The neo‐authoritarian dilemma and the labor force: Control and bankruptcy vs freedom and instability

Neo‐authoritarian leaders confront one of their greatest dilemmas when attempting to decide what to do about China's non‐agricultural labor force. Should leaders continue to maintain short‐term order and stability by providing comparatively comfortable employment and benefits to a state‐sponsored workforce, even as two‐thirds of all state enterprises are experiencing financial difficulties and central government deficits are rising? Or should they permit the development of a free market for labor, even though the full implications of a free market — hundreds of millions of surplus rural laborers flooding the cities, tens of millions of surplus urban laborers laid off — are so destabilizing that they are difficult to contemplate? This article discusses the extent to which a neo‐authoritarian program to reform the labor market has succeeded in practice, and it assesses the destabilizing effects of the program. Specifically, it outlines the goals of neo‐authoritarians as they struggle to reform the labor market; the daunting problems that they confront in this struggle; and their limited successes to date. Despite some successful reforms, the article concludes that ‘the neo‐authoritarian dilemma’ with respect to the labor force — stability vs economic modernization — has not been solved.