Total Factor Productivity with Chinese Characteristics

Abstract

Although total factor productivity (TFP) is a common concept in mainstream Western economics, its origins are actually embedded in Marx’s understanding of improving labor productivity. As an important element of labor productivity under socialized production conditions, TFP is further reflected in the category of “socially necessary labor time” in two distinct senses. Re-examining TFP from the perspective of Marxist political economy and incorporating it into the theoretical system of political economy of socialism with Chinese characteristics vividly illustrates the essence of “adhering to original principles, assimilating foreign concepts, and embracing a forward-looking vision” within political economy of socialism with Chinese characteristics. In practice, it is necessary to start with Marx’s theory of productive labor and delineate the sectors involved in productive labor so that TFP and its fluctuations can be measured in a more relevant way. In the context of the new era and the new journey, as the key to achieving high-quality economic development in China, efforts are needed to increase TFP. This requires balancing economic factors such as the long term and short term, supply and demand, and gross quantity and structure, and promoting transformative changes in the quality, efficiency, and dynamism of economic development.