Xu Chenggang: China has obvious achievements in the past 40 years, but on the basis of the old institutional gene, the mechanism that supports the Chinese miracle has failed.With the development and legalization of private enterprises, some new institutional genes are moving.
A popular saying is that the achievements of China since the reform and opening up of China are called Chinese miracles.The so -called miracle refers to the phenomenon that cannot be copied.But before China's reform and opening up, Japan, South Korea, Singapore, and even the Soviet Union and Nazi Germany had experienced high -speed economic development.Therefore, the rapid economic development itself is difficult to call a miracle.The real Chinese miracle is not the economic development itself, but the private enterprises in China, from illegal to legal, from scratch.
Why can the major development of private enterprises be called a miracle in China?The reason is that China banned private economy at the beginning of reform and opening up.All resources are completely controlled by the government from top to bottom.Without the conditions of lifting the ban, many local governments violated the party discipline and state law at that time, secretly covering and even supporting the development of local private enterprises, which not only helped the development of the local economy, but also laid the foundation for the later major private enterprises.Strong private enterprises have obtained a complete legal status and become the protagonist of the Chinese economy.This miracle is the result of the ingredients of some Chinese institutional genes.
When we observe the institutional evolution, we will find that in the long -term system evolution, some basic institutional ingredients will continue to replicate ourselves and therefore appear repeatedly.I call these constant self -copying ingredients as institutional genes.The reason why these basic institutional components continue to copy themselves is often because these ingredients determine the own interests of the main parties of the system.
In the following, I summarize the starting point of the 40 years of China's economic reform. Some of the institutional genes it inherited, as well as the role of these system genes in this miracle as a memorial for the 40th anniversary of reform and opening up.
The starting point of reform
Since the founding of the People's Republic of China, the Soviet -style totalitarian system has been established since the founding of the People's Republic of China.However, after the Great Leap Forward in 1957 and the Cultural Revolution in 1966, China's institutional system systematically deviated from the Soviet -style totalitarian system, and became a totalitarian system that was decentralized to regional rights.In terms of the ideology of the party, government and military, this system is the same as the Soviet -style total authority and extremely centralized.However, in terms of administrative, economic management, and resource allocation mechanism, this system is highly decentralized to local party and government power, and the Chinese economy has been made into large and comprehensive administrative economy (with the Soviet Central Planning EconomyThe above are basically different).The beginning of China's reform and opening up is the end of the Cultural Revolution.The institutional heritage left over from the Cultural Revolution is the system during China's reform and opening up.
In order to quickly get rid of the disaster caused by the Cultural Revolution, to find a way out in the disaster, at the beginning of the reform, China followed the reform model of Central and Eastern European countries closely. The most important countries include Hungary, Czech Republic, Poland, Yugoslav, and so on.In the late 1970s, the Communist Party of China invited Eastern European economists and senior government officials to come to China to introduce the experience and lessons of its reform to China.The Chinese government also sent a delegation to study in Central and Eastern European countries.
The basic ideas of these Central and Eastern European countries reform are market socialism. The basic characteristic is that the market operation completely replaces the central plan, but does not change the state -owned system of assets.In 1968, Hungary led the central plan to establish a marketing socialist economy, and other Central and Eastern European countries and the Soviet Union followed.However, due to the constraints of ideological and political restrictions, the reforms of all countries are prohibited from the establishment and development of private enterprises.Unfortunately, after more than 20 years of reform, from the aspects of economic development, technological innovation, and meeting consumer needs, all Central and Eastern European countries that insist on comprehensive state -owned system have acknowledged their comprehensive failure of market socialist reform.The main reason for failure is that private enterprises are not allowed to develop.They generally recognize that the reform of ownership requires changes in the political system.This was the basic reason for all Central and Eastern European and Soviet countries between 1989 and 1992.
What needs to be supplemented here is that many people's transition from the beginning of the 1990s in the 1990s and the reform of the 1990s were confused with the reform of more than 20 years before 1990.The so -called rotation is based on the complete failure of more than 20 years of reform and the entire system has collapsed, and the track of the basic system has been transformed.Only during the derailment period can private enterprises be allowed to develop.Those countries have developed serious economic recessions during the derailment.Many people have guilized the economic recession in the derailment as a shock therapy and other policies.In fact, the failure of more than 20 years of reform not only caused the collapse of the state -owned system, but also accumulated enough debt, which laid the root cause of the economic recession.
