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Information to Users INFORMATION TO USERS This manuscript has been reproduced from the microfilm master. UMI films the text directly from the original or copy submitted. Thus, some thesis and dissertation copies are in typewriter face, while others may be from any type ofcomputer printer. The quality ofthis reproduction is dependent upon the quality ofthe copy submitted. Broken or indistinct print, colored or poor quality illustrations and photographs, print bleedthrough, substandard margins, and improper alignment can adversely affect reproduction. In the unlikely event that the author did not send UMI a complete manuscript and there are missing pages, these will be noted. Also, if unauthorized copyright material had to be removed, a note will indicate the deletion. Oversize materials (e.g., maps, drawings, charts) are reproduced by sectioning the original, beginning at the upper left-hand comer and continuing from left to right in equal sections with small overlaps. Each original is also photographed in one exposure and is included in reduced form at the back ofthe book. Photographs included in the original manuscript have been reproduced xerographically in this copy. Higher quality 6" x 9" black and white photographic prints are available for any photographs or illustrations appearing in this copy for an additional charge. Contact UMI directly to order. UMI A Bell & Howell Information Company 300 North Zeeb Road, Ann Arbor MI 48106-1346 USA 3131761-4700 800IS21~600 SOCIALISM + THE MARKET: A PROBLEMATIC FORMULA FOR MANAGEMENT AND LABOR REFORM IN CHINA'S STATE-OWNED ENTERPRISES A DISSERTATION SUBMITTED TO THE GRADUATE DIVISION OF THE UNIVERSITY OF HAWAI'I IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY IN POLITICAL SCIENCE MAY 1996 By Xin Chen Dissertation Committee: Deane E. Neubauer, Chairperson Stephen Uhalley, Jr. Kathy E. Ferguson Harry J. Friedman Neal Alan Milner OMI Number: 9629816 Copyright 1996 by Chen, Xin All rights reserved. UMI Microform 9629816 Copyright 1996, by UMI Company. All rights reserved. This microform edition is protected against unauthorized copying under Title 17, United States Code. UMI 300 North Zeeb Road Ann Arbor, MI 48103 © Copyright 1996 by Xin Chen All Rights Reserved iii ACKNOWLEDGMENTS During my doctoral research, I was blessed with generous assistance from many people. I wish to extend my gratitude especially to each one of my committee for their academic interest and invaluable guidance in my work. Their readiness to help, their appreciation of every bit of progress in my work, and their friendly expression of concern touched me deeply and encouraged me to complete the project. Specifically, I wish to thank Professor Steven Uhalley, whose knowledge and expertise on Chinese affairs enabled me to see through the appearance of many issues covered in my research and get to their essence. would also like to thank Professors Kathy Ferguson, Harry Friedman, and Neal Milner, for the seminars and individual discussions that I had with them, on public organization, public policy and administration, politics and development in Asian countries and the Third World as a whole, society and judicial systems, discourse analysis, gender issues, etc. Their expertise and instructions on these subjects assisted me profoundly in developing the analytical framework for my research. I am especially grateful to my advisor and chairperson, Professor Deane Neubauer, for his intellectual guidance in both my M.A. and Ph.D. programs in the Department of Political Science in the University of Hawai'i. I was greatly indebted to him for his involvement from beginning to end; from helping me initially identify a critical issue in China's economic reforms, to the writing up of the results. He carefully read three drafts of the major chapters and for each one of them made invaluable suggestions about the framework and development of the arguments. He moreover took great pains in editing each draft. iv Outside my committee, I wish to thank Professor Kate Xiao Zhou for sharing her opinions on many issues identified in my dissertation and allowing me to think aloud with her. I am also grateful to Dr. Gaye Christofersson for her valuable suggestions during my entire doctoral research. My special thanks also go to Dr. Matti Malkia for his contribution to my fourth and sixth chapters. Finally, I wish to thank my husband, Charles Johnston, who, while finishing up his own doctoral degree in geography, carefully edited every chapter of my dissertation. He is a rigorous scholar who edits everything with red, blue, and green ink pens, each standing for a different type of problem. In addressing these problems, my frustration often found him as the target, Yet he was extremely patient and understanding. Without