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Public Finance in State Governance: From Public Goods to Public Order

【Authors】
LV Bingyang 
【WorkUnit】
Renmin University of China, 100872
【Abstract】

This paper develops a framework of “Public Finance in State Governance” to elaborate the relationship between public finance and state governance, where “fiscal system” promotes “public order”, constituting “state capacity pillar”, and leads to the goal of “state governance”. The underlying principles of this theory are as follows: first, “public order” , a basic human need, guarantees the social and economic operation; second, the development of market economy disembeds market from society, differentiates interests and causes creative disruption, and the public order has been constantly impacted and reconstructed; third, the country's governance relies on the support of “state capacity”, two pillars of which are the market encouragement and mobilization abilities; forth, in order to construct a good public order, the goal of state governance is to build a society that is economically efficient, socially ordered and politically inclusive; fifth, a series of institutional arrangements in fiscal expenditure, income, budget and intergovernmental fiscal relations serve the purposes of promoting economic development and stability, social protection and control, opening of rights and safeguarding of authority, and so on from different aspects.

JEL:H77, H11, H4

【KeyWords】
Public Order, State Governance, State Capacity, Financial System