Communist Review - Developing a socialist-oriented market economy is a major policy of the Party and State, creating favourable conditions to mobilise, allocate and use resources effectively and to promote investment, production and business activities for the goal of “a prosperous people, a strong nation, democracy, equitability and civilisation.” The development of a socialist-oriented market economy represents an important theoretical achievement of the Communist Party of Vietnam, arising from Vietnam’s own realities while selectively absorbing international experience.

Vietnam’s socialist-oriented market economy – a creative development model and a product of assimilating the achievements of human civilisation in a way suitable to Vietnam’s conditions.

First, any nation or people can adopt and benefit from the universal achievements and common values of the market economy – a product of human civilisation.

Hostile and reactionary forces claim that a socialist-oriented market economy cannot exist. They equate the market economy with capitalism, considering it an exclusive product of capitalism; therefore, they argue that combining a “market economy” with a “socialist orientation” is subjective and voluntarist. Some even claim that if Vietnam were to remove the term “socialist orientation,” its economy would develop faster and achieve even greater success.

It is essential to consistently affirm that the market economy is an achievement of human civilisation, formed and developed over the course of humanity’s progress once the commodity economy reached a certain level. A market economy is a highly developed form of commodity economy in which all economic relations are conducted through the market. As an achievement of human civilisation, the market economy embodies universal values and is of broad applicability. To date, the market economy has evolved through various stages and under different social systems, reaching an advanced level in capitalist societies. However, this does not mean that the market economy is an exclusive product of capitalism. As a widely applicable economic model, the development of a market economy is both inevitable and objective for all nations and peoples. Every country or people can adopt and benefit from the universal achievements and values of a market economy, while creatively adapting it to the specific characteristics, conditions and circumstances of their own nation.

Practical experience also shows that the market economy has emerged and developed under various social systems and through different models, such as China’s distinctive socialist market economy, Japan’s market economy, the welfare state market economy of Sweden and other Nordic countries, the social market economy of the Federal Republic of Germany, and the free-market economy of the United States. Within the market economy models of capitalist countries, to varying degrees and in different forms, socialist elements exist, whether recognised or not. This indicates that the seeds of socialism can emerge even within advanced capitalist societies.

Looking back to the early years of building socialism in Soviet Russia, V. I. Lenin recognised the problem of equating the commodity economy solely with capitalism and not using commodity–money relations to promote production and improve people’s lives. From this understanding, Lenin proposed and implemented the “New Economic Policy” (NEP), which had a fundamental content of maintaining and developing market relations under the management of the proletarian state. The implementation of the NEP quickly helped Soviet Russia overcome stagnation in the 1920s and demonstrated the practical viability of an economic model that combined market mechanisms with socialism. From this analysis, it can be affirmed that the market economy and socialist orientation are by no means contradictory; they can be integrated to form a comprehensive economic model during the transition to socialism in Vietnam.

Second, ensuring a socialist orientation and the State’s role in regulating the market economy in Vietnam.

In Vietnam, the Communist Party of Vietnam advocates the development of a market economy and encourages the growth of the private economic sector, viewing this sector as an important driver of the socialist-oriented market economy. This does not mean that the country is choosing the path of capitalist development. It is important to emphasise that determining whether an economy is “socialist” or “capitalist” cannot be based solely on the presence of private enterprise or market regulation. More crucial are the development goals of the economy—who it serves, which classes or social strata benefit, the principles guiding its operation, the process of its formation and development, and who are the true owners of the economy.

The Communist Party of Vietnam defines the socialist-oriented market economy as “the general model for our country during the transition to socialism… for the goal of ‘a prosperous people, a strong nation, democracy, justice and civilisation,’ suited to each stage of the country’s development.”⁽²⁾ The formation and development of Vietnam’s socialist-oriented market economy originate from the interests of the people and the State. When the command economy with a centrally planned mechanism was maintained for a long period and revealed its limitations and weaknesses, the Communist Party of Vietnam carried out a comprehensive renewal of the country, promoting the building and development of a socialist-oriented market economy.

