To target the establishment of a socialist market economic system in China’s system transformation in the process, transformation of Government as a key variable in both positive, irreplaceable important role to play, while the Government on China’s economic development during the transition period from the negative effects. This “double-edged sword” phenomenon, can be said to be in the new institutional economics “North paradox” in another expression, or “country presence is key to economic growth, however national anthropogenic causes of economic recession.” But with different institutional background in China and Western countries, makes this paradox also exhibits different characteristics. From the start with this paradox, you can understand the Chinese system transition provides a unique perspective of the system, enabling us to grasp the economic development of China’s economic operation and inherent in the nature and overall trends.
, Government power is a unique problem in system transition period in China
1, monopolistic Government power is to understand the evolution of a main economic development and economic transition in China
Factors affecting China’s transition is complex, but we can always “pick out from the transition the complex reality of critical factors, and in a framework that can be handled in the analysis of interaction of these characteristics”. (In my opinion, the effects of monopoly Government power is the evolution of a unique and crucial element in the transition process. First, on the surface, we see a gradual exit of the authority of Government and limited exits, some scholars call “untie” reforms. (This “relaxed” evolution of the main line is the monopoly of the reform of government power. It should be said that in the period of institutional transition, operation and change of government power is its soul. Is to say, not simply because the Government powers decided to position, the primary cause is Government power under the traditional planned economic system of rules covering almost all areas of social and economic life, once in the aspect of the reform of the Government (mainly Central) retreat and deregulation, other community members have the ability through institutional innovation to capture the potential profit opportunities on a voluntary basis, so as to promote economic development. Phasing and system deregulation of Government powers, in making reforms in the beginning while maintaining economic institutional transition, rapidly form a situation of coexistence of two-track system, which not only through price reforms, industrial restructuring, and other content, and quickly build up a market economic system. If the Government is trying to gain a first-mover advantage, by administrative means to forcibly intervene and occupy these opportunities, there may be spontaneous enthusiasm and creativity of the people hurt and depressed, hurt the interests and rights of the population. From this perspective, China is expected to continue market-oriented reform of such a long time, it is because of government intervention in economic life will not be voluntarily giving up power, Government powers in different stages of the transformation of “exit” and “intervention” between rocking, makes a paradox phenomenon in the economic level. Secondly, judging from the current system in China environment, Government power, “” exit on does not mean “quality” on the changes. First, in the production process, on a number of State-owned enterprises in China has declined considerably, but it still plays a leading role, they determine to a large extent the basic situation and trend of China’s economic future. Secondly, judging from the allocation process, Government power distribution determines the basic patterns of distribution of the benefits of all social strata and the direction of motion. Thirdly, from the economic system, power structure determines the speed, intensity and direction of the economic system transition in China as well as the Basic Law of structure and function of the economic system. Four, it is the power of, forming on China’s industrial structural rigidities on the longitudinal and transverse segmentation, malformed economic and feudal economy. V, judging from economic development, powers constitute implicit in economic development and economic growth in China, but often up the last elements of the role. Whether elements of elements of capital, labor or is the technology factor, power factor in China’s economic development plays a role so decisive, final strength.
2, from a traditional government function in market failure to study the system has limitations
Acts outside the Chinese Government market research within the framework of our economic system is significant. There are many documents on the Government behavior in a market economy was discussed, but the problem is that many economic theories in the analysis of market and government relations always from general market in modern Western economics and based on the General conclusions of the Government, to demonstration of market failure and Government intervention in the market economy in China, government regulation and economic operation of market failure as the reason. This understanding, examine the markets of developed countries is working properly, but they are not appropriate for the actual situation in China. As is the institutional goal of market economy in China, but there is no established market economy, but in a transitional phase of the planned economy to a market economy. Therefore, we should put aside from the standard model of market economy in the Government set out to expand the analysis usually thought patterns, from Chinese specific “transition” phase to the reality of deployment analysis and inspection.
