Abstract: Fiscal deficit is one of the core issues of contemporary mainstream finance theory and practice. Its root lies in the two-dimensional cognition of “market or government”. Under such an interpretation, fiscal deficit not only cannot be eradicated but also can not be avoided, even with a trend of expanding as there lies an increase in population aging and public interest. Moreover, this kind of fiscal theory and practice weakens the social group functions and social emotions. An ignorance of its social dimensions makes it difficult, through social mutual assistance, for an effective exchange of information, knowledge, and skills that individuals cannot obtain through market dealing, thereby reducing the efficiency of markets and government mechanisms. In view of this, we should build up a financial framework based on the three-dimensional cognition of market, government and society; market transaction should be given priority and social mutual assistance should be promoted based on an analysis of the exchange characteristics of market transaction, government transfer payment and social mutual assistance, so as to reduce the transfer of government relief to be the lowest and last choice.

Key words: fiscal deficit, markets and government, social reciprocity, new market finance