Carolyn L. Hsu

Dissertation Title: Creating Legitimacy: Developing the Institutions of Market Socialism in the People's Republic of China

Chapter 1: Theory and Methods

***A brief overview is enclosed. If you don't want to read it, please skip to page 8

Chapter 2: Institutions in Flux

-- Historical Background

-- Profiles of Institutions 1997-8:

Chapter 3: Interest Groups and Institutions

-- Description of three groups of power elites, and which institutions they have vested interests in.

Chapter 4: Political Institutions of Social Mobility: Attacked, De-valued, and Re-made

Chapter 5: Market Institutions: Searching for Legitimacy

*** This is the chapter enclosed. It begins on page 8, after the theory and methods overview.

Chapter 6: Intellectual Institutions: The Source of Legitimacy

Conclusion

Brief Overview of Chapter 1: Theory and Methods

Main question: How does the process of institutional change happen at the ground level, during times of transition? How are new hegemonic institutions being established in the PRC today?

Contributions:

Institutionalism: The current literature on institutions in sociology focuses on abstract analyses of stable institutions. My research, examining the creation of institutions in a specific historical moment, fills in some gaps to the theory. For example, some new institutionalists argue that one of the primary purpose of institutions is to convey legitimacy. But how is that legitimacy imparted into the institution when it's created?

In Chinese studies, my research fits in with the literature debating the relation between Chinese culture/society and the market. The obvious straw men here are the economic determinists (market transition theory, all the globalization lit that says consumer capitalism swallows up local cultures and created homogeneity) and the cultural determinists, such as Fukuyama and Huntington. Another version of the latter are those scholars who say the socialist state is incompatible with market reforms and predict the downfall of the regime, such as Leslie Holmes. In many of these cases, they're predicting the future without actually examining the process of what's really happening in China at the ground level.

Once we get past the simplistic antagonism between socialist or Oriental values and capitalist practices, we realize Chinese market socialism doesn't have to look like Western

capitalism or fail, that there are indeed different possible successful versions of political economies which can accommodate market practices. (Andrew Walder) That leaves us with a couple of questions: What do the institutions of market socialism look like? Why do they turn out that way? How can we have a complex, nuanced understanding of local culture and how it plays a role in affecting how institutions turn out?

To answer these questions, I argue for a theory which balances a focus on political economic forces, through institutional sanctions, with an examination of the role of local culture and subjective perception, through what I term "narratives of legitimacy". My theory also seeks to balance a realistic appraisal of the disproportionate influence of elites with a serious consideration of the role ordinary citizens play in the creation of new institutions on the ground level.

Defining "institutions":

For my purposes, institutions are not organizations but social practices. I'm not talking about if you shake hands or bow when you meet someone, but instead large scale social practices which define how power and resources are distributed. (By "large scale", I'm trying to get at the sense that these are practices which are society-wide, and which require the support of organizational networks, regulations, etc. In other words, there's a significant cost to establishing and eliminating them.)

For example, the Chinese Communist Party is an organization, but Party membership, with its attendant benefits and responsibilities, is an institution. It acts on how power and resources are distributed (though not as much as it used to.) The educational system, schools and universities are all organizations, but a college degree (and what doors it will open for you) is an institution.

Established, stable institutions are supported an ranked through social sanctions -- rewards and punishments which are attached to practices. They are also invested with legitimacy, and actors participate in institutions at least partly because they want to participate in that legitimacy. (March and Olsen, Meyer and Rowan) In other words, institutions function as gateways to status (legitimacy), material resources and power (sanctions). However, during times of extensive social transformation, new institutions must be established. For these institutions to become hegemonic and stable, they must be somehow imbued with legitimacy and connected to sanctions.

My Theory:

Borrowing from French Revolution literature, there are three general stages to a major social upheaval. First, former institutions are torn apart. Secondly, there's a period of flux and confusion, during which there's an enormous potential for all kinds of new institutions to develop. Lastly, there a state of solidifying, a period of consensus about which institutions will be accepted and internalized -- which will become hegemonic. What I want to know: How do you get from confusion stage to consensus stage? How are new, legitimate institutions created? Or, how are new bases of trust and new foundations for legitimacy are created in times of institutional flux? What is the process by which these things happen?

For institutions to become established, they must be supported by sanctions and imbued with legitimacy. Therefore to analyze the way institutions are established, I propose looking at the interaction between unsettled sanctions and narratives of legitimacy. Because of the flux and lack of consensus, people have to explain, argue, defend their view of how things should be done, how the world works, and their place in it. Narratives of legitimacy make sense of power distributions in society, identify worthwhile goals and proper strategies to reach those goals, and connects these goals and strategies with concepts of good and evil. In doing so, they explain where various institutions fit in the world.

The Case of China: In the Chinese case, the first stage began with Deng Xiaoping "reforms and opening up" policy dismantling the institutions of Maoist socialism. (Started in 1978, but really starting dismantling institutions in 1980's and 1990's.) Currently we're seeing the second stage, that of flux and possibility. It's a time of social upheaval, and the power structure is not stable. Walder's argument is that by instituting market socialism, the CCP has relinquished a significant amount of control over both society and its own members. It's no longer the monolithic power. So new groups with new resources and new forms of power (and new vested interests) have risen up: cadres, entrepreneurs, and intellectuals. ("New" in comparison to the situation under Maoist socialism. Even cadres have different bases of power than they did, not that they're not as controlled by the central state.) These three groups are jockeying for position, and they are pushing for those institutions which further their interests.

On the ground level, one result is that institutions are unstable, and that the political economic sanctions which guide people in how to deal with institutions are also unstable. For example, going into business for yourself is both rewarded (opportunity to make lots of money) and punished (ever increasing fees and taxes, constraining regulations, blackmailing officials, corruption accusations.) People are forced to guess which sanctions will remain and which will change. (Will teachers' salaries get raised and stay high? Will this business practice remain legal? Will local officials continue to ignore that regulation?) One way to figure this out is to determine which institutions make real sense, which ones have the legitimacy to stand.

Therefore it is in the interest of the competing power-holding groups to argue that the institutions they want are the most legitimate, and vice versa. Entrepreneurs want people to believe that a residency card (which is only given out by socialist work units) doesn't matter, but that money does. They know they if they get enough people invested in an institution, if the have critical mass, the institution is that much harder to eliminate. Intellectuals know that if everyone in China believes that a college degree is a sign of ability, culture and moral righteousness, then political and economic power holders will find it in their best interests to create sanctions which work with that, rather than fight against it. It's not that sanctions come first, and legitimacy comes later. Sanctions have to look legitimate when they are implemented, and in a time of upheaval and uncertainty, that requires a lot of work. And in a time of conflicting sanctions and elites offering conflicting visions, that work takes places in the form of arguments -- narratives of legitimacy.

Since what elites are fighting for is the hearts and minds, respect and loyalty of "common people, a significant part of this conflict is being played out at the level of everyday life. Therefore, I'm looking at the ground level: how ordinary people receive, interpret, act on and recreate the narratives of elites, thereby participate in the creation of new bases of legitimacy in Chinese society. This, of course, happen not just through what they say, but through how they choose to live, act, identify themselves, and how they defend those actions -- through narratives of social mobility.

Some thoughts on how narratives of legitimacy work:

Narratives of legitimacy are not the same as institutional ideologies. The institution itself may have an explicit (or implicit) ideology that everyone ignores or mocks, but that same institution can be legitimated by a number of "outside" narratives. This indicates that narratives of legitimacy are not confined or attached to institutions. Instead, the narratives use to legitimate or de-legitimate institutions are some of the same narratives which make up people's world views. In other words, a person doesn't simply use a narrative to defend an institution, and then drops it when she moves on to considering the next institution. Narratives are ways of understanding how the world should work and what your place is in it, and who deserves how much power and resources. People become invested in them. They take them with them when they encounter the next new institution.

Institutions, however, are the location where narratives come into contact with each other. (And social mobility is a window onto how people encounter institutions.) When there is consensus about the legitimacy of the institution, the conflict between the narratives becomes hidden. Institutions which can do that gain legitimacy. In contrast, when the legitimacy of an institution is questioned, the conflict between narratives becomes visible and exacerbated.

Methodology

1. Social Mobility: To use my theory, I needed to find a way to examine:

A. What kind of new institutions are being produced

B. What kind of sanctions are affecting how people interact with those institutions

C. What are the narratives of legitimacy being used to understand those institutions

Therefore, I chose to analyze stories about social mobility. Talking about social mobility allows people to talk about their own encounters with institutions. It encourages them to describe the motivations they had in interacting with institutions (sanctions). It also allows calls upon them to explain their attitudes towards those institutions -- and their attitudes towards other people's attitudes (narratives of legitimacy).

