Zhou Qiren: Reading is my favorite, but I must go to the real world to seek "very understanding"

Zhou Qiren

Real-World Economics was first published in 2006, and most of the articles I collected for newspapers and magazines after I returned to China in 1995 to teach at Peking University. This new edition retains most of the articles and adds a section of monopoly that cannot be published at the time, as well as articles on property rights that I have repeatedly emphasized.

Papers and titles

Before returning from the United States, I was at UCLA (University of California, Los Angeles) to finish my phD thesis. The general procedure is to pass the doctoral qualification examination first, and the passer will go to find the topic of the doctoral dissertation, and then go through a threshold called "opening report" in China to start thesis writing; after the thesis is written, and then through a "defense" of the thesis steering committee, you can go through the formalities to obtain the doctoral title. However, the project I was working on— my dissertation was on economic history, and the steering committee was made up of professors of history and economics — was more special, and the "opening" and "defense" of the doctoral dissertation were merged. That is to say, before the supervisor agrees to open the topic, the basic work of your thesis research, and even most of the research work, must be done inexorably. Once the defense is passed, students only need to sign the final polished papers to the committee members, and they no longer need to go to the "church meeting" to "defend" their papers.

I was lucky enough to pass the defense once. The teachers were happy, and the written comments were nothing more than affirmations that my paper "had great potential." I am also pleased that the topic of my thesis, along with the questions asked, the evaluation of previous research, new hypotheses, and the materials prepared and the research methods to be adopted, was recognized as "sufficient for PhD qualifications". By the way, it was less than four years since I entered UCLA's PhD program.

Two American classmates who helped me a lot in English were curious to know that I was "illiterate" when I entered the United States "unplanned" in 1989. Yes, I started learning English officially when I entered the United States. The first year was funded by the Ford Foundation and studied English for 9 months in the picturesque town of Bude, Colorado; the second year, at the recommendation of Professor Gale Johnson, he was a visiting scholar in the prestigious Department of Economics at the University of Chicago; and in the third year, he entered UCLA. Even if you are a genius who is studying, it is not slow to "walk" like this, right? Moreover, I have examined myself for many years, and the conclusion is that the IQ is mediocre and has nothing to do with genius. The "experience" in this will be explained to the reader in the future when the Chinese page of the paper is launched.

However, the thesis that had already passed the defense was "stranded" until I returned to UCLA in the summer of 2000 to complete the formalities. By the end of 1995, the main chapter of my thesis had been written two or three drafts, and the rest was an "introduction" and a "conclusion" that could run through the whole text. The original ruyi abacus was to end all the papers before the summer of 1996, and return home in the autumn when the autumn was high. At past pace, this is not a risky plan. What happened in between that caused my thesis to be shelved for 5 years after the defense was approved?

One fun thing: teaching at Peking University

I returned to China in the spring of 1996 and began teaching at the Center for Chinese Economic Research at Peking University, and those who know me will not be surprised that I have returned to China. With 10 years of experience in "soil insertion team" plus 10 years of "rural survey", I am an "old soil" like a fake bag. Going to the overseas "foreign insertion team" to study for a doctorate was an unexpected "bias" for me. After living in the United States for 6 years, apart from being impressed by the university libraries, highways, and the rule of law there, I didn't find anything that suited me and made me happy. Returning home to me is only a matter of time.

But Peking University's appeal to me is very different. In the early spring of 1978, I stood under a loudspeaker at beidahuang Farm, listening to the news of this year's college entrance examination, and thinking about how to fill in the application for the volunteer. I didn't have to hesitate, the best school in my mind was Peking University, and I was never afraid of any other competition based on my test scores. Unfortunately, when I was twenty-eight years old, and only in the previous year, the first year of Deng Xiaoping's decision to resume the college entrance examination, Heilongjiang Province's "soil policy" still stipulated that except for the old high school students in 1966, anyone over the age of 25 was not allowed to apply! Does Peking University want older students? I'm not sure. Suffering repeatedly, I had to give up filling out Peking University.

