Need for interest-balancing mechanism

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By Sun Liping (China Daily)
Updated: 2009-10-22 08:47

It has become an indisputable fact that there is a great disparity between the haves and the have-nots in China and the gap is widening over time. The problem of polarization, which is directly related to insufficient domestic demand or sluggish market, has not only been at the root of sharpening social contradictions but also seriously hindered the sound development of China's economy. Therefore, how to narrow the gap between the rich and the poor has become a challenge facing us. We need a solution of social mechanism.

We noticed that the uneven distribution emerged in the context of China's engagement in market-oriented reform for 30 years and the establishment of a framework of market economy system. There are only two options to resolve the problem of polarization: One way is to lapse into the previous planned economy and the other is to set up an interest-balancing mechanism under the conditions of market economy. If the former has been ruled out, the latter becomes our only option.

A general interest equilibrium pattern could be reached through a series of concrete mechanisms. Generally, an interest-balancing mechanism under market-economy conditions includes two aspects: One is about market, mainly focusing on labor-capital relations; the other is about redistribution, concerning national revenue and expenditure on social welfare. Although improving State redistribution is a necessary means to establish a more balanced profit distribution pattern, its effect is quite limited given the current stage of China's economic development. So it is more pressing for us to set up an interest-balancing mechanism inside the current market system.

The so-called interest-balancing mechanism under market economy conditions means the institutionalization of the equal interest-articulating rights of social subject and a relatively fair interest game, in which the most principal part is to protect the equal rights of interest expression and pursuing self-interest.

The current uneven interest pattern originated from the partiality of social rights. What is the reason for such dramatic changes that have taken place in income disparity of Chinese residents over the last two decades? What are the underlying causes? As long as we review the matter seriously, we can find that the crux of the issue lies on the great gap of competence among different social groups to express and pursue their interests. In other words, the polarization is the outcome of unbalanced ability for different social groups to express and pursue their interests. Behind the grave disparity, such factor always exists.

The fact is that the ability of striving for interests is highly unbalanced between the superior groups and disadvantaged groups in China. Today, with the diversification of interest subject, the issue of interest articulation, especially that of the disadvantaged groups, cannot be ignored any longer. If we do not establish a corresponding interest-articulating mechanism, which seems as if some trouble is avoided, the imbalance will be further escalated.

Setting up an interest-balancing mechanism under market economy conditions needs a variety of institution construction, including mechanisms of information sharing, claim expression, pressure release, demand concentration, interest coordination and conflict settlement. Of all these mechanisms, claim expression, pressure release are the most important.

When a group of people want to express their demands of interest, there must be a mechanism to concentrate their demands first. Take the problem of unemployment, for example. If there is no opinion agglomeration, we can only see some complaints on the Internet. Meanwhile, if the demands could be concentrated, it may come out with a bill. If the demands of the laid-off workers could be collected, there may be a specific social security scheme in the arrangement of social security system.

The author is a professor of sociology at Tsinghua University. The story was first printed in China Business News.

(China Daily 10/22/2009 page8)