Socialist-Oriented Market Economy

The official term for the economic system that exists in Vietnam today is a “socialist-oriented market economy”. In order to understand what the ideological basis of the socialist-oriented market economy in Vietnam, one must first understand the concept of the primary and advanced stages of socialism. The primary stage of socialism is distinguished by underdeveloped productive forces which prohibit the further development of socialism. In 1986, when the 6th Party Congress of the CPV initiated the Doi Moi economic reforms, the official party line described the current state of Vietnam as being in the primary stage of socialism, and in order to progress, that a temporary, market-oriented economy would have to exist in Vietnam in order to develop the productive forces. Economic reforms like this, which on the surface seem troubling or revisionist, but are not a new concept within Marxism-Leninism:

Inasmuch as we are as yet unable to pass directly from small production to socialism, some capitalism is inevitable as the elemental product of small production and exchange; so that we must utilise capitalism (particularly by directing it into the channels of state capitalism) as the intermediary link between small production and socialism, as a means, a path, and a method of increasing the productive forces. Lenin, 1921

VietinBank is one of four banks owned by the Vietnamese state.

To put it simple, Vietnam had to adopt elements of market capitalism in order to build the necessary economic infrastructure to advance Vietnam’s capability to produce wealth/capital. The Communist Party of Vietnam, does this through allowing markets to exist in Vietnam, under strict state supervision or through state owned enterprises (SOE’s) in certain key industries such as telecommunications, energy, and banking (currently there are approximately 2,000 SOE’s where the state controls a majority interest, and 781 SOE’s where the state controls 100 percent. However, Vietnam does not publish a full list of SOE’s).

The socialist-oriented market economy allows private capital to flourish only to the degree in which it positively contributes to the economic development of the whole country and serves the greater class interests of the working class. Within this system, the vast majority of businesses and companies are not independent of the government and are instead dominated by the workers state.

It is also worth mentioning that, Vietnam is currently building a universal healthcare system. At the end of 2014, approximately 71.6% of the population had health insurance. Currently, the Vietnamese government subsidizes 80% of hospital fees for the poor and near-poor, as well as 100% for poor people and ethnic minorities living in disadvantaged areas, and 30% for workers who have average living conditions. The Vietnamese capitalist class does not receive government subsidies for healthcare.

Health Indicators in Vietnam and China (PRC) over a 20 year period.

Some other points to consider are that there is a system of price-controls in place for certain products and services such as medicine,milk, rice, formula, and airline tickets, and perhaps most importantly, all land is collectively owned and managed by the Vietnamese state. If an individual wishes to “purchase” land from the state, they are only able to lease it. Property rights in Vietnam are considered some of the poorest by capitalists standards, with right-wing groups such as the Heritage Foundation classifying Vietnam as “mostly unfree” in terms of economic freedom.

Price controls have also remained a powerful force in the Vietnamese economy, especially in the area of agriculture, particularly rice production. In a country where 75% of the daily caloric intake comes from rice, price controls on the rice industry remain essential to providing equitable access to rice and other goods. The role of price controls in Vietnam has also taken a different path from other socialist leaning states such as Venezuela. For example, the Vietnamese state has set price controls on the sale of rice within Vietnam at below global market values, however, the export price of rice is not controlled only the quantity of rice being exported is. This has remarkably resulted in a market equilibrium for the sale of rice in and from Vietnam, and as such, Vietnam has not experienced the shortages that other market economies often experience due to price controls (see Venezuela). In this circumstance, we can see how the Vietnamese government has centrally planned and regulated the market economy, while retaining the benefits of the market and avoiding its disadvantages.

Through the introduction of markets into Vietnam, economic inequalities inevitably emerged, as such, the gap between the rich and the poor in Vietnam is substantial. This contradiction within the socialist-oriented market economy is significant, and Marxists should acknowledge this and criticize it, however, it is also important to recognize that many of the Doi Moi reforms were enacted out of economic necessity in order for the survival of socialism in Vietnam. The Doi Moi reforms were also able to dramatically decrease poverty in Vietnam by more than 40% within a period of ten years, and today, the poverty rate in Vietnam is an estimated 8.4% with an unemployment rate of 2.2%.