Theoretical Logic, Practical Requirements and Governance Paths for the Healthy Development of Capital Under the Conditions of Socialist Market Economy

Abstract

The issue of capital is a core theoretical proposition in Marxist political economy, and also a major practical issue that must be properly understood and addressed in the development of the socialist market economy. While revealing the operating laws and inherent contradictions of the capitalist mode of production, classical Marxist writers fully affirmed the role of capital in boosting the development of productive forces in a specific historical stage. As socialism with Chinese characteristics has entered a new era, how to correctly understand capital, give full play to its positive role and effectively curb its negative effects within the framework of the basic socialist economic system has become a key issue that must be answered to advance high-quality development and the Chinese path to modernization. Grounded in the basic tenets of Marxist political economy and integrated with China’s practice of socialist market economy, this paper analyzes the issue of capital from the dimensions of historical logic, functional positioning, practical tensions and institutional governance. The study concludes that capital cannot be simply equated with the capitalist system. Under the conditions of socialist market economy, as a vital factor of production, capital exerts positive effects in facilitating factor agglomeration and allocation, driving technological innovation, expanding employment and generating social wealth. Nevertheless, its profit-seeking nature, if without effective constraints, may trigger problems such as disorderly expansion, market monopoly, financial risks, unbalanced income distribution and ecological and environmental externalities. To properly handle the issue of capital, the key lies in upholding and strengthening the Party’s overall leadership, adhering to and improving the basic socialist economic system, balancing the relationships between government and market, efficiency and equity, vitality and order, as well as development and security, and regulating and guiding the sound development of all forms of capital in accordance with the law, so that capital will better align with and serve high-quality development, common prosperity and the Chinese path to modernization.