Chu Văn Cấp
Prof, Dr, former Director of Institute for Political Economy,
Hồ Chí Minh National Academy of Politics
One of the important directions of the 12th Congress of the Communist Party of Vietnam is “Continuing to grasp thoroughly and deal successfully with major relations, including the relation “between abiding market regulations and ensuring a socialist orientation.
The process of perceiving and implementing the relationship between the market economy and socialism
Process of perception
The 12th Congress of the Communist Party of Vietnam (in 2001) officially defined the overall economic model in the transitional period towards socialism in Vietnam as being a “socialist-oriented market economy” and confirmed that Vietnam is categorically shifting towards a market economy. The option of a socialist-oriented market economy model in Vietnam is inevitable as the market economy is a dominant global international model and it’s impossible to return to the centrally planned, bureaucratic, and subsidized economic model.
The 10th and 11th Congresses of the Communist Party of Vietnam were fully aware of the nature, connotations, structure, and modes of operation of the socialist market economy. The 11th Congress defined that the socialist model of the market economy is a multi-sectoral commodity-economy operating in accordance with market mechanisms under State management and the Party leadership. It operates in accordance with market rules and is directed and dominated by the principles and nature of socialism. So, it can be said that Vietnam’s market economy contains some of the common characteristics and rules of the market economy with specific characteristics of socialism. A socialist-oriented market economy consists of 2 factors: that of the market economy and the other of the socialist-oriented society, with the market economy factor being a “means” and “momentum” for the rapid and effective development of social production, with the socialist-oriented society factor playing the role of directing and institutionalizing the market economy’s operation to realize set targets.
The definition of Vietnam’s overall economic model as a socialist-oriented market economy means that the relationship between market economy and socialist principles becomes a core content of the perception of reform in Vietnam over the past 20 years, and in the years to come.
The 10th and 11th Congresses of the Communist Party of Vietnam defined a system of viewpoints on the socialist market economy and the characteristics of its socialist orientation, reflected in the content of socialist orientation(2); 8 characteristics of the socialist model Vietnam have been constructed, the 8 basic directions of the path to socialism and 8 major relations that need to be addressed during the process of advancement towards socialism(3).
Evaluating the significance of the viewpoints and 8 major relations, a summary report on several theory and practice issues over 30 years of renewal said: “The definition of the 8 major relations marks a new step forward in the Vietnamese Communist Party’s thoughts on socialism and socialist construction in Vietnam. Successfully dealing with the 8 major relations provides the condition and means to ensure the realization of the reform goals and to reap the achievements of the socialist-oriented reforms”(4).
Realizing the relationship
After 30 years of renewal, Vietnam has basically shifted from a centrally-planned, subsidized economy to a socialist-oriented market economy. Vietnam has achieved positive and great results in both theory and practice in its development. The development of the socialist-oriented market economy has been a fundamental factor in bringing Vietnam out of crisis, poverty, and least-developed country status to become a middle income country with the people’s living standards raised remarkably, along with socio-political stability, and the enhancement of Vietnam’s global position.
However, during the process of developing a socialist market economy, there remain problems in viewpoints, perceptions, and the mechanisms for dealing with the relationship between a market economy and socialist orientations, as follows:
First, the nature and connotation of the relationship between the market economy and the socialist direction has not been clarified. The draft political report submitted to the 12th Party Congress said that: “The perception of a socialist-oriented market economy has not been clear enough, particularly in relation to the state economy, state enterprises, collective businesses, and so on…”
According to the 11th Party Congress, the Vietnamese socialist-oriented market economy is a multi-sectoral commodity economy operating in accordance with market mechanisms under State management and the Party leadership. This form of a market economy operates in accordance with market rules and is directed and dominated by the principles and nature of socialism. Such an interpretation has led to misunderstandings about the current model being a “physical combination” of the market economy adhering to socialist orientation, or that socialist orientation is a “cover” for the market economy. In addition, an economy which is impacted by two conflicting rules can hardly create the necessary momentum for socio-economic development, or even create obstacles to development.
