In this paper we explore how, in authoritarian contexts where political elites wield power to unilaterally craft the “rules of the game” and maintain the status quo, institutional adaptation may occur through the informal process of “selective deinstitutionalization.” In selective deinstitutionalization, actors in the lowest levels of bureaucratic administration respond to similar challenges with the same pragmatic concessions, selectively enforcing rules to resolve incongruencies between policies and established social norms; if such tactical behavior becomes well-patterned, it may, over time, transform de facto institutional practices in the absence of de jure policy change. We derive our insights through the development and analyze a historical dataset based on sources collected from Chinese flea markets— 2338 cases of “speculation and profiteering” prosecuted by market administrators between 1964 and 1978 in Maoist China. Our evidence suggests that in this extreme context, where the CCP attempted to monopolize control over economic life, market administrators (i.e., the street-level bureaucrats tasked with implementing public policies on the ground) reshaped the expression of realized institutional constraints at the local level through selective enforcement. Our study thus reveals how street-level bureaucrats can, in the course of their day-to-day work, act as institutional entrepreneurs who drive informal adaptation and gradual institutional change.
