Theory of the Firm and China's reform

 Theory of the Firm and China's reform and
2008-10-09 16:14:49
Theory of the Firm and Chinese Reform
Zhou Qi Ren
Weekend October 9, 2008 Thursday
individuals from Zhou Qi Ren Website: reproduced please specify.
mm Coase then used his teacher used a vivid metaphor, like a real market economy, the sea is the sea of those companies, large and small islands.
mm Deng Xiaoping reform policies the most amazing place, is in various forms of economic organization developed after the launch price reform in a timely manner.
Speaking from Kos: The company is a market in the ocean island
thought the origin of a planned economy is theory of the firm. Marxist discourse, the great house in a planned and unplanned whole society, it is this conflict will push the demise of capitalism. At that time the view is more and more social productive forces, so the company will increasingly larger, until covering the whole economy, the internal plans of large companies plan to become whole society. this view, the theory of planned economy, in fact, the first is a theory about the company. Lenin put it more clearly, the socialist leadership of the proletariat , is to all members of society have become a national company employees, the whole economy is a super-national companies.
Coase Looking back on his theory of the firm, clearly speaking, he was subjected to the impact of these ideas of Lenin, that countries can be seen as a big company. Of course, Coase provides information on the company's economics. He first asked: In the the price mechanism to run enterprise? Coase's answer was the cost of market price mechanism. The transaction costs. As the market expands, transaction costs have to spend a lot of resources. In some cases, the price mechanism to use the then went to the market in the enterprise organization. However, Coase can not come to the State Super company so far, because his analysis also take into account other costs, that concentrated within the enterprise, the Company's costs (including decision-making, supervision, management costs) to rise.
complete look, Coase's theory of the firm is taking two costs: the company can save the cost of market transactions, but must pay the costs of organizing this, when the companies to save costs and thereby increasing the transaction costs of organizing are equal at the margin, when the boundaries of the company and the market to determine. Coase with his teacher used an image of the year analogy, the real market economy like the sea, the ocean is those companies large and small islands. In Coase view, transaction costs and organizational costs in the coexistence of the real world, the Ocean can not cover everything, let alone cover all the island Ocean.
reform starting point: the super-national companies dysfunctional
reform socialist countries, and contrary to the starting point of Coase. Coase contemporary economics from the reason the company exists. the former Soviet Union and China, reform, it is from the practice of the planned economy, that is, a super-state's reality. The super-national companies, all economic resources in their own hands, by the state machine political authority, coercive power, and a comprehensive plan to organize the national economy. Lenin came to power after a period of and the market, but it was a very short-lived. Stalin advanced the overall nationalization, the Soviet economy before the revolution, Lenin organized into the envisaged super-state companies by executive order organization within the planned economy, not to private property rights and free market activity illegal left status.
China in the more backward turn a peasant country to build socialism, the Soviet Union is also a great framework. But Chairman Mao and the Soviet Union's highly centralized and not much satisfaction, several tests of decentralization, the decentralization of the central to place. Looking back, it was only in the central government and the separation of powers between local governments, is a super-national companies plus many local government company. This of course can not constitute the basis of a market economy, because ; this issue, Chairman Mao, not to step. really where the local government to economic decision-making into private hands, he must stop the elderly, such as the 1962 installment of ; household responsibility system. is not as good as the internal level of the former Soviet Union as a . Over the years of socialist economic construction problems, is super-state in the company's costs are too high, failure of the planned economy, efficiency of resource allocation is too low. millions of people to improve their lives in times of peace, involving many variables and the coordination of supply and demand? by the planned economy, a super company to deal with centralized decision-making, information costs are too high, and people incentive to work less than .1977 of labor reform in China in the eve of the State Council has opened a retreat to reflect on why China and the major Western economies, the technology gap pulled big, over-centralized main conclusion is that more and more centrally planned economy will not turn.
reforms launched: Decentralization and rural household responsibility system
problem is that after the establishment of super-national company, organization costs if it is found too high, what Which route to the cost of running the economy down, is indeed a task of unprecedented. Coase's theory found that the market transaction costs are too high, you can expand the organization to be saved. but the social Reform of the difficulties faced by Marxism, fully prof: State Super company too, the organization costs are too high, how can we reduce it?
seems easy to determine the direction, that is, cover all of the national economy from the super-national companies, turned to the ; market sea system, the market how the reconstruction of human history and experience and theory is not readily available.
Coase in 1959 in a paper that clearly defines the rights of the key conditions for market transactions. This proposition contains a simple truth: If a thing is not me, then I put it where the right to sell you? Therefore, the transaction should be defined as a prerequisite to the right. Since the market economy for the content of the transaction, then the premise is the clear market the right to define.
reform in China, in practice the right from the start to redefine. In the , that is how people can act, not how the behavior of a system specification. forced by the situation in the reform, the right to be re-defined, because of re-defining the rights, especially the re-recognition of private property rights and transfer rights, market relations before re-up development in China.
