Traditional Grassroots Governance And The Morden Development In China

Economic development is a commonplace topic and one of the hottest issues in economics,and it has been deeply and meticulously discussed by scholars of almost every era.In particular,nearly 40 years of reform and opening-up,China's economic development has made great achievements that have astonished the world,and more and more economists turn to China,trying to explain the miracle of China from different angles.However,in the course of the explanation of China's booming economy,few have noticed the regional differences,especially the differences between the North and the South.Overview all the determinants of economic development,they can be roughly classified as technological determinism,institutional determinism and geographical and cultural determinism.However,due to the difference of explanatory power,the technological determinism gradually goes down,in contrast,the institutional determinism tend to prevail.Furthermore,when we put all these new institutional economic theories to analyze the cause of the rise of China,especially the regional difference,not only the original new institutional economics but also the emerging public economic theory and fiscal state theory seem to be helpless.The influence of informal institutions on economic development has attracted the attention of scholars for a long time.But up to now,most studies either simply rely on neoclassical models for empirical analysis,or view the informal institution as culture,which has not been analyzed in economics as a black box.Based on the theory of public economics,this paper tries to provide a more logical and more elaborate analysis from the perspective of economic development theory about how informal institutions affect the economic development.I redefine the informal institution,tease out the main informal systems and their functions,and analyze the possibility of public goods supply of these informal institutions from a perspective of public economics.The informal institutions provide a variety of public products and the clan is very representative.In the theoretical part of the article,firstly,I make a demand-supply analysis of public goods in traditional China.On the demand side,public goods demand is mainly collective existence;and on the supply side,the national capacity is very limited,in other words,the formal institution is weak,and the informal plays a very important role.Secondly,concentrating on the clan,the most important informal institutions,I analyze its structure and the decision-making mechanism of public goods supply,and find the clan has a considerable efficiency in the supply of public goods.Moreover,there seems to be a positive incentive mechanism within the clan to promote the provision of public goods.Finally,on the basis mentioned above,I analyze the logical relationship between informal institution and economic development.It indicates that these informal institutions such as the clan have provided development-oriented public goods incidentally,and formed the basis of market economy in the South.Informal institution will be conductive to the development of market economy only if it provides the development-oriented public goods,in that it reduces the market transaction costs.In the empirical part of the article,the fieldwork in the northern part Fujian and southern of Zhejiang gave us a clear understanding of the cultural,geographical conditions and the public goods supply of the informal institution;the empirical model indicates that the overall economic development of the south is better than that of the north due to better market economy.Logical analysis,field study,and empirical research reveal that informal institutions really have a positive effect on the market economy.Specifically,culture and geography jointly determine the direction and structure of public goods supply.For example,culture in south such as “cultivation and read to bequeath to the family” and geographical conditions which is not easy to live determine arise of public goods like bridge and so on.Those development-oriented public goods promote economic development in reducing market transaction costs.Beyond that,in the process of public goods supply,informal institutions like the clan have trained a group of entrepreneurs with an organizing ability of public economics.Once participating in market economic activities,those entrepreneurs can directly promote economic development.Of course,the promotion of development-oriented public goods to entrepreneurs and market economy can only be manifested in the context of small pressure on survival public goods,especially less pressure on the defense.Hence,in the past more than 30 years,the pressure on defense was small,and the south got an opportunity to develop.The rapidly development in south was related to its original public economic base and ability.Nevertheless,for the development of whole human society,informal institution cannot substitute for the state,which is one of the most important formal ones.And it is not even the main driving force behind the evolution of civilization.