After nearly 40 years of renewal, Vietnam has achieved enormous socio-economic development and increasingly affirmed its position in the international arena. Therefore, there is a fundamental difference between a capitalist market economy and Vietnam’s socialist-oriented market economy. The clearest distinction lies in ownership: in a capitalist market economy, the owners are the capitalist class; in Vietnam’s socialist-oriented market economy, the owners are the people under the leadership of the Party and the management of the State.

Vietnam’s current socialist-oriented market economy is in the transitional period towards socialism. Multiple forms of ownership and various economic sectors inevitably coexist to mobilise all resources for national development, with the Party identifying the private sector as an important driving force. The private economic sector is encouraged to develop in all industries and sectors not prohibited by law and enjoys equality before the law with other economic sectors. The State facilitates the development of the private economic sector but does not allow the “privatisation” of the economy. The State-owned economy retains a leading role, serving as a key instrument and material force for stabilising the macro-economy, guiding, regulating, and directing other economic sectors, promoting socio-economic development, and maintaining the socialist orientation in the market economy. The State’s involvement in stabilising the macro-economy, guiding, regulating, and leading other economic sectors, and promoting socio-economic development is crucial for preserving the socialist orientation in the development of the market economy. It also provides an essential foundation for ensuring that Vietnam’s market economy remains socialist-oriented.

The choice of a socialist-oriented market economy in Vietnam is entirely correct

To affirm the validity of this choice, two issues need to be clarified. First, why did Vietnam opt for a socialist-oriented market economy instead of a command economy with a centrally planned mechanism? Second, what achievements has Vietnam attained in building and developing a socialist-oriented market economy?

The first issue is evident from the period following the country’s complete liberation on April 30, 1975. Maintaining a command economy with a centrally planned mechanism began to reveal its limitations and weaknesses, causing stagnation in the economy: “From 1976 to 1980, the average annual growth rate of the gross social product was only 1.4%, while national income increased by just 0.4%, whereas the population grew at an average rate of 2.24% per year. This situation made life extremely difficult for people of all social strata (it is estimated that in the 1980s, seven out of every ten Vietnamese people lived in poverty).”⁽³⁾ This situation posed an urgent need to reshape the approach to economic development.

The sixth National Congress of the Communist Party of Vietnam (December 1986) marked the beginning of the Doi Moi process in Vietnam. It also represented the Party’s first breakthrough in thinking about the market economy, reflected in two main aspects. One was a reconsideration of the management mechanism: “The centralised, bureaucratic and subsidised management system maintained for many years has failed to create development incentives, has weakened the socialist economy… hindered production, reduced productivity, quality and efficiency, caused disorder in distribution and circulation, and generated many negative social phenomena.”⁽⁴⁾ 

The second is that the Party set out the requirement to build a new management mechanism consistent with objective laws and suitable to the level of economic development. It emphasised that the process of moving from small-scale to large-scale production in Vietnam is a transformation from a largely self-sufficient economy into a commodity economy. The new management mechanism has two defining features: “Planning is the number-one characteristic of the economic management mechanism… The correct use of commodity–money relations is the second defining feature of the new economic management mechanism.”⁽⁵⁾

The sixth National Congress affirmed: “The essence of the new economic management mechanism is planning in accordance with the socialist business-accounting method, upholding the principle of democratic centralism.” ⁽⁶⁾ Thus, by the sixth Congress, the Communist Party of Vietnam had recognised commodity production – that is, it acknowledged the market mechanism – but had not yet considered Vietnam’s economy to be a market economy. The Resolution of the sixth plenum of the sixth Party Central Committee stated that in 1986, the renewal process began, with Vietnam developing from a centrally planned economy towards a market-oriented economy.

In 1991, the seventh National Party Congress adopted the Platform for National Construction during the transition to socialism. The Platform further developed the theory of the commodity economy: First, it put forward the policy to “develop a multi-sector commodity economy with a socialist orientation.”⁽⁷⁾ Second, it called for the “thorough elimination of the centralised, bureaucratic and subsidised management mechanism, and the establishment of a market mechanism under State management through law, planning, policy and other instruments; the comprehensive construction and development of markets for consumer goods, materials, services, capital, and labour; and the implementation of smooth economic exchanges nationwide and with the world market.”⁽⁸⁾

Building on fifteen years of experience of the renewal process, the ninth National Congress of the Communist Party of Vietnam (2001) officially defined Vietnam’s economy as a “socialist-oriented market economy.” It also clarified the essence of this economy: “A multi-sector commodity economy operating according to market mechanisms, under the management of the State with a socialist orientation; this is the socialist-oriented market economy.” ⁽⁹⁾ The purpose of the socialist-oriented market economy is to develop productive forces, advance the economy to build the material and technical foundation of socialism, and improve the people’s living standards.