2. Main source of data:

From July, 1997 until June 1998, I conducted my fieldwork in the northeast Chinese city of Harbin, and industrial city of about 3.5 million people. I examined numerous workplace sites, covering the continuum from government offices to industrial factories to open-air markets. I conducted intensive interviews with 80 working people in Harbin, who were chosen to cover a variety of walks of life. (I can discus how this sample was chosen at a later time.) The interviews were informal and open-ended, and usually lasted between 45 minutes and two hours. They were conducted in Mandarin Chinese, and the majority were recorded on audio tape. Also, I spent a lot of time with my interviewees outside the formal interviewee, hanging out at their workplaces, eating meals together, and even helping them with their work on occasion.

Subjects:

Total of 80 interviewees, all working adults

28 female, ranging in age from 20 to 58

52 male, ranging in age from 20 to 73

Most of my subjects consider themselves "ordinary people" (in Chinese, laobaixing), a vague and subjective term which can be used to refer to anyone outside the elite. Even so, many were invested in strategies of success which are linked to each of the three power groups: political elites, economic elites, and intellectual elites. I assumed that these aspirations would have an effect not only on their experiences of institutions and sanctions, but also on which narratives they would be prone to use. Therefore, I chose my sample to reflect a three-fold comparison between these groups. In addition, I added a control group of subjects who did not seem obviously identified with any of the three strategies. My subjects were also chosen to reflect a wide range of state, market, and hybrid institutions.

Chapter 5: Market Institutions: Searching for Legitimacy

Before the reform, if you did business, then you would be accused of "taking the capitalist road". Then, you'd be done for. Especially at and before the Cultural Revolution. It would be over for you. After the reforms began, people began to envy it, and then it became a kind of glory even. The difference is just amazing....

60 year old enterprise cadre

In the communist era, private business was outlawed, stigmatized, and eventually effectively eradicated. To accomplish this, the Maoist state invested considerable energy in repeated political campaigns and continuous education and propaganda. Those who indulged in private business were accused of "taking the capitalist road" and were subject to harassment and punishment. Although it took a number of years before businesses were removed from Chinese society, by 1976, Deng Xiaoping's predecessor boasted that China was able to face even disasters without reverting to the evils of privatization. (Spence 1990: 649-650) In the Maoist era, therefore, going into business was not a legitimate social mobility option. Not only was it illegal and dangerous, but it was an ineffective strategy. In the integrated redistributive economic system, goods and services were distributed primarily through urban work units or rural communes, not on the open market. Housing, health care, basic foodstuffs were given through the workplace according to personal rank and the type of organization. In cities, state enterprises, government agencies, and military organizations were considered the best work units, while collective enterprises were second best. For someone outside the work unit system, there was not much to buy and sell, and virtually no place to do it.

Beginning in 1978, the "reform and opening up" policy began dismantling the redistributive economic system and setting up alternative institutions of social mobility out in the market. In 1979, individual family businesses (getihu) were legally allowed, though the law was hedged about with all kinds of restrictions. Only certain types of business were permitted, and budding private companies were limited to seven employees. By the early 1980's, the state media was openly expressing support for "non-exploitative businesses", recounting stories of ambitious and clever getihu getting rich from their own ability and hard work. (Footnote 1: Although the term "getihu", grammatically speaking, should refer to either the business or the family which runs the business, in the common vernacular it denotes the individual person who runs a small business, usually a peddler or a trader. ) In 1983, most restriction on private business were removed, though not the limitation on number of employees, which was not eased until the Private Enterprise Interim Regulations of 1988. (Wank 1995) From then on, it became theoretically possible for the individual to develop a private business into an enterprise, to go from being a getihu to becoming an entrepreneur. (Footnote 2: Throughout the rest of the chapter, I will use the terms "getihu" and "entrepreneur" to refer to two different types of businesspeople. These definitions are based not so much on the dictionary as on popular usage in Harbin. A getihu refers to a person whose business which has not grown out of the scope of their immediate family, usually a peddler or trader who works on their own. In contrast, an entrepreneur is running a business large enough to at least have paid employees and an office.)

In 1990, another path to entrepreneurship was opened up through the reform of state and collective enterprises. Under the Maoist system, each enterprise was controlled by the party-state through its Communist Party Secretary. The reforms theoretically switched everything over to a "modern enterprise organizational system" where enterprises would be independent, run by a manager. In reality, the transition was more complicated, and even in 1998 in Harbin it was unclear in some enterprises who had the real power: the director of the enterprise, or the Party Secretary. However, the reforms at least created the possibility of genuine leadership and control, allowing individuals to become legally responsible for their enterprises. Through these policies, people like Zhang Dacheng could transform themselves from enterprise cadres to Chairmen of the Board of sprawling business groups like HIT Group. A number of enterprises were even released completely from state control, sold off and privatized, thus creating more entrepreneurs.

However, the vast majority of people going into business were not these entrepreneurs, but getihu running small family businesses. Moreover, despite the media attention to budding business tycoons, it was the food stalls and peddlers' booths of the getihu which were the most visible sign of market institutions in urban China. Ole Bruun, who conducted anthropological fieldwork on getihu in the city of Chengdu in the late 80's writes, "The concept of getihu has a strong negative tone in ordinary language, since it is associated with the unwanted qualities of individualism: selfishness, a low level of culture, and social deviation.s According to my interviewees, Harbiners felt the same way during those years. Of the 26 interviewees who had gone into business for themselves at one time or another, only one had gone into business in 1981, two in 1989, and all the rest in the 1990's. For the vast majority of Harbin residents, market institutions of social mobility were illegitimate -- even unthinkable -- for most of the 1980's, supported by neither sanctions nor their world views.

In contrast, by time I conducted my research in the late 1990's, market institutions were no longer universally scorned. Yet neither were they seen as thoroughly legitimate. Instead, these institutions were the site of more contention and contestation than either political or intellectual institutions of social mobility. On one hand, when I asked my subjects to name a respected profession in Chinese society, only 13 out of 80 answered "businesspeople" or "entrepreneurs". On the other hand, a significant number of people who were not in business expressed a desire to become entrepreneurs in the future. Only academics and government cadres seemed relatively immune from this desire; professionals, service people, workers, and cadres in enterprises and companies all discussed their desire to someday "be my own boss." Although this sentiment was more prevalent among young people, a surprising number of people in their 40's, and even one in his 50's, articulated this ambition. Yet none of my subjects expressed hope that their children would go into business, and many spoke out against it as a possible path for their offspring.

Clearly, although the institutions of market socialism were gaining some legitimacy, they were still sites of contestation. The sanctions, both positive and negative, surrounding market institutions were both contradictory and in flux. The first section of this chapter will examine these contradictory sanctions during three different time periods during the reform era: the 80's, the mid-90's, and the late 90's. Because sanctions were so inconclusive, various interest groups have used narratives of legitimacy to argue for how they believe market institutions should be perceived and analyzed, valued and judged. Section 2 examines the ways in which these interest groups have utilized the narratives of competition, contribution, culture, and independence to either legitimate or de-legitimate market institutions. The last part of this chapter analyzes how successful these groups were in promoting their interests through these narratives of legitimacy by examining the views and actions of subjects in the control group.

1. Mixed Sanctions, Mixed Legitimacy

Market institutions, because they are relatively new in Chinese society in its present incarnation, have not been not attached to stable sanctions. Instead, the sanctions surrounding these institutions have been in constant flux, forcing people to guess which policies or regulations would last and which would be reversed after a few months. This very uncertainty has acted as a sanction against market institutions, since people were wary of leaving the safety of their work units for ventures which may not remain supported -- or even legal -- for very long. Although sanctions have changed over the past two decades, at every point they have been mixed, balanced inconclusively between those sanctions which encouraged the use of market institutions and those which discouraged it.

Sanctions and Market Institutions in the 1980's

Although getihu were not legalized until 1979, small ad hoc businesses did exist prior to that date in Chinese cities. The socialist work unit system was supposed to cover all urban residents, but in reality by the 1960's the urban population had grown to the point that there were fewer jobs than people. The solution to this dilemma was to send urban youth to the countryside to "temper themselves" among the peasants and learn to become "revolutionary successors". However idealistic these young people were when they began their rural tenures, by the mid- 1970's, after the debacle of the Cultural Revolution, they were bitter and disillusioned, and they began returning to the cities. Some were squeezed into their parents' enterprises, but others were forced out into the informal economy of street vending, where they were joined by others who had fallen through the cracks of the socialist system.

As a result, by the time it was legalized, private business was already associated with the lowest segments of society. A cadre explained:

At that time, people felt very uncomfortable with [private business]. We felt like they were all illegal elements doing it. And some of them really were society's dregs who had been unable to do anything. No work units would let them in, they couldn't test into college, and some had even done time in prison. People without knowledge, without culture were the first to go into business. They were the ones with not other choice in life, no salaries.

A clerical worker reminisced: "Back in the 1980's, everyone looked down on them. People who went into business were embarrassed. Like if someone was selling roasted chickens, and they met with someone from their work unit, they'd just drop the chickens and run off and hide." Not surprisingly, the only interviewee who went into business before 1989 was a woman with very little status to lose -- a housewife of Korean ethnicity with only three years of education, who sold homemade pickles on the street to shore up her family's meager finances. This low status of getihu brought her not only shame, but real harassment and mistreatment. She recalled that in the early and mid-80's, "we were getting hassled from the authorities a lot. People would always be coming to collect this or that fee, sometimes even throwing our goods into the trash just for fun. There was nothing we could do about it."

