Parse of China: Gradual Reform Logic Based on Bargaining Game PDF
Preview Parse of China: Gradual Reform Logic Based on Bargaining Game
Yilun Tong Parse of China Gradual Reform Logic Based on Bargaining Game Parse of China Yilun Tong Parse of China Gradual Reform Logic Based on Bargaining Game 123 YilunTong Hunan University of Science andTechnology Xiangtan, Hunan China ISBN978-981-10-4477-9 ISBN978-981-10-4479-3 (eBook) DOI 10.1007/978-981-10-4479-3 JointlypublishedwithTruthandWisdomPress TheprinteditionisnotforsaleinChinaMainland.CustomersfromChinaMainlandpleaseorderthe printbookfrom:TruthandWisdomPress LibraryofCongressControlNumber:2017940355 ©TruthandWisdomPressandSpringerNatureSingaporePteLtd.2017 Thisworkissubjecttocopyright.AllrightsarereservedbythePublishers,whetherthewholeorpart of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission orinformationstorageandretrieval,electronicadaptation,computersoftware,orbysimilarordissimilar methodologynowknownorhereafterdeveloped. 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Theregisteredcompanyaddressis:152BeachRoad,#21-01/04GatewayEast,Singapore189721,Singapore The book is dedicated to my mother Yu Guixi Foreword The Bureaucratization Trend of the World and its Outcome “Will this world be better” once asked by Liang Shuming, the last confucianist of China,inthe1980s;BertrandRussellalsoaskedinthe1960s:“whatwillhappento humanbeingstomorrow?”Now,itturnstoourgenerationtoaskthesamequestion. My answer is: the world won’t be better, because it develops generally towards bureaucratization,andtheultimateoutcomeistheinternalrevolutioninpopulation or its extinction as a whole. The bureaucratic process of the world is just like a spiraling screw which is destined to have such an end-result since its first ring. However, as one of the complex phenomena in Hayek’s discourse, the bureau- cratization of a society is more complex than the process of tightening a screw. When we areall utterly ignorant, some bureaucraticfactorshave gradually formed from some little buds in many aspects of social organizations, such as politics, economics,andlaw,atawideranddeeperlevel.Thosefactorsreinforcefromeach other. Finally, bureaucratization becomes an irreversible process of social evolu- tion.Atthistime,wecan’taffordtheburdenofthebureaucraticmachineandtryto getridofthevisibleendarrangedforusbythefate,butitistoolate.Wearekeptin an iron house and feel suffocated, regardless of those opening the eyes or being in lethargy. Max Webber is perhaps one of the few sober persons in the iron house. He has realized a certain inevitable connection between the tool nature of rationality and the bureaucratization of social organizations. Human history also supports his opinion.Itseemstobealwayswanderingbetweentwoextremestates.Oneiscalled “the period of value creation”, and the other is called “the period of value depletion”. Value creation is the social function of some leaders with Charismatic charm. These leaders can make the public obey their charismatic authority from the heart. Menciusonce said:“there mustbe anew king inevery fivehundred years, among whom there must be some famous ones”. According to his observation, the period of value creation appears at an interval offive hundred years. The so-called king vii viii Foreword refers to the Charismatic men like Chengtang, the Duke of Zhou, and Confucius. Here, the public and the leaders are combined into a social organism full of cre- ativity. And in decades of years, new material life, sociallife, and spiritual life are created. Max Webber pointed out whereafter, firstly, Charismatic characters could live for only decades of years after all; secondly, passion would return to rationality soonerorlater.Inordertomaintainthenewlifebearingnewvalue,thesocietymust rely on the professional bureaucratic group. Then, it is inevitable to form the bureaucratic process which gradually kills the creativity of the society, which is known as the period of value depletion. The social management period of bureaucratizationcanusuallybeverylongwithonehundredastheunit,succeeded from generation to generation with the lasting influence. Asoundsystemofbureaucraticinstitutionmaylastforhundredsofyears.Ifwe say that the eternal dilemma of Charismatic characters is “cultivating the succes- sors”(becausethecharismaticcharm cannotbecopiedorinherited),butthesound