State building, capitalism, and development: state-run industrial enterprises in Fengtian, 1920-1931.

Abstract

During the late Qing Dynasty (1644-1911), Western powers and Japan forced China to open its market and flooded the country with goods produced by large-scale industrial enterprises. The Chinese found that with military defeat, they lost not only political sovereignty but also economic interests. The situation was even worse in Northeast China (often called Manchuria in English), where the Russians and the Japanese built railroads and seaports and gained extraterritoriality over large stretches of land. With such advantage, the two imperialist powers, especially the Japanese, dominated the Northeastern economy. For the Chinese, the only way out was to establish native industrial enterprises. The Chinese regional state in the Northeast (known as the Fengtian Clique, 1916-1931) most urgently wanted to develop a modern economy, because it was the only viable way to generate wealth and strengthen the state in the long run. Due to the lack of a full-fledged bourgeoisie, the regional state had to be very hands-on in economic modernization - it established and managed large-scale industrial enterprises. In the process, the state became the largest business owner and the forerunner in capitalist enterprises. In this study, I investigate two industrial enterprises established under the leadership of Fengtian Civil Governor Wang Yongjiang - the Fenghai Railway Company and the Fengtian Textile Mill. These state-run enterprises were joint-stock companies strictly formulated according to the Company Law, which were based on Western laws. The provincial government, as the largest shareholder and the manager, ran the companies rigorously in a rational and profit-oriented way and competed in the open market. This phenomenon requires us to re-think capitalism - its existing paradigms and generalizations should be re-examined and new theoretical possibilities explored. I tentatively propose the concept of capitalism embedded in state bureaucracy, as I see in the two state-run companies. To wit, it was capitalism not led by the bourgeois class. The state became a capitalist in its endeavors to develop regional economy and to strengthen itself. For Karl Marx, capitalism was essentially defined by a new mode of production, in which the bourgeoisie own the means of production while the workers are deprived of it. He therefore often referred to the form of society created by capitalist mode of production "bourgeois society." For Max Weber, the fundamental nature of capitalism is rationality, mainly embodied in "rational capital accounting." Weber better grasped the essence of capitalism, because his conceptualization stripped it of the unnecessary class-based elements. Through empirical examination of two provincial enterprises in Fengtian, I demonstrate that rationality was indeed the driving force of capitalism. Under certain circumstances, rationality can bring about capitalism, without the sociopolitical and economic preconditions such as private ownership of means of production, highlighted by Marx and even Weber. The capitalism in Northeast China during 1920s is quite different from the conventional, Marxian understandings of Chinese capitalism, which have centered on the bourgeois class. To better understand capitalism, I believe, we have to make a clear distinction between its origins in Western Europe and its replication in other parts of the world - the trajectories are bound to be vastly different. If the gestation of the world's first capitalism as an economic force was a prolonged process, necessarily concomitant with profound social or cultural transitions, as elaborated by Marx and Weber, its replication around the world often takes place more quickly and easily, with only small changes in the sociopolitical context. Through this empirical study, I hope to show that capitalist development can unfold in highly distinctive and localized manners.