of rural enterprises Chinese villages? (2) Do
kinship networks affect the development of collective and private enterprises similarly
or differently? Using village-level data collected in 1993-1994 and firm-level data, I
will show that kinship networks have a positive impact on the number of nonfarm
enterprises in Chinese villages and the impact is much stronger on private ones than on
collective ones; but that kinship networks do not seem to improve the efficiency of rural
enterprises.
K
INSHIP
N
ETWORKS
:
OBSTACLE OR
E
NGINE
When criticizing the methodological individualism in neoclassic economics, Biggart
and Hamilton (1997) pointed out that social networks play an important role in the
social and economic life of Asian countries. Actually social networks are important for
both western and Asian economic life, as suggested by Granovetter (1985).
Granovetter uses the image of social embeddedness to launch a critique on neoclassical
economic theory in general and Williamson in particular. Williamson responded by
incorporating the concept of embeddedness into the concept of “institutional
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