Part-3 PROBLEM OF REALIZATION OF STATE CAPITALISM IN THE SOCIAL AND ECONOMIC DEVELOPMENT OF VIETNAM AND HOCHIMINH CITY IN PARTICULAR

CHAPTER  V

THE  NECESSITY  OF  REALIZATION  OF  STATE  CAPITALISM

IN  VIETNAM’S  ECONOMY   AT  PRESENT

1. Specifics of the course to build socialism and to develop the commodity economy with many modes of production and with market mechanism of socialist orientation in Vietnam


According to Marx and Lenin’s theory, any country passing to socialism from a highly developed capitalist economy does not need no intermediate stage. Material, technical, economical, organizational, ciltural and social conditions for this transition are already formed in a highly developed capitalist economy. Each time speaking about material conditions to form socialism, we usually mean heavy industry. Speaking so, we do not mistake, but it is not a complete understanding, it is too simplistic. The issue is not only in the presence of large-scale mechanized industry itself, but also in the complex of economic connections inside national economy which it creates. It means the organized and planned industrial production, related to government control, depended upon the state; it is the whole economic system, system of regulating instruments, economic organizations, for example, banks, national income distribution system, management mechanisms. I.e., all material and organizational institutes of modern economy. Material conditions for socialism are the set of all the above mentioned elements.
Speaking briefly: if you like to have socialism, you should have such key terms as: 1) modern material and technical base built on the newest achievements of modern science; 2) state organization carrying out the strategic planned management and regulation (without any bureaucratic centralism and donative supply); 3) working class including working intelligentsia which is the leading class, the representative of progressive productive forces.
After the victory of the people’s national democratic revolution directed by working class and labour people, in Vietnam there appeared some basic political conditions for development in the direction of socialism. However, at present, our country still is a small-peasant one, in fact. In our ocuntry up to 80 % of population lives and works in a rural economic sector, the density of rural population is exceptionally high (900 people on 1 square kilometre of agricultural land), and agricultural technics is outdated. Vietnam – one of the most poor countries of the world. Small-scale production with backward equipment is widely spread. (In Hochiminh city after almost 10 years of «open-door policy» only 10 % of enterprises are equipped with modern technique.) We have no any plan and unification in the organization and management of dispersed economy. Therefore, if the low level of development of productive forces at small-scale production does not allow us to widely apply the planned system of production, then the building of state capitalism in different forms is a correct step back of the new production relations, it is a step backward to a lower level of development of productive forces.
Our great patriot, the leader of the Party and of the people, the first who perceived and spread marxism-leninism in Vietnam, President Ho Chi Minh as early as during the war against French colonialists thought about application of Lenin’s theory about state capitalism for building socialism in our country after the victory in the Resistance War.
In 1949 already, President Ho Chi Minh appealed to foreign capital to invest  into Vietnam on principles of mutual benefit and equal rights, but not for suppression of Vietnam. In the interview of a foreign correspondent on Vietnam’s attitude to foreign capital after the achievement of independance, Ho Chi Minh said: «After  80 years of robbery and exploitation by French colonialists and some years of destruction and plunder by the French colonialists, independent Vietnam must aim all its force into building. Vietnam will sincerely welcome any country (including France) which sincerely wishes to bring an enterpreneural capital to Vietnam for the sake of mutual benefit. Any country (including France) which wishes to bring capital for robbery and exploitation will be rejected resolutely by Vietnam» [16,4-5].
In 1953, speaking about the economic modes of production in our country under new social system, Ho Chi Minh mentioned the existence of state capitalism with some some socialist c features. In May 1953, in the article for the “Cuu Quoc” newspaper (issue no.  2344 dated 25.5.1953) with heading «Economic modes of production in our country» President Ho Chi Minh clearly specified: «In economy of our country there presently exist the followings modes of production:
– feudal landlord economy exploiting rent;
– state economy of socialist character;
