The so-called efficiency-wage theory，the validity of which is in doubt,53 has been interpreted by returningPh.D.s to mean that if workers are paid more they would produce more.I can accept the view that given two groups of identical and homogeneous laborers，the high-er-paid group would tend to perfor mbetter.This is no more than saying that if a publisher doubles my writing fees，my articles would read better.But at what level would an employer want any given worker to perform？What about the lower-paid group？Why should the mini-mumpayment be decided exogenously by the govern-ment？
Returning at last to the main thesis of this paper，one must ask: What about the power of the competing xians？Though they had not been consulted before passing the new labor law，what about their resilience to unwarrant-ed central intervention as I described？At this moment,most xians ignore the new law.However，it will be diffi-cult to resist this time，for three reasons.First，there wasa‘soft’ old labor law which by and large has not been followed or enforced.The new lawdraws attention to the old violations.Second，because of Article 14 of thenewlaw（tenure provision），employers and workers are forced to look back ten years.
【53】There are some people who believe that the efficiency-wage theory stems frommy paper “Why Are Better Seats‘Underpriced’？”（op.cit.），but what I meant in this work is notwhat the newtheory says.A critique of the efficiency-wage the-ory can be found in my Chinese book The Choice of InstitutionalArrangements（2002），pp.156-159.张五常，《制度的选择》，二○○二年花千树出版，一五六至一五九页。
Finally，Beijing has pro-posed to pay workers’ legal fees if they wish to sueemployers.What a mess!
What would happen if Beijing stands firmon the laborlaw？Other than what I have described，two out comesare certain，for we already see them unfolding.The first is that enterprises would seek evasive contractualarrangements，not only with regard to labor but in corpo-rate structure.Whatever happens，ultimately transactioncosts would increase with detrimental effects on eco-nomic growth.Secondly，producers would increaseautomation and screen out less productive workers.Forthe moment，the majority of factories which are closing down are relatively small or ‘marginal’.This would cre-ate the impression that Beijing has succeeded in promot-ing technological progress by reducing labor intensity,but what will happen is that technological progress shall be hindered by a weakening of labor support from below.
Beijing authorities today have apparently forgotten themot to of Deng Xiaoping which has served the reform process very well: Give it a try，and then take a look.They should try out the new labor contract lawin a few selected xians first，monitor and observe their perfor-mance，compare to others without，before deciding what to do.
Because the situation in China is changing fast，I must point out that this epilogue is written on April 8，2008.On 9 May 2008，a set of rules for the enforcement ofthe new Labour Contract Lawappeared on the Internet.Comments were solicited from the general public，with20 May as deadline.Some lawyers began to inter pret these rules to be revisions aimed at softening the eco-nomic impact of the law.Then came the 12 May Sichuanearthquake.Economic concerns are now in abeyance,as the genii of the Chinese people are pitched against the destructive forces of nature，and the world watches with deep sympathy and increasing admiration the triumph ofthe will.
Steve，31 May 2008
中国的经济制度
