楊小凱教授紀念專號

XIAOKAI YANG: AN ECONOMIST'S TRIBUTE
James M. Buchanan, Nobel Laureate in Economics Science, 1986.

With the death of Xiaokai Yang on 7 July 2004, economics lost one of its most significant modern scientists. My personal evaluation of Professor Yang's contribution is best indicated by stating that in two successive years, in November 2002 and November 2003, I nominated Xiaokai Yang for the Alfred Nobel Memorial Prize in Economic Sciences --- a nomination solicited from me annually as a former Nobel laureate.

We are fortunate that Yang left us with a comprehensive treatise, Economics: New Classical versus Neoclassical Frameworks (New York: Blackwell, 2001), which offers open access to his basic ideas. It is only slight exaggeration to suggest that Yang ``jumped over,'' so to speak, two and one-quarter centuries of misleading analysis and brought us back to the basic insights of Adam Smith, as reinterpreted through the imaginative use of modern technical tools. As this statement implies, Yang's contribution goes to the heart of the whole scientific explanatory enterprise that is ``economics,'' as a stand-alone discipline.

In its broadest meaning, economics is about exchange in all of its many institutional forms, whether or not these be explicitly labeled. And the most central proposition is that there are mutual gains from exchange or trade.

But why? Adam Smith's (and Yang's) answer is that specialization, as such, is disproportionately productive. If a person works half a day to produce one unit of economic value, he can produce more that two units if he works a full day. Derivatively, the extent or size of the market or exchange nexus determines the degree to which specialization can be exploited and aggregate value generated. Hence, further extensions in the size and scope of effectively working markets become the means to secure more value. The case for free trade is embodied in the very logic of the understanding.

Unfortunately, most economists have digressed from Smith's logic at this most elementary level and have shifted toward the explanation for exchange offered by Ricardo in his analysis of foreign trade. Trade is explained as emerging from the differences among traders in endowments, capacities, or preferences. And, of course, if persons are different, gains emerge if resources are allocated in accordance with their comparative advantage. In this logic, which is not, in itself, in error, the differences (the comparative advantages) among traders, or among groups of traders, including whole countries, become the analytical-explanatory lynchpin rather than specialization, per se. The elementary logic of trade differs as between the two quite separate approaches.

The contribution of Xiaokai Yang lies in his rigorous development of an explanatory apparatus that commences from and builds upon the presumption that persons, potential traders all, are identical in all relevant respects. Yang spells out and extends the logic to encompass equilibria that involve more behavioral adjustments than those defined in orthodox neoclassical models of general equilibrium.

There are major implications of the shift in emphasis --- implications for public and political attitudes toward the integration of world markets (globalization), toward outsourcing, toward interoccupational and locational mobility, toward the incidence of losses and gains from technological change, toward collective interferences with markets, and, most importantly, perhaps, toward recognition of the basic equivalence between internal and external trade. The economy of the world, as viewed through the Smithean lenses offered to us by Yang, looks quite different from the world as viewed from the perspective of conventional neoclassical economics.

Xiaokai Yang was a gentle man with enormous courage. He converted a decade-long Chinese prison experience into a productive educational opportunity. In the long fight with demon cancer, by sheer will he extended his productive career well beyond all rational medical expectations.

There could be no more fitting memorial than successful efforts by his professional peers everywhere to extend, elaborate and apply Yang's basic insights, which have yet to be widely absorbed and appreciated by the disciplinary orthodoxy.

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