Distribution Structure and IncentiveSystem under the Socialist Market Economy

Stiglitz contends that the failure of the socialism in the former Soviet Union and the Eastern European countries can be attributed to their micro-economic defect, namely, the absence of the effective economic incentive, which is called Stiglitz's Propositionin this paper. This proposition sends out a warning message to the Chinese economy that the increase of the economic efficiency necessitates the scientific arrangement in relation to the establishment of an effective incentive system which is intended to uplift the efficiency. The building of an incentive mechanism hinges on the establishment of an efficient distribution system. The crucial point to be dealt with at present is to abide by the distribution system according to work in general, and attach importance to its efficiency dimension in particular, and meanwhile seek to make up for the non-efficiency dimension through establishing and improving the distribution system which involves all the essential elements. Attention should also be paid to the coordination of behaviors of related economic bodies so that their operation revolves around the ultimate goal--promoting the work efficiency and the efficiency of resource allocation.