A Study On The Mechanism Of Capital Under Socialist Market Economy

Under the socialist market economy,there are two types of capital,public capital and private capital,both of which are indispensable in China’s economic growth process.So,what is the role of both in China’s economic growth process,and what is their impact on China’s long-term economic growth and income distribution? For the impact on macro production,whether it is public capital or private capital,both belong to the general category of capital.Both,as capital,have a positive effect on China’s economic growth.In Western economic research,capital,as an input factor,follows the law of diminishing marginal output.So,does public and private capital under the socialist market economy also follow this law?The answer is yes.The basic economic system of public ownership as the mainstay and the common development of multiple ownership economies is a strong proof.In the early stages of reform and opening up,China’s productivity level was low,and the domestic product market was in a blank state.In order to rapidly develop productivity and meet the growing material and cultural needs of the people,and due to the enormous vitality of private capital and the technology brought by foreign capital,the marginal output of private capital was enormous.With the development of the economy,the market continued to saturate,and China entered a new era of transforming economic growth drivers,the marginal output of private capital began to continuously decline;For public capital,before the reform and opening up,China’s way of allocating resources was through a planned economy.Public capital almost occupied all of the capital shares.However,in terms of resource allocation efficiency,the efficiency of allocating resources through a planned economy has always been lower than that of a market economy in most fields.Therefore,an excessive share of public capital leads to a relatively low marginal output of public capital.After the reform and opening up,with the continuous progress of socialist market economy reform and state-owned enterprise reform,public capital began to withdraw from some unnecessary fields and became more concentrated in important industries.Public capital continued to streamline and optimize its layout,resulting in a continuous improvement in the efficiency of public capital and a continuous increase in its marginal output.Improve.Therefore,from a macro perspective,both public and private capital follow the law of diminishing marginal output.The underlying mechanism is that different ownership economies have different advantages,and the socialist market economy integrates these advantages to achieve high-speed economic growth in China;In the case where both types of capital satisfy the law of diminishing marginal output and the domestic market size is constant,the amount of capital that the market can accommodate is fixed.Reducing the proportion of one type of capital will inevitably increase the proportion of another type of capital.This means that there should be a reasonable capital structure in China’s macroeconomic growth process,which should make the marginal output of the two types of capital equal.For micro production,according to the principles of principal-agent theory and enterprise management theory,capital under different ownerships has different advantages.The combination of capital under different ownerships can play to their respective strengths and weaknesses,but it may also bring unfavorable effects.This reflects on the micro level,which means that capital structure may affect the production efficiency of micro enterprises.For public capital,it has scale and resource advantages that private capital does not have,but the main or only goal of public capital entities is often not to maximize enterprise profits.The public nature of public capital itself means that public enterprises inevitably bear administrative burdens.For private capital,compared to public capital,The main goal is to maximize profits,It responds more quickly and sensitively to market changes;For public capital,combining with private capital can improve its management efficiency and resource allocation efficiency,while for private capital,introducing public capital can bring advantageous resources,but at the same time,it will inevitably burden itself with administrative burden,affecting the investment efficiency of enterprises.So,what is the impact of micro level capital structure on the production efficiency of enterprises.For the research on capital structure at the macro level,this paper analyzes the relationship between capital structure and economic growth by including both public capital and private capital in the total production function and introducing capital structure parameters.The model results show that the relationship between capital structure and growth presents an "inverted U-shaped" for both short-term production and long-term growth,and there is an optimal capital structure.In terms of empirical analysis,in order to verify whether there is an optimal capital structure in the process of economic development in China,this paper uses the data of fixed assets investment Yearbook to calculate the stock of macro public capital and private capital in China from 2000 to 2020,and constructs the index of macro capital structure.Through the threshold effect model,it is found that there is an optimal capital structure in the process of economic growth in China.capital structure threshold,The threshold value for this capital structure is the ratio of private capital to public capital,which is 2:1.This indicates that when the proportion of private capital is less than 1/3,increasing the proportion of private capital is beneficial to China’s economic growth.However,when the proportion of private capital exceeds 1/3,continuing to increase the proportion of private capital and reduce the proportion of public capital is not conducive to China’s economic growth;For the issue of capital structure at the micro enterprise level,this article first explores the mechanism by which capital structure affects enterprise production through relevant knowledge of principal-agent theory.In empirical terms,using China’s industrial enterprise database from 2011 to 2013,this indicator of micro capital structure is constructed based on the actual paid up capital of enterprises,and total factor productivity is used as a representative of enterprise production efficiency to explore the relationship between micro capital structure and enterprise production efficiency.The research results show that mixed enterprises with both public and private capital in actual paid up capital have the highest total factor productivity,followed by enterprises with only public capital in actual paid up capital,and enterprises with only private capital in actual paid up