Legal Constraints For Government Intervention In The Economy

In the process of improving socialist market economy with Chinesecharacteristics, whether the government can function effectively is crucial to thestability of national economy development. For the purpose of maintaining socialjustice, ensuring the fairness of social wealth distribution and promoting stability ofnational economy development, the establishment of a legal constraint system hasbeen an urgent task for the economic development.The great depression in1929and the international oil crisis in1979divided thetheory of government intervention into three parts: the economic liberalism, theKeynesian and the neo-liberalism. Based on the intensity of government intervention,the development of western capitalist government experienced a small-large-smallmode. In the era of fully developed market economy, the essentiality of governmentintervention with legal constraints has been a consensus in economical and legalcircles. China is experiencing the transition to market economy, and the governmentintervention played an important role to maintain the stability of economic systemsince the Reform and opening up. With the deepening of the economic reform,Chinese government intervention tends to be more reasonable. Chinese governmentreform aims at a “small government, big market” mode and the exercise ofgovernment power of intervention is becoming more legitimate. However, defects stillexist in government intervention, includes offside and absence in the governmentregulation against market and lack of standard for government intervention. Theunrestricted expansion of government power will inevitably lead to disorder in themarket, making economic reform degenerate into a tool for the top class in power.Constraining government intervention through legal rules is feasible andnecessary. As Chinese government has adopted series of measures to interveneeconomic system since the reform and opening up, the experiences and lessonsobtained from practices provide guidance for legal constraints against governmentpower. Meanwhile, the promotion of “rule by law” has put some economic andpolitical laws into implementation, laying the foundation for a complete legalconstraint system against government intervention power. However, the fact thatChinese people’s cogitation is under the impact of conventional patriarchal systemmakes the thought “rule by human power” prevalence among distinct social classes,causing the insufficiency of legal consciousness for the whole society. Therefore, itappears naturally when impulse for bureaucratic class occurs to seek private benefits through intervention power. Abuse of government power is bound to lead to theprevalence of rent-seeking and deteriorate the economic reform into reprobate cronycapitalism, which will reduce the efficiency of market economy. Besides, flaws arenot uncommon in the existing legal system regulating the government interventionactions.In order to constraint government intervention by law effectively, principles fordefining the boundary of government intervention must be clarified. Basic principlesinclude respecting enterprise’s autonomy to engage commercial affairs, facilitatingenterprise’s business and concentrating on macroeconomic regulation. To constraintgovernment intervention by law means to supervise intervention policy determination,formulation and implementation through legal measures. To prompt the governmentto make the best policy package, the macro-control targets must be clarified throughlegislative and judicial procedure, and then based on the respective functions of fiscalpolicies, monetary policies and administrative interventions, the government choosesthe policy package which meets the requirement of intervention targets. The processof formulation and implementation of policies is requested to abide by specific legalprocedure, namely conference assessment and discussion, legislative review onintervention targets and the corresponding policies, approval of state council upon theopportunistic decision, and report released regularly by the government about phasedresults of intervention manners. It is essential to improve accountability mechanics tocurb the randomness when the government performs its intervention functions. Theresponsibility and its characteristics according to the economic and political laws mustbe firstly defined clearly. Secondly, the accountability system must be establishedwith more emphasis on investigating and affixing specified related officers’responsibility, so that the defects of vague rule about government responsibility can besurmounted.With the promotion of the reform of political system, the function of politicalintervention is being weakened, and the government intervention in the economytends to rely more on economic policies to regulate and control macro-economy.Therefore, a complete economic law system is in need to constraint governmentintervention power. Firstly, protection for the private property must be paid moreattention to improve the whole citizens’ confidence law and cultivate the entire socialmembers’ legal consciousness. Then laws to regulate relationship betweengovernment and market entities must be completed in order to impel the governmentto support economic entities’ market activity. Meanwhile, it is also urgent to legislateto stipulate the government’s power configuration so that power overlapping andconcentration can be avoided. At last, legislation should provide the government’smain function lies in a complementary for market malfunction, forbidden thegovernment snatching benefits from economic entities as the governor of state-ownedassets.