1978 �� deployed the Third Plenum of the reform is to expand the autonomy of state-owned enterprises. It is based on the local reform experiments in Sichuan, the original organ controlled by the country's economic decision-making power, into the enterprise level. This is a response to external shocks because of foreign investment entered China, they can make decisions quickly, but not state-owned enterprises. What should be approved, a large state-owned enterprises to build a latrine must be declared with the approval of the so-called famous story, where a set of equipment is the Westernization Movement era, the energy consumption greatly, if altered, the driving force, two years of energy savings can recover their investments. But the report played for many years, or not approved. So was the slogan of the reform is decentralization, deregulation.
Interestingly, the expansion of enterprise autonomy, not in the global open, and the rural household responsibility system reform on the agenda. A few days before the commemoration of 30 years at the rural reform , when the charge of the work of Du Ruizhi rural Guangdong told a wonderful thing: the first power of rural reform, the peasants of the belly! is the farming of people hungry, not hungry stomach, forcing out the household responsibility system. is not the first time, the household responsibility system is the first in Wenzhou Yongjia County, the second half of 1956, began to engage in high society; 40% in 1961, Anhui Province, the production team out of the household responsibility system. The problem is the situation before a turn for the better every time, temporary policy to recover the.
path of China: the bottom of innovation, the Government acknowledges
after careful observation of rural reform in 1978, the same as in the past, farmers and production team cadres under the first change spontaneously engage in household production. not the same place where? is the top line of a fundamental change in political ideology, the ruling party and work hard to make realistic, book worship, dogma and rigid. In this ideological line, some local dare to reform the bottom of the first to admit , at least not big stick, allowing to try, take a look. a number of places to see the effect of the reform, the central policy document then, to recognize, the final legislation recognizes the complete legalization of the right to redefine the whole process.
this Article constantly reiterated old in his memoirs that, as early as 1962 Deng Xiaoping said, restoration and development of agricultural production, to take what form; people willing to take what form it should take what form it illegal to make it legal. become the dominant line on the Third Plenary Session. This changed the fate of China, because at the bottom, in the first line, there will always extract a number of ways of solving practical problems, the problem is, they can not get recognition. has been to redefine the right to have a system of results. get it? underlying experience or individual experience, at best an expedient measure, absolutely can not last long.
. ideas and concepts have a strong stubborn, not to mention contradictory interests of all parties, and each angle of approach is often the central meeting different .1980 rural reform, party secretary because of the high officials as a difference of opinion was referred to the bad terms. test of truth is a process easier said than done.
radical redefinition of rights can also be gradual. China's reform process generally come step by step. is this view, the ownership of rural land still belongs to the collective, it seems exactly the same a few decades ago. just change the ownership of the content is no more than the contract by contract, to agricultural land use rights, management rights, the right to return the contract period until the transfer of rights, one by one are defined to the farmers. Agriculture collective ownership of land still, but in this title to be a negative owner. in the production and economic activities, the positive is that farmers contractor.
have friends criticizing that the contract system is not complete, that still maintains a sense of collective ownership and, therefore, to grass-roots power of people leaving a violation of the interests of farmers basis of the system. This criticism is justified. But if this step had not take household responsibility system in rural China do not go out. go first step, followed by further defined property rights along the way, the total can go on. such as the contract system, collective resources of a still mode of operation, but the contract farmers income can be clearly legitimate private property. This shows that is re-are also generally valid. This is something for the refrain.
right to redefine the contract system is a Chinese form, but also super-state organizations from the high cost of the company came out of the predicament of a realistic channel. contracting business from the public, to include private property system, including the formation of a variety of property rights system, and finally take the market economy, China has laid the foundation of the road.
property rights are not using it, but to make use of them, especially to protect the co-operation with others, formed through the exchange of specialization. Here there is a thing too much trouble to head is hired. With the end of the same big pot of Agriculture, there have been massive rural To eliminate capitalist exploitation, when the policy, private workers over seven workers the capitalist, that is, the exploiting class.
