Vietnam: How 'state capitalism' misleads Australian socialists

By Allen Myers

In the current international economic crisis, we can expect both attacks on the living standards of workers in the imperialist West and increased economic exploitation of the countries of the Third World by the imperialist powers, as the richest of the capitalists try to solve their problems at working peoples’ expense. A fight-back needs to be waged in both areas. In particular, it is necessary for socialists in the West to provide whatever support we can to those in the Third World who are resisting imperialist exploitation.

To do this properly, it’s obviously necessary to understand what is going on — who are the forces defending the exploited and oppressed and who are the handmaidens of imperialism. The Revolutionary Socialist Party believes that the Socialist Republic of Vietnam is a state that defends the interests of the workers and peasants. It was created by a vast and powerful revolutionary movement stretching over decades, and its leadership, the Communist Party of Vietnam (CPV), continues to be a party from which revolutionary socialists in other countries can learn much.

There is another view on this, however. In Australia, the organisation Socialist Alternative (SAlt) believes that there are no states or governments in the world today that defend the interests of the workers, peasants and poor. To SAlt, they all represent capitalists of one sort or another, either ordinary capitalists or “state capitalists”, and the differences between them don’t matter very much. So when Socialist Alternative’s magazine of the same name published an article last month by Josh Lees titled, “Is Vietnam socialist?”, it didn’t require rocket science to work out that the answer would be “No”. But despite the predictable answer, or maybe because of it, it is worthwhile examining Lees’ article in a little detail. It is necessary above all because Lees tries to justify his position with slanders and misrepresentations about Vietnam and its history, and these need to be corrected.

‘Capitalist excesses’

Lees’ article begins with the assertion: “Vietnam today is a country characterised by all the excesses of capitalism. Its market-based economy, dominated by private industry, foreign investment, stock markets and the profit motive is enough to make any neoliberal proud.” So Vietnam is “characterised by all the excesses of capitalism”? Surely the excesses of capitalism would include:

  • gross conspicuous overconsumption by multi-billionaires;
  • multi-million-dollar bonuses for bankers who lose billions;
  • widespread Ponzi schemes that deprive workers of what they need to live in old age;
  • participation in military alliances or invasions to enforce capitalist “order” in other countries;
  • multi-billion-dollar companies going bankrupt because they didn’t bother to notice what was wanted on the market;
  • and, tens of thousands of people in a country’s largest city being homeless even though they have regular jobs.

That is just a quick list, but I’m sure readers can think of other capitalist excesses that have little or no occurrence in Vietnam. But according to Lees, all of them, no matter how grotesque, are not merely present in, but “characterise” Vietnam. The only possible conclusion is: Josh Lees knows nothing about Vietnam, and is trying to hide his ignorance with rhetoric.

Take his description of the “domination” of the Vietnamese economy by foreign investment. According to the US State Department website’s March 2009 Vietnam update, foreign investment was US$8-11 billion in 2008. A Vietnamese government website reports that foreign investment was 13.1% of the total investment capital in 1990, 32.3% in 1995, 18.6% in 2000, 14.9% in 2005 and a bit over 16% in 2007.

As for Vietnamese private corporate sector “domination” of the economy, in 2001 its investments represented only 4.4% of total investment. Again according to the US State Department, “the state share of GDP has remained relatively constant since 2000, at 36%-40%”. Small family businesses, mainly in agriculture and commerce, accounted for most of the rest.

What about the stock market? A handy measure of its importance to an economy is the total capitalisation of listed firms compared to the economy’s GDP. For example, the capitalisation of companies listed on Australian stock markets is around 80% of GDP. In the United States, where the stock market has an even larger role, total capitalisation in 2008 was around US$17 trillion, considerably over 100% of GDP, which was US$14.26 trillion.

In Vietnam, a stock market was set up only in 2000. By the end of 2006, it listed 56 stocks, with a total capitalisation of US$3.5 billion. I have not been able to find detailed information for subsequent years, except that in the first half of 2008, US$300 million in capitalisation was added. If we assume the same rate of increase throughout 2007 and 2008, that would bring the total capitalisation at the end of 2008 to around US$4.7 billion — a bit over 5% of Vietnam’s US$90 billion GDP.

Socialism and underdevelopment

To avoid misunderstanding, it is necessary to be aware that the term “socialist” is commonly used by Marxists in several different ways. As used by Marx and Engels themselves, it referred to a society which would be economically more productive than the most advanced capitalist countries, because it would be brought about by socialist revolutions in the developed capitalist countries, and would then advance by doing away with the myriad contradictions of capitalism. In that sense, there are not yet any socialist countries in the world and there won’t be until revolution has occurred on an international, rather than merely national, level.

