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Qian Yingyi:Acceptance speech


I want to deeply thank the economics award committee of NEF recognized me and Xu Chenggang’s research work. This award aims to “Encourage Theoretical Innovation and Boost Economics Science”, “to award Chinese scholars who devoted to theoretical economics innovation, spread academic ideas of Chinese economists, encourage and propel Chinese economists to make contributions to boost economic science”. The first awarding of this prize is to praise the relevant research that applies modern economics in Chinese economy’s transition to market economy, which is inspiring.


First of all, I want to emphasis that the achievements mentioned here were made by me, Xu Chenggang and many other economists. Therefore, I would like to thank my partners in my research work in my speech. In addition to Chenggang, there are Che Jiahua, Jin Hehui, Liu Zunyi, Eric Maskin, Gerard Roland, Barry Weingast, etc. They are my teachers, classmates, colleagues and students. In my academic career, what I feel the luckiest about was to cooperate with these excellent scholars, to research on incentive mechanisms that applied in government and enterprises in economic transition and to receive recognition from other economists.


When I graduated from mathematic major of Tsinghua University and went to study in the America 35 years ago, I knew nothing about economics. I didn’t hear of supply and demand these two words, and words like market and incentives were not popular vocabulary of economics in China at that time. I felt lucky because the gurus around me led me to study economics. Jonos Knai, my doctoral thesis adviser, Maskin, 2007 Nobel Economics Prize winner and Andreu Mas-Colell greatly influenced my understanding toward economics. In addition to study in Harvard, I also took some courses in MIT, including two courses taught by Oliver Hart, 2016 Nobel Economics Prize winner and Jean Tirole, 2014 Nobel Economics Prize winner. Douglass North, 1993 Nobel Economics Prize winner, who I interacted with when I taught in Stanford University and UC Berkeley, Oliver Williamson, 2009 Nobel Economics Prize winner and other professors directly influenced my research. Among Chinese economists, I want to mention Wu Jinglian here. I met him in Yale University in the autumn of 1983. It was him that introduced Kornai’s Economics of Shortage to me. I first met Kornai when he made an academic report in Yale University.

The four economists that I mentioned have special meaning to me and I learned a lot from them. I learn about system, value, power of thought from Kornai. I learned about what is the usefulness of useless knowledge from Maskin. I learned that the reform in China is part of the modernization process of China and human being from Wu Jinglian. I learned from Hart about the simplicity and practical relevance of economics theory. These gurus not only gave me inspirations and tools for research but also meaning for conducting research. I did my work on the shoulder of giants.


China Economics Award encourages theoretical innovation, academic standards and Chinese elements. Just now, the award committee announced that we won the award because of “the contribution they made to the research on government and enterprises incentive mechanism in the transforming economy”. I don’t want to summarize my research work here but to discuss my work focus on the subject, method, result and meaning of economics academic research.


Firstly, the research subject. One of the most important global economic events in 20th century was human tried to replace market economy with plan economy and wished to create an economic operating system which is more efficient and with more equal distribution. Decades of practice has shown that plan economy is unable to achieve this goal. It not only widened the gap with developed market economy but also failed to compete with emerging market economy. In the last 20 years of 20th century, almost all the plan economies were shifting to market economies. China is one of them and also an outstanding example.


There were two major issues in plan economy, one is resource allocation issue and the other is incentive issue. For the former one, it was because the price in plan economy was not decided by market supply and demand but by the planner, which resulted in great distortion in resource allocation. For the latter one, it was the incentive distortion caused by “big-pot” system, soft budget constraint and other issues in public ownership and government dominated economy. Individuals, enterprises and government were not encouraged to increase efficiency.


Of course, the resource allocation issue and incentive issue are not isolated but related. For example, Kornai was the first to propose soft budget constraint issue which was caused by incentive issue but further influence resource allocation, causing distortions in resource allocation like shortage. However, we must look at the incentive issue if we want to have a deep understanding toward the nature of soft budget constraint.


To transit from plan economy to market economy is to replace the whole institution of plan economy by using resource allocation method of market and incentive mechanism that based on market. To me, there were two major lines in all transition economies, including the economics research on Chinese economic reform. One is resource allocation issue and the other is incentive issue. The combination of these two should also be considered. The fundamentality and decisive influence of market and the helpful role of the government are related to resource allocation issue. Price, including product market price and element market price are the core issue. Issues like property, contract, ownership, management are related to incentive issue. Incentive is also closely related to the price. However, it has a closer relationship with the power allocation between government and individuals, government and enterprises, and government departments at different levels.


