Sheng’s note: THis is my speech in last year, I reissue it today again.
A dinner celebrating 91th birthday of Mao Yushi.
Why Economists Live Longer?
— Remarks on Mao Yushi’s 90th Birthday Celebration
I recall Professor Demsetz once said, economists celebrate their heroes. Professor Mao Yushi is our hero. We don’t normally celebrate him, but today is a special day and we should celebrate him. In two days’ time, January 14th, it will be Professor Mao’s 90th birthday. I am happy to pay tribute to Professor Mao on this special occasion.
Why do we celebrate Professor Mao? We celebrate Professor Mao for his contributions and for his example. His first contribution was his independent discovery of the optimal resource allocation theory, that is, the marginal utility equals the marginal cost, or the marginal profit equals the marginal cost. Some say, this is something discovered by people in the west long time ago, what does this independence rediscovery account for? Of course it matters. The discovery of the same theory in an isolated environment would further prove the universal truth of this theory. On another note, Professor Mao discovered this from his study of the planned economy. Another person, Oskar Lange wanted to apply this to central planning, or “computing market economy”, that is central planners calculating that the marginal cost equals the marginal profit. Professor Mao exceeded Lange and proclaimed that, in the Optimal Allocation Theory, even housewives could do such calculation. Letting tens of thousands of economic entities calculate and make decisions in a decentralised manner, that is true economic liberalism.
Professor Mao’s second contribution is in humanistic economics. He did not stop at the basic economic theories. Different people have different endowment. For example, man and women have different command of violence. If people just pursue the maximisation of their own interest, as homo economicus, there will not be optimal resource allocation, and some will use their advantageous endowment to breach the market rules. Therefore, Professor Mao developed humanistic economics, in other words, “ethics liberalism”. Professor Mao pointed out, in his acceptance speech of the Milton Friedman Prize for Advancing Liberty, “liberalism is about self education, a self-constraint from interfering other people’s liberty.” That is to say, only when those with advantages stop abusing their advantages will there be optimal resource allocation and true liberalism.
Professor Mao’s third contribution concerned the founding of Unirule Institute of Economics by him, a few other economists, and the Daxiang Culture Company. Twenty five years on, Unirule has achieved way over what we initially expected. At first, we only wished to advance economic theories, studies, and development. It’s been much more than that. Unirule has transcended disciplines, cultures, and nurtured its own style and culture, a Unirule Cultural Tradition, indeed. It’s a small tradition. But those traditions that win at last know no size, but only right and wrong. Unirule’s cultural tradition may have a positive influence on the build-up of a new Chinese cultural tradition for the future.
Fourthly, Professor Mao is not a man to talk the talk. Some scholars or theorists may be able to put forward great theories, but they may overlook practice. Professor Mao not only has theories, but also believes in walking the walk. He never overlooks the good deeds no matter how small they seem. He wishes to improve the livelihood of the people by his efforts, especially the less privileged. He created the micro loans fund for Longshuitou Village, which helped the poor people in dire need. He and his friends founded the Fuping Domestic Service School to help those women from the most marginalised and unprivileged conditions.
Fifthly, Professor Mao is a modest man. It’s a modesty deeply rooted in his bone instead a pretended modesty. I remember the first letter that I ever received from Professor Mao ended with “Yushi with regards”. After so many years, he still keeps that ending in every email he wrote to me. It shows that Professor truly believes that he is an ordinary man. Professor Mao is a senior to all of us. He is learned and highly renowned, but he’s not changed by all those things. His modesty is unchanged.
Sixthly, Professor Mao writes concisely. Many of us here today write, but Professor Mao writes in the most clear and simple manner. It is also the most beautiful style. Such a style touches the most souls in the easiest way to get his ideas across. If there were not interference, there were over 20 million followers of his Microblog. His style has facilitated the spread of economic liberalism.
Seventhly, Professor Mao criticises with a good will. Professor Mao never shies back from criticising people or offending others, but he never does that without holding a good will. His criticism is the purest and clearest, without a hint of malevolence. Such criticism is for the correction of one’s deeds and mistakes, which is good for the one getting the criticism, and the society in general. This is also the style of Unirule. We, sometimes, criticise the government or the interest group, which may have come out straightforward. But we have never done so with any malevolence. We only criticise with a good will in heart.
Lastly, I would like to say, we wish Professor Mao a happy birthday and good health. We also believe that Professor Mao will live a long and happy life. Why? Because economists live a long and happy life. Professor Coase had 103 good years, Professor North 95 years, and Hayek over 90 years, too. Why? I think I can explain this with for core concepts of economics.
The first concept is “equilibrium”. Economists don’t believe the more the better, but a proper ratio of different factors, not too much, not too little. That’s the recipe for the best resource allocation. Such an equilibrium among different factors start from the heart and manifests in the balance of one’s heart. Therefore, economists are those with a balanced heart, an inner peace. There will not be imbalance, or extreme emotions. They live longer who have a peaceful heart.
The second concept is “optimisation”. Economists believe there is an optimal solution, a best state. Accordingly, they will find there are flaws in the world, far from perfect. They, therefore, obtain the drive to promote for the ideal world. This gives them a sense of purpose. Professor Mao once said, the “meaning of life” that he finally understood was to “enjoy life”. Did he mean enjoying good food, wine, and colourful entertainment? Obviously not. What he meant was that the process towards an ideal state was enjoyable in itself.
The third concept is “substitution”. When economists say something is not good, they will find a substitution. They would not just claim something is no good without offering a substitution. Getting rid of something bad is sabotage sometimes, while offering a substitution is constructive. Constructiveness is healthy for a society and healthy for a person as well.
The last concept is “marginal”. Marginal means trial and error. Economists don’t believe in once-and-for-all solutions. They don’t expect a super hero falling from the sky and save people from sufferings. Economists believe in step-by-step progress of a society by the collective efforts of the people. That’s because they don’t get disappointed when they don’t hold false faith in the arrival of an ideal society out of the blue. Economists would rather trust in their little but concrete progress day by day that improves the society. They would also take joy in such small steps forward.
Therefore, economists are peaceful, content, healthy, joyous to live a long life. Professor Mao is having a long and happy life. Please join me in raising your glass and wish Professor Mao Yushi a happy birthday, and a long and happy life!
This speech is translated by Ma Junjie