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Common prosperity promotes shared development

ZHAO YUAN | 2021-12-16 | Hits:
(Chinese Social Sciences Today)

John Ross Photo: PROVIDED TO CSST


Common prosperity is an essential requirement of socialism. To unpack the theoretical connotations of common prosperity, John Ross, a senior fellow from Chongyang Institute for Financial Studies at Renmin University of China, and former director of Economic and Business Policy for the Mayor of London, shares his insights. As evidenced in the interview below, China’s pursuit of common prosperity is of great practical value.

 

CSST: What’s your take on China’s economic development?
 
John Ross: In 2022–2023 China will become a high-income economy by the World Bank’s criteria. As China is the world’s most populous country, this will signify the greatest economic achievement in world history. The overall development processes in a high-income economy are well known. Satisfaction of basic biological needs will account for a decreasing share of the population’s expenditures, while economic sectors necessary to satisfy “discretionary” expenditure and the more complex needs of human life, will expand more rapidly. The economy will therefore undergo a radical reshaping, as some traditional industries grow more slowly than the economy as a whole, while new sectors expand far more rapidly. The investment pattern will shift to satisfy these needs. Take the United States as an example. This has radically reshaped its industrial structure since World War II. But while the overall pattern is clear, what cannot be foreseen in advance are the precise economic sectors and technologies that will satisfy these new demands over the next decades—particularly because many of the technologies which will dominate this process do not yet exist.
 
To use obvious examples, key sectors in China today—e-commerce, electronic payments, social media, high-speed trains—did not exist, or were tiny, 15 years ago. In the next 15 years, equivalently revolutionary technologies will come into existence. It is simply not possible to predict in advance exactly what all of these will be. Economic policy’s goal, therefore, is to create the most favorable macroeconomic background against which such new sectors can flourish. This, therefore, requires an accurate understanding of the specific features of development of high-income economies.
 
CSST: What’s your understanding of the theoretical connotation of common prosperity?
 
John Ross: Common prosperity is outstanding precisely because it is both a strikingly original solution to a key practical issue and a further development of, and in continuity with, Marxism. The originality and importance of the policy of common prosperity can be most clearly understood against the most fundamental issues of China’s economic development.
 
There has been a fundamental change in economic structure since 1978, with the reform and opening up, and with a wide opening of China to the international economy. China’s socialist market economy after 1978 was simultaneously: outstandingly original in terms of its practical economic solutions; creating an economic system never seen before; and a “return to Marx” in terms of economic theory.
 
China created this economic system in 1978, as is by now well known. It has produced the most rapid economic development in any major economy in world history—far outperforming both capitalist economies and the economic systems of the USSR and China prior to 1978.
 
Comparative economic data makes this clear. The suitable starting point for comparison is 1950, both the first full year of the People’s Republic of China and marking the end of post-World War II Soviet economic reconstruction. From 1950–1978 world per capita GDP grew by 210%, the USSR by 231%, the US by 192% and China by 218%. China made extraordinary social steps forward in this period, but its per capita GDP increase was only slightly above the world average. In contrast, from 1978–2020 the increase in world per capita GDP was 172%, the increase in US per capita GDP was 190%, the USSR disintegrated, and the increase in China’s per capita GDP was 2,737%. That is, China’s increase in per capita GDP was 16 times the world average, and 14 times that of the United States. China after 1978 produced the fastest sustained economic growth in any major country in world history. Maintenance of the socialist market economy system is therefore vital for China’s development and national rejuvenation.
 
Common prosperity is the first adequate conceptualization which tackles the issue of social inequality under China’s socialist market economy, in which both income from labor and property income exists. It combines maintenance of the state sector of the economy, payment by work for those whose income comes from labor, strong support for productive private investment, but minimization of the unproductive use of property income. It is an outstanding contribution to both practical social and economic policy and economic theory.
 
 
 
 
 
Edited by ZHAO YUAN