Chapter 12 Chapter 11 Seeking Taoism at Yale

Wu Jinglian studied at Yale from January 1983 to July 1984.This year and a half is crucial to the maturity of his academic thinking.He said in "Wu Jinglian Selected Works: Author's Autobiography", "These three semesters at Yale enabled me to conduct a concentrated supplementary class on the achievements of foreign economics in the past century."His old friend Zhou Shulian said that when Wu Jinglian came back from Yale, his hair turned gray. He went to Yale as a visiting scholar as a researcher at the Institute of Economics of the Chinese Academy of Social Sciences. This title is equivalent to a professor in the eyes of the United States.However, after going there, Wu Jinglian realized the seriousness of the problem.

He went to attend an academic seminar, but he couldn’t understand it at all; it often took dozens of hours to prepare a short commentary in a discussion class of a doctoral class;Unable to understand, there are language problems, academic framework problems, and cognitive and value problems. Wu Jinglian had to start from the beginning, starting from the general courses for undergraduates. In the later days, Wu Jinglian spent the hardest life of seeking knowledge in his life.He started from the principles of economics courses for non-economics majors, and proceeded sequentially, gaining a lot of exposure to various theories and new knowledge.Fortunately, he is gifted and intelligent, especially good at comprehension. His language and professional skills are improving almost every day, and he will be able to participate in academic discussions soon.During that time, his daily life was extremely poor and boring, and most of the time he ate noodles and boiled cabbage in clear water.

In the future, Wu Jinglian recalled that the reason why he gained a lot during his time at Yale was not only his own hard study, but also two objective factors. First, the early 1980s was an "earthquake period" in Western economics.At that time, the Chicago School, which advocated neoliberalism, rose rapidly, and a large number of young and middle-aged economists, such as Milton Friedman and George Stigler, upheld Hayek’s neoliberalism spirit, and made great contributions to World War II. Keynesianism, which has been dominant since then, has challenged the belief that "competitive markets without government intervention enable the economy to run most efficiently."On the premise of controlling the money supply, they advocate allowing companies and consumers to make free decisions under the government's limited control. The core value they defend is to oppose any form of intervention, against the planned economy and Keynesianism.Under the guidance of this trend of thought, Western economics has taken on a new look, and many new disciplines have emerged, such as the quantity theory of money, industrial economics, information economics, new institutional economics, monetarism, and rational expectations.Many leaders of this school, such as Friedman (1976) and Stigler (1982), first won the Nobel Prize in Economics, and Buchanan (1986), Coase (1991), North (1993), Vogel (1993), Becker (1992) and Lucas (1995), among others, had also emerged at this time.

More importantly, the theories of the Chicago School have profoundly influenced Western economies.In 1981, before Wu Jinglian went to the United States, Ronald Reagan, a Republican who was a Hollywood actor, was elected president of the United States.He adopted neoliberal monetarism and supply-side views, and used measures such as tax cuts and deregulation to activate the competitiveness of American companies, allowing the U.S. economy to get rid of the stagflation since the 1970s and show signs of recovery.At the same time in Europe, the British female prime minister Margaret Thatcher echoed Reagan, and adopted the same policy after taking office in 1980, which also brought the British economy out of the downturn.In the future, this period will be called the "Reagan-Thatcher Doctrine" period.

Wu Jinglian was in the old mainstream economics——Yale University, a comprehensive center of neoclassicalism, and he also felt the impact and changes of new theories on economics and economic policies.He closely observed the operating mechanism of the market economy, and then compared it with the familiar Chinese economy to find opportunities for reform. Second, Wu Jinglian is a visiting scholar at the Department of Economics and the Institute of Social and Political Studies at Yale University.Fortunately, this is the "ancestral home" of the subject of comparative economic systems.The old director of the Yale Department of Economics, L. Reynolds, is well-known in the American economics circle. He cared for Wu Jinglian and gave him a lot of guidance.Wu Jinglian’s main research collaborator, Mike Montias, is a pioneering figure in the field of comparative economic institutional studies. It was he and Koopmans (the winner of the Nobel Prize in Economics in 1975) who first proposed the A basic framework for the discipline of comparative economic systems.Wu Jinglian was very interested in comparative economics when he was in China, and after he got to Yale, he was considered the right candidate.During the one and a half years at Yale, the Institute gathered many scholars from Eastern Europe, South Korea, Japan and South America. The innumerable symposiums and seminars opened Wu Jinglian's horizons and improved his knowledge.Later he recalled: "Yale's comparative economic system theoretical framework is like a color spectrum, one end is a command-and-control planned economy, the other end is a laissez-faire market economy, and the transitional state in the middle is very different. The color of neoclassical economics. However, every week, many theoretical seminars will be held, and the voices of scholars from different countries and schools can be heard. It contains many ideas of neoliberalism and new institutional economics. Viewpoints. With these theoretical backgrounds, it becomes much clearer when we consider China’s issues.” During this period, he also made many friends in the academic circles.

