Economics, Law and Policy ISSN 2576-2060 (Print) ISSN 2576-2052 (Online) Vol. 7, No. 1, 2024 www.scholink.org/ojs/index.php/elp 154 Original Paper Embedded Governance Perspective on the Theoretical Development and Evolution of Minority Village Regulations Chen Yaolu 1 1 School of Management and Economics, Guangxi Normal University, Guilin, China Received: April 17, 2024 Accepted: May 31, 2024 Online Published: June 7, 2024 doi:10.22158/elp.v7n1p154 URL: http://dx.doi.org/10.22158/elp.v7n1p154 Abstract Village regulations, as an informal institution, can only function when embedded in specific social networks. In traditional times, village regulations were endogenous, embedded in the “cultural governance network” of traditional rural society, forming an important part of the rural governance system. Since modern times, especially since the founding of the People’s Republic of China, the “cultural governance network” supported by Confucian ethics, gentry, and clans has been replaced by an “organizational integration network” supported by modern state power, administration, institutions, and modern culture. The current village regulations are constructed by modern state forces and are detached from the current rural social network, thus their role in rural governance is limited. As an important form of “three-governance” integration in grassroots governance, village regulations need to be adjusted according to rural social networks to play their expected governance functions, activate autonomy to cultivate endogenous subjects, practice moral governance to revitalize the cultural foundation, and promote rule of law to optimize the state’s presence. Keywords village regulations, institutional evolution, embedded governance 1. Introduction In recent years, the state has increasingly valued the role of millennium village regulations in rural governance. On December 27, 2018, the Ministry of Civil Affairs and other departments jointly issued the “Guiding Opinions on the Work of Village Regulations and Residents’ Conventions”, requiring that “by 2020, all villages across the country should formulate or revise practical and useful village regulations”. This represents the state’s use of administrative power to promote village regulations. As an important component of the villager autonomy system, village regulations are seen as codes of conduct for regulating rural life, as well as important means for maintaining rural social order, www.scholink.org/ojs/index.php/elp Economics, Law and Policy Vol. 7, No. 1, 2024 Published by SCHOLINK INC. 155 protecting villagers’ autonomy rights, and revitalizing rural culture. In traditional Chinese rural society, there was a “dual-track politics”: on one hand, the top-down imperial power, and on the other, the bottom-up gentry power and clan power. These operated in parallel, interacting to form a rural governance model where the emperor ruled without direct intervention (Gao, 2013, pp. 133-136) and local governance relied on clans and gentry, which in turn relied on ethics (Qu, 2005, pp. 20-22). “Ethics” was the foundation of traditional Chinese governance, and village regulations, as a concrete manifestation of “ethics”, played an important role in traditional rural governance. However, since modern times, especially since the founding of the People’s Republic of China, rural society has undergone several profound transformations, dismantling the traditional relational networks and social structures. The cultural and institutional foundations that village regulations relied on no longer exist, and the traditional rural governance system has ceased to function. Therefore, to what extent can the current top-down state-promoted village regulations play a governance role? What are the conditions for their effective governance? 2. Literature Review 2.1 Research on Minority Village Regulations in Yunnan, Guangxi, and Guizhou Village regulations are one of the tools for effective rural governance in China, functioning to educate the people, stabilize order, manage public affairs, and supplement the deficiencies of formal institutions like state laws (Dang, Liu & Mo, 2022, pp. 117-129, p. 141). In areas with multiple ethnic groups, traditional village regulations might have different evolutionary paths compared to Han-dominated regions and follow an independent evolution logic. Since the 1990s, scholars have increasingly focused on village regulations of ethnic minorities in Yunnan, Guangxi, and Guizhou. Many scholars have made pioneering contributions to the study of these regulations, viewing them as concrete manifestations of the spiritual civilization requirements of different eras (Ma, 2016, pp. 36-45). Some studies have highlighted the deficiencies and limitations of minority village regulations, while others have examined their historical evolution and continued importance in modern society (Chen & Chen, 1992, pp. 80-86). These studies provide new research directions for