Capital: Why Does “Capital” Exist in the Current Socialist Countries? And, How Do We Hinder Capital Logic Becoming Dominant in Socialist Society?  

Author Feng Zhixuan is Prof. at the School of Economics and Management, Wuhan University, March 2025

Source: This article was originally published in the February 2025 issue of the Journal of Cultural Horizon

【Introduction】The recently released 2025 Government Work Report proposes to promote more funds to “invest in people’s livelihood”, which means that the weight of residents’ employment, consumption, pension, childbirth and other fields in macroeconomic policies will be further increased, and the flow of funds to the people’s livelihood field is expected to accelerate; on the other hand, this Government Work report has significantly increased its attention to science and technology and promotion of private enterprises, which is in line with the spirit of the recent Private Enterprise Symposium. Overall, the future economic focus on the investment in residents’ social welfare and corporate innovation vitality is closely related to changes in the economic and social situation at home and abroad, as well as related to the trend of capital movement on a global scale. In this article we will argue that China’s relations of production can be defined as socialist public property relations of production, and that the “universal light” in our socialist society is not the capitalist relations of production.

We will argue that in the contemporary world system, if latecomer countries want to break through the trap of low-level development, they must connect to the global division of labor system dominated by capitalism, embark on the road of industrialization and socialized production, and should connect to the capitalist world market. Therefore, it is almost an objective compulsion for latecomer countries to accept “capital” as the basic production organization method. However, capital is not equal to capitalism. There is a difference between an economic system in which we see widespread “capital” and an economic system of “capitalism”. But the question is, how should we understand and explain this difference in a historical and realistic way?

In this article we will argue that if capital wants to evolve from a production unit to a dominant social power in the society, it needs to control three strategic nodes:

 (1) Control of core circulation nodes. By monopolizing economic lifelines such as finance and energy, it forms a structural domination of social reproduction.

 (2) Control of credit relations and ownership of natural environments such as land. Capital can flow on land through credit and further obtain the ability to control labor and allocate resources throughout the entire social economy through prices, thereby gaining the ability to reshape the entire macroeconomic structure. In addition, through the “capitalization” of “non-reproducible production factors” represented by land, the logic of capital can be continuously extended, incorporating everything into the logic and process of capital proliferation (multiplication).

(3) Competitive political environment. The competitiveness of the political system is the key to whether capital power can expand. For a country, the more the political system cannot be integrated and the more various political forces compete with each other, the more will these political forces compromise with capital regardless of where their interests come from.

However, in China, although capital is a ubiquitous form of production organization, the power of capital has never been able to jump out of the narrow field of production. At the subsequent nodes of the expansion of capital power, they are subject to corresponding institutional regulations, so that the purpose of capital will not rise to the economic purpose of the entire country. This includes: most of the core nodes of the capital cycle are controlled by the state-owned economy; the state achieves effective regulation of the financial system through multiple dimensions; there is the state ownership and collective ownership of land; and most importantly, the Communist Party of China plays a leading role in taking charge of the overall situation and coordinating the interests of all parties in the society. Starting from the theoretical perspective of Marxist political economics, this article focuses on capital, which is the core category of the market economy, and conducts an analysis, which is somewhat groundbreaking in the discussion of China’s socialist market economy.

“Capital” in the Socialist Market Economy

Introduction​

The discussion on the issue of capital under the conditions of socialism with Chinese characteristics has almost run through the entire process of the development of the theory of socialist political economy with Chinese characteristics since the reform and opening up (1978). In recent years, this discussion has gradually flourished as the Party Central Committee has attached importance to the issue of capital in theory and policy. In the current socialist market economy with Chinese characteristics, various types of capital, including state-owned capital, private capital, and foreign capital, which are prevalent. These kinds of capitals realize the combination of hired labor and means of production in their own way; these kinds of capitals constantly change their forms between currency, production factors, and commodities, and in this movement, these kinds of capitals connect all links of production, distribution, exchange, and consumption, which has become an indispensable category for understanding the Chinese economy. Any serious discussion on China’s social and economic form can no longer bypass this category.

