Introduction
The growing attention to social networks as a central feature of contemporary global capitalism has been a mixed blessing. On the one hand, it has opened new possibilities for a more fine-grained analysis of socio-institutional processes of economic governance operating below as well as beyond the framework of state regulation. On the other hand, it has provided convivial and often essentialist cover for the increasingly devastating economic transformations at play. Efforts to understand the processes underway have triggered a rediscovery of the work of Max Weber. Neo-Weberian perspectives have informed analyses of how contemporary religious and ethnic networks create new frameworks of economic efficiency and market rationality amid the upheavals of economic crisis and contracting states, as evident in the work of Gary Hamilton and Manuel Castells on East Asia, David Martin on Latin America and David Maxwell on Africa. While revealing processes that escape conventional structural analyses, neo-Weberian analyses risk concealing the darker side of the new ethos of flexible production behind the solidary relations and cultural or religious interpretations of contemporary ‘network capitalism’.
I must admit to a certain scepticism about the relevance of Weber to analysing these processes when I began my research on social networks and informal entrepreneurship in Nigeria over a decade ago. The fact that I read him anyway marks me as a student of Gavin Williams. In his work on Nigeria and Africa more broadly, Gavin has staunchly refused to follow Marxist protocol in regarding ‘cultural’ institutions as a blockage to development. Instead, he has persisted in ‘taking the part of the peasantry’, arguing for the efficiency and developmental potential of local institutional creativity as an alternative to domineering and profligate state structures (Williams 1976). At about the same time as the prophets of the Confucian ethic were revolutionising the analysis of capitalist development in East Asia, Gavin was arguing for the capacity of embedded economic institutions to produce development in Africa (Williams 1980, Williams and Tumusiime-Mutebile 1978). Against my expectations, reading Weber opened my eyes to what Steven Feierman (1999) calls the ‘invisible histories’ of indigenous processes of institutional change and economic rationalisation emanating from within African societies – a discovery which has profoundly marked my thinking ever since. This epitomises one of the distinguishing characteristics of Gavin's academic contribution, which lies not only in the iconic pieces of scholarship he has produced, but in his formative impact on his students, whose creative energies are refined and unleashed rather than remade in his image.
Despite a potential to catalyse valuable insights into informal institutional processes that transcend the boundaries of firms and nation states, some insights drawn from Weber's work have had a dubious influence on analyses of contemporary capitalist transformations. Exuberant neo-Weberian accounts of the transformative powers of cultural solidarity and social networks have tended to gloss over their more negative effects on the restructuring of contemporary capitalism. In his analysis of the new ‘spirit of capitalism’ animating the Asian economic miracle, Manuel Castells (1996) evokes a supercharged Weber blasting away bureaucratic rationality with network connectivity to disrupt boundaries, topple bureaucratic hierarchies and dissolve national borders in a dynamic drive to global economic efficiency. But a closer look suggests that there is something more sinister lurking in the iron cage of global network capitalism.
Beneath the cultural glue of socially embedded work ethics and ascriptive solidarities are starker institutional realities that are glossed over rather than illuminated by celebratory accounts of the Asian miracle, but which become increasingly problematic when these same network perspectives are applied to enterpreneurial development in contemporary Africa. These relate to the ways in which the focus on cultural determinants of network success have served to validate intensified processes of labour exploitation as well as glossing over the role of the state in making networks work for development. In this paper, I will focus on three issues that are that are hidden by neo-Weberian representations of the ethos of network capitalism. The first relates to the ways in which notions of the trust, flexibility and solidarity are used to normalise the use of unfree labour in the service of capitalist accumulation. The second involves the critical role of the state in fostering network dynamism by mobilising culture and socialising risk in ways that diffuse the tensions created by the super-exploitation of labour. And the third issue centres on how the obfuscation of these processes in cultural analyses of Asian network success has cast the poor performance of African enterprise networks as a product of cultural failings which obscure underling processes of state withdrawal and policy failure.
Weber and the Confucian ethic
The spectacular performance of East Asian economies since the 1980s has challenged Weberian ideas of the superiority of Western bureaucratic capitalism. Yet Weber has remained central to contemporary analyses of global capitalism amid a renewed focus on the cultural processes that underpin contemporary capitalist transformations. As Gary Hamilton (1994, p. 199) maintains in his analysis of Asian capitalist networks:
The only adequate explanation for their structure and character, however, must be derived from organizational logics that have been developed and institutionalised historically by East Asian societies (Hamilton and Biggart 1988). This is merely to restate for the case of Asian economies, Weber's conclusions about the development of capitalism in the West.
