Inscription: This article was written by Professor Lin Yifu, Honorary Dean of the Peking University Development Institute, for the 20th anniversary of the founding of Economics (Quarterly), and was published in Economics (Quarterly) No. 5, Vol. 21, 2021.
In 1994, I, Yi Gang, Haiwen, Zhang Weiying, Zhang Fan, Yu Mingde and six others founded the China Economic Research Center at Peking University, which is the first entity institution in China that integrates education, scientific research and policy research with the main body of overseas scholars who have returned from studying abroad, with the purpose of introducing a complete modern economic discipline and theoretical system, teaching and educating people for the construction of China's socialist market economy, deepening theoretical exploration based on the locality, and contributing wisdom to the cause of reform and opening up. After the establishment of the China Economic Research Center at Peking University, other colleges and universities have also introduced talents or set up research centers with the same purpose, and in a few years, the cause of education, scientific research, and policy research with the theories of modern economics has become a common practice in China's colleges and universities.
At the turn of the century, the number of economists who have returned from overseas studies and the number of doctors and masters in economics trained by themselves in China has gradually increased, and the team engaged in economic scientific research has grown day by day, and China urgently needs a new high-level publishing platform to advocate research that conforms to international norms and exchange scientific research results from China. For this purpose, on the occasion of the 100th anniversary of Yan Fu's translation and publication of "The Wealth of Nations" in 2001, "Economics" (Quarterly) (hereinafter referred to as the Quarterly Journal) was published by Peking University Economic Research Center and published by Peking University Press in the form of a book, and in 2010 it received an official issue number.
The quarterly journal adopts the internationally accepted anonymous review system, publishes original theoretical and empirical research done in a rigorous and standardized way, and reviews and reviews of cutting-edge achievements, through the joint efforts of founding editor-in-chief Professor Yao Yang and other editors-in-chief, deputy editors-in-chief and all colleagues of the editorial department, the quarterly journal has quickly been recognized by colleagues in the economics community and has become one of the top journals in the domestic economics community. Over the past 20 years, the quarterly journal has made indelible contributions to the development of Chinese economic disciplines.
When the quarterly magazine was founded, it also put forward the judgment that "when China becomes the world's largest economy, the achievements of the Study of China's economy are also world-class achievements", and encouraged colleagues in the academic community. This judgment was first put forward in my congratulatory article "Localization, Standardization, and Internationalization- Celebrating the 40th Anniversary of the Founding of Economic Research" published in 1995 on the 40th anniversary of the founding of Economic Research. In that article, I boldly predicted that as long as Chinese economists study China's local problems in a standardized way, China will become the research center of world economics in the 21st century, and the 21st century will be the century in which economic masters will emerge in China.
When the above article was published, there will be no more than 5 influential Chinese economists in the world, from a domestic point of view, the China Economic Research Center of Peking University has just been established for a year, and among the young generation of economists in China, there are only 6 teachers who have received a complete modern economic education, and China's economic community is just in the early stage of introducing and learning Western economics. At that time, although China's economic circles were only in the embryonic stage, my prediction of the future stemmed from my understanding of the nature of innovation in economic theory.
If we only look back at the history of the development of modern economics a little, it is not difficult to find that from adam Smith's publication of The Wealth of Nations in 1776, economics began with the independence of philosophy into an independent social science, until the 1930s, when the masters who led the world's economic theory were basically either British or foreigners working in Britain, after the Second World War until 1995, when I published that statement. The masters who led the world's economic theory were either Americans or foreigners working in the United States. During those two periods, even if there were masters of economics in other countries, it was only rare.
Why do the countries produced by the masters of economics have the relative concentration of the above time and space? I think this is determined by the nature of economic theory. Every theory of economics, like the theory of any other discipline, is a very simple causal logic, and the importance of the theory depends not on the logic of the theory but on the importance of the phenomenon to be explained by the theory or the problem to be solved. What are important economic phenomena or problems? In fact, it is the economic phenomenon or problem that occurs in the most important country in the world, so the economic theory that explains the phenomenon of that country or solves the problem of that country is the most important theory, and the proposer of such a theory becomes a world-class master.
