Small firms in Chinese cities, which before 1949 were private, have in the communist era gradually come under more government authority. The stages of this slow process can be treated as a case study in the political socialization of small units. They tell a tale of tensions between different levels of economic power, high, medium and low. Research into the kinds of power that promoted this step-by-step centralization, and also into those that resisted it, may suggest a more comprehensive approach to power in China generally.* The author expresses great thanks to the Joint Committee on Contemporary China of the Social Science Research Council and the American Council of Learned Societies for support related to this article. The Center of International Studies and the Woodrow Wilson School, Princeton University, supplied some clerical help, and the Foreign Area Fellowship Program supported the author's first researches on Shanghai. Very useful comments were received from James Nickum, Gordon Bennett, Bruce Reynolds, Thomas Rawski, Carl Riskin, Dick Wilson, and an anonymous reader for The China Quarterly. All opinions here are the author's solely.