Since August 2020, Mr. Liang Henian has been invited by China Investment magazine to publish a column to write essays on his thoughts on various issues in China and the world. This issue will start a new column on April 20, 2023 - Interpreting Mr. Liang Henian's thoughts on the economy and people's livelihood, and three young scholars will share their insights from reading these articles in this series.
Chapter 17 The Relationship between the Market and "Planning" under the Socialist Market Economy System (←Click on the title of the article to jump to read Mr. Liang's original article) Economy - The purpose of the market economy is to meet the needs of consumption, and the purpose of the planned economy is to meet the needs of the people[1]. "People's needs" has a wide range of meanings, and consumer needs are only a small part of them, in addition to the needs of survival, emotion, security and other dimensions of the demand level. According to traditional Chinese philosophy, the development of anything can have two positive and negative effects. The selfishness of "profit-seeking" based on consumer demand has negative guidance, while its equilibrium state leads to "justice" and has positive guidance. In this way, the short-term pursuit of efficiency may be able to quickly solve some of the current social contradictions, but if its negative orientation is not constrained, once it triggers the positive expectations of the whole society, it will not be compensated for by any amount of economic benefits.
In the market economy competition of "big fish eat small fish", the market is gradually monopolized by "big fish", and the monopolist wants to completely control the market, and then produce according to the "plan" to ensure the highest and most lasting profits[1]. Generally speaking, monopoly capital actually "does not want" a real market economy, and what it hopes most is a capitalist monopoly "planned economy". The balance adopted by the government to maintain the apparent tranquility of society further encourages producers to evolve from "unconsciously" ignoring fairness to "intentionally" exploiting the weak, and various moral crises, credibility crises, and even philosophical crises in Western society are all closely related to it.
The goal of the "market" is to maximize the effect of supply and demand information, and the purpose of the "plan" is to make the country prosperous and strong, and the people's livelihood is stable[1]. The center of gravity of the planned economy is "people's livelihood", and production is for the purpose of "helping the people through the world", and its internal logic and ideal state are to pay equal attention to efficiency (through the world) and fairness (to help the people). If there is no lively market to provide information, "planning" depends on decision-makers to estimate and predict the needs of the people, so in practice it is necessary to separate the roles of "market" and "planning", that is, to separate "political matters" and "technical matters", which is also Mr. Liang Henian's consistent way of thinking.
In the socialist market economy with Chinese characteristics, "market" information should be the best information to guide the country's economic policy, and "planned" measures should be the best way to mobilize economic resources[1]. The "market" is used to open up the information channels of consumption and production, and the production resources are allocated by "planning", so as to use accurate supply and demand information analysis technology to help decision-makers quickly see the magnitude and frequency of changes in supply and demand, which can provide a basis for decision-makers to issue "economic benefits to the people" from the "market".
Of course, it is one thing to rely on "estimates" in decision-making when it is not clear in the eye, and it is another thing to be in the hands of bureaucratic culture and political compromise in decision-making, and not to meet the real needs of the people's livelihood. Therefore, Mr. Liang said, "Commerce and profit-seeking are conducive to economic development, but it is necessary to control their adverse impact on spiritual civilization and national stability." There is a saying in the "University", "Those who want to be clear and virtuous in the world in ancient times should first rule their country, those who want to govern their country should first gather their families, those who want to gather their families should first cultivate their bodies, those who want to cultivate their bodies should first correct their hearts, those who want to correct their hearts should first be sincere in their intentions, those who want to be sincere in their intentions should first know them, and those who want to know them in Gewu." Character and then know, know and then sincerity, sincerity and then heart, heart and then body cultivation, body cultivation and then family Qi, family Qi and then national governance, national governance and then the world is peaceful. Nowadays, people often only say "self-cultivation, family harmony, governing the country, and leveling the world", but this is actually just the result that people expect, and to achieve this state, it is necessary to work hard from "learning things, enlightenment, sincerity, and righteousness", that is, to achieve the results need means or methods. References[1] Liang Henian. The Relationship between Market and "Planning" under the Socialist Market Economy System[J]. China Investment, 2021(Z0): 35-36.
Yu Dongfei is an associate professor at Xi'an University of Architecture and Technology, and a visiting scholar at Queen's University
The end of economic development should not be just profits, Mr. Liang Dongyin's "The Relationship between the Market and "Planning" under the Socialist Market Economy System" published in China Investment in October 2021 said that the division of labor between the market and "planning" is not in the economic sector, but in the economic function. The socialist market economy with Chinese characteristics is a synthesis of "planning" (rules) and "markets" under the principle of socialism[1], and its biggest feature is that it is combined with the basic socialist social system, the market plays a decisive role in the allocation of resources under the means of national macroeconomic regulation and control, and follows the requirements of the law of socialist value through market economic activities, and finally realizes common prosperity of society.
