Value production, value transfer and accumulation: a political economy analysis of uneven regional development in China

FENG Zhixuan LI Bangxi LONG Zhiming ZHANG Chen

【Abstract】This paper used a political economy approach to understand China’s uneven regional development in recent years. This paper summarized two theoretical frameworks related to the uneven regional development, the framework of production and the framework of exchange, and unified two seemingly contradictory theories, the labor theory of value and the capital circulation theory. Taking a static viewpoint, and using the labor theory of value, we explained that production and exchange frames can correspond to value production and value realization, respectively, which are the two main factors in the differences between regions in the value added per unit of labor time. To characterize dynamic processes, both frames introduce the capital accumulation process and use its interaction with production and exchange in the fields of technology and distribution. These two interactive processes can be unified in the logic of capital circulation, and the complex dynamics of uneven development between regions can be understood in this uniform framework. The relative magnitude of the cross-regional flow of value in the process of accumulation and the cross-regional transfer of value in the process of exchange embody the relative relationship between the two interactive processes. Based on these theories, this paper conducted an empirical study of the uneven development of regions in China. First, we divided GDP per capita into three factors: the value added per unit of working time, the average working time of workers, and the proportion of workers in the population. Furthermore, the difference in the value added per unit of labor time was decomposed into the production gap of the value per unit of labor time, the amount of transferred value per unit of labor time, and the differences in the value added rate expressed by the market price and individual labor time. Using national and provincial input-output data for 2002, 2007, and 2012, this paper calculated the gap in value production and the amount of transferred value in each provincial-level areas. We found that the gap in value production and the amount of transferred value are highly correlated with the GDP per capita between regions, and they can explain most of the inter-provincial differences in GDP per capita. Next, this paper analyzed the dynamic process of uneven development in China. On the basis of our theoretical framework, we introduced the net flow of value in circulation by subtracting the transfer of value in the process of exchange from the flow of value in the process of accumulation to examine the relative relationship between production and exchange. We identified a tendency to reduce regional differences in the interaction between accumulation and production processes, and we found that before 2007, the effect of this tendency was not sufficient to change the polarization effect in exchange. After 2007, the negative feedback of the accumulation and production processes gradually exceeded the positive feedback and weakened the polarization effect in the exchange process, resulting in a narrowing of the gap in development levels between the regions of China. We argued that the effect of balanced development will eventually overcome the effect of polarization because the process favors backward areas in China. Using the provincial panel data from 2001 to 2015 in China, we estimated the national Foley-Michl accumulation equation to explain why the accumulation process favors the backward regions. We found that the share of profits and the share of capital stock in the country—the two factors favoring developed regions—have short-term effects on capital accumulation but not long-term effects. The slow response of investment to capacity utilization also weakens its role in strengthening the accumulation level of developed regions. Although the ratio of potential output to capital promotes the accumulation of developed regions in the short term, it also has the larger effect of promoting the accumulation of backward areas in the long term. Therefore, in the long run, the entire accumulation system promotes capital accumulation in backward areas. This mechanism is a common consequence of the logic of the accumulation process and the shaping of the accumulation pattern by the government.

【Keywords】 value production; value transfer; capital accumulation; uneven development;

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ISSN:0577-9154

CN:11-1081/F

Vol 55, No. 10, Pages 4-21

October 2020

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