Another sanction against market institutions was the lack of market infrastructure. The redistributive system had transformed China's urban spaces into "standardized landscapes of mixed industrial and residential compounds" where Chinese citizens spend most of their lives living and working within gated work units. (Gaubatz 1995:28) There was no place for commercial activity. Nearly all of the large markets and retail areas in Harbin date back to the early or mid-1990's, so in the preceding decade, private business was mostly limited to peddling on the streets. If being a street peddler was too shameful or unpleasant, other forms of private business were out of reach for most people during those years. Banks refused loans to all but a few who were politically powerful or well-connected. As a result, larger business ventures and deals were the exclusive province of political elites and their cronies, who used their positions to manipulate the gaps between the redistributive economy and the market to great profit. One professor/entrepreneur gave me historical synopsis of businesspeople in market socialist China:

In the early years of reform in Harbin, the first group to get rich were hoodlums (liu mang). These were people without culture. I'm talking about the period between 1978 and 1985. Now they're all in jail.... Now from 1985 to about 1990, at that time there were those who relied on power to make money. Because you know, China used to have a planned economy. So at that time, there were places where materials were very scarce, low supply and high demand. The favorite phrase at that time was "bandit-officials" (guandao). People who used power, political power....

For most urban residents, though, such profitable manipulations were out of reach.

Another sanction against market institutions was that many goods and resources were still primarily distributed through the work unit, and they were difficult or impossible to obtain with cash. Housing was a primary example, but even as late 1992, I found it impossible to buy flour, rice or cooking oil, since these staples were "purchased" with ration coupons distributed by the work unit. Until the mid-1990's, a work unit identification card was required to purchase train tickets. No wonder the slang term for leaving the work unit and going out into the market was xia hai, to "jump into the sea". To become a getihu was to leave the "iron rice bowl" of the work unit, and to launch out into the great unknown. As a result, market institutions were most appealing to either those who were so highly placed that they could keep these benefits and dabble in business on the side, or those who were so low in society that they had little to lose.

This sense of risk was exacerbated by the feeling of uncertainty surrounding market institutions, especially at the beginning of the reforms. After the various political upheavals of the preceding decades, who could be certain that economic liberalization would not be overturned with a shift of the political winds, and another campaign launched against "those who took the capitalist road"? This feeling of uncertainty resurfaced when the political uprisings of the late 1980's led to the bloody suppression of protestors at Tiananmen Square in 1989. As a result, most Harbiners chose to stay in the safety of their work units, rather than face the risk of the open market. Two of my interviewees did go into business in 1989. One was a worker who had been moonlighting as a waitress on and off for years before deciding to open her own food stall. The other was a government cadre who became so disillusioned with the Chinese state that he literally immigrated to another country, though he has since returned to China to do business there.

Ironically, in retrospect, many of my interviewees admitted that those were the best years to "jump into the sea," and they now regret their timidity with 20/20 hindsight. There were few regulations and taxes, policies were supportive, and the market was wide open and immature, brimming with opportunities. Since few people were willing to go into private business, those who did found it easy to make fortunes. One middle-aged professor explained:

At the beginning of reform, people who had stable lives and set salaries wouldn't leave their jobs. Instead it was those who did not have stable jobs who were willing to go into business. Those were the ones who got rich, the people who were willing to run around -- people without culture, who were willing to do anything. At that time there was a phrase: "Nuclear scientists don't make as much as people selling eggs." At the beginning of reforms, people just had great opportunities. These people suddenly met up with a fantastic chance and became rich overnight. They became big shots (dakuan -- literally "Big Money".)

Despite all the sanctions against market institutions, the material benefits had a very strong appeal. The interviewee who opened a food booth saw her small stall grow into a full size restaurant. The Korean housewife who sold pickles made enough money to buy a new home for her family. Eventually she graduated to international trade brokering, and has become successful enough that her husband has left his job in order to do their housework and take care of their children.

To those living the ascetic lifestyles offered by urban work units, the financial wealth of getihu seemed fabulous. One woman, a low cadre at the time, describes befriending two traders:

They said to me, "You go to work and make how much?" At that time we thought getting 300 yuan salary [each month] was pretty good. They said, "We make it that a day." I would go over to visit and chat with them. Even in the winter they would be eating "fine vegetables". Do you know what I mean by "fine vegetables"? Eggplant and cucumbers and tomatoes, in the winter! Their standard of living was a lot higher than it was for us working folk.

Inspired by this display of wealth, she retired early and became a getihu in 1990, at the age of 46. Several years later, she had made enough money from her little stall to spend 80,000 yuan to buy her son an automobile.

Sanctions and Market Institutions: 1992-1996

After the 1989 massacre at Tiananmen Square and the political suppressions which followed it, there was widespread anxiety that the Chinese regime was going to turn back from its program of economic liberalization. In such an uncertain environment, market institutions seemed like unsure investments. In 1992, Deng Xiaoping made a much publicized tour of southern China's most market oriented areas, signaling his continued support for the economic reform policy. This event gave a great boost to market institutions, and many of my interviewees "jumped into the sea" in the period from 1992 to 1996. The woman who bought the car for her son remembered 1992 as a turning point in attitudes toward getihu:

[I started in] 1990, when this was something completely new, this "jumping into the sea." At that time there was still this kind of attitude toward it -- "profiteering" and all that. Small peddlers, small business, it wasn't something that would be valued. It wasn't until 199-- what year? About 1992, that it started to change a little, the view towards getihu. Then society began to have the experience of individual business as not something insulting, but something to envy.... The way it was before that, people would hide, just get up and hide if they were peddling something and their coworker came by.

The rise of private entrepreneurs, whose successes was touted in the media, also helped to increase the legitimacy of market institutions. However, if average small business owners were not as despised as they used to be, their status was still far from high.

By the mid-1990's, some of the other sanctions against market institutions had also been softened. With policies opening up international trade opportunities, Harbiners took advantage of their proximity to Russia and Korea to make their fortunes. One peddler joked that he and all his neighbors in the Russian Market were "transnational corporations" because they bought goods from South Koreans and then sold them, in bulging sacks, to Russians. A market infrastructure was growing, one of the most visible signs of which was the creation of more and more commercial spaces. Informal trading areas were formalized into regulated markets, such as the Russian Market in Nangang. Other spaces were deliberately constructed, from street markets to buy vegetables to glittering malls to up to the minute fashions. The urban landscape was also transformed with office buildings to house budding companies, and glamorous restaurants, nightclubs and hotels for the nouveau riche to meet, play, and network.

On the other hand, the increase in organization also meant an increase in regulations and fees. When the Russian Market was formalized, the formerly freewheeling area was divided up into numbered booths, which then required a monthly rent. In contrast to the generous policies of the 1980's, the government began to demand its share in taxes. One getihu complained bitterly about the rise in fees: "It's not easy to do business now. The administrative fees are too high. All of a sudden they show up and want 200 yuan for some administrative fee you know nothing about. Then there's taxes, custodial fees, this and that." In addition, despite the increase in marketization, bank loans were still impossible to obtain for the average city dweller, according to my subjects. Of all the entrepreneurs I interviewed, only one started his business with a bank loan. All the others used money borrowed from relatives and friends, and most started businesses which only needed low amounts of capital: trade, advertising, tourism. As a woman who started a travel agency explained, "All I needed was an office and a telephone."

The growth of commercial structures not only gave people more places to do business, it made it clear to everyone that there was more to buy. Some goods and services previously distributed through the work unit became available for cash, and store windows beckoned shoppers with dazzling displays of consumer goods. In addition, the things money could buy were now seen as necessities, rather than luxuries. In the late eighties, the Chinese urbanite's material wish list was called the "Eight Bigs": a color TV, a refrigerator, a stereo, a camera, a motorcycle, a suite of furniture, a washing machine, and an electric fan. (Spence 1990: 733) By the mid-1990's, these items (with the exception of the motorcycle) were de rigueur members of the middle class household, along with video recorders and telephones, and their owners were lusting after personal computers, mobile telephones, and automobiles. And even with the increased fees and regulations, it was not difficult to make money in China's new market, where consumer demand still outstripped supply. According to my interviewees, during those years it was common for even a new getihu's profits from a market stall to be over four times as much as a cadre's salary.

On the other hand, there were goods and services which money could not buy easily, and these acted as strong sanctions against market institutions of social mobility. The items which were of greatest concern to my interviewees were housing, residency, and retirement pensions. Although it was possible to rent an apartment, this option was inconvenient and temporary. Buying a home was also an option, but an unappealing one. In urban China's tight housing market, apartments were scarce and expensive. In contrast, work units could give their employees nicely located homes at highly subsidized prices. Also in Chinese cities, one established official residency through the hukou, the residency permit, provided by the work unit. Although the hukou had diminished in importance in the reform era, it still had at least one serious consequence: children had access to local public schools according to their mothers' hukou.