In 1992, Comrade Deng Xiaoping said in his speech to the south, "Whether there is more planning or more market is not the essential difference between socialism and capitalism." A planned economy is not equal to socialism, capitalism also has a plan, a market economy is not equal to capitalism, and socialism also has a market. Both planning and the market are economic instruments. After Roosevelt came to power, he denied the free market economy of the past, and by increasing the government's direct or indirect intervention in the economy, he partially adjusted the relations of production, and paid attention to the welfare of workers and the distribution of profits, in an attempt to guide the market economy back to the track that the government wanted. The Roosevelt New Deal laid the foundations of a capitalist empire in the United States, and generations of Americans reaped the dividends of the planned economy. In the 1960s, the United States launched the Vietnam War, and the subsequent national debt overdraft, ten years of stagnation, and the people were miserable. In 1980, Reagan came to power, lifted a series of policies restricting capital, and actively promoted the so-called globalization of trade. Reagan's neoliberal economy gave rise to the semblance of a resurgence in the United States, but today it can be seen that behind the high prosperity of the financial, real estate, and entertainment industries is the hollowing out of manufacturing, massive outflows from basic industries, and the disorderly expansion of Internet capital. In contrast, in China, following the rapid development of traditional industries such as steel, industries such as high-speed rail, photovoltaics and electric vehicles have risen rapidly. The main reason for China's ability to overtake in the economic sector is that the Chinese government, as an unconventional market player, has implemented large-scale economic subsidies for key industries. It is the country's large-scale investment guidance that these industries can prosper and develop, and Chinese manufacturing can win in the international market competition with an absolute advantage.
The above phenomenon corresponds to the theory at the beginning of the previous paragraph, and what the author wants to say is that this is the socialist market economy with Chinese characteristics, and the advantages of the national political system are the essence of the above phenomenon. Specifically, it can be interpreted from the following points. First, macroeconomic regulation and control should be optimized and balanced. On the premise of following the dominance of the laws of the market economy, we should firmly grasp the direction of the government's macroeconomic regulation and control to guide the industry, and mainly achieve it through economic means. The so-called "democracy" under the multi-party rule of the West is nothing but the "democracy" of the interest groups behind the ruling party, and the endless debates and quarrels cannot recognize the big government or the big market, nor can it determine who is the core of the dominant economy and the boundaries of the rights and interests of the rulers. Second, we need to maintain the continuity of economic policies. Two or three years will not be able to prop up a new industry to stand out in the global market, which also means that the ruling party in the West, which seeks to maximize profits, will not risk stepping down at any time to give a competitor a legacy. Represented by the U.S. federal government, which has frequent regime changes, it categorically does not continuously invest in a certain industry as a market entity. On the other hand, in 2010, the mainland introduced a support policy for electric vehicles, and by 2023, the mainland's electric vehicle industry will shine in the domestic and foreign markets, and the continuity of industrial policies will provide a guarantee for it. Third, stand firm in the overall interests. Unlike the GDP growth generated by a socialist market economy, supporting industries is not simply picking winners and losers, and the end of industry innovation, scale and competition is not just economic profits. Just as we are different from the English vocabulary of income/profit/interest, which is only linked to the economic dimension, we are more concerned with good/well-being, that is, benefit, benefit, well-being, happiness, but also refers to good deeds, ethical behavior, and righteous behavior. Therefore, compared with capitalist countries, we focus on those sectors or industries that are vital to the development of the country, the well-being of the people, and even all mankind to make long-term investments.
References[1] Liang Henian. The Relationship between Market and "Planning" under the Socialist Market Economy System[J]. China Investment, 2021(Z0): 35-36.
Authors: Wang Dongyin, Ph.D., Deputy Director of the Coordination Office of the Chengdu Bureau of the National Natural Resources Inspectorate, Secondary Researcher, Visiting Scholar, Queen's University, Canada
Reflections on the "combination of rigidity and elasticity" in spatial control in the context of urban renewal
Li Yuan
Since urban development has shifted from incremental development to stock development, and urban renewal action has become a national strategy, more and more attention has been paid to how to promote the control based on the use of "land" to the reorganization based on the function, ownership, operation mode and other attributes of the existing "space", so as to realize the release and improvement of space value. In particular, in the context of the continuous contraction of government financial funds and the continuous growth of the scale of properties to be renewed, it is the general trend and difficulty for the government to guide market entities to participate in the renewal in an orderly manner. However, this does not represent the withdrawal of the main role of the government. For example, the renovation of old urban communities is positioned as a major livelihood project and development project, and is one of the important items in the work plan of the central and local governments. How to understand the role of "planning" and "market"?
