Efficiency And Equity: Theoretical Analysis And Policy Options

The issue of efficiency, equity and their relationship has always been one of the puzzles argued in the economic field, even some called it the"Sphinx's Riddle"in the economic area. Different people hold different opinions on this issue. The Party's Fourth Plenum of the 16th CPC Central Committee brought forward the idea of constructing a socialist harmonious society. Equity and equality is not only the basic character, but also the foundation stone of a harmonious society. Nowadays, China has a rapid economic development;however, the income gap between the residents is widening and unfair social distribution becomes a serious problem. Under such circumstances, it is very important for us to reconsider the principle of efficiency and equity.The thesis starts from explaining the concepts and meanings of efficiency and equity and studies the dialectic relationship between them. Then it introduces the summarization of related theory both from home and abroad, including the Western Economics, the Marx Economics and China's Economic theory.Combined with China's social and economic situation, the paper analyses the policy evolvement of efficiency and equity after China's establishment and it thoroughly discusses the principle of"Giving priority to efficiency and giving consideration to equity". Basing on the theoretical and practical analysis, the article points out its policy selection in the new situation, that is,"realizing the unification of efficiency and equity".The thesis then theoretically analyses the principle of"unification of efficiency and equity". The article uses the negative reasoning method to discuss some obscure opinions about the relationship between efficiency and equity, so that the perspective of the thesis is further proved. The principle of"realizing the unification of efficiency and equity"not only has its feasibility in theory, but also has its necessity in practice. Therefore, the paper analyses the practical significance of the principle of"realizing the unification of efficiency and equity"under the new circumstances. Basing on the theoretical research, policy review and practical analysis discussed above, the thesis brings forward the basic ideas of"realizing the unification of efficiency and equity", that is,"the market deals with efficiency and the government manages equity". The article also makes some policy suggestions, such as reinforce the tax system, improve the social security system, reform the monopoly industry and perfect the Socialist Market Economy System to realize the unification of efficiency and equity.