Housing and schooling are obviously issues which affect young families, and they could be dealt with through several means. An obvious solution would be to have one spouse stay in their work unit while the other went into business. Indeed, all but four of the 26 businesspeople I interviewed were married to spouses with work unit positions. ( Footnote 3: In the four exceptions, two were cases of divorced women who got remarried to men who were also getihu. The other two were male entrepreneurs who had reached a level of success that their wives quit their work unit jobs and came to work for them.) Another way was to work in an work unit for a few years before "jumping into the sea" after the necessary benefits were obtained. I knew of several cases where people wanted to go into business, but chose state organizations instead to gain their hukou, and then stayed on at their work units for years to obtain an apartment and pay it off before finally "jumping into the sea."

These solutions did not solve the problem of retirement pensions. Chinese urban work units provided generous pensions for their workers, as much as 100% of the last paycheck, a benefit which was hard to give up. In fact, retirement pensions were such an important consideration for people that a new institution was created to deal with this issue. Through tingxing liuzhi (literally "cease working, but retain the position" ) former employees pay their old work units to retain their positions on paper. I asked one getihu to explain why she was doing this.

No, now the company gives no salary and no benefits. So why keep paying them? Because it's a good company. So I can go back someday. And also, all the time I spend away still counts towards my seniority, which is directly linked to pay increases. All these years will continue to be added to my file for my pension.

Tingxing liuzhi dealt with not only the problem of retirement, but the issues of insecurity and instability surrounding market institutions. It gave this woman a safety net, an assurance that she could always return to a steady job if her business ventures failed -- something well worth paying for, in her opinion.

For people used to "iron rice bowl" taking care of them from the cradle to the grave, the riskiness of market institutions was a serious drawback. Many of my interviewees hedged their bets by waiting until retirement to go into business, with their pensions secure. Others dealt with the situation by moonlighting; people would keep their jobs, but run a small stall before and after work and on the weekends, until their business either succeeded or failed. Another strategy was to maintain dual positions. Four of the successful entrepreneurs I interviewed retained their positions in state organizations, two as managers, one as an engineer, and one as a professor. One especially ambitious young engineer was covering all his bases by keeping his state enterprise position, running a small restaurant on the weekends, applying for Party membership, and taking classes in his spare time. Needless to say, he was single.

Still others, unwilling or unable to do tingxing liuzhi, took other forms of leave from their work units, such as sick leave. One woman, a former engineer, had managed to string "sick leaves" and "study leaves" for eight years even after she became a successful restauranteur, though most people eventually had to quit their work unit jobs. Others would slide into market institutions in stages, first leaving to work for a modified state company, then a private company (to get a taste of the world "outside") before taking the plunge to start up their own business. It is telling that of all my interviewees, only two businessmen actually "jumped into the sea" directly from their work units positions, and both were well-connected cadres. For most people, the "jump" was more like a slow, careful slide into the water.

Sanctions and Market Institutions: 1997-8

In the late 1990's, some residents of urban China were not sliding carefully into sea, but being thrown against their will into the turbulent waters of the market. In order to deal with state enterprises, whose notorious inefficiency have been a drain on state finances, a series of extensive layoffs was commenced. Nor was the government sector spared. In 1998, President Zhu Rongji announced that since a market socialist state needed less administrating than a redistributive one, the government was going to be reduced by at least a third. Like publicity-wary US corporations, the Chinese state sector never uses the term for "layoff", but instead calls the process xia gang, a terms which literally denotes leaving a military post. In theory, xia gang is not equivalent to a layoff, since the work unit is still responsible for the person to the extent that it is able to be. Some workers were still given a percentage of their salaries, even when there was no work to do. On the other hand, in other work units, employees found their salaries reduced -- or gone altogether -- months before they stopped laboring. Work units are also supposedly responsible for finding new jobs for their xia gang workers, a difficult prospect at best. Also, if the enterprise should become profitable in the future, it is under some obligation to hire xia gang workers back again. However, in reality, xia gang employees know better than to hope for this, and for most, xia gang is essentially a layoff. Xia gang not only affects current employees; these cash strapped enterprises are often also unable to pay out pensions to retirees.

The practice of xia gang actually started earlier in the decade. One of my interviewees was an enterprise cadre at a factory which went bankrupt in the 1992, when she was forced out into the market to become a getihu, an event she spoke if with great bitterness. However, the sheer scope of the layoffs which started in the late 90's was unprecedented. In Harbin, an estimated 80% of the state enterprises laid off workers. Some really were re-employed in other enterprises, or found work in private companies or hybrid organizations like HIT Park. Others used the opportunity to retire and retreat from the work of work, especially if the work unit was still able to provide pension payments. But most were thrown into the market. Of the nineteen interviewees who went into business between 1981 and 1996, only one was forced into the market because she was laid off. In contrast, of the seven people who "jumped into the sea" in 1997, four of them were there involuntarily because of xia gang.

The advent of xia gang has had a profound impact on sanctions surrounding market institutions. The most visible immediate effect was a severe increase in the number of getihu crowding the streets and markets of Harbin. Existing markets filled up and spread, and new ones sprouted up for all the new sellers. Fashionable malls locked up their chic boutiques at 5:00, only to be invaded by a veritable army of peddlers, shilling plastic toys and underwear on blankets laid out on the floor of the gleaming hallways.

For businesspeople who had enjoyed the fat years of the early 90's, it seemed that their seller's market had been transformed overnight into a cutthroat, competitive buyer's market. Not only were there more people selling goods, but with so many people laid off, my interviewees were convinced that there were fewer customers able to buy. One getihu snapped, "More and more people are xia gang. How can you do business? Who can buy goods if they have no money? It's a lousy market." Many of my interviewees complained that business was terrible. The owner of a successful restaurant suddenly lost her entire customer base when the four work units in the neighborhood went bankrupt. The woman who bought her son a car now sighed that she was barely breaking even. Even people who were not in business were aware of the harsh market. As we drove by a street market, an enterprise cadre gestured in disgust at the crowded peddlers, "Look at all those people. They're all xia gang workers. There's got to be four hundred peddlers there, all trying to sell stuff, but only twenty customers." Even a young worker in a factory on the edge of the city knew that business was bad:

I hear no people say they wouldn't go into business -- because you can try, but no one's buying. And some people who want to business can't do it. Without money, how can you go into business? So many people have xia gang, so no only has money. You put a stall out somewhere, but no one's going to buy anything. Who can buy when no one has money?

The global economic crisis of 1997-8 only exacerbated the problems, and highlighted the inherent instability of life dependent on the market. Although China managed to avoid the serious economic downturn experienced by almost all of its neighbors, the problems in the Russian and South Korean economies had a real and direct effect on the lives of businesspeople in Harbin. In the Russian Market, getihu sat in front of their stalls, playing cards and knitting sweaters as they waited for the stray Russian customer to wander by. South Korean corporations closed up their Harbin branches, leaving their employees to deal with their own version of xia gang. The new global economic situation also provided some opportunities, such as cheaper South Korean products, but for the most part there was just too little money chasing too many goods. All in all, one of the strongest sanctions supporting market institutions -- increased material wealth -- had been severely compromised.

In addition, although the status of businesspeople was higher than it has ever been in socialist China, getihu still suffered from problems of prestige. The woman who had bought the car was very proud that none of her children had gone into business, but had all gotten good stable jobs as cadres. As I interviewed her in the Russian Market, she whispered conspiratorially to me,

You look at the getihu here, the men. A lot of them can't find girlfriends. But my sons had no problems. When looking for a spouse, you want someone who has education, someone in government. Not some getihu with money. My son married a girl who graduated from Heilongjiang University, and a girl who's not bad-looking, either! Even when we're just here talking, chatting, about finding someone for someone, it's always "Find me someone who works for the government, who has an education.' Rarely does someone say, "Okay, just find someone with money."

The low status of getihu on the marriage market was confirmed by a young man who also worked in the Russian Market. Good-looking and well-spoken, he had developed his small business to the point that he had several branches at markets in other cities and made hundreds of thousands of yuan a year, all by the tender age of 26. But all of these accomplishments failed impress the parents of marriageable young ladies:

Every time someone's tried to introduce a girl to me, every one of those girls' families have looked down on me.... They think their daughter should marry someone with a good job.... They want their daughters to marry a college graduate, who works in a good work unit. Someone with a proper job, not one that may have its salary stopped or its workers laid off. With a stable income. That's the kind they all like. That's how all the parents, the fathers and the mothers think. They all look down on me and think I'm not good enough for their daughters.

With a grin, he added that all was not lost. "The daughters, well, they think I'm okay. Pretty good in fact. So maybe the way young people think, it's different."

