Social Sciences in China (Chinese Edition)

No. 6, 2023

 

Total Factor Productivity Revisited: Based on the Perspective of Political Economy

(Abstract)

 

Fan Xin and Liu Wei

 

Although total factor productivity (TFP) is a common concept in mainstream Western economics, from the origins of the idea, it is embedded in Marx’s understanding of increasing labor productivity. As an important element of labor productivity under socialized production conditions, TFP is further reflected in the category of “socially necessary labor time” in two senses. The re-examination of TFP from the perspective of Marxist political economy and its incorporation into the theoretical system of socialist political economy with Chinese characteristics epitomizes the political economy of socialism with Chinese characteristics, which adheres to its original principles, assimilates foreign concepts, and embraces a forward-looking vision. At the practical level, as a result of the changes in production patterns brought about by long-term rapid economic development, the traditional growth accounting based on neoclassical growth theory is no longer applicable to the practical examination of TFP in China. To address this issue, it is necessary to start with Marx’s theory of productive labor and to identify the sectors involved in productive labor, so that the TFP and its fluctuations can be measured in a more relevant way. In the context of the new era and new journey, as a key grasp to achieve high-quality development of China’s economy, efforts to improve total factor productivity need to balance long-term and short-term, supply and demand, aggregate quantity and structural aspects, in the coordinated development of supply and demand to drive transformative changes in the quality, efficiency, and motive forces of economic development.