Socialist market economy

Description[edit]

In the late 1970s, then-paramount leader Deng Xiaoping and the CCP leadership rejected the prior Maoist emphasis on culture and political agency as the driving forces behind economic progress and started to place a greater emphasis on advancing the material productive forces as the fundamental and necessary prerequisite for building an advanced socialist society. The adoption of market reforms was seen to be consistent with China's level of development and a necessary step in advancing the productive forces of society. This aligned Chinese policy with a more traditional Marxist perspective where a fully developed socialist planned economy can only come into existence after a market economy has exhausted its historical role and gradually transforms itself into a planned economy, nudged by technological advances that make economic planning possible and therefore market relations less necessary.^[1]


The socialist market economy is presented by the CCP as an early stage in the development of socialism (this stage is variously called the "primary" or "preliminary" stage of socialism), where public ownership coexists alongside a diverse range of non-public forms of ownership. In the CCP's view, China is not a capitalist country because despite the co-existence of private capitalists and entrepreneurs with public and collective enterprise, the party retains control over the direction of the country.^[1] However, many scholars consider the Chinese economic model as an example of authoritarian capitalism,^[6][7] state capitalism^[8] or party-state capitalism.^[9][10]


Proponents of this economic model distinguish it from market socialism as market socialists believe that economic planning is unattainable, undesirable or ineffective and thus view the market as an integral part of socialism whereas proponents of the socialist market economy view markets as a temporary phase in development of a fully planned economy.^[11]


Cui Zhiyuan traces the theoretical foundations of the socialist market economy to James Meade's model of liberal socialism in which the state acts as a residual claimant on the profits generated by state-owned enterprises that are operated independent of government management.^[4]


Writing for English-language readers, academics Christopher Marquis and Kunyuan Qiao state that to avoid the incorrect assumption that "market economy" is the core idea, a more appropriate translation would be "market economy within the Chinese socialist system."^[12]: 16 In Marquis and Qiao's view, this alternative translation better reflects the subordination of "market" to "socialist system."^{[12]: 16–17}