This article is from WeChat official account:Economic Observer (ID: eeo-com-cn) , author: Xu Jia Ye, the original title: “Book Review | seize the” invisible hand “,” head Figure from: unsplash

Introduction

1. Economists recognize that there are often unsatisfactory aspects in the process of market allocation of resources. On the one hand, personal interests and social interests do not always coincide perfectly; on the other hand, the existence of market friction will also make price signals unable to correctly guide market operations.

2. Some economists choose to go a step further: the root cause of market inefficiency is precisely because the “invisible hand” is bound. Therefore, the “invisible hand” must be further broadened. Only when the “hands” can play a role in the field, and give them corresponding guidance, can the market be effective again.

3. These “simple and rude” schemes proposed by the author have a common feature: to maximize the market role, rely on providing incentives to participating individuals and make While maintaining economic operations, a more centralized institution is still needed to create and continue to maintain this market and corresponding mechanisms.

The market is an important and effective way of resource allocation. This has been a consensus among economists for a long time. So, where does the market’s effectiveness in resource allocation come from? Regarding this question, Adam Smith, known as the “Father of Economics”, first put forward a key point in his book “The Wealth of Nations”: the individuals involved in economic operations do it for their own benefit. The commercial behavior of the company often happens to make a corresponding contribution to the well-being of the entire society. Subsequently, the representative of the “Austrian School” Hayek gave another key point in his thesis “On the Use of Social Knowledge”: Although no individual can master the ownership and economy of the entire society All information related to the operation, but this information can be reflected through transaction behaviorIn this case, the first chapter of this book discusses the system of “Public ownership self-assessment“(COST) : For any commodity, the owner must declare its value and pay taxes according to the declared value. At the same time, other people can purchase the commodity according to the declared value; this means that all commodities are put on the shelf and the opportunity for trading is Fully expand to ensure that price signals can function normally. In particular, the commodities mentioned here are not limited to commodities, real estate or land that are usually traded, but also include more intangible “commodities” such as political power, human capital, etc. COST enables these intangible commodities to be priced, and then Get an efficient configuration.

For another example, labor does not flow freely in the international market. Foreign laborers who want to work in the United States must be guaranteed by the company (also known as H-1B visa), which leads to the income gap of the same technical level of labor in different countries can be as much as ten times, also means that there is inefficiency in labor allocation. The “Personal Guarantee Visa Program“(VIP) proposed in Chapter 3 of this book tries to solve this problem: Not only companies can guarantee foreign labor, but qualified individuals can also “contract” the responsibility of guaranteeing foreign labor. This expands the opportunities for labor migration, especially low-skilled foreign labor that is difficult to obtain company guarantees. The guarantor can obtain a part of the wages of the guaranteed person as a profit, but at the same time must also bear the responsibility of paying social insurance for the guaranteed person or making compensation when the guaranteed person commits a crime.

As another example, Chapter 5 of this book puts forward the concept of “Data as the Fruit of Labor“: When a user speaks on social media or makes a purchase on an e-commerce website, all these behavioral information data are It is the “product of labor” of the user, but the user shares it with the website almost for free, but for the website, the almost free data is very rough and difficult to rely on algorithms for effective processing. If transactions between the website and the user are allowed, the user “explains” the data to the website (such as “circling” friends in photos and adding mood to the text status , And even answer some questions, etc.), and the website pays a certain amount of remuneration and uses these more refined data to provide users with better services.It is obviously a “win-win” situation for both parties.

Another reason for the inefficiency of economic operations is the inconsistency between personal interests and social interests. From the perspective of optimization, a more classic conclusion is that the optimal result occurs when the marginal cost and the marginal benefit are equal. If the marginal cost or marginal benefit of the same behavior to the individual is not the same as the marginal cost or marginal benefit to the society, then it means that the optimal result of individual choice does not meet the requirements of social optimality, so it depends on the market of individual interaction. The economy cannot achieve overall efficiency. In this case, the equally straightforward solution is to adjust the individual’s marginal cost or marginal benefit so that it follows the marginal cost or marginal benefit evaluated by the society as a whole, and the individual’s optimal choice is the same as the social optimal choice. Coincide.

