Return to the Library

Political Economic Analysis of Common Prosperity


A professor of economics at Renmin University attempts an explanation of the “common prosperity” concept according to Marxist theory.

FacebookTwitterLinkedInEmailPrintCopy Link
Original text
English text
See an error? Drop us a line at
View the translated and original text side-by-side

After reform and opening up, we have broken the traditional institutional constraints, allowed some people and some regions to get rich first, promoted the liberation and development of social productivity, and improved our overall economic strength and people’s living standards at a rapid pace. Since the 18th National Congress of the Chinese Communist Party (CCP), the Party Central Committee has placed greater importance on gradually achieving common prosperity for all people, creating good conditions for promoting common prosperity, and leading all people toward the goal of common prosperity. The achievement of common prosperity is fundamentally dependent on high-quality development, and the key lies in overall planning and coordination. Whether it is promoting economic development or coordinating various aspects of economic relations, it is necessary to adhere to the Marxist political economy as the guide and understand relevant economic issues from the perspective of Marxist political economy.




In socialist contemporary China, common prosperity contains rich and profound content. Poverty is not socialism. To build socialism that is superior to capitalism, it is necessary to get rid of poverty and move into affluence. It is socialist affluence, common prosperity, not capitalist affluence, that is, the affluence of the few. Common prosperity is a gradual and progressive process. In this process, the balance and coordination among regions, urban and rural areas, and industries should be taken into account so the problem of unbalanced and inadequate development can be solved. Common prosperity is an all-round affluence, encompassing not only material, but also spiritual satisfaction. Common prosperity embodies harmony and common prosperity, but instead of walking together, a few people can take a step first, then lead everyone to prosperity together. The economic development of a country or region is dynamic, so common prosperity is phased and regional, evolving from imbalance to equilibrium. 


High-quality development is an inherent requirement for common prosperity. Common prosperity is both a production and a consumption issue. To say that it is a question of production problem means that to achieve common prosperity, it is necessary to address the supply side of the production of goods or services that meets the needs of the people, including both quantitative and qualitative satisfaction. To say that it is a matter of consumption problem means that the process of achieving common prosperity is also the process of escalating consumption for the entire population. This process of upgrading will lead to an increase in the total supply and stimulate the economy to continue to move to a higher level. 


Common prosperity is not only manifested by the rise in individual income levels and the narrowing of income disparities, but also by increasing the level of public welfare provided by the government and by constantly promoting the equalization of basic public services, such as providing more equitable public services such as healthcare and education, unobstructed upward mobility channels, and equitable access of various development opportunities, to create opportunities for more people to become wealthy. 




Achieving common prosperity involves a wide range of contents. From the perspective of political economy, one of the core issues is income distribution, that is, the formation of a reasonable distribution pattern for all. General Secretary Xi Jinping pointed out, “We should clean up the norms of unreasonable income, the rectification of the income distribution order, and resolutely outlaw illegal income” and put forward specific requirements for improving income distribution and narrowing the income gap. 


