Correctly Handling the Relation of Accumulation to Consumption

The problem of the proper relation of accumulation to consumption is an important one in economic construction.

To deal with the problem of the proper relation of accumulation to consumption scientifically can not only ensure the smooth realization of social reproduction, promote the continuous development of social production, but also gradually improve people's standard of living. Therefore, we must establish the reasonable proportion of accumulation fund and consumption fund in national income according to the relationship between accumulation and consumption in national economy. Accumulation fund is mainly used to expand reproduction, consumption fund is directly used to meet the needs of individuals and society.

In his speech “On the Correct Handling of Contradictions among the People” on February 27, 1957, Mao Zedong pointed out that the problem of the proper relation of accumulation to consumption within each of the two sectors of the socialist economy, the one where the means of production are owned by the whole people and the other where the means of production are owned by the collective, are complicated problems for which it is not easy to work out a perfectly rational solution all at once. This requires that every year our country draws up an economic plan in order to establish a proper ratio between accumulation and consumption and achieve an equilibrium between production and needs.

Mao Zedong believed that production and life should be paid attention to at the same time, and the emphasis must be placed on the development of the productive forces. For the long-term interests of the people, the state and the cooperatives must keep proper accumulation and make it increase year by year with the development of productive forces. However, only increasing accumulation and neglecting raising consumption level will damage people's enthusiasm for production and social stability. Therefore, he pointed out: "Accumulation is essential for both the state and the co-operative, but in neither case should it be excessive.” We “must take the interests of the state, the collective and the individual into account.”

On the basis of the growth of production, we must make the personal income of the people increase year by year and their life gradually improve, we must pay attention to the construction of municipal administration and service facilities while carrying out production and construction, and we must pay attention to the improvement of social consumption and social collective welfare.

In a word, "it can not only ensure the key construction, but also take care of the people's living needs", and this is the principle we must adhere to in implementing the policy of overall consideration, correctly handling the relationship between accumulation and consumption, and correctly handling the relationship between the state, the collective and the individual.