In the social sciences, especially in the political economy, the discussion of capital issues is driven by such a theoretical tension: in the classical political economy theory, the category of capital reflects the main content of the capitalist mode of production and also contains the historical limitations of capitalism. So, in China’s current socialist economic system, when capital has become a universal category and has a wide impact on social production, how should we understand the relationship between capital and the socialist economic system, or why does socialist China need such a large and complex capital movement?

Since the movement of capital is based on the market economy, before discussing the existence of capital, we first need to discuss the commodity-money relationship and the existence of the market economy. On this point, contemporary Chinese political economists have basically reached a consensus. There are numerous documents proving the existence of commodity-money relations and market economy under socialist conditions, providing a large number of theories from different angles.

In this article, these different angles are actually unified in the contradictory movement of private labor and social labor behind the commodities. The commodity-money relationship is essentially a system that relies on the unity of opposites between private labor and social labor to coordinate the social division of labor. The production process of producers is part of the extensive social division of labor, so it is a kind of social labor; but the decision-making in the production process is based on the information and interests of the producers themselves, so it is a kind of private labor. If the producer’s commodities can be exchanged in the market, it means that his labor is indeed needed by other parts of society, and the social nature of his labor is recognized, so that private labor and social labor are unified. If the commodities cannot be sold smoothly, it means that this private labor cannot be recognized by society and cannot become part of social labor. Therefore, we can consider a kind of “proof by contradiction”: if the market economy no longer dominates economic operation, then there are only two possibilities logically. One is that social labor does not occupy a dominant position in the production process, that is, there is no large-scale social division of labor.

The typical form of this situation is natural economy (mode of production); the other is that the labor of different production units and workers can be directly manifested as social labor, that is, the labor of workers is manifested as social needs from the beginning. In contemporary society, medical care, education and other social services gradually shift from personal needs and personal consumption to public needs and public consumption, reflecting the nature of the gradual increase in direct social labor. However, in any case, under the current level of productive forces and mode of production, although the scope of direct social labor is constantly expanding, it is still only a part of social labor, not the main part. In this way, the market economy or the social division of labor and coordination mode based on the unity of opposites between private labor and social labor still occupies a dominant position. In the world different schools of economics have argued the universality of the market economy from various perspectives such as property rights, information, and uncertainty. In fact, they are all special cases of the above reasons in a specific aspect.

It is a relatively mature and complete theoretical viewpoint to prove the existence of commodity-money relations and market economy under socialist conditions, but it becomes complicated to prove the existence of capital. At present, there are at least the following common ideas for proving the existence of capital: first, distinguish between the social relationship aspect and the material aspect of capital, and emphasize the commonality of the material aspect of capital in different societies; second, starting from the commonality of state-owned capital, collective capital and private capital, emphasize the commonality of their value proliferation, capital accumulation and other aspects, which can be used at the current stage; third, emphasize the constraints of productive forces conditions, and argue that the current era is still in the productive forces basis corresponding to the production relationship of capital. These studies have undoubtedly expanded the understanding of the relationship between capital and the socialist economic system, but there are still several points worth further explanation.

Firstly, capital itself is a kind of production relationship. Any aspect of a thing is merely its material form, not the fundamental characteristic that distinguishes capital from other categories. Marx once had a classic metaphor for this: “A black man is a black man. Only under certain relations does he become a slave. A spinning machine is a machine for spinning cotton. Only under certain relations does it become capital.” Viewing capital as a thing or the relationship between people and things may ignore the specific production relationship represented by capital and its historicity, and may eternalize it.

Secondly, as revealed in the third volume of Capital, the complex nature of capital is directly contained within the category of capital, and the development of the logic of the general formula of capital movement itself forms the entire process of capital from general to specific.

