Guerrilla Capitalism: Revolutionary Legacy, Political Cleavage, and the Preservation of the Private Economy in Zhejiang

Abstract

In this article, we propose a causal relationship between a region's communist revolutionary legacy before 1949 and the variation in private sector development after 1949. In the case of Zhejiang, the pre-1949 revolutionary experience led to the power struggle between two elite groups, the guerrilla cadre group and the southbound cadre group, in the province after 1949. As the weak side, guerrilla cadres were willing to protect local economic interests in exchange for local popular support, which improved their odds of political survival. As a result, in contrast with counties where the guerrilla forces were historically weak, counties with strong guerrilla forces before 1949 saw significantly more robust private sector development throughout much of the Mao and post-Mao periods. In this article we provide preliminary historical and statistical evidence to support this hypothesis.