subsequent academic work on village regulations. Since the formation of minority village regulations in Yunnan, Guangxi, and Guizhou, they have not only embodied minority cultures but also responded to the shortcomings of formal institutions (Duan, 2011, pp. 21-25). Domestic scholars have examined how traditional cultures and morals act as endogenous variables in the creation of minority village regulations and have studied the relationship between official organizations, state laws, and the evolution of these regulations (Yang & Zhao, 2005, pp. 63-66). Existing research mainly focuses on the connotations, historical evolution, nature, characteristics, types, functions, forms, textual structures, main contents, effectiveness basis, and sources of authority of village regulations (Zhou & Liu, 2013, pp. 65-70). Some scholars have also explored the coordination www.scholink.org/ojs/index.php/elp Economics, Law and Policy Vol. 7, No. 1, 2024 Published by SCHOLINK INC. 156 and integration between village regulations and state laws from the perspective of national governance. Specific issues studied include conflicts between minority customary laws and state laws and how these two can interact constructively (Xu, 2009, pp. 13-19). Scholars have also investigated the cultural characteristics and values of customary laws in ethnic regions based on historical evidence (An, 2013, pp. 8-11). 2.2 Interdisciplinary Perspectives on Village Regulations The historical origins of village regulations can be traced back to the Zhou dynasty’s “codes of law (Zhou & Liu, 2017, pp. 126-134)”. Essentially, they are customary laws of rural society, independent of state laws, based on social authority and organizations, and possessing a certain degree of enforceability (Hao & Zhong, 2014, pp. 75-80). The unique natural ecology and social environment have nurtured multiple overlapping governance structures, ethical content, and distinctive social customs and regulations. Village regulations, also known as village conventions, have evolved from theoretical constructs to social practices. They are a cultural phenomenon involving knowledge from various disciplines, including history, law, and ethics, reflecting their interdisciplinary nature (Chen & Yao, 2019, pp. 90-99). From a historical perspective, scholars have traced the origins and development of village regulations, discussing their significant value in promoting rural governance, village integration, and social reforms in modern legal society. From a legal perspective, studies have examined the legal challenges of village regulations in minority areas and the constructive interaction between village regulations and state laws. From an ethical perspective, village regulations have strong ethical implications, with traditional ethics and customs becoming important criteria for regulating villagers’ daily lives and evaluating social behavior. 2.3 Research on Minority Customs Village regulations are typical informal institutional norms, reflecting the connotations and colors of customs, habits, and morals. They are products of specific regions, groups, and cultures, and are unique norms and principles of rural society (Gao, 2018, pp. 56-64). Customs are social norms, independent of state laws, emphasizing social ethics and behavioral norms, existing in actual life, originating from practice, and applied to practice. In the process of ethnic formation, religious rituals and customs dominate social life, maintaining and controlling the survival and development of the ethnic group (Wang, Y. & Wang, W., 2015, pp. 100-103). Minority groups, often residing in unique natural environments such as mountains, forests, and valleys with isolated transportation and limited external contact, retain natural worship and traditional customs that influence their village regulations (Zhang, 2004, pp. 51-57). Belief is the foundation and base of village regulations, which are rooted in local beliefs and cannot transcend or violate them. Village regulations first aim to maintain the stability and authority of beliefs (Xu, X. & Xu, B., 2019, pp. 90-99). Informal institutions combine with specific regional and cultural environments to unify and standardize basic thoughts and behaviors, guiding minority people’s www.scholink.org/ojs/index.php/elp Economics, Law and Policy Vol. 7, No. 1, 2024 Published by SCHOLINK INC. 157 thoughts and actions within the advocated management track (Zhou & Liu, 2014, pp. 21-27, p. 110). Shared cultural foundations and the organization and advocacy of clans and leaders form a unified ideology and belief system, relying on villagers’ will and internal constraints of universal compliance, solving the problem of shared beliefs with low educational costs for enforcement (Liang, 1999, p. 60). Compliance with these beliefs and customs ensures orderly social structure within ethnic communities (Gao, 2013, pp. 133-136). These points of focus are both important influencing factors in the evolution of village regulations and the objective objects influenced by village regulations. As material carriers of informal institutions, village regulations involve the participation of different subjects in their evolution, shaping their current cultural characteristics and connotations. Therefore, analyzing village regulations based on existing theoretical foundations helps understand the evolutionary mechanisms of village regulations in Yunnan, Guangxi, and Guizhou minority villages and addresses the current challenges of detachment from traditional social networks. 