bureaucratic institution seems to be able to replicate itself, as long as it allows the social members who are the most suitable for maintaining the existing institution share enough vested interests. In the long term, the bureaucratic social institution is unsustainable in units of onehundredyears.Afterall,thecreativityofindividualsisthesourceofallvalues. Therefore,thebureaucraticprocessisalsotheprocessofself-destructioninthelong run.ReaderscanrefertoATheoryofEconomicHistorybyHicksformoredetailed demonstrations.Thus, inthe long term, no any human societycanavoidthe threat ofrigidnessanddeath.Agreatsocietymustconsistentlyseekinstitutioninnovation, soastoinspiremanydifferentindividualstocreatevaluesinalldifferentdirections. When explaining the economic growth phenomenon, Acemoglu, the economist at Massachusetts Institute of Technology, published a paper in the Journal of Theoretical Economics (two of his partners are from Spain and Switzerland respectively) to discuss the competitive relationship between two forces causing economic growth, namely, innovation and standardization. That standardization, pleasenote,meansmanagementbureaucratizationtoagreatextent.Thusthekeyto sustainable economic growth is to achieve a balance between innovation and standardization. Through standardization, the enterprises can acquire the scale economic benefits of new products. At the same time, they must pay the price of creativity decrease. The optimal choice is to achieve a balance after offsetting the marginalcostbythemarginalrevenue.However,theauthorsofthepaperprovethat the balance is not the only one. Afterinvestigationonamoregeneralsocialprocessbeyondtheeconomicfield, it is not hard to imagine the balance between value creation and value depletion similartotheaboveone.Ifasocietycanmaintainsuchabalanceforalongterm,it can be expected to maintain the long-term prosperity, like hundreds of years of prosperity.Whyisitdifficultforustoobservesuchasociety?Obviously,itisvery difficult to maintain the balance. In other words, the balance lacks the necessary stability. So, we should ask: is the balance above naturally instable? Foreword ix Ofcourse,Ihavenoreadyanswertotheaboveproblem,butIholdapessimistic negative expectation; or, I don’t believe the stable balance existing between value creation and value depletion. Therefore, Keynes’ following expression strikes a sympathetic resonance in my heart: human civilization is extremely fragile. In a sense,civilizationisonlymaintainedbytheheartsoftheminorityofus.Thusalso, we have the courage to bear the inescapable mission. Then,isthefightagainstthebureaucratictrendeffective?Thisisfirstapractical problemwhosesolutiondependsonthepracticeartofthereformers.Secondly,asa theoreticalproblem,theeffectofthereformdependsonwhetheritisthoroughness or not. The reform fails always because it is not thorough. Therefore, in order to make the society move forward, it is inescapable to convert the reform into a revolution. ThisarticleisinspiredbyDr.Yilun’sbook.Itissuitabletobeapreface.Readers mustreadthebookpatiently;oryouwillnotunderstandwhytheshortpassagecan be the preface of such a book. Xiangtan, China Wang Dingding Autumn, 2016 Preface To understand China, it is necessary to parse China’s reform of social institution. ThegreatchangesinpoliticandeconomyofcontemporaryChina,formorethan 30 years, not only have the empirical significance of the Chinese context but also become an important event in the history of modern human civilization. Different from the violent revolution process of traditional centralized politics, nor the democratic election process of traditional western politics, she began with the practice consciousness of pure Chinese local meaning, but has owned the core connotation of western civilization sense with the outstanding achievements in social transformation. Despite the controversial opinions since its appearance, she has been developing according to her own logic, in which the political economic principle involve the academic debates between the radical reform of the new Classical Liberalism “Washington consensus” and the gradual reform of the Chinese model, and connect with the practice direction and path selection of China’s reform as well. Adhering to the academic tradition of the thought of classical political eco- nomics since Adam Smith, the book tries to regard the institution