First, the definition of modern economics on economic function of Government is to “market failure” as the logical basis, and to confirm the scope and functions of the rationality of government intervention. Selection process and structure of the market, likely to be blindly fluctuations, externalities, issues such as monopolies and lead to inefficient resource allocation, such as “failure” or “insufficient”. In addition, the market economy itself is difficult to guarantee a fair distribution of income, trends of polarization occurs. These are functional defects of market economy system itself. When when the existence of these market failures, if the Government can to remedy the market failure, and improve economic efficiency, on the possible role of the Government. Therefore, to remedy the market failure caused the economic function of Government: stable economy as a whole, as well as on economic resources and configuration, regulating income distribution, and so on. In this sense, market selection need to be complemented by Government, but government intervention on the market and “market failure” there is no causal link between, because the resulting “market failure” there are many reasons, and the solution should not be a single. And that government intervention is here as a foreign born in the market forces, in addition to the areas of market mechanisms and take service in the market and the function of enterprise. According to the traditional understanding, with the gradual improvement of market mechanisms, seemed little room for government intervention. But in fact, since the “war” since the further improvement of market mechanisms, role of government economic function space is not narrow, but is growing. Enter the era of knowledge economy, by asking the Government to provide public goods also increased significantly. The contrast between this theory and reality, shows from the theory of market failure to indicate the functions of the Government has certain limitations. Study on the need to find a better perspective of Government behavior and analysis framework.
Second, the mutually beneficial exchange of market selection, implies an assumption that there exists a collective choice of system. This system of collective choice corresponds to a “constitutional compact”, it clearly establishes everyone’s right and constraints, as no self-serving pursuit of institutional constraints under the market economy can only be a “natural distribution” will this distribution arises from a Hobbes-State. If you want to get rid of Hobbes’s natural form, is bound to have an established property rights of everyone and constraint “constitutional compact”. This “constitutional compact” constitutes a system of voluntary exchange, and property rights there is no doubt the development of “constitutional compact” a necessary condition. Is the content of the study of Western economics in economic, with clear property rights of the individual in economic behavior and the resulting phenomena. Samuelson believe that property rights and ownership of the program is a pure public goods, it has “each person’s consumption does not reduce the consumption of any of the other people on this article” feature. As a pure public goods of a non-competitive, will be provided by the Government. In this sense, market selection within the Government’s choice. System transition of the actual situation in China is clearly in market selection, a prerequisite condition does not meet the condition, that individual rights do not improve the case for reform, that is, students on role of government authority in the establishment of a market economic system, since it not only to protect the property rights of “third parties” functions of the more important is the definition of property rights. This is the prerequisite and basis for establishing a market economy. Again, in China in transition economies, if developed hundreds of years of development based on market failures that exist in mature markets, as the Government, economic regulation and intervention operation used to explain the causes of problems and contradictions facing the Chinese economy in transition, both in theory and in practice will have a huge bias. In fact, the Chinese economy in transition, on the theory of market failure premise, to a large extent, is illusory, or said to be unrealistic. Because the reforms have not occurred in the process of transition in China caused by defects in market functionality is much larger than the market itself (market failure). Therefore, the role of Government in China in transition economies, are not generally go correction “market failure”, but to strengthen the supply of effective systems, seeking to build market operating system framework of rules and, through the expansion and development of the market, achieving government market to a certain extent, a certain stage of partial substitution. Otherwise, if the Government respond to transition in economic development or incomplete market for all kinds of adjustment, it will inevitably cause negative effects of a series of counter-productive. This also determines just from “market failure” leads to government departments in China presentation, will mislead people’s understanding of Government function in the transition economies.
3, Government power to interfere in China’s particularity
Economics Shang on government intervention of theory controversy has long, different of scholars has different of views, but current academia of controversy more concentrated Yu government intervention of range, and way and role Shang, for market economy to don’t government intervention basically has reached consensus, in here, has no intention of on government intervention theory this a problem for discussion, and main in description for a is economic system changes in the of government power, its role content, and way, and consequences and Western national market economy mature national of government economic compared, has particularity.