In other words, the nature and movement of capital are already contained in the simplest form of capital, but these nature and movement need to be revealed step by step. If we start from the commonality of different types of capital, it is not easy to grasp at what level of abstraction the generality of capital should be located. In other words, in the process of capital gradually concretizing from the simplest stipulation of value that brings surplus value to the complex capital movement in reality, it is difficult for us to identify which are the general attributes of capital across different social and economic forms, and which are the particularities of capitalism. In fact, due to this difficulty, when discussing public capital in the academic community, other strategies are always adopted, introducing factors external to capital such as the state when discussing the specific nature of public capital. After the introduction of external factors, the original nature of some private capital has changed or no longer appears. Under this discussion strategy, the “prototype” or “general form” of capital used for theoretical discussion is precisely the capital that can fully display its own logic under capitalist conditions! This means that although starting from the commonalities of different kind of capitals, the logic should be from capital in general to the particularities of capitalist capital and socialist capital, just like from the generalities of sailing ships to the particularities of large sailing ships and small sailing ships, what is actually presented are sailing ships and sailing ships equipped with steam engines.

Thirdly, the existence of a certain production relationship is ultimately based on productive forces, which is a general principle of historical materialism. However, to link the productive forces of a certain period with a specific production relationship, we still need an intermediary process to analyze the specific reality. Otherwise, it is not easy for us to analyze the current productive forces basis and how it determines the necessity of the existence of capital.

Meta -mode of production and the existence of capital under socialism

 In this section of the article, we will attempt to give another argument for the existence of capital under socialism, which is actually to find an intermediary state for the view based on productive forces in the previous section. In order to do this, we need to introduce the concept of “meta-mode of production” proposed by Italian scholar Alberto Gabriel and Brazilian scholar Elias Jabbour. See the book  Socialist Economic Development in the 21st Century.

The meta-mode of production is not a specific mode of production, but a basic economic structure that constrains various modes of production, including capitalism and socialism, and reflects the general constraints of current productive forces. In other words, the content contained in the meta-mode of production is not enough to constitute a separate, specific mode of production, but it is a characteristic that all specific modes of production must have. These characteristics come from a certain necessity caused by the current level of productive forces, so these characteristics also constitute a kind of intermediary between productive forces and specific production relations.

In Gabriel and Jabbour’s understanding, these constraints include commodity-money relations, the law of value and dominant markets, the possession and accumulation of surplus products, and the existence and mutual complementation of productive and non-productive sectors at the macro level. However, in this article we argue that there is another basic element of the meta-mode of production that has not been introduced, which is economic globalization or the division of labor in production on a global scale.

In the theory of political economy, an important driving force for the development of productive forces comes from the development of socialized production. The larger, wider and closer connection between producers within and between production processes is the basic manifestation of socialized production and an important driving force for the development of productive forces. Economic globalization itself is dominated by capitalism, especially developed capitalist countries, and reflects the law of capital accumulation. It constantly creates imbalances in development between different countries and has a differentiated effect on different participants in globalization. Its specific form has been fully explained by underdevelopment theories including dependency theory and world system theory and has been supported by historical experience since the emergence of capitalism. However, in a general sense, economic globalization is still a manifestation of socialized production on a global scale, reflecting the improvement of the level of division of labor and cooperation among humans as a whole, and is an important factor in improving productive forces. This kind of globalization based on high-level socialization of production is an important element of the meta-production mode that all current production modes need to face. Because in essence, just like the unity of opposites between private labor and social labor, it is also an aspect of the social production coordination process.

This duality of economic globalization means such a situation for a latecomer country: if a latecomer country rejects capital-led globalization, it will also exclude itself from the high-level socialization of production. For a country with a low starting point for development, this is equivalent to rejecting a basic source of productive forces progress, which cannot be maintained in the long run. It is for this reason that the decoupling of latecomers from the capitalist world system in the process of development can become a strategy to gain independent status and policy space, reduce the shaping of the world system on itself, and even reshape the country’s economic structure. However, this is only possible for a certain period of time and cannot become a long-term “path”. Therefore, integrating into the capitalist globalization process is almost a kind of “external coercion” for latecomers.

Once we introduce economic globalization into the analysis of the meta-production mode, we will find that the capitalist world market has become an external compulsion, making the existence of capital in late-developing countries inevitable. The above-mentioned meta-production mode means that a country must intervene in the international division of labor and competition and participate in the international economic circulation process dominated by the central strong capitalist countries in the world system. In this process, the operating logic of capital will be manifested as an external compulsion, and the commodity-money relationship of the country will inevitably be shaped into a capital relationship centered on the profit rate or value increase.

