Introduction
Government is the most powerful party within the Grand Tripartite—Family-Household Rights, Enterprise Rights, and Government Power—and also the most difficult to analyse. It is both the guardian of the market economy and a potential destroyer; both the regulator of the game between families and enterprises and a participant with interests of its own. By comparing three major hypotheses about human nature, this article analyses the nature, rational behaviour, and institutional constraints of government and, on this basis, assesses the capacity of different political systems to maintain the equilibrium of the Grand Tripartite.
I. Three Major Hypotheses about Human Nature
Judgements about the nature of government ultimately depend on judgements about human nature. Three hypotheses are proposed and compared here.
1. The Hobbesian Hypothesis
The Hobbesian hypothesis holds that human nature is inherently bad: everyone is self-interested, and society exists in a state of “war of every man against every man”. A powerful sovereign—the Leviathan—is therefore required to maintain order and suppress the selfishness and violence in human nature.
Its political implication is that a government wielding strong power is necessary, and that law and order take precedence over freedom and rights.
Its limitation is that it absolutizes one aspect of human nature—self-interest—while disregarding human sociability, cooperativeness, and moral capacity, thereby providing a theoretical basis for authoritarianism.
2. The Rousseauian Hypothesis
The Rousseauian hypothesis holds that human nature is inherently good and that social institutions and private property corrupt the human disposition. Government embodies the “general will”, represents the common will of the whole people, and should serve the public interest.
Its political implication is that democratic government executes the will of the people and derives its power from their authorization.
Its limitation is that it overestimates the capacities of human reason and morality while disregarding self-interested motives and the distortion of information in public choice, thereby providing a theoretical basis for populism and totalitarianism.
3. The Complete-Human-Nature Hypothesis (the Position of This Framework)
The Complete-Human-Nature Hypothesis holds that human nature has both a self-interested aspect and social, moral, and cooperative aspects. Human beings are rational and affective; competitors and cooperators; pursuers of private interests and contributors to the public interest.
Its political implication is that realistic institutional design must accommodate both aspects of human nature: it must both constrain self-interested behaviour and create incentives for cooperative behaviour. Any institutional design that reduces human beings to purely self-interested or purely moral beings will fail in practice.
II. The Nature and Rational Behaviour of Government
The Organizational Character of Government
Government is an organized force founded on public power and charged with the function of providing public goods. What sets government apart from families and enterprises is coerciveness: through such coercive means as law, taxation, and administrative orders, it can alter the behaviour of families and enterprises.
The Rational Behaviour of Government: Maximization of Power
Government’s rational behaviour is hypothesized as the pursuit of the long-run maximization of Government Power within the framework of the rule of law.
The key to understanding this hypothesis lies in the words “long run”. In the short run, a government can expand its power by predatory means. In the long run, however, the foundation of Government Power is the tax base, which arises from the economic activities of families and enterprises. Systematically damaging families’ Life-Reproduction Capacity or enterprises’ Productive Forces will inevitably erode the tax base and ultimately weaken Government Power.
This logic explains why even a self-interested government has an incentive to protect the interests of families and enterprises—not out of morality, but because of the need to maintain its power. This is the institutional basis for the possibility of a cooperative game within the Grand Tripartite.
The Three Major Responsibilities of Government
Within the framework of the Grand Tripartite, government bears three core responsibilities.
First, maintaining rule-of-law order. Protecting property rights, enforcing contracts, and maintaining the order of market competition are the foundation on which the market economy operates. Without the rule of law, there can be no market.
Second, providing public goods. National defence, infrastructure, public education, public health, social security, and other public goods cannot be provided effectively by market mechanisms and must be supplied under government leadership.
Third, regulating imbalances within the Grand Tripartite. Families are naturally the weaker party in the game between Family-Household Rights and Enterprise Rights. Through policies such as minimum-wage standards, labour protection, social welfare, and antitrust enforcement, government rebalances imbalances generated spontaneously by the market. This is the most important justification for government intervention in the market.
III. Government Failure: The Boundaries of Power
Government is not omnipotent. Government failure takes three principal forms.
First, corruption and rent-seeking. Public officials use power to pursue private gain, converting public resources into personal returns and undermining the foundations of the rule of law.
Second, insufficient information and decision-making errors. Government cannot obtain all the information dispersed among hundreds of millions of market participants; centralized decision-making therefore inevitably causes resource misallocation. This is the fundamental reason for the failure of the planned economy.
Third, the inherent impulse towards the expansion of power. Government Power has a natural tendency to expand: bureaucratic organizations tend to enlarge their budgets and authority, while politicians tend to seek more power. Without effective checks and balances, power will exceed its legitimate boundaries and infringe Family-Household Rights and Enterprise Rights.
Corrective mechanisms for government failure take different forms under different political systems: democratic elections, separation of powers, judicial independence, freedom of the press, and civil society. Each has advantages and disadvantages, but their common function is to provide a political mechanism that enables power to make its way forward through side-to-side oscillation and to achieve a dynamic balance through error and correction.
IV. A Comparative Analysis of Four Political Systems
Four political systems are compared and assessed by their capacity to maintain the equilibrium of the Grand Tripartite. The following comparison is typological rather than a complete evaluation of any particular country. Actual countries often combine features of multiple systems, and those features change across historical stages.
1. Liberal Democracy
Represented by developed Western countries, its core mechanisms are electoral competition, separation of powers, judicial independence, and freedom of the press.