First, from a content point of view, due to the developed market economies are based on the rule of law, Government behavior is constrained by law, making it difficult to violations of property rights and restrict the freedom of establishment and development of enterprises, the Government’s main duty is to address the externality and the provision of public goods for economic. However, in the transition economies and developing countries are different, such as: through the establishment of the rule of law to constrain Government action also takes a longer time to implement, focused and hold excessive powers of the Government, individuals and businesses own rights have not been effectively regression. Before the perfection of the rule of law, rights of individuals and businesses before the handover, acts of Government, maximum impact on the economy is not the most prominent aspect of providing traditional public goods, but rather on how the Government dealt with in the complicated process of reform and marketing, and business, and society’s interests. Is “chicken egg” or “killing” is giving individuals and businesses more freedom and rights, powers or to the Government instead of the right of individuals and businesses. This not only determine a country’s economic vitality, actually fundamentally determines the economic transformation of China’s real success. Because, in the short term, alternative people’s rights to government power to quickly clear economic effects, but the long term, personal and Enterprise vitality, creativity is the real cause of prosperity of a country. So, research China Government power role of significance also is is: China currently in by planned economy to market economy transition of stage, and this “transition” precisely is in on Government power of master who and right who lack effective of supervision mechanism of situation Xia for of, it inevitable to will produced various “goose that lays the” of Government behavior, this is China transformation period Government paradox different Yu Western developed of performance causes one, is this article is called Government power paradox of causes one. Imperfections in the market economy mechanisms in the economy, involved in the process of economic power not just because of the economic activities of externalities and public goods, but with the power to replace market price mechanisms regulating resource distribution. Compared with the perfect market economy mechanisms, this form is inefficient resource allocation. Since power ultimately consumes economic resources. Only in the use of the powers the social benefits of intervention in economic activities is large, and that when receipts cannot be produced through the price mechanism of regulation, power directly to the economic activity is worth it.
Second, different institutional backgrounds determine the economic consequences of government intervention raised different. Western national of government economic is a to mature of market economic system for Foundation of economic, power on economic of intervention of negative consequences basic not hurt market economic system of Foundation; and in is transformation period of to government power for led of social in the, power on economic of intervention while will helps implementation overtaking target, but on the also has may will disintegration economic system or makes a species economic system of system innovation process into a stagnant of situation (as some Latin America national and African of some national); this description transformation national in the of government power has more important of significance.
Third, limits the scope of activities are different. Economy in General is the Government of the Western countries from one economic system to external intervention in the economy, and the scope of activities of the political system of Government is subject to strict limitations. In the economies in transition, is in itself a variable in the economic system change of government authority, the Government is often an internal activity and constitute the core part of the economic system, in a sense, this economic base around power and power services, with the process of economic system change, Government power itself and its mode of operation is also constantly changing.
Second, the characteristics of government power and economic analysis
As a political organization, is a specific composition of the political institutions of the Government, it is based on a force, to manage community, power is the largest resource as an organization owned by the Government. As an economic organization, the Government of the economic nature and existence of enterprises have in common, it is a natural monopoly. As Kos says: “in fact, the Government is a super company.” Government as a behavior, and general agents (such as manufacturers, resident and non-governmental organizations, etc) is no different. But since the Government is one in a special position of actors, it is given a certain amount of mandatory power, such power is not found in the private sector. Therefore, the Government’s participation in economic activities and the allocation of resources, will directly have a significant impact on economic, social.
Government economic powers, is derived from State power, its essence is the public power, and basic features of public power is in the whole of society-wide mandatory and monopolistic. Mandatory means that the Government can, through an executive order requiring people to do what or what not to do, and people must obey. Monopoly means that the executive powers of the Government without competition, it is the public power in the whole of society-wide mandatory and monopolistic, consequences of the exercise of public authority of the Government, will not only affect the whole of society use of production factors, and on members of the social distribution of income, wealth and social net welfare change aspects have a significant impact. More important is that if the consequences of the implementation of government policies and governmental regulations and afterwards proved to be inefficient, the Government does not accept direct financial responsibility. Specifically:
1, the mandatory power brings you to obey the order, thereby saving transaction costs. “The power lies with the minimum price possible exchange for maximum to obey. “For example, Chinese an advantage relative to the CEE countries in concentrated form in the iron grip of government authority can be used to reduce the bargaining under the democratic system, reduce the so-called” transaction costs of institutional change “.
2, monopoly performance leading to expansion. From an economic sense, is any organization under monopoly conditions are likely to lose the ability to pursue cost minimization, has the monopoly of public powers, the Government also lacks adequate incentives to reduce production cost. The product itself and policies do not need material consumption in the production process is consistent, resource costs of making policy item in the absence of clear cost requirements does not exist in nature, this characteristic excludes the Government there is a reality based on production costs can be consciously save, this is also the Government scale expansion, rising administration cost “system” root causes.