Therefore, in the autumn of 1995, I received a teaching offer from the Center for Economic Research of Peking University, and I signed it on the same day to express my honor to accept it. I said to myself, I didn't become a student of Peking University in the past, and now I am retreating to the second place and becoming a teacher at Peking University, how can such an opportunity be missed? Dear readers, do you want to know the appeal of Peking University? Look at what happened to me: After I sent back a letter of appointment to the China Economic Research Center of Peking University, I remembered that I had never taught before, and I had no idea if I could teach!

Teaching at Peking University is a pleasure. In comparison, I think Peking University's best asset is its students. Yes, the tradition and spirit of Peking University pioneered by President Cai Yuanpei still have a "fatal appeal" to the best students in the country , the best who win from millions of college entrance examination students every year. If you consider the level of faculty in terms of the salary level of professors, Peking University is still inferior to National Taiwan University, the University of Tokyo, the University of Hong Kong and UCLA, but in terms of the excellence of students, Peking University can compare all these schools. I myself benefited greatly: because the tastes of the students were "picky", people like me, who had never taught before, were forced to seem to be able to teach.

Originally, teaching at Peking University and finishing the thesis could go hand in hand, but in the unfortunate words of Professor James Lee of the California Institute of Technology, I quickly "got involved" in the investigation and research of the real economic problems in the reform, and put the doctoral dissertation aside. Thinking to myself, my thesis passed the defense anyway, and it has been considered by the supervisors to be good enough for the doctorate level, and to take the title later has no impact on my knowledge. However, on the real economic issues, I have been "away from the soil" for six years, during which although I have had several experiences of field investigation in China for my graduation thesis, the scope of contact with the problem is after all very narrow, and the "real feeling" has been consumed by the years, and it is not as good as before. There is an opportunity to make up for the class and pick up a little "ground gas", which I should not refuse.

Grounding: Hydraulic Research

Opportunities ensued. In the first file, Mr. Du Runsheng asked me to go to Shanxi to participate in the study of a large-scale water supply project. Hydraulics has always been a major focus in China's economic history, and I have been interested for many years. In contemporary times, water has become a "public resource owned by the state", and the vague definition of property rights and the deviation from the price mechanism can only be caused by shouting "water crisis" everywhere, and no water diversion strategy can be expected to solve the problem. Therefore, hydraulic engineering is a subject that property rights economics cannot be left alone.

In the 1980s, Du Lao and I attended the Four Provinces Governance Conference, and witnessed the "tragedy of the commons" between the upstream and downstream "brother regions" in the process of flood control in Wangjiazhai, Anhui Province, and had a sense of the humanistic and institutional factors in water control. However, there has never been an opportunity in the past that has given me a chance to conduct a field trip to the water, especially the water of the Yellow River. Now that Elder Du has spoken, coupled with the warm invitation of Mr. Guo Yuhuai, who was in charge of this work in Shanxi at the time, is there any reason not to go?

So, my old friend Professor Song Guoqing and I took a few students and went straight to the Loess Plateau. The study lasted almost three years, starting in the fall of 1996. Although we have not published a word for this purpose so far, through this study, we have a thorough understanding of water rights, water prices, water markets, decision-making and implementation of "national projects", and the construction system. Competition, monopolies, natural monopolies, and the famous "pricing paradox" of the "average cost curve sloping steeply to the lower right" scenario— the old problem posed by economics that Coase made important points in the 1940s— had a personal understanding of it.

We are like Zhang Wuchang said, because we have done enough work on one example, "blind fist can bring down the teacher Fu".

In the book "Real-World Economics", the articles included in the column "Alternative Eyes on Monopoly" are actually almost all "by-products" of my participation in hydraulic research. Some of the articles in this book have the audacity to "touch" education, postal services, and stock markets, and the ideas of analysis are the same, but the specific constraints of each industry are different, and the "touch" is colorful and colorful, and each has its own meaning.

