Interstitial Emergence and the Making of Capitalism: The Thriving of Private Enterprises in China's Education and Training Industry

This paper investigates China’s private economy and focuses on its origins—forms of precursor organizations that later became private by retaining their previous private enterprise status or transforming from other ownership forms. Drawing on China’s education and training industry (ETI) and education and training organizations (ETOs) as de facto economic, private and for-profit enterprises, I show that the list of origins identified by the extant literature—state owned enterprises, indigenous private enterprises and hybrid enterprises—is incomplete. I argue that we need a theoretical tool of ‘interstitial emergence’ to systematically capture a general type of origin that grows from the interstices, boundaries and peripheries. I propose that interstitial emergence can occur along three major dimensions and that the education and training organizations present a special case sitting on all three dimensions. Extant studies on the size and contributions of China’s private economy, due to their negligence in covering all dimensions and industries such as the ETI, are all understatements. I further explain three interrelated puzzles regarding China's private economy and interstitial emergence: a) why does interstitial emergence often breed more vibrant capitalist economy than institutionalization does? b) Why do Chinese private enterprises tend to benefit more than their state counterparts do from interstitial emergence? c) Why is China and especially the ETI a place where interstitial emergence plays a significant role and, more generally, under what social circumstances does interstitial emergence matter?  I conclude by discussing the limited role of institutions, the non-rural nature of China’s private economy and other methodological implications.