Despite their roots in Asian culture, these new institutional arrangements are said to transcend their cultural context to usher in a new paradigm of flexible economic organisation more suited to globalisation (Castells 1996, Hamilton 1994). According to Edward Chen and Gary Hamilton (1996, p. 1), the Confucian ethic provides an institutional framework that ‘make[s] export-oriented industrialization workable and successful’. Castells (1996, p. 193) suggests that networks have transcended their East Asian cultural context to become the new ‘spirit’ of contemporary capitalism:
Thus, the network enterprise, a predominant form of business organization in East Asia, seems to be flourishing in various institutional/cultural contexts, in Europe, as in the United States, while the large, multi-unit corporation, hierarchically organised around vertical lines of command seems to be ill-adapted to the informational/global economy. Globalization and informationalization seem to be structurally related to networking and flexibility
While many have celebrated the liberating potential of a model of capitalist development grounded in Third World rather than Western cultural realities, there have been growing concerns that the model of Asian network capitalism may conceal more than it reveals about the nature of contemporary capitalist transformations. Robert Wade (1990), Alice Amsden (1992, 2001) and Ha-Joon Chang (1990) have long emphasised the role of the state rather than cultural forces as the primary factor behind East Asia's rapid economic development. Indeed, Ha-Joon Chang denounces cultural explanations of East Asian success as a misreading of history. While these state-centred approaches contribute a vital part of the story, their focus on the formal institutional processes of rapid development has less to say about the equally vital social processes through which small firms were coordinated and labour mobilised outside the bounds of state regulation. In his seminal work, Governing the market, Robert Wade confesses that, ‘I should stress that the organisation of firms – their size, the way they grow, their methods of doing business, and the relationships between them – is a major gap in the argument of this book.… But since little evidence is available on this subject for Taiwan, and since my primary interest is the uses of public power, I say little more about it.’ While the leading scholars of East Asian capitalism have continued to focus on the commanding heights of rapid development, others have taken up the challenge of investigating the industrial networks of small and medium firms operating at the margins of the state (Buck 2000, Cheng and Gereffi 1994, Deyo et al. 2001, Greenhalgh 1994, Yeung 1997, 1999a, 2000). As Cheng and Gereffi (1994, p. 202) explain, ‘neither market forces nor the state can explain the dynamism of the small-firm sector… Successful small businesses in Hong Kong and Taiwan alike are enmeshed in dispersed networks laced together by social ties of kinship, friendship, ethnicity and common regional or village roots, which are rarely formalized as such… These networks are a key factor in explaining…the competitiveness of some East Asian economies'. It is precisely because they offer a means of grappling with the dynamic role of Asian business networks, which continue to prove resistant to conventional structuralist analyses, that neo-Weberian approaches have proven so popular. Yet, their cultural focus has been both their greatest strength and their greatest weakness.
Instead of illuminating the institutional processes at play, neo-Weberian approaches have been criticised for obscuring them behind essentialist cultural discourses. A number of commentators emphasise the need to focus on the aspects of economic and political reality that are erased by talk of culturally embedded work ethics and capitalist efficiency (Chan 1996, Greenhalgh 1994, Hart 2002, Tsui-Auch and Yee 2003, Lam and Clark 2005). Susan Greenhalgh (1994, p. 747) questions ‘both the substantive conclusions and the emancipatory implications of this new discourse on Confucian culture and economic development’ within the Chinese context. Others contend that neo-Weberian representations of Asian network capitalism obscure the differences in conditions encountered by capitalist networks as they extend into new cultural and political contexts, particularly in Africa (Brautigam 1997, Hart 2002, Tsui-Auch 1999, Yeung 1999b). Tsui-Auch and Yee (2003) criticise the static view of culture implicit in notions of Asian network capitalism. They argue that even among East Asian countries, ‘other factors, including the market, the institutional environment and the state each played a role’ in shaping economic outcomes. Exploring the more jarring extension of Taiwanese industrial networks into South Africa, Gillian Hart (2002, p. 169) contends that the ‘ahistorical and homogenising’ notions of Asian network capitalism leave ‘little room for understanding crucial questions of dynamics: how networks change and what happens when they travel’. Too few questions are asked about what happens when Asian business networks are extended into new regions, with different states, different institutional histories, and different social and economic realities.
In the discussions that follow, I will explore what is lurking in the shadows of this new spirit of global capitalism. Is the Confucian ethic a product of culturally embedded economic organisation or of more political forms of mobilisation and institutional reform? Does it tap into co-operative efficiencies of social solidarity and trust, or simply dress up more coercive and regressive forms of labour control in consensual clothing? Is Asian network capitalism as globally transferrable and empowered by liberalisation as some would have us believe? As states wither and Asian economic networks find their way into Africa, are we witnessing the unleashing of a new spirit of African capitalism freed from patrimonial restraints, or the exposure of the underlying contradictions of stateless notions of economic development?
The Confucian ethic and unfree labour
The idea of embeddedness in Third World cultural norms of solidarity and indigenous work ethics seems to soften the edge of contemporary global capitalism. Association with the Confucian ethic is often used to suggest the emergence of a ‘kinder gentler capitalism for the 21st century’ (Ong 2002, p. 349). Indeed, Hamilton (1996, p. 54) argues that ethics of solidarity and reciprocity embedded in network organisation preclude the kind of cut-throat competition characteristic of Western capitalism:
In China, the network based market economy rested on reciprocal relationships. The ethics formed the rules of the economic game, so to violate the relationships, and hence seek unfair advantage, was to jeopardise one's credibility in the market place…. Seeking morally unfair advantage in the West has always been legally okay.
From a more ideological perspective, Susan Greenhalgh (1994) and Aihwa Ong (2002) draw attention to the ways in which references to Confucianism, family firms and guanxi networks have been instrumentalised by contemporary entrepreneurs and ideologues to gloss over authoritarian relations and abuses of labour within the context of modern capitalism. These observations link up to wider questions about the tension between the rationalising logic of capitalism and the contemporary focus on cultural embeddedness. Is the cultural turn of contemporary capitalism a reversal of the rationalising trajectory of the Protestant ethic? Why are the forces of globalising modernity associated with a reversion to tradition?