The core logic is that at this stage, expanded reproduction and productive forces improvement are still based on the possession and use of surplus products. When commodity-money relations are dominant, the use and possession of such surplus products will be manifested as the possession and use of value, especially surplus value. In the face of competition from other countries in the world system, the conditions for expanding reproduction using surplus products are linked to maintaining the possession and accumulation of surplus value in the international market, which makes value multiplication an inevitable goal for domestic production entities. Higher profit rates can help companies purchase more means of production, thus they can achieve productivity improvements, and they can even obtain and retain investment from other countries. As to the question whether the profit rate increase comes from the relative labor productivity of the company, the transfer of value between different sectors, or the lower value of domestic labor, it is not so important.

This external coercion can be compared to the movement logic of a single capital. A single capital in the domestic market may have various purposes, but the coercion of market competition will inevitably make a single capital focus on profit rate and capital accumulation. Because a capital which does not focus on the above goals will be eliminated in the coercion of competition, only capital that focuses on profit rate and accumulation can survive, and these remaining capitals will also become external coercion for other new capitals entering the market.

In addition, it should be noted that this external coercion does not only affect enterprises participating in the international cycle, but also has a universal effect on latecomer economies. On the one hand, as mentioned above, enterprises participating in the international cycle will form a competitive coercion on enterprises not participating in the international cycle in the domestic market. This coercion may come from multiple aspects such as accumulation speed, labor and credit acquisition; on the other hand, the process of latecomer countries catching up is inevitably accompanied by imitation and learning from developed countries, and capital as a production relationship is related to specific productive forces level. Therefore, the process of learning and catching up is always accompanied by the shaping of specific production processes by capital production relations. Moreover, this external coercion is by no means only a passive choice but can also be an active adaptation of policies based on different reasons.

In short, the prerequisite for expanded reproduction has been transformed into how to improve the level of value realization and realize value multiplication in the world market under the shaping of domestic commodity-money relations and the capitalist world market. This means that process of capital production has become a universal mode of production that must be adopted. With the help of globalization or the socialization of production worldwide, productive forces have continuously reproduced the category of capital in developing countries.

If this argument is valid, then one of the implications behind it is that since the capital of developing countries comes from the coercion of the capitalist world system, we cannot simply think that this capital is a general category that transcends social forms like commodity-money relations, but rather has a specific social and historical background. The assumption that some kind of “capital in general” that transcends social forms is certainly critical in theory, but what we are actually facing is capital that is actually moving against the backdrop of the capitalist world system. In this case, we cannot expect capital to directly show some fundamental differences in China, which is a developing country. If we want to understand what capital, as a prevalent or even universal form of production organization, means for China’s social and economic forms; or, when China’s social and economic forms will coexist with capital for a long time, then how the nature of socialism affects the laws of capital’s behavior cannot be found in the nature of capital itself, but should be found in the production relations that are external to capital. As mentioned above, when the theoretical community analyzes the nature of Chinese capital and the particularity of its movement process, it actually generally adopts a theoretical approach which argues that external economic relations have “transformed” capital (in socialist China) in some way. And how to understand this “transformation” will also be the core of the following article.

Three Mechanisms of How Capital Power Expands

In the above, we mentioned that capital, as a form of production organization, has an important basis for its existence in China, which is the coercion of the capitalist world market on latecomers brought about by the socialization of production worldwide. In this case, capital movement in China itself is based on the background of the capitalist world system, and it cannot be directly assumed that capital in this background – regardless of its source and owner – directly has a certain socialist nature. To understand the particularity of capital under the socialist economic system with Chinese characteristics, and the uniqueness of the Chinese social and economic form behind it, we need to look beyond capital.

To illustrate this point, we need to first explain that there is a difference between an economic system with widespread “capital” and an economic system of “capitalism”. What is “capitalism” is a grand and complex question, involving the disputes of many schools of economics in the history of thought. But there is no doubt that capitalism refers to a social economic form and an organic social system. The properties of an organic system are not simply the sum of individuals. The superposition of individual capitals cannot directly deduce the properties of the capitalist system, just as the superposition of individual individuals cannot deduce social organizations, and the properties of individual iron atoms cannot deduce the properties of steel machines.

