Preface
By Professor Yuanchen Dai
Mr. Bingxin Wu wrote a book called Consumption and Management when he was 70 years old. It is an honor for me to read it first. And I have many thoughts and feelings.
Last April, I heard his speech and read his paper about the theory of consumption at a proseminar on theory of consumption in Peking University. Then I read his book Bingxin Wu Anthology, published ten years ago, so he and his book left a deep impression on me. My field is the history of social development. I profoundly feel that people have been more thirsting for living better than in the past, which has led to the improvement of human society for thousands of years. The desire for and realization of increased consumption and higher living standards from one generation to another are motivation for society to create and accumulate more wealth. Human history is a history of creating. The rise of a society is the rise of creation. Therefore, I think that Mr. Wu’s emphasis on the research of consumption theory has captured the fountain of power of social improvement. Upon such consensus, I encouraged him to publish Consumption and Management, and I offered to write the preface.
During communication with Mr. Wu, I learned that he is from Shandong Province with a legendary background. His father died when he was five years old and his mother died when he was six. He began to farm when he was seven. He liked learning when he was young, but he could not afford to buy books because of his poor family situation. He borrowed books from neighbors and studied in the open air. He knew well of the life direction indicated by Chinese culture and its established ambition for rendering service to the nation. At the call of country, he left his home to work on constructions in Baotou Iron and Steel Base at the age of 19. Then he was transferred to work in the Inner Mongolia Mining Bureau, Baotou Valvate Plant and so on. He successively assumed the office of accountant, section chief, chairman of the labor union, secretary of the party branch and president of technical school, and was rewarded for his contributions many times.
Mr. Wu retired from a state-owned enterprise 22 years ago. In the spirit of the saying ‘As heaven maintains vigor through movements, a gentle man should constantly strive for self-perfection’, he established his own enterprise from Baotou to Huainan and then settled in Jinan. His Sanzhu Group possessed health care products, medicine, medical equipment, and ecological cosmetics industries. It had fixed assets of billions of yuan, and its highest annual sales income reached 8.4 billion yuan with 820 million yuan in annual tax. It had been the biggest private enterprise in China, and was called an ‘economic miracle’ by domestic and foreign economists. In 1994, Sanzhu Group was confirmed to be a high-tech enterprise by the State Scientific and Technological Commission and Shandong Scientific and Technological Commission. In 1997, it was confirmed to be a key high-tech enterprise of a national torch plan by the State Scientific and Technological Commission. In the same year, it won the five star diamond award issued by the American High Quality Service Scientific Association. In December 1997, ‘Sanzhu Trademark’ was confirmed as a Shandong famous brand. The outstanding achievement of Sanzhu received many praises from the Party and state leaders.
In society, many people know Mr. Wu as a successful entrepreneur, but actually he is a hard- working scholar who likes learning theories and exploring thinking. He had been the president of a technical school. Nowadays, he has been invited as a visiting professor and special visiting researcher by many domestic and foreign universities and research institutes. He has continued writing articles. At the beginning of the Economic Reforms and Openness, he wrote with great sincerity to the State Council to propose his plan to manage the national affairs.
Mr. Wu is a brave and wise person indicated first by his cognition of market economy. For most people today, knowledge of a market economy is not a problem, but in the early 1980s, there were many debates about whether China should establish a market economy system. Under the condition that the central government did not confirm that our national economic system should be a market economy, Mr. Wu had proposed that the socialist economy should be a market economy in his paper ‘Consumption and Economic Law’. He discussed this issue through origination and development of economic law in human economic life. He claims that our country must implement market economy and that consumption is a traction force for production competition. He firmly believes that consumption creates production and wealth and is the most important driving force for economic development. Therefore Mr. Wu defined consumption as his long-term research task 30 years ago.
Consumption is an important behavior and process in human social economic activities. Traditional classification of consumption divides it into production consumption and living consumption. Mr. Wu classifies consumption into three kinds: living consumption, production consumption and social consumption. Social consumption mainly means public consumption such as national administration consumption, national defense consumption, scientific research consumption, and education consumption. Compared with the old method, I think this classification is creative and advanced.
As is known to all, there are four stages for the general process of social production: production, distribution, exchange, and consumption. Production is a basic stage that not only determines distribution and exchange but also determines consumption. Types, quality, and quantity of products of social production objectively regulate consumption’s object, structure, and patterns. No production, no consumption. However, consumption also has its significant position and effects in the process of production and reproduction. In a static view, consumption is the termination of the social production process, which is the final test for the economic benefits of reproduction. In a dynamic view, it is the precursor of the next production process, which provides targets, demands, and power for the new production process. In addition, it provides important feedback information for production and reproduction through commodity circulation and markets.
For this reason, consumption is the final target of social production and the stage of social reproduction process. Consumption is an indispensable condition for human existence and labor force recovery. Labor force recovery is a precondition to guarantee the continuity of the production process. The influence of production on consumption is that production provides objects for consumption, determines consumption patterns, and inspires new consumption needs. Consumption also affects production and improves or hinders the development of production. In the capitalist system, workers are exploited by capitalists. Economic crises as the consequence of overproduction are inevitable because of the antagonism and contradiction between great increases of production and the relative decrease of purchasing power of working people. In socialist society, material and cultural living levels of people improve with the development of production. The rise of people’s consumption level, in turn, continuously promotes the development of socialist production.