In 1776, when Adam Smith published The Wealth of Nations, Britain had begun the Industrial Revolution, the largest and most developed country in Europe, and until the First World War, Britain was the center of the world economy, and the economic phenomena or problems that occurred in Britain at that time were the economic phenomena and problems that had the greatest impact on the world. After the First World War, the center of the world economy gradually shifted to the United States, and by the end of the Second World War, the total economic volume of the United States accounted for half of the world's total, and the economic phenomena and problems that occurred in the United States became the most important economic phenomena and problems in the world. Economists have the convenience of explaining the phenomena of their time or solving the problems they encounter, so the vast majority of world-class economic masters appear in countries that are the center of the world economy.
In 1995, China was a low-income country with a per capita GDP of only $610 in current dollars, the total economic volume was only 9.6% of the United States, accounting for only 2.4% of the world's economy, even in purchasing power parity calculations of only 6.1%, at that time, the Chinese economic community had just introduced and popularized Western economic education, trying to integrate China's economic disciplines with the world. However, at the same time as the establishment of the China Economic Research Center of Peking University in 1994, I cooperated with Cai Fang and Li Zhou to publish "The Miracle of China", which predicted that as long as China continues to emancipate the mind, seek truth from facts, and follow the gradual dual-track transformation mode adopted at that time, while maintaining economic stability, give full play to comparative advantages to make full use of the advantages of latecomers, China's economy can achieve long-term rapid growth, according to purchasing power parity calculations, by 2015, China's economic scale will surpass the United States, calculated according to market exchange rates By 2030, China's economy will also surpass that of the United States and become the world's largest economy. Moreover, even then, because China's population is 4 times that of the United States, and its per capita GDP is only 25%-30% of that of the United States, China will still have a latecomer advantage, China's economy can still develop faster than the United States and other developed countries, the world's economic growth will mainly come from China, and the world economic center will also shift to China.
When China becomes the center of the world economy, the economic phenomena and problems that appear in China will naturally be the phenomena and problems that have the greatest impact on the world economy, and in understanding China's economic phenomena or solving the problems of China's economy, Chinese economists will also have the convenience of being close to the water, so the emergence of master economists who lead the new trend of international economic theory will also shift to China with the world economic center.
I am pleased that the size of China's economy in terms of purchasing power parity has become the world's largest in 2014. According to market exchange rates, china's economic size surpassing that of the United States around 2030 has also become the consensus of international development and financial institutions. So, when China becomes the center of the world economy, how can the predictions of the masters who lead the new trend of world economic theory in China become a reality? In my opinion, the key is still the "localization, standardization, and internationalization" emphasized in the 1995 article, but when studying local phenomena or problems in a normative way, it is necessary to change the current Chinese economic community's customary practice of explaining economic phenomena or problems that appear in China with existing theories and using Existing Theories to test existing theories. The particularity of countries in transition, especially the endogenous differences between the various economic structures affecting China's economic development, transformation and operation, and developed countries, as well as the endogenous nature of many problems that are distorted from the mainstream theory.
Since modern economics became an independent social science, the research center has been developed in the United Kingdom and the United States, in the past 250 years through the efforts of countless economic masters, has flourished, related to economic development, operation of all aspects of the indeed mature theory. However, any theory, as a simple logical system, must be constructed by the theorist through two processes of abstraction and consemation, that is, the proposer of the theory finds the key variables from the thousands of socio-economic variables in the country in which he is located and retains them in the theory as dependent variables to explain the observed phenomena or solve the problems encountered, while the theory is like other non-critical variables, that is, the existence of other non-critical variables, which are social and economic variables that are shed by a theory. It becomes an implicit premise of this theory, or a state variable of cybernetics. If these socioeconomic variables, which are represented by a theory, undergo a critical change, the original theory loses its ability to explain socio-economic phenomena or solve socio-economic problems, and will be replaced by a new theory. It is also because of this that in the economic circles of the United Kingdom and the United States, there have been talented people from generation to generation, each leading the way for decades, and new economic theories and economic masters have emerged.
