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Research on the Tertiary Industry in Modern China: Theoretical Considerations on Service and Military Industries

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Study of the Tertiary Industry in Contemporary China: Theoretical Reflections on Service and Munitions Industries

Abstract This book is situated against the backdrop of the tertiary industry increasingly becoming a pillar of the global economy, specifically within the context of China’s vigorous development of this sector during its rapid economic expansion. By reviewing the historical development of the tertiary industry in developed nations, this work illustrates the historical fact that these nations only began developing their tertiary sectors after their primary and secondary industries had reached a considerable level of maturity. This raises a critical question for China: as a nation where the market economy was established relatively recently and where the primary and secondary industries have not yet been fully developed, does the excessive and artificial promotion of the tertiary industry benefit the sustainable development of the Chinese economy?

Utilizing the labor theory of value and reproduction theory from Marxist economics, this work analyzes and explains this issue in depth by clarifying the nature of the tertiary industry—specifically the service industry—and establishing a brand-new reproduction schema for the service sector. The conclusion reached is that the tertiary industry is primarily composed of services, and the majority of service activities do not create value. The development of the service sector must depend on the growth of the value-creating primary and secondary industries, just as the development of the fictitious economy must rely on the real economy. If the tertiary industry is developed blindly and excessively, divorced from the development of the primary and secondary industries, it will inevitably lead to economic bubbles and false prosperity, ultimately triggering economic crises and causing immense damage to the economy and society. In fact, the global economic crisis that broke out in 2008 has fully vindicated the arguments presented in this book.

Another important achievement of this book is the establishment of a reproduction schema for the munitions industry. The munitions industry possesses characteristics that are both similar to and distinct from the tertiary industry. They are similar in that their final products are consumed and cannot return to the process of social reproduction; they belong entirely to the process of consumption. They differ, however, in that munitions production belongs to the realm of production and is a process of value creation. Nevertheless, munitions production does not necessarily bring significant benefits to socio-economic life. Not only is it a dangerous force that destroys production and life, but its excessive development also creates latent side effects for socio-economic development beyond mere security risks.

The book emphasizes that heavy investment and continuous improvement in military technology represent a hidden tendency toward the expansion of munitions production, which carries significant potential risks. It points out that while China enhances its military strength, it must pay particular attention to the harm these risks may pose to future sustainable development. Simultaneously, it proposes that "military-to-civilian conversion" (军转民)—namely, the application of military technology to civilian production—is a superior strategic choice under current conditions where munitions production cannot be entirely abandoned.

With a strong sense of "problem consciousness" (问题意识) [1], this book focuses on the development of the service and munitions industries, which occupy an increasingly important position in the modern economy. In terms of theory, its primary contribution lies in the supplementation of reproduction theory within Marxist economics. This is achieved through innovative research into reproduction schemas—specifically, the creation of two entirely new schemas: one for the consumer service sector and one for the munitions sector. By linking these to China’s actual conditions for targeted realistic analysis, the book highlights issues China should heed regarding the service and munitions industries and suggests corresponding countermeasures. This enhances the persuasive power of the abstract theories of Marxist economics in their practical application.

Author Biography [...]

Table of Contents

Introductory Chapter

  1. The global expansion of the tertiary industry
  2. Research on the tertiary industry in theoretical circles

Part I: Developments Concerning Industrial Classification Chapter 1: On Industrial Classification

  1. The proposal of industrial classification (1) Fisher’s proposal of industrial classification (2) The Petty-Clark Law (3) Three other contemporary industrial classifications
  2. The practice of industrial classification in various countries (1) The United Nations International Standard Industrial Classification (ISIC) (2) The latest revision of the Japan Standard Industrial Classification (3) China’s industrial classification and its changes
  3. The significance and problems of industrial classification (1) Significance of industrial classification methods (2) Problems with industrial classification methods Conclusion

Chapter 2: On the Classification of the Tertiary Industry

  1. The initial division of the internal components of the tertiary industry
  2. Contemporary Japanese classification of the tertiary industry (1) Functional classification (2) Classification by comparative economic systems (3) Classification from the perspective of value theory and reproduction theory (4) Summary
  3. Classification of the tertiary industry in this thesis (1) Classification of the tertiary industry in this thesis (2) Re-reconfirming tertiary industry classifications in various countries Conclusion

Part II: Developments Concerning the Service Industry Chapter 3: The Definition of Services According to Marx’s Labor Theory of Value