Ironically, though, one of the strongest sanctions against market institutions, the risk and instability, was also mitigated, albeit indirectly. What xia gang taught everyone in urban China was that work unit jobs are not necessarily safe or stable either; there is no iron rice bowl anymore. Some people tried to deal with this by distinguishing between "good work units", which would take care of you, and "bad work units", which would not. However others, especially young people, argued that work units were no longer trustworthy, and that it was best to take care of yourself through market institutions. One successful entrepreneur argued:

You have to go into business. If you don't, you don't eat. Really. It's more and more obvious. If you're going to depend on a work unit or wherever to eat, it's not going to work. There's xia gang.... Chinese people should have seen this coming a long time ago. They should have started to work for themselves. But they didn't.

Throughout the reform era, the decision to utilize market institutions of social mobility has never been a straightforward one. The sanctions for leaving the work unit and going into business have always been balanced by sanctions against it. The situation was more difficult by the fact that these sanctions have also been transforming over the years, forcing people to predict the future of institutions with too little history in the PRC. Would it be foolhardy to leave the "iron rice bowl" and go into business? Or is it shortsighted to remain in the work unit rather than to "jump into the sea?" To negotiate this confusion and flux, people use narratives of legitimacy to understand these circumstances and justify their decisions.

2. Narratives in Contention

The sanctions surrounding market institutions have been mixed and in flux, and thus inconclusive. Until the mid-1990's, the passive, safe choice was to stay within the work unit. However, with the advent of xia gang, people were forced to seriously consider the possibility of launching out into the market, and to wonder if they should make the decision before the decision was made for them. My interviews occurred at a historical moment in which many people were trying to make judgements about market institutions, and doing so in a situation of incomplete information. Under these circumstances of uncertainty, interest groups argued for their own views of market institutions using narratives of legitimacy. Predictably, cadres (especially government cadres) and intellectuals used these narratives to devalue private business, while getihu and entrepreneurs used narratives to legitimize market institutions. The following section will examine how these interest groups mobilized the narratives of competition, contribution, culture and independence to argue about the place of market institutions in the hierarchy of social mobility.

The Narrative of Competition

As mentioned in Chapter 4, the narrative of competition has been a powerful and popular discourse of legitimacy, invoked by the vast majority of my interviewees. This narrative argues for a meritocracy, for fair and open competition on an even playing field. It was used both to legitimate and to de-legitimate market institutions. 29 of my subjects utilized it to discuss market institutions; fifteen of them (including all but one of the businesspeople) used it to argue for the legitimacy of life out in the market, while thirteen others (six of whom were cadres) invoked the same narrative to devalue those same institution. (One graduate student took a balanced view in the middle.)

Businesspeople in China were well aware that their profession suffered from problems of low status. One middle-aged getihu described herself as the failure in her family, although she was quite successful in her business. "All of my brothers and sisters have done better than me, " she said. "They're all cadres in administration, in provincial management offices and municipal departments." When I asked her if she made more money than they did, she laughed and said of course she did, but she did not see that as relevant to issues of status. Later in the interview she mused, "I had an English teacher who worked with me a lot, who really liked me. You wouldn't have thought that I'd end up here. So I have money. But to have money, it's not the same as having culture and knowledge." Her experiences reveals that in urban China, political and intellectual forms of capital were linked with status, but the kind of capital gained through market institutions (i.e. money) was not. As a journalist explained, "Money doesn't lead to respect. People say, 'You're so poor. You have nothing but money.'"

Therefore, businesspeople used the narrative of competition to argue that economic success should be seen as an outward sign of inner virtues, of intelligence, discipline, and ability.

I often asked my interviewees to describe someone successful whom they admired. Businesspeople often responded by telling stories, detailing the ascent of a self-made entrepreneur. (In contrast, people who admired cadres or intellectuals usually just named names or listed attributes.) These tales began with the hero's humble beginnings, and detailed his or her progress over the years, documenting that their eventual success was earned through genuine work. The phrase "step by step" was often used to emphasize the laborious nature of business, as in: "She developed that company step by step until she had twenty employees." In addition, the heroes' success was often measured in terms of financial wealth and business size. The message was clear: money and business scope were accurate outward measures of admirable inner qualities.

Business people argued that the world of the market which was a truly even playing field, where only the best rose to the top. A getihu insisted, "In private business, you have to have ability, rather than just make it on relationships and connections. It's not like that in the [state] enterprises. It's more fair in the outside world." A successful entrepreneur explained:

Nowadays to succeed in China, you need to be capable.... If you're losing money, no one's going to help you for very long, no matter who you are. It's much better than before. Yes, now you need to be capable. In business you need economic skill.... and experience to deal with the market.Therefore, market institutions were a true test of a person's mettle, the realm for the ambitious and courageous, while the work unit was a hiding place for the timid and weak. One middle aged man explained why he left his factory job.

If I'd stayed at the factory, the most I'd ever be is maybe a mid-level cadre. That's it. I wanted to use my abilities and not feel wasted. To test my value. It wasn't for the money, though the money's good.... Common people respect those who work hard to succeed economically -- someone who works step by step and becomes an entrepreneur. They admire these kinds of people.

The narrative of competition was clearly an effective strategy for legitimizing market institutions, since it affected the views of a number of people within work units as well as those "outside". I asked a middle-aged enterprise cadre if she'd ever consider going into business for herself. She admitted she was scared but tempted: "Everyone's willing to jump into the sea -- at least everyone with ability is." Later in the interview, she said:

People admire those who are in business. How can they succeed without ability and hard work? So we admire those who succeed, like a former worker who rises up. We were all poor before, so if you have money now, you must have ability. No one could have inherited it. All the money in China is new.

When I asked a rather high ranking Party cadre if he had ever thought about "jumping in the sea, he became surprisingly defensive. He launched into a long explanation justifying why he had not yet tested himself out in the market, and insisting that he would succeed if and when he did so. It was clear from his reaction that he had internalized the message that the market was realm of real competition, and that his decision to stay within the party-state structure could be construed as a sign of weakness. A 50 year-old worker also believed the world of the market was competitive:

I've never been interested in "jumping into the sea" because doing that depends on a person's ability. I've been in the factory so long that I'm no interested in it, and I don't have the skills to do that kind of thing. And it's risky, though of course it's also exciting. To work here [in the work unit] is stable, but there isn't the potential for great happiness.

His words reveal that he also has bought into the view that the world of market institutions was fiercely competitive, where only people of ability succeed, while the world of the work unit was for the timid.

However others, especially cadres, used the narrative of competition to promote the opposite view. They insisted that market institutions did not lead to fair competition on an even playing field, but to a chaotic, lawless world where the innocent were preyed upon by the crafty and cruel. Success in business, therefore, was not a reflection of the virtues of intelligence and hard work, but of the vices of amoral greed and sly trickery. A low-level government cadre argued:

In China's current social situation, if you follow the laws in doing business, you won't profit. You have to bend the law to have success. It's not about really using ability, fairly competing in business. So if I see someone who's a successful in business, I assume they used illegal methods.... If I see an American or Japanese or European businessperson, I would assume they were okay, but if I see a Chinese business person, I'm suspicious. That's the way it is. In China, we have a saying, "Businesspeople all cheat."

A Party official informed me, "Real common people look down on those who do business because they don't know where their money is coming from. They think it's coming from cheating people." A higher ranking cadre was more subtle, but also revealed his view that market institutions were for failures and cheaters:

People without knowledge, without culture were the first to go into business. They were the ones with not other choice in life, no salaries. So they made a little money. But in those years, getihu were looked down upon. Now, basically, people don't think that way anymore. But in reality, there are a considerable number of people who use improper methods to get wealthy.

Cadres were not the only ones who criticized market institutions. A middle-aged professor said, "Personally, I respect businesspeople the least of all because they devote too much to money. They pay little attention to the morality of their methods. Those who make money through correct ways, I can respect. But most of them do not." A media professional explained,

People don't look down on businesspeople, but they don't respect them either. People say, "Who knows how they made that money." They envy them, but don't respect them. Money leads to connections and that leads to more money. There are few who really made it honestly, step by step.... Personally, I respect real entrepreneurs who make it step by step. But there are few of these.

A number of people, especially cadres and intellectuals, made this distinction between the "good" getihu and entrepreneurs who gained their success "step by step" through honest means, and the "bad" ones who reaped illicit gains through cheating people. These comments often indicated that there were more of the latter than the former, and implied that it would be wise to treat all businesspeople with suspicion.

Although the narrative of competition was used to criticize both political and market institutions, it was not used in the same way. Cadres were accused of "pulling guanxi" -- using connections and relationships to get ahead. In contrast, guanxi rarely mentioned in the context of businesspeople, who presumably also utilized networks and connections to reach their goals. Instead, those in market institutions were condemned for using "improper methods" and for "cheating" (pian). In both cases, the accusers struck at the perceived flaws of each set of institutions. Political institutions were seen as older and more embedded, and could be criticized for being overgrown and entangled with relationship networks, a veritable Old Boys' (and Old Girls') Club. In contrast, market institutions were seen and new and comparatively unregulated, where individuals' actions were relatively uncontrolled. Those who wanted to undermine market institutions focused on a vision of individuals acting outside of moral strictures: self-seeking, cunning, and dangerous.

