Chapter 23 Chapter 22 Will China Become a Rent Seeking Society?

Throughout the 1990s, Wu Jinglian should be the most active and one of the most important economists.He was praised by the media as "the first person in the market economy" because of his defense of the market economy. His reform ideas are becoming more and more mature, and many policy suggestions have been referred or adopted by decision-makers in formulating some national strategies.He is not only an enlightening economic thinker, but also an "engineer" with policy suggestions and program design capabilities. His personal life also underwent some changes during this period.His two daughters went to the United States to study in the 1980s. The eldest daughter Wu Xiaolian became a doctor of psychology, and the second daughter Wu Xiaolan was a doctor of biomedicine. Their achievements should be attributed to their grandmother Deng Jixing and mother Zhou Nan. In life, Wu Jinglian is basically a "hands-off shopkeeper" who doesn't care about everything.In 1992, Wu Xiaolian had a son with her German husband, which made him a grandfather.

On August 29, 1995, 88-year-old Deng Jixing passed away in Beijing. Wu Jinglian, who was a filial mother, was extremely sad.In an article reminiscing about his mother, "Achieving One's Pursuit of Life as an Entrepreneur", he wrote that in the month since his mother passed away, I have been thinking about what is the unique spirit of our mother.It occurred to me that if Max Weber's words were used, it could be called "capitalist spirit" or "rationalist spirit", and if Stalin's words were used to describe it, it should be called "realistic spirit" combined with "revolutionary courage". ".Now I would like to adopt a more "neutral" statement and define it as "entrepreneurship".The meaning of the so-called "entrepreneurship" in economics can be roughly said to be "engaging in innovative activities in a pre-planned and calculable way to maximize the results."

Wu Jinglian's unique interpretation of "entrepreneurship" is obviously a typical reformist perspective. Perhaps it is on this point that he and his mother have reached a spiritual consensus. As he got older, Wu Jinglian's understanding of China's modernization became increasingly sophisticated. In the last two years of the 1990s, he began to think about China's future as a whole again.Although he is seen as a major contributor to China's economic reforms.But at this time, in addition to having a great sense of accomplishment in China's economic reform and economic development, he also has a deep sense of urgency, watching the dark side of Chinese society, thinking about where the corruption that is spreading rapidly comes from and the possible causes. tend.

In the summer of 1998, when the financial turmoil was overshadowing the sky, Wu Jinglian had a "dialogue on the future of China's reform" with economist Wang Dingding, which was published in the 11th issue of Caijing magazine that year.It was during this dialogue that Wu Jinglian first raised the question of "how far is crony capitalism from China". Here, people saw a worried Wu Jinglian.He said: "System transition is a process of major reorganization of the interest structure. No matter what method is adopted to realize the transition, there will always be problems in the distribution of benefits. Those who originally held power will definitely use their power to appropriate the past public property for themselves .”

He said in the dialogue, "After the 15th National Congress of the Communist Party of China adopted the strategy of 'letting go of the small', the trend of clarifying the property rights of small and medium-sized enterprises has become unstoppable. Controlled and powerful people have changed their tactics, not only using their power to take the enterprise into their own hands without spending a few dollars, but also asking employees to pay money, otherwise they will be 'laid off'. So the issue of social justice is stand out." What Wu Jinglian raised here is actually a problem he has been thinking about since 1986: the original reformers have split (“It is too superficial to simply divide people into ‘reformers’ and ‘conservatives’.” ), some people have become vested interests. They do not approve of restricting administrative power and promoting market-oriented reforms, but hope to maintain and expand the special interests of power rent-seeking.In this dialogue, he asked sharply: "Why is the reform of norms often regarded as 'idealization' or even 'conservative thinking', while various rent-seeking activities, 'property reform' that devour public wealth, and land enclosure movement "Land leasing", the financial magic that plundered the majority of stockholders, etc., were praised in the name of "reform" and became popular all over the country in an instant? These strange phenomena emerge one after another, aren't they enough to make people think?"