his full support and help, this study would not have achieved its present state. v ABSTRACT In 1987, at the 13th congress of the Communist Party, post-Mao leaders made public their decision to gradually let go of control over state enterprises. Their voluntary reduction of Party authority in state firms was meant to decrease the ideological volume of discussion on industrial development and to replace political decision-making in state enterprises with the impersonal "market mechanism." Their ultimate purpose was to improve the low efficiency and productivity of state enterprises. This effort to depoliticize and decentralize decision-making and management of the public industrial sector has, however, proved ineffective. Nearly ten years after the Party's 13th congress, state firms have yet to be transformed into corporations that are responsible for their own profits and losses. Reform policies and procedures have also failed to provide adequate scope to the execution for the manager responsibility system. Contrary to the progress made in the private sector, reforms in state enterprises have in fact come to a standstill and so has the evolution of the al"lticipated "socialist market economy." This dissertation shows that a fundamental reason for the impasse lies in the fact that post-Mao leaders, while attempting to amend China's socialist order with proven methods of market economies, have shied away from the challenge of establishing a conceptual platform for reconciling Marx and Mao with Adam Smith. Instead, they have resorted to a more convenient program, namely, "separating the Party and government," or, more accurately, separating politics and economics. With this separation scheme, they have maintained the conventional discourse on vi socialism and meanwhile appropriated a separate discourse which represents economic policies and actions as politically innocent events that are directed only by the "invisible hand" of the market and the "inviolable" economic "laws." Yet a reform rhetoric which continues to honor Marxist socialism as its framework does not allow government agencies, enterprise managers, or workers to perform in ways required by the market. Until a legitimate reconciliation is conceptualized by post­ Mao leaders, "socialism + the market" will remain a problematic formula for reform. vii TABLE OF CONTENTS ACKNOWLEDGMENTS IV ABSTRACT VI LIST OF TABLES XIII LIST OF FIGURES XIV 1. INTRODUCTION 1 Background to Economic Reforms in Post-Mao China 3 The Mao Era 3 1976: the "Second Revolution" Begins 5 Economic Innovations in the Countryside 6 Attempts to Reform Public Industry 6 The Nature of Enterprise Management Reform 8 Decentralizing Decision-Making Powers to State Firms 8 Problems from Over-Centralization 8 Increasing Efficiency Through Decentralization 9 "Separating Party and Government" Through the Manager Responsibility System 11 Transformation of Ownership and Labor Systems 14 The Absence of Conceptual Linkages Between China's Socialism and the Attempted Market Economy 18 Incorporating Proven Capitalist Practices 18 Capitalism Within Socialism: A Contradiction in Terms 19 Failure to Design a New Conceptual Framework 21 Initial Avoidance by the Leadership 21 Making Due with the Old Concept of "Primary Stage Socialism" 23 Perpetuation of Conventional Socialist Concepts and Discourse and the Impact on Management Reform 26 Institutionalization of Socialist Principles in the Work-Place 27 Socialist Principles Continue to be Paramount Among China's Leaders 28 Workers' Adherence to Socialism in Enterprise Routines 32 Endnotes 33 viii TABLE OF CONTENTS (Cont.) 2. DEVELOPMENT OF ENTERPRISE MANAGEMENT 1930-1978: CONCEPTUAL CONTENTION OVER LEADERSHIP 39 Enterprise Management in Communist-Controlled Areas, 1930-1949 42 Initial Attempts to Create Effective Management.. 42 Coordinating the Authority of the Party, the Union, and Management 44 Initial Conflicts 44 Mao's Response 45 Socialist Reorientation of Appropriated Enterprises 47 Initial Lack of Guidance 47 Instilling a Socialist Orientation 48 Different Approaches to Enterprise Management: North China Versus Northeast China 50 The North China Approach 51 The Northeast China Approach 52 Post-Liberation Attempts at Unifying Enterprise Management: 1949-1956 54 Restoration of Production to Normal levels 54 Sources of Managerial Staff 56 The Collective Leadership System Prevails, Temporarily 58 The Single Manager Responsibility System Persists, but Remains Controversial 60 Two-Decades of "Class Struggle" Hinder a Solution 66 The Single Manager System is Denounced 66 Production Falls During the "Great Leap Forward" 67 Managers are Beseeched to Rescue Industrial Production 71 The "Cultural Revolution" Totally Negates the Single Manager System 72 Summation
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