Grounding: Business Survey

In addition to "Another Look at Monopoly", there are three other columns related to the theme of enterprises and entrepreneurs. That was part of the results of my second economic survey after I returned to China, "Company Research." Participating in rural surveys in the 1980s, one of the few theoretical conclusions was that farmers, whether agricultural or non-agricultural, had to rely on companies based on market contracts in their organizational form. At that time, it was realized that there was a congenital defect in our country's tradition, that the organization maintained by the administrative hierarchy was very developed, the organization maintained by blood kinship was also very developed, and the market organization maintained only by free contract was not developed. Since then, "company" has lingered in my head.

While studying in the United States, I worked on Coase's business theory. "On the Nature of Business", which he wrote in his third year of college at the London School of Economics, I read it again and again, and every time I read it, I had new experiences. Later, I came to UCLA to listen to Professor Demsitz's lectures, and the focus was also on corporate theory. In 1996, I compiled those reading notes into an article published in Economic Research, understanding "firms in the market" as "a special contract between human capital and financial capital." This note, along with some other academic papers written after returning to China, has been submitted to the China Social Science Literature Publishing House for publication, and it is actually a "family lesson" that I prepared for the corporate investigation.

The first company to be inspected was the Little Duck Washing Machine Factory in Jinan. I still remember a statistic about the company that surprised me at the time: on average, there were two marketers for every third production worker. I think the young Coase is so good that he can explain the existence of a company by using "market transaction fees" to "capture" the characteristics of a company in China that he has never met decades later!

Entering the second company, it should be the Far East Textile Machinery Factory in Shanghai in 1997, because there is no market order, it has fallen on the verge of bankruptcy. At that time, the situation in Shanghai's textile industry was moving: 550,000 workers in the whole industry had laid off 280,000 workers. Zhou Fangsheng was working at the Research Institute of the State-owned Assets Management Bureau at that time, and had a very rich experience in state-owned enterprises, and he and I walked into the Textile Industry Bureau building that was still on the Bund at that time to visit Director Zhu Quanyu, and saw that the four big words on the left were "ruthless adjustment" and the four big words on the right were "sentient operation". Zhu Quanyu has a profound insight into the system disease of state-owned companies, and his speech can be summed up in four words: a battle on the back of the water.

A battle of backwaters, the battle out of the hall of fame. It turned out that Wu Lingling, the head of the working group sent by the Shanghai Textile Industry Bureau to the Far East Factory to "reverse losses and increase profits", presided over personnel affairs for two years, knew that there was no hope of "reversing losses", and painstakingly "took care of the aftermath" while preparing for new students. She selected a group of people from the Far East Factory, and everyone took out 1 million yuan in cash, together with 12 million yuan in cash from the textile holding group represented by Zhu Guanyu, and formed another "Eton Co., Ltd." It turns out that the state-owned companies I know of are not based on market contracts (the elements are all administratively allocated), and no natural person can be associated with the company's share capital. Now the new "Aeton", based on the contract, the manager is also a shareholder, is this not a "big name"?

Consistent with the experience of rural reform, the reform of state-owned enterprises is also under the pressure of market competition by some pioneers who have fought a "war" against the water. Why should I waste time on those innocuous "statements" and "theories" of spending fists and embroidering legs? To study enterprise and enterprise reform, take your own "homework" to test whether you have the ability to explain the real events, and then take more observable facts to test the "theory that seems to have explanatory power", can you not have a long insight?

So I watched the company get addicted. For a while, as long as the Shanxi project was fine, I traveled to see the company after class at Peking University. But whenever I encounter an opportunity to dig into the root causes, I will not let go.

Once, I heard that Pan Ning, the entrepreneurial boss of Kelong, was invited to Shijiazhuang, I got up from Beijing at 3 a.m., drove to his residence before breakfast, listened to him tell the entrepreneurs in Hebei about Kelong's history and his business philosophy in the morning, and helped me in the afternoon, Kelong's car in Shijiazhuang did not complete the Beijing entry permit, so I drove Pan to the capital airport to return to Hong Kong. With this friendship, you said that I later studied Kelong is not "easy as a palm"?

