China's economic transformation in the evolutionary perspective: uncertainty, learning and experimentation

Abstract

This paper applies the Austrian perspective of human agency to model a 'learning government'. It portrays the government as an actor who makes decision under uncertainty. Public agents, like private enterprises, formulate expectations and plans based on their experiences. Assimilating new incoming events, they revise their plans, learn to implement projects, and experiment new ideas, resulting in policy changes. This Austrian perspective of the governmental process is applied to re-appraise the role of the government in the economic transformation of modern China. The paper concludes that the Austrian approach in understanding development planning is an alternative to the cost-benefit analysis.