  1. Productive labor theory of Petty, Quesnay, and Smith and the classical definition of services
  2. The definition of services based on Marx’s theory of productive labor (1) On Marx’s theory of productive labor (2) On Marx’s definition of services (3) Summary
  3. Developments and errors in the theory of services in modern economics (1) Developments in the theory of services in modern economics (2) Errors in the theory of services in modern economics
  4. A critique of the view that “Marx’s definition of services is outdated”

Chapter 4: The Japanese Service Industry Debate Based on Marx’s Labor Theory of Value

  1. The “Non-Production of Value by Service Labor” theory (Standard Theory) up to the 1960s (1) Perspectives based on the original definition of productive labor (2) Perspectives based on the capitalist formal definition of productive labor (3) Developments intended to overcome the one-sidedness of traditional views
  2. The “Production of Value by Service Labor” theory (Anti-Standard/Expansionist Theory) from the 1970s to 1980s (1) Differing views on the substance of services (2) Nobuo Iimori’s new developments
  3. New developments in the “Non-Production of Value by Service Labor” theory (Standard Theory) from the 1970s to 1980s (1) Views providing new reinforcement for the “Material Productive Labor Value Formation” theory (2) New views based on Marx’s two definitions (3) Clear grasping of services in accordance with Marx’s two definitions
  4. The “Service Labor/Labor-Power Value Formation” theory (The Third Theory) since the 1980s (1) Characteristics of the Third Theory (2) Main points of the Third Theory Conclusion

Chapter 5: The Chinese Service Industry Debate Based on Marx’s Labor Theory of Value

  1. Mid-to-late 1950s to mid-1960s: The period of exploratory inquiry
  2. Late 1970s to early 1990s: The period of adhering to the material productive labor theory of value
  3. Early 1990s to 2002: The period of emphasizing service value formation theory
  4. 2002 to present: The period of analysis and synthesis Conclusion

Chapter 6: Establishment of the Service Schema under Conditions of Simple Reproduction

  1. Positioning the service sector within the reproduction schema (1) Debates on the positioning of the service sector in the reproduction schema (2) Debates on the treatment of “production-related” versus “consumption-related” services (3) Debates on the replacement of material means of activity in the service sector (analogous to constant capital) (4) Debates on the treatment of the service-demanding subjects: the capitalist class and the working class (5) Summary
  2. Formation of the service reproduction schema (1) Formation of the simple service reproduction schema (2) Significance of establishing the service schema

Part III: Developments Concerning the Munitions Industry Related to Military Services Chapter 7: Positioning Munitions Production in Reproduction Theory

  1. Introducing the munitions production sector into reproduction theory (1) Marx’s definition of the division of the total social product (2) Characteristics of munitions production
  2. Positioning the munitions production sector (1) The anti-introduction theory (2) The third-department theory (3) The second-department theory
  3. On the value-bearing portion of munitions (1) Rosa Luxemburg’s view on the burden borne by the v (variable capital) portion (2) Mr. Yamada’s view on the burden borne by the m (surplus value) portion (3) Mr. Moriya’s view on the burden borne by both v and m

Chapter 8: Establishment of the Munitions Schema under Conditions of Simple Reproduction

  1. Establishment of the munitions reproduction schema (1) Marx’s basic schema (2) Moritaro Yamada’s munitions schema (3) The new munitions schema
  2. Significance of establishing the munitions schema (1) Conclusions drawn from the munitions schema (2) Errors in Keynesian assertions (3) Significance of establishing the munitions schema

Chapter 9: The Impact of Military-to-Civilian Conversion on Economic Development

  1. Analysis of munitions production conversion using the munitions schema
  2. Destruction of the economy by the expansion of munitions production in the modern era (1) Main causes of the US economic slowdown during the Cold War (2) The collapse of the Soviet Union due to the arms race
  3. Trends in global disarmament after the Cold War
  4. Conversion of munitions production to civilian production through disarmament (1) Practice of “military-to-civilian conversion” in the US (2) Attempts at “military-to-civilian conversion” in the Soviet Union

Chapter 10: Prospects for Munitions Production Conversion in China

  1. China’s shift from quantity to quality in munitions production (1) Changes in the positioning of munitions production (2) The shift from quantity to quality in munitions production
  2. Latent negative effects in the conversion (1) The essence of technological progress in munitions production based on the munitions schema (2) Characteristics of modern munitions production (3) The fallacy of nuclear deterrence theory
  3. Principles during conversion (1) Active promotion of scientific and technological progress (2) Utilization of military technology in civilian industries (3) Restrictions on investment in military technology Conclusion

Concluding Chapter

  1. Distinctions and connections between the service definitions of the three-sector industrial classification and Marx’s definition of services
  2. Comparison between consumption-related service industries and the munitions industry
  3. Prospects for China’s tertiary industry: Focusing on consumption-related and military services

References