Abstract
PurposeIn the current literature, there is little systematic research on the relationship among adjustment of the income distribution, change in economic structure and improvement of macroeconomic efficiency.Design/methodology/approachThis paper expands Marx's reproduction schema into the “Marx–Sraffa” three-department structure table comprising fixed capital, general means of production and means of consumption and employs China's input–output table from 1987 to 2015 to portray the relationship between income distribution and macroeconomic efficiency under investment-driven growth.FindingsThis paper calculates the wage–profit curve of China's economy and evaluates the space of macroeconomic efficiency improvement in China based on the deviation between actual and potential income distribution structure.Originality/valueThe results show that there is a downward trend of the profit rate, which meets Marx's theoretical prediction, and the decline in the profit rate is mainly attributed to an increase in the organic composition of capital arising from the rapid growth of fixed capital investment under extended growth. The analysis of macroeconomic efficiency shows that the space for improving macroeconomic efficiency is extremely limited under traditional growth pattern and that China must transform its economic development pattern and foster new economic growth drivers.
Highlights
In the current literature, there is little systematic research on the relationship among adjustment of the income distribution, change in economic structure and improvement of macroeconomic efficiency
Based on the foregoing research approach, this paper tentatively puts forward a quantitative macroeconomic efficiency model of political economy, and its main contributions cover the following three aspects: First, this paper develops a three-department dynamic general equilibrium model, expands the classical reproduction theory of Marxist political economy and provides a theoretical framework to study the relationship between production efficiency and structural change
Conclusions and future work Following the fundamental principles of Marxist political economy, the degree of matching between the production structure and income distribution structure has a critical impact on macroeconomic efficiency
Summary
The authors first examine the optimum relationship between production and distribution when China’s social reproduction reaches equilibrium under existing technical and distribution systems, which is shown in a wage–profit curve, and calculate actual coordinates of wage and profit. In the meantime, considering the three departments, i.e. fixed capital, general means of production and means of consumption, equation (10) can be spread as follows: pB 1⁄4 ð1 þ rÞpðA þ cFLÞ (11). In equation (11), the input coefficient matrix A of fixed capital and general means of production of ðτ þ 2Þ 3 3τ; 1 3 ðτ þ 2Þ, the wage-goods vector F of 1 3 ðτ þ 2Þ, and the labour input vector L of 3τ 3 1 can be expressed as follows, respectively: k1 0 Á Á Á 0 k2 0 Á Á Á 0 k3 0 Á Á Á 0
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