In research on small enterprises in Taiwan, Greenhalgh highlights the need to problematise rather than culturalise the Chinese family firm, and to question the static orientalism of Confucian discourses. Why would a society so heavily penetrated by the global capitalist economy be steeped in traditional economic and labour relations? According to Greenhalgh (1994, p. 748), ‘the flowering of apparently traditional family firms represented not the persistence of tradition but the reinvention of traditional family forms by powerful family patriarchs who were constrained to build their firms out of their families by powerful currents in the domestic and global political economies.’ The cultural advantage of Confucianism is shown to lie in its capacity to mobilise unpaid family labour amid global pressures to cut costs in order to remain competitive, pressures that fell particularly harshly on women within Chinese family firms. Far from illuminating the processes at play, Greenhalgh argues that the focus on culture serves to divert attention from the realities of gender and generational inequality and severe exploitation of labour. Similarly, Ong contests the over-socialised view of Chinese entrepreneurs in narratives of overseas Chinese networks, highlighting the instrumentalisation of cultural discourses, and the abuses of labour that go on behind the veil of Asian solidarity. She argues that guanxi networks are ‘not without their own violence and exploitation of workers, family members and so on.’
These observations feed into wider concerns about the ways in which the contemporary celebration of social networks does not so much reverse strict Weberian notions of capitalist regulation as reassert them in a new, more insidious form. In a provocative ethnography of flexible production, Gavin Smith (1994, p. 82) speaks of the rise of social networks as having less to do with the humanising of labour relations than a ‘shifting of regulation to new forms and social spaces’. He maintains that apparently embedded networks of labour relations are ‘ideologically constructed so as to justify forms of labour regulation hitherto deemed unethical by all parties involved, and to delegitmate collective action by people in their capacity as workers’ (Smith 1994, p. 80). In other words, the rise of network capitalism is less about a shift from rational to culturally embedded forms of regulation, than about a shift from an economic system based on free labour to one that revolves around unfree labour.
The sociologist Philip Corrigan (1977, p. 437) goes a step further to argue that the use of community and kinship networks to engage in capitalist accumulation through the use of unfree labour is nothing new: ‘Unfree labour is not a feudal relic, but part of the essential relations of capitalism’. He uses a range of empirical examples to demonstrate that unfree labour, in the form of South African labour reserves, neo-slavery in contemporary mining concerns, and the abject conditions of migrant labour, is not a relic of former modes of production, but a mark of global capitalist expansion. Far from turning Weber on his head, the contemporary recourse to cultural norms and communal ties represents a continuation of capitalist mechanisms to cheapen labour in the name of enhanced efficiency:
Ascription is not, as it were, antagonistic, to effective social or technical division of labour (the rationalist thesis in brief); but is the manner in which that division and circulation is accomplished. Status relations are the mode of achieving contractual relations; the contradiction between formal and substantive rationality is permanent and coextensive with capitalism. (Corrigan 1977, p. 449)
Networks capitalism and the invisibilisation of the state
In addition to repackaging relations of unfree labour as ‘network governance’ or ‘social capital’, the Confucian ethic has also contributed to the ‘invisibilisation’ of the state in the development of Asian network dynamism. Despite the recognised centrality of the state in the success of the East Asian development model, Confucianist discourses have tended to downplay and even deny its role, both as an agent of development and as a supportive force in the development of dynamic economic networks. Instead, they shift the focus to the importance of cultural dynamism and unfettered markets as the key to global economic success. The implication is that liberalisation is all that is needed to unleash the developmental power of network capitalism in any society. However, a more historically and politically sensitive literature on the Asian miracle suggests that East Asian states played a critical role in fostering dynamic business networks through the instrumentalisation of culture and the nationalisation of risk (Tsui-Auch and Yee 2003, Whitley 1991, Chan 1996, Castells 1996). The tendency of East Asian states to work with rather than against cultural norms and embedded business practices has contributed to concealing the hand of the state behind the spectacular successes of business networks.
Capitalism beyond the state
The legendary flexibility and efficiency of Asian network capitalism is often attributed to the ability to bypass rather than to harness the state. According to Hamilton (1996, p. 284), ‘How Asian economies actually develop and perform depends on the dynamics and effectiveness of the inter-firm networks themselves, rather than on encouraging actions of governments’. Hamilton and others invoke institutional peculiarities in the history of East Asian state–society relations to explain this inversion of Weberian notions of the centrality of the state to capitalist development. They argue that in East Asian societies, stable regulatory authority became embedded in social networks rather than states. These scholars concur with Weber's assessment that the Confucian state was inimical to the development of capitalism. Indeed, it was the opposite of a rational bureaucratic state, characterised by a lack of respect for property rights, a distrust of mercantile wealth and the lack of an effective legal system, serving to inhibit the development of impersonal authority in many East Asian societies, especially China and Korea (Deyo et al. 2001, Whitley 1991). Thus, while Western capitalism relied on centrality of the state as guarantor of law and order, East Asian, especially Chinese, society was characterised by a mistrust of the state and reliance on regional and kinship relations for stable economic regulation. In the process, proponents of the cultural turn contend that self-regulating kinship ties and place-based commercial organisations became the locus of ‘legitimate authority’, occupying the role played by the state in Weberian bureaucratic capitalism (Chen and Hamilton 1996, Hamilton 1994).