3. Analytical Perspective: Matching Informal Institutions with Social Network 3.1 Research on Embedded Governance The term “embedding” originally refers to the organic combination of one system with another, or an endogenous phenomenon within other objects. Polanyi first proposed the concept of embeddedness, constructing the theoretical proposition that “economic actions are embedded in relational networks”. Later, Granovetter proposed a new theory of embeddedness, but their interpretations and theoretical perspectives differed. While both viewed humans as social beings whose actions are constrained by social, economic, political, and cultural factors, Polanyi emphasized the relationship between individual behavior and social structure, highlighting the importance of social relations in economic actions—a substantive embeddedness. Granovetter advocated a “formal embeddedness”, where markets and actors are influenced by social relations and are part of these relations. Granovetter further divided embeddedness into relational embeddedness and structural embeddedness. Relational embeddedness refers to the embedding of actors’ behaviors in the social networks of interactions with others, where expectations of regularity, desire for approval, and reciprocity principles significantly influence decision-making. Structural embeddedness refers to the connections between the network in which the actors are embedded and other networks, driven by social factors such as culture and values. The interaction and trust generated among economic actors limit opportunism and ensure smooth transactions. Subsequent researchers, while criticizing and developing Polanyi and Granovetter’s theories, have not surpassed them. Andersson expanded embeddedness to include business and technical embeddedness through network analysis of multinational companies’ value chains and internal operations. Halinen explained embeddedness in terms of time, space, society, politics, market, and technology. Scholars later advanced the discussion of embeddedness to hierarchical structures. Jessop viewed embeddedness www.scholink.org/ojs/index.php/elp Economics, Law and Policy Vol. 7, No. 1, 2024 Published by SCHOLINK INC. 158 as including social embedding of interpersonal relationships, institutional embedding between organizations, and social embedding of complex centrifugal social functions’ institutional orders (Zhang, 2006, pp. 169-175). Hagedoorn classified embeddedness into environmental embeddedness, organizational embeddedness, and bilateral embeddedness based on the characteristics of enterprise embedding and external environment. Based on Granovetter’s embeddedness theory, many management researchers adopted the theory to analyze organizational performance (Chen, 2019, pp. 80-90). As the embeddedness theory was continuously refined, it generated different theoretical frameworks for various analytical purposes. Granovetter classified embeddedness into structural and relational embeddedness, while Zukin and DiMaggio identified four types: (1): Cognitive embeddedness, where culture and shared knowledge shape actions; (2): Cultural embeddedness, where individual action norms align with community actions; (3): Political embeddedness, concerning relations with political entities; (4): Structural embeddedness, referring to social relations’ impacts. The concept of “embedded governance” is widely applied in rural governance studies (Chi, 2017, pp. 78-82). Within this field, there is a substantial body of research on the “embeddedness” of government power and endogenous rural order. These studies primarily address two issues: the distinction between state power and endogenous rural order (informal institutions) in terms of embeddedness, and the “mutual embedding” of endogenous order and state power. In general, embedded governance refers to the integration of state or governmental power into grassroots society within the overall framework of national governance (Dang, Liu & Mo, 2022, pp. 117-129, p. 141). This effective political strategy aims to integrate various social resources to achieve effective state governance over grassroots society. To achieve effective rural governance, it is necessary to consider the normative guiding role of formal institutions, as well as the indispensable role of informal institutions, such as village regulations and customs, in rural