Elite Cleavage and the Rise of Capitalism Under Authoritarianism: A Tale of Two Provinces in China

37 Pages Posted: 24 Jul 2018

See all articles by Qi Zhang

Qi Zhang

School of Economics, China Center for Economic Studies, Fudan University

Mingxing Liu

Peking University - School of Government

Dong Zhang

Lingnan University

Victor Shih

University of California, San Diego (UCSD), School of Global Policy & Strategy, 21st Century China Center

Date Written: January 3, 2018

Abstract

A great challenge for capitalist development under authoritarian regimes is to effectively constrain predatory behavior. Beyond existing frameworks of the dictator’s time horizon and institutionalized power sharing, we introduce an alternative perspective - elite cleavage. We argue that the systematic vulnerability of marginalized local cadres motivated them to ally with grassroots constituents and protect local economic interests in order to increase the odds of political survival. Difference-in-differences analysis of counties in two Chinese provinces shows that the upheaval of the Cultural Revolution created a moment of political decentralization which enabled marginalized local elites to protect local entrepreneurs against national-level radical policies, resulting in much more vibrant private economic activities in some regions. Further empirical evidence shows that elite cleavages formed in the 1940s had a long-lasting impact on economic performance in the reform era.

Suggested Citation

Zhang, Qi and Liu, Mingxing and Zhang, Dong and Shih, Victor, Elite Cleavage and the Rise of Capitalism Under Authoritarianism: A Tale of Two Provinces in China (January 3, 2018). 21st Century China Center Research Paper No. 2018-06. Available at SSRN: https://ssrn.com/abstract=3218748 or http://dx.doi.org/10.2139/ssrn.3218748

Qi Zhang

School of Economics, China Center for Economic Studies, Fudan University ( email )

Guoquan Road 600
Yangpu District
Shanghai, 200433
China

Mingxing Liu

Peking University - School of Government ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

Dong Zhang

Lingnan University ( email )

8 Castle Peak Road
Lingnan University
Hong Kong, New Territories
China

Victor Shih (Contact Author)

University of California, San Diego (UCSD), School of Global Policy & Strategy, 21st Century China Center ( email )

9500 Gilman Drive #0519
La Jolla, CA 92093-0519
United States

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