Analyses of contemporary East Asian capitalism emphasise a similar independence of regulatory efficiency from relations with the state. Accounts of the triumph of small enterprise capitalism in Hong Kong and Taiwan highlight the virtues of ‘guerrilla capitalism’, which achieves efficiency by evading the state (Buck 2000, Lam and Clark 2005). While attributing the ethos of guerrilla capitalism to Taoism rather than Confucianism, Danny Lam and Cal Clark (1994, p. 419) argue that ‘guerrilla capitalists generally operate quite independently from the state. This independence actually contributes to their flexibility and low costs…. Guerrilla capitalism, therefore, constitutes a vital component of Taiwan's developmental trajectory that takes us far “beyond the developmental state”’. Accounts of the spectacular industrial growth in China's Pearl River Basin also emphasise the bypassing of the state by culturally embedded networks from Hong Kong and Taiwan. Hsing (1996, pp. 2245–2246) draws attention to the massive decentralisation of fiscal authority and responsibilities to local governments, encouraging the mediation of foreign investment through interpersonal guanxi networks which largely bypass state regulations in interest of flexibility, adaptability, and competitiveness.
The unique institutional history of Asian enterprise networks is seen to have come into its own in the context of economic globalisation. While the bureaucratic structures of Western industrial capitalism have been disrupted by processes of liberalisation and globalisation, Asian business networks are flourishing. Hamilton (1996, p. 294) contends that cultural path dependence and the institutional framework of the liberalising global economy provide a sufficient institutional framework for the development of network capitalism: ‘Asian business networks, although rooted in traditional structural patterns, represent dynamic industrial structures … globalization creates the conditions for the continuation of path dependent trajectories of economic development.’ While there is a less explicit sense of the need for a basic ‘night watchman state’ to provide infrastructure and enforce law and order, Asian business networks are credited with the capacity to provide the major institutional requirements of capitalist development as they move out into the global sphere. Hence Francis Fukuyama's (1995, p. 103) assertion that ‘in the post-Cold War world, the most important distinction between nations are no longer institutional but cultural’.
Bringing the state back in
If we are shifting the focus from culture to political economy, however, the evidence suggests that, rather than operating as an alternative to state-based organisation, social networks and the Confucian ethic were harnessed and shaped by the state (Tsui-Auch and Yee 2003, Whitley 1991, Castells 1996, Chan 1996, Hart 2002). Despite his fascination with the role of Asian cultural in the rise of global network capitalism, Manuel Castells (1996, p. 182) claims that the developmental state was more influential than the Confucian ethic in promoting the success of Asian business networks. He claims that ‘the dynamic configuration of East Asian business networks, able to take on the global economy came in the second half of the twentieth century, under the decisive impulse of what Chalmers Johnson called the developmental state.’ Political economy perspectives indicate that the success of network capitalism does not derive from its ability to bypass the bureaucratic rigidities of state regulation, but from the ability of East Asian states to mobilise cultural values and facilitate the operation of enterprise networks. In this way, states played a critical role in squaring the circle of industrial co-operation and intense labour exploitation. Looking behind the veil of culture reveals that the state was central to the success of Asian network capitalism in three ways: the developmental state mobilised an economically hostile Confucian ethic in the service of industrial growth, it indirectly subsidised the cost of enterprise development, and it provided the co-ordinating structures to spread risk and prevent fragmentation.
Closer scrutiny of the rise of the Confucian ethic shows that, contrary to culturalist interpretations, its association with Asian capitalism was the product of significant political remastering of the original doctrines. Chan (1996) and others have noted a long history in East Asian countries, dating back centuries, of using Confucianism to mobilise political support for regime changes or policy reforms (see also Tsui and Yee 2003, Whitley 1991). Indeed, Chan (1996, p. 37) goes so far as to argue that ‘Confucianism has never been, and is not, concerned with economic development. It has always been concerned with political legitimation and compliance’. Indeed, numerous scholars, including some proponents of the Confucian ethic, have noted that Confucianism was originally hostile to merchants and commercial accumulation, though its emphasis on discipline, loyalty, and the value of education made an important contribution to the development of an effective labour force (Whitley 1992, Hamilton 1996, p. 48, Chan 1996, Chang 2003). Nonetheless, the repackaging of Confucianism as a doctrine of flexible industrial development involved considerable effort on the part of East Asian states.
