Analysis Of Underconsumption From The Angle Of Institution

In recent years, Chinese economy has been puzzled by a difficult question, that is, underconsumption. This paper analyzes the essential cause of underconsumption from the angle of institution and institutional changes. First of all, the author discusses the judgement on the standard of the desired consumption; then judges the situation of Chinese consumption on the basis of the standard and draws a conclusion that the question of underconsumption has existed in China. Then, the author analyzes, in a systematic way, the western consumption theories and the Marxist consumption theory and compares their merits and defects. The author puts forward that when we analyze the question of Chinese underconsumption, we should attach importance to both the complex nature of consumer behavior and the institutional roots of underconsumption. When the author analyzes the relationship between Chinese institution factor and underconsumption, he analyzes the feature of the present institution in the China first, and puts forward that Chinese economy has been the market economy at present, but still been imperfect because the government always plays a leading role in it, and the institutional changes will not be finished in short time. Then the author analyzes how the three institutions in China influence the demand for consumption. Based on the analysis, he concludes that market failure resulted from market economy will lead to underconsumption; government failure caused by Chinese feature in the economy, that is, the leading role of government in it, is an important source of underconsumption; the institutional changes and the transitional nature of the institution, is also an important reason.