Back to the starting point of the Chinese miracle in this article, one question we want to answer is why the reform of private enterprises in Central and Eastern Europe and the Soviet Union for more than 20 years is strictly forbidden until the full collapse?Why China's reform started after the Eastern European countries. However, students surpassed their teachers, and private enterprises grew up illegally and became the protagonist of the national economy?
The motivation and institutional gene of reform
The starting point of China's 40 years of reform and opening up is precisely the end of the Cultural Revolution.From the totalitarian system inherited by the cultural revolution, the large, complete, small and comprehensive government at all levels controls everyone and controls all the resources in all areas of the country.No matter what the central government's decision is, the success or failure of reform depends on how to solve the problem of incentive mechanisms of local officials at all levels.Is it possible to advance whether the reform and whether the economy is growing depends first on the motivation of governments at all levels.
Where does the motivation of reform come from?Or who will reform?The core of these issues is the incentive mechanism.
In the Chinese system, the entire society is ruled from top to bottom.Therefore, how to solve the problem of incentive mechanisms between superiors determines the reform and development of this system.However, it turns out that the problems of the incentive mechanisms of all levels of bureaucratic bureaucratic bureaucrats in all the totalitarian and authoritarian bureaucratic systems of ancient and modern China and foreign countries cannot be basically solved.Because this system requires subordinate officials to obey the superior officials, the superior leaders must obtain information from the subordinates, and determine the reward and punishment based on the information reported by the subordinates.The informed subordinates can easily deceive superiors for their own interests.There are policies, and there are general laws.
Without an appropriate incentive mechanism, most local officials will not automatically work hard to reform.Just as in an enterprise, if the problem of incentive mechanisms cannot be solved, most enterprise employees will not work hard to work and innovate.Different systems determine the characteristics of power and resources; determine the problem of information between superiors and subordinates.This is the source of the problem of incentive mechanism.Any reform or innovation requires the efforts of subordinates.On the one hand, for subordinates, hard work is his cost. The superior can only observe the performance of the lower level and cannot observe the degree of effort.On the other hand, the performance of subordinates also depends on the degree of effort and other external factors. Therefore, how to link rewards and punishments (such as promotion) with performance is the core of the incentive mechanism.Because under any system, power and resource allocation are arrangements for solving the most important incentive mechanism problems.
The birth of the so -called Chinese miracle is precisely due to the early reform. The method of sorting competitive economic growth in the region solves the problem of local government reform.The so -called regional sorting competition refers to the evaluation standards based on the performance sorting of its subordinates' local governments, and the performance sorting of the performance of the lower government is directly linked to their promotion.In addition to economic growth, the most common other performance indicators include attracting foreign investment, exports, industrial output, and so on.In academic, this kind of competitive way is called sorting competition, or championshipEssence
On the basis of solving the pursuit of economic growth and the motivation to promote reform in the use of regional sorting competition methods, inspire local governments to conduct bold local trials. It is the reason why the private economy can obtain localities in many areas in many areas in many areas.The protection of the government can survive and grow.One of the most important examples is Central and southern Zhejiang and southern regions of Wenzhou.Wenzhou has almost no state -owned assets.To compete for economic growth with other places, it is necessary to protect and indulge the development of private enterprises.In the context of illegal private enterprises, it is protected in the name of collective system.The nominal collective enterprises, the facts of private enterprises, and large -scale development.
However, the theory of economics tells us that in principle, there is no common method to solve the problem of incentive mechanisms for government bureaucratic systems.We theoretically prove that under the following four specific conditions, local sorting competition can solve the problem of incentive mechanisms in the bureaucratic system (Maskin, Qian Yingyi, Xu Chenggang, 2000; Xu Chenggang, 2011).A large amount of evidence of sorting competition is beneficial to economic growth (such as Li Hongbin, Zhou Li'an, 2005), which meets all these conditions.But it must be emphasized that these four basic conditions cannot be met at the same time when most of the time.When it cannot be satisfied at the same time, in violation of any of them, regional competition cannot solve the problem of incentive mechanisms in bureaucratic institutions.A solid empirical evidence shows that when one of the conditions is violated, sorting competition can lead to evil results, such as destroying the environment (Jia Ruixue, 2017).These four basic conditions are:
First, the bureaucratic system (common characteristics of totalitarian system and authoritarian system) that effectively appoints, supervise, and execute it from top to bottom; second, except for the highest levels, bureaucratic bureaucratic agencies are organized into large, complete, small, and comprehensive.Structure (characteristics of China decentralization); Third, the government has only one competitive goal that can be clearly defined and clearly measured; fourth, other issues other than the above competition goals will not cause serious consequences.