This is the household responsibility system, the reform of the second issue encountered. this thing handled more successful, basic approach is to look at, do not rush to make decisions, but are not allowed to stick to the crushed one.
was caught a few cases. A Tony Chen, Guangdong Gaoyao County, contracting fish, there are more than three acres of water, relying on family labor and a few helpers not enough, and hired more than 7 people. It is not that capitalism? a lot of people started to discuss, and later Hu Yaobang personally intervene and asked to clarify the situation, different views can be debated, but do not big stick, also decided in the , the famous iron rice bowl. the competition for good workers. Tonnochy personally organized a survey of the situation very carefully and tangible: the number of people employed in the end, made a number of salary, pay no taxes to the state, the boss how much total profit of all find out , then the arguments have to figure out different views, organize a material reported to the Deng Xiaoping. I remember returned by Deng Xiaoping's instructions, that is five words mm the last batch of capitalism, not only with a critical weapon, and often in front of a recognition of the private sector and there is no socialist real danger. This is a very important step in economic development. In fact, Deng Xiaoping returned to power shortly reactivated Rong, which is representative of the national bourgeoisie in the past, through state-funded Office of CITIC However, the management of full power to wing boss. in fact the ability of state-owned capital with entrepreneurs mm which is something impossible to imagine the past. In addition, the household responsibility system into place after the civil from the many new forms of business organization, Deng Xiaoping has been said look, do not move, such a policy orientation about two to three years to maintain the central 5 In 1986 announced the beginning of the file, you can put into the private sector to deal with the socialist framework. China's industrial and commercial registration began the Some take the time to shed a tear card, that finally have a legal status. actually start a company, fried melon seeds, shoes like that. This is the second leap of China's reform, not only recognized the labor of workers based on their own ability of property rights, but also in the framework of laws and policies, employee contracts, including contracts through the market to organize economic development of production.
breathtaking prices break through the barrier
reform policies of Deng Xiaoping's the most amazing place, is in many forms of economic organization developed after the launch price reform in a timely manner. logic is this: when a super-national companies broken down into many separate companies, with the newly formed private company, the economy can no longer rely on plans and orders to command, to give full play to the market price mechanism of coordination functions. From the spring of 1988, Deng Xiaoping began to promote the price reform. China's price reform called the The core and key. the original Soviet Union and Eastern countries such as Poland, the change to the price system to be a big problem. This is a big barrier, there is no strong political support can not cross this off.
strongly promote the price reform of Deng Xiaoping. This is valuable. Usually speaking, economists understand and believe that the price mechanism, on the whole easier. but the politicians in power, to believe that the price mechanism usually more difficult. because so-called plans to see the hand, between inadvertently replaced. the price mechanism into play, the approval of the hand, the hand of power not much use. Xiaoping served as General Secretary, command over the powerful army, clearly has strong visiblehand, should be the world's most powerful visible hand. are like this great statesman and his colleagues to spare no effort to price support and promote the reform is to reform the least likely places. no strong political support for price reform is difficult to succeed. However, to politicians in support of price reform, but also easier said than done?
, of course, the price of 1988 which pass through the wave of the launch, and did not succeed. Politburo that year on the price and wage reform, a published decision, the country to buy and run occurred. The main lesson is that too many cases in the currency, liberalizing prices put the stealth inflation, inflation becomes dominant, the masses can not be accepted. However, Deng Xiaoping has not put price reform as a restricted area can not meet again. He waited patiently for several years, until the super-issued currency Shoulong was about time to push prices in 1992, he changed. big step forward in China's price reform was completed in 1993, even the most powerful food prices are liberalized. This is the establishment of China's socialist market economy, laying a foundation.
broad point of view, the leadership of Deng Xiaoping, China's reform, by redefining right, activate the market contracts to establish the market price-based coordination mechanism, that is, so the three points, the traditional socialist super-state corporate model, radically changed. the reform process, no major shocks of social, economic activity and production of not only continuous, but also to maintain a continuous high growth. It is through reform and opening up of China as a large developing country with global influence.
bound by the rule of law back to talk about the power
Coase's theory of the firm . He left the starting point is that contemporary mainstream economics, the reduce transaction costs for the real economy was active in the world. Coase understood the company is through internal orders, engage in plans and strategies, there are owners and managers, by the visible hand of the command, thus saving the transaction costs of market . However, Coase did not believe the company the bigger the better, because he also found that the big companies have to face the rely on central planning command command, and that transaction costs are of course able to save all, but this see Coase's theory, is to uphold the constraints of cost, analyzing real-world markets, business and government. model market economy on one of those problems, but faced with the trouble of planning within the system information cost mm high and low incentive levels. Therefore, the reform of the tone is from the State Super company that is starting a planned economy towards more use of the market price mechanism. So that reform is not to go national companies, nor is the so-called perfect market.
the difficulty of reform in the wrong? is to leave the perfect super-national companies that market and the poles in the middle there is a lot of room for maneuver selection system. Chinese companies from the super-state out, by the re-definition of rights. The problem is to redefine the rights of a process, which has a key, Deng Xiaoping put forward, but not resolved, this is the definition of national executive power and restraint. because in the past super National company is Zhengqigeyi, political and economic unity, decentralization reforms, the executive power and economic power to go down with the new problem is that delegating authority to bind rely on? leave effective binding, the executive power into the market that corruption is not a moral issue of individual officials, but the institutional problems. broad executive power to stir the market transactions, how to resolve?