From the perspective of political economy, a necessary condition for capitalism is that the production purpose and movement laws of the economy are subject to the purpose and movement laws of capital. This means that whether capital can proliferate smoothly becomes a prerequisite for the smooth operation of the economy. The difficulty of capital movement will lead to difficulties in the operation of the social economy. The superstructure and ideology of society also serve the movement and reproduction of this capital. To put it more directly, this actually means that the power of capital has formed a domination over the entire social production and entire life. Therefore, to understand how capital transitions to capitalism, it is necessary to understand how the power of capital can achieve domination over the society as a whole.

The power of capital is not a power that can be directly understood from a micro perspective. Its source is hidden in the social and economic structure. The most intuitive source of capital’s power is its use of monetary power. Since money itself acts as a general equivalent, it represents abstract labor and social labor. Therefore, money actually becomes the power to recognize and control undifferentiated human labor. When primitive accumulation separates the means of production from the laborers, capital realizes the possession of the means of production, and the control of capital over the laborers is formed. When capital obtains its own stable productive forces base through machine industry – under such conditions, the form of production organization has undergone irreversible changes, and the productivity of labor has been expressed in the form of the productive forces of capital, realizing the transition from “formal subordination” to “substantial subordination” of labor to capital, the power of capital has further expanded. The above is also the most commonly discussed content in the study of capital power.

However, if we further examine along the logic of capital development, we will find that these contents are still mainly power in the narrow production process. If capital wants to dominate the entire economic activity, it needs the cooperation of a series of powers in the fields of production, distribution, and exchange to form a complete power “closed loop”. Combining Marx’s discussion in “Capital” and the analysis of theories deeply influenced by Marx, such as the world system theory, it can be found that to form such a complete system, at least three core nodes are needed.

Three core nodes

First, the control of the core nodes of the capital cycle. In order for capital to multiply in motion, it is necessary to continuously realize the circulation of capital between different forms; and in order to realize the transformation of capital in form, it is necessary to exchange commodities and currencies with external entities. The commodity and currency exchange between different kind of capitals and other production entities constitutes a network of value circulation. If the network structure is uniform, and the number and scale of other capital cycles connected to each capital cycle are similar, then the impact that each capital can have on other capitals is limited. However, the reality is that due to the continuous improvement of the level of socialization of production in some areas, competition between capitals is also constantly intensifying the concentration of capital. Therefore, the network structure of capital circulation is not uniform, but there are some nodes with high centrality. These nodes exchange commodities and currencies with a wide range of capital, so they themselves become the basis for the operation of these capitals and even the entire capital circulation network.

In reality, a typical core node of capital circulation is the financial sector. For industrial capital and commercial capital, they need to obtain money from the financial sector in the purchase stage of capital circulation and provide money to the financial sector in the sales stage. This is true whether the money is credit provided by the financial sector or the money owned by the real capital. Different financial enterprises are closely linked through their credit relationships, so that the entire financial sector as a whole becomes the core node of capital circulation. Another typical sector is the infrastructure sector such as electricity and transportation. Almost all capital needs to exchange goods with these sectors during the circulation process. Of course, expanding from this, enterprises that produce and operate a certain network structure or platform with universal significance also have the nature of core nodes to a certain extent.

Since a part of the capital circulation has the nature of such a core node and becomes the basis for the operation of the entire capital circulation network, only when capital fully masters these core nodes can it “stand on its own two feet” and independently maintain the movement process of capital.

Second, the control of credit relations and ownership of natural environments such as land.

In the above, we have discussed the financial sector as the core node of capital circulation, but in addition to this, the credit relations behind finance play a more important role in the expansion of capital power. Credit allows monetary capital that is temporarily stagnant in the circulation process to be transferred to other capital circulation processes, speeding up capital turnover. In this process, capital can flow between different sectors, different spaces and different subjects. And this free flow means the ability of capital to control labor and allocate resources within the entire social and economic scope. Without credit, the “heavy body” of industrial capital and commercial capital will greatly reduce the liquidity of capital. The power brought by this free flow can be fully observed from the process of production price formation. It is through the flow between different sectors that capital realizes the equalization of profits and the formation of production prices. The formation of production prices is not just the deviation of value realization from value production or the formation of a new price system. In the process of production price formation, capital regulates the supply of social products and the distribution of money between sectors and the resulting demand through reconfiguration between different sectors. It can be said that the formation of production prices actually means that capital has the ability to reshape the entire macroeconomic form. In reality, credit is essential to achieve profit equalization.

