ABSTRACT

In this chapter I develop the idea that in China’s ritual economy the notion of the ‘corporation’ remains weak. Whereas in the previous two chapters I dealt with the interface between markets and the state based on my analysis of market governmentality, I now look at the interface between market and organization in the context of the phenomenon of modularization introduced in Chapter 5. So, the topic also ties up with the analysis of the longue durée of the market system in China, and asks how far the forces of market involution in traditional China cast a shadow over more recent developments. As we saw, these forces created a trajectory of market development which suppressed the emergence of more complex organizations, in particular of what we identify as ‘modern corporations’. I argue that in the context of modularization, and reflecting the specific form of market governmentality, the role of the corporation in the contemporary Chinese economy remains fragile and is unfinished business in the agenda of modernization. In this argument, I do not claim that this is a permanent feature of Chinese economic style, but that it has been a hallmark of market transition thus far, and that it is only gradually changing, especially in response to the growing integration of the Chinese economy with the global economy. However, as I will argue, the impact of globalization upon the Chinese economy is not unequivocal with regard to corporatization, and even appears to partly leverage the forces of market involution which have hampered corporatization in the past. That being said, we should avoid false normative assessments of Chinese developments, since the historical model of corporatization in the West is also under pressure of change in the global economy. This is not the place to delve into these discussions proceeding both in academia and the media, but suffice it to note certain highlights. One argument that has held sway for many years now is that the emergence of the internet will erode the traditional notion of the corporation as it opens up new ways of organizational hybridization, thus rendering the borders between the corporation and the market obsolete, for both technological and

organizational reasons. The most recent version of this argument is the notion of ‘platform capitalism’, in which corporations mainly organize networks of loosely affiliated independent workers or suppliers of services, thus not only undermining the traditional organizational structures, but, most interestingly in comparison to China, also erode the institutions of the formal social security system, thus partly also driving the growth of an ‘informal economy’. If this trend persists in the global context, the very adoption of the most advanced forms of capitalist organization will actually bolster the resilience of ‘traditional’ structures of market governmentality in China. Another example is the resilience if not resurgence of family business worldwide. This has clearly disproved earlier assumptions about the necessary withering away of these ‘traditional’ forms of organization in favour of the modern public corporation. In these earlier opinions, there was evidently a bias towards emphasizing the costs of family organization (such as, typically, the intermingling of family affairs with business), underestimating the many advantages of family organization in terms of commitment, long-term decision-making and so on. Again, this observation calls for great care in evaluating the Chinese situation, where traditionally family business has played a pivotal role. In other words, we need to disentangle the analysis of the Chinese enterprise from modernist accounts of Western development, thus for another time explicitly reflecting on the ‘mirror of culture’. This is extremely important in avoiding the creeping in of normative judgements in assessing the specific patterns of business organization in China. For example, in recent decades there has been intensive international cooperation between China and organizations such as the OECD with regard to the buildup of modern corporate governance structures. In these efforts, often the Company Law together with associated laws is treated as the reference framework for assessing the Chinese situation, which leads to overlooking certain essential elements of corporate governance as it is actually practised. In the state-owned sector, this mainly refers to the role of the CCP in shaping the ‘market for managers’ via the nomenclature system. This shows that standard approaches to corporate governance tend to concentrate on the capital markets and the shareholder perspective, but neglect the market for managers as an important embedding element. This becomes partly evident when considering the role of corporate bodies in determining the role of leading positions such as the CEO, which are also included in the CCP nomenclature. If this is considered at all, it is mostly in terms of a factor of disturbance in the mainstream model of corporate governance, and there is no systematic view on CCP impact in terms of a potentially alternative model of corporate governance.1