The totalitarian system of the Soviet Union and the Central and Eastern European countries before the derailment of China meet the above conditions.During the period when China ’s whole Sulva and the establishment of the Soviet -type totalitarian system, the system of conditions has been greatly strengthened.At the same time, the two types of conditions left in Chinese history were severely destroyed.After the two campaigns of the Great Leap Forward and the Cultural Revolution, some of China deviated from the system formed by the entire Sonalization.In the framework of the totalitarian system, the system elements of administrative and economic rights that are stable in the establishment of the imperial system during the imperial system have been reconstructed, so that conditions II can be met.This is important because its existence makes China different from the Soviet -style system and has become one of the basic conditions for the feasibility of regional competitive mechanisms.
The totalitarian system of local decentralization is not only the institutional foundation of China's reform achievement, but also because of regional sorting competition mechanisms, it cannot be applied in the economic reforms of the Soviet Central and Eastern European countries, which cannot be copied.Developed into a miracle.Although the imperial system has no longer existed in China, the traditional Chinese system genes have replicated themselves in modern society, and have laid the foundation for Chinese miracles.
Tomorrow of Reform
The concept of institutional gene can not only help us analyze and understand the major achievements of the early achievements of reform and opening up, but also help us understand the dilemma we encountered in the reform path in the past decade.At the government or system level, the reason why regional competition can play a very important role is that the prerequisite is that the government must have only one goal: GDP.But any government in the world must not be a single goal but a multi -goal.
In the early stages of reform and opening up, the Cultural Revolution has just ended. For political reasons, all its forces are concentrated in economic growth to reduce high -level differences.In addition, China was one of the poorest countries in the world at that time. Putting all its forces on economic growth is acceptable to the whole society.Therefore, the method of competition in the region can be used to solve the problem of incentive mechanisms in the bureaucratic system.
However, when China has become a middle -income country, the basic nature of the government means that it must face multiple goals.As a result, the central government could no longer continue to use local governments to compete with each other as an incentive mechanism.As a result, those practices of Chinese miracles have not been effective in the past.After China has changed from the poorest country in the world to a middle -income country, when society has numerous major problems that exceed economic growth, such as environmental, inequality, corruption, social stability, etc.Nothing can be satisfied, and it will become more and more unsatisfactory.A series of data tells us that before more than ten years ago, before the outbreak of the global financial crisis, many serious social problems, as well as the consequences of the increasing invalidation of the regional competition incentive mechanism brought by it, have begun to appear.
The effective regional competitive mechanism, which has been effective, and the miraculous achievements made by the early reform and opening up under this mechanism, are only transitional, but only won time for further reform.I did not know this issue, but I mistakenly touted this as a Chinese model that could always be implemented. It only made a leafy eye, making it harder to make system reform.
The theoretical and empirical research of social sciences has found that in the fields of politics, economy, and judicial, in addition to the simple and emergency organizations such as the army and fire brigade, the centralized bureaucratic system ruled resources and manpower, and the incentives cannot be resolved in the face of the centralized bureaucratic system.The trap of mechanism problem.Specifically, as long as it is faced with important multiple tasks, the top -down government bureaucratic system cannot solve the problem of incentive mechanisms of bureaucratic bureaucracy at all levels; the top -down judicial system cannot effectively enforce the law; the top -down fiscal and financial system, Soft budget constraints will occur, thereby restricting innovation.
Therefore, the market economy surpasses the planned economy; more than, for the order and development of the market economy, it should minimize the top -down administrative system, financial and financial system, and judicial system from the political, economic, and judicial system.In the field of top -down rule, we must try their best to reduce the scope of its rule.For example, it is necessary to separate all competitive economic activities as much as possible and as fast as possible from the government and state -owned enterprises as much as possible, let the market allocate resources, let private enterprises compete, and let private enterprises solve the problem of incentive mechanisms in the market.
China's achievements in the past 40 years are obvious to all, making people optimistic.But on the basis of the old institutional gene, the mechanism that supports China's miracle has failed.The road that passed in the past is difficult to repeat.The reform is not to be blind and optimistic tomorrow.With the development and legalization of private enterprises, some new institutional genes are being sprouting.How far can China go and how fast you can go depends on the generation and development of new institutional genes.
(The author is a professor of economics at the Yangtze River Business School. This article only represents the author's point of view. Editor -in -chief email: [email protected])