– consumer cooperatives and supply cooperatives of some socialist character;
– private economy of peasants and small-scale artisans, usually natural one; they have little to sell and also buy a little. It is a backward economy;
– private capitalist economy; capitalists exploit workers, but at the same time they also support the building of economy;
– state capitalist economy; the State unites its capital with private proprietors in enterprising under the guidance of the State. In such economy the private capital is a capitalism. The capital of the State is socialism” [18,346].
In September 1953, in the article under heading «New democracy» in a newspaper «Cuu Quoc» (issue no. 2418 dated 7.9.1953),  Ho Chi Minh pointed to 5 economic modes of production under the new system. He wrote:
«There are five different kinds of economy under the new democratic system: the state, co-operative, individual ones, private capitalist, state capitalist ones, but the state economy maintains its leading role.
The Party rules the working class and labour people in realization of new democracy and gradual movement toward socialism» [18,390].
The views of Ho Chi Minh on the application of Lenin’s theory of state capitalism have profound practical value. We can consider them now as a strategic course in the application of state capitalism at present. The VI congress of the Communist Party of Vietnam confirmed: «The transition process from a small-scale production to the large-scale production in our country is the transition from a mainly natural economy to the commodity economy. According to the plan, we manage our commodity economy with the specifics of transitional period. The complete and correct application of commodity-money relations in our planning of state economy is the objective necessity» [20].Our Party elaborated the concept of renovation: to create consistently the economics with many modes of production, to give space to any production possibility, to consider it as a long-term objective strategy of transition from a small production to socialism, to follow the democratic course in economy, to guarantee to everybody to work free in the lawful frames. Different forms of ownership on means of production have different essence, but in business activity they are inseparable, many forms interlace with each other. Private businesses sometimes unite into cooperatives or convert into different capitalist  economical forms for production development and economic efficiency grow.
The VII Party congress elaborated the model of transit to socialism: «Construction and development of commodity economy with many modes of production working according to market mechanism under the rule of socialist state which orients to socialism under the Party direction for the purpose: rich people, strong country, just and civilized society. On this stage, we should also reach capitalists in the modern science, technologies and management experience. Ho Chi Minh  underlined: «We must build a really new society with no analogues in the national history, we must resolutely change the way of living, habits, thinkings and prejudices that have deep roots for thousand years» [15,69].
The preliminary condition for fast growth and construction of modern socialist material and technical base, as the Party and Government consider, is industrialization and modernization of our country which includes reasonable structural strategy, fast and effective perception of front-rank technologies of the world. Plus a commodity economy with many modes of production, with market mechanism of socialist orientation, the total transfer of enterprises to accounting on the basis of planned commodity economy with many modes of production, oriented to socialism, the unification of domestic market and the close connection with world markets, the renovation and  «open-door» policy both inside our country and abroad, the following objective laws of commodity economy.
The state must renovate itself and increase the quality of macro-economic planning, to conduct inventory and control of economic activity. To form a public financial, credit, price, wages policy, stimulate business accounting. To elaborate economic legislation, to conduct an external economic policy, to strengthen exchange, trade relations and joint ventures in production. To pass and promulgate the law on foreign  investment, law on companies, law on stimulation of domestic investment, law on bankruptcy, on the land, etc.
This concept and policy of renovation in their essence are truly new. They coincide precisely to economy of transition to socialism. They differ with previous determinations. They also show state capitalism as a political and economical content of transitional period to socialism in our country. They indicate the means, forms, ways of its realization  in our economy and its connections with our other modes of production during transit to socialism.