It can be seen that consumption is a significant stage. To a certain extent, it has not only a huge effect on total economy, but also a key function. Consumption cannot be separated from research and production. They supplement and promote each other.
Generally speaking, entrepreneurs are interested in production and circulation, because the production process is basic. The most important things are what kind of modern equipment is to be used and what measures are to be taken in the production process to make sure that the products produced are suitable for the market’s demand. The other one is circulation. Circulation mainly refers to the market, since the value of the products produced by enterprises is ultimately realized through the market. If products cannot win the market or be washed out from the market, there will be a crisis in the enterprise. General entrepreneurs always focus on market and production but give little attention to research on consumption, because consumption is the last stage of the whole social production process.
Mr. Wu suggests that consumption is not passive and negative, and it has determining effects compared with production. He has seen that consumption has a huge counteractive influence on production, circulation, and distribution, so he decided to research this question. Marx revealed the production secret of capitalist production, capitalist exploitation, and the trend of capital accumulation, starting from commodity. Mr. Wu discussed every aspect of consumption of the whole society starting from consumption, which included many economic problems such as production, research, revenue, finance, price, value, currency, credit and other economic issues. This book has taken him more than 30 years, and required his utmost effort. This book reveals his profound theoretical basis for exploring scientific truth and his novel method of studying economic problems.
I think that it took an academic insight for the author to set consumption as a breakthrough of economics research to carry out long-term special research. After reading the entire book, I think the author makes several points with a new perspective, in the following ways.
Key features of the book
Using subjects to study consumption problems
This is the first monograph that uses many subjects to systemically and wholly study consumption problems. It not only studies consumption from economics, management and marketing perspectives, but also from those of philosophy, sociology, culture, and history. In particular, the author utilizes systematic and scientific theories and methods to study consumption, as he recognizes that consumption is a complicated and dynamic system to research. He uses quantitative analysis in many aspects and describes the positions, influence, and significance of consumption in the entire economic field, even social life.
Studying consumption through history, reality and the future
The author studies origination, development, function, and continuous new change of consumption through history, reality, and the future. From the beginning of human society until modern times, Mr. Wu reveals a truth that the whole history of the development of human society, including the extension of human life and social development, is pushed by the power of consumption. The history of human economic development suggests that the ultimate target of each social cell’s economic behavior depends on consumption, and the final direction of any product is consumption. Therefore, all important social activities take place around consumption. When the social machine starts to move, consumption begins. When people are born, consumption begins. From heroes to common people, from a macro view to a micro view, from part to whole, from individuals to colonies, the whole human society must be in the process of consumption and creating consumption as long as vigor exists.
Consumption is the eternal core topic in economics, which is always focused on by economists and economic theorists and is emphasized by national departments and decision-makers. The mechanism of consumption indicates that the circulation of consumption is vital for the whole circulation and effects of the national economy.
The position and function of consumption in the development of the national economy
In the macro view, and with thorough research on consumption from different angles, the book makes clear the position and function of consumption in the development of the whole national economy and the power of social development created by the continuous extension of consumption. He provides many policy-directed suggestions that can be the scientific basis for government to make a decision on consumption problems. Mr. Wu suggests that the main power of development of the national economy is not investment or trade but consumption. This view greatly accords with spirit of the Seventeenth National Congress of the Communist Party of China. When discussing the transition of the economic development mode, the report of the Seventeenth National Congress stated:
We must keep to the new path of industrialization with Chinese characteristics, pursue the policy of boosting domestic demand, particularly the needs of consumption, and propel three transitions in the mode of economic growth: the transition from relying mainly on investment and export to relying on a well-coordinated combination of consumption, investment and export; the transition from secondary industry serving as the major driving force to primary, secondary and tertiary industries jointly driving economic growth; and the transition from relying heavily on increased consumption of material resources to relying mainly on advancement in science and technology, improvement in the quality of the workforce and innovation in management.
The Seventeenth National Congress emphasized expanding consumption to make it a pulling force for economic growth. Economic development in 2007 indicated that the power of consumption for promoting the national economy first exceeded investment and trade since reform and opening to be the leading power of economy. The development of history was completely in accordance with the conclusion of Mr. Wu’s research.
New opinions about consumption
The book puts forwards many new opinions, concepts and thoughts about consumption, such as the structure of the consumption chain, the structure of the value chain, the law of value of consumption, the contribution of the nature of consumption, the investment nature of consumption, consumption as a force for expanding reproduction, and consumption as the direction of the money vote for consumers. These creative opinions not only help readers to recognize the value of consumption, but also broaden our horizons from a macro-economic perspective. Mr. Wu suggests that consumption is both the starting point and the end point of production.