In fact, Chinese economic reform practice in the last three decades was conducted based on these two lines. It is natural that Chinese economists had different emphasizes on research and policies during the reform. The agricultural reform in late 1970s and early 1980s showed the importance of incentive issue. There were incentives reform and resource allocation reform in agricultural reform. In the agricultural reform, we not only increased the prices of agricultural products but also introduced Household-responsibility system. The former one targeted at both resource allocation issue and incentive issue while the latter one mainly targeted at incentive issue. The reform on price, finance and taxation, exchange rate and interest rate, etc, in the mid 1990s was focused on solving resource allocation issue and greatly influenced the changes in incentives. Enterprise reform, ownership reform, property reform, management system modernization, legal construction, etc. that continued throughout the whole reform process were trying to change incentive fundamentally, not only individual incentives but also enterprise incentives and government incentives. These reforms also greatly influenced resource allocation but were more difficult.


That is the background of our research. Under such background, our research emphasized on incentive issue and analyzed the systemic flaws in plan economy and new phenomena in transforming economy, including its achievements and flaws. This led us to research the changes in incentive that generated by the changes of system as well as the changes in economic behaviors and performance that caused by incentives changes. Unexpectedly, the research found that the former one greatly influenced the latter one. That was the starting point for the question that we needed to research.


Secondly, the research framework and methods. I have to mention the evolution of modern economics law. Modern economics has many theories about the resource allocation and incentives in mature market economy. The first is the theory about resource allocation issue. Based on the theory that used Marshall’s marginal analysis as the framework, after continuous development after the World War Two, the most important General Equilibrium Theory analysis framework was formed. The book General Competitive Analysis that published by Arrow and Frank Hahn in 1971 concluded the General Equilibrium Theory which developed under complete information and complete competitions.


Incentive theory was developed slower due to its reliance on incomplete information theory. This theory began to develop in 1960s by Arrow who introduced the basic concept of incomplete information, such as moral hazard and adverse selection, which was introduced from insurance terms. Information economics and incentive theory developed rapidly in 1970s and 1980s. James Mirrlees and William Vickery, 1996 Nobel Economics Prize winners, George Akerlof, Michael Spence and Joseph Stiglitz, 2001 Nobel Economics Prize winners, Leo Hurwicz, Maskin and Roger Myerson, 2007 Nobel Economics Prize winners, Bengt Holmstrom, 2016 Nobel Economics Prize winners, etc. made tremendous contributions to the development of the theory. They have different focuses on the research, some focused on public finance issue, some focused on labor market, some focused on auction issue and some focused on the fundamental theory of mechanism design. However, their research was related to incomplete information and the incentive issue that under this circumstance.


I would like to specially mention Jean Tirole, the 2014 Nobel Economics Prize winner. He won the prize because he successfully applied incomplete information theory into industrial organization, government regulation, etc. Just as Tirole said in his Nobel Prize winning speech, Game Theory and information economics, these two essential tools for research, had a series of breakthroughs during late 1970s and early 1980s. This provided opportunity for researching on industry organization issues, i.e. establishing Antitrust and Regulation theory. By applying these tools, modern industrial organization theory was created and theoretical basis was provided for the making of public policy. He conducted his research based on the work of the first generation of creators like Ronald Coase and Williamson, took modern Game Theory as foundation and information economics as the tool to develop the second generation of modern enterprise organization theory.


In the mid 1980s, when I and scholars like Xu Chenggang began to research Chinese economic reform and transition to market economy, we were exposed to the Game Theory and information economics these two advanced research tools. We of course paid our attention to the incentive issue in Chinese economy and transforming economy. We tried to use the incentive theory in modern economics to research the incentive issue in the Chinese economic transition. In other words, we needed to use the most advanced theory, method and tool to analyze transforming economy, especially the most fundamental issues in the Chinese economic reform.


Therefore, on one hand, there were issues in Chinese economic reform while on the other hand, there were modern economics advanced theories and tools. The research on government and enterprises incentive mechanism in the transforming economy that we conducted was to innovate in the combination of these two.