2. Role of state capitalism  in our country presently


State capitalism is the road to socialism during transit period. Our economy now consists of small peasants, and the anarchism of small producers needs to have state capitalism for entering the orbit of socialism. The struggle and collaboration between the modes of production happens not between  state capitalism and socialism, but mainly between, on the one side,  private capitalist economy and small-scale economy and, on the other side,  state capitalism and socialism. Spontaneous petty-bourgeois and lust for bigger profit oppose any state inventory and control. Small speculation is widely widespread and grows. If state capitalist forms determine in economics, it will be good for working class and labour people, the State will overcome chaos in economics. We will lawfully conduct  inventory and control in economics through  state capitalism and will stop and push back the bribery and other negative phenomena, will simultaneously stimulate production, support employment and increase workers’ profits growth, help to solve social problems and improve natural environment in Vietnam. It will help to fight dogmatism, to push back donation-distributive bureaucratism, to build a dinamic economy, to quickly perceive  common trends of world progress.
Imporatnt point is that now we follow the strategic course to industrialization and modernization of our country. During the coming 10 years the investment demand will be up to 45-50 billions USD and it will grow to hundreds of billions of USD in future decades. Industrialization and modernization need new scientific achievements and new front-rank technologies. We must admit that contemporary capitalists achieved top-world technologies, they are able to maximum effectively use the scientific and technical revolutionary achievements, to make the world economics truly «global», to strengthen  interdependence between the states. The world is now in the situation of collaboration and fight, fight for the sake of collaboration. The international climate now welcomes Vietnam’s integration into the world economy. The integration into world market requires that we should pass to the market economy, that, should use state capitalism. In addition, the most of multinational companies of developed capitalist countries and of developing countries with relatively high level of capitalist development need to export their capital to low-developed countries. Therefore, to attact multinational and transnational companies from capitalist countries to serve the matter of industrialization, modernization and development of Vietnam, we must practice state capitalism for a  relatively long time. State capitalism  stimulates personal benefit as an engine of development. It is a powerful instrument mobilizing force of people and of capital, especially inside our country and from abroad.
State capitalism and its creative application in the conditions of our country is an objective demand and the following common laws of development.
However there are negative aspects too because market economy is complicated. Lenin said that it is war without tanks and cannons.
In the political report at the Extraordinary All-Vietnam Congress of the Communist Party after VII congress is mentioned: «We creatively apply marxism-leninism in our renovation, in particular the ideas of Lenin about new economic policy, about state capitalism in various forms according to real historical situation of our country which passes to socialism» [15,69].
This Party’s statement is extremely important as a confession that in fact in our policy of renovation and «open door» we creatively applied the theory of Lenin about new economic policy, about state capitalism, we guided our country out of crisis and pushed our development. This fact another time confirms not only theoretical but also the practical value of state capitalism  for the transition of country from a small-scale production to the large-scale socialistic production, for industrialization, modernization of country.
The world and domestic situation for application of state capitalism in our country is very much differed from that of Russia’s application of state capitalism:
1. The Russia implemented state capitalism in the conditions of imperialist blockade and isolation. The Vietnam, in spite of yet existent intrigues of hostile forces to blow up our economics, overcame all the hardships and broke through isolation and blocade, «opened doors» in economy and external relations with multiple directions and multiple forms. Now in the world there co-exist both fight and collaboration, integration, consent. For example, Vietnam is  already a member of ASEAN.
2. Russia applied state capitalism in the conditions of extremely devided society, furious class struggle, sharp opposition of political ideas, while in Vietnam presently, though  there still remain a lot opposing forces inside and outside the country, but mainly there is only one united leading Party rallying a course on unity and  solidarity of nation on a way to socialism.
3. Russia’s state economy potential on the whole was then yet weak, while in Vietnam, in spite of many shortcomings, but the state is able to play a leading role in economy, so the role of state capitalism is not so pervading, as in Russia at that time.
4. State capitalism in Vietnam presently can be used in more various and enriched forms, than in Russia before.
With Lenin’s study and ideas of Ho Chi Minh about state capitalism, the renovation and «open-doors» policy is a decisive factor of the victory in the socialist construction to attain rich people, a strong country, a just, democratic and civilized society, a free, happy man. It is the remarkable realisation of the sacred testament of Ho Chi Minh.

