Contemporary Economics and Rational Synthesis

This chapter summarizes some key theories and methods in economics, including the mixed economy theory, the aggregate demand/aggregate supply model, the Harrod-Domar model and the Solow-Swan model (neoclassical economic growth model), and the real business cycle theory. The mixed economy theory advocates implementing a mixed economy by combining market regulation and government regulation, private economy and public economy, as well as distribution according to labor and to production factors. The AD/AS model derived from the neoclassical synthesis school is used to analyze fluctuations in total output and price levels. The neoclassical economic growth model emphasizes the effects of savings, population growth, and technological advancement on economic growth and explains the conditions for economic growth to achieve steady-state equilibrium. The RBC theory explains economic fluctuations within the framework of general equilibrium, ascribing the root cause of economic fluctuations to technology shocks. The thinking of rational synthesis is closely related to these important theories, and on the basis of these theories and methods, performs relatively unified logical analysis. It can be said that the thinking of rational synthesis is built on and elevates these theories and methods. The basic logic of the thinking of rational synthesis is as follows: Based on the combined role of market and government, aggregate demand and aggregate supply are regarded as important forms of government involvement, the relations between short-term fluctuations and long-term economic growth are taken into account, and dynamic analysis methods are used to construct a dynamic theoretical model with unified economic logic, with attention paid to disequilibrium analysis.