Thirdly, research innovation and results. In terms of the specific research direction, we focused on government, especially local government and enterprises. This is because we noticed that in the Chinese real economy, China is a big country and local government plays a significant role in economic development. The change in local government incentives is the most obvious one. They could have positive or negative effects, which worth analyzing and researching, unlike the situations in Soviet Union and Eastern Europe where local government’s effect on economic development was quite limited. In terms of enterprise, due to the constraints of ideology and political system, there were SOE reform issues, private enterprises development issues, issues of different enterprises of mixed ownership in enterprise reform. The incentive issues in the enterprises were far more complicated than that of the regulated market economy, and more abundant compared with most of the developing economies due to different systems. Now I will make further explanation based on three aspects of my awarded work.


A significant phenomenon in Chinese economic reform and the transition to market economy was the deep involvement of local governments, which bought up a basic question: What are the incentives applied in the government? There are at least three aspects, fiscal levy provides important incentives; appointment and dismissal mechanism of cadres provides important incentives; regional competitions are also important incentives. These incentives can generate multiple effects. They can stimulate economic development or may otherwise distort economic behaviors. That depends on the form of incentives, power allocation, etc.


The first aspect is the incentive issue that applied in the government. There were two theoretical frameworks. One was the organizational form consists of M-form and U-form that proposed by me and Xu Chenggang. M-form means to organize by products or regions while U-form means to organize by functions or industries. This theoretical framework was first used to analyze the internal organization of big enterprises, proposed by Alfred Chandler and Williamson. Our work was to use this framework to analyze the whole economy in plan economy and transforming economy. In M-form, enterprises are more likely controlled by local governments. Together with the fiscal incentives brought by decentralization, local governments are greatly motivated to develop regional economy. On the contrary, in U-form, enterprises are controlled by different ministries and commissions according to different industries. Even though the latter one is supported by traditional plan economics theory and has some advantages on economies of scale, it is weak in providing incentives.


The other one was the fiscal federalism theoretical framework that used by me, Weingast and Roland. Federalism is originated from politics. Fiscal federalism theoretical framework was initially used for analyzing the public goods supply in the central and local governments. Our work was to use it to analyze the role that government played in the economic development and reform, especially the effect on promoting market growth in the economic transformation. One of the advantages of building this general framework is to make quantitative empirical comparisons transnationally. For example, in the comparison with Russian that done by me and my partners, I found that local governments’ revenue was positively related to the local economic development in China. That is to say, the better the local economy develops, the higher revenue the local governments can earn. However, in Russian, these two are irrelevant. The better the local economy developed, the much money central government can take. The money that taken away by the central government could counteract the benefits that local governments could enjoy. Such comparisons can show us the problem. It is the application of incentive theory. It is applied in the new field which means the government behavior in economic transformation, and to link government incentives with local economic development. We called it market-preserving federalism. From this we can see our research inherits the literature and makes further innovation. Without the former one, we could not analyze Chinese issue in the framework of general issues while without the latter one, we would not be able to explain the new phenomenon.

The second aspect is the incentive issues in enterprises. Conceptually, those are comprised of property issue and ownership issue. However, it is not enough to only discuss its initial basic concept. How do incentives work in different property system and different ownerships? If we take Coase, North and Williamson’s theory as the first generation of property theory, then the second generation of property theory was constructed based on incentive theory, game theory and information economics. The latter one provides us with the new framework and tools to conduct an in-depth analysis on property issues in transforming economy.


Obviously, the institutional environment that Chinese economy transformed to market economy was different from the institutional environment of regulated market economy that developed on legal foundation. For example, we cannot assume that property is secured by laws in the transforming economic environment. Therefore, existing framework and conclusions could not be applied directly. However, it doesn’t mean that analysis tools of contract theory and property theory are inapplicable. Instead, they are not only applicable but also useful. In the cooperative research, we used theoretical analysis framework of “Incomplete Contract” which was developed by Professor Hart, this year’s Nobel Economics Prize winner in 1980s.


In the theoretical analysis, we assumed that property was insecure and this reflects the systemic feature of Chinese transforming economy. The core of “Incomplete Contract” theoretical analysis framework is the control right allocation. The core idea of our research is that the security of property is decided by the control right allocation of the enterprise. Therefore, the security of the ultimate revenue claim of the enterprise is endogenously decided by the control right allocation. This results in enterprises’ different behaviors in different ownership and different performances under imperfect institutional environment. We discussed three types of ownership, including state ownership, private ownership as well as non-state ownership and non-private ownership with local government involvement. The third type of ownership is popular in China, even though its specific form changed with times. At early stage, it was collective ownership like township enterprises; later it changed into mixed ownership, etc. Even the private enterprises today are not as pure as those in developed economies.