CHAPTER  VI

REAL SITUATION  IN  DEVELOPMENT  OF  THE STATE  CAPITALISM  IN  HOCHIMINH CITY


Total area of Hochiminh city is 2056 sq. km. With its «internal city» and near-by territories, it can be extended plus 947 sq. km; presently there are 18 city and rural districts; its population is 4.9 million people, including 2.4 million working people. It is the central, the main city of the South Vietnam provinces. In the north it borders the Tay Ninh province, in the east – the Dong Nai and Song Be provinces, westering – the Long An province and in the south opens to the sea. It is located between two – the Dong Nai and the Mekong – river systems, with three «river gates» opened from the sea upwards to the city, where large ports emerged – all this creates the conditions for converting Hochiminh city into a central city connecting the East-West provinces of South Vietnam.
It is a big city not only as compared to other cities of Vietnam but also to the cities of South-East Asia. Yet when a French colony, Saigon was named «a Pearl of Far East», it was one of big, developed and «magnificent» cities of South-East Asia. Saigon was also traditionally  the fastest of other regions in «opening doors» for market, for exchanges with the world. After Pho Hien (Hung Yen) in 1533 and in ХVI-ХVII centuries, after Hoi An in the middle of ХVIII century, Saigon emerges in the middle of ХVIII century and becomes an international trading center. In fact, it always has a living, creative tradition of choosing novelty, of constant renovating. From 1975 by now, the city always was in advance-guard of renovation, often “broke-through”, giving valuable practical lessons for the course of total renovation of our country [6].
The cost of gross domestic product (GDP) made in the city in present prices is up to 22826 billion dongs (1993), according to the prices of 1989 it is equal to 5953 billion dongs, that is equal to 3,1 billion USD (by calculation method of General statistic department). Per person, it equals to 679 USD, that is 2.5 times higher than per capita index of whole Vietnam (236 USD per person). As for economic sectors, in Hochiminh city, the industry and services contribute to GDP most of all, that corresponds to the development of other cities of the world. Sector I creates 30% of GDP, sector II – 42.6% of GDP [34].
Hochiminh city is the biggest hub of transport ways, post and telecommunications of Vietnam: you can contact different regions of our country and many countries of the world from here. On the river there is a complex of Saigon-Nhabe ports reachable for 20000 ton ships, the commercial port processes more than 8 million tons of goods per year. There is also the Dau (Oil) port pumping 50000 tons of oil daily. The system of railways and highways includes: the «North-South» railway, state highways, for example, State highway no.1 Hochiminh city-Hanoi, State highway no.13 «Hochiminh city-Tay Nguyen-Laos», State highway no. 22 « Hochiminh city-Cambodge». The international Tansonnhat airport located not far from the city center presently carries more than 1 million of passengers per year to more than 20 international destinations.
Education: the city has 48 institutes, colleges and specialized medium educational institutions with about 100000 local and other provinces’ students; about 15000-20000 graduates annually [30].

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Information is dated after the year 1997. Presently Hochiminh city has 5 new districts additionally (Thu Duc and districts 2, 7, 9 and 12). (The remark of the Publishing house, 2001).