3 factors affecting expected costs and expected benefits, Government power and the impact of institutional change. Analysis for process of institutional change in China, power factor affects the expected costs and benefits of the system change. New institutional economics view that system changes the fundamental reason is the potential profit opportunities exist, that expected return is greater than the expected cost. But such statements are the community as a mature market economy in the West. In some particular historical circumstances, particularly when we consider the political, and social variables analysis after flow into it, you will find that this “general principle” is not fully adapted to the realities of our country. Because under certain conditions, expected costs and expected benefits of connotation that changes, costs and benefits is subject to a certain degree of institutional structure, out of the established institutional structure is meaningless to talk about costs and income. Since China’s transition period, is both a part of the system structure of government authority, but it is also in the dominant variables, it is to a large extent able to affect the expected costs and benefits of other economic agents, in this special period into a decision other variable variable, so this becomes the decisive variable selection of economic system change occurs or system underlying motive.
It is the Government authority has different from mandatory economic rights of individuals, enterprises and monopolies, ensuring government power has the ability to make up for the lack of market, but also for government power that extended the scope of activities to the General article) include the production of public goods and private goods and Exchange offers the potential in the field. Buchanan’s research shows that governments naturally have a tendency to expand. Government powers of these two features make it the “approximate freedom of economic action” to determine the boundaries of government power effects become important part of economic behavior.
Third, the economic role of Government in the period of transition of Paradox duality is the essence of power
Analysis on the role of Government in market economy, economic theory has a different interpretation of the different, except the specific analysis of the causes of, in this case, essentially speaking, think of this article, the economic role of Government during the transition period can be attributed to a paradox of power there. It implied the authority of Government and individual rights (or rights of the people) of the game, conflict and coordination of economic and political, is on market abuse and the protection of the Government.
First, judging from the relationship between Government and market. Simply speaking, the market is equal between voluntary transactions, the essence of market economy is to give people full of the right to free choice of the economic system. While Government activities reflect the superior to a subordinate commands – subject to relations. That is, the market is a decentralized decision-making, spontaneous formation, free exchange system, and the Government is a centralized decision making, human, hierarchical administrative organization system in the management of the design. So, can say that the basic elements of the operation of the market is right, is built on the basis of power and Government rules. Both have different logic and concepts. Both side of the conflict, also coordinated side. Is the individual right of freedom to former followed transactions based on the inherent logic of the market economic system, which relies on the public power to force force for the implementation of the protection of market economic system of external protection. And the complexity of modern market economy, the relationship between Government and market requirements cannot be completely antagonistic relationship between alternative, but a relationship of mutual complement and mutual substitution. So on a personal basis the market order and man-made order established on the basis of public power joint unified within a market economy. Second, the market order based on the establishment and protection of the right of personal freedom, and the Government to the results of the public choice premise. On personal rights and State power of relationship,, personal rights is people and people mutual relationship of Foundation, its implementation is rights of let crossing and transactions, as people mutual Zhijian of a recognized and promised, while, it independent Yu power zhiwai, also not by power of dominated; on the, it and very vulnerable, Gravis captive, most easy was from outside of against; it both need State power of protection, and most fear State power of against. From the State, because the country is a legitimate use of force means a natural monopoly nature of institutions, power comes from the monopoly of violence, and possible abuse to violence. On the relationship between individual rights and State power, on the one hand, State power is the most effective tools of protection of individual rights, because it has huge economies of scale, appears and the rationality of the existence of the State, it is to protect individual rights and saving of transaction costs need, no State, no property; on the other hand, State power is the largest and most dangerous of individual rights against users. Because, not only with the expansion of the nature and characteristics of State power and always rely on the erosion of the rights of individuals to achieve their expansion, before the infringement of the country, the individual is powerless. In Chinese system transition period, since the individual rights and State power, the market system and a national system of this nature and their relationship, determined the country’s role in the market economy and market economy in transition may be either positive or negative. It can be said that conflict and coordination of government power and the rights of the individual’s status in the process of economic transition in China can even conflict with scarcity-desire compared to the position in the new classical economics.
