The Advantages of Ambiguity? Development, Rule Formation and Property Rights During Transition in China

Abstract

Legally protected individual private property rights and a constrained state are doctrines of neoclassical economics-derived development theory. But what about China? It lacks strong rule of law, property rights can be collective, contested and ambiguous, and the state is relatively unconstrained and maintains a central role in the economy; yet it has seen impressive economic growth to take it to the world’s second largest economy. I argue that in the absence of legal/rational protections of individual property rights, political and social networks can provide alternative methods of property protection, allowing for economic development – with political protection substituting for legal. The novel claim I make is that ambiguity of property rights can provide opportunities and spaces for development and innovation, with the building of meaning and institutions found in a transitional state, where rules are unclear and contested, and where formal rules can “catch up” if apparent success can be demonstrated.