1. Application of state capitalism in Hochiminh city before the VIth All-Vietnam party congress


Economic situation in the country before the VI All-Vietnam congress of the Communist Party of Vietnam: unchanged backward economic mechanisms, some new management mechanisms are still unsystematic, often not coordinated, even conflicting with each other. Bureaucratic centralization is still very heavy, a lot of disorganization and lack of discipline. There were some manifestations of hasty desire to liquidate immediately non-socialist modes of economy, to transform quickly private capitalist enterprises into state ones. Both in understanding and in practical work, we did not actually acknowledge yet that multi-modal structure of our country’s economy would exist for a relatively long time, we neither mastered nor correctly applied the law on corresponding the production relations’ character with the level of development of productive forces. Our economy was in crisis: permanent instability, galloping inflation, daily decline of life level, the sense of fatigue was clearly seen everywhere, both in officials as well as in workers more and more.
In such a situation, Hochiminh city was the first to make a «break through», the people practically applied state capitalism as transitional form of economy for combining the reform with the building of material and technical base of socialism.
On April 30th, 1975, when Saigon was liberated, the working class and labour people seized political power and  applied it immediately for reforming, building and reorganization of city’s economy for gradual movement to the socialism, after the country was re-united. Aiming to fulfill the guide-line to a large-scale total nationalization which is an important instrument to overthrow bourgeoisie in economic aspect and to form the socialist mode of economy in the future, to capture immediately the main means of production of the private capitalist economy, we nationalized 1071 industrial enterprise. We also nationalized all the enterprises lending direct services to them, that affected 3.987 big, middle and partly small-production bourgeois who owned these key industrial enterprises in Hochiminh city and the South Vietnam. These enterprises had relatively modern equipment and technologies, considerable production capacities, hundreds of thousands of high-professional technical specialists and managers. All the material and technical basis of these enterprises was transferred by the State into public ownership.
We also totally nationalized the system of financial commercial banks, that affected 11.044 families of compradore bourgeoisie, big tradesmen,  19.092 families of capitalist merchants and businessmen. They were the biggest businessmen, controlling all the capitalist economy and trade in the South of Vietnam. All  this material basis passed under state administration and became public entity in banking, trade and service. Some people had idea not to involve the bourgeoisie to work in these sectors, but to occupy them only in the production sphere [3].
All the pledged and owner-missing property, commodities and finance, mainly the system of warehouses and moorages, was confiscated or bought by the state to support production in the state sector. Almost all the objects of culture, medicine, hospitals, buildings to lease, etc. were nationalized and became  public property directly guided and used by the state. By the end of 1980, the city economy was formally mainly reformed and the production process was reorganized. We directly managed 70% of capitalist production enterprises which created more than 80% of gross product of the Hochiminh city. The ruling part of bourgeois class was overthrown in economic aspect, bourgeoisie on the whole was abolished as a class, working class and labour people got monopoly for political advantages, for basic material and technical means of production in the city. The creation of the state economic modes after the victory of socialist revolution on the basis of public property on the means of production by nationalization of capitalist production enterprises guaranteed  the keeping of major capital goods in the socialist state sector. Therefore just after its creation, the state sector of economy had key positions in national economy.
After the reunification of the country, socialist transformations in Hochiminh city were also made through forming mixed enterprises, consumption cooperatives, individual artisan and small-trade units (domestic economy) between  State and national bourgeoisie. The State Capitalism sector had two forms – the mixed state-private form and a capitalist cooperative form, they were based either on collective capitalist property of bourgeoisie, small bourgeois and small owners or on the joint-stock form of profit shares under control of the Socialist State. By the end of 1980, in Hochiminh city there were 150 mixed state-private enterprises consisting of 782 bourgeois economic units (families) and 5.146 small owners (operating in industry and transport), 2.615 cooperatives of different levels, general production cooperatives basing on collective capitalist ownership of bourgeoisie and small owners, exploiting wage labour to a certain extent. There was also a system of trade cooperatives of wards operating on the basis of “people buy shares-share profit” under local authorities’ control. They were necessary transit economic modes able to attract individual capitalists, small owners and labour people to develop production and business, fight against spontaneous elements, strengthen state economy.
By the end of 1981, the private capital in city has 848 enterprises with 11.734 workers in the industry. The situation in trade is the following: a part of bourgeois reformed their business, but some new bourgeois traders, a lot of trade mediators, tradesmen, tycoons still had considerable force, captured the delivery of almost all agricultural products from provinces to the Hochiminh city, different goods supplies were in the hands of certain clans. Almost all small trade was of private merchants (60-70%), including some private merchants of Chinese origin. The last have been in trade for a long time, have rich experience, considerable capital and connections with foreign capital, many of them work with capitalists on international markets.
As for small-scale production based on private ownship and individual labour of family, by the end of 1981, in Hochiminh city there were 21.431 individual enterprises with 60.463 artisans. Speaking about a artisan production, it is very difficult to distinguish small owners from small private capitalists. Small trade prosperes, quickly develops. Markets under the sky and straight on sidewalks are already hardly controlled and managed [1+3].