Second, the recent renewal process has sometimes put a strong emphasis on socialist orientations, downplayed the rules and nature of the market economy and vice versa. This has led to the following situations:
– “The market economic mechanism in Vietnam is being slowly finalized,” “The implementation of the socialist-oriented market economy is limited,” regulations on market participation and withdrawal are not fully respected; the investment and business environment is not really a level paying field for competition. The prices of some essential goods and services are not in accordance with market rules, while the level of market development remains low without a unified mode of operation. The State’s direct intervention is huge, the subsidy and ask-give mechanism remains in construction and policy implementation(5).
– The factors of socialist orientation initiated by the 8th and the 10th Party Congresses are basically associated with state ownership, collective ownership, the state economy playing a leading role, the state economy and collective economy have become the foundations of the national economy and associated with settling the relationship between economic growth and the execution of social advancement and fairness. “But perception of the role and position of the state economy, state enterprises, collective economy, cooperative economy, and private economy, as well as the mechanism of public service provision and prices in the health and education services are different and unclear.”(6)
The 12th Party Congress said: “Factors that ensure the socialist orientation of the market economy have not been paid due attention.”(7) Most notably, several state economic groups and state enterprises are making losses, provoking social anger; policies and distribution are irrational; the people’s right to self-reliance is violated in some places and fields; the living conditions of many of the people remain difficult, the results of poverty reduction programs are unsustainable, with a high risk of poverty-levels rising again, and the development gap between residential areas and between population groups is growing.(8)
The reasons for these difficulties are: “The position, role, significance, and content of settling 8 relations have been fully and thoroughly perceived, but the details of the 8 relations, and the characteristics and popularity in perceiving theory and dealing with the reality of the 8 major relations have not been properly understood.”(9)
Guidelines for settling the relationship between abidance by market rules and ensuring socialist orientations in the years to come
- Continue to unify perceptions of the socialist-market economy
Perceptions of the socialist-oriented market economy were more clearly defined in the draft documents submitted to the 12th Party Congress. That is to say, “the economy operates fully and uniformly in accordance with the market economy, while ensuring the socialist orientation compatible with each period of national development. That is, the modern market economy integrating into the world under the management of the socialist State, governed by law and the leadership of the Communist Party of Vietnam, to achieve the goal of a “wealthy people, and a strong, democratic, fair, and civilized country.”(10)
It’s necessary to be adaptable in regard to the circumstances and development-level of the Vietnamese economy, while accessing the major elements of the modern market economy status. Our suggestions are as follows:
First, a full market economy eradicates subsidies and ask-give factors to create a healthy, equal, transparent, and favorable environment for all forms of businesses; it also strengthens facilitation and minimizes priorities to ensure a level playing field.
Second, the modern market economy is highly marketized. Marketization means that the market economy mechanism proves to be more effective than other economic mechanisms and also upholds its effectiveness, so that State intervention in the market economy should abide by market principles and respect the rules of the market economy.
Third, to successfully integrate into the world economy, Vietnam’s market economy should strive for a modern market on a par with those of developed countries, including prominent features such as:
1- The major trend of the modern world economy is in moving towards the formation of a knowledge economy, which is seen as ushering in a new development period in the history of humankind. It helps to clearly distinguish the role of knowledge in today’s production-economy as compared to previous times due to its fundamental characteristics. To develop a knowledge-based economy, State intervention in the economy should be based on knowledge and the State should treat the economy knowledgeably. To be able to use human knowledge, it’s necessary to knowing how to treat the “knowledge carriers”, namely the contingent of intellectuals both inside and outside Vietnam. 2- Building a state governed by law: under the current conditions and in all social regimes, “The rule of law” is cherished as an absolute principle for adjusting the behavior of social actors, including the state. Building a state governed by the law is an objective trend in state development. Such a state is not a “type” of state, but a mode of state-power organization, in which social actors (individual or organizations) cannot be beyond or outside the law, but must abide by the law. A state governed by law exists and develops from the evolutions of socio-economic relations within the market economy, ensuring the Communist Party’s leadership’s role and effectiveness.