After analyzing the phenomenon, Wu Jinglian gave a staged summary: "China's greatest danger lies in two aspects, one is to continue the planned economy, and the other is to rob the public in the name of reform. No matter what, China will return to the It is unlikely to reach the planned economic model. But if it is not done well, there will be a tug-of-war process, which may develop into 'crony capitalism', 'family and friends capitalism', or 'crony capitalism'. In fact, it It is the bureaucratic capitalism that older Chinese people are familiar with, that is, 'feudal, comprador, and state monopoly capitalism'. The signs of this in China are quite obvious. To avoid its vicious development, from an economic point of view , is to develop an independent non-governmental economy and non-governmental power; from a political perspective, it is to establish the rules of the game and implement the rule of law.” Finally, he gave a new judgment that is sobering: “I think that by the 1980s, China In the later period, or after 1992, the main danger of reform does not necessarily come from conservative forces, but whether justice is taken into account in social change. If the power of bureaucrats is too strong, a situation like Russia will happen; most of the wealth If it is swallowed up by a small group of people, but the common people have nothing, then there will be no peace for the country.”

Wu Jinglian's remarks revealed another theme of China's reform.In the first 20 years of economic development, "justice" was a concept that was suspended or even completely ignored. In order to get rid of poverty, some people must be allowed to get rich first, and let them become "catfish" that stir up the society. To dare to disrupt all order, let the whole society "tilt" first.However, when the machine of change is in operation and wealth begins to accumulate rapidly, social justice and transitional justice become a proposition that must be followed up.In the process of China's economic reform, the phenomenon of injustice not only exists all the time, but also tends to become more and more serious.And this is what made Wu Jinglian extremely worried.

Regarding "how to achieve social justice in the reform", he believes that there are two directions to think about, one is how to eliminate the increasingly rampant corruption in the reform, and the other is to ensure the interests of vulnerable groups from the institutional level. Regarding Wu Jinglian’s analysis of the root causes of the spread of corruption during the transition period, the most important thing to pay attention to is the new political economy concept of “rent-seeking” introduced by Wu Jinglian and his partner Rong Jingben in 1988. In the international theoretical circles, the rent-seeking theory was put forward in the mid-1970s. Economists used "rent-seeking" to describe the activities of wasting resources caused by some people seeking wealth transfer with government protection. Its One of the concept definers James ?Buchanan won the Nobel Prize in Economics in 1986.

In China, the concept of "rent-seeking" first appeared in the magazine "Comparison of Economic and Social Systems" edited by Wu Jinglian. The second issue of the magazine in 1989 published an article "The Rent-Seeking Society Caused by China's Price Reform" written by Nicholas Lardy, an American expert on China issues.Professor Lardy said in the article: "China's economic reform after the death of Mao Zedong was undoubtedly much more successful than that of other socialist countries. However, whether the reform of the basic organizational structure of China's industry and agriculture has been enough to support China to get rid of the Soviet model quickly and turn to 'Market socialism' is still unclear." He raised two major problems in China's economic system at that time.First, the most prominent creation of the reform in the early 1980s was the implementation of the dual-track system.The preferential state-owned enterprises can obtain inputs through the state-controlled distribution system, mainly collective enterprises purchase inputs in the market, and the enterprises whose inputs are supplied at the state-fixed price “get a subsidy”.Second, China's reforms after 1978 have been seeking to expand both the power of enterprise managers and the power of local governments.This creates an incentive for local protectionism.Under the "new revenue-sharing system" (referring to the financial "separate cooking" system), the "profit" can be used for local government expenditures.These are "actually a rent".

Some readers were puzzled by the unfamiliar terms such as "rent" and "rent-seeking" in this article, so they wrote to the editor to inquire.In order to answer readers' questions, Wu Jinglian and Rong Jingben, the two chief editors of "Comparison of Economic and Social Systems", consulted Qian Yingyi, a friend of Wu's at Yale who was studying for a Ph.D. at Harvard University, and also studied rent-seeking theory. .The results of the research made them feel that the theory of rent-seeking was just a key to answer the question of why the "official downfall" that was hotly discussed in China at that time was so rampant.So, they planned and organized a big discussion on rent-seeking and corruption.