Thus, the Communist Party of Vietnam’s process of understanding and transforming its economic thinking – from a command economy with a centrally planned mechanism to a socialist-oriented market economy – has been a long journey, because this model has no precedent in the world. Vietnam has been both implementing and learning from experience to gradually develop a comprehensive economic model for the transitional period towards socialism. Although the process of refinement is still ongoing, it can be affirmed that Vietnam’s choice to develop a market economy on the path to socialism is entirely correct. For example, the law of value in the market economy helps regulate production and the circulation of goods: sectors, industries, or fields that operate efficiently and generate high profits will attract more participants, while less efficient sectors may contract or withdraw from production. This phenomenon leads to a reallocation of production factors such as capital, labour, land, and science and technology, resulting in more efficient use of resources in society. In addition, goods are regulated from areas with lower prices to areas with higher prices, or from regions where supply exceeds demand to those where supply is less than demand, thereby helping to balance the flow of goods in the market. Under the influence of the law of competition in the market economy, producers must innovate in technology to increase labour productivity, reduce unit costs, and lower product prices in order to gain advantages in production and sales. In doing so, “producers pursue their own interests while simultaneously fulfilling an unintended task of serving the broader interests of society.”⁽¹⁰⁾

The market economy also promotes dynamism and creativity among producers and business operators. To maximise profit, they must remain proactive and perceptive in understanding consumer psychology and market trends, master the art of business, anticipate supply and demand relationships, and continuously innovate to gain a competitive edge in production and commerce.

Alongside the significant benefits that the market economy brings, it must be recognised that it also contains inherent flaws that it cannot resolve on its own: it can lead to social polarisation between rich and poor, pose the risk of economic crises, and damage the ecological environment since producers and business operators in a market economy often prioritise profit over environmental responsibility, and may even seek to avoid it altogether. These inherent flaws require the presence of the State in a constructive role, establishing institutions and regulations. This is precisely why a socialist orientation is necessary for Vietnam’s market economy. In the development of a socialist-oriented market economy, the role of the State is clearly defined in the Resolution of the fifth plenum of the 12th Party Central Committee (Resolution No. 11-NQ/TW), dated June 3, 2017, on perfecting the socialist-oriented market economy institution: “Orient, build, and complete the economic institutional framework; create a fair, transparent, and healthy competitive environment; use State instruments, policies, and resources to guide and regulate the economy, promote production and business activities, and protect the environment; implement social progress and justice step by step, through each policy of development.”

The socialist orientation is reflected in every policy, plan, and socio-economic development strategy of the country. Policies, plans, and strategies aim to achieve the objectives and tasks of each stage in the process of building socialism; they are compatible with market mechanisms while ensuring modernity. Modernity is expressed through the selective inheritance of global market economy achievements, the development of market elements and integrated markets operating smoothly, and their connection to the world economy.

The second issue is that, after nearly 40 years of carrying out the renewal process, the implementation of the policy to build and develop a socialist-oriented market economy in Vietnam has achieved remarkable and undeniable success:

Regarding the scale of the economy, “the average growth rate has been about 7% per year. Vietnam exited the group of low-income countries in 2008. The nominal GDP in 2023 reached approximately 10.22 million billion VND, equivalent to 430 billion USD. Nominal GDP per capita in 2023 reached around 101.9 million VND per person, equivalent to 4,284 USD, an increase of 160 USD compared to 2022.” ⁽¹¹⁾ “Vietnam’s current gross domestic product comprises roughly 27% from the state sector, 4% from the collective economy, 30% from the household economy, 10% from domestic private enterprises, and 20% from the foreign-invested sector.”⁽¹²⁾