We need to start from the simplest and least assumption to deviate the general conclusion that can be examined. At the same time, economics theoretical conclusion must be supported by evidence. Me and my partners research on the above theoretical derivation and providing empirical evidence for deviated conclusions. Our theoretical model and empirical evidence not only coincided with some of our intuition but also deepened our intuition. For example, in the research on township enterprises of 1980s and 1990s, we found that collective ownership and private ownership enterprises were not distributed randomly in township enterprises. They were related to the several local environment variables, including market environment, status of SOEs, local government fiscal incentives, local government power, etc. To reverse it, we found the distributions of collective ownership and private ownership enterprises were directly positively related to the local government fiscal taxation revenue. Therefore, the incentives mechanisms valid for enterprises and the governments are correlated and reciprocal causation. The combination of rigorous theory and meticulous evidence is usually the key to making an academic research convincing.

The third aspect is the common issue in government and enterprise incentives, the soft budget constraint issue. The concept of soft budget constraint was first brought up by Kornai in his comparison of market economy and plan economy, which is contrast to the hard budget constraint. He used this to explain other differences between two systems. This is a very important concept because it not only explains the unique phenomena like shortage in plan economy but also provides new idea for comparing other aspects of the systems.

Game Theory and incentive theory, which developed in 1980s, provided new analysis tools for understanding soft budget constraint and its influence to the economy. In view of the Game Theory, soft budget constraint is essentially the issue of credible commitment in the game. For example, when lenders find borrowers unable to repay the loan, they would still be motivated to relend as they rationally conclude that they only lose sunk cost while relending is profitable. However, borrowers predicted that this would happen, so they make distorted decision “rationally” like making over investment. However, the deeper cause of the incredible commitment is government’s undue monopoly. From this we can see the systemic origin behind incentives.


By applying this analysis framework, we can systematically analyze the incentive distortion caused by government and enterprises’ soft budget constraint in plan economy and transforming economy and conclude many results that would not happen in hard budget constraint. For example, in the paper that I explained shortage phenomenon using soft budget constraint, I found that when soft budget constraint distorts enterprise incentives and distortion in resource allocation cannot be corrected by price mechanism, shortage is a corollary. Therefore, the price in soft budget constraint cannot effectively coordinated resources allocation as it could be in hard budget constraint. This conclusion also stands even when applying on government that aims for public welfare.


In the cooperative research that I conducted with Xu Chenggang, we compared the economic innovative features in soft budget constraint and hard budget constraint. Innovation is an economic activity which generates highly uncertain results. However, it does not mean that plan economy or government dominated economy cannot innovate. They can innovate or even at a leading position in some areas like nuclear energy or spaceflight but they are not effective in many other areas like computers or personal computers even with tremendous investment. We constructed our theory based on the screening mechanism for innovative projects which inherits in soft and hard budget constraint. We concluded that innovation with a small probability is more possible to realize in hard budget constraint as unsuccessful ones would be eliminated soon. However, this was not applicable in soft budget constraint because unsuccessful ones were hard to eliminate; therefore, it was difficult to launch parallel experiments beforehand.


I worked with Roland to build the model and analyze the incentive issue caused by different power allocation in central government, local governments and enterprises. In soft budget constraint environment, as local governments competitions could increase the opportunity cost, credible commitment issue could be partly solved as the results generated by soft budget constraint can be reduced. On the other hand, the centralization of central government’s monetary power and the decentralization of local government’s fiscal power can reduce inflation and harden the enterprise budget constraint. We then concluded the competitive effect of the former one and counterbalance effect of the latter one from one model. These are the two fundamental mechanisms in market and governance system.

The fourth aspect is the deeper meaning of academic research. What general ideas can we find in the specific research on incentives that applied in government and enterprises? They tell us that the research on institution, property right and ownership should be based on institutional environment and framework of power allocation in order to discuss how different arrangements influences human. The common point in theoretical innovation of above research is realizing that when incentives were distorted due to institutional environment in transforming economy, many theoretical analyses must follow “second-best principle”. This principle provides wider space for analyzing issues of economy in transition and Chinese economy, which is also an important insight in theory.


What is second-best principle? Let’s begin with first-best principle. The first-best principle means it feels good that reducing the only distortion will definitely improve efficiency. Similarly, it’s undesired that increasing one distortion will inevitably hinder efficiency when there is no distortion. This is our intuition and the route for analyzing issues. The deduction we have about issues of reform in the forum basically follows this logic. We will first say a distortion is bad, and then deduce that the reform for reducing this distortion is essential. This is reasonable under many circumstances. However, it is not all-time right, especially when many distortions exist at the same time.