governance. From the above, it is evident that the academic community has developed a deep understanding of the concept of embeddedness (Duan, 2011, pp. 21-25). The boundaries of its connotation have expanded beyond the original concept, and its meaning has become increasingly generalized. From the diverse explanations, it is clear that “embeddedness” remains a core concept. Almost all theoretical propositions can be judged based on the idea that the economy is always embedded in society, and economic actions are merely a subset of social actions. In other words, economic activities are shaped and constrained by interpersonal networks, hierarchical organizations, cultural beliefs, and economic ideologies. Without these “social factors”, economic activities would be impossible. www.scholink.org/ojs/index.php/elp Economics, Law and Policy Vol. 7, No. 1, 2024 Published by SCHOLINK INC. 159 4. General Theory of Institutions and Their Evolution Institutional evolution is a complex process. Since Adam Smith, the importance of institutions to human economic and social activities has been widely acknowledged in the field of economics. Many economists have been exploring theories of institutional evolution, presenting a diverse landscape of research from different perspectives. How do institutions evolve? Mainstream economics often employs the concept of “institutional change”. Mainstream theories of institutional change suggest that when factors such as production technology, the relative prices of resources, exogenous transaction costs, and institutional choice sets change, people demand new institutional services (Fang, 2002, pp. 58-60). This disrupts the original institutional equilibrium, leading to institutional imbalance and creating opportunities for new institutional arrangements. If the transaction costs of institutional change are not prohibitively high, the change can occur, potentially altering the entire economic structure (Dong Zhiqiang, 2008). Research on institutional evolution in institutional economics has yielded valuable insights, focusing on several aspects: 1) Modes and Paths of Institutional Change: North (1994, 2013) established a theoretical framework for analyzing “institutional change”, transitioning from a static to a dynamic perspective. This framework integrates property rights, state theory, and philosophical ideologies as core foundations of institutional change, addressing the shortcomings of neoclassical economics in explaining historical economic performance and providing a solid theoretical basis for subsequent research. 2) Game Theory in Institutional Analysis: Aoki (2001) introduced evolutionary game theory to institutional analysis, defining institutional change as a fundamental shift in participants’ decision-making rules and associated common beliefs. 3) Case Studies of Institutional Change: Greif (1994) examined the institutional foundations of market transactions through historical case studies, such as the Genoese merchants, to explain the self-enforcing nature of market institutions. Evolutionary economics focuses on the role of entrepreneurs in institutional evolution, the relationship between knowledge evolution and institutional evolution, cognitive models and institutional evolution, and the co-evolution of technological innovation and institutions. Entrepreneurs and innovation are central to evolutionary economics, crucial for understanding Schumpeter’s “creative destruction”. Later economists extended this idea, highlighting the importance of entrepreneurs in institutional evolution. Kirzner’s (1973) concept of “alertness” discusses entrepreneurship as the source of innovation in economic systems. The relationship between knowledge evolution and institutional evolution is also examined. Evolutionary economics posits that human ignorance and incomplete knowledge necessitate institutions as means to reduce uncertainty. Participants’ rationality and cognitive abilities are limited, leading to fundamental uncertainty about the future (Fei, 2006, p. 72). This incomplete knowledge leads to the hypothesis of “bounded cognition”, where individuals rely on past experiences and others’ knowledge www.scholink.org/ojs/index.php/elp Economics, Law and Policy Vol. 7, No. 1, 2024 Published by SCHOLINK INC. 160 to solve new problems. When these sources are insufficient, logical thinking becomes the source of institutional innovation. The Santa Fe School has re-examined fundamental economic propositions from behavioral and evolutionary perspectives. Arthur (1995) introduced self-reinforcement mechanisms into institutional analysis, discussing increasing returns and the lock-in phenomena in institutional change, leading to multiple equilibria. Prominent domestic scholars are concentrated in three research areas: 1) Institutional Factors as Drivers of Economic Growth: Huang Shaoan and Wang Wei (2023) studied the economic disparity between northern and southern China from the perspective of Confucian culture, revealing the differential impact of informal institutions in these regions as a deep-rooted cause of economic disparity (He & Li, 2013, pp. 21-24). Sheng Hong (2011) analyzed the “Chinese miracle” through the lens of institutional economics, discussing the role of economic liberalism in China’s economic performance (Jia & Li, 2016, pp. 16-20, p. 25). Yang Ruilong (2003) explored the relationship between economic growth and institutional change, proposing that natural endowments and institutional determinants can complement each other in economic development (Jiang, 2010, pp. 17875-17877). 