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This research note reiterates the productivity theory in the Solow growth accounting framework to explore an institutional interpretation of changes in total factor productivity. In theory, total factor productivity or TFP growth is a costless gain in output, which captures the effect of positive externalities caused by spillovers of technological and organizational changes in a perfect market system. This provides a yardstick to gauge institutional effect on output in an imperfect market system if all inputs are properly measured. Using the Chinese case, I show that an integrated approach a la Jorgenson and Griliches (1967. “The Explanation of Productivity Change.” Review of Economic Studies 34 (3): 249–283) that ensures a consistency between theory, methodology and measurement can facilitate empirical exercises even with data problems, and a so-constructed TFP index for China can satisfactorily reproduce China’s post-reform productivity path with institutional interpretations.

This paper focuses on the diffusion of 無為/ wu-wei (an ancient Chinese concept of political economy) throughout Europe, between 1648 and 1848. It argues that at the core of this diffusion process were three significant developments; first, the importation and active transmission of wu-wei by the Low Countries during the seventeenth century. It is revealed that the details of Chinese expertise entered Europe via the textual diffusion of Jesuit texts and the visual diffusion of millions of so-called minben -images during the ceramic boom of the seventeenth and eighteenth centuries. Thus, the hypothesis is advanced that the diffusion of wu-wei, co-evolved with the inner-European laissez-faire principle, the Libaniusian model. In the second part, it is shown that the intellectual foundation of Europe’s first economic school, Physiocracy, is a direct replica of the imported Chinese economic, agrarian craftsmanship of wu-wei ; subsequently, it is denied that the indigenous European Libaniusian ideology can be considered the intellectual master-model of Physiocracy and his founder Quesnay. Finally, we argue that Switzerland can be identified as the first European paradigm state of wu-wei . The crystallization process of wu-wei inside Europe ultimately ended with the economic-political reorganization of the newly formed Eidgenossenschaft in 1848. The Swiss succeeded in institutionally transforming traditional Chinese agrarian wu-wei into the modern version of European “ commercial wu-wei ”. In due course, this alpine paradigm enabled the endogenous Libaniusian model to verify and reflect upon its theory of commercial society. Additionally, this third focus also demonstrates that the later development of Europe’s laissez-faire doctrine has to be seen as a Eurasian co-production – without importing China’s wu-wei , Europe’s pro-commercial ideology might never have matured.

This paper inquires the nature of monetization with the positive transaction costs approach. It is argued that the nature of monetization is marketization. Once a market emerges, its monetization would be practically 100 %. The huge efforts devoted to measure monetization are thus chasing a mission impossible, and the policy implications derived from these measures are possibly misleading. The study of this paper suggests that it could be beneficial to discard the concept of monetization in the study of financial development and illustrates the importance of the systematic inclusion of transaction costs into economic analysis.

Zeng liang gaige (incremental reform) is the term used by some economists to define the characteristics of the Chinese reform. In my opinion, the real increment reform is the increase in people's rights in our times. The econmy should not be considered as a simple question of production and distribution of ressources, it should be an econmy of the subject both for China and the world WU Jinglian, Dangdai zhongguo jingji gaige (Contemporary Economic Reform) Beijing, Zhongxin Editions, 2017, pp. 343–360. .