Evolution Theory And The Revelation Of The New Classical Economics Enterprise System

The evolution theory of firm institution is the necessary part of the classical economics theories. After Marshall however, the neo-classical economics, guided by the marginalism, began to formalize the classical theories. On this basis, they applied mathematics as a tool much to the artery theories, and improved the theories logically. But regretfully, the neo-classical economics can not formalized the labor division theory efficiently because of the marginalism method they applied, and cannot formalize the evolution theory of firm institution for the same reason.Ronald.Corse, in his famous paper, perceived acutely that firms are deemed as "black holes" or " simple transaction units" in the neo-classical domain. The neo-classical economist did not specify where the firms come from and where to go, and did not pay attention to the internal structure of firms, neither to the reason why the structure formed. Stigler summarized Corse's theories as Corse theorem: If the transaction cost does not exist, the state of property rights initialization would not influence the economic efficiency. Corse's theory intended to raise other's interest in the transaction cost, because the cost actually exists in the real world. Just for the cost, system arrangement is of importance significantly. Following Corse, many economists devoted themselves to the study of new institutional economics. But most of the followers did not start form the theory of labor division, and then cannot find a perspective or a method to peep into the whole firm theories.XiaokaiYang introspected on the basis of study of classical and new classical economics, and found the essence of the above problem: Optimal solution can be searched by marginal analysis, and the solution is only the interior solution, but the process of solution searching in labor division theory is non-linear programming, The optimal solution through non-linear programming can be a corner solution or be a ulterior solution. So, in order to describe the labor divisiontheory correctly, a new mathematical method is needed, namely, inframaginal analysis. In the labor division theory, different personal roles mean different system arrangement, and the roles decision can be made through inframarginal analysis only. According the new method, XiaokaiYang and Yew-kwang Ng restored the thought of classical labor division theory by following the essence of transaction cost related theory of Corse's theorem, and developed a new concept of economics, which is called new classical economics. The inframarginal analysis of new classical economics provided a perfect reasoning way to analyses the evolution of firm institution.This paper, on the basis of defining the labor division theory of new classical economics, tries to describe the firm institution evolution, systematically and qualitatively: If the cost occurring in the final goods transaction climbs to a high level, autarky is optimal, and then firms would not appear. When extra profit that benefit from the declination of the cost become available, people turn to the arrangement of labor division. While the labor division can be performed by market, so firms would not appear certainly; when the intermediate products appear with high transaction cost thereof and low transaction cost in labor market, firms then come to being. The reason is that: If the transaction cost of intermediate products is low, market can performs labor division spontaneously, and this performance is optimal; even the cost is high, firms would not appear certainly because the occurrence of firms depends on labor market. While, only when the labor market take the place of the intermediate products market, do firms come to being.With inspiration by the firm evolution theory of new classical economics, this paper provides some explanations on the reality of the firm institution evolution in china.