2) Interdisciplinary Perspectives on Institutional Change: Wang Dingding and colleagues (2005) studied institutional change from a behavioral science perspective, proposing an evolutionary equilibrium model based on “evolutionarily stable strategies” and discussing the genetic basis of altruistic behavior. 3) Institutional Change in Evolutionary Economics: Jia Genliang (2015) discussed the two main schools of thought in evolutionary economics—old institutionalism and neo-Schumpeterianism—and proposed creating a new Listian evolutionary economics, offering strategic and policy recommendations from an evolutionary economics perspective (Miao, 2016, pp. 18-21). Yang Huta (2009) detailed how evolutionary economics views the world, emphasizing the formation of diversity and differences over history and employing anti-reductionism as a guiding principle (Liu, 1998, pp. 42-46). In summary, the evolution of institutional change might go through several stages: unconscious natural selection, unconscious social selection, conscious social selection, and conscious design and social selection. Institutional evolution involves both unconscious and conscious processes. Although unconscious behaviors may lead to many unintentional social institutional changes, spontaneous order does not exclude conscious rational choices, as human decisions encompass both rational and irrational elements. www.scholink.org/ojs/index.php/elp Economics, Law and Policy Vol. 7, No. 1, 2024 Published by SCHOLINK INC. 161 5. Adaptation of Village Regulations and Conventions in Rural Revitalization In Chinese society, particularly in rural areas, the influence of informal institutions is crucial in aspects such as economic development, social policy implementation, and even the enforcement of legal systems. Informal institutions need to be the premise, integrating formal institutions within them to achieve the desired policy effects (Zhou, 2006, pp. 2-10). Formal and informal institutions together constitute the institutional framework; thus, the concept of “institutional embedding” applies to informal institutions. The embeddedness of informal institutions means that they are deeply understood and believed by social members, forming part of the social structure and integrating with local social culture (Rao Xupeng & Liu Haixia, 2012). Therefore, when an informal institution is deeply ingrained in people’s minds and integrated into the social structure, this state can be called “embeddedness”. Conversely, it is in a state of “disembeddedness”. Specifically, for village regulations and agreements, when they can regulate villagers’ behaviors and effectively maintain the order of rural society, this state is “embedded” in the rural social network. On the contrary, if village regulations and agreements cannot perform their expected governance functions and maintain rural order, they are “disembedded” from the rural social network (Mou & Xu, 2018, pp. 117-125). In traditional periods, most village regulations and agreements were endogenous to the village, usually arising from a lack of institutional supply, leading to spontaneous order. These were customary rules among villagers, representing their interests and aligning with the actual production and living needs of the rural society. Formal institutions are rigid, but humans are social animals who need the coupling of informal institutions (Qin, 2004, p. 9). These endogenous informal institutions do not require coercive forces to enforce but rely on villagers’ spontaneous spiritual constraints, using ethics and morality to guide, educate, and regulate people’s behaviors, thereby embedding in the traditional rural governance network and order to perform governance functions. After the establishment of New China, the state power began to penetrate the countryside, with the state establishing rural people’s governments and gradually building a top-down administrative management system, where orders were transmitted downwards to the villages, reducing villagers’ participation in rural public affairs (Wen, 2010, pp. 39-46). Unlike endogenous village regulations and agreements, the new village regulations and agreements depend on external forces from the village for their generation, execution, and continuation, and they have a certain degree of coercion. The promotion of village regulations