The innovation and development of capital theory under the conditions of socialist market economy

Purpose This paper aims to deepen the comprehensive and accurate understanding of the essence, types, characteristics, laws of motion and functions of capital in the socialist market economy, explore policies for rationally regulating and guiding the sound development of various forms of capital and thereby to uphold the basic socialist economic system, advance high-quality development and common prosperity and modernise and sinicise Marxist political economy. It systematically addresses why China has innovated and developed capital theory, what the new capital theory contains and in what respects it innovates upon and develops Marx's theory of capital and the capital theory of mainstream Western economics. Design/methodology/approach Adopting materialist dialectics and a problem-driven comparative approach, the paper first reviews and synthesises the main content of Marx's theory of capital and of mainstream Western capital theory, identifying the historical and practical limitations of the former and the fundamental defects of the latter. It then examines the new perspectives on capital theory advanced in China since the reform and opening-up and, grounded in the reality of China's primary stage of socialism, constructs and expounds the new capital theory of socialist political economy with Chinese characteristics and demonstrates its scientific validity through theoretical rebuttal and logical demonstration. Findings The paper finds that capital, surplus value, labour-power as a commodity and the valorisation process are not unique to capitalist society; capital is both a production relation and, in appearance, a factor of production; “capital in general” denotes the commonality of all capital across social formations but cannot itself justify capital's existence; and capital has a duality that must be grasped comprehensively. Reinterpreting “free of all property” as workers relying mainly on selling labour-power for their livelihood, it shows that both necessary conditions for capital – a market economy and labour-power as a commodity – obtain in the socialist market economy, so that capital, including publicly owned capital, objectively exists. The surplus value of publicly owned capital is collectively appropriated by workers, reflecting mutual-aid relations rather than exploitation. It further classifies capital by ownership into public and private capital, clarifies the commonality and particularity of capital and criticises the “socialist capital” and “neutrality of capital” theses. Originality/value Upholding rather than negating the fundamental principles of Marx's theory of capital, the paper systematically constructs the new capital theory of socialist political economy with Chinese characteristics, advancing original propositions on capital's nature and duality, the reasons for the existence of capital and labour-power as a commodity under socialist market-economy conditions and the concept and ownership-based classification of publicly owned capital. It expands the scope of application of Marx's theory of capital, resolves long-standing theoretical disputes and provides a scientific basis for regulating all forms of capital and promoting Chinese modernisation and common prosperity.