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of the strongest and clearest evidence for learning in thestudy. When the control variables are included in the model,emulation again emerges as significant, and regional effectsappear for the Latin America subsample. For policies sur-rounding capital account liberalization, the learning effectsare less marked. Only the average results from the world

appear to have a consistent effect on adopting and sustain-ing the removal of capital controls. Emulation and thepossibly coercive effects of IMF agreements again are sig-nificant. Finally, Meseguer considers the effects of learn-ing on decisions to enter into an IMF agreement, with allthe conditions that decision imposes on the state. Theseconditions include some of the polices already investi-gated, but the author looks at this decision separately todetermine if the IMF programs have costs other than thepolicies they prescribe (p. 182). While there is some evi-dence of learning from world experience on the decisionto enter into an IMF agreement, the record for growth

under such agreements is relatively poor, and other domes-tic political and economic variables, including emulation,recent elections, and low reserves, were stronger influences.

Overall, Meseguer highlights the importance of learn-ing from other countries in the world, not only, or insome cases instead of, learning from ones own experienceor regional models. Regional influences were strong forthe only real policy innovation considered, privatization.These are valuable findings that address persistent debatesabout the sources of market-oriented reform policies. Theunevenness of the record for learning lends credibility tothe analysis and gives us confidence in the authors abilityto distinguish learning from nonlearning. Also consis-tently important in accounting for the policy choices, how-ever, was emulation. She interprets this as indicating thatemulation and learning are not exclusive phenomena(p. 222) and can occur together.

While Meseguer distinguishes learning and emulationconceptually, they may become confounded in the analy-sis, however, especially as learning from world growth aver-ages could generate the appearance of herding. Thisillustrates a persistent problem with learning analyses: dis-tinguishing learning from other forms of change that donot depend on new causal inferences and cognitive change.Other issues, of which Meseguer is well aware, include

focusing only on economic growth to predict policychanges. Political motivations may be equally important,but finding a reasonable metric for that motive has beendifficult. Treating the policies, most of which actuallyinvolve multiple programmatic elements with diverserecords and supporters, as single choices may result in theappearance of more policy convergence than actually exists.Similarly, the diversity of actors and viewpoints raises ques-tions about who is actually learning.

Although these problems are not completely laid torest, the fact that even some rational learning can be shownto occur makes Learning, Policy Making, and Market

Reformsa valuable contribution both substantively andmethodologically to the growing focus on policy and gov-ernment learning. The detailed literature reviews of thecontroversies surrounding the policies and the mini casestudies of the adoption of some of them make the bookengaging and appropriate for students of political economy.

The Closed Commercial State: Perpetual Peace and

Commercial Society from Rousseau to Fichte. By Isaac

Nakhimovsky. Princeton: Princeton University Press, 2011. 203p.

$35.00.doi:10.1017/S1537592712003416

Jennifer Pitts,University of Chicago

Isaac Nakhimovskys book admirably combines a tightfocus on a neglected text, Johann Gottlieb Fichtes TheClosed Commercial State(1800), with wide-ranging atten-tion to that works many important intellectual contexts,

including eighteenth-century debates on individual rights,perpetual peace, republican constitutions, political econ-omy, industrialization, and global commerce, as well asnineteenth- and twentieth-century legacies. The result isa fascinating and always judicious account of a world ofargument over whether and how European states couldpursue economic vitality without destroying themselvesand the rest of the world in the process.

Fichtes strongly Rousseauian diagnosis of the crisis ofmodern Europe was shrewd and penetrating. Hissolutionradical economic isolationism, national self-sufficiency, and an end to global commercewas largelydismissed by readers at the time and has been seen since asan unworkable invitation to state tyranny, nostalgicSpartanism, or fascism. Nakhimovsky, by restoring Fich-tes thought convincingly to its sources and contexts in thethought of Hobbes, Fnelon, Rousseau, Kant, and Sieys,among others, renders it far more compelling, even as heacknowledges the ambiguity of Fichtes politics (p. 126).He shows Fichtes fundamental aim to have been to finda way to heal the corrosive ugliness of commercial society

without sacrificing its unprecedented dynamism and eman-cipatory potential (p. 156). Fichte, unusual for his time,hewed to a radical egalitarianism resolutely based in acommitment to individual rights, rather than in the beliefs

in natural sociability or in the priority of the collectiveover the individual more common among later socialists.

As Nakhimovsky observes, Fichte has long been knownto the English-speaking world primarily as an apostle ofGerman nationalism (p. 3), thanks to later nineteenth-century distortions of hisAddresses to the German Nation.HisClosed Commercial Statehas until now been availablein English only in excerpts, but a complete translation by

Anthony Adler has just been published (2012). A widerreevaluation of his thought is long overdue; Nakhi-movskys lucid and engaging book is an invaluable contri-bution to that project, as well as to the broader study of

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a timely and well-judged intervention as we continue towrestle with the violence and accelerating inequalities thatseem inextricably bound to global commerce.