change as the non-violent process of bargaining game for continuous adjustment and agreement of social contract by related participants so as to give a unified logic based on the bargaining theory around the institution phenomenon of gradual reform since China’s “reform and opening up”. Allthespontaneousfolkbehaviors,suchasthehouseholdcontractmanagement inXiaogangVillage,townshipenterprisedevelopmentinWenzhou,andevenearly explorationofShenzhenSpecialZonesincethebeginningofthereform,1aretaken assomekindsoftheobjectivelystrategicactsofthegeneralizedbargaining,andthus the related policy changes of government as the results of game equilibria of bar- gaining between two forces of the market economy and planned system. For this 1WetakethepracticeprocessofShenzhenSpecialZoneasanevolutionaryprocessratherthana simpleplanningdecisionofthecentralgovernment,whichisconsistentwithitsfoundingprocess. TherelateddiscussioncanbefoundinthememoriesandrecordsofHuYaobang,XiZhongxun andRenZhongyi. xi xii Preface purpose,thebookwillarguethattheinherentlogicofbargaininggamerequiresthat two parties with contradiction not only reach the cooperation of compromising transactionin reform plans but also play abargaining game ontheexpected return of the reform, so as to make the institution reform balanced the cooperation effi- ciency with the fair values of confrontation.2 This kind of reform of “priority to efficiency with due consideration to fairness”, namely the reform principle of Chinesecharacteristics,givesChinareformtwokeyconnotationsofpractice:firstly, it liberates the institutional constraints through the institution adjustment of non-violent bargaining which is required for developing the market economy sys- tem; secondly, it preliminarily realizes the reform goal of Washington consensus through the market-oriented economic restructuring—complete competition in the economy,resourceallocationbythemarket,andeffectiveprotectionoftheproperty. That is, the theme of the book is the pure institution reform theory. By the method of combining the bargaining theory in K. Binmore’s sense with the utili- tarianismfromJ.Bucanann,itworksatthescientificandrationalanalysisinvolving both economy and politics, and examines how the social institution reform occurs andformsintheprocessofthegeneralizedtransactionofpeople’ssocialbargaining behaviors.Since thebargaining institutionreformconsistentitsinherentlogicwith the mass line of “seeking truth from facts” and the political practice of the CPC3 which corresponds to the real social life in contemporary China, it possesses a unique practical value and the fundamental connotation. Of course, the bargaining institution reform is not the whole story of social institution change in China. In reality, the latter is more like a mixed institution change process which shows an interaction between upper and lower, linkage between left and right and even a wanderingofinternalrepetition.However,thebookplanstoshowthatthecorefor the social and economic development in contemporary China is exactly the bar- gainingmechanism ofinstitutional reformthat we argued. Thus,the general social reformprogramofbargainingisthemainreasonfortherelativesuccessofChina’s institution reform, as well as the social process of political democracy in an endogenous sense under the oriental context. In other words, if the efforts of the book are appropriate, it will prove the following conclusions. First of all, the bargaining institution reform is of efficiency. Its economic logic lies in that the transaction equilibrium of bargaining has the efficiency mechanism ofParetoimprovement:“itcanimprovetheutilitylevelofatleastonepersonwhile not reducing the social welfare of any other members”. Here, the best evidence is 2Thetheoreticaldifferenceofthedualityofcooperation-conflictofthebargaininggamefromthe traditional games can be found in Tong Yilun’s specific review (the Review of New Political Economy,2008,totalNo.10).Theunpopularstatementofthebookisbasedonthegeneralization oftherelatedreview. 3AccordingtoDengXiaoping,“theessencesofMaoTsetungthoughtareseekingtruthfromfacts andthemassline”(seetherelatedcontentdiscussioninSelectedWorksofDengXiaoping,P231). This is the core of the book which may give a mathematical logic of game theory to the good traditionsoftheCPConthosetwoprinciples.
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