In fact, many of East Asian states now most closely associated with the Confucian ethic, including Singapore, Korea, Japan, and China, were hostile to Confucianism in the early development period of the 1950s and 1960s. Tsui-Auch and Yee (2003, p. 523) explain that in Singapore and Korea, the state reintroduced Confucianism into national education systems and political discourse to counteract the corrosive effects of capitalism and Western values on embedded norms of discipline, family loyalty and respect for hierarchy: ‘to offset the pervasive influence of western culture (particularly in Singapore) or to mobilise their citizens to support the state imperative for economic development, both states harnessed traditional cultural values and institutional norms.’ Similarly, Thierry Pairault (2008) notes the extensive process of ‘manufacturing Confucian values’ in the service of economic development across East Asia. In the case of China, Chan (1996) argues that Confucianism was denounced in the revolutionary period, but was reintroduced in 1978 in to mobilise support behind the market reforms (see also Pairault 2008). The process of weaving Confucianism into the development project took different forms in different East Asian countries, but in all cases involved a strategy of adapting enterprise management to local cultural and institutional contexts. Tsui-Auch and Yee (2003, p. 511) point out that what was at work was more than just political manipulation. In remastering Confucianism and elevating it to a dynamic economic ethic, East Asian states succeeded in reducing the social friction of rapid economic change, fostering economic efficiency and social legitimacy through mobilisation of cultural values and social ties. As Singaporean President Lee Kuan Yew pragmatically observed in a 1994 interview with the managing editor of Foreign Affairs: ‘If you have a culture that does not place much value in learning and scholarship and hard work and thrift and deferment of present enjoyment for future gain, the going will be much slower’ (Pairault 2008, p. 106).
The process of ‘manufacturing consent’ for rapid economic development involved more than just harnessing cultural ideologies. East Asian states underpinned the ideological dimension of the Confucian ethic with material strategies to subsidise labour and livelihood costs in order to make networked firms more competitive. Providing what Gillian Hart (2002) describes as a ‘social wage’, East Asian states indirectly supported the economic viability of networks by means of such policies as agrarian reform, public infrastructure, public or subsidised health and education, and, in the case of Hong Kong, public housing (Castells 1996, Hart 2002). This not only provided a social safety net for the poor, but reduced the labour costs faced by small firms, as well as the cost of living of entrepreneurs. This militated against economic and livelihood pressures that could otherwise have eroded business networks and encouraged opportunism, as scholars of enterprise networks have observed in other contexts where the state was less active (Meagher 2010, Visser 1997). As Castells (1996, p. 189) explains in the case of Taiwan and other Chinese territories, ‘the form of Chinese business networks is also a function of the indirect, subtle, yet real and effective form of state intervention in the process of economic development in various contexts.’
In addition to its critical role in ideological mobilisation and livelihood support, East Asian states played a vital role in economic co-ordination and risk reduction, creating a business environment in which enterprise networks could thrive. As Richard Whitley (1991, p. 19) explains, ‘the major significance of state co-ordination and bank involvement in business strategies … concerns risk reduction and sharing, what Pye (1988) terms the “nationalisation of risk”’. This included policies such as public support for research and development and technical upgrading, policies to attract foreign investment, credit and exchange rate policies, export support and tight control of labour movements, all of which contributed to absorbing risk and increasing investor confidence (see also Castells 1996, Hart 2002). Even policies that seemed hostile to the interests of enterprise networks, such as the economic and political marginalisation of small firms in Taiwan, contributed to absorbing risk at the level of the formal economy and the state, leaving small ‘guerrilla capitalists’ free to benefit from the spillover effects. In fact, Castells (1996, p. 186) claims that ‘it is doubtful that these small enterprises would have been able to compete on the world market without critical strategic support from the state.’ In the context of small-firm networks in Taiwan and Hong Kong, Whitley (1991, p. 20) also highlights the importance of strong state co-ordination to avoid fragmentation of the industrial structure. Even Lam and Clark (1994, p. 428), defenders of ‘guerrilla capitalism’, concede that the role of the state was key with regard to the provision of public goods to the private sector, and policies that guided economy through key structural transformations. ‘In short, the state created, in all probability not entirely intentionally, an excellent “business environment” in which guerrilla capitalism could flourish’ (see also Buck 2000, Castells 1996, pp. 181–182).
Similarly, in the case of China, Hart (2002, p. 199) and Hsing (1996, p. 2242) note the critical role of the state in attracting and facilitating investment from overseas Chinese firms. Seen by some as a quintessential case of cultural networks bypassing the state, the penetration of overseas Chinese networks into southern China were facilitated by much more than cultural ties. In addition to social affinities and guanxi networks, overseas Chinese investors have drawn major benefits from the social investments and redistributive reforms of the Chinese state, and from complex incentives of decentralisation, collective ownership, and social investment which reduces labour costs while ensuring ongoing public investment in schools, health and infrastructure to guarantee a conducive business environment and a skilled and compliant labour force. Hsing also notes the role of the Chinese central state in leaving local governments room to interpret the law as long as results were positive, while reserving the right to close down options if stability or economic goals were threatened (see also Ramo 2004).
What is clear from these accounts is that the success of Asian network capitalism was not about its ability to bypass the state, but about the indirect forms of cultural, material and strategic support provided by the state. While the celebration of the Confucian ethic tends to gloss over the critical role of the state, a closer look at how the Confucian ethic became a rallying point for contemporary global capitalism reveals the invisible hand of state policy. In debates about the relationship between culture and state policy in East Asian development, Tsui-Auch and Yee (2003, p. 527) highlight the need for attention to how policies and institutional mechanisms of the state have shaped micro-organisational and management strategies of economic actors. They argue that ‘state capacities and strategies do matter … we suggest taking into account state capacities and strategies in guiding the market and harnessing cultures and institutions.’