The Narrative of Contribution

Another way to draw attention to the individualistic and selfish aspects of market institutions was through the narrative of contribution, which was invoked by sixteen of my subjects. This narrative shares much in common with the narrative of paternalistic care discussed in chapter 4, and it argues that the chief end of work is to serve the community ("the people" or "society" or "the country"), and legitimacy should be granted on that basis. In both narratives, people use the term gongxian, which means to contribute or devote oneself. The opposite of contribution is exploiting the community in order to indulge in personal pleasure and decadent luxury. Once again, this narrative shares similarities with the narrative of corruption used against cadres in chapter 4, but they are not identical. First, the language is different. The terms for "corruption" (tanwu and fubai), which are constantly invoked to condemn errant officials, are rarely used to describe businesspeople. Secondly, whereas corrupt cadres were seen as debasing the explicit goals of their profession, market institutions were seen as inherently self-centering and materialistic. In other words, the narratives of care and corruption were used to condemn cadres for failing to live up to the standards of their institutions, while the narrative of contribution was used to criticize market institutions for leading people into selfishness and decadence. This may be why cadres, who were being criticized themselves for these vices, were so eager to use the narrative of contribution against market institutions. They could argue in all honesty that their political institutions of social mobility were created around the ideals of service, whereas market institutions were based on selfishness.

In a society steeped in socialist values for decades, it was difficult for many people to see capitalist success as anything but "profiteering" and exploitation. The view that market institutions contributed to society by creating jobs or creating economic growth was foreign to most of my interviewees, though some did try to propagate these views, as we shall see later. One young man, who was going to work for a private company rather than to follow his father's footsteps into government, tried very hard to justify market institutions through the narrative of contribution, but his tone was unsure and his argument was unconvincing:

Now the Party desires that its members set the example among the people, lead all the people in society to become wealthier. This is what the Party requires of its members now -- to make more money! To motivate and raise up others. Like Deng said, a portion should get rich first. It's a service to society, and it's fulfilling the Party's requirements.

For others, the only way that businesspeople could justify their legitimacy through the narrative of contribution was through generous acts of charity. To quote a government cadre:

There are those entrepreneurs who make money, but they take the money to contribute to society. Where there's suffering, they'll help -- build a hospital, help the disabled. They'll take their money out. These people get respect. But some aren't like this, those who indulge themselves in wine, women and song, and go out and play, go traveling. Every night they're in restaurants. I mean those who have extravagant lives. A young state enterprise engineer also highlighted the distinction between "bad" businesspeople who "cheat people and hurt them economically", and "good" ones who "give lots of money to the poor." A professor echoed these thoughts, explaining that she respected those entrepreneurs who became wealthy and then donated their money, but not those who made money and then wasted it on luxurious living. All of these people offered up a dichotomy between the legitimate and the illegitimate based on contribution: there were those who gave generously, and those who were exploitative, immoral and selfish. However, since "contribution" was defined as large and public acts of charity, just about all getihu and all but a few entrepreneurs were condemned to be labeled as self-centered, greedy cheaters. In the next quote, a young engineer seems to assume that those businesspeople who do not contribute visibly to society must be indulging in illegal means:

Chinese common people stress human sentiment. If [entrepreneurs] used hard work [to succeed], and if after they have succeeded, they contribute to society, then they'll gain respect. But if they use irregular methods to achieve their own ... goals, and if after they get rich, they don't give back to society, then people, if they don't oppose them, at least they definitely won't respect them.

Cadres, intellectuals, and professionals were not the only ones who bought into the narrative of contribution. Businesspeople themselves were also aware that public acts of giving were one way to gaining the legitimacy and status their profession often lacked. Several getihu expressed admiration for entrepreneurs who built schools and hospitals. A man who had started a successful advertising company told me of his dreams:

I'm thinking now that if I make a big pile of money, I'd build a school, in a poor, faraway place. If I built it in Harbin, I'd make sure it was the really poor, suffering kids who could go to it. Because now that I've got my own kid, I realize how hard it is to send children to school. There's this fee and that fee. I figure that there must be families that can't raise the money.

As far as I could tell, though, none of the businesspeople I interviewed actually contributed anything to charity. Ironically, thanks to the narrative of contribution's focus on huge, public acts of giving, contribution was seen as out of reach for ordinary businesspeople, even ones who had built up companies worth several million US dollars. My subjects talked about building hospitals or donating computer labs to universities, not about contributing mundane amounts of money to charitable causes. As a result, this kind of contribution was seen as a goal far off in the hazy future to even the most successful of entrepreneurs.

A few businesspeople attempted to redefine "contribution" to make it more amenable to market institutions. One young woman, who had just started her own company, expressed her dreams of contribution:

The worst problem in Chinese society now is unemployment (xia gang). It's hard to transform society, to solve an unhealthy situation. One of my goals in starting this business is to give a lot of people a chance for employment, a chance for success. It's how I hope to contribute to society; it's my way to be happy.

She used the narrative of contribution to argue that creating jobs, the natural outcome of a successful business, is a real way to serve society, especially a society struggling with unemployment. However, by and large, most getihu and entrepreneurs were unable to articulate how market institutions could lead to a life of meaningful contribution for anyone but the most successful businesspeople.

The Narrative of Culture and Intellect

Closely related to the narrative of contribution was the narrative of culture and intellect. Among my interviewees, intellectual credentials such as college degrees were closely associated with "high culture", even when the degree was in a technical field. In fact, when Chinese people talked about "intellectuals", they often mentioned scientists or those "who understand science and technology". Furthermore, these two concepts, "knowledge" and "culture" were linked with morality and contribution. (Footnote 4: In Chinese, the word for "knowledge"(zhishi) is also the root word for "intellectual" (zhishi fenzi). Therefore, I use the words "knowledge" and "intellect" interchangeably, since they refer to the same Chinese term.) Essentially, the narrative argues that people with intellectual credentials have gained a greater understanding of the world and achieved a higher level of "quality", in terms of both righteousness and civility. Because of their higher abilities, they also contributed more to society than ordinary people. In other words, this narrative imbued intellectuals with all of the virtues businesspeople were accused of lacking. The connections between intellect, culture and morality will be explored in greater detail in chapter 5, but at this point it is important to note how this narrative of legitimacy was used to interrogate market institutions.

Like the narrative of contribution, the narrative of culture was used to both criticize market institutions and to extend legitimacy to a few select members of the business community, thereby de-legitimating the vast majority. For example one very young businesswoman, who was both ambitious and insecure, explained:

Common people respect those with education and virtue. People without education who are only entrepreneurs only think about money and economics. But someone with education, like a professor, thinks more broadly. They think about how to contribute to society.

In her view, entrepreneurs were less legitimate than professors because they only thought about money, and were too narrowly focused to contribute to society. Others, especially intellectuals argued that there were legitimate entrepreneurs who were intellectuals, but uneducated businesspeople were selfish, amoral, and untrustworthy. One professor-entrepreneur described his own analysis of the history of business in the PRC:

In the early years of reform in Harbin, the first group to get rich were rascals (liu mang). These were people without culture.... Now they're all in jail. At that time, people weren't very clear about the market. And nobody had courage. Like the people in the university all thought, "Doing business is wrong; it's uncultured." People looked down on it.

From 1985 to about 1990, at that time there were those who relied on power to make money.... Now, this kind of thing, it happens somewhat less than before. Now you can say that few people are using these kinds of methods....

Now we say that China is entering the period of the "scholar-businessman" (rushang). That is to say now there are some scholars, or some scientists, or those who do scientific work, who are doing business. Like me. People who use your own technology, your own knowledge, or your own idea.

According to this analysis, there are three kind of people who use market institutions in China: the uneducated riffraff who eventually go to prison, the rapacious officials who misuse their political power, and the good intellectuals (like himself) who use their knowledge to develop a legitimate business. Obvious this view was a bit self-serving, but he was not alone in his view. Workers, waitresses, intellectuals, and cadres told me that they did not respect businesspeople -- unless they were entrepreneurs with "culture". As one cadre put it, "People don't respect businesspeople because they think most make their money by cheating. Of course, some businesspeople are good: those with education and culture, those who have quality."

Who, then, was qualified to be seen as an "scholar-entrepreneur"? My interviewees treated "intellectual" as an established category, but upon further examination, there was some disagreement about its prerequisites. Some, like the cadre just quoted, seemed to include anyone "educated" in the classification, which usually meant anyone with a college education. In this formulation, it was the person's educational credentials which mattered, not the type of business. In the words of a waitress:

There is a portion of young entrepreneurs who used education to develop. Of course people respect them. But other kinds of businesspeople, well, [they view is different]. I know of one who left a high position at a state enterprise contributing to society to go back to school. This person got a master's degree at HIT, and then went to Beijing to "jump into the sea." That's the kind of person I admire.

