Rational Synthesis Economic Model and Policy Framework

A real-world economy is neither purely market economy nor planned economy but is a mixed economy, in which market and government both play their roles. Economic theory should accurately reflect and explain reality, and any theory from the perspective of a pure market economy model or a planned economy model would deviate from reality. China’s successful practices over the past decades have shown that relying solely on the traditional planned economy would not work, and China must take the road of developing a market economy, in which the government should play its part. This sets it apart from the market economy model in the West. The combination of the role of market and government forms a relatively effective economic model, but the government should play an appropriate role. Throughout the years, economic development models and economic theory have evolved with different combinations of the roles of market and government. What is needed for constructing a rational synthesis economic model is the basic conditions in original theories, with no additional tough conditions required. The primary goal is to integrate the logic of existing theoretical models with China’s successful practices and make proper adjustments in line with the thinking of rational synthesis to form a relatively unified economic logic. Through unified equations, important conclusions can be drawn from deductive reasoning and justified with relevant theories.