Wu Jinglian wrote in an introduction article "Rent Seeking Theory and Some Negative Phenomena in my country's Economy": "The reason why we need to pay attention to this theory is that some of its arguments and research methods are useful for scientifically analyzing the current Chinese economy. It will be enlightening to find effective treatments for some of the negative phenomena in the disease.” At that time, the Chinese people talked a lot about the corruption phenomenon of "official downfall", but at that time people had great differences on the reasons for it.According to Wu Jinglian’s analysis, there are mainly three views. One view is that corruption is an inevitable product of the market economy. Since the reform, corruption has intensified, which shows that the direction of market-oriented reform is wrong. The conclusion drawn from this is that we should return to the planned economy.The second point of view also believes that corruption and the market economy are necessarily related, but in order to revitalize the Chinese economy, corruption should be tolerated and even supported.The third, Wu Jinglian’s point of view, is that the market economy itself does not necessarily bring about corruption, but in the process of transitioning to a market economy, when administrative intervention is still widespread and the market order of equal competition has not been established, it is easy to Corruption occurs, so the solution should be to try our best to promote reform, promote market development and establish market order. Wu Jinglian believes that using rent-seeking theory to analyze, can ascertain the main institutional basis for the spread of corruption in China: the extensive intervention of administrative power in micro-economic activities will cause many people to obtain "rent" or "indirect productive profit" by virtue of power. Chance.It was by using this theory that he objectively analyzed the "dual-track system" of prices in the 1980s—the economic and social consequences of the "dual-track system" were double.On the one hand, it gives a certain space to private entrepreneurial activities, enabling various types of private enterprises to grow; on the other hand, this institutional arrangement of "monetization of power" or "capitalization of power" creates a broad rent-seeking environment , sowing the seeds of corruption spread. From this, he deduced that the negative phenomena we are currently facing are obviously not caused by the influence of market laws, not the result of fiddles with the "invisible hand", but from the severely underdeveloped market and the multi-party intervention of administrative forces in market activities. , because the "visible foot" stepped on the "invisible hand", which led to the formation of huge rents in various fields of the national economy and the competition for rents by people of all colors... More than 20 years have passed, but Wu Jinglian's words seem to have never faded, and his foresight has become increasingly evident. This group of articles published in "Comparison of Economic and Social Systems" was widely cited and triggered a heated discussion. In 1989, Wu Jinglian compiled the texts of these discussions into a book, "Corruption: Exchange of Money and Power". "is the title of the book published by Beijing Zhanwang Publishing House.Since then, using rent-seeking theory to explain China's corruption has quickly become a consensus in the economics circle, and the foreign term "rent-seeking" has become increasingly familiar to people. In 1995, Wang Yuanhua, a famous thinker, said in a dialogue: “In the past few years, some influential scholars (most of them are my friends) have taken it for granted in the discussion about the market economy, such as the market economy. The economy will inevitably bring about inevitable corruption. When I heard these statements, I was very disapproving at the time, and I had put forward different opinions, but I just learned from the imperfection of our market economy, the incompleteness of economic laws and regulations, and the lack of power due to money. Let’s explain the problem in combination with the issues that have arisen, such as approving notes, selling quotas, etc. Until recently, I have discovered some entangled issues in the cultural field, and economists have made convincing explanations.” What dissatisfied Wu Jinglian, however, was that even though he had found the root of corruption and put forward suggestions to limit power to eradicate the basis of rent-seeking, the phenomenon of corruption has not been eliminated, and even has become more and more serious.In Wu Jinglian's view, the reason is that, for those with special interests in power, demanding to limit power is tantamount to seeking skin from a tiger. After Deng Xiaoping inspected the South in 1992, since most commodity prices had been liberalized, the conditions for commodity rent-seeking no longer existed, so "government collapse" no longer became an important social phenomenon.However, the vested interests who hold the rent-seeking power not only refused to stop, but also tried their best to create new rent-seeking conditions, that is, the "rent-setting" or "rent-making" activities pointed out by Wu Jinglian earlier.During this period, the huge interest rate difference between the two tracks, the "trickiness" in the "rental" of land, and the administrative approval of stock listings all provided huge rent-seeking opportunities for power rent-seekers.Wu Jinglian divided the rent-seeking phenomenon in China at that time into three stages. In the late 1970s, it was "business rent-seeking", in the mid-1980s it was "commodity (dual-track system) rent-seeking", and after entering the early 1990s, it became "element-seeking". (Land, capital) rent-seeking".According to Hu Heli's calculations, the total rents in China's economy in 1987 and 1988 reached astonishing scales equivalent to 20% and 40% of the gross national product of the year respectively. It reached 624.37 billion yuan, equivalent to 32.3% of the national income of the year.Wu Jinglian quoted the above data