A rather intriguing question is why, in the era of the rise of the Chicago School and Reaganism, the subject of comparative economic system based on neoclassical economics is changing to comparative institutional analysis with more influence from new institutional economics, but Wu Jinglian does not Become a "believer" of neoliberalism?In his later years, he himself was curious about it. There may be many answers.First of all, Wu Jinglian, who is over half a century old, is no longer a blank slate. He has his own values ​​and theoretical literacy, and it is not easy to be "conquered" by a set of theories—especially economics with laissez-faire as the highest criterion; second, Yale University is an important center of neoclassical synthesis, and has always competed with the University of Chicago in terms of economic theory. James Tobin (1981 Nobel Laureate in Economics) of the school is the most important Keynesian economist.The more direct point is that Wu Jinglian went to the United States to study for the purpose of finding a way to develop China's economic reform. In essence, he has always been an economist who pays attention to application-this makes it easier for him to still emphasize A New Keynesian approach to macroeconomic management.

In the last period of his stay at Yale, Wu Jinglian used the newly learned economic theory tools to summarize and sort out the fragmented ideas formed in the domestic reform discussions in the past few years, and gradually formed his own theoretical thinking on China's reform.The most important one, which will have the greatest impact on the design of China's reform path in the future, and which has caused a lot of controversy, is his distinction between "administrative decentralization" and "market decentralization". The distribution of national economic power under a planned economic system is mainly carried out in two relationships, one is between the central government and local governments, and the other is between the government and enterprises.In China, before 1978, all enterprises were nationalized and tightly bound, so there was no issue of decentralization. Therefore, the issue of decentralization mainly occurred between the central and local governments.For quite a long time, the logic and methods of decentralization were disordered, and the centralization was divided again, and the division and centralization were repeated several times:

——First, there is a high degree of centralization.After the founding of the People’s Republic of China in 1950, the Government Council promulgated a decree, deciding to implement a financial system of centralized management and unified revenue and expenditure. to zero. ——Then is the full decentralization. In 1956, Mao Zedong published the famous "On the Ten Major Relationships", in which he proposed to fully mobilize the enthusiasm of the local government in the part about the relationship between the central government and the local government.Two years later, the central government delegated power to local governments on a large scale, including delegating to local governments planning power, corporate jurisdiction, material distribution power, labor management power, fiscal and taxation power, and investment and credit approval power.In short, all the rights that can be released are released.

——At the same time as the decentralization of power from the central government to the local governments, movements in the opposite direction took place in the industrial and commercial circles and in the countryside.The former is the launch of the "Socialist Transformation Movement", and all private industries and businesses in China have realized "public-private partnerships" and "has already entered socialism", and private capital has since "extinct" in China.The latter launched the "return to the big society" movement, which merged the high-level agricultural cooperatives with only 15 to 20 households into the "big society". ownership of land.The consequence of these two movements was the complete loss of enthusiasm for production in enterprises and rural areas.Wu Jinglian later argued in his article "50 Years of the Republic's Economy" that this was an important cause of the chaos in the national economy after 1958.

—and then another great centralization.After experiencing the absurd "Great Leap Forward" and the terrible three-year catastrophe, in 1962 the central government took another big turn. At the "Seven Thousand People Conference" held in January, the central government strengthened the idea of ​​centralism and a game of chess for the whole country. Subsequently, most of the previously delegated powers were withdrawn from the localities. ——Then there was another great release of power. In 1966, Mao Zedong put forward the slogan of "a republic of virtual monarchs" at the meeting of the Political Bureau of Hangzhou. In his opinion, the central government should only be a symbolic "virtual monarch", and the real economic power should still be distributed to various regions. In his words It is said to be "go out with all the people and horses".So, it was another round of scrambling to distribute power.After that, the "Cultural Revolution" broke out immediately, and the national economy was no longer efficient and orderly.

