Law, Chinese Style: Solving the Authoritarian’s Legal Dilemma Through the Private Provision of Law
Abstract: How do authoritarian states build the legal infrastructure (e.g. property rights, contract enforcement, and the rule of law) necessary to support efficient markets? The market legal infrastructure is often weak due to an “authoritarian’s legal dilemma.” Autocrats avoid creating an independent judiciary strong enough to supply private law (e.g., property rights, contract enforcement), because the same judiciary cannot credibly commit to not strengthening public law (e.g., citizen rights, constitution). We argue that China has devised a novel solution to this dilemma: by partially outsourcing the provision of private law to key private actors. In China’s 500-million-user e-commerce market, online trading platforms such as Taobao have privately supplied strong legal infrastructure to enforce contracts, prevent fraud, and settle disputes. These platforms not only enforce law but also help to reform formal legal institutions through rule experiments. This new route to legal development is politically viable and potentially generalizable to other developing countries.