in his article. It was under such circumstances that Wu Jinglian organized and published "Corruption: Exchange of Money and Power" in 1993.In order to correctly represent the active role of unfettered power in rent-seeking activities, the title of the book was changed to Corruption: The Exchange of Power and Money. In 1997, according to the resolutions of the "15th National Congress of the Communist Party of China", the ownership structure adjustment and the restructuring of state-owned enterprises (mainly small and medium-sized enterprises) were carried out, and a new form of rent-seeking appeared.In the process of "letting go of the young", some people in power kicked out the old employees, but they themselves took the opportunity to make a fortune.Wu Jinglian, who was taking classes at Shanghai China Europe International Business School, published an article in Shanghai News on November 6, 1997. The eye-catching title was "Don't Play the Crooked Idea of ​​Shareholding Cooperative System", severely criticizing the occurrence of small and medium-sized enterprises during the restructuring process. This kind of bad behavior of "depriving the public for selfishness". In 1998, Wu Jinglian wrote the section "Analysis of Various Social Forces in the Transition Period" in the book "Contemporary China's Economic Reform", continuing to use the rent-seeking theory to analyze changes in Chinese social forces.He said that the huge rent-seeking interests will foster a large number of vested interest groups, and they will try to use their power not only to "rent-seek" but also to "set rent" in the process of system change in our country. In order to create the possibility of new rent-seeking.If the government fails to take firm and correct measures to stop the development of the situation, if it is not done well, rent-seeking will become rent-setting, which will form a vicious circle of rampant corruption.Then, when this kind of powerful capital is in a dominant position in a country, a large amount of social wealth is devoured by a few people, and the masses are trapped in general poverty.This situation has already happened in some former socialist countries, and we must not allow it to happen again in China. A few months later, China Economic Publishing House decided to publish the third edition of the 10-year-old book "Corruption: Exchange of Money and Power".Wu Jinglian wrote a new preface, this time the title is actually a question: "Corruption Seeking Roots: Will China Become a Rent-Seeking Society?" "He wrote with a sigh: Looking back on the publishing history of this small book of popular science, the need for reprinting 10 years after its first edition has not changed, and it cannot but be lamented... On the one hand, the anger of the public towards corruption The indignation is rising day by day, and the writings of some economists and cultural figures strongly express this kind of indignation. On the other hand, the arrogance of corrupt officials who have failed the people has not been restrained, and they still have a large number of rent-seeking opportunities. They operate rampantly under the system, and sometimes their "rent-setting" money-raising activities are carried out openly in the name of "comprehensively strengthening management" and other high-sounding names. At this time, Wu Jinglian's brushstrokes were already very anxious.From the introduction of the theory of rent-seeking to the warning of "crony capitalism", that is, "feudal, comprador state monopoly capitalism", his critical temperament has become stronger and stronger.What we are about to see is his voice getting shriller every time in the next 10 years as corruption ramps up. Although Wu Jinglian believes that the gap between the rich and the poor in China is mainly caused by inequality of opportunities, to change this situation, we should first limit the power of government officials to control resources and break the administrative monopoly of some enterprises to reduce the possibility of rent-seeking.However, he did not ignore the inequalities in the inevitable results of the distribution according to ability under the market economy conditions.For this kind of inequality, the government should timely adopt social security and tax system arrangements, on the one hand, to help vulnerable groups such as the elderly, the weak, the sick, and the disabled, and on the other hand, to restrain the excessive accumulation of personal wealth of a few people, so as to alleviate social conflicts and strive to achieve common prosperity. . In his oral history in his later years, Wu Jinglian focused on a "abortion" social security plan.He said that this may be the most regrettable thing in the economic reform of more than 30 years. In the class structure of Chinese society, workers—mainly workers in state-owned enterprises during the first 20 years of reform—were the most vulnerable group.Peasants gained economic freedom through the joint production contract system, while workers became the most tragic victims of the failed reform of state-owned enterprises.Wu Jinglian believes that the working class has always been advertised as "the masters of state-owned enterprises", but their asset relationship with enterprises has always been vague, so the property rights reform of state-owned enterprises must take this into account. As early as September 1991, Wu Jinglian published the article "Large and Medium-sized Enterprises' Legalization and Public Property Rights" in the "State-owned Assets Management" magazine, and put forward his own views.He believes that the enterprise contract responsibility system is only a transitional method under the condition that the functions of the government and enterprises have not been separated, and the "shareholding system" that divides property rights between the "ultimate owner" and the operator and transfers part of the ownership to the operator Reform" has destroyed "the check and balance relationship between the owner-board of directors-managers" and is also "a road that is contrary to the development trend of modern industrial