Socialist market economy
The socialist market economy is seen by the Communist Party of China as an early stage in the development of socialism (this stage is variously called the "primary" or "preliminary" stage of socialism), where public ownership coexists alongside a diverse range of non-public forms of ownership. The Communist Party of China maintains that despite the co-existence of private capitalists and entrepreneurs with public and collective enterprise, China is not a capitalist country because the party retains control over the direction of the country, maintaining its course of socialist development. Proponents of this economic model distinguish it from market socialism as market socialists believe that economic planning is unattainable, undesirable or ineffective and thus view the market as an integral part of socialism whereas proponents of the socialist market economy view markets as a temporary phase in development of a fully planned economy.
Wage reform in China, 1949–1976
Politically, it aimed at creating a more equal society that fits the vision of socialist society. Following Marx's conception of the communist society, CCP held that the optimal principle of distribution is “distribution according to need” (按需分配). The need mentioned here was determined by the nature of the society. However, the socialist period is still a transitive period towards the communist society.It is transitive in two senses: in the sense of forces of production and also in the sense of social consciousness. The Marxism's orthodox discussion about productivity and social consciousness is expressed as “the economic base determines the superstructure”. Due to the low level of economic development in China, there were different kinds of ownership existing during this period, making the market remain a necessary mediation between different parts of the economy. More importantly, according to this thought, the social consciousness is still undeveloped due to the backwards in the economy. Thus people were supposed to continue being guided by the commodity exchange. During this transitive period, the “distribution according to need” is impossible. Alternatively, the general principle in it was called “distribution according to labor” (按劳分配).