But socialist revolutions have taken place in capitalistically underdeveloped countries, and it long ago became sensible and common to refer to as “socialist” those states that had resulted from these revolutions, revolutions that had ended the domination of capitalist employers and which sought to develop their economies with as little capitalist involvement as possible. These states were socialist because they defended the property forms that will be necessary in the construction of a socialist society.

But in an underdeveloped country such as Vietnam, the tasks of a revolutionary working people’s government involve creating the means of production as much as or more than expropriating them from capitalists. Before the collapse of the Soviet Union, socialist governments in the Third World could usually count on a certain amount of (not always disinterested) Soviet assistance to begin overcoming economic underdevelopment. No longer having that option, such governments now necessarily seek access to modern technology through foreign capitalist investment.

This involves dangers and some degree of “normal” capitalist exploitation of working people, and yes, capitalist investors will be motivated by profit. But there is no other way to quickly begin raising living standards and developing economically. Lees seems blissfully unaware of such realities. He even appears to imagine that a socialist government in an underdeveloped country has no need to engage in international trade: one of his condemnations of the Vietnamese government is that it joined the World Trade Organisation.


Lees does acknowledge that Vietnam was under foreign occupation in World War II and that it was “devastated” by the subsequent 30 years of war waged by French and then US imperialism. But if he knows of any post-1975 challenges facing the country and its government, he doesn’t mention them — not the Chinese invasion attempt of February 1979, not the decade-long war with the Khmer Rouge in Cambodia, not the 1979-91 US-led international trade embargo, not the loss of Vietnam’s major trading partners when the East European and Soviet regimes collapsed in 1989-91, not the 104,000 people killed since 1975 by unexploded US ordnance, not the millions of people affected by Agent Orange, not the 9% of the population who have physical disabilities. He doesn’t mention that, by 1990, this history had reduced the country’s per capita GDP to US$78 and that the rural poverty level was 70%.

Rather than burden his readers with such details and what the Vietnamese government has or hasn’t done to overcome them, Lees declares that Vietnam is simply a “hell-hole” and “shit” — terms that he seems to think are economic categories. Therefore, let’s take a brief look at some real economic and social indicators. Some of the figures below come from an article by Michael Karadjis, “Socialism and the market — China and Vietnam compared”, which appeared in issue 27 of Links magazine, in 2005. This means that those figures are a little bit dated, but that is not a real problem since Lees argues that Vietnam has always been a “capitalist hell-hole”.

For a start, that 70% level of rural poverty had been reduced to 28% by 2002. According to the World Bank, 58% of all Vietnamese lived in poverty in 1993; by 2006, this had declined to 16%. Per capita GDP in 2008 had risen to $1024. Of course, per capita GDP is an average, and averages may hide great inequalities. Lees asserts that there is “high inequality” in Vietnam, but provides no evidence. The evidence that exists contradicts him.

Economists normally measure income inequality by a figure called the Gini coefficient, in which a figure of 0 represents perfect equality and a figure of 100 complete inequality; thus the higher the Gini coefficient, the greater the inequality. Vietnam’s economic growth has been accompanied by a small increase of income inequality, from a Gini coefficient of 34 in 1993 to 37 today. For comparison, India has an almost identical figure, 36.8. Indonesia has less inequality at a Gini of 34.3, while Thailand (42) and China (47) have more. Outside the region, Mexico’s Gini coefficient is 46.1 and Brazil’s 49.3. The United States went from a Gini of 34.4 in the mid-1990s to around 43 at present.

Vietnam also does better on a range of indicators than countries at comparable or even higher levels of per capita GDP. According to the UN, Vietnam’s life expectancy is 74.2 years, its literacy rate is 90.3%, and its infant mortality rate is 19.5 per 1000 live births. These figures contrast sharply with those of countries with similar per capita GDP, examples being India (64.7 year life expectancy, 61.0% literacy, 55.0 infant deaths per 1000 live births), Pakistan (65.5, 49.9, 67.5), Nigeria (46.9, 69.1, 109.5) and Senegal (63.1, 39.3, 65.7).

Comparing Vietnam to countries with substantially higher per capita GDP in the article referred to above, Karadjis noted: “Vietnam … [has] 170 primary health clinics at the village level per million population, compared to only 32 in Indonesia, 63 in China and 141 in Thailand. There is a hospital bed for every 389 Vietnamese, compared to every 465 Chinese, 665 Thais, 910 Filipinos and 1743 Indonesians. By the late 1990s, nearly every one of Vietnam’s 10,000 communes had a primary school and a commune health centre.” Probably the only other Third World country that does so much for its people with so little economic resources is Cuba — which SAlt also regards as a “capitalist hell-hole”.

