Chinese / English
Home >> Great Minds China Forum >>  3rd Great Minds China Forum >>  Research Frontiers of New Institutional Economics: Theories, Methodologies, and ToolsResearch Frontiers of New Institutional Economics: Theories, Methodologies, and Tools
Song Bingtao:it is necessary to reconsider the way we compare the east and the w

QQ截图20170530184104.png

Professor Long Xiaoning said the other aspects need researching. I wish I can what he just mentioned, the other aspects. Now I would like to discuss the views of Mr. Claude Menard from several perspectives. First, I agree with him over two mismatches and the idea of adopting a new framework. But the most important thing is to find out where we disagree!

 

For instance, I can’t agree with his understanding of the nature of mismatches. As regard the first mismatch, he thinks it is deferent layers that account for the mismatch. However, I don’t think so; my account is that the resolutions are unsuitable for problems we are facing. As for the second mismatch, he explained, it is due to the disagreement between politics and final decision. But in my opinion, it is because of the disagreement between the state sovereignty and property. This is where I disagree with him.

 

Now, let’s study the guiding thoughts of post-crisis from two aspects. That is, the nature of the crisis is what? Personally, I think we should adopt right resolutions to the problem. So, what is the resolution, what is the nature of problem and correspondingly, what shall we reflect?

 

First, we shall be conscious about that today, the real problem facing us is not the relationship between humans and nature or the problem of economic growth, but the relationship between the poor and the rich. Secondly, because of that, we can have a new thinking about many things: do people care about the amount of productive wealth? Do they care about GDP? Even now China is a developing country, is the GDP still the most important thing for us? Or can we say now that we have accumulated so much wealth, the most noticeable problem for us shall be the wealth distribution between the poor and the rich?

 

We shall also ask that who can possess the wealth. As new institutional economists, how can we respond to these new problems? As for the New Institutional Economics, Professor Menard mentioned that we should respect the rules and rights. But I would like to add that shouldn’t we respect the humans’ will? The institutions and rights are artificial stuff, but to whom all the stuff shall be served? Do we omit anyone in this progress? We need to remember in particular that although the property is very paramount; its content is determined by humans not God. So, we need to ask ourselves: is it reasonable that the definition of property has remained unchanged for long?

 

We often criticize the second official generation, but never give a consideration about the second rich generation, are they rightful? Can the property remain unchanged forever? I think this is the problem which shall be studied by institutional economists. Certainly, if we admit that the growth is not the only target for us, and if we care about the feelings of humans, we should give a consideration to something related.

 

What is the institution? The institution is an approach for humans to solved problems, and overcome challenges. The former institutional economists always argue that to define the property like that will bring forth economic growth. Today, to solve the problem, shouldn’t we consider this question in a different perspective? Can we offer solutions for that in a different perspective?

 

For example, once upon a time, in the flood experienced by all human beings, people in the east and the west, respectively developed their own resolutions when facing this situation. The story, Noah’s Ark must be heard by you all. In the story, Noah’s resolution is to build an ark, and take some people and some animals onboard. But it is known to us all that not all the people can have this opportunity onboard. But in the east, the story is Yu the Great Harnesses the Flood. It is said that finally Yu the Great dug channels to drain the flood; everyone got saved, let alone animals and plants. These are two kinds of institutional approaches. Professor Acemoglu always repeats that the western institutions are open and inclusive. But when referring the examples above, we shall say it is indefinite. On the contrary, the approach in Yu the Great Harnesses Flood seems opener and more inclusive and more workable in solving the problems of more people.

 

Lastly, I think it is necessary to reconsider the way we compare the east and the west. Maybe the great divergence happened in the early age. If we know we can have different choices, could we consider the problem from another standpoint? Or more precisely, for those who advocate the political economics, could you try to study the phenomenon in the way of public economics? Or would you please consider the problem from the perspective of state sovereignty? Let’s not mention the property all time.

 

Fortunately, there have been some scholars already, including Epstein, O'Brien, Bony(博尼), Wenkai(文凯), and me, trying to discuss the institutional change with fiscal state theory. Therefore, we can change our point of view to think. For instance, how could we think form the standpoint of public economics? We may have to give a consideration about the structure of public products, because the public products required by the poor is different from that required by the rich. They are two kinds of demand structures. The paradoxes of demand structure lie on the aspect of state sovereignty other than property. As for the new institutional economics, if there shall emerge a new way of thinking or a new direction for discussion, I think it shall be public economics and the demand structure of public products. I have noticed that in last speech, there is a professor put forward that we can try to discuss the process and the target. We may have different opinions over target, or goals and process, for we choose different ways to settle the problem in the early age. In the west, if we apply the resolutions in Noah’s Ark, we need to select someone onboard, so the process is very important. Who can be chosen? Who can not? This is very critical. We need to implement universal suffrage, constitutional government to ensure the fairness and justice of the process thereof. If we choose the way of Yu the Great, an achieved goal will outweigh any electoral process! The principle in story Yu the Great Harnesses Flood is that the final result outweighs anything. In fact, in China’s history, the government’s performance is highly valued other than its way of emerging. However, there is always an electoral culture in the west. The difference shall be attributed to the sources of two cultures. I would like emphasize that it is not a problem of superiority and inferiority, but of different focuses in different institutions.

 

Accordingly, when we compare the east with the west, and think about the framework of new institutional economics, can we bring the public economics into consideration, or can we consider the problem according to the supply options of public products? Thank you so much for listening!





◆please indicate the source if authorized: National Economics Foundation

◆photo:National Economics Foundation