This dissertation provides a distinct class-based explanation of China’s transition from socialism to capitalism. Its overarching argument is that the way in which urban industrial workers – ideologically and rhetorically celebrated as the “leading class” of Chinese socialism – interacted with the Party-state in the late 1970s and throughout the 1980s was a crucial causal ingredient in the making of China’s transition to capitalism. More specifically, this dissertation argues that the patterns and modes of interaction between workers and the Party-state during this period shaped and derailed the Party leaders’ efforts to pursue incipient marketization within the parameters of socialism (i.e. to build “market socialism” in China). Whereas the post-Mao Party leadership turned to market socialism as a way out of the profound crisis of the late 1970s, the patterns and modes of interaction between urban industrial workers and the Party-state set off one crisis after another throughout the 1980s. China’s market socialism collapsed within a decade under the strain of these intensifying crisis cycles. It was only in the context of such derailment of China’s market socialism did a full-blown transition to capitalism become an appealing option for the ruling elite, which they relentlessly pursued in the 1990s.

Based on a wide range of historical source materials, I explicate this argument by tracing a series of political contestations and policy maneuvers centered on the issue of workplace democracy, along with their economic and political aftermaths, over China’s “long 1980s” (the period between the end of the Mao era in 1976 and the pro-democracy movements in 1989). These contestations and maneuvers played a pivotal role in shaping not only the trajectory of China’s enterprise reform, but also the fate of China’s socialist political economy more broadly.