The second-best principle means when there are many distortions, efficiency might not increase when one distortion is eliminated, which might not be a good thing. Similarly, when there is at least one distortion, adding another one might not decrease the efficiency, which might not be a bad thing. What we discuss here is possibility while specific conclusion should be draw upon reality. Normally, our intuition is formed when there is no or only one distortion, so we will not have second-best principle intuition. That’s why we tend to make wrong deductions.


Take the enterprise incentive issue that I mentioned as an example. When property is secure, private enterprises are with high efficiency while enterprises with other ownership will have distortions due to agency problems. However, if distortions exist in real economy, like insecure property due to lack of rule of law, then pure private enterprises would need to pay extra cost to seek for property protection. When the institution is complete, it is a waste; when the institution is imperfect, it exists for certain reasons. Therefore, reform might use one distortion to suppress another distortion, like using local government power to protect property from government at higher level and possibly increase efficiency. This is a specific example of second-best principle.


The second-best principle results in the second-best institution that I called transitional institution. There is an important new conclusion which no one mentioned before. The second-best principle is obviously not the first-best principle due to institutional cost. However, what is less obvious is that when other institutional distortion cannot be changed, the second-best institution can increase efficiency and play the positive role of transitional institution. There are preconditions for this transitional institution. It need to both increase the efficiency, which means to enlarge the share, and being incentive compatible, which means to benefit stakeholders. There are many examples in Chinese reform. To view from a long term, transitional institution allows better institutions to emerge. It could also hinder future reform, which we need to analyze specifically.


Such meticulous analysis is important conceptually as it can help us go beyond the arguments like “Chinese Model” and “Simplified Market”. The former one believes that everything features with Chinese characteristics is good while the latter one believes that anything that is not of market institution is bad. The theoretical innovation which is based on modern economics analysis framework can point out the reason of Chinese characteristics and meaning of transitional institution as well as clarify their cost and limitations.


Theoretical research and academic research are not aiming for generating direct policy influence, instead, it helps to clear our mind, build the framework and focus on the problems. It is critical for us to figure out the issue and avoid falling in traps. Economic issues are complicated. Economic theory means to use simple assumption and rigorous logical deduction to deduct conclusions that can be tested by empirical experience. Even though the Chinese economic state today is not exactly the same as 1980s’ and 1990s’, the analysis method is still applicable. For example, anti-corruption is an important event recently. Corruption and anti-corruption both have great influence on government and enterprises incentives. However, their effects are not so obvious either theoretically or empirically, and thus require meticulous research.


Incentive issue is not a unique issue in transitional economy or Chinese economy, rather, it is a general issue. For example, the economic development issue in developing countries. In WilliamEasterly’s The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics, 

he sharply criticized the so-called panacea for stimulating economic growth such as increase the support to poor countries, increase domestic investment, improve the level of education, reduce the population, foreign aid that linked with reform, external debt relief, which proved to be inefficient in reality. After analyzing a huge amount of empirical facts, Easterly concluded that “the biggest obstacle for economic development in developing countries is the failure in incentives”. Will finding the right incentives be another panacea? He believed that it is only an economics principle but not a panacea. The application of this principle must be based on reality. Our research followed this direction which is universal.


Now let’s back to the issue of plan and market. Is this argument come to an end? Not yet. Not only some transitional countries begin to stagnate or even going backward, new arguments will emerge with the changes in technology. For example, with the development of big data, cloud computing and artificial intelligence, people will subconsciously think that the proportion of planned economy will increase. However, robot will never be able to replace human because it doesn’t have imagination, passion or idea. Human beings have passion, idea and imagination, then they also have incentive issue. It could be positive incentive, which means being motivated to do something. Or it could be negative incentive, which means try to avoid doing another thing. The common representation of people’s reaction to incentive is drawing on advantages while avoiding disadvantages. Therefore, no matter how advanced technology is, we cannot ignore incentive issue.


In fact, this issue can be seen in the debate of plan and market in the last century. Hayek was the first to propose the issue of information use in the society in this debate. Later, after generations of research, the information issue expanded to incomplete information, asymmetry information, and the incentive issue under these circumstances. Mechanism design, contract theory, property theory and other theories were developed in this direction. If the issue in plan economy was only about information collection or miscalculation, then with computer advancement as well as big data and artificial intelligence development, plan economy seems to have hope again. However, as long as human decision is still decisive, we cannot ignore human incentive. That is the power of theory.