In this article, Mr. Liang's discussion of the relationship between "market" and "planning" under the socialist market economy system is very enlightening. He pointed out that "short-term imbalances between supply and demand can be dealt with through the flexible response of the market economy to maintain market stability, and long-term problems can be dealt with through the 'planned' allocation of production resources to ensure the effective use of resources and the fair distribution of benefits." This is a stable and flexible economic development model. [1] In other words, an active market can reflect the supply and demand information of a large number of economic participants in the short term, which can compensate for the limitation of the "plan" relying only on the government's forecast information, but it should also be taken into account that the market cannot cope with the long-term livelihood needs of the whole society, so it is necessary to "plan" to allocate resources to ensure the overall interests and social equity.
In the allocation of resources and the supply of institutions for urban renewal, the two tools of "market" and "planning" also need to be used flexibly. Many cities in China have entered the stage of stock maintenance and operation from the high-speed growth stage of investment and construction, and the realization of the dual goals of "promoting development" and "protecting people's livelihood" needs to work the stock, which includes not only the improvement of the quality and efficiency of the stock space itself, but also the innovation of institutional design.
Take the recent national plan to promote the placement of affordable housing policy as an example. This policy can be regarded as a comprehensive application of planning and market means: the placement type of affordable housing is a type of affordable housing that is allocated according to the principle of guaranteed capital and small profits, and the local government formulates an annual construction and financing plan according to the principle of "building according to demand", makes full use of idle land and housing, and is targeted to wage and salary groups and groups such as scientific and technological personnel, teachers, and medical personnel that need to be introduced by the city [2]. This kind of institutional design not only stimulates the generation of "market" information on the supply and demand of multiple groups, but also includes the "planned" adjustment of housing prices based on the principle of capital preservation and low profit, which helps to allocate resources more accurately to meet the housing needs of such groups. It is worth mentioning that while implementing the policy of placing affordable housing, Guangzhou has further distinguished between affordable housing and high-end improved housing, stipulating that "the purchase of housing with a construction area of more than 120 m² is not included in the scope of purchase restrictions" [3]. This is not only a local exploration of the "dual-track system" of housing supply and system design, but also a rethinking of the relationship between "planning" and "market". UPI
bibliography
[1] Liang Henian. The Relationship between Market and "Planning" under the Socialist Market Economy System[J]. China Investment, 2021(Z0): 35-36.
[2] The Central People's Government of the People's Republic of China. Accelerate the construction of affordable housing The new round of construction is divided into two types: rental allocation type and placement type[EB/OL]. (2023-12) [2024-04-09]. https://www.gov.cn/zhengce/202312/content_6922013.htm.
[3] General Office of Guangzhou Municipal People's Government. Notice on Further Optimizing Policies and Measures for the Steady and Healthy Development of the Real Estate Market in Our City[EB/OL]. (2024–01) [2024–04–09]. https://www.gz.gov.cn/zwgk/fggw/sfbgtwj/content/mpost_9464839.html.
Author: Li Yuan, Ph.D., Queen's University, Canada, Research Fellow, Urban Renewal and Governance Branch, Tsinghua Tongheng Institute of Planning and Design
This series of articles
01 Interpreting "Capitalism and Global Capital"
02 Interpretation of "Economic Future Direction to "Cooperation"
03 Interpretation of "National Parks or Feasible "Harmony of Nature and Man" Practice
04 Interpretation of "On Methods (1): Seeking Truth" 05 Interpretation of "On Methods (2): Decision-making" 06 Interpretation of "On Methods (3): Comparison" 07 Interpretation of "The Great Changes from the Perspective of Civilization"
08 Interpretation of "On Methods (4): Economy"
09 Interpreting the Law of Nature
10 Interpretation of "The Balance of Self-Existence and Coexistence"
11 Interpretation of "People-Oriented City (1)"
12 Interpreting "The Infrastructure of the City"
13 Interpretation of "People-Oriented Stock Development"
14 Interpretation of the Government's Land Assets
15 Interpretation of "People-Oriented City (II)"
16 Interpretation of "Refinement of People-oriented Main Functional Areas"
Editing, typesetting | Gu Chunxue
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