A Research On Fairness And Efficiency Of The Public-owned Property Rights Reform In The View Of New Institutional Economics

Accompanied by modifying the theory that transaction cost is zero and the complete information hypothesis, new institutional economics gradually gets closer to the mainstream economics, which makes the economists consider refresh on several economic problems. This paper aims to put forward the principles about the public-owned property rights reform, which is based on proving the positive correlation between the system justice and the economic efficiency. And the foundation of all of this is relative theories of new institutional economics.The organization transaction cost reflects the efficiency of the transaction as to a given outcome. The increasing of the efficiency means cost saving. The change of the property rights system and structure can reduce the transaction cost of the operation of an economic system, accordingly advances the increase and development of economy. That is to say, we can make use of the change of the definitely defined property rights as long as the trade fee is not zero to achieve the best efficiency of resource allocation. The above is the theory of trade fee and property rights by Coase. But Coase's theory doesn't mention the problem about fairness, the relationship between fairness and efficiency. Just using the transaction cost as an agency, Coase's theory saw about the relationship between property rights and economical efficiency. For this problem we can deduce it from the country and ideology theory of North, who is also a master of new institutional economics. He considered the essence of property rights is a kind of exclusive right. The organization that has comparative preponderance can get the status that restricting and exerting the property rights. And the country is just the organization. Thereby the country power constitutes a necessary condition of effective property rights arrangement and economic development; whereas in another aspect the country power's intervention into property rights arrangement and transaction forms the restriction and segmentation to the personal property rights, which can induce invalid property rights arrangement and economic depression. That is to say whether the country power is used properly or not has an effect on the property rights arrangement directly, and then affects the economy efficiency through the trade fee. The essence of whether it is proper or not is whether it is fair and justice or not. Because North's ideology theory thought ideology is a saving mechanism, and one fixed part of everyone's ideology is about the judgment of the fairness and justice of the system. The ideology affects the rules enforcement cost because the change of everyone's understandability about the exchange relation is whether justice or not.Correct ideology can conquer the free ride and opportunism problems, so as to save the trade fee and increase the economic efficiency. Whereas in another aspect, the sense about fairness is in any kind ideology, so the correct ideology is based on the justice system. From the second chapter we can know the relationship between fairness and economic efficiency, which fairness influences the efficiency greatly.North argued the relationship between fairness and economic efficiency, but he didn't demonstrate it concretely. Also all the representative economists of the new institutional economics didn't do it. The difficulty in defining the relationship of the two is that fairness has several explanations which are filled with deep historical and cultural meanings. So it's very important to define the meaning of fairness. The thesis explains fair, fairness, justice, which are basically a set of alternate words in lexicographic meanings. We can ignore their difference. Secondly via the contrast among the vary schools of legal philosophy history, the clarification on the historical and cultural nature of feelings of fairness, also the use for reference of Buchanan's "justice chance", we define the meanings of the fairness in this thesis. Through all the above we get the standpoint of the relationship between fairness and efficiency of new institutional economics: the fair system brings the high economic efficiency to a certainty; without the fair system, the wastage of efficiency is unavoidable.Through observing on the privatization process of the four countries, Russia, Czech, Hungary, Poland we saw the failure of Russian reform, also the success of Czech, Hungarian, Polish reform in different degree. From this we knew the failure of the Russian reform is the failure of its system. The privatization process of the four countries in East Europe approved the standpoint of the relationship between fairness and efficiency in new institutional economics fully. Also their privatization process has great significance on China's reform.This thesis affirms the necessity of the property rights reform of China's SOEs. In the course of SOEs property rights reform, building fair and reasonable property rights construction is of most importance. The core of the property rights reform should be made that the owner can enforce his ownership in reality. Only when the core problem is solved, the resource scheme can be optimized and the economic efficiency can be promoted. Moreover the settlement of the core problem relies on the establishment and implementation of the fair rules, so China's property rights reform must be carried out under the principle of rule fairness.