Interest Groups In The Process Of Institutional Transformation Studies

An original intention of the paper is to look at the true causes for market-oriented reform in Chinaso as to provide a different perspective on understanding the essence of market competition by theconcept of interest groups. The analysis of the paper initially disclosed such an actual scene that interestgroups, which are almost universal in the course of China's market-oriented reform, attend marketcompetition in form of self-organization, seek for competitive advantages through political market, andhave deeply affected the order of market competition and its structure of interest allocation. As a result,the paper had a fundamental conclusion that market competition, in a essence, is interest groupcompetition based on individual rationale. And especially, by reciprocal exchanges in political market,interest group competition makes the process of public policy having the nature of institutionalequilibrium, but it does't mean that could realize the optimization of public interest.The paper arranged according to the logic structure of formation, competition, influence andgovernance of interest groups. In my opinion, the transition of China's system has created theinstitutional conditions for the emergence of interest groups, and provided the opportunities for themto affect the process of public policy and the result of its allocation. As the demand for public policy,interest groups make rational choice between productive investment and non-productive investment,and as long as the return from the later is higher than from the former, they would have a strongincentive in non-productive investment to adapt collective actions out of their self-interest. As thesupplier of public policy, government officials have a benchmark to take their actions like a rationaleconomic man, which would minimize the risks of changing specific policy and gaining profit fromrelated interest groups. In the period of system transition, relation but rule plays a leading role in theallocation of economic resources, so that economic resources controlled by government have becomethe object of interest group competition, and their scale larger, the competition more intense. Therefor,in condition of the lack of effective constraints upon public power, the result of the process of publicpolicy is always that government officials, from their personal best interests, make their effort tomaintain institutioanl foundation for rent-seeking activities by blocking the actual market reform.Because of their self-interest, government officials would be easily captured by interest groups, andbecome its core members. Thus, interest groups will be able to constantly expand their influencethrough a rent-seeking type of relationship investment, have the public policy locked in theirself-interest track, and solidify the existing structure of interest allocation while making it irreversible. At present, in order to reverse its unbalanced stucture of interest distribution, China must make its besteffort by the deeper institutional innovations to build a good government with an interest-neutral quality,eliminate a variety of institutional discriminations that hinder fair competition in the market, andpromote the market economy changing from personal exchange to impersonal exchange.The study of the paper on interest groups of China's transition period is tentative, focusing ondeeply understanding market economy system, without involving the issues about system ofgovernment, relations of political parties, and ideology. But in the course of the study, I recongnized thatpure economic policy cannot solve China's actual economy problem, because its making andimplementation also involving in all aspects of reforms of politics, legal, society, culture and so on. Inorder to remedy this defect, we need to build a more general analytical structure of interest groups,which is obviously aa important theoretical proposition that China's social scientist will beinsurmountable in the future.