Directed Improvisation in Administrative Financing

Abstract

This essay examines one of the oldest and most basic problems of governance: how to pay the bureaucracy. Even as a relatively prosperous locale in China, Zouping County is not spared from budgetary pressures. Public organizations must “self-finance” — that is, generate a portion of their own incomes and staff benefits. How do they go about self-financing? Are they free to generate revenue in any manner? Or is their self-financing behavior regulated by certain rules, and if so, which rules?

My investigation finds that strategies of administrative self-financing in local China are bound by rules, specifically rules made by an intersecting matrix of vertical and horizontal authorities within the state. More broadly, this account illustrates a key condition of adaptation — which I call “directed improvisation.” Rather than attribute China’s adaptive governance to fixed factors such as history or culture, I argue that the combination of top-down directions and bottom-up improvisation is essential for effective adaptation to occur within the bureaucracy.

Keywords: China; bureaucracy; public finance; adaptive governance; corruption; decentralization