Three-tiered approach to common prosperity
Farmers pack pineapples in Wanning City, Hainan Province, on Feb. 28, 2022. Photo: CFP
To promote common prosperity, the economic “pie” should be expanded and well-distributed. Furthermore, the quality of the “pie” should be improved continuously. Common prosperity not only involves abundance of material wealth, but also relates to people satisfying their non-material needs. Prosperity not only includes material wealth but also a person’s status and role in social production and reproduction, the degree to which one realizes their mastery of society, their future goals, as well as their spiritual wealth. Therefore, the following “three commonalities” should be grasped to promote common prosperity.
Common enhancement
Common enhancement refers to the common increase of individuals’ and families’ income. First, family income should increase with economic growth. The growth of family income does not necessarily increase in proportion to economic growth, but it must align with the economic growth trend. Second, the relative income levels of different families should rise. At different stages, the income levels of different families may increase by different degrees, but increases in income should be universal. The common enhancement in family income does not mean that income levels of different families increase synchronously, but that the incomes of different families show different degrees of growth alongside economic growth. Common enhancement is not a completely proportional improvement, and common prosperity does not mean that all families become equally rich. In the long run, common prosperity requires a narrowed income gap between families, and finally, that the gap maintained is generally accepted by society.
To realize the common enhancement of family income levels and economic growth, we must first ensure that the growth of workers’ remuneration aligns with the growth of the marginal productivity of labor. Workers’ remuneration is the main income source for most families. Efforts should be made to synchronize labor remuneration’s growth and improvement of the marginal productivity of labor, and to synchronize the growth of residents’ income with economic growth. Second, we should coordinate system construction in primary, secondary, and tertiary income distribution. The primary distribution is essentially a market distribution, in which the market distributes production outcomes, according to the physical strength and intelligence of workers, and the significance of their roles. The principle of distribution according to one’s work encourages people to contribute more, which stimulates their enthusiasm. However, the market fails to identify physical and intellectual differences among individuals.
Therefore, although market distribution is conducive to improving efficiency, it doesn’t automatically lead to fair distribution results. The secondary distribution is redistribution by the government.
The government increases income for people with low incomes and adjusts excessive incomes through taxes and transfer payments, so that “the visible hand” makes up for the deficiencies of “the invisible hand.” Government redistribution is a common practice across countries to narrow the income gap. Social organizations should be encouraged to participate in the tertiary distribution which is known as “social distribution.”
Common endeavor
Income and wealth are created through labor. Common endeavors and expanding the national income are the prerequisites to common prosperity through common enhancement. At present, China is still and will long remain in the primary stage of socialism. As China advances toward basically realizing modernization and becoming a great modern socialist country, we must fulfill the central task of economic development, unleash and develop productive forces.
Individuals, families, and society as a whole all rely on labor, endeavors, innovation, and creation to realize common prosperity. Common prosperity is not about equalizing everyone financially. Our vision for common prosperity should be above the conditions of Western welfare countries. Common prosperity is the result of joint efforts from all workers, rather than sitting on one’s laurels. The happiness from enjoying the fruits of other people’s work is distinct from those of one’s own struggle. With motivated initiative and creativity, everyone will work diligently together to develop productive forces, and start innovative businesses, which lays the foundation for a broad path to common prosperity.
There are two layers of meaning in common endeavors. First, everyone contributes actively to the process of wealth creation, doing his or her utmost in the struggle together. Second, in the process of wealth creation, everyone works together, unites, and helps each other, contributes labor and wisdom on the basis of both division of labor and cooperation, constantly expands the national income and improves its quality.
Common development
Common enhancement and common endeavors require a certain institutional environment: common development. There are two aspects to common development: first, socio-economic development is coordinated, balanced, and complete, in other words, a well-rounded high-quality development; second, individuals also enjoy full and well-rounded development.
Coordinated and balanced socio-economic development mainly includes coordinated development among industries, and between the production of private and public products, balanced development between urban and rural areas, among regions and ethnic groups, and common development in economic, political, cultural, social, and ecological civilization constructions of the “five-sphere integrated plan.”
Full socio-economic development refers to enhancing the development capacity of our economy and society, social harmony and stability, and sustained economic growth. The ultimate goal is to achieve high-quality economic and social development, developed education, sci-tech, strong innovation abilities, rich material and spiritual products, universal public services, a beautiful and livable environment, and friendly and harmonious relations between man and nature. Modern society’s affluence is not only affluence in terms of material life, but also elevated intellectual products and high-quality public services. We also need a beautiful natural environment, clean air, convenient transportation, and a safe, civilized, and harmonious social environment. In the process of socio-economic development, no regions, industries, or families shall fall behind. We must promote common prosperity by realizing well-rounded socio-economic progress. Only through coordinated and balanced socio-economic development can people in different industries, occupations, and regions achieve common development, narrow the income gap among industries and regions, and move toward common prosperity. Therefore, to achieve common prosperity, the imbalanced and insufficient development should be addressed, supply-side structural reform should be promoted, and aggregate demand management improved.
Individuals’ full and well-rounded development means that everyone can have education, employment, mobility, promotions, start a business, and accumulate human capital. Everyone will be rewarded fairly and share development achievements.
High-quality socio-economic development is a prerequisite for individuals’ full and well-rounded development. Only by constantly enhancing abilities can everyone continuously increase income levels, improve situations, and achieve common prosperity.
High-quality socio-economic development, equal opportunities, and free mobility are vital conditions for common development of social members and a significant premise for common prosperity. Only through working hard to realize their life dreams can individuals fully access their initiative and have a steady driving force for socio-economic development.
How do we realize high-quality socio-economic development? How do we equalize opportunities and free movement? The answer is reform and innovation, which are the fundamental driver, pathway, and guarantee for the realization of common prosperity.
Fang Fuqian is a professor from the National Academy of Development and Strategy at Renmin University of China.
Edited by ZHAO YUAN