Government and Market in the Market Economy

Author: Wang Shanmai
Publisher:
Publish Date: 2002-01-01
Features: Modern market economy is a mixed economy, which includes both the "private sector" and the "public sector." In terms of resource allocation, it involves both market mechanisms and government administrative mechanisms. There has never been a pure form of market economy in the world, nor has there been a pure form of planned economy. Pure market economy or pure planned economy is merely a theoretical abstraction. In countries practicing a market economy, the government intervenes in the economy to varying degrees and in different scopes. In countries practicing a planned economy, the government also utilizes market mechanisms to varying degrees and in different scopes. In resource allocation, both market failures and government failures exist. In their respective domains of operation, both government and market can achieve efficient resource allocation. Academically, the roles and mutual relationships of government and market in a market economy have been debated for a long time, even to the point of being vastly different. There are liberalist schools of economics that oppose government intervention in the economy and advocate for laissez-faire, while there are schools that advocate for strengthening government intervention. Practically, the boundaries of government and market roles differ among different countries practicing a market economy or in different historical periods within the same country. It can be said that in a market economy, the boundaries of government and market roles face choices, making it an eternal theme. Since China's reform and opening-up, based on the judgment that the market economy is more efficient in resource allocation and promotes the development of productive forces, China has chosen the market economy as the goal of its economic system reform. Currently, China is undergoing profound institutional changes from a planned economy to a market economy, i.e., it is in a period of economic transition. For countries in economic transition, the boundaries of government and market roles and their mutual relationships differ from those in mature, typical market economies. During the transition period, governments face choices about what they should and should not manage, while also facing the transformation of their scope of action and functions. The definition and transformation of government functions during economic transition is an issue that needs to be explored both theoretically and institutionally. The resolution of this issue is related to the design and implementation of the socialist market economy system model, as well as to whether macroeconomic stability and sustained growth can be achieved during institutional reform. Based on the above considerations, we have chosen "Government and Market in the Market Economy" as our research topic, aiming to provide a theoretical and practical answer to this question. The basic viewpoints and conclusions of this research are reflected in this book.