In this way, the Chinese economy is trapped in a vicious cycle of "when it is released, it becomes chaos;It actually shows that finding a balance between centralization and decentralization within a centrally planned system is an impossible task, both economically and politically.During this period, some economists, represented by Sun Yefang, have always opposed "decentralization of the system" as the main measure of economic management system reform.As early as 1961, Sun Yefang pointed out that the central issue of the economic management system is not the relationship between the central government and local governments, or the relationship between "tiaotiao" and "blocks", but "the powers, responsibilities and their The issue of the relationship with the state is also the issue of the right to operate and manage the enterprise. During the "Cultural Revolution", Sun Yefang's theory was regarded as revisionism, and it was naturally criticized. After 1978, with the development of reform and opening up, it became a consensus to let go of enterprises. After the Third Plenary Session of the Eleventh Central Committee, decentralization and convenience of enterprises became the main axis of reform.At the same time, because the central finance is very weak and unable to allocate large-scale investment, the central government has also boldly delegated power to the local governments. Approved some "separate planning" cities, giving more powers to the localities.The pros and cons of this series of policies have completely different evaluations in later generations, but everyone has seen the situation they formed, that is, the enthusiasm of local governments for economic development has been fully exerted, and there has been a rush of excitement. scene.At the same time, there has also emerged a "princes' economy" in which regions are beggar-thy-neighbors, block each other and divide markets. What's more serious is that it has created a fiscal structure of "local fat, central thin". The decline has become a "financial begging". For such a reform scene, how to judge, whether it needs to be revised, and how to explain and evaluate it from a theoretical level have become a big problem in the field of economic theory.There were many schools of opinion in the theoretical circles at that time, one of which was the "Decentralization faction", who advocated that the central government should decentralize all local governments and enterprises to transfer power; there was also the "Power Conservation faction", who advocated maintaining a highly centralized planned economic system. .Judging from the available information, Wu Jinglian, who was at Yale, was the first Chinese scholar to propose that reform and decentralization should not be simply equated. He believes that decentralization or collection of power should not be advocated in general, but two concepts of "administrative decentralization" and "economic decentralization" (also known as "market decentralization") should be distinguished.The so-called "administrative decentralization" refers to an economy in which the central government delegates power to the provincial, city, and county governments, and the local administrative agencies manage the entire economy; while "economic decentralization" refers to the management of the entire economy by enterprises based on market price signals. decision making.Wu Jinglian believes that "administrative decentralization at best only makes enterprises change from the original appendages of the central government to the appendages of local administrative organs, and cannot make enterprises independent commodity producers, nor can they improve the economic mechanism. Therefore, while maintaining The decentralization of powers without changing the framework of the command economy will damage the unity of government orders required by the planned economy. Because the allocation of resources by administrative orders is the essential requirement of the planned economy. If this is not the case, it will be implemented layer by layer under the framework of the command economy The result of the decentralization of powers can only be that the government has multiple branches and the entire economy is in chaos."Therefore, he believes that "decentralized command economy is the worst kind of command economy". Based on the above theories, Wu Jinglian came to a very important conclusion: the goal of reform should not be defined as "decentralization" in general, but two kinds of decentralization with different natures should be distinguished, that is, the "decentralization" based on the market economy. A decentralized economy (economic decentralization) and a decentralized economy that maintains the framework of a planned economy (administrative decentralization).Therefore, the key to reform is to establish a market system based on independent enterprises, rather than decentralizing power to local governments. This assertion of Wu Jinglian is an important viewpoint of Wu-style reform theory, and he has written many articles to demonstrate it.Its core meaning is actually: if China's reform is to proceed smoothly, it must carry out the "three-link supporting reform" with the goal of establishing independent enterprises, a competitive market and a macro-control system.In the eyes of some reformers who advocate the decentralization of power to local governments, this is a kind of "conservative thinking in the reform camp". In June 1984, Wu Jinglian attended a comparative economics seminar on economic reform in Eastern Europe in Germany.In his keynote speech, he gave his own interpretation of China's reforms in the early 1980s, which also aroused great interest from the participants.A month later, he gave another speech on this topic at a symposium at the University of California, Berkeley.Afterwards, he flew back home. To be exact, when Wu Jinglian left Yale, in addition to bringing back a whole new set of economic theories, he also brought back a lot of problems.When he returned to China, a heated debate was brewing in China's economic theory circles, and the reform was reaching a delicate crossroads.There is a person who is eager to see him.