Last but not least, I want to talk about three insights and gainings and hope to inspire you on doing meaningful and significant academic research.


Firstly, the position of economics academic research. The differences between political research and the academic research of social sciences are similar to those between science and engineering in natural science. Academic research aims to reveal the basic principles while political research aims for solving problems. We Chinese love to and hurry to solve problems. However, we tend to make mistakes when we are busying with solving problems before understanding the basic principles. If we are anxiously seeking for quick success, we might be penny-wise.


On the other hand, economics is social sciences, not math. Its theory must have practical relevance and be tested by reality as it is a science. However, realistic relevance is not equal to immediate usefulness, in other words, instant effectiveness. Maskin’s theory of mechanism design was later applied in auctions for radio waves, which was very useful. But this was not his initial motivation for conducting this design. Even the Hart’s contract theory closely related to reality cannot applied to specific reforms of bankruptcy proceedings immediately.


Social science includes the scientific methods that academic research of economics must follow. In scientific methods, there are theoretically and empirically validated analysis framework and analysis tools. Game Theory, information economics, contract theory and incentive theory are all important frameworks and tools. To innovate is to stand on the shoulders of giant and fully utilize existing tools to do unprecedented work. Therefore, theoretical innovation is innovative and inherited.


Secondly, the importance of academic research of economics. Chinese economic reform issue and transitional issue have gained much attention since 1980s and 1990s. However, the Chinese issue itself is not the sufficient condition nor the necessary condition for the important economic issue. A good Chinese economy does not equal to good Chinese economics. The precondition for an influential research is choosing important issue in Chinese economy. There were historical events in 20th century like the debate about plan and market, competition between planned economy and market economy, country with one thirds of global population in the transition from plan economy to market economy, the rise of Chinese economy, Chinese economy ranked the second in total volume in the world and predicted to be the first, etc. These events did have many important issues that need us to research and explore.


The technical training of economics in Chinese universities as well as the research skills are greatly improved comparing with 10 or 20 years ago. However, it is more difficult to understand that doing what research is different from how to do research. There are many other issues in choosing meaningful and important issues. In October, I participated in the natural science awarding ceremony of Qui Shi. When Yang Zhenning talked about the development state of physics in China, he said that doing a great work in physics is not about technical training but choosing the important issues. He used Heisenberg as example, saying that even though he made mistakes in the calculation in his thesis, he grasped the major issue. Yang Zhenning believed that the major block that hinders Chinese physicists is not technical skills but choosing research issue which needs scientific tradition. Comparing with physics, such issue is even more severe in social sciences. Choosing an important issue is more important than technical training. Scientific tradition needs long time accumulation.

Thirdly, the meaning of motivation in scientific exploration. On seminar in Coase’s 100th Birthday celebration in the end of 2010, Xu Chenggang referred to the Principle of Research in Edition of Einstein’s Work which was the speech that Einstein made in Max Planck's 60th birthday that held by Physical Society in Berlin in April, 1918. He said that there are different types of people in the temple of science, whose motivation for exploring science are different as well, some for a joyful sense of superior intellectual power and some for purely utilitarian purposes. They made great or even major contributions to the buildings of the temple of science. However, the root of the temple of science relies on a different type of people who tries to make for himself in the fashion that suits him best a simplified and intelligible picture of the world. Their daily effort comes from no deliberate intention or program, but straight from the heart.


To me, the principles of scientific research include three parts that based on three kinds of values, short-term utilitarianism, long-term utilitarianism and non-utilitarianism of intrinsic value. In terms of short-term utilitarian, they research for publishing papers, making results and earning professional titles. For long-term utilitarian, conducting research is aiming for becoming the top professionals in the country or the world, winning Nobel Prize and glory for the country. For non-utilitarian of intrinsic value, conducting research is for exploring the mysteries in the world and seeking for the truth.


In China, there are many researchers having the first or the second type of principles but only few with the third type of motivations. The first type of researchers might make achievements but not necessarily with innovation. The second type of researchers has long-term goals comparing with the first type of researchers and they can make innovative contributions. However, this is not the tidemark of principles of scientific research. Natural scientists and social scientists like Einstein, Planck and Coase are at the highest end. Without them, the temple of natural science and social science cannot be called the temple.

We ought to have higher end in the road of economics academic exploration.

Thank you.





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