.1980 Deng Xiaoping has done a lot to explore about the party and the years to reform the state system , 1986, he was revisiting this topic, has made it very clear that, first, that if not engage in political reform, economic reform achievements is the restrain of; second, if not to engage in political reform, economic reform is can not continue. That is, the economic reforms launched after the political system must be launched in due course. elements of the reform is to super-state that part of the company's executive powers, bound together again In 1987 the CPC adopted a political system Thirteenth reform agenda, but the price break through the barrier in 1988 failed, the ensuing turmoil in Beijing, there is no chance of implementing the political reform program of 1992 and pushed the reforms Deng Xiaoping's Southern speech, the main thing is to push economic reform, marketization and accelerate development. So the political reform, Deng Xiaoping's unfinished ready.
super-state company is not purely a business, it is also a power (power) system, not just the is not suitable theoretical framework with a contract to deal with it. Some economists accustomed to deal with the market of contract theory, principal-agent model of what local government competition, and so, I think they may have missed a key constraint is not legally enforceable contract constraints. the reality of the central government departments or local governments, although it seems like corporate behavior, but there is one factor, namely, power factor, the legitimate coercive power factor, not the market contracts can be deal. such as income distribution, public opinion much. But the problem is not only is the difference between income issues are more fundamental causes of income differences on what basis? Yao high income, is one thing, but the corruption of Wuhan Railway Station high-income owners, is another matter. scalping for the illegal use of revenue from the power that is legitimate coercive power, not the market forces of competition can be restrained.
ability to make money. must be clear, this problem is not simply economic reforms can be solved, nor can these activities great success, with farmers contracting with private enterprises, with the reform of state-owned enterprises, but also have a price mechanism in the allocation of resources according to a market economy basis, these reforms greatly emancipated productivity in China. But we also see that reform did not complete. The biggest challenge is Zhengqigeyi super-national companies, after the decentralization, property rights can be constrained by competition in the market to go, but the executive powers are released only to rely on the rule of law may be effective constraint. This is the more difficult reforms.
land, and price monopoly of state-owned enterprise reform is the difficulty
there is a perception that China's reform is progressive in terms of strategy, or some scholars summed up the Russia's is not easy to be changed. The difficulty here is no longer understanding, or purely ideological, but very hard, it's vested interests. The current observation that any difficulties in the reform, are related to this .
such as the reform of land property rights system, the first place, but today there are some crucial issues remain unresolved. agricultural land base along the agricultural system that is contracted to the home, long-term change, the implementation of the transfer of power, can basically meet the productivity requirements. However, once agricultural land to non-agricultural uses, the land requisition system in that country or the world shine. why the farmers of the land when converted to non-agricultural purposes, there must be national compulsory acquisition, and then to the land leased by the government to the market ? This is the most obvious example of the executive power to enter the market. Now a lot of social conflicts have occurred in this area. Why is the rural collective construction land, the land can not directly enter the market? discussed for many years, the experience of local tests a lot, there are more underground, semi-underground practice, why is the long delay in completing the nationwide legalization? In my opinion no other reason, that is, the benefits of power stirred the market is too high, no vested interest parties willing to give up.
farmers around the city as city, urban land use, of course to increase, but the country as a share of the homestead benefits, farmers have no right to transfer and trade, would the allocation of land resources and, therefore, not subject to price guidelines. the result is not only China's rapid urbanization no more intensive use of land, instead of an even more intensive land use. the one hand, urban land was placed on the one hand a large number of unused rural land for construction. so the inevitable result. Recently countries have begun to redefine property rights to promote forest is an important reform. like water rights, mineral rights, and so re-defined, there are many articles do.
another example, there are private enterprises great development in recent years also adopted the triumph, it seems to become bigger and stronger so that only one thing.
whether price reform is not completed? much of the price determined by the market is a fact, but some key price or administrative pricing. exchange rates, interest rates, energy such as coal, oil electricity, where serious problems of the national economy in recent years, looks around with the price mechanism to play a role not related. Experience has shown that price controls will not only affect the configuration of the number of resources, but also affect the quality of goods and services. no further price reform, difficult to eradicate a lot of chaos.
In short, the great achievements of China's reform, the task is arduous. only seriously sum up their experience to better move forward. real complex phenomena and problems, this simple theoretical framework for companies to borrow, to understand the past the face of the future. above views for you criticism.
(The author is a professor of Peking University's China Center for Economic Research, this is the day of the Economic Institute of the Guangdong Institute of Memorial Humanities seminar on 30 years of reform and opening remarks , text revised by me)
from Zhou Qiren website: reproduced please specify.