Why have private enterprises in China flourished when the country's reform policies remain within the institutional framework of state socialism and the enterprises are discriminated against in financial and regulatory terms? This is the question Victor Nee and Sonja Opper seek to address in their book. Arguing against state-centered explanations and relying on new institutionalism, they contend that an account of China's capitalist development should focus on the “endogenous emergence of economic institutions” where “mechanisms embedded in social networks” occupy a central position (p. 9).
In their view, China's marketization presented incentives that were readily grasped by economic actors who experimented with practices of raising capital, hiring workers, collaborating with suppliers and distributors, and engaging in innovation, among others. Uncertainty and related collective action problems, while not tackled by formal market institutions, were overcome by these entrepreneurs and “like-minded economic actors” who, motivated by cost-benefit calculation, exercised mutual surveillance and...