organization forms".The method he advocated is to reorganize state-owned enterprises into joint stock limited companies held by investment companies of governments at all levels, financial institutions such as insurance companies, other enterprises, pension funds, endowment foundations and other legal persons.In later works, Wu Jinglian further clarified that the most important institutional investor was the national social security fund owned by employees. In 1992, when he presided over the "Overall Design Plan for China's Economic Reform", Wu Jinglian deduced and perfected this idea with his colleagues, and Zhou Xiaochuan and Wang Lin completed the special report "Social Security: Economic Analysis and System Suggestions".They suggested that the existing social security system should be changed, the pay-as-you-go system should be changed to a personal account system, and a part of personal income should be included in social security funds in a pre-funded manner. In June 1993, at a CCTV seminar on CCTV, when talking about the joint-stock reform of state-owned enterprises, Wu Jinglian said: "We should allow more state-owned enterprises to be listed on the stock market after restructuring, and the money recovered after the sale should not be taken immediately. The investment should be taken back by the government." This was a passage that sounded very incomprehensible at the time, and the host didn't follow the trend to ask—"Why take it back?" He had suggested many times before: to return the country's assets The social security arrears of old workers form the national social security fund. Wu Jinglian proposed in a policy proposal that a piece of state-owned assets should be "cut out" and transferred to the personal accounts of veteran workers to compensate the state for their social security debts.Wu wrote in the article: "Obviously, this is both reasonable and legal, because the property rights of this part of state-owned assets formed on the basis of wage deductions originally belonged to the old employees who contributed to this accumulation. Naturally, this part of the accumulation should be paid back to them. Whether the state repays the old employees who have contributed to the stock of state-owned assets and often suffer some loss of interest in the process of economic reform interest reorganization? It is a major issue concerning the basic rights and interests of hundreds of millions of veteran workers and the political credibility of the government." In his oral history in his later years, Wu Jinglian recounted how this suggestion was not adopted in the end.He said: "This kind of proposal is often opposed by two parties. On the one hand, the management department of state-owned enterprises. Some people say that this is turning state-owned assets into private assets of employees, which is obviously a loss of state-owned assets. On the other hand, the social security department , and they opposed it even more severely.” According to Wu Jinglian’s recollection, the Minister of Finance at that time was in favor of this proposal. Pay off debts owed by old workers.However, this practice was quickly stopped by high-level officials on the grounds that it "caused a large loss of state-owned assets."Wu Jinglian recorded in "China's Economy in the Sixty Years" written in 2009: "In 1993, the Third Plenary Session of the Fourteenth Central Committee decided to adopt a personal account system for pension insurance. Some economists proposed to 'cut' a piece of compensation from state-owned assets. The method of old workers was used to enrich the personal accounts of the 'elderly' and 'middle-aged'. At that time, some people opposed it on the grounds of "loss of state-owned assets", so that it was impossible to establish a personal account system for old workers. In the mid-to-late 1990s, the large-scale losses of state-owned enterprises and the subsequent forced property rights reform movement caused a sharp increase in the number of unemployed workers—called "laid-off jobs" at the time. From 1996 to 1997, the total number of unemployed workers reached 15 million people, and then until 2000, this number remained high, which became the most terrible "social bomb" at that time.As one of the designers of the reform plan, Wu Jinglian has been "staring" at this phenomenon intently.Around 1998, the World Bank and the Research Group of the State Council's Restructuring Office both estimated the amount of social security arrears, and a relatively close number was 2 trillion yuan.Wu Jinglian believes that "if the pension insurance debt problem is not resolved, the new pension insurance system will not be able to operate normally, and the establishment of a social safety net to maintain social stability will become empty talk."In the following years, he repeatedly wrote and suggested, striving to solve the social security debt problem of the old employees of state-owned enterprises and establish a fair and perfect social security fund. Officials and scholars who worked with him include Liu Zhongli, Zhou Xiaochuan, and Lin Yifu. In early 2000, the State Restructuring Office participated in the design of a plan to allocate nearly 2 trillion yuan of state-owned assets to "solidify" the social security personal accounts of old workers, but this plan eventually aborted. In the history of China's reform, some mistakes were caused by ignorance, while others were caused by greed for personal gain. In Wu Jinglian's words, "It is necessary to do it, and it is not to do it." In the case of slow progress in establishing a national social security system, Wu Jinglian tried his best to promote the development of charity and welfare in China in other ways.For example, in 2004, he and Professor Zi Zhongyun jointly promoted the revision and improvement of the "Public Welfare Donation Law". In 2006, he and Professor Mao Yushi jointly initiated a fundraising of 18 million yuan to establish the Fumin Foundation. Since 2008, he has served as a director of Beijing Fuping School. Chairman of Alxa Ecological Fund established with donations from entrepreneurs, etc.