Orientalising success and Africanising failure
The complex work done by Asian states to square the circle of industrial dynamism, intense labour exploitation and social cohesion tends to fade away behind the discourse of the Confucian ethic. What comes into view is a model of industrial organisation based on communal solidarity, trust and state withdrawal, which is believed to give rise to more flexible and efficient economic organisation. The underlying tensions of intense labour exploitation, communal divisions, industrial co-ordination and global competition simply melt away in the aura of the Asian miracle. But the elevation of the Confucian ethic to the new spirit of global capitalism has two problematic consequences for other regions of the world. On the one hand, it conceals the role of the state in making enterprise networks work for development, and on the other, it interprets the absence of competitive enterprise networks as a failure of culture. These twin pressures have fallen hardest on African societies, where the proliferation of culturally embedded economic networks has been associated with poverty and economic marginalisation rather than competitive dynamism despite over two decades of liberalisation and state withdrawal.
Over the past decade, there has been a pervasive tendency to characterise the inability of African economic networks to jump-start development in liberalising economies as a product of cultural dysfunction. In the same work in which he eulogised Asian networks, Manuel Castells (1996, p. 134) refers to African networks as a ‘black hole’ in the network society owing to the divisive effects of ethnic conflict and patrimonial political cultures. Others have expressed frustration at the failure of African social networks to give rise to globally competitive enterprise clusters despite burgeoning informal enterprise networks, suggesting an inability to form the right kinds of networks for development (Fukuyama 1995, Schmitz and Nadvi 1999, Sverrisson 1997). A prolific body of commentators attribute the developmental failures of African networks to parochial divisions and perverse ‘cultural repertoires’ that privilege redistribution over productive accumulation, and opportunism over trust and co-operation (Bayart et al. 1999, Chabal and Daloz 1999, Reno 2000, Roitman 2004). Where the ‘economy of affection’ led to global economic dynamism in Asian societies, in Africa it is associated with conflict, corruption and the dissipation of resource (Hyden 1983). Passing a neo-Weberian verdict of no confidence in African social resources, Jean-Francois Bayart has famously declared that ‘the “social capital” of Africa appears to display a marked affinity with the spirit of criminality’. Just as some scholars of East Asian economic networks have complained about the tendency of the Confucian ethic to ‘orientalise’ economic success, an even more problematic consequence is its propensity to Africanise economic failure (Ong 2002, Greenhalgh 1994, Hart 2002).
More optimistic neo-Weberian analyses have questioned these Afro-pessimist interpretations. Attention has been drawn to the continent's dynamic religious and ethnic trading networks that have expanded as formal economies have contracted. References to the ‘Mouride ethic’ characterise Senegal's dynamic Islamic trading networks (Babou 2002, Malcolmson 1996), while Somalia's active hawala networks have financed hundreds of millions of dollars in global trade and remittances that have kept the economy going for over twenty years after the collapse of the state (Hagmann and Hoehne 2007, Lindley 2009, Little 2003). In Nigeria and Zimbabwe, studies of evangelical Christianity have highlighted the emergence of a Protestant ethic within local business networks that struggle for economic efficiency in the face of corrupt and crumbling states (Macaulay 1986, Marshall 1991, Meagher 2009, Maxwell 1998). Yet even vociferous defenders of the developmental potential of Africa's indigenous business networks have found themselves documenting the unravelling of their developmental capacity in the face of globalisation, radical market reforms and non-performing states. Studies of petty trading networks in Guinea Bissau, transnational trading networks in the two Congos, and my own research on informal manufacturing clusters in Nigeria reveal that relations of trust and co-operation are breaking down under the strain of intense livelihood pressure and state neglect unleashed by liberal market reforms (Lourenco-Lindell 2002, MacGaffey and Bazenguissa-Ganga 2000, Meagher 2010). In place of the social welfare subsidies and nationalisation of risk that underpins the vitality of East Asian business networks, Africa's enterprise networks are beset by the corrosive effects of a ‘fend for yourselves’ approach to social welfare and risk management. This raises questions about why African enterprise networks seem unable to flourish under conditions of liberalisation and globalisation, and invites investigation of whether they could be dynamised by contact with globalising Asian networks.
Flying geese to the rescue?
The penetration of Chinese enterprise networks into Africa offers a perfect opportunity for exploring whether Asian networks could catalyse the developmental capacities of African enterprise networks. Can linkages with globalising Asian networks compensate for the limitations of ethnically divided societies and non-developmental African states? A growing number of scholars have drawn on the ‘flying geese’ model to explore whether linkages with Chinese business networks could remedy African network failures (Brautigam 2003, 2008, 2009, Dobler 2009). Deborah Brautigam (2003, pp. 455–456, 2009, p. 190) suggests that contacts with Chinese networks could help to catalyse an industrial transition in Africa through flows of ‘models, ideas and resources’ from outside the region, encouraging ‘the possibilities for businesses in Africa to form linkages with transnational Chinese networks that enable them to reap some of the synergies of this particular model of capitalism’. The evocative image of flying geese has provided a useful lens for the exploration of globalising enterprise networks, but tends to ignore how the realities of cultural and political embeddedness affects what happens when Chinese networks touch down in Africa. A closer focus on the role of labour and the state in the activities of Chinese business networks in Africa offers a sharper understanding of the processes underpinning networks success and network failure in globalising African economies.