Economic situation in the end of 1980 on the  territory of Hochiminh city

The socialist economic mode (especially the “central” state sector guided by government) considerably decreased and was gradually losing its leading role over other economic modes. For example, the product cost of centre-managed industry  decreased in the general structure of city industry from 70% in 1976 to only 36,5% in 1980; many state enterprises ran the risk of being closed because of lack of raw materials, spare parts and other conditions. Only in 1980, 25 thousand workers of centre’s state enterprises and 3.000 workers of city’s state enterprises  gave up work. Labour productivity in the centre’s state sector was only a half of its 1976 level, and in a city’s state sector it just grew insignificantly.
At the same time, the product share of artisan sector grew very quickly from 22,5% in 1976 to 48,5% in 1980 in the structure of gross industry value, individual workers formed 57% of it. Labour productivity in artisan production grew 5 times as compared to 1976. In 1981 the number of enterprises increased to 8.000. Many private capitalist enterprises concentrated their activity in 7 industries: machine building – 337 enterprises; food processing – 160 enterprises; construction materials – 135 enterprises; chemistry and plastics – 51 enterprises, office commodities – 35 enterprises and other consumer goods – 27 enterprises. There were rather big with hundreds of workers, and also there were small enterprises but with high-quality equipment. There were people managing even 10 enterprises at once. This fast development of artisan sector showed the presence of goood economic conditions.
Prices jumped up to the unprecedented level. The state supplied only not more than 1/3 of daily necessery goods to workers and office workers, the rest they was supplied by free market. The state held considerable amounts of commodities, but because of not not enough good management a lot of goods deteriorated, some commodities were theft to sell profitably on free market. That time also a lot of products were made just for own consumption («self-made, self-consumed» – natural economy), the state owned only 40%-50% of production. There were pots of cash in the hands of private traders, while the state often had difficulties with cash in spite of high inflation and daily depreciation of money.
All this directly affected the life of people and party cadres daily and hourly [1+3].
All the above testifies the presence of 5 economic modes of production in Hochiminh city, it is objective reality both now and before now, it is a historical necessity. These modes’ existence had both conscious and spontaneous character.
This situation emerged for a number of reasons, namely:
At first, in the process of transformation of capitalist economy and trade in Saigon we mainly aimed into formal nationalization, socialization or collectivization of production. We did not pay enough attention to the most important transformation – i.e., practical socialization, concentration of all of our efforts on the search of the most appropriate forms of organization, links to capture the former economic structure aiming to further develop productive forces and to prepare conditions for development and gradual transformation of economy of Hochiminh city for functioning in the new economic structure. So, an old economic pattern was destroyed, but a new one was not created, that is why the state economy lacked a basis for solid existence. While the non-state economy gradually recovered, gained another time its former city-village market connections. These sectors had money, means of production, labour force with high technical level, they had market,  therefore production and business in this sector had sufficient conditions for revival.
Secondly, in theoretical understanding we opposed capitalism and socialism mechanically. Actually we did not create conditions for the best use of individual high-professional capitalists in development of economy and technologies, for them to help us to capture the former economic connections  aiming to develop production and business activity in Hochiminh city in the socialist direction. Work potential of high-professional specialists, «creams» of capitalist production and trade was not involved in a due measure.
Thirdly, financial potential (capital, material resources and technique) hidden inside the city is exceptionally great. We have not found a method to fully utillize this important material and financial force for production and business grow by now. While these potential possibilities in different ways are attracted into sector of capitalist production for production grow, for speculative capture of the market, for counteraction against socialism.
Fourthly, in the process of reforms and management level reorganization of the nationalized enterprises of city, we did not pay attention to development history of large-scale capitalist production, did not keep common     connections inside particular branches, inter-branches structure and in the scale of all city economy which is organically related to the economy of provinces of South Vietnam and to the market of all country. On the contrary: we splitted production processes and divided levels of management according to the principle: the Center (government) manages major business and production concerns, city authorities – medium ones and districts – small ones. As a result, big enterprises were often weakened and left with no conditions for proportional development.
Fifthly, in respect of method of management, we set the management mode which did not proper the economic specifics of Hochiminh city, insulated it from the provinces of South Vietnam, tore off production process from business activity, tore off socialist market from free market, etc. Such management system actually bound the chances of socialist economy to co-operate with other productive sectors and with market, that created conditions for capitalist economy to rapidly revive and to oppose socialist economy in all aspects (money, commodities, prices and others).