The idea of ​​this solution is concentrated in the “square voting“(QV for short) discussed in Chapter 2 of this book Among them. Compared with the usual voting method, square voting has three important differences:

First, when there are multiple items to be voted on, Square Voting requires a limited voting budget to be allocated to each item. The usual voting method is equivalent to setting an unlimited budget, which means that the cost of each vote is zero, and zero cost often leads to more extreme voting results; limited budget increases the opportunity cost of voting, so you don’t care about it. You can vote less on matters of interest and use the saved budget to cast more votes on matters you care about.

Secondly, you can vote for or against, and the final votes are counted to offset each other. The purpose of allowing a negative vote is to give equal weight to the supporting and opposed opinions; especially when there are more options in the matter, if only supporting votes are allowed, if there is a degree of support for a certain option, then Only one vote is required, and if there is one vote against an option, one vote must be cast for all options except that option.

Thirdly, when voting for each option of each item, you can cast more than one vote, but the budget for the number of votes is the square of the number of votes, which is the reason for the name “square voting”. The reason for the square is that the number of votes itself reflects the importance of the matter to voters. The profit of one more vote at the margin is proportional to the current number of votes, so the marginal cost should also be proportional to the current number of votes, and the total cost is corresponding The ground is the square of the votes.

The same is true for the discussion of COST in the first chapter of this book: For the overall benefit of society, the declared value of a commodity should appropriately reflect the actual value of the commodity. To achieve this,Therefore, the Coase Theorem should be regarded as a stepping stone to the study of positive transaction cost markets.

For any decentralized market, the design of a centralized mechanism that initially created the market is just like the Coase Theorem said that “the government must bear the responsibility for clear property rights.” But even if these things are aside, the absence of any supervision in the operation of the market is undoubtedly too idealistic, just like applying the Coase theorem assuming that there are no transaction costs. Coase’s later research on corporate organization proposed that in a world of positive transaction costs, employees will spontaneously form companies to reduce transaction costs; similarly, some spontaneously formed centralized institutions and the need for centralized supervision are also market-oriented. Trade-offs for more efficient allocation of resources.

From the perspective of historical development, many mechanisms that we are accustomed to now are often very “radical” or not understood when they were first proposed. For example, the “Vickory Auction” named after the economist Vickery mentioned in this book, that is, the “Second Price Sealed Auction”, is suitable for ordinary people who have never been exposed to related concepts. It would seem particularly strange: this method of auction requires bidders to write the bid price in the envelope and seal it over. Finally, the person with the highest bid price gets the lot and pays the second highest bid price. For ordinary people, the impression brought by the term “auction” probably comes from public auctions, especially British auctions with low to high bids; when it comes to sealed auctions, such as bidding, it is usually the first price. Sealed auction, where the person with the highest bid price gets the lot and pays his own (that is, the highest) bid price. However, “Vickry Auction” has many advantages, especially in theory, it can be proved that the best choice of bidders is always written with their true psychological price; moreover, similar mechanisms can be extended to more general resource allocation problems. In the (known as the VCG mechanism), it still plays an important role in the market such as advertising bidding.

As far as this book is concerned, especially the COST in Chapter 1, the QV in Chapter 2, and the paid “interpretation” of data in Chapter 5, have all been used in a small range on the virtual digital economy platform. . In fact, after the book was released, it caused a huge response in the blockchain and digital currency industry, especially by Vitalik Butrin, the founder of the famous blockchain platform Ethereum. The main ones are Because the “radical market” and the blockchain have the same appeal for the concept of decentralization. In addition to digital currency, blockchain technology has always been in an embarrassing situation where there is a lack of important and irreplaceable application scenarios, and some of the ideas in this book undoubtedly create new ideas for the further implementation of blockchain technology.