However, other interviewees focused on they type of business people were in. These interviewees often focused on high technology sectors, which they would describe as "scientific." One social science professor told me he respected most "people with culture, who are entrepreneurs, like those making high-tech products. Like Bill Gates, or the head of Intel." An entrepreneur, one of the very few who used the narrative of culture, explained:

It's not that businesspeople are not respected, but it's qualitatively different than [the respect for] intellectuals. And it depends on the kind of entrepreneur -- like the president of Legend Computers, he's respected. But not the guys who makes money off of nightclubs because these guy doesn't have culture. And also, they're not contributing to social development.

In this view, the owner of a nightclub must not have "culture", while the president of a computer company must be contributing to society, simply because of the high-tech character of the business. Thus morality, education, culture, and technology were conflated, offering an opportunity for certain businesspeople to borrow legitimacy from intellectual institutions for market institutions.

Chinese businesspeople were of course savvy to these connections, and exploited them if they were able. It was common practice to highlight intellectual capital, from the simple practice of listing educational degrees on business cards to more complicated approaches. I asked the professor-entrepreneur, who ran his own chemical analysis company, why he still maintained his university position teaching three days a week. He admitted his monthly university salary was less than a third of his monthly mobile phone bill, but explained:

I want to become a full professor. Because you see, right now I'm an assistant professor, right? Every year I can make 150,000 to 200,000 yuan. But if I had the title of "Full Professor", this probably would double. Because other people would believe that my knowledge, my technology was at a higher level. They would give me more projects.

"Culture" could be translated almost directly into profits because it conferred much needed legitimacy onto market institutions. The professor-entrepreneur said he was seen as "trustworthy" because of his university connection, a vital attribute for securing contracts. Universities often exploited this situation, with the result that in China one could buy the equivalent of "MIT batteries" or "University of California milk powder."

However, for the average businessperson in Harbin, the narrative of culture actually had a de-legitimating effect. College degrees are so valued in China because they are so rare. None of the eleven getihu I interviewed had a Bachelor's degree. Moreover, the number of people capable of developing a high tech company, much less succeeding at such a venture, was minuscule. The narrative of culture, then, like the narrative of contribution, holds out a form of legitimacy which was basically unavailable to the vast majority of those who used market institutions. By drawing the line between "good" cultured entrepreneurs and "bad" uncultured getihu, this narrative serves to question the legitimacy of the most prevalent and visible forms of market behavior in Chinese society. One cadre, after praising a particular entrepreneur who has a Master's Degree, went on to say:

So some entrepreneurs are okay. But out there, there are a lot of people who can't be called entrepreneurs. They're just small, small getihu. Getihu and entrepreneurs aren't the same thing. I look down on those getihu. People will ask me, what will you do after you retire? I say, even after I retire, I'm not going to become one of those getihu, selling some clothes or vegetables or whatever to make a little cash. I'll stay home and baby-sit instead. I can't respect them, those getihu.

In fact, the gulf between the intellectual "haves" and "have nots" was quite startling among the businesspeople in my data set. On average, those who had less than a vocational college degree ran small businesses, earning about ten to fifty thousand yuan a year. In contrast, businesspeople who had vocational college degrees ran businesses averaging in the mid-hundreds of thousands of yuan annually, while those with Bachelor's degrees or higher were running million yuan companies. This discrepancy is undoubtedly due to a number of variables, but the narrative of culture may be one of those factors and resulting legitimacy may be one of them.

The narratives of contribution and culture were used primarily by those interest groups who had a stake in de-legitimating market institutions. They accomplished this goal by selecting out a special segment of businesspeople as legitimate, businesspeople who happened to follow values closely allied with political and intellectual institutions. By focusing on attributes or credentials which they possessed, but which the majority of businesspeople do not, cadres and intellectuals were able to cast doubt on the legitimacy of market institutions as a whole, even while stacking the deck in their own favor in case they should ever have to "jump into the sea."

The Narrative of Independence

Instead of attempting to justify market institutions with the narratives of contribution or culture, people in business preferred to focus on the narrative of independence. This narrative legitimates market institutions by arguing that they are the only path to "depending on yourself" (kao ziji), an important consideration in the era of xia gang. According to the narrative, people on the "inside" were dependent and childlike, relying on their work units to "manage" them and to "support" them. The words for "manage" (guan) and "support" (yang) are both terms used to describe what parents do for children, carrying implications of patriarchal discipline and maternal nurture. Businesspeople used this narrative to argue that market institutions had allowed them to wean themselves off from these quasi-parental relationships and to become truly self-sufficient adults. One entrepreneur argued that xia gang was serving as a wake-up call for Chinese people used to dependence:

Chinese people should have seen this coming a long time ago. They should have started to work for themselves. But they didn't. Why? Because most people, even today, most people have an ideology of dependency. So they depend on the CCP or depend on their work units... Get your salary every month, and if you get sick the work unit takes care of you. The want someone else to take care of them. But that's not going to happen. Society doesn't allow that anymore.

Many of the businesspeople I interviewed emphasized their ability to take care of themselves. For example, I only interviewed two people who left their work unit positions directly to start their own businesses, without intervening strategies to soften the transition. Both of these men made sure I was aware of their courage and self-sufficiency in "jumping into the sea" without a safety net. Another man, who was working for a private company but contemplating starting his own business, informed me: "I'm not afraid of losing the iron rice bowl. I can take care of myself." Those who used this narrative not only emphasized their own moves towards independence, but also held up self-made entrepreneurs as heroes to be admired. They also made a point of criticizing those who depended on connections to gain status, usually through political institutions. One foreign trade entrepreneur said:

I'll tell you who deserves to be admired: the president of [a certain business group] that recently went public. He probably used some connections to make it, but it was mostly hard work. He's a peasant from a village, who came to the city to work construction. It was really hard in the beginning .... But he made it step by step. He had to mainly depend on his ability, hard work, brains. He depended on himself.... But I'll tell you who I disrespect: those people with ordinary ability who depend on their parents to get a good job and develop a high position. They can't actually compete, but they still brag a lot and act arrogant. It makes everyone annoyed.

For businesspeople, the ability to take care of oneself was only one aspect of independence. They also used the narrative to glorify the freedom they had to implement their own decisions without currying to a supervisor, "to be their own boss" (ziji de laoban) and to "develop themselves" (fazhan ziji). One successful restauranteur complained about the downside of business, like the hard work and the risk, but argued in the end it was all worthwhile because of the independence.

But I like it this way, to be my own boss. What I say counts. I can try out my own ideas. But in a work unit, you can have an idea, but if your boss doesn't like it, they can quash it. You can think of it, but you can't do it if they don't agree. But now, I have an idea and ponder it over till I'm sure it's right. Then I definitely do it -- try it out. There's no one controlling me. Only the results will prove whether I was right or not.

Over and over again, businesspeople assured me that once they had tasted the freedom of "being their own boss", they could never go back to working for someone else again. One successful young man had a strong desire to get a college degree, but passed up an opportunity to get a degree in television at a communications university: "I decided not to go because I would have had to rely on my sister for some of the money. That doesn't fit my character. I'm used to being independent. And working for a television station also may have been a bad fit. I don't want to work under someone else."

The narrative of independence paints a picture of market institution as the path to self-sufficiency, ambition, and adventure. It dovetails with the narrative of competition to argue that the market is a Darwinian struggle, fit for the strong. It uses language that implies that those who avoid market institutions are timid and childlike, unable and unwilling to take responsibility for themselves or their own actions.

3. Making Decisions About Market Institutions

Two men were workers at the same factory, a failing state enterprise which had already laid of many workers and was slated for even more xia gang. Both had been at this work unit since their late teens. At the age of 50, the first man was facing possible retirement in five years, though it was unclear what kind of pension, if any, he could expect. Since his wife and both of his children also worked at this faltering factory, his safety net was precarious. The second man, age 30, was even more vulnerable; his wife had already been laid off, and they had a baby daughter. Both men faced a choice: should they leave the dubious security of their work unit positions for the risks of the market, or should they stay and hope for the best? Weighing out the sanctions alone did not yield a conclusive answer.

Cadres and intellectuals used the narratives of competition, contribution, and culture to paint a picture of businesspeople as amoral, self-centered, uneducated rascals, operating in the chaotic, cutthroat, and money-obsessed world of market institutions. Worker number one, the 50 year old, had absorbed these narratives and used them to justify his decision to avoid seriously considering market institutions. He argued that the market was too risky and dangerous for him, and complained greatly about "cheaters, who take your money but don't have the goods, or sell fake goods to you." In contrast, those in business argued that the market was an open playing field of fair competition, the only place in Chinese society where people could be independent and "develop themselves", and where intelligence, hard work, and ambition paid off in financial success. Worker number two used these narratives to explain his own plans. Factories were not as dependable as they used to be, he said, so he was thinking about starting a small business, perhaps when his baby daughter was old enough for day care.