The applicability of any theory depends on whether the premise and implicit premise of the theory remain unchanged, and the economic theories from developed countries are constantly innovated in developed countries with changes in socio-economic conditions, so economic theories from developed countries in Britain and the United States are not the truth of "a hundred generations of saints and not confused", can they be applied to all corners of the world in China?
Although many phenomena or problems that occur in China seem to have ready-made theories to explain or solve, china as a developing country and a developed country, due to the different degrees of development, many developed countries' theories are likely to have key differences in the socio-economic variables that are discarded and implicitly premised. Even if China's economic size reaches twice that of the United States, the per capita income is only half that of the United States, so the factor endowment structure is different, the industries with comparative advantages are different, the economies of scale and risk characteristics are also different, and the corresponding corporate governance, finance, human capital, regulation, fiscal policy, monetary policy, etc. will be different.
In addition, as a country in transition, China has many socio-economic variables in its economic system that are distorted from the existing theory, but these distortions are not random and for a reason, that is to say, these distortions are also endogenous. Due to the endogenous differences in the socio-economic structure between China and developed countries, when using the existing mainstream theories to explain China's economic phenomena, it is inevitable that there will be a problem of missing a thousand miles, and when using existing theories to solve China's problems, it is inevitable that there will be regrets that Huainan is orange and Huaibei. Therefore, the use of existing theories from Britain and the United States to explain the economic phenomena or problems that appear in China, or to test the existing theories with Chinese data, although the papers written can seem to be very rigorous and meet the expectations of the existing theories, and then easily accepted and published by domestic and foreign academic circles that have accepted the mainstream theories, but it is likely that the essence of the Chinese phenomena and problems has not been grasped.
China's economic development after the reform and opening up is called a miracle, that is, the success and existing problems of China's development cannot be explained by existing theories, but the successes and problems must have their own reasons, and revealing these truths is to promote the theoretical innovation of economic development. There will be many new experiences and new problems in China's future development process, and these experiences and problems still need to be explained and solved by new theories that grasp the causal mechanism behind them. If the Chinese economic community can grasp the two endogenous natures of China's economic structure and distortion when doing research and writing papers, it will be able to better understand the truth, theory and philosophy behind China's past, present and future experiences, phenomena and problems, and will be able to produce many new theories and new views that are different from the existing mainstream theories. The new structural economics that I have advocated over the years is an effort in this direction.
When China develops into the world's largest economy before the middle of the 21st century, China's economic phenomena and problems will inevitably become the economic phenomena and problems that have the greatest impact on the world economy, which gives Chinese economists an opportunity to lead a new trend of world economic theory that has not been encountered in a hundred years. Since its inception, the quarterly journal has made great contributions to the development of China's economic disciplines in the past 20 years, and it is hoped that in the future, when advocating a standardized approach to study China's local problems, the quarterly journal will be able to publish more theoretical and empirical research papers that consciously take the structure and distortion of China's economic structure and distortion endogenous nature as the entry point for research. Only such research results can realize the unity of China's goal of understanding the world and transforming the world, and such theoretical innovation will also realize the transfer of the world economic center to China, the research center of world economics will also be transferred to China, and the era of master economists who lead the new trend of world economic theory will come to China. As long as the thinking is right and efforts are made, the 21st century will inevitably be the century belonging to Chinese economists. It is hoped that the quarterly journal will not forget its original intention and continue to run the journal for the purpose of achieving this goal.
Yifu Lin is a Liberal Arts Chair Professor at Peking University, Honorary Dean of the National Institute of Development Studies, Peking University, Dean of the Institute of New Structural Economics, Peking University, and Dean of the School of South-South Cooperation and Development. Professor Lin Yifu's research interests include agricultural economics, development economics, and China's economic reform.