The ‘invisible’ revolution

Vietnam’s progress in the face of tremendous difficulties demonstrates the enormous creative power of a working-people’s revolution led by a committed revolutionary party. SAlt is unable to refer to these advances because it could not explain them; it doesn’t believe that there was a revolution in Vietnam. As Lees puts it, the anti-imperialist struggle led by the VCP was “fought for national independence alone, not for workers’ power and the abolition of classes”. (In the Communist Manifesto of 1848, Marx and Engels wrote that the first step in the working-class revolution was to make the working class the ruling class. But according to Lees, the first revolutionary step in an underdeveloped country occupied by imperialist armies is declared to be “the abolition of classes” — hence there is no longer a working class to be raised to the position of ruling class!)

In Lees’ telling, two things of significance happened in Vietnam in 1945: “Ho’s Vietminh began murdering the Vietnamese Trotskyists”; and “the colonial authorities returned to Vietnam to re-establish French rule”. But in the real world, as World War II drew towards its end, the Japanese  forces in Vietnam confiscated vast quantities of rice, creating a famine that killed some 2 million people. The CPV, operating through the Viet Minh (Vietnam Independence League), spent months preparing what became a massive insurrection. At the time, the Viet Minh regular armed forces numbered less than 1000, and perhaps only a few hundred. But throughout 1945, Viet Minh committees took control of villages, then of county and provincial seats, then urban areas.

The Viet Minh mobilised the people to seize rice being hoarded by the French or Japanese or by Vietnamese landowners. The period from March to August was one of increasingly generalised partial insurrection. When news of the Japanese surrender was received, the Viet Minh issued a call for a general insurrection on August 13. The huge size of the mobilisation discouraged reactionary resistance. Hanoi was seized on August 19 by a mass demonstration; the only gunfire was three revolver shots to salute the Viet Minh flag. Huge demonstrations likewise overthrew the Japanese puppet “provisional government” in Hue, Danang and Saigon.

These events don’t get a mention in Lees’ account. Why not? Because they don’t fit SAlt’s theories. Ho Chi Minh, you see, was a Stalinist, and Stalinists don’t organise revolutionary uprisings. For his view of Ho, Lees supplies three bits of evidence: Ho visited Moscow in 1924 (for a congress of the Communist International, though Lees doesn’t say so); Ho “never rais[ed] any criticism of Stalin’s policy”; and in 1939 he made anti-Trotskyist comments in a report to the Comintern. With this sort of trivia, Lees converts Stalinism into nothing more than wrong ideas: if Joe Stalin convinces you of some mistaken ideas about Marxism, then you’re a Stalinist. But Stalinism was above all the embodiment of a material reality: a bureaucratic layer parasitic on the Soviet state. To justify its rule, this bureaucratic caste pushed the anti-Marxist nationalist-reformist theory of “socialism in one country”.

SAlt wants us to believe it was even more than that — that the privileged Soviet state officials consistuted a new capitalist class that had become the ruling class in the Soviet Union. Presumably it took something more than a failure to criticise Stalin’s policies to gain admission to this ruling class — otherwise just about everyone outside the Gulag would have been part of the Soviet “state capitalist” ruling class. So how did the Soviet Stalinists make Ho into one of their own? Did they issue him shares in the Soviet Union? Even on the basis that one is a Stalinist simply on the basis of Stalin’s nationalist-reformist theory, Lees presents no evidence that Ho adhered, either in theory or practice, to a reformist conception of the road to socialism.

And what about the other members of the CPV? Lees doesn’t mention any members other than Ho, but quite a few of them did and do exist. Since these other CPV members didn’t visit Moscow in 1924, how did they all become incorporated into Vietnam’s “state capitalist” class? Moreover, it is not accurate to refer to the CPV as Stalinist even if we use that term in the correct sense of a hardened privileged bureaucratic layer. From the time the CPV was founded in 1930 all the way up to at least 1975, there were remarkably few opportunities for anyone opposing imperialism to acquire material privileges; membership in the VCP meant great personal danger, sacrifice and hard work, not an easier life.

Lees’ ill-informed distortions regarding Vietnam and its revolution, and his arrogant abuse of the Vietnamese revolutionaries, stem directly from his attempt to apply SAlt’s fallacious theory that Stalin’s regime was a form of state capitalism. Seeing where this theory leads ought to cause any serious member of SAlt to question it.

[Allen Myers is the assistant editor of Direct Action and a member of the Revolutionary Socialist Party.]