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«Inaugural-Dissertation zur Erlangung des Doktorgrades des Fachbereichs Wirtschaftswissenschaften der Johann-Wolfgang Goethe-Universität Frankfurt am ...»

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Thus, the aim of reforms was to get hold of the socio-economic crisis and as such can be interpreted as a familiar phenomenon. A hundred years earlier, when the Qing dynasty ended in 1911, the so-called Westernization movement aimed to apply Western practical knowledge to the ―substance‖ of Chinese doctrines and thus implant Western technology and science into Chinese institutions, without changing social or cultural context.793 In 1978, reforms again intended to import foreign technologies to modernize the Chinese economy. From 1992 until today the official goal of reforms is called ―system of socialist

market economy‖. However, the explanations as to what this exactly means vary enormously. Deng Xiaoping‘s opinion on distributional issues was captured in the famous quote:

United Nations Development Programme (UNDP), 2010, p. 105.

Nee and Opper, 2010, p. 2.

He and Reisner, 2006, p. 463.

The second quote is actually a Chinese proverb.

In 1800, Chinese literati resisted the incorporation of Western knowledge into traditional curricula, but in 1880 mathematical methods such as algebra and calculus were added to school education. By that time, however, China already lacked behind in technological development. Faure, 2006, p. 31.

―Let some people get rich first‖.794 It is often also compared to other ‗developmental states‘ in East Asia.795 Indeed, the Chinese experience shares with those that it built ―on a strong authoritarian national leadership and an elite state bureaucracy pursuing developmental goals and industrial policy‖. However, the concept of the developmental state remains unclear concerning a definition of the features that propelled economic growth and how policies can influence industrial performance.796 The Chinese approach is often seen as incremental and gradual. However, some authors claim that reforms were such a success not because but despite the gradualist approach.797 Already fifteen years ago the puzzle of China‘s successful transformation ‗against all rules‘ was widely discussed.798 The common ground of the discussion has been the insight that ―history and institutions matter‖ which gave China a more favorably starting point compared to other transitional countries. Also, all authors agree on the notion that reforms have to introduce competition and choice into the system, to alter incentives for all actors in favor of economic change.799 The gradual nature of reforms is often explained by the rising share in output by the private sector.800 Ellerman identifies the ‗Chinese method‘ as parallel experimentation that ―tr[ies] several options, prototype(s) quickly to test the options, and communicate[s] between the experiments since improvements in one option might also benefit other options. Eventually a clear winner might emerge so that resources could then be concentrated on that option‖. It is a pragmatic approach that acknowledges that it is impossible ex ante to know what might be the best reform (or development) strategy.801 It is a process of decentralized social learning that has not the central government as ‗experimenter for the nation‘ that knows and implements the correct solution but the periphery – the local governments – that by experiments tries out different solutions. The central government merely is the facilitator of this social learning, as it takes on the best experiments and applies it to the entire country.802 Pragmatism ―views the social world as being actively constructed by people so, at each point in time, it is radically incomplete and in a state of becoming‖.803 However, the ―Chinese reforms were neither gradual nor slow‖.804 He and Reisner, 2006, p. 463-467.

Oi, 1995.

Nee and Opper, 2010, p. 4f.

See Naughton, 1995 for the first, Sachs and Woo, 2000 for the latter argument.

Nolan, 1993, Rawski, 1994 among many others and summarizing Walder, 1995.

Walder, 1995, p. 977f.

Huang, 2008, p. xi.

Ellerman, 2010, p. 17f., similar in Ellerman, 2004.

Ellerman, 2010, p. 21f.

Ellerman, 2010, p. 4.

Ellerman, 2010, p. 14.

The notion of gradualism versus shock therapy for many authors is misleading. Some authors go as far as arguing that there is no underlying theory for the Chinese reforms at all. This ‗strategy‘ was of course not deliberately chosen; it did not refer to the theoretical schools of neoclassics, Marxism or IMF police advice, but was an entirely pragmatic, adhoc endeavor. Indeed, measures were cautious and risk-averse; policy directives in official central government documents remained vague, leaving room for local experiments to develop a private sector, as outlined in detail in chapter 8, without explicitly planning for that to happen.805 Even at the beginning of reforms, in the resolution of the Third Plenum of the Eleventh Central Committee, the reform of the agricultural sector was not mentioned – and still having the result of completely abolishing the commune system. The whole transformation process is characterized by regional decentralization and fiscal federalism that resulted in structural learning by regional experimentation.806 Even without clearly defined property rights, the Chinese private (or rather non-state) sector thrived, pragmatic entrepreneurs accepting a relatively high level of uncertainty. To interpret that as gradual would rather be an ex post construct than an ex ante decision. As will also be outlined in chapter 7, Chinese tend to be very pragmatic in their actions and thus the acceptance of such a ‗strategy‘ is not as odd as it might seem from a Western point of view.807 ―China‘s reform was propelled from below via a peculiar form of massive participation by 800 million farmers who were incapable of theorizing and organizing, not ‗engineered from above‘ by power elites armed with ready theories and systematic strategies‖.808





5.2. The role of the family for economic development in Europe

5.2.1. A short outline of the traditional household before the industrial revolution809 In traditional societies, economic activity was usually subordinated to the social relationships. Material well-being was important, but even more so social standing within society. In an ideal-type traditional economy, as for example described by Aristotle for ancient Greece (see also below), material goods were valued for their use, not as investment and thus for sale. The ideal-type traditional household was mostly autonomous, working for its subsistence. Only items that it was not able to produce itself were bought on the vilZhu, 2007, p. 1503ff.