Another time, he went to Hefei to investigate a listed company. The wind and snow "forced the plane to land" in Nanjing, and I waited for a group of people to walk for 14 hours on the frozen road in a car before arriving at the company. The investigation of listed companies is generally more difficult, and on that day, when we were "on a long trip" and only asked for talks, the reception staff moved their compassion and said more to us.

In order to avoid the managers in the enterprise from seeing the "Peking University teachers" inevitably have some courtesy and respect, I even "mixed" into the joint investment management company and accompanied the colleagues there to investigate the company. There are several professionals in the joint investment, who have more than ten years of experience in the company's capital introduction, financing and restructuring business, and I believe that no MBA can teach them now. In addition, usually commissioned by the company and signed a confidentiality agreement, the investigation can be much deeper than the general university research project. Of course, participants will also be limited in their access to these survey materials. However, figuring out the problem is the first, and publishing is the second.

Economics based on the "real world"

The above is actually the "production process" of Real World Economics. I have long known that I can't be a scholar in the ivory tower. This is not to say that I don't like to read, reading is my favorite, but I must also go to the real world outside the book to seek "very understanding".

For this reason, my favorite economists are Coase and Zhang Wuchang. Coase is a scholar who directly opposes "real-world" economics with "blackboard economics" whose appearance is "scientific" in vain, but is actually an empty "emperor's new clothes". But Coase's own ideas about the method of research are "shallow" enough for all ordinary readers to understand.

He argues that the presuppositions on which economic theory is based should not only be "manageable" but also "true."

He criticized, "When economists find that they cannot analyze what is happening in the real world, they replace it with an imaginary world that they can grasp."

He put it personally into practice: "I try to find a reason for the existence of enterprises in the offices of factories and companies, not from the writings of economists." ”

I think the work Coase did was closely related to the method of research he stated.

Zhang Wuchang's discussion on research methods is even more remarkable. I learned about Zhang Wuchang's name, together with the theory of property rights and contracts, from a friend in Beijing in 1985 from the "Words of the Orange Seller" that was "privately printed." Since then, I have not spared a single word of Zhang Wuchang's works that can be found. Because of the relationship between "the same language and the same species", I read Professor Zhang's works and got the most inspiration. Not surprisingly, Zhang Wuchang was also fascinated by learning in the real world. He has worked on various market contracts for Asian agriculture, and he knows it in the industry. In addition, he has studied beekeeping, fisheries, beach farming, U.S. oil, invention patents and antitrust lawsuits, piece pay in Hong Kong, seats and fares in cinemas, contracting in the mainland and "India syndrome". What is even more remarkable is that he bears the title of dean of the School of Economics of the University of Hong Kong and sells oranges on the streets of Hong Kong on two Chinese New Year's Eve nights!

He himself said that the study of economics:

Any development of empirical science can be judged by the following criteria: How many times has its hypothesis been tested by hard facts? By this standard, economics may not be successful. Economists have always been willing to accept utopian theories, careless with facts and numbers, unwilling to test the meaning of what they are trying to point out.

There is widespread complaint that economists often have too many different opinions among themselves. My point is that they often come to an agreement on untested theories and unsubstantiated evidence too easily.

The information needed for economic investigation is not a "laboratory" in itself, produced in a well-built laboratory, and the facts must be excavated from it. However, excavation itself is a very hard job.

I firmly reject the past tendency to make policy recommendations based on analysis and crude investigations that are divorced from reality.

Finally, the title of the book "Real-World Economics" is to show my yearning for real-world economics. Economics in the real world can be told to ordinary people in the real world. Yes, some readers have told me that they like to read my text. I wrote the article with my heart, and some people appreciated it and was always happy. But I would also like to say to these readers that my thoughts and words, from the perspective of seeking a shallower and more direct aspect, have yet to be improved.

(This article is the self-prologue of the book "Real World Economics", the author is a professor of the Peking University Development Institute)