Biweekly Symposium No. 538: Rethinking the Paradigms of Economics

Lecturer: ZHANG Weiying

Host: FENG Xingyuan, Professor, Chinese Academy of Social Sciences

Commentators: SHENG Hong, ZHAO Nong, MO Zhihong

As a champion of market economy, Professor ZHANG Weiying introduced his latest book Principles of Economics and spoke on “Rethinking the Paradigms of Economics. ” He mentioned several topics that stimulated his rethinking, such as the discussion of the socialist planning economy, the market economy and entrepreneurship, the market failure and the government’s intervention, the sector politicise and their flaws, the two major financial crises and their implications, and the flaw of mainstream economics in understanding institutions.

He stressed that it was not conclusions of economics, but the paradigms and analytical frameworks that were at issue. The main stream economic paradigm was based on given assumptions, resources, preferences, and techniques; secondly, the assumption entailed that information was objective and given, and could be obtained fully; thirdly, there was no such thing as uncertainty; fourthly, everyone was equally smart and rational. If such assumptions proved market was efficient, then planned economy was possible and effective where both the market and the economic plan sufficed.

He specifically pointed out that from a theoretical point of view, the Austrian School of economics was the best school of thoughts about economics because it considered the market as a process, instead of a static equilibrium. The market was a process where entrepreneurs constantly created, and produced, and processed information. If such logic stood, then the government’s intervention on economy was false.

Other participants also commented on Professor ZHANG Weiying’s lecture. Professor MO Zhihong spoke highly of the book; Professor SHENG Hong thought Professor ZHANG’s book and research was a new evidence that planned economy would fail and market economy would prevail; Professor ZHAO Nong pointed out that the neo-classical economics and the Austrian School were not at contradiction, but at supplementary position.