Zhu, 2007, p. 1507.

Zhu, 2007, p. 1504f.

Zhu, 2007, p. 1515.

For a detailed description, please refer to Wehler, 1987. For the development of markets and a comparison of traditional and modern economy, see Polanyi, 1944.

lage market. Additional goods were produced by artisans. These craftsmen sold their products retail in the town market and were organized in guilds that regulated prices and quality of the products. However, they were not motivated by gain and profits. Also, they did not work for remuneration as prices were defined by cost of production and custom, and as such needed not to be determined on a market.810 Land and labor were thus part of the social organization; wages of the craftsmen were determined by the rule of the guild and the town.

The economy in the old, traditional way was based on the house or household (―das ganze Haus‖) as main institution of economic activity.811 It was an economy based on agriculture; therefore it was a peasant economy, where ―economics‖ was involving a selfsustaining household integrating all spheres of life, which made it also a family economy.

The meaning of economics –‗Ökonomik‘ - goes back to the Greek word Oikos, meaning ‗house‘.812 This sense of economics eventually got lost with the changed attitude towards the notion what life is and, more fundamentally, what the aim of one‘s life is.813 The traditional household was mostly found in rural areas, but also urban households were organized in that manner in pre-industrial times. Craftsmen often had beside their trade a small husbandry that supplied most of their food (see chapter 7 and 8 for a description of the entrepreneurial bourgeois household).814 However, this ideal-type traditional oikos used to be the origin and basic social unit of economic activity but was not as narrowly defined as it is today with the urban ‗nuclear family‘ that became detached from the ‗house‘. It was not merely a family consisting of just two generations living under the same roof but rather an extended family of three to four generations living together including the elders and unmarried relatives.815 Additionally, the menial staff belonged to the household although it was not related to the family but worked on the farm and in the house.

The average family consisted of four to six people, plus two to four servants and maids forming the rest of the household. There was no distinction made between blood relative and menial staff until the 18th century regarding status and treatment. The extended family

- including the people without family ties - worked without any or only a very minor wage Polanyi, 1944, p. 45ff. and 65f.

For the etymology of the terms Oikos and family please refer to Mitterauer and Sieder, 1977. He provides also an analysis of the typology of the family.

See Richarz, 1991.

Brunner, 1956, p. 34.

Ipsen, 1992, p. 32.

A definition of the term extended family in contrast to the nuclear family can be found in Schwägler and Mühlmann, 1975.

and was only paid with food and accommodation. It was essential to have enough workers for all errands and duties available and therefore the household needed a minimum size to be functional.816 The household gave shelter and subsistence to its members, no matter of the individual contribution. Thus, it also served as a social institution for needy and elderly people and even for the lazy. The head of the household had the right to decide about all matters of an individual‘s path of life, such as marriage or education. Loyalty and obedience towards the family came first.817 This description does not intend to idealize the traditional household as a cozy, snug place - as was often done during the 19th century by contemporary authors like Riehl – in contrast it has to be perceived as a patriarchal-authoritarian environment, based on inequalities, especially between men and women.818 Consequently, no separation of house and business existed. This changed drastically with the emergence of capitalistic structures.

Later, eighty percent of the population lived in urban environments, their life and work becoming mechanized and the old institution of the household disappearing.819 In the capitalistic economy, the rationality of companies and business contrasts the ―sentimentality of the family‖, the first being part of society, the second of a community.820 The household in the old sense had the capacity to unify both spheres.

However, the typical traditional household was focused on securing food and had little involvement with markets, this being characteristic for the subsistence economy of the time as outlined before. The house was not only an economic but also a social collective of domination and authorization, characterized by unity of production and reproduction. Living and working were not spatially separated and duties were assigned according to gender roles.821 In the ideal-type house a patriarchal-authoritarian hierarchy reigned. The center of the household consisted of the ‚core family‘ – husband, wife and unmarried children. Members of the family were not treated equally; head of the house was always a man, the patriarch.

The woman, the housewife, was subordinated under his command, being his deputy and forced to subservience. She was on average far less educated than her husband. The range of a women‘s authority depended on the size of the household. In smaller crofter houseDülmen, 1995p. 13, 24 + 29.

Kerr, 1960, cited in Fukuyama, 1995, p. 89.

Riehl, 1889 [1885], cited in Weber-Kellermann, 1982, p. 87-90.

See Brunner, 1956, p.38-45.

Brunner, 1956, p. 42.

Weber - Kellermann, 1988, p. 144f.

holds, the women had to be more involved. In the hierarchy below the housewife were the children, beginning with the oldest of the sons (the household being a strict genderstratified surrounding), followed by the menial staff and apprentices. The members of the household did not appear in public as individuals but always as elements of the extended family, represented by the pater familias.822 He had the sole responsibility for business, organizing work within the household and additionally maintaining contacts outside the family. He also represented the family in public, for example in village assemblies, which further stressed his high position inside the household.823 The status of people within the household was also dependent on their role in the domestic division of labor. Women, i.e. the housewife, resided with ‗actual‘ domestic work inside the house (but were not restricted to it). This included responsibility for the garden and the cow barns, whereas the fields and horses were male duties. This traditional division of labor had practical aspects and allowed combining work and childcare. The woman was thus bound to the house, constituting its organizational center. Her responsibilities required diligence and effort, e.g. when handling milk.



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