Regarding import–export activities, “Export turnover has continuously increased, making a significant contribution to GDP growth. In 1986, total export turnover reached only 789 million USD; by 2006, exports had exceeded 39 billion USD, and following Vietnam’s accession to the World Trade Organisation (WTO), export turnover continued to rise, reaching 355.5 billion USD in 2023. In terms of structure, exported goods have become increasingly diverse, with many ‘key’ product groups achieving large export values. Numerous export products now have high volumes and rank prominently in the world market. While in 1986 no export product exceeded 200 million USD in value, today many products exceed 1 billion USD or even 5 billion USD in turnover.”⁽¹³⁾ To date, Vietnam has established trade relations with 224 partners and is negotiating, signing, and implementing 17 free trade agreements (FTAs). The country has become one of the regional leaders in establishing multilateral economic cooperation frameworks.⁽¹⁴⁾

Regarding social welfare, significant results has been achieved, particularly in education, healthcare, and support for people in difficult circumstances. “Many diseases that were previously widespread have been successfully controlled. Poor people, children under six, and the elderly are provided with free health insurance. Rates of child malnutrition and infant mortality have declined nearly threefold. By April 2022, 5,706 out of 8,227 communes nationwide met the new rural standards, including 663 communes meeting advanced standards and 71 communes achieving exemplary standards.”^(15).

The achievements recorded in building and developing the socialist-oriented market economy affirm that Vietnam’s choice of this model is entirely correct. It aligns with objective laws and global economic trends, meets the country’s development needs, and helps build the material and technical foundations for the transition to socialism.

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The realities of Vietnam’s renewal process have convincingly demonstrated the effectiveness of adopting the market economy model as a means to build socialism. The socialist-oriented market economy is one in which the institutions, instruments and operating principles of a market economy are established and utilised to fully unlock productive capacity and progressively improve people’s living standards, in pursuit of the goals of “a prosperous people and a strong, democratic, equitable and civilised nation.”

To further advance and refine the socialist-oriented market economy model in the coming years, it is essential to step up communication and raise awareness across the entire Party and people about its distinctive features, nature and objectives. At the same time, Vietnam must resolutely and uncompromisingly counter and refute distorted arguments propagated by hostile and reactionary forces against this model, thereby safeguarding the Party’s ideological foundation and preserving and promoting the achievements attained throughout the process of building and developing the socialist-oriented market economy in Vietnam./.

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(1) Textbook of Marxist–Leninist Political Economy, National Political Publishing House, Hanoi, 2008, pp. 114–115.

(2) Documents of the 13th National Congress of the Communist Party of Vietnam, National Political Publishing House, Hanoi, vol. I, p. 128.

(3) Le Thi Que, “From ideology to practice: 15 years of ‘transformation’ of the Vietnamese economy (1986–2001)”, Journal of Economic Studies, No. 354 (11-2007), p. 60.

(4), (5) Documents of the 6th National Congress of the Communist Party of Vietnam, Su That Publishing House, Hanoi, 1987, pp. 62, 63.

(6) Documents of the 6th National Congress of the Communist Party of Vietnam, ibid, p. 65.

(7), (8) Complete Collection of Party Documents, National Political Publishing House, Hanoi, 2007, vol. 51, pp. 137, 138.

(9) Documents of the 9th National Congress of the Communist Party of Vietnam, National Political Publishing House, Hanoi, 2001, p. 86.

(10) Textbook on the History of Economic Theories, National Economics University Publishing House, Hanoi, 2009, p. 73.

(11) Mai Chi (December 29, 2023), “Vietnam’s GDP per capita surpasses 100 million VND,” Dantri, accessed at: https://dantri.com.vn/kinh-doanh/gdp-binh-quan-dau-nguoi-viet-nam-vuot-100-trieu-dong-20231229093332819.htm

(12) Nguyen Phu Trong (2022), Some Theoretical and Practical Issues on Socialism and the Path to Socialism in Vietnam, National Political Publishing House, Hanoi, p. 31.

(13) Department of International Finance and Integration Policy, Institute for Economic and Financial Strategy and Policy (May 30, 2023), “Achievements after 30 years of renewal in international economic integration,” Ministry of Finance Portal, https://mof.gov.vn/webcenter/portal/btcvn/pages_r/l/tin-bo-tai-chinh?dDocName=MOFUCM098068.

(14) Nguyen Thuy (December