An Analysis Of The Evolution Of Economic Thought And Its Methodology

" Accelerating development and reform by opening up" is the creation from our opening up experience, which is the key direction of our future economic development strategy. This study focuses on the theme of "Accelerating reform by opening up", summarizes various economic thoughts from ancient times and clarifies their relationships. It explains the internal logic from the methodological perspective of these economic thoughts and explores the positive interaction between opening up and reform in the future.Based on the institutional development theory from the American economist Mancur Olson’s Collective Action Theory and New Institutional Economics, the author concludes that: reform is in essence the institutional change based on the selection of collective action. In a sustainably stable situation, the balance among different interest groups cannot be easily broken. If there is no certain "selective incentive", economic system will enter into a frozen dilemma. Opening up comes as an external push and blow to break the existing interest system and creates the "selective incentive" to all the social organizations and individuals. The power of the market itself will trigger the institutional change to develop the supporting system to activate the market and realize the economic growth.Studying economic thoughts is a unique way to learn the internal thinking logic of human kind. In Chapter One and Two, the author introduced the main researching ideas and the intenal logic of “Accelerating reform by opening up”. The body of the study starts from the third chapter, which puts "Accelerating reform by opening up" into China’s development history and explores its effectiveness with the methodology of economic thoughts. It is the key storyline of this study.In Chapter Three, the author studied the ancient and recent economic thoughts about opening up and reform. In a strict sense, there were actually no real systematic economic thoughts about "Accelerating reform by opening up" in the ancient times. There were only some thoughts about expanding international trade and trading cross cities. The ancient opening up thoughts did no good to the domestic reform. Such opening up was mainly based on the military needs with the purpose of increasing the national tax income. Whenever there were some emergencies, the reform by the governor was always focused on holistic way of strengthening the state interference and central governance. The overseas market was continuously neglected and compressed. Finally it reached a closed position by banning on marine trade and cutting off the country from the outside world.In recent times, the opium war forced the door of China open and woke up Chinese people’s sense of openness to "look at the outside world". From the Records and Maps of the World by Wei Yuan, New Work for Aid in Government by Hong Renxuan, to the Great Harmony thought by Kang Youwei and Industrial Plan of Sun Yet-san, gradually the economic thought of "Accelerating reform by opening up" started to become clear. Though the recent opening up created a strong push from outside, but the supporting reform was still following the holistic economic methodology. It stagnates at the limit of "Chinese learning for the essence, western learning for practical use". It did not trigger the reform by the power of the market itself.From Chapter Four to Chapter Seven, this study analyzes the current " Accelerating reform by opening up " economic thoughts in three periods which is incubation, exploration and deepening.Chapter Four is focused on the incubation period of current "Accelerating reform by opening up " thoughts. This includes the economic thoughts from leaders like Chairman Mao and Chen Yun as well as some economist like Gu Zhun and Sun Yefang between 1949 when new China was established to 1978 when the opening up policy was announced. In this period, our country has achieved the change from the new democratic economy system to planning economy system. We have achieved a compulsory institutional change in a very short time. The opening up was basically in a half open half closed status. There were a lot of difficulties for the economic development.Chapter Five is focused on explaining the thoughts in the exploration period. It includes the economic thoughts from leaders like Deng Xiaoping, Jiang Zeming and scholars like Xue Muqiao, Wu Jinglian, Liu Guoguang from the beginning of opening up policy in 1979 to the Eighteenth Party Congress meeting in 2012. During this period, our country has realized the change from planning economy system to market economy system. In the more than 30 years reform process, we have gradually realized a combined institutional change of compulsory change and induced change. We were actively involved in the world economy and have achieved the quick economic growth under the opening up policy.In Chapter Six, the author makes a comparison of the economic methodologies in the time before and after the opening up with a main focus on the opening up and reform thoughts from Chairman Mao and Deng Xiaoping. The author thinks that except for some objective reasons of the international situation, the two opening up thoughts has in heritage and development. But the different angels of their economic methodology and the different directions of institutional change have led to totally different results. Deng Xiaoping introduced the opening up policy as the external pressure for the reform. From the market oriented logic, this policy gives individual and organizations more power. It emphasizes the government’s macro control as well advocates the spontaneous reform by the market and stimulate the power of the market.Chapter Seven is focused on the analysis of thoughts and ideas in the deepening period, which is the "Accelerating reform by opening up" national strategy from the new central leadership after the Eighteenth Party Congress in 2012. The author thinks that the new central government has inherited and extended the economic methodology from Deng Xiaoping. They pushed for a comprehensive deepening reform, a global governance system and further increase the resource allocation efficiency and a law governance society. This is a holistic, balanced and trial economy management thought. With the further change of the global governance system, the new central government advocated a transformation and upgrade of "Accelerating reform by opening up" with the "New Norm". This shows the holistic characteristic of the comprehensive deepening reform and the diversity of market economy energy.Chapter Eight is a conclusive summary which reiterates the development history of "Accelerating reform by opening up" from ancient times to the current. It emphasizes the "selective incentive" impact of opening up for the reform and makes suggestions: the initial opening up is always out of the reversed force from its own difficulties of reform. The outside power pushed the change of the internal structure. While with China’s more and more active involvement in the globalization, opening up has been a New Norm of institutional opening. We need to seek for more internal growth mechanism of the economy, better use the holistic and individualism methodology and correctly handle the relationship of the government and the market. On one hand, we shall fully leverage the enterprises and the entrepreneurs to trigger the internal power of the market to form the new market game rules. On the other hand, we shall leverage the "market-augmenting government" to protect individual rights, strength the legal rules and make China the participants and the pusher for the future global governance system.