[Biweekly Symposium] No.366, Corporate Theory and China
Author:Unirule
Time:2008-07-18 14:13:04 Clicks:
Topic: Corporate Theory and China Lecturer:Prof. Zhou Qiren Discussants:Prof. Mao Yushi, Prof. Cao Yuan Zheng, Prof. Sheng Hong, Prof. Li Shi, Prof. Feng Xingyuan
This year is the thirty anniversaries of China’s reform and “opening-up”. Unirule, which has been working on enhancing the public understanding of the merit of an free economy since it was founded in 1993, hold a series of symposium on re-examining the gains from China’s 30 years of reform and “opening-up” in this June to September. Below it’s the proceedings of the second of this series of symposiums. At the 366th Unirule bi-weekly symposium, Prof. Zhou Qiren, director of China Center for Economic Research Peking University, delivered a speech entitled “Corporate Theory and China”. Prof. Zhou first reviewed the classic work on the boundary of corporation by Nobel laureate Ronal Coase. According to Prof. Coase, the bigger the firm the lesser the transaction cost. However, there is drawback too. Bigger firms have greater organization cost. So, although Lenin argued that socialism society could function like a big corporation. Prof. Coase questioned that. You must weight the cost and benefit of increasing the size of a firm. So it may not be optimal for the whole society to function like a big firm. Prof. Zhou thought the inseparable organization cost associate with socialism society is the root cause of the failure of socialism on general. China achieved the economic miracle because it let the market to conduct economic activity not the government and thus cutting down the organization cost of economic activities in China. However, China’s reform is far from complete. Government still intervene the economy frequently. And in China today, the government face no constrain on its activity thus make firms more voluntary to the risk of sudden changes of government policy. Like Prof. Wu Jinglian, Prof. Zhou also thought that this problem could only be solved by further institution reform.