It is necessary to note that after liberation of South Vietnam our Party paid attention to state capitalism. But conceptually we considered it only as one of ordinary economic forms, in the line with distribution of contract works, goods purchases, participation in tenders, organization of groups for goods production and so on. In resolution № 254/NQ-TW of Politburo of CPV dated 15.7.1976 it is clearly indicated: «Except for key enterprises which are gradually transformed into mixed state-private enterprises, every branch of state economy must attact private enterprises into their management orbit applying such private capitalist forms as distribution of contract works, goods order, participation in tenders, also unite them into groups for goods production with state enterprises as their hub». At the same time, «the policy and actual steps in transforming private industry and trade are determined separatly for each industry, they coordinate with development of state enterprises, mixed state-private enterprises, other forms of private capitalism, also artisan units with the purpose of production development according to general economic plan. Industries should find and define private capitalist forms proper for each industry» [23].
Naturally, the narrow mind in understanding resulted into narrow mind in actions – we considered the mixed state-private enterprises as equal to the state ones, we underlined liquidation more than creation. That is why the application of Lenin’s theory on state capitalism not in conformity with its basic principles resulted into negative consequences – our country was led to an exceptionally serious socio-economic crisis.
After analysing situation for the passed 5 years (1976-1980), the 2nd Hochiminh City Party conference (1980) elaborated the following course: in multy-modal economy of transitional period the application of all the economic modes is quite correct. 3 main tasks were stated:
At first, to create the system of economic policy friendly to the different economic modes.
Secondly, to find the most effective forms of economy organization which correspond to transitional character of economic relations in our country, to the mutual relations between the economic modes, under the leading role of the state economic mode.
Thirdly, to combine correctly socialist reforms with the building of socialistic economy – optimally combine formal socialization and practical socialization [26].
The creation of large-scale industry able to transform agriculture into a united technacal and production structure, the formation of a new man – all this will need a long historical process, may be decades or longer. Therefore, the transitional stages, intermediate forms, appropriate for the public interests of specific economic modes of transitional period, are obligatory. The most reliable method for doing this transitional step is the state capitalism.
Hochiminh city authorities applied the  state capitalism with the following purposes:
– To make it an instrument of victory over scattered character, anarchy and disorganization of small production. To approach the liquidation of bureaucratic supply-distributive administrative mechanism.
– To fully utillize economic potential of capitalism, to attract investments inside our country and from abroad, to utillize modern technique and equipment, to create conditions for socialist industrialization.
– To guarantee production and life conditions for people.
– To transfer all small-scale, private capitalist production into socialist orbit, to gradually form domination of socialist economy in all spheres of economy.
In this period  Hochiminh city  utillized the state capitalism in different forms, namely:
– In production: mixed state-private enterprises, co-operative enterprises, private enterprises under the management of the State.
– In foreign trade: mixed state-private enterprises for export and import.
– In trade: co-operative organizations which worked with private merchants.
– Joint-stock enterprises were created for export and import attracting funds inside the country.
However, because of the too simplified and mechanical understanding, the mixed state-private enterprises which are the highest form of state capitalism did not succeed. The 2nd Hochiminh City Party conference noted therefore: «As for the mixed state-private enterprises, they were created not in exact conformity with the policy, in fact they were state ones. The management did not pay any special attention to the bourgeois elements» [26].
Almost all the mixed state-private enterprises did not save their former potential. As we based on a  conception «to buy out and to gradually get back», there were not aplied any measures for effective encouragement and use possibilities of former owners of enterprises, we did not encouradge workers to use their right to be the collective owner of enterprise. The estimation of the mixed funds and capitals of former owners, the payment by instalments on the fixed annual rate were unfair. Fixed assets and real estate were underestimeted, the property gradually returned to the owner during 12 years and 6 months in form of payment him the fixed amount 8% per year, that was mistakenly understood as the return of capital assets. The state paid a yearly profit through a bank account, while according to instruction the bank was allowed to pay only 50 dongs per person per month to a bourgeois family, except for the special cases.  In addition, the scale of workers’ grades and salary on mixed state-private enterprises was analogical to state enterprises, the management style on the mixed state-private enterprises was the same as on state ones (bureaucratic administrative system).
In organization, the situation was the following: a state representative was a director, a bourgeois representative was a deputy director but with no rights or authorities, he was only «having rest and having tea». It resulted into negative consequences: a lot of bourgeois left all their property and went abroad.  For example, 120 from 195 bourgeois representatives participating in mixed state-private enterprises went abroad. Also 600-700 workers left their job per month, including many highly skilled technicians, professionals who went abroad to make living. The quantity and quality of products decreased catastrophically. All this was a result of the wrong application of state capitalism. There was required a rapid adjustment of the policy in accordance with the real situation and in exact accordance with theoretical basis of marxism-leninism.
So the 2nd Hochiminh City Party conference specified: «It is necessary to elaborate a policy of  due use of our present labour resources who had former close and confident connections with capitalist market, also experience of organization business, production and export-import activity» [26].  In the middle of 1980 and especially in 1981, the authorities of Hochiminh city founded a great number of export-import companies of city level and a few companies of district level which brought the first big flow of foreign currency for a city. Alone «Direximco» export-import industrial company, from May 1980 to February 1981, made USD 23.563.000 worth foreign trade turnover, including USD 10.987.000 of exports, USD 12.575.352  – import (see table 1).


