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Wednesday, 26 October 2016 11:14
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Can the market economy work in harmony with a socialist orientation?

(LLCT) - One of the primary achievements of the Communist Party of Vietnam (CPV) during the Doi Moi (renovation process) was the development of a socialist-oriented market economy, considered the country’s general economic model during the transitional period towards a more socialist society.Vietnam’s Party and State consider the market economy a model that is capable of building the material infrastructure of socialism and achieving its objectives of a wealthy people, strong country, and an equitable, democratic and civilized society.

One of the primary achievements of the Communist Party of Vietnam (CPV) during the Doi Moi (renovation process) was the development of a socialist-oriented market economy, considered the country’s general economic model during the transitional period towards a more socialist society. However, suggestions have been made that the market economy system as applied in other industrialized countries cannot work in harmony with a socialist orientation. These arguments, though they appear logical, are wholly unfounded for the following reasons:

First, the CPV’s perspective of the current socialist-oriented market economy model is based on theoretical research, practical reviews and international experiences. In no way is the current economic model the result of a random, subjective, temporary, and sentimental decision. When the renovation began in 1986, the CPV took careful steps by first introducing the thesis of their plan to develop a multi-sector commodity economy with a socialist bent. It was not until the 7th CPV Congress in 1991 that the CPV defined the mechanisms of operating the multi-sector commodity market under the management of the State. At the 10th CPV Congress in 2001, the CPV officially considered the socialist-oriented market economy as a consistent and long-term policy. The CPV announced, “This will be our country’s general model throughout the transitional period towards socialism”(1). Furthermore, the market economy is not a distinctive product of capitalism but is in fact representative of human civilization. It was once thought, incorrectly, that the market economy model could only exist within a capitalist political system and even that “market economy” and “capitalism” were homogenous terms. During the renovation process, the CPV realized that one does not necessitate the other and announced that, “the market economy model best represents the products of human civilization. Its use in Vietnam thus far has persuasively proven that the market economy can be a tool for building socialism”(2).

In fact, Vietnam’s production forces have advanced unevenly and remain separated by gaps in levels of development. Besides the modern mechanical tools as of industrialized countries, rudimental tools are still being widely used in production. This staggered process of development requires a multi-sector economy operating under the mechanism of a single market, ensuring that each level of production forces is organized and managed respective to product distribution. This represents the law of correspondence between production relations and the level of development in production forces.

History has observed both positive and negative features of the market economy. Therefore, to promote the positive aspects of the economic model and limit its drawbacks, it is necessary to maintain an orientation that adheres to the foundations of socialist thought and has the goals of economic development and the improvement of citizens’ lives. Accordingly, the market economy initiated by the CPV is a socialist-oriented market economy.

Second, we understand that the market economy is a process of production, distribution, exchange, and consumption, which are all completed in the context of the single market and according to various economic rules. However, this does not mean that retailers and consumers are passive in the face of market regulations. Although rules cannot be arbitrarily eliminated or created, they can, through practical procedures, operate faster or in a different direction. If they are conscious of market mechanisms, participants in the market economy can work with mandated rules for their best interests and utilize these rules to serve their purposes in an efficient manner.

As an example, Germany has also applied the market economy model on a social-oriented platform. In their economic system the State guarantees economic freedom according to market rules, while attempting to reach social balance. Thus, Germany aims to develop their market economy within the framework of social equality, theorizing that consensus between the direction of the State in developing its market economy and the direction of the masses, of the society will create impetus for economic and social development. However, should the economy stray too far from its socialistic bent, economic growth may come at the cost of the social, spiritual, ethical, and humanistic values.

In regard to Vietnam’s Party and State, the 9th CPV Congress affirmed that, “The goal of the socialist-oriented market economy is to develop the country’s production forces, and in turn the economy, in order to build the necessary material and technological infrastructure for socialism and the enhancement of people’s lives”(3). At the 10th Congress, the CPV highlighted specific objectives of the economic model, which are: “wealthy people, strong country, and an equitable, democratic and civilized society; to liberate and consistently develop production forces and improve people’s livelihood by eradicating hunger and poverty, encouraging people to engage in lawful business practices, and providing means for poor people to gradually accumulate wealth”(4).

Therefore, Vietnam’s Party and State consider the market economy a model that is capable of building the material infrastructure of socialism and achieving its objectives of a wealthy people, strong country, and an equitable, democratic and civilized society. It can be said that this is the main difference between a socialist-oriented market economy as envisioned by the CPV and State and other types of market economies, such as Germany’s.

The people, Party and State of Vietnam share these objectives; there is consensus on the proper way to develop the economy. Thus, the only way forwards should be the socialist-oriented market economy, which is the most effective tool in achieving economic harmony between people and State.

Obviously, developing the market economy system while maintaining the socialist orientation simultaneously is a difficult task, one that requires consistency of direction in regard to the development and application of market rules. This consistency is key in harmonizing the objective rules of economics with the particular conditions of Vietnam’s production capacities and economy.

Third, the socialist orientation of the market should focus on maximizing the potential strengths of the system while minimizing its negative effects on the socio-economic development of the Vietnamese people. Therefore, a socialist orientation in the process of market development requires state management. However, state management must also follow market rules and its actions cannot be subjective or arbitrary. Consequently, the CPV requires the State to “manage the market economy with laws, strategies, plans, and policies, apply market mechanism, and implement various economic forms and methods of economy management in order to stimulate productivity, promote the positive aspects of the economy, limit the adverse side of the market system, and protect the interests of the Vietnamese people”(5). According to these statements, the State can only manage the market economy to achieve its goals of unleashed productivity, promotion of economic strengths, and the minimization of adverse reactions for participants in the market. This represents the socialist orientation of market development in Vietnam.