In today’s Vietnam, the construction of a socialist State governed by the law of the people, by the people, and for the people is a prerequisite for realizing the socialist orientation in market economic development. Because only this political regime can ensure sustainable development, stability and social advancement, and promote the Communist Party leadership’s role and effectiveness.
Fourth, market economy and socialist orientation are not two different puzzles. The Socialist orientation is not a “cover” for a market economy but is integral to the goals and operations of a market economy. The socialist direction arises internally out the development process as follows:
First, Vietnam’s socialist-oriented market economy has advanced forms of production suitable for the development of the forces of production. The economy includes diverse forms of ownership and sectors, in which the state economy (including state resources and state businesses) plays a leading role.
Second, it upholds the people’s leading role in socio-economic development.
Third, the socialist orientation requires social advancement and fairness. It’s necessary to ensure economic growth, social advancement and fairness in every development policy, as economic growth runs in parallel with the development of social culture, healthcare, and education, while effectively settling the social problems that obstruct the goals of human development.
Fourth, the management of a socialist State governed by law persists. The State plays the role in directing and fine-tuning economic institutions, and creating a fair, transparent, and healthy environment for competition; the State’s resources and policies are used to guide and regulate the economy, boost production and business, and protect the environment.
Fifth, the Communist Party of Vietnam leads the market economy’s development towards the goal of a wealthy people and a strong, democratic, fair, and civilized country. The Communist Party’s leadership is a prerequisite for realizing the socialist orientation during the development of the market economy(11).
So, the key objective of Vietnam’s socialist-oriented market economy is sustainable development. It’s obvious that in Vietnam’s developmental guidelines, the concept of socialist orientation is practically significant only when it includes the “connotation” of sustainable development for the purposes of social advancement and the free and full development of every individual. As a result, a market economy and socialist orientation are not contradictory aspirations.
2- Fine-tuning mode of operation of the Vietnamese economy
Fine-tuning the mode of operation of the economy should quickly create free market competition, while retaining appropriate areas of State intervention, abides by and respects the principles of the market economy. Both of these aspects are described as tangible and intangible hands, which only are effective if used at the appropriate level and scale. It’s more common to drastically reduce direct State-intervention and strengthen the market economy’s regulations of production and business, where the market can regulate more effectively. The State should focus on its role of directing, accelerating, and making breakthroughs in prioritized sectors and areas, creating growth momentum and increasing a competitive edge for the entire economy. To this end, we suggest that the State concentrate on successfully carrying out the following actions: 1- Directing the socio-economic economy and the environment; 2- Ensuring a socio-economic infrastructure which is convenient, stable, effective, and developed to a modern standard; 3- Providing an institutional framework (mostly with regard to the legal system) which effectively manages and regulates the economy; 4- To undertake the above-mentioned role, the lever system for implementing development priorities should operate in accordance with market principles. Successfully implementing these activities means the State’s shift to a macro, indirect mode of management through law and economic measures, from direct management and deep intervention into micro activities through administrative orders.
(1) Ref: Draft documents submitted to the 12th Party Congress, section Political report (Documents used at provincial, district Party Congresses), April 2015
(2) Ref: Document of 11th Party Congress, National Politics-Truth Publishing House, Hanoi, 2011, p. 78
(3) Ref: Document of the 11th Party Congress, National Politics-Truth Publishing House, Hanoi, 2011, p. 70 – 73
(4) Summary report on theoretical-practical issues over 30 years of renewal (1986 – 2016), National Politics – Truth Publishing House, Hanoi, 2015, p. 175
(5), (6) Ref: Draft documents submitted to the 12th Party Congress, section Political report (Documents used at Party Congresses at grassroots levels), February, 2015
(7) Quoted documents of the 11th Party Congress, p. 166
(8) Ref: Quoted draft documents submitted to the 12th Party Congress, section Political report, February, 2015
(9) Quoted summery report on theoretical-practical issues over 30 years of renewal (1986 – 2016), P. 183-184
(10) Quoted draft documents submitted to the 12th Party Congress, p. 29
(11) Quoted draft documents submitted to the 12th Party Congress,p. 15-16