In 1981, Hochiminh city, also due to application of different forms of capitalism, reached very important success: industrial, small-scale and artisan production started developing and exceeded the planned indexes, the gross value of products from a 1,7 billion in 1980 grew to 2,9 billion of dongs in 1981. Including 2/3 of the gross value of products of Hochiminh city was in small-scale and artisan production. The socialist sector of trade seized 50 % of the market, the indexes of domestic purchases grew more than 4 times as compared to 1980. The commodity amount grew, so the rationed goods supply became more stable. Export grew 20 times, import grew 3 times as compared to the previous year. There were done some first steps to involve districts into export activity, to attract people’s money, to expand sources for budget income. The cash receipt exceeded the planned targets everywhere. In every industry, in every district, ward and commune, in basic production units there were applied some changes in methods of production and business growing into wide movement in the city. A favourable basis was created for successful realization of  the plan for 1982 and subsequent years.

•    Primary conclusions on application of state capitalism in Hochiminh city:

a) State capitalism in Hochiminh city was applied stage-by-stage and limitedly in some industries, mainly in a correct way, meeting  the real situation in Hochiminh city. Application of state capitalism is an important economic measure for active involvement of bourgeoisie and non-socialist elements and creation of pre-conditions with the purpose to pass to the creation of the future socialist economic mechanism.
b) There spread a lot of mixed state-private enterprises in the form of joint-stock companies working on principle «income shared together, losses shared together». Mixed state-private enterprises – medium and small ones closed or still working unprofitably because of weak management, lack of capitals, lack of raw materials, spare parts – transformed into another form of state capitalism, such as leasing into bourgeois hands.
c) The use of trade bourgeoisie: To capture the market, it is necessary to be able to manage big and small bourgeoisie, better avoid confront it, as we did it before and in vain. We severely punished speculation and smuggling, inmplemented high taxes to infringers of law, but simultaneously applied an attractive policy in respect of bourgeois and private merchants through business collaboration, creation of representative offices. These first practical steps of Hochiminh city’s authorities gave a positive result.
d) Foreign trade: To have raw materials and spare parts for production it is necessary (а) to mobilize domestic raw materials, as for example, knitting factory no.13 quickly managed to self-produce spare parts. Also foreign trade with capitalist countries (b) is important,  and Hochiminh city can actively utillize Vietnamese capital or the one of Vietnameses of Chinese origin in export-import.
e) Banks and credit: It is necessary to to attract maximum money of local people, to fix a reasonable bank rate of interest. Also to change the backward style of banking to serve production and export-import activity. We can diversify the forms of crediting to attract more money of the people. This is the application of state capitalism in banking.
Speaking on the whole, this period we used state capitalism only experimenting in some forms in some industries. We should remember that in the beginning of 80-ies the bureaucratic administrative system was yet heavy and could unexpectedly interfere the process of transit to new mechanisms. But, in spite of everything, primary experience of Hochiminh city in application of state capitalism has an important practical and theoretical value. It became a basis for elaboration of the further step in development of our country. The resolutions of the VI and VII congresses of the Party opened the epoch of socio-economic renovation and «open-door policy» for all Vietnam and for Hochiminh city.

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