The rising proportion of the economy used for investment is one of the most central predictions of Marx’s Capital—or, as he terms it, the “rising organic composition of capital.” Such a rising proportion of investment in the economy was, less systematically, also predicted by Adam Smith, and by, for somewhat different reasons, by John Maynard Keynes.
An increase in the percentage of consumption in GDP will lead to a lower rate of growth of consumption, and therefore of living standards, and slower rate of GDP growth.
The importance of China’s economy is twofold. The first is the material scale of China’s economic achievement. The second is the conclusions that can be drawn for other countries—the “universalizable”, or not, character of China’s economic system.
Different national cultures have different starting points, and different ways of arriving at the truth, but the truth is objective. It may flow from the economics of Smith, or Marxism, or classical Chinese thought but it expresses objective reality.
China has a won clear victory in the first battle of the US “trade war”. But the U.S. will not abandon its economic struggle against China. This article analyses the forces that will determine the outcome of this “protracted” economic war.
Trump’s “tariff war” is an attempt to bring the entire world trading system under unilateral US control, removing any minimal element of multilateral negotiation from it.
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