capital have the lowest total factor productivity.At the same time,the research results also find that for public enterprises,the total factor productivity of mixed enterprises with both public and private capital is the highest,The introduction of private capital can significantly improve their total factor productivity level,while for private enterprises,the introduction of public capital significantly reduces their total factor productivity level.The above conclusions are statistically significant.The above logic starts from the differences in the attributes of public and private capital,and then explores the impact of capital structure on macro and micro production.However,existing research suggests that the differences in attributes between public and private capital can also lead to different roles in distribution.So,what is the role of public and private capital in terms of income distribution? From the perspective of class analysis of capital from the perspective of political economy,public capital,as a capital owned by the whole people or collectives,focuses on the interests of all working people.No individual can obtain income based on the ownership of capital.Public capital reflects the relationship of labor equality,and the attributes of public capital determine that it has the function of suppressing the widening income gap and promoting equality;As the capital owned by private individuals,private capital focuses on maximizing the individual interests of capital owners,reflecting the relationship of exploitation.Therefore,the attributes of private capital determine that the existence of private capital will widen income inequality levels and increase inequality;In the research on income distribution in Western economics,substitution elasticity is an important factor affecting factor income distribution,especially capital labor substitution elasticity.Substitution elasticity reflects the change in the proportion of factor input when the relative price of factors changes.If we start from the analysis of the class attributes of public capital and private capital in political economy,then there should be differences in the substitution elasticity of labor between public capital and private capital.Based on this difference,do public capital and private capital have different roles in factor income distribution?This article innovatively starts from the substitution elasticity of labor between public capital and private capital,and studies the impact of the difference in substitution elasticity between public capital and private capital on factor income distribution.The study also conducts research from both macro and micro levels;At the macro level,research explores the impact of the differences in the elasticity of two types of capital substitution on the overall distribution of factor income at the macro level.At the micro level,research explores the impact of the differences in the elasticity of two types of capital substitution on the distribution of factor income within micro departments;At the macro level,this article constructs a general equilibrium model of a two sector model,which includes the public and private sectors of production(referred to as the public and private sectors).The heterogeneity of the two sectors is reflected in the difference in the elasticity of capital labor substitution.The general equilibrium is reflected in the fact that the factors in both sectors can freely flow,so they both have the same factor prices.This is to explore the impact of the difference in the elasticity of capital labor substitution between the two sectors on the overall distribution of factor income in the face of external technological shocks.In the context of external technological shocks,the marginal output of the two sectors will change,affecting the proportion of factor input,and the size of substitution elasticity will affect this process,thereby affecting the distribution of factor income;The numerical results of this article show that capital enhanced technology in the public sector has the effect of increasing the share of labor income,while labor enhanced technology in the private sector also has the effect of increasing the share of labor income;At the micro level,based on the idea of biased technology,when facing external technological shocks,the asymmetric change in factor marginal output of two sectors due to the non 1 substitution elasticity leads to an asymmetric change in factor prices,thereby affecting the relative income of factors.Similarly,the size of substitution elasticity affects this process.This article explores the impact of substitution elasticity differences on the impact of biased technological progress on the change in factor income share through a model mechanism.Secondly,an empirical analysis is conducted using China’s industrial enterprise database.The research results show that regardless of whether it is within the public or private sector,technological progress ultimately increases the capital labor income ratio and widens the factor income gap.The calculation results show that this is due to the overall bias of technological progress towards capital,This indicates that the widening of factor income gap caused by technological progress in the socialist market economy is inevitable in both the public and private sectors.However,the research results also found that although technological progress in both sectors can lead to the widening of income gap between capital and labor,this effect is smaller in the public sector than in the private sector,meaning that the effect of technological progress on the widening of factor income gap is smaller in the public sector than in the private sector.The model mechanism shows that this is related to substitution elasticity.By calculating the capital labor substitution elasticity of the two sectors,it is found that the elasticity of public capital to labor substitution is smaller than that of private capital to labor substitution elasticity,This indicates that the smaller capital labor substitution elasticity in the public sector leads to a smaller effect of technological progress on the widening of factor income gap in the public sector compared to the private sector.From another perspective,it indicates that public capital has a restraining effect on the widening of factor income gap compared to private capital.At present,China’s economy has entered a new stage of development.A clearer understanding of the roles of public and private capital in the socialist market economy helps us to have a more comprehensive and profound understanding of the current economic development situation in China,adjust our capital structure in a timely manner,construct a reasonable capital structure,and ensure sustained,healthy,and stable economic growth.This has significant theoretical and practical significance.