Socialist market economy
The socialist market economy (SME) is the economic system and model of economic development employed in the People's Republic of China. The system is based on the predominance of public ownership and state-owned enterprises within a market economy. The term "socialist market economy" was first used during the 14th National Congress of the Communist Party of China in 1992 to describe the goal of China's economic reforms. Originating in the Chinese economic reforms initiated in 1978 that integrated China into the global market economy, the socialist market economy represents a preliminary or "primary stage" of developing socialism. Despite this, many Western commentators have described the system as a form of state capitalism.
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).