Consumption–production–distribution–exchange–consumption is not only an operating law but also a logic course. Consumption is the motivation of production, but the production process also involves consumption. Production not only creates consumption products but also continuously creates new needs of consumption and patterns. These academic thoughts can give new inspiration for research about consumption.
Rational analysis of theories on consumption
The book does not copy theories about consumption at all times and all over the world, but rationally analyzes and critically absorbs these theories. The book profoundly analyzes consumption level theories of Confucius, the inaction consumption theory of Taoism, and the extravagant consumption of Guan Tzu. Although they are old problems, they make us feel new and fresh. For instance, for the consumption thinking of Lao Tzu and Taoism, the author considers that Lao Tzu and Taoism promoted inaction consumption that advocated being content with one’s lot and taking things as they come. It denied the enjoyment of consumption and restrained people’s consumption desires. Lao Tzu and Taoism demanded no desire in the mind, and being content with one’s lot to restrain people’s continuous needs of consumption. The author much admires the consumption thinking of Guan Tzu, including his extravagant consumption ideas. Guan Tzu had opinions about both abstention consumption and extravagant consumption. The principle of abstention consumption was a generally applicable foundation principle. The opinion of extravagant consumption was proposed in particular conditions to stimulate social production, which should be affirmed and admired. Mr. Wu thinks abstention consumption and extravagant consumption are the unification of realistic stability and social development.
In addition, the author brilliantly analyzes Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations, Keynes’s The General Theory of Employment, Interest and Money, and Samuelson’s Economics, admiration, criticizing, abandoning and adopting them. The book provides a systematic account on consumption thinking in Marx’s Capital. In Capital, there is no particular part about consumption, but many chapters have discussions about it. It is estimable for the author to connect with other works of Marx to draw a conclusion on Marx’s consumption thinking. The author makes a relatively systematic generalization on Deng Xiaoping’s consumption thinking including the strategic target of consumption, the strategic emphasis of consumption, and specific consumption policies. It not only makes us feel not only that the author has a profound theoretic basis, but also that Consumption and Management has been established on a solid theoretical basis.
Concluding remarks
Publication of Consumption and Management has external as well as internal motivations. In the macro view, it grew during the period of the economic reform and reflects the acclimated historical trend of reform. In a micro view, it is the result of Mr. Wu’s elaborative research and continuous thoughts. The book derives essences of excellent scholarship from forefathers and the West. It develops through combining the economic thoughts of Marx and Deng Xiaoping and the author’s practice. The book builds on reasonable factors of excellent traditional economic theories and explores, discusses, and concludes new economic theories from economic practices in new situations, which include new breakthroughs, opinions, and thinking modes. Great practice is produced by great theory. Today’s achievement of Sanzhu benefits greatly from Mr. Wu’s consumption theory.
Overall, it can be seen that Consumption and Management has been created through theory and practice. The author has worked in state-owned enterprises for more than 30 years, so he has abundant practice and experience with a planned economy and private economy nearly 30 years after the economic reform and openness. Things written on this basis are not only rich in substance but also have many unique opinions on comparative research. Mr. Wu has been an executive committee member of the National Business Association, vice director of China’s Private Technical Industrialist Association, Shandong PPCC member, Jinan standing PPCC member, chairman of Shandong Private Economy Labor Union, and vice chairman of Jinan Business Union. These roles have offered him the opportunity to have contact with the decision-making administration of the country, which provides more bases in the macro view for his research.
As a part of his study, Mr. Wu’s theory reflects an individual view, with many questions that need further research. As an individual view, if it can suggest research methods for everybody, it will contribute to the development of theories. In the scientific research field, there is no single person who can exhaust a truth or complete an entire theoretic system; they can only blaze a way in researching and exploring truth.
During my communication with Mr. Wu, I have come to admire his unremitting will deeply. Although he is nearly 70 years old, he leaves no stone unturned and finds every opportunity to continue his research diligently, as he deals with multifarious affairs. I expect that this book can be recognized and valued by elites from governments, enterprises, and academia after being published. Nowadays, the publication industry is flourishing and publishes thousands of books every year, but good books are scarce.
As an experienced economic theoretical researcher, I can say that Consumption and Management is a good book that is worth reading.
Professor Dai
Professor Yuanchen Dai was born in 1926. He is an honored academician of the Chinese Academy of Social Sciences, professor and researcher at the Economic Institute of the Chinese Academy of Social Sciences, as well as a famous economist. He was the eighth national committee member of CPPCC, committee member of Taikangaoqiao Sodality of CPPCC, special adviser of National Federation of Industry and Commerce, decision-making consultant of Municipal Party Committee of Beijing, expert consultant of Beijing Municipal Government. Professor Yuanchen Dai mainly engages in theoretic research of macro-economic management and Chinese economic system reform. He has written more than ten books such as Socialist Macroeconomics, New Theory of Chinese Economy, Non-loose Reality and Loose Realization-Macroeconomic Management under Dual Systems, Exploration of Chinese Price Problem, and Researches on Chinese Economic System Reform Modes, Chinese Labor Market Cultivation and Wage Reform, and From Closed Economy to Opening Economy, and hundreds of papers.