A growing number of commentators suggest that Chinese enterprise networks can help to bridge the gaps in African enterprise development, providing labour discipline and connections to capital and markets to foster a surge of developmental dynamism (Kohnert 2010, Brautigam 2008, 2009, Gu 2009). Brautigam lets the evidence speak for itself, detailing the explosion of Chinese manufacturing investment and joint ventures across Africa, including active garment industries in South Africa, Lesotho, Swaziland, Mauritius and Madagascar, a burgeoning leather industry in Ethiopia, and technical assistance to the legendary auto-parts industry in Nigeria (Brautigam 1997, 2009, pp. 2005ff). Gu (2009, p. 573) corroborates this trend, noting that ‘Chinese enterprises are springing up all over Africa, working across industries such as agriculture, forestry, food processing, fishing, furniture manufacturing, footwear, textiles and garment making, pharmaceuticals and services’. Chinese firms are seen as a ‘catalyzing presence’ generating technological spillovers, access to new skills, entry into Asian-based commodity chains, and a more competitive business environment, offering African entrepreneurs new opportunities for ‘learning from Asia's giants, the flying geese that are now touching down in flocks across Africa’ (Brautigam 2009, p. 231).
The developmental strength of Chinese networks is located in their capacity to free African manufacturing from its embeddedness in weak investment regimes and poor labour quality. Chinese labour discipline is seen as the solution to a weak working culture of African labour, characterised by poor skills, numerous ceremonies, and unrealistic wage expectations, which constitute a serious constraint on competitiveness (Brautigam 2009, Gu 2009, Lall 2005). Noting that labour costs in South African garment firms are twice as high as in the garment export region of Shenzhen in China despite lower productivity, Brautigam (2009, p. 200) hints at the importance of wage restraint as a stimulus to industrial growth, suggesting that economic gains would come ‘not by sharply raising wages for existing factory workers but through labour intensive industrialisation, attracting rural migrant workers with wage rates higher than the informal sector, but still affordable for industries facing global competition’. In the short run, these problems encourage Chinese firms to bring their own labour, and tend to concentrate African labour in less-skilled positions, but the impression is given that these are transitional difficulties.
Chinese networks are also credited with ability to kick-start the kind of growth-inducing investment regime that African states have so far failed to provide. Brautigam (2009, p. 195) suggests that Chinese networks bring with them the financial and institutional support of the Chinese developmental state, including state-sponsored information on investment opportunities in Africa, credit and a range of other investment incentives offered through China's ‘going out’ strategy. By contrast, Gu (2009, p. 573) observes that approximately 85% of Chinese enterprises in Africa are private small- and medium-scale industries operating without meaningful state support. Pointing to a significant gap between Chinese government support and the needs of private Chinese small and medium enterprises (SMEs), he maintains that that ‘contrary to the conventional wisdom on Chinese FDI [foreign direct investment] in Africa, private investment was emphatically market driven’ (Gu 2009, p. 582). The contribution of Chinese firms seems to lie in their ability to make developmental rather than cliental demands on African states and international NGOs to catalyse a more conducive investment regime for the development of manufacturing. Either way, Chinese networks appear to catalyse development by disembedding African manufacturing from disadvantageous social and political cultures. In addition to the Confucian ethic, both Brautigam and Gu suggest that Chinese business networks bring increased pressures for improved infrastructure, a stable macro-policy environment, and deregulated import and labour regimes – a policy package that seems to have more in common with neoliberalism than with the East Asian developmental states that spawned them.
Contrasting interpretations highlight the more complex environment of ‘mixed embeddedness’ affecting Chinese networks in Africa, which has been a source of conflict as well as growth. Focusing on Taiwanese industrial networks in South Africa, Gillian Hart takes issue with the very premise that enterprise networks can just ‘fly in from elsewhere’ to catalyse development. Globalised Asian business networks are not autonomous forces touching down on passive African landscapes, but are shaped by the social and economic forces in which they operate, in Africa as in Asia, driving distinctive processes of globalisation in each new environment. In contrast to the East Asian histories of constructive cultural mobilisation, land redistribution, social welfare subsidies, and the nationalisation of risk, Hart highlights the South African legacies of cultural alienation, agrarian dispossession, and economic liberalisation to explain why efforts to transplant Asian network capitalism into Africa soil have led to labour conflicts. ‘[T]hat relatively labour-intensive Taiwanese – and more recently mainland Chinese – forms of production explode when grafted onto South African conditions derives at least in part from the troubled histories of dispossession that have produced severely eroded social wages for the majority of South Africans’ (Hart 2002, p. 303).
In much of the rest of Africa, the lack of a social wage is more directly linked to economic restructuring, which stripped away the benefits of free education and health and eroded infrastructure, making the cost of living of African workers significantly higher than in many parts of East Asia. In this context, the low wages and harsh labour discipline of Chinese firms, devoid of the cultural strategies mobilised by co-ethnic employers to soften the edges of economic hardship, is experienced as abusive rather than developmental. Indeed, Hart notes that new generations of South African-born Chinese industrialists have begun to emulate the paternalistic labour relations of African employers, allowing absences for ceremonies and assisting workers in times of illness, in order to improve relations with their African workers.
