How to best develop a poor and agrarian economy has rightfully captured the attention and imagination of countless scholars. It is both idealistic and pragmatic to search for better ways to make sociopolitical changes that raise productivity and living standards faster with less instability, dislocation, and hardship. Various prescriptions and prognoses—such as local corporatism, mixed economies, social democracies, and community-confined markets—have emerged. Here we have another effort in that long thread of intellectual endeavor.

Originating from a PhD thesis, Community Capitalism in China is a thin book with a big, commendable objective. Xiaoshuo Hou attempts to conceptualize an alternative model of economic development through a sociological observation of three villages in rural China: Nanjie, Huaxi, and Shangyuan, The book claims to be “an exploration of local institutional innovations that end the dichotomous view of the state and the market” (p. x) and proposes a “community capitalism” as “an alternative model of development for transitional societies” (p. 13). Under that model, the three villages are described as behaving internally like clan-companies (p. 126) or “collectively owned corporations” (p. 13) but acting externally in capitalistic and market-oriented ways. The dual goals of prosperity with equality and development with stability are well served in the three cases “that exhibit a balance between the state and the market and capitalism and socialism, and combine competition with cooperation” (p. 20) and “indicate the dialectics between capitalism and communism, and between the state and the market” (p. 22).

This monograph might have helped the inquiry into alternate development models had it not been plagued by several, significant problems. Instead of a viable model of development, what is reported here is essentially a transient experiment by some in the ruling Chinese Communist Party (CCP). In fact, Hou seems to be aware of the CCP's “searching for alternative ways” of development so as to reconcile the market economy with its “Soviet-Leninist” politics (p. 3). Nanjie in particular has indeed been such a “Mao's last village” to the Chinese elites on the left.Footnote ¹ Hou also acknowledges that perhaps “these star villages will fade into oblivion” (p. 134), yet presses on to tell a half-story about how communities and village/clan structures bend market mechanisms, something that happens commonly elsewhere in the world. The other half, a more fundamental story of three affluent “socialist” villages in the sea of capitalism, is largely missing: the crucial role of peculiarly Chinese institutions such as the hukou (household registration) system is insufficiently mentioned (pp. 18, 26) with little consultation of the latest scholarship; the significant and critical support by the state—massive financial injections, and trade and “red tourism” favors showered on the model villages—is largely overlooked. The assertion that “Nanjie does not have any special advantages” (p. 15) is untrue. In fact, the “socialist heaven” of Nanjie (p. 39) has been significantly and opaquely financed by state loans and grants and was reported to be “practically bankrupt” by 2008.Footnote ²

The prosperity and egalitarianism enjoyed by the local hukou-holding villagers in Nanjie and Huaxi are built on the exploitative employment of massive numbers of outsiders or migrant workers akin to the alien workers in some rich Middle Eastern emirates except that state funds replaced oil deposits here. Hou does notice the migrant workers (many folds larger than the local population) in Nanjie (p. 47) and Huaxi (pp. 92–94) but glosses over this decidedly unequal “two or more tiered distribution system” (p. 94) with the propagandist “honorary villager” scheme and some showcase examples furnished by the local cadres (pp. 46–57). This serious problem is striking since Chinese scholars in fact reported as early as 2000 in detail the crucial exploitation of migrant workers in those model villages, followed by the English media.Footnote ³ The third, weaker case of Shangyuan is likely even more exploitative of migrant workers, since it is a small part of the quite raw capitalist market economy, Wenzhou style (pp. 102–7, 113), rather than a meaningful socialist or communist model of economic development.

Community Capitalism in China is also weakened by its conceptual vagueness (e.g., pp. 122–27) with regard to communism, socialism, capitalism, and corporatism. It essentially presents government showcases as viable alternatives with a mix of ephemeral phenomena, state-subsidized political showcases, and the communal and social bending of the market economy that is genuine and common in a transitional society.