and agreements is mainly undertaken by grassroots governments and village committees, with state orders transmitted downwards and the final implementation by grassroots townships (town) governments. At this stage, grassroots governments also advance the work related to village regulations and agreements based on state directives (Xu & Liao, 2004, pp. 73-77). Compared with the traditional period, the rural society lacks authoritative internal organizers like clans and gentry, making it difficult to genuinely penetrate the countryside and effectively mobilize the villagers’ enthusiasm with mere administrative tasks by village committees and grassroots governments. Moreover, village regulations and agreements, www.scholink.org/ojs/index.php/elp Economics, Law and Policy Vol. 7, No. 1, 2024 Published by SCHOLINK INC. 162 originally tools for village self-governance, should align with villagers’ needs. However, in practice, some village regulations and agreements are often template-based and not closely related to villagers’ actual lives, making them difficult to gain villagers’ support and recognition (Zhou & Liu, 2014, pp. 21-27, p. 110). After being integrated by state power, the village regulations and agreements constructed by state power actually lack endogenous support and villagers’ participation in their operation. Additionally, due to the loss of traditional cultural authority in rural areas, village regulations and agreements, as tools of cultural governance in traditional periods, have relatively low recognition in the current rural areas and fail to perform the expected governance functions (Yuan, 2013, pp. 20-21). It can be said that they are disembedded from the organizational integration network of contemporary rural society. In summary, domestic and foreign scholars have conducted extensive research on institutional evolution and the embedded governance of village regulations and agreements, achieving fruitful results worthy of learning and reference. However, existing research still has certain deficiencies: 1) Most scholars’ research on the village regulations and agreements of ethnic minority villages focuses only on the excavation and analysis of existing data, rarely exploring the evolutionary mechanisms and embedded governance of village regulations and agreements from the perspective of institutional evolution. 2) Most existing literature on village regulations and agreements mainly focuses on rural governance and social governance, neglecting the exploration of the generation background and evolutionary process of village regulations and agreements in ethnic minority villages in the Yunnan-Guizhou-Guangxi regions and the “disembeddedness” issue between village regulations and agreements and rural governance. 3) The formation of village regulations and agreements is based on the long-term development of disciplines such as anthropology, history, and law. However, existing literature on the village regulations and agreements of ethnic minority villages in the Yunnan-Guizhou-Guangxi regions mainly interprets from a single dimension, lacking interdisciplinary comprehensive analysis (Yuan, 2005, pp. 122-127). In view of this, based on field investigations of village regulations and agreements in the Yunnan-Guizhou-Guangxi regions of ethnic minorities, we aim to collect and organize issues of traditional cultural legacy under the protection of existing systems, and through methods such as evolutionary game theory, social network analysis, text mining (Python), mark coding, evolutionary dynamics modeling, combined with theories from institutional economics, evolutionary anthropology, and ethnology, explore the reasons for the evolution and current state of embedded governance of village regulations and agreements, systematically summarize their evolutionary mechanisms, and assess the problems and obstacles in protecting the traditional culture of ethnic minorities. Subsequently, we aim to construct macro-universal practical paths, providing practical measures to promote the modernization of grassroots governance systems and governance capabilities in China. www.scholink.org/ojs/index.php/elp Economics, Law and Policy Vol. 7, No. 1, 2024 Published by SCHOLINK INC. 163 References An, J. (2013). A study on the folk legal order in ethnic minority areas: Taking the Tibetan ethnic area as an example. Guizhou Ethnic Studies, 34(04), 8-11. Chen, H. (2019). Embedded rule of law: Rural governance based on self-organization. Journal of China Agricultural University (Social Sciences Edition), 36(01), 80-90. Chen, Q., & Yao, J. (2019). The fission and inheritance of village regulations in the Li area of Hainan from the perspective of rural governance. Journal of Original Ecological Ethnic Culture, 11(06), 90-99. Chen, Y., & Chen, W. (1992). Social customs of the Dong ethnic group in Guangxi. Guangxi Ethnic Studies, 1992(04), 80-86. Chi, J. (2017). 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