Advantages: Its corrective mechanisms are relatively well developed; institutional safeguards constrain power and can, to some extent, prevent systematic infringements by power upon families and enterprises.
Limitations: Electoral cycles compress the horizon of decision-making, placing short-term public opinion above long-term rationality; money politics allows Enterprise Rights to exert excessive influence over political processes; and welfare competition may move towards the opposite extreme of “strong labour and weak capital”, undermining enterprise creativity.
2. Social Democracy
Represented by the Nordic countries, it establishes a system of high welfare, strong trade unions, and extensive social security on the foundation of a market economy.
Advantages: It establishes a relatively balanced distributive mechanism within the Grand Tripartite, with a low Gini coefficient, strong social cohesion, and a relatively high fertility rate.
Limitations: High taxation weakens incentives for enterprise Productive Forces; excessive welfare may foster dependency and create “perverse incentives”; and high-cost economies face sustained pressure in global competition.
3. Developmental Authoritarianism
This type takes certain East Asian developmental countries and regions as points of reference. Their common feature is that government plays a strongly organizing and coordinating role in industrialization and industrial upgrading. Yet countries and regions differ greatly in their degree of political openness, level of rule of law, and mechanisms for social participation, and cannot simply be classified as a single system.
Advantages: In the early stages of development, it concentrates resources to advance industrialization, achieves notable results, and maintains a relatively high level of dynamic balance between families and enterprises.
Limitations: Effective checks and balances on power are lacking and the risk of corruption is high; political pressures accumulate as the economy develops; and the transition to a higher stage of development encounters institutional bottlenecks.
4. The Chinese Model: The Socialist Market Economy
China is the principal case. Under the leadership of the Communist Party of China, the model combines the leading position of the state-owned sector with the extensive development of the private sector and takes unswervingly consolidating and developing the public sector and unswervingly encouraging, supporting, and guiding the development of the non-public sector as a basic policy.
Advantages: It has strong capacities for resource mobilization and long-term planning; in property-rights reform, it has followed a path distinct from simple privatization and demonstrated that public ownership and the market economy can be compatible under certain conditions; and at some stages, it has effectively coordinated the interests of families, enterprises, and government.
Limitations: External checks and balances on power are insufficient, and corruption control depends on internal discipline; the protection of property rights in the private sector has long been uncertain; and, although policy continuity is strong, corrective mechanisms are insufficiently flexible.
Comparative Conclusion
No political system can perfectly maintain the equilibrium of the Grand Tripartite. The key criterion for evaluating different systems is not their ideological label, but the effectiveness of their mechanisms for constraining power and their capacity for dynamic correction.
The merits of a political system are ultimately manifested in whether it can prevent the systematic infringement of families and enterprises by power and whether it can preserve and enhance families’ Life-Reproduction Capacity while Productive Forces develop.
V. The Boundary between Government and the Market: The Visible Hand Clasps the Invisible Hand
The invisible hand of the market mechanism and the visible hand of government intervention are not opposed to one another. The modern market economy is a mixed system combining market mechanisms with government intervention.
The question is not whether government should intervene, but when it should intervene, in what, with which instruments, and to what extent.
Within the framework of the Grand Tripartite, the legitimate boundary of government intervention is clear: when the spontaneous operation of the market causes a serious imbalance within the Grand Tripartite and endangers the sustainable development of families’ Life-Reproduction Capacity, government intervention is necessary and legitimate.
Government intervention nevertheless has inherent limits. Its effects depend on the quality of information, the precision of policy instruments, implementation capacity, and corrective mechanisms. Intervention exceeding the boundaries of governmental capacity is not only ineffective but harmful.
How to maintain a dynamic balance between the visible and invisible hands is a core question for the political economy of every era and one that Synthesis Political Economy seeks to answer.
Theoretical Comparison and Open Questions
Hobbes emphasizes order and the sovereign; Rousseau emphasizes the general will and popular authorization; and public-choice theory reminds us that self-interested behaviour and rent-seeking motives also exist within government. This framework seeks to bring these three lines of thought together: government is necessary to provide public goods and maintain order, but it also presents the dangers of power expansion and information failure.
Compared with the classical separation-of-powers doctrine (the “Lesser Tripartite”), this article concerns not only the division of state power among the legislature, executive, and judiciary, but society-wide checks and balances between Government Power, Family-Household Rights, and Enterprise Rights.
Open questions:
- How can the behavioural hypothesis that government pursues the long-run maximization of Government Power be reconciled with the public-service ethic?
- Under different political systems, how can Family-Household Rights generate effective feedback instead of passively accepting policy arrangements?
- When government regulates imbalances within the Grand Tripartite, how can it avoid sliding from the correction of market failure into government failure?
Notes
- Hobbes, T. (1651). Leviathan.
- Rousseau, J.J. (1762). The Social Contract.
- Acemoglu, D. & Robinson, J.A. (2012). Why Nations Fail. Crown Publishers.
- North, D.C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge University Press.
- Buchanan, J.M. & Tullock, G. (1962). The Calculus of Consent. University of Michigan Press.
- Weber, M. (1919). Politics as a Vocation.
- Hayek, F.A. (1944). The Road to Serfdom. University of Chicago Press.
- Rodrik, D. (2011). The Globalization Paradox. W.W. Norton.
- Lin, Justin Yifu. New Structural Economics. Peking University Press, 2012. The corresponding English edition is New Structural Economics: A Framework for Rethinking Development and Policy (World Bank, 2012).