Secondly, from the background of the realities of today and the actual view of the transition process, mixed with combination of State and the market economy, this is the background of the realities of China. And the country’s increasingly powerful role, has become a common phenomenon throughout the world. Public products expenditures of number can as a basic measure indicators, Marx is early pointed out that: for “public need” of that part “deduction” (means public products) will will increasingly expansion, this “deduction” including “and production no relationship of general management costs”, and for meet “common need” of such as “school, and health facilities,” and for lost labor ability of people, established of Fund. Later the famous “Wagner’s theorem” also reveals to enter after industrialization, number and proportion of the public sector in the economy is an intrinsic expansion trend. In the Chinese Government under the background of this reality, inevitably to adapt to this trend, the objective trend of Government’s role has expanded. Also, judging from the actual transition, as is an all-round dominated Government under the planned economy system and determines the structure of social rights, my first actual transition process to a government authority of “exit” or “restore”, whether it is a limited decentralization reform of property right reform, on the overall trends are a return of government power to the people’s rights. This “exit” or “restore” means individuals have more decision-making sovereignty, was tantamount to government power to itself in the negative, whether it is voluntary or forced, will be resisted. While, Government of this “exit” or “restore”, although means was directly intervention market and enterprise of Government behavior of large reduce, but does not means was transformation in the of government power just blindly of narrow, it while means was Government in other field of strong to “intervention”, requirements Government can effective, and strong to bear macro-control, and social management, and provides public products and legal protection, due of functions. At the same time, it also could mean more government action, because the policy choice is not easy to choose between free markets and Government intervention. In fact, in countries with excessive government intervention, the Government should adopt more policies to correct the problem of excessive intervention, and policy support for start-up of the market to the full.
Thus, you can see that is in that it is necessary to promote the modernization of the Government of China but also to establish a market economy “dual logic”, in the power of “exit” and the pressure of “intervention” between the demands of this contradictory, the Government powers to intervene directly and indirectly between intervention swing, thus various seemingly contradictory phenomena in economic operations, showing a paradoxical phenomenon.
Again, from a Government power-led features in system transition in China, can come to understand the paradox of government authority in two ways: 1, “Government to adopt administrative measures to advance the process of market-oriented”. This is the initial condition and logical starting point of China’s economic transition. China as a late-developing countries, in the early stage of development, and civil power is weak due to lack of market, entrepreneurs often industrialization started sluggish, slow economic growth. To overcome the initial stage of the initial barriers, Government role in takeoff stage play the first cause. In addition, under the traditional system has the advantage, the power of market-oriented reform of government organizations to a certain extent meet the Government’s objective function, also enable the Government to adopt administrative measures to facilitate the process of marketization feasibility. Therefore, in the paradox of Government transition stage in our country, more mature sound is not based on Western political economic system under the environment of government failure, although it contains a general sense of the failure of the Government, but most important is based on the Government to promote market-oriented reform of administrative power in China under the background of this basic structure, it must have different manifestations of the failure of the Government in the general sense. 2, the “powers the first impetus of the Government” has the efficiency decline law. The existence of a strong centre of government power, at a certain stage, can have unexpected high growth economy, but it cannot fundamentally solve the engine for economic development and coordination, it is impossible to create a vibrant, energetic and creative society. With the deepening of the process of transition, direct effect has a law of diminishing the role of government power. First, with the deepening of market-oriented reform, significant changes in the pattern of distribution of social resources, residents and significantly improve on the status of non-State-owned enterprises in the national economy, national economy facing the inevitable “demand for Government-dependent” economy to a “market demand-dependent economy” changes in markets and entrepreneurs to be naturally replaced the Government as the main driving force of economic development. “Economic expansion and contraction of power has not completely in the hands of the Government.” Sector expansion or contraction of the will of residents will have a significant effect on the economy. II is in transition process in the, because Government on market of intervention has monopoly sexual, easy makes Government lack reduce operation cost, and improve efficiency of inherent power, makes Government on market of alternative easy caused large government small market of pattern; three is because Government and civil forces Zhijian exists was extrusion effect) developing countries Government on entrepreneurs of alternative often makes Government on enterprise of control strengthening, formation strong Government weak enterprise of State. These reasons will form “of government power in the first cause” efficiency gradually decreasing trend.
Early in the system transition, leading role in a stage of increasing efficiency of government authority, due to the operation of the power of the Government will achieve the incentive for the people’s rights and interests, in the economic operation to show it is more active government role. And entered the stage of deepening the reform, decreasing efficiency of the leading role of government authority, due to Government delays, lack or a coercion, would undermine the public interest on the basis of an individual’s rights, at the economic level the Government will show the negative effects of the action more visible. So, Government power only Dang its used to integration social resources, promote production and personal, and enterprise, economic rights main Zhijian of cooperation, and not using power to grab from production and trade in the of most proceeds Shi, social only will appears continued to growth and not decline, and successfully cooperation of secret “not is Government actively to station in front acts as a protagonist, manufacturing market, and is tightly follow personal of found Lee behavior, and along it of direction, under it of need, for its clearing paving, provides service, given protection, be boot”.