Capitalism from Below: Markets and Institutional

Change in China. By Victor Nee and Sonja Opper. Cambridge, MA:

Harvard University Press, 2012. 456p. $45.00.doi:10.1017/S1537592712003428

Andrew Wedeman,Georgia State University

In their book, Victor Nee and Sonja Opper examine theemergence and growth of Chinas private sector. Formallyeliminated in the 1950s with the socialization of the econ-omy, Chinas private sector was reborn in the early 1980sas black-market speculators moved into the abovegroundeconomy and workers and peasant-farmers opted to becomeentrepreneurs. Initially limited to the employment of nomore than eight family members, private firms rapidly

proliferated. According to the authors, by 2008 Chinasprivate sector included 5.5 million registered firms employ-ing 100 million people, twice as many as then employedby state-owned enterprises. In recent years, private firmshave accounted for over 40% of industrial output, 40% ofindustrial profits, and close to half of total industrialemployment. In all, the private sector now accounts for70% of GDP. Given that it started at zero, the rapid devel-opment and growth of the private sector has, in fact, beenone of the single most important dynamics in the Chi-nese Economic Miracle.

As Nee and Opper correctly argue, it is not simply themagnitude of its growth that calls for explanation; it isalso the fact that the private sector grew remarkably inspite of the governments best efforts to limit private eco-nomic activity and to protect the state-owned sector.

Would-be entrepreneurs faced a long uphill fight against ahostile regulatory system that sought to limit the privatesector to small, family businesses; denied the private sec-tor secure legal and property rights; shut private compa-nies out of the formal banking system, and often allowedlocal governments to treat private businesses as easily milkedcash cows. In the face of such adversity, proto-entrepreneursturned away from the state and its formal legal policybased regulatory system. Instead of relying on the state

and legal mechanisms to solve problems of interfirm coop-eration, they devised a system based on social norms andintense interaction in which an individuals reputation wasthe gold star and deals were sealed with a handshake ratherthan a formal contract. Those who welched on a deal orcheated became pariahs, and word of their untrustworthi-ness spread quickly. Funds were raised from relatives orfrom downstream and upstream partner companies.Knowledge about markets, production technologies, andmanagement techniques were spread by word of mouthby businessmen seeking to help other would-be entrepre-neurs set up new businesses. In short, as the books title

suggests, it was private businessmen who built Chinasprivate sector, and, by extension, it was their pluck and

willingness to work outside of the states control that pro-duced Chinas miraculous growth.

To a large extent, Nee and Oppers description of theworkings of the private sector in China dovetail with pre-

vious works by authors such as Susan Whiting and KelleeTsai. Nee and Oppers data are particularly rich. They basetheir description of the emergence, growth, and operationof the private sector on a sophisticated survey methodol-ogy that yielded information on more than 700 privatebusinesses in seven cities in the Jiangnan region, including

Wenzhou, Hangzhou, Shanghai, and Nanjing. The authorsdraw on this data to provide not only statistical supportfor their assertions about the private sector but also livelyand often fascinating firsthand accounts of the challengesfaced by would-be entrepreneurs: how they dealt withadversity, how they overcame obstacles, and how they inter-

acted with other private businesses, state-owned firms, thestate, and their own employees. The authors are thus ableto answer a number of key questions about the privatesector. For example, they reveal that, in general, privatefirms try to avoid interaction with the state sector; thatin many cases firms spawn new firms as employees learnbusiness skills and opt to set up their own companies;that when this occurs, existing firms often nurture andencourage spun-off firms, even though they are potentialcompetitors; and that firms engaged in similar lines ofproduction often co-locate because this allows them torealize efficiencies in both subcontracting and down-stream processing and production.

Capitalism from Belowis not without shortcomings, how-ever. In particular, it appears to paint a rather rosy pictureof Chinas private entrepreneurs. In Nee and Oppersaccount, businessmen and women are upright, honest,and hardworking; they rely on their reputations for deliv-ering goods and services on time and at reasonable prices,and they stand behind their products to achieve the sortsof interfirm cooperation that in most market economies isbackstopped by a legal system and enforceable contracts.Like Elinor Ostrom, Nee and Opper reject Mancur Olsonsprediction that the collective-action problem can be over-come only by the creation of a Leviathan empowered to

penalize free riding in favor of a social-networking modelthat posits that dense interaction allows individuals todetect potential free riders and use tit-for-tat strategies tosustain mutually beneficial cooperation.

While Chinas private sector may rest on a foundationof reputation, trust, and social networks, rather than on astrong legal framework, the notion that it is populated byupright and honest individuals seems hard to accept, giventhe rough and tumble nature of business in China. Itseems difficult, for example, to reconcile Nee and Oppersaccount with the many examples of product adulteration,scams, forced demolitions, and so on unless one is willing

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