Abstract:

While the current financial crisis brings about a deep adjustment of virtual economy and real economy, it also promotes a new awareness of several important theoretical issues on economics. Among them, the issues on market failure and government failure, or market freedom and government intervention, once again, as hot topics, have been raised. Any establishment of theory requires a set of assumptions. For neoliberalism, there are assumptions of economists and perfect competitions. If these assumptions do not hold or need extension, the conclusion is sure to change. In this sense, the crisis can not——and should not——put an end to the market. The reasons that cause the crisis are not only attributed to market failure but also government failure, including interest rate failure, regulation failure and monetary policy failure. By analyzing the bailouts of governments in the crisis as well as the resulting effects, can be seen a tendency to the "new comprehensive" in government intervention. Keynes' government intervention means that, when the market can not be clear automatically, that is, lacking of effective demands, the government, through fiscal and monetary policies, increases and simulates effective demands to help market to restore balance. But the government intervention of the "new comprehensive" refers to three extensions of Keynes' government intervention, including the normal government intervention and abnormal government, the government intervention in commodity markets and government in capital markets, the macroeconomic government intervention and microeconomic government intervention, and two different government intervention both in economics and economic sociology. Throughout the history of economic developments, as well as the evolution of economic development modes, it is not difficult to discover that all sorts of economic development modes，whether different or similar, mainly depend upon the role of the government. And their success or failure is also dependent, at several stage of development, on some "degree" role of the government. Although there is no the "China mode" in economic developments, but it will probably exist sometime in the future, parallel with the "AngloSaxon mode" and the "Eastern Asia mode". It has a practical, directive significance for China' s development of economy and society to have a correct understanding of the government role of the "China mode" and the status of stateowned economy.

Key words:  financial crisis, government intervention, China mode, government failure, free market