How successful were these two interest groups at propagating their messages about market institutions in urban China? Overall, it appears that those who supported these institutions were more effective at spreading their vision, though some important caveats do hold. In general, like the younger man in my example, the people in the control group were much more likely to use those narratives which legitimated market institutions and to have plans to put these views into action. The control group consisted of 23 people who had not yet invested in political, market, or intellectual institutions of social mobility They were mainly factory and clerical workers and people in the service industry. This group included five workers who had been xia gang from their factories, three of whom had become getihu in the year prior to their interviews. I included them in the control group, rather than in the market interest group because they did not choose to go into business voluntarily. Of the respondents in the control group, fourteen spoke positively about market institutions, twelve of whom expressed the ambition to "jump into the sea." Only four people used narrative primarily against market institutions, while the rest were either ambivalent or silent on the subject.

The respondents in the control group were as apt as businesspeople to use the narratives of competition and independence to support market institutions. They were aware that businesspeople suffered problems with status in Chinese urban society, but still aspired to "become their own boss". One waitress in her early 20's used the narrative of independence to explain:

People envy those in business, but it's not the same as respect. It depends on what kind of business. I'll respect those who depend on themselves, who used hard work to get ahead. I admire those kinds of people.... I hope to find a career someday where I can be my own boss, where I won't have to work under someone else. This is the biggest change from the reforms. Now everyone hopes for this.

A young man, a contract worker at a state factory, was attracted to the competition of the market:

If you want to know, I have a lot of hopes and ambitions. They're pretty big things. I want to do the things I should -- the things I like to do. I want to start my own enterprise, to "jump into the sea." Because it's a market society that we have now, and I like competition.

Both of these young people suffered the same obstacle to their ambitions: their parents had quite the opposite view of market institutions and wanted their children to find stable work unit jobs. Indeed the generation gap was never more present than when discussing market institutions. Of the twelve interviewees who were actively hoping to go into business for themselves, the oldest was 30 years old, and he was the only one who was married. In contrast, most of those who were negative about market institutions were over the age of 40, with spouses and children. In other words, there was a significant gulf between those people who were strategizing for themselves as individuals, and those who were making plans for a family. Even the youngest of my subjects, who was only twenty, was aware of this gap:

People my age all want to become a boss one day, to make some money for themselves. But people who are old, like if you get to 25 or 26 -- how do I put this? When you get to the age when people ought to get married, then you begin to think of finding a stable occupation, one which can support a family.

A 25 year-old waitress who had expressed her admiration for "scholar -entrepreneurs" and was studying in her spare time to reach that ambition, found herself at this crossroads. Although she had been dating her boyfriend for years, she said:

I don't want to get married. It's just like this -- if I get married I'll lose a lot of opportunities, like to study more. Being married is not like being single. I won't be able to just think of myself, but instead I'll have to think of my family. It would be so tiring.

For those who already had family commitments, the decision to "jump in the sea" was much more agonizing that it was for those who were single. A woman in her late 20's with a spouse and child was xia gang from her job as a factory technician. On one hand, she expressed admiration for businesspeople, saying, "People admire them. After all they can take care of themselves, and they don't care if they state takes care of them or not. They use their own ability, knowledge, and labor to make their own way." But on the other hand, she worried about the risks of actually using these market institutions herself. "I just don't know. I could go "outside" like some of my classmates have, go into business. But it's really hard right now. There are too many people without jobs, so there are too many people trying to go into business." She chose to take a position as a clerical worker in a modified state enterprise, but could not help wondering if she should still try "jumping in the sea" while her husband was still employed.

The generation gap about market institutions often led to tensions within families. Out of all my interviewees, I never met one parent who expressed a desire for their children to go into business for themselves. On the other hand, the vast majority of my subjects under the age of 30 hoped to "jump into the sea" eventually, and most of these complained that their parents did not understand their dreams but instead insisted they get "real" jobs in work units. In interviews, the narratives of competition and independence was often mustered to defend market institutions against the imagined protests of their parents. The contract worker told me:

Of course my parents hope I find a good work unit, a stable job! But in the last plenum, Zhu Rongji took the iron rice bowl and shattered it. So we young people must learn how to go out and deal with the market, for the sake of our future.... The way I see it, I should find ways to enrich myself, to do what I need to do to "jump into the sea." But my parents made me get this job. They think it's safer this way. Of course safety is a good thing, but it's not guaranteed. Experience is something you can keep. Achievement are something you can keep.

In arguing that "safety is not guaranteed", not even in the work unit, this young man was invoking the narrative of independence. This narrative also gave the young waitress who admired "those who depend on themselves" the words to express her frustrations with her parents.

They want me to stay in a stable work unit and not to go off on my own. But I personally believe that you can't depend on a work unit to take care of you. There are too many people now without salaries, or who have been xia gang. But my parents still think it's better to have a job in a real work unit. In contrast, people in their parents' generation were more apt to use the narratives of contribution and culture, complaining that businesspeople were selfish, amoral cheaters. They also used the same narrative to express their bewilderment and despair about "young people today", whom they saw as concerned only with money and frivolity, rather than responsibility. A 60 year old enterprise cadre with two adult children, insisted, "Money isn't important; it's what you can contribute to society. At least that's what we thought in my generation. Today's young people look for what's good for themselves." He hoped that his two grandchildren would grow up "to be useful to China." A retired professor and father of three mused:

People in my generation would still work hard, no matter how lousy the pay was. Old professors work hard and are very responsible. We weren't in it for the money. But now, young people aren't nearly as dedicated to [their work].... Because now students can consider more options, now they think about how to get better pay. In the past, you'd never switch professions. Now they don't care; they'll switch to anything. They're goals are different than ours were. They pursue money and personal development.

Others were even less generous in their assessment. The fifty year old worker profiled at the beginning of this sections snapped, "Young people today, all they want to do is spend money, go out and eat, sing, and dance." For these older people, the younger generation's desire to "be their own boss" was not about independence or ambition, but a misguided priority on material consumption, a selfish obsession with personal pleasure.

Of course there were other parents who spoke out positively about market institutions, who expressed a personal desire to "jump into the sea", or who were actual businesspeople themselves. But even none of these said they wanted their own children to go into business on their own. This reveals that in the late 1990's, in Harbin, market institutions still lacked the aspirational status of other institutions of social mobility. As the getihu who had bought her son a car put it,

In our country, no matter what you say, the status is different. To be a getihu, no matter how much money you make, it's not as good as being in the government. At least this is how I see it. It doesn't matter that you don't make much money in government, the status is still higher.... If someone's child tests into college, ah, tell me that they aren't happy? Everyone's congratulating them. No one congratulates someone if their child opens up a booth and goes into business.

One of the ironic side effects of this generation gap is that some young people felt grateful to xia gang for liberating them from the work unit. Of the four interviewees who were laid off in 1997, three were in their twenties. Two of these were young men who had wanted to "jump in the sea", but had taken work unit jobs in obedience to their parents. One explained,

The view of parents is that you should pursue the iron rice bowl, go to a work unit and let it take care of you until you die. But this guarantee isn't there anymore. Enterprises are being auctioned off, and they're going bankrupt. But parents still think that way. They first question they ask about anyone is, "What work unit are they in?" Nowadays young people don't think that way. The first thing they care about it how you look.... But young people like me all want to be their own boss someday, not to work in a factory for someone else.

His parents were upset when he was laid off, but it provided him the chance to find a job as a business manager in a private company, where he hoped to gain the experience to launch his own business in the future. The other young man had been so dissatisfied with his factory job that he had been moonlighting in secret for months before he was officially laid off. At the time of the interview, he had recently set up a booth selling hip fashions near a university.

Xia gang also provided unexpected opportunities. A young woman laid off in 19997 admitted that she was initially angry. But after she established a small business selling gifts, she realized that xia gang had actually been for the best:

Selling gifts can't make a lot of money, but I can meet a lot of different people and learn a lot. Before, at the factory, I only learned how to do one thing. But on the outside, you learn a lot more.... Supposedly, if business gets better at the work unit, we can go back to our old jobs. But I'm not going back, not even if I could. I don't want to listen to my boss anymore. I want to be my own boss.... But if I wasn't laid off, I wouldn't have "jumped into the sea" on my own. I had heard that to make it out in society you needed education, economic capital, and a good background. I didn't have any of that, so I wouldn't have dared. But when I did come out, I discovered that it wasn't like that.

Xia gang had not only give her a newfound sense of independence and self-sufficiency, it actually improved the quality of her life. Not only was she earning twice as much money as she did at the factory, she also said, "Now I have more free time. I used to go home from work and just fall asleep. Now I have time to talk to my friends about society, about economics, about my future plans." Her ambitions had also grown. She had tested for a beautician's certificate and was dreaming of opening her own beauty salon.

The generation gap in attitudes reveals that although market institutions have become significantly legitimized in the eyes of the younger generation, they have made more limited progress among their elders. And even young people insisted that the most respected and admirable businesspeople were those who contributed to society, or who had "culture and intellect". In conclusion then, market institutions, though still viewed with uncertainty and even suspicion, have gained a considerable degree of legitimacy in urban China during the reform era, and will continue to do so in the foreseeable future. It is also likely, given current narratives of legitimation, that most respected forms of market behavior in the PRC will be linked with acts of social contribution, academic credentials, and "science and technology."