Abstract

The distribution process, which determines not only the exchange and consumption, but also the production, plays the most important part in economic activities. The enterprise contracts, market prices, policies, laws and regulations are the interests distribution mechanisms formed by all sorts of power games. Based on re-cognition of economic power, this book discusses various economic issues about resources allocation, anticipated to set up a new economic research paradigm, the power paradigm.

As a common social phenomenon in human society, power reflects the interpersonal behavioral relationship, and it can be defined as one behavioral agent's ability in influencing and controlling the others based on the resources he posses. According to its different resources and subjects, power is usually divided into political power, social power and economic power, and the adjustment and improvement of these three kinds of power widespread in market economy promote the whole society forward. By game theory analysis, we show that the power structure decides the social interests distribution structure. So our reinterpretation of economy viewed on power paradigm is rational, and it is practically significative to seek an appropriate social power structure for resource allocation. In any society, power always combines with the production factors difficult to get or substitute. And the person mastered the supply of such production factor also owns the power to the enterprise residual claim. Both the replacement of the land by the capital in history and the current human capitalization are inevitably results effected by production factor changing. Similarly in the interests distribution mecha nism of market trading, the trader's willingness depends on his economic power, because the greater the power he owns, the more will could be reflected in the contract and the more interests he could gain. No matter the commodity prices in ordinary markets, the transaction prices in financial markets, or the wages in labor markets are all the consequences of interactive power equilibrium obtained by the negotiations among the enterprises, the consumers and the government.

The power structure decides interests distribution structure, then the fairness of the distribution influences the input and its efficiency of each factor in production, further more the optimal allocation of the whole social resources. We have proved that to attain the reward of the production factors corresponding to their contribution and full utilization of resources so that social interests and welfare are optimized, the basic way is to realize, at the same hierarchy level, the power formed by the resources besides their direct contribution in production reciprocity among different economic agents and meanwhile to make sure that power and responsibility are symmetric for the same economic agent.

Economic development is a dynamic evolution process, and mainly the change of interpersonal economic relationship, i. e. the formal or informal trading rules adjusting, shown as the institutional evolution. Institution is a distribution mechanism that all participants decide their cooperation incomes and personal interests, and the basic institutional structure must reflect interpersonal power structure of each economic participator. Further more, the distribution of economic power influence the structure of political power, which decides the political institution and then impacts on economic institution. It can be said that the institution, a solidified distribution structure among interests groups, not only reflects the current power structure, but also affects the future economic performance. The stable institution structure implies the accumulation of distributed interests and the changes of power structure, while the institution evolution is the inevitable result of the changes in the power structure to a certain extent.