Abstract
The relationship between government and the market is an issue constantly discussed in economics. A review of the history of economic thoughts shows the vicissitude of trends of thoughts on this issue: from the early idea of free market economy to the rise of interventionism during the Great Depression of the 1930s, to the neoliberalism that advocates a return to the free market and strong individualist stimulation in the changing social trends of thoughts in the 1970s and 1980s, to the rise of new interventionism that emphasizes the necessity of government intervention in recent years, especially after the new round of global financial crises.
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Notes
- 1.
Party Documents Research Office of the CPC Central Committee (1996, p. 180).
- 2.
Party Documents Research Office of the CPC Central Committee (1996, p. 19).
- 3.
Party Documents Research Office of the CPC Central Committee (2005).
- 4.
Jintao (2007).
- 5.
Jintao (2012).
- 6.
“The Decision on Major Issues Concerning Comprehensively Deepening Reforms.” People’s Daily. November 16, 2013, pp. 1–3.
- 7.
Oi (1992).
- 8.
See Yean (2001).
- 9.
In the process of providing public service, we should emphasize the role of all kinds of competition mechanisms, including competition in the market, competition for the market, benchmark competition, yardstick competition, etc. Consumers will also have more choices when competition among service providers is encouraged by introducing the mechanism of demand-side subsidy, for example, by issuing vouchers (such as education vouchers).
- 10.
Here are some other examples of this theoretical discussion: Brubaker believes that there isn't sufficient empirical evidence to support the free-riding problem in public good consumption, as many important elements in reality that influence people's demand for public goods are ignored. For example, the value of other people's trust will greatly demotivate free-riding behaviors. Schmidtz thinks that the free-riding problem can be solved by providing public goods through making contracts by the unanimity rule. Coase's study of lighthouses shows that public goods always believed to be government-operated only can actually be provided and run privately.
- 11.
- 12.
In addition, public institutions are more suitable to meet demands of higher homogeneity, while private profitable institutions have greater advantage in meet demands of higher heterogeneity.
- 13.
In addition to the mechanism of contract supervision, in certain conditions, there is need for supervision of prices and supervision to ensure fair competition. To address the problems of incomplete information and information asymmetry, in some fields and links it is also necessary to strengthen social supervision, for example, the supervision of service quality.
- 14.
As seen in both theory and practice, private participation generally helps to promote universal services. Its functions include expanding the coverage of service; reducing the cost and price (in the medium and long run) by providing innovate technology and service models, and by improving efficiency; improving the quality of service; improving the reaction to users' different demands.
- 15.
The subject of the bid can be the lowest sum of subsidy needed for the provided service. The government will supervise the service according to the designated standards. For some service, bidding can be invited with a fixed sum of subsidy.
- 16.
According to one definition, regulation is “state intervention in the name of economic management. In accordance with Keynesian precepts, regulation indicates the adjustment of macroeconomic activity by means of budgetary or monetary contra-cyclical interventions.” According to the other definition, regulation “consists of governmental actions to control price, sale and production decisions of firms in an avowed effort to prevent private decision-making that would take inadequate account of the ‘public interest’”.
- 17.
Administrative intervention and control of microeconomic activities in the name of “macro-control” shows marks of the profound influence of traditional institution, which can already be seen in the English translation of the term. “Macroeconomic control” suggests government regulation and “control” over macroeconomy. This is obviously characteristic of the planned or command economy.
- 18.
Lall (1994).
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Chang, X., Zhu, H., Zhang, L., Zhang, Q. (2020). More Powerful Market and More Effective Government in Resource Allocation. In: Li, P. (eds) Comprehensive Deepening of Reforms in China. Research Series on the Chinese Dream and China’s Development Path. Springer, Singapore. https://doi.org/10.1007/978-981-15-4000-4_1
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