Durham; London: Duke University Press, 2017. xii, 216 pp. US$24.95, paper. ISBN 978-0-8223-6321-7.
The Magic of Concepts is a set of related essays that identifies similarities and repetitions in debates about “the economic” and the nature of Chinese society in the 1930s and 1940s and the 1980s and 1990s, as well as their impacts on revolutionary strategies and policy making. Karl argues that an ideology of global capitalism underlies these points of resemblance and has been disguised in social scientific analysis and universal economic theories in post-socialist China. To uncover this hidden ideology, Karl critically reviews how late imperial and modern Chinese history has been incorporated into global history in recent decades.
Karl’s observation of a similar role played by global capitalism in China’s integration into the world economy in the 1930 and 1940s and 1980s and 1990s is truly surprising given the significant differences in socio-economic and intellectual contexts in these two periods. The Chinese economy in the 1930s and 1940s was largely based on a market economy and private property rights; yet the state did not have effective institutions of public finance to regulate the macro-economy and to safeguard the domestic economy against fluctuations in the international markets. China in the 1980s and 1990s was in the process of transition from state socialism to a market economy; but the state possessed a much enhanced autonomy and capacity in managing its macro-economy, particularly after the fiscal centralization of 1994. Moreover, global capitalism as a phenomenon and knowledge about it were quite different in the two periods. Thence, a careful examination of the contextual differences is crucial to establishing whether any similarities are the reflection of deeper patterns or constructions derived from Karl’s theoretical framework and ideological agenda.
Unfortunately, Karl’s discussion of the debates on “the economic” seems to be detached from the historical context. Little attention is given to the important debates on monetary and fiscal reforms in both the late 1930s and the 1990s, to which there was little contribution from either Marxists or market fundamentalists. Another example is the Asiatic Mode of Production (AMP) in chapter 2. The concept of AMP was prominent in the 1930s and did indeed come back in the 1980s. Nonetheless, this revival seems to have been quite minor. Karl cites two historians, Ke Changji and Zhao Lisheng, and one political economist, Wu Dakun, as evidence, without providing any further information to show how influential these three scholars were in the 1980s. How then can we judge whether AMP’s “minor comeback in China historical analysis” (42) had any substantive impact on the economic reforms of China in the 1980s, let alone the reorientation toward a state-capitalism in the late 1990s?
Karl states that “the reorientation of Chinese socioeconomics in the 1980s toward growth and the accumulation of national wealth at any cost facilitated the return of the AMP” (59). But in the early 1980s no such reorientation existed. Karl attributes slogans and phenomena from the 1990s, such as “Good-bye to Revolution,” or high-speed growth with no regard for social cost as measured by massive lay-offs of workers of state-owned enterprises, to the 1980s (58–59). Those who shaped the economic reforms in the 1980s, such as Xue Muqiao, were sincere Marxists whose policies were mainly based upon their practical experience in managing the economy in the liberated areas in the late 1940s and in the PRC in the early 1950s. Integration with the global market in the 1980s remained very limited and well controlled by the state. The trajectory of reform from the 1980s to the 1990s should not be understood as a unilinear trajectory toward capitalism (see particularly chapter 4). Karl curiously does not mention the use of AMP in the 1988 TV series River Elegy (Heshang). Its producers, who were politically connected to General Party Secretary Zhao Ziyang, employed the AMP as a political strategy to call for a more liberal economy and more opening to the global economy. However, they did not have much influence on policy making in the 1990s; after June 4, most were either forced into exile or imprisoned.
Karl also notes the parallels between the introduction of the Austrian School into China in the 1930s and the popularity of the second-generation Austrian School economist Friedrich Hayek among Chinese intellectuals in the 1990s (chapter 3). For the reception of the Austrian School, Karl relies completely upon Wang Yanan’s critique without explaining whether or not it is justified. To connect Hayek to the market-oriented reforms, she mentions in a footnote (78) that Hayek’s major works were translated into Chinese in the 1990s and “sold briskly.” She also quotes Liu Junning that “the prime minister of China had Hayek’s works on his bookshelf” and that the former vice secretary at the Institute of Economics of the Chinese Academy of Social Sciences was a “firm Hayekian” (161). However, Karl does not provide any evidence as to how Hayek’s theory affected the actual making of economic policies, nor even which of his books were popular. The Fatal Conceit and The Road to Serfdom argue that it is impractical for state planners to determine prices, yet say nothing on how to reform state socialism. Hayek’s evolutionary approach to institutional development in Law, Legislation and Order could be used to criticize top-down radical reforms such as “Five Hundred Days to Capitalism” as irrational.
The contexts of economic theories in the 1930 and 1940s and 1980s and 1990s matter to our evaluation of Hayek’s influence. In fact, the disasters of the shock therapy in the former Soviet Union and Eastern Europe and the economic performance of Japan and South Korea in the 1990s made market fundamentalism less appealing to Chinese economic reformers. Neo-institutional economics and the political economy of late development, particularly the theory of the developmental state and its emphasis on regulation and on legal and political institutions, were quite influential among Chinese economists and reformers. Hayek’s influence should be judged against the range of economic theories and models that were known in China at the time. Market fundamentalism was by no means uncritically accepted.
In Karl’s view, “the appeal to ideology-free empiricism … through its reaffirmation of empiricist positivism as adequate conceptualization and method…is symptomatic of the pure ideology of the global and of universal economics as the expected history of the world” (33). But we should be careful to distinguish the relative autonomy of both economic analysis and empirical historical studies from ideology. The empirical investigation of rural households organized by the Marxist economist Chen Hansheng has had long-lasting value to scholars of different theoretical persuasions. Empirical studies of Chinese economic history that used terms such as semifeudalism, semicolonialism, or “sprouts of capitalism” accumulated to form the basis for the scholarship of R. Bin Wong and Kenneth Pomeranz, who situate their own studies against a broader review of global economic history. They reject a unilinear understanding of economic history by showing that a vibrant market economy does not necessarily become an industrial capitalism. Karl pays little heed to the varieties of development implied, such as industrial development based upon collective ownership (Wong) or energy-saving industrialization (Pomeranz).
Dialogue between critical theories of capitalism and empirical studies of the political economy of reform and the economic history of China is crucial to deepen our understanding of the interactions between China and the global market. Karl’s book is a valuable contribution to be followed by future scholarship.
Wenkai He
Hong Kong University of Science and Technology, Hong Kong SAR, China