Guangming daily Chinese Government to safeguard price stability effectively

"Editor's note"

Guangming daily on October 4 published a signed article points out that our practice shows that the Government's timely and effective intervention of capital market is necessary. Paper, workers in the presence of two major trends in financial mechanisms and split not only in the form of surplus value of income distribution, and household financial income redistribution to the workers.

Articles emphasize theory and practice have shown that capitalist countries, financial development does not spontaneously to narrow the income gap, only when government intervention in the market, and will take measures to narrow the income gap. Our practice also shows that Government's timely and effective intervention of capital market is necessary. China is a socialist country, the Government does not need to wait until the West to intervene in the market when the financial crisis spread to China, and institutional strengths to take proactive and timely steps should be used. Recent share price fluctuate strongly, before a potential crisis, my Government has taken as big shareholders holdings, directors Kao Jen and equity incentives and other measures to maintain price stability, and also to some extent in effectively narrowing the income gap.

Following is the full text:

Financial development and income gap between people how to change? In fact, the financial development is a historical process, determine historic distribution of income because income according to the accumulation of capital or capital of the assigned claims. Financial development was originally of commodity money, which can be traced back to the currency. Monetary capital is turning money into capital, part of the capitalist labor creates surplus value as a currency for the purchase of new means of production capital invested in the production, the objective was not to use value, but for the purchase of new means of reproduction new value.

Dominant unproductive of productive areas, two major areas of mutual sharing of surplus value. In this way, financial development and income gap within the capitalist class is shrinking. Due to the surplus value created by workers are functioning capitalist and plundered by the joint between financial capital, which itself by threshold effects and other reasons not to participate in the income distribution, so the income gap is widening between workers and capitalists. Awkward lucky why didn t VW vehicle emissions

When entering the capital after the virtual stage, the capitalists in order to alleviate the basic contradiction of capitalism, private means of production and social capital in combined for more of their residual value. Joint-stock company with the birth, capital by issuing shares to the Community financing, shareholders through dividends received a portion of the profits, relieving the contradiction, promoting the growth of the real economy. With the acceleration of capital the virtualization process, prosperity in the financial markets and the real economy has become increasingly depressed, result in unproductive areas dominate the productive domain: productive investors must go through bank loans, issued to the public stocks, bonds borrowing to raise funds in order to truly expand entities by way of investment. The reason is that organic composition of capital in the financial sector than in the production domain, the virtual capital faster and the expected earnings decline in the real economy, leading to average profit rate of productive areas in the financial sector, profit-driven capital will naturally choose the former.

Capital virtual duality makes in this period of financial development and income distribution effects of changes in the way. First, unproductive areas gradually dominate the productive field, optimal production requirements in the area of income distribution were not met through informal channels to get more financial capital functions of the capitalists to make more profits, widening income gap between the capitalists. Secondly, within the financial sector income gap will widen, because some powerful financial capitalists issuance of loan sharks to get huge profits to others, was severely disrupted by the original pattern of income distribution. Thirdly, the financial redistribution on the basis of the area of distribution, control of the productive areas of more financial capitalists than functioning capitalist profits, leading to disparities in income distribution. Finally, because workers could not be obtained through the purchase of shares a portion of the profits of the enterprise, the capitalist can be obtained by way of rights issue, bonus, the income gap is widening between capitalists and workers.

With the advance of capital virtualization, large numbers of investors will gradually reduce the productive investment, financial investment. Real economy will reduce reliance on banks and turning to the financial markets, the resulting banking financial trends, and accelerate your virtualization process of capital. Meanwhile, workers participating in the financial mechanism under the action of the above two trends and split not only in the form of surplus value of income distribution, and household financial income redistribution to the workers. Enterprises need bonuses to attract and maintain shareholder dividend was derived from the profit, profit arising from the increased number of financial investment companies, dividend in this situation is re-distribution of shareholders ' funds, shareholders would get a dividend and will increase confidence, contributing to share, increased stock ownership, making this mechanism to cycles. As the banks ' financial looting intensified, unable to repay the loans triggered a financial crisis at the working class, the working class and small businesses into bankruptcy and large enterprises with a strong information resources, rapid evacuation of the financial sector, to reduce losses. This redistribution led to invest in widening income gap between residents of different enterprises.

Therefore, government intervention in the financial markets is essential. First, prevents the build-up of financial fragility and the outbreak of the financial crisis, and second, can prevent people to lose confidence in the financial sector, called "run" phenomenon, third, can transfer support to narrow the income gap.

Theoretical analysis and practice have shown that capitalist countries and financial development will not spontaneously to narrow the income gap, only when government intervention in the market, and will take measures to narrow the income gap. United Kingdom as typical of the early capitalist countries, its money capital in economic development has widened the income gap for the later planted the seeds of the disparity. When the world is shifting United States zhihou, Wall Street financial capitalists to increase the mobility of capital has created a variety of financial products, led to excessive capital virtualization, expand the income gap, all the way to the crisis, government intervention in the market, the adoption of policies to narrow the income gap, including subsidies for poor education, medical and health.

Our practice also shows that Government's timely and effective intervention of capital market is necessary. In 2008, after the outbreak of the international financial crisis, my Government immediately introduced include raising income, ten, adjust income distribution measures, a one-time living subsidies to more than 70 million social security, and continue to raise the level of basic pensions, narrowing the income gap, 0.49 narrowing of the Gini coefficients from 2009 to 2014 to 0.47. In fact, China is a socialist country, the Government does not need to wait until the West to intervene in the market when the financial crisis spread to China, and institutional strengths to take proactive and timely steps should be used. Recent share price fluctuate strongly, before a potential crisis, my Government has taken as big shareholders holdings, directors Kao Jen and equity incentives and other measures to maintain price stability, and also to some extent in effectively narrowing the income gap. (The original title of the impact of financial development and income distribution, the author for the school of Economics of Renmin University Huang Zeqing)