Fourth, the model does not determine its own social characteristics. These are dependent on the subjects of the economy, based on historical examples. Thus, the goal set for the tool will decide its characteristic and impacts on society, similar to wars classified as “just” or “unjust” according to their purpose. Just wars aim to protect national independence, protect the lives of the people, repel invaders, and liberate the country based on basic ethical values. Unjust wars maintain the goal of invasion or robbery in order to enslave or otherwise dominate another people group. Therefore, because the objectives of the market economy envisioned by the CPV and State aim to unleash productivity, build the material foundations of socialism, and to improve the lives of its people, we may call it a socialist-oriented market economy, completely separate from a capitalist system. In the midst of the scientific-technological revolution, capitalist countries reaped the rewards of their investment in capital, science, and technology, which created a new face for capitalism in the 21st century. In certain respects, the capitalist market economy has achieved its progressive goals in regard to productivity and the applications of its technology to the mechanism of its market. Nevertheless, the operators of the capitalist economy, CEOs, politicians, and bankers, have instigated many sufferings for their own people and the people of other countries such as war, poverty, social injustice, enslavement, oppression, and environmental destruction. These operators consider the maximization of profit as their primary objective, which dictates their economic and political actions. Therefore, while the people may seem better off than in previous forms of capitalism, in fact, they have gradually been neglected(6). Despite improvements in productivity, production technologies, management of economic mechanism, and progress of social regulation, the capitalist market economy is unable to settle the issue of social equity, especially regarding the distribution of social wealth.

The gap between the rich and the poor has increased and social polarization continues to cause problems. Thus, the CPV was not subjective when, in summing up 30 years of renovation, they confirmed, “Capitalism offers potential for development, but its inherent contradictions have become more intense. Economic, social, and political crises will continue to occur as a result of this model”(7).

Fifth, economic activities over 30 years of renovation offer convincing evidence that the market economy is a useful tool in building socialism and improving people’s lives. Many forms of ownership now exist, as well as diversified economic sectors, forms of businesses, and the particularly rapid growth of mixed joint-stock companies. State-owned businesses and collective businesses have become a strong foundation for the national economy and the private sector is providing momentum for the national economy. The market mechanisms in Vietnam are mainly based on efficiency and according to the level of capital contributions and other resources, which can be then redistributed into social security and social welfare. This relationship is appropriate to our country’s conditions, which both guarantees social equality and boosts economic growth. The State manages and regulates the market by implementing laws and policies, strategically using economic tools and necessary materials, within the principles of the market, to influence the economy. In spite of various limitations, such as unstable development, “our economic strength has increased: the country’s micro economics have been stable, inflation has been controlled, our economic growth has been maintained appropriately and is considered to be one of the fastest growing countries in the world”(8). Furthermore, the socialist-oriented market economy has made important contributions to sustainable poverty reduction and the promotion of lawful business practices.

Over the past 30 years, consistent socialist orientations of the market economy have fought against poverty. In fact, “The number of poor households has been reduced by 1.5 - 2% every year, while the poorest districts and communes have seen impoverished households drop by 4% annually according to poverty standards for each period of measurement. The percentage of total poor households fell from 58.1% in 1993 to 9.5% in 2011, 7.8% in 2013, and 5.8% - 6% in 2014”(9). Besides, “social security systems have been steadily improving. In 2014, 11 million citizens were covered by compulsory social insurance, 190 thousand were covered by voluntary social insurance, over 9 million were covered by unemployment insurance, and over 61 million were covered by health insurance throughout the country”(10). That being said, Vietnam’s market economy certainly has a number of limitations and shortcomings, understandable given its short history and compared to the 300-year development of capitalism in other countries. Vietnam continues to learn about proper management of market economy. However, recent achievements in economic growth, sustainable poverty reduction, and social security demonstrate the ability of the CPV and State to lead and control the market economy within the principles and nature of socialist theory. Vietnam can now completely understand and apply objective rules to the economy in order to build lasting institutions and ensure fast and sustainable development in the interests of the people and the nation as a whole.

Sixth, suggestions that the market economy cannot be harmonized with socialist orientations are rigid, conservative, or stagnant and deliberately ignore the reality of the current economic situation - in clear denial of renewed theoretical knowledge. In fact, these arguments purposely antagonize the perspectives of the CPV. Viewing the market economy model as a distinctive product of capitalism, and thus opposite of socialism, represents an outdated way of thinking, especially considering the economic achievements of Vietnam under the changes brought about by the socialist-oriented market economy. While acknowledging the value of the market economy system will help develop Vietnam and contribute to achieve the goal of a prosperous people, a strong country, and an equitable, democratic, and civilized society, rejecting its value as capitalist and anti-socialist is backwards and flies in the face of the people of Vietnam as well as the CPV.

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(1), (3), (5) CPV: 9th National CPV Congress document, National Political Publishing House, Hanoi, 2001, p.88, 86-87, 87-88.

(2) CPV: Document of 6th plenum of the 10th Party Central Committee, National Political Publishing House, Hanoi, 2008, p.139.

(4) CPV: Document of 10th National CPV Congress, National Political Publishing House, Hanoi, 2006, p.77.

(6) See:  Our time and the vitality of Marxism - Leninism, National Politics Publishing House, Hanoi, 2002, p.58; Renovation and development of socialist realism, Education Publishing House, Hanoi, 2003, p.190-191.

(7), (8), (9), (10) CPV: Summarized report on theoretical-practical issues over 30 years of renovation (1986-2016), National Political Publishing House, Hanoi, 2015, p.38, 72-73, 110, 112.

Assoc. Prof., Dr. Tran Van Phong

Institute of Philosophy

Ho Chi Minh National Academy of Politics 

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