After the reform and opening up, China has rapidly become the world’s second-largest economy with economic construction as the center, and the overall level of development has improved rapidly. At the same time, rapid economic growth has been accompanied by a widening income gap. The reasons for the widening income gap are multifaceted, most of which are phased in nature and can be addressed continuously in the context of reforms. It mainly includes: First, in the period after reform and opening up, we put more emphasis on efficiency as a priority. The reason is that the planned economy was previously implemented for a long time. Although the limited manpower, material resources, and financial resources were concentrated in a short period, a relatively complete national economic system was built. However, it is difficult to plan and distribute widely varied supplies and demand, production, and consumption, economic development was not efficient, and being out of poverty was an urgent task at that time. To be out of poverty as quickly as possible, efficiency must be the priority. Prioritization of efficiency means that capable market players grow faster and incomes grow faster, leading to a widening of the income gap. Second, some of the misconceptions that once existed in the quest for reform led to a widening of the income gap. For example, confusion over value creation and value distribution. The correct logic should be that if a contribution to value creation is greater, the reward will be greater, and if the contribution is less, the reward will be less. In some fields, however, there has been a misconception that allocation determines the size of the contribution rather than the size of the contribution determining the size of allocation. In some enterprises, managers receive high annual salaries, and because of their high annual salaries, they believe that their contribution to value creation is large. Those frontline workers in the real economy who contribute the most to value creation, because of their relatively weak market bargaining power, earn less than their contribution, and it is considered that the contribution to value creation is small. This has led to insufficient attention being paid to improving the remuneration of frontline workers. Third, there is no distinction between productive and non-productive labor work. Productive work is the production of material goods, such as the work of peasants and workers, while non-productive labor work refers to work that does not produce material goods. According to Karl Marx’s theoretical logic, distinguishing between productive and non-productive labor and giving corresponding reasonable returns is conducive to the development of the real economy. If no distinction is made between productive and non-productive labor, and even if all labor is regarded as productive labor, it is easy to develop a virtual economy and form an economic bubble. Fourth, excessive financialization. The so-called financialization is to turn all physical and virtual things into tradable financial products. While finance was meant to serve the real economy, excessive financialization reversed the relationship between production and finance; not only does it make little contribution to the growth of real wealth, but it also encourages speculation, which is not conducive to social development. 




To achieve common prosperity, the labor values of Marxist political economy must be adhered to. Marx believes that labor creates value while participating in the creation of use-value. If any nation loses its labor, for a year or even a few weeks, it goes without saying that it will also perish. A relatively equal amount of social labor is required to obtain a total product that meets the various needs. Adhering to the theory of labor values is to distinguish between productive and unproductive work, and only if the rewards of productive work are fully taken into account in the distribution will it ultimately benefit the development of the real economy. Adhering to the theory of labor value is to focus on protecting labor income, increasing labor remuneration of workers, especially frontline workers, and increasing the proportion of labor remuneration in the initial distribution; achieving simultaneous growth of residents’ incomes and economic growth; and simultaneously increasing labor remuneration at the same time as labor productivity increases. Adhering to the theory of labor values is to distinguish simple labor from complex labor. The value created by complex labor is a doubling of simple labor. Complex labor is dynamic, emerging in more advanced forms as science and technology advance. Full attention should be paid to the special nature of the work of scientific and technological workers and researchers of basic theory, and to pay full attention to it as complex labor work.


To achieve common prosperity, it requires to adjust greater redistribution and a greater focus on equity. The 18th CCP National Congress pointed out that both the initial distribution and redistribution must balance efficiency and fairness and that redistribution should pay more attention to equity. The 10th meeting of the Central Financial and Economic Commission held a few days ago pointed out that basic institutional arrangements for initial distribution, redistribution, and coordination of the third distributions should be established and that the adjustment of taxation, social security, transfer payments, and other adjustments should be increased and accuracy improved, the proportion of middle-income groups should be expanded, and the income of low-income groups should be increased. Also, high incomes should be rationally regulated, and illegal income should be abolished, to form an olive-type distribution structure with a large middle section and small two ends. Such institutional arrangements can improve the welfare level of the society as a whole and promote the achievement of common prosperity. 


To achieve common prosperity, the principle of combining markets and government must adhere to the distribution-related issues. We are implementing a socialist market economy: the market plays a decisive role in the allocation of resources, and it is a normal market phenomenon that the labor prices follow the market. The reason why the government needs to intervene appropriately, as a socialist country, is that when the individual workers are in a weaker position than capital in market negotiations, the government must reasonably intervene to ensure that the basic wage of the workers is not lower than the level of labor remuneration in the national income. The socialist market economy with Chinese characteristics adheres to the principle of combining the market and the government on the issue of distribution, that is, not only to rationally allocate labor resources through market mechanisms to improve the efficiency of economic development, but also to safeguard the legitimate rights and interests of workers, safeguard the interests of workers, and promote social equity. 


To top

Cite This Page

李义平 (Li Yiping). "Political Economic Analysis of Common Prosperity [共同富裕的政治经济学分析]". CSIS Interpret: China, original work published in Guangming Daily [光明日报], September 7, 2021

FacebookTwitterLinkedInEmailPrintCopy Link