In terms of the relations between business networks and the state as well, there is growing evidence that operating in Africa is leading Chinese networks to behave more like African networks rather than the other way around. Earlier waves of Chinese investors in Africa during the 1960s to 1980s enjoyed a supportive relationship with host states, including tax exemptions, easy access to land, and a welcoming administrative environment (Hart 2002, Ho 2008, Kohnert 2010). More recent successful Chinese investors behind the growth of textile industries in Southern Africa also enjoyed a range of infrastructural provision and regulatory and tax exemptions (Hart 2002, Lall 2005). For smaller private firms spreading into other parts of Africa, however, the ‘context of reception’ has become less supportive since the turn of the twenty-first century, leading to corresponding changes in the nature of Chinese business networks. Studies from Namibia and Ghana have highlighted a trend toward greater involvement of Chinese businesses in irregular activities, such as illegal foreign exchange transactions, work permit fraud, violation of retailing restrictions, and bribing state officials (Ho 2008, Dobler 2009, Liu 2010). In his illuminating account of Chinese traders in Namibia, Gregor Dobler (2009) finds that Chinese manufacturing investment is often a front for trade, signalling a shift in investment toward trade and real estate rather than manufacturing, reminiscent of criticisms of African investment patterns. The problem, according to Dobler (2009, pp. 725–726), is not the recalcitrance of Chinese investors, but the unfavourable investment environment created by global competition in weaker developing economies.
A less congenial investment environment in African countries, combined with more limited linkages with the Chinese state appears to be contributing to increased fragmentation of Chinese business networks in Africa. As Mohan and Tan-Mullins (2009, p. 595) explain, ‘in addition to these state-backed migrants are petty entrepreneurs who largely operate in trade, services and light manufacturing … these entrepreneurs operate independently of Chinese state agendas even though the misguided western notion of “China Inc.” suggests otherwise’. In this less conducive context, Dobler (2009) notes considerable communal fragmentation within the Chinese business community in Namibia, accompanied by exploitative relations between older and newer generations of migrants. Similarly, Ho (2008) argues that relations within Chinese business networks in Ghana are increasingly marked by suspicion and distrust owing to communal divisions and a transient attitude among contemporary Chinese migrants. Mohan and Tan-Mullins rightly draw attention to the varied developmental impacts of Chinese enterprise networks in different African countries, but beneath these variations is a trend toward a declining developmental capacity in the context of cultural friction in labour relations and decreased support from the Chinese as well as African states. Without the forms of state support that turn culture into synergistic engagement with the global economy, the Confucian ethic begins to look more like neoliberalism, and Chinese networks begin to look more like African networks. Instead of bringing development on the wings of flying geese, Chinese business networks seem to be moving into Africa more like birds of prey.
Conclusion: constraining Godzilla
A century after the publication of the Protestant ethic and the spirit of capitalism, Weberian ideas still have a lot to teach us about the development of capitalism. The discourse of the Confucian ethic has opened up fascinating debates about the role of culture in global network capitalism, but it has also concealed as much as it has revealed. In this paper, I have added my voice to Asianist as well as Africanist scholars who emphasise the need to understand the spirit of contemporary capitalism in political economic as well as cultural terms. While some have drawn attention to the role of the state in the productive mobilisation of culture, others have emphasised the need to foreground the presence or absence of redistributive and risk-sharing mechanisms through which global imperatives of cheap labour are squared with social imperatives of labour reproduction (Tsui-Auch and Yee 2003, Hart 2002, Whitley 1999).1
The central argument here is that the delicate balancing act of efficiency and legitimacy is not a product of path-dependent cultural logics and liberalised markets, but of active state intervention to preserve and buttress enterprise networks in the face of ruthless global competition. The tendency in the contemporary ideology of global capitalism to gloss over these realities risks turning the Confucian ethic into a destructive rather than a creative force as cultural mobilisation becomes detached from policy contexts and material realities. While the states involved in the East Asian miracle focused on harnessing informal values and institutions for national development, contemporary development discourse seems more focused on instrumentalising them while downgrading the infrastructural and social provisioning that underpins their dynamic possibilities.
The experience of Chinese business networks in Africa highlights the contradictions of culturalist strategies without appropriate state support. Far from transmitting the spirit of global capitalism to Africa via a ‘flying geese’ model, Chinese enterprises seem to be sliding into the patterns of networks fragmentation and patrimonial strategies that have plagued African business networks. The developmental potential of both Chinese and African enterprise networks cannot be understood in abstraction from their relationship with the state, which can support and guide cultural ethics to unleash a new spirit of capitalism, or instrumentalise and erode them in the spirit of neoliberalism. Amid the growing focus on the ways in which culture shapes development, Susan Greenhalgh (1994, p. 769) reminds us of the need to be ‘more knowledgeable about the global politics and economic developments that penetrate the most intimate domains of social life, reorganise gender relations and rejuvenate cultural traditions in unexpected ways; and more attentive to the political implications of our work in a new and more complicated world order in which an argument that may appear to be emancipatory may turn out to be just the opposite.’
Note on contributor
Kate Meagher is a Lecturer in Development Studies at the Department of International Development, London School of Economics. She has published widely on various aspects of African informal economies, including Identity economics: social networks and the informal economy in Nigeria, James Currey, 2010. Current research interests include informal institutions, hybrid governance, religion and economic informality, and the politics of informality.