Another direct result of the development of credit is the emergence of interest-bearing capital. The emergence of interest-bearing capital has caused the real source of capital growth to disappear from people’s sight, exacerbating the illusion that capital can achieve self-growth, and ultimately brought about “virtual capital”, the most profound representative of capital fetishism. After this concept appeared, capital as a production relationship finally acquired the most confusing form, allowing people to discuss capital as a permanent, material relationship, and to see through all kinds of social relations in human society from the perspective of capital and to produce bizarre concepts such as human capital, social capital, political capital, and even ecological capital. It can be seen that credit not only brings capital the ability to reshape the macro-economy, but also makes capital fetishism reach its peak, resulting in an ideological fantasy centered on capital, and allowing the logic of capital to “capture people’s minds.”

In the process of virtual capital generation, the role of capitalist land ownership and the rent brought about by it is very critical. Compared with the land ownership in pre-capitalist society, one obvious feature of capitalist land ownership is that although it still manifests itself as a monopoly on land ownership, it is no longer the dominant force in organizing labor and means of production but only participates in the distribution of surplus value as a factor of production. In this sense, land ownership becomes virtual capital like securities. Since one of the foundations of land rent is the possession of non-reproducible production factors such as land and natural resources, when the logic of virtual capital extends to the field of land ownership, the “capitalization” of non-reproducible production factors is completed. Furthermore, since non-reproducible production factors themselves are part of the natural foundation on which human beings depend for survival, this leads to the continuous extension of the logic of capital, incorporating these factors into the process of capital proliferation and serving capital proliferation, thereby making factors as large as geographical space and as small as human genes become a means for capital to obtain rent. The logic of rent and virtual capital cooperate with each other and have also become the basis of contemporary complex speculative financial activities.

The third is the competitive political environment. It is easy to see that the expansion of capital power described in the above part of our article is actually unfolding along the logical sequence of Capital. The traditional view focuses on commodity-money relations and the direct production process of capital. The control of the core nodes of capital focuses on the circulation process of capital, while the control of credit relations and land ownership focuses on the distribution process of capital. Therefore, in the existing discussions, the expansion of capital power and the development of capital’s own logic are two sides of the same coin. However, for a specific society, it is not just the movement of capital. As Marx’s six-volume book plan suggests, it also includes other non-capital categories such as workers, real estate, and the state, which have different operating logics from capital. It is not enough to analyze the development of capital’s own logic. It is also necessary to analyze how the movement of other categories themselves will affect capital. Among various non-capital categories, the state is particularly important. In the process of the continuous development of capital power, workers and real estate are shaped as part of the movement of capital, but the state is not only not a part of capital, but also frequently appears as an overall economic regulator in the process of maintaining the normal reproduction of capital. This article agrees with the view of Dutch political economist Rothen that the disintegration of pre-capitalist production units has brought about the differentiation of enterprises and families, and on the basis of this differentiation, the relationship between capital and the state has emerged. Therefore, the state is an important external factor for the expansion of capital power.

The state itself is a complex system that will have connections and interactions with capital at many levels. Our article argues that among many dimensions, the competitiveness of the political system is the key to whether capital power can expand. The so-called competitiveness of the political system refers to the extent to which the political system is divided into competing subsystems. The core of this view comes from the discussion of the process of the emergence of capitalism by world-system theorists.

World-system theorists emphasize that an important basis for the emergence of capitalism is the existence of an “inter-state system.” These countries compete with each other as independent political entities and therefore are not enough to form a politically integrated whole to achieve control over capital. Freely flowing capital becomes the object of competition among different political entities, and thus more power is transferred. This allows capital to gradually “dissembled” from the constraints of social and political life and dominate the political processes of different countries. This process is still manifested in various ways in the international economic field today. For example, the famous international economic impossible triangle theory argues that free capital flow, monetary policy independence and exchange rate stability cannot exist at the same time. From another perspective, when capital is able to flow freely between countries, the results of its flow will be sufficient to reduce the country’s monetary policy space.

Further extending this view, not only will competition between different nation-states as political entities lead to the expansion of capital power, but also within a country, the more the political system cannot be integrated and the more the various political forces compete with each other, the more likely it is that these political forces will compromise with capital regardless of where their interests come from. For example, under the conditions of the Western multi-party system, different political parties need to win more support than other parties in order to gain a ruling position. In this process, regardless of whether the party represents the interests of a certain part of the bourgeoisie, it is inevitable that it needs to cede some power to capital.

The Constraints on Capital Power and the “Universal Light” of Socialism (allgemeine Beleuchtung)

Marx in his famous work A Contribution to the Critique of Political Economy suggested “universal light” (allgemeine Beleuchtung) idea when explaining Marxist method of political economy research. Marx wrote: “there is in every social formation a particular branch of production which determines the position and importance of all the other branches of production, and the relations obtaining in this branch accordingly determine the relations of all other branches as well. It is an universal light– as if this light of a particular hue were illuminated upon everything, tingeing all other colours and modifying their specific features; or as if a special ether determined the specific gravity of everything found in it”

In the existing discussions on the issue of capital under socialism, many scholars in China argue that capital will change its behavior due to the effect of the “universal light” of the socialist basic economic system of current China. Through the analysis in the above part of the article, we can clearly see how the power of capital gradually expands from the production process and eventually makes economic and social and political activities gradually revolve around the purpose of capital. In this process, the difference between the movement of capital in China and capitalist countries is obvious, and from this we can understand how this “universal light” “illimunates” on capital within China’s social and economic system.

In China, although capital is a ubiquitous form of production organization and wage labor is ubiquitous, the power of capital has never been able to leap out of the narrow field of production. At the subsequent nodes of the expansion of capital power, the socialist system with Chinese characteristics has corresponding institutional arrangements, so that the purpose of capital will not rise to the economic purpose of the entire country.

First, most of the core nodes of the capital cycle are controlled by the state-owned economy.

 An important idea of ​​China’s state-owned enterprise reform is to let the state-owned economy focus more on areas related to national security and the lifeline of the national economy, which overlap with the core nodes of the capital cycle to a certain extent. State-owned capital actually embeds the state’s governance mode into capital, thereby changing the nature of this kind of capital, and coordinates the relationship between different kinds of capital and coordinates the relationship between capital and labor through the relationship between the state and enterprises. When state-owned capital controls the core nodes of the capital cycle, state-owned capital can play a greater role in leading economic activities and leverage changes in a wider range of capital cycles. For example, in order to achieve the development of the poor western regions of China, the state has laid out a large number of transportation infrastructure in the poor western regions of China which have inconvenient transportation, and a large number of private capital has participated in the construction of these infrastructures as a link in production. These private capitals still aim to increase value, but because the project itself is established by national-state policy based on the purpose of regionally balanced development, and the government and state-owned enterprises are responsible for investment and the recovery of overall construction funds, each local capital cycle of private capital is actually nested in the larger capital cycle of state-owned capital with more diversified goals. Therefore, the local (partial) purposes of these private capitals are not of an overall nature but are subject to the overall purposes of state-owned capital.

Second, the state achieves effective regulation of the financial system through multiple dimensions.

The previous part of our article has mentioned the multifaceted role of credit in the expansion of capital power. In a short nutshell, when money is the most important power to control undifferentiated human labor, the institution that allocates money has actually become the “headquarters” of social division of labor. In China, the state’s control over finance is reflected in at least two aspects: first, in the financial sector, the state-owned companies and state owned economy occupies a dominant position in terms of quantity, proportion and competitiveness; second, the Chinese government has a more multidimensional and complex regulatory policy system for the financial system. These systems not only include traditional aggregate policies but also include a large number of structured and highly targeted policies, which enable the state to regulate industries, regions and even energy structures through financial activities to achieve more complex goals. Because the China’s national governance system is embedded in state-owned capital, China’s regulatory policies on the financial system are more complex and can achieve multi-faceted supervision from institutions, information and personnel. At the same time, the continuous emphasis on the positioning of financial services for the real economy is, to a certain extent, also a disenchantment of the fetishism generated by virtual capital, and looking from ideological aspect and from practice financial activities in Chinese economy are reduced to a tool for achieving economic development and effectively coordinating social division of labor.

Third, state ownership and collective ownership of land.

China’s land and natural resources are mainly owned by the state and rural collectives, and specific land management methods have been formed according to the characteristics of different land production uses. In this way, on the one hand, the natural conditions for human survival can always be placed under the regulation of the whole society, regulating the most basic material transformation process between man and nature, and exploring geographical space forms different from capitalism. A considerable number of political economics studies have shown that the material transformation process between man and nature dominated by capital has led to a “metabolic rupture” in the material cycle, which is an important reason for the current ecological dilemma of human society; geographical space is also more shaped by capital, forming a geographical space that is conducive to capital accumulation.) On the other hand, land rent can also be controlled by the state, thereby realizing the social appropriation of surplus value, improving the efficiency of the use of surplus value within the social scope, and preventing the economic “rentierization” brought about by land rent.

Fourth, and most importantly, the CPC plays a leading role in taking overall charge and coordinating the interests of all parties in the society.

As the most essential feature of socialism with Chinese characteristics and the highest political leadership force, the CPC is able to achieve coordination and unification of all aspects of national governance. The communist Party not only achieves the integration of the superstructure but is also an important factor in organizing and coordinating social division of labor and social cooperation, and is therefore an important part of the economic base. The CPC integrates the political and economic systems together, in which the totality of society and the socialist production purpose are embodied by the CPC as the main pillar and main actor, thereby ensuring the socialist nature of the aforementioned institutional arrangements and allowing capital to be embedded in social and economic activities, instead of capital being “disembedded” thus becoming the dominant force in social and economic operations.

In summary, although capital is the universal mode of production organization at this stage of building socialism, and although the movement law of capital is still facing the coercion of the world capitalist system, the socialist economic system led by the Communist Party of China, including the state-owned economic system, public ownership of land, and control of financial activities, can allow capital to be embedded in the socialist economic system and thus capital constrained by these economic system arrangements, thereby changing the capital movement process, reducing its negative factors on the development of the socialist economy and making full use of capital’s positive factors. It is in this way that the “universal light” of socialist economic relations “illuminates” on capital within China.

At the end of our article, there are three points worth emphasizing:

First, although the above-mentioned institutional arrangements in China actually achieve the role of regulating and guiding capital, it does not mean that all or part of these institutional arrangements are established or retained to restrict capital. These institutional arrangements we have in China are the result of the historical process of socialist revolution, socialist construction and reform, and guiding and controlling capital is only an objective result of these institutions.

Secondly, since the above-mentioned way of guiding and controlling capital is the result of the historical process, it means that this is not the only feasible way to restrict capital in the process of historical evolution.

These institutions do not correspond to a certain policy of guiding and regulating capital, but the social power structure formed by these institutions makes it possible to restrict capital and this social power is the deep foundation of more specific policies to regulate and guide capital.

Thirdly, capital itself has a tendency to continue to proliferate and break through obstacles in the process of its proliferation. Therefore, the relationship between these institutional arrangements and capital is not a completely stable relationship but is in a contradictory movement. This contradictory movement has actually become a driving force for changes in economic structure and can be seen as a clue to understand China’s economic reform and development.

To conclude we argue that China’s relations of production can be defined as socialist public property relations of production, the “universal light” in our socialist society is not the capitalist relations of production, but socialist public property relations of production, which determines the status and influence of all other relations of production and production (including capital), which changes the characteristic or character of all other production and relations of production (including the production of capital and its relations of production), which determines the weight of all existence (including the various forms of existence of capital) that is present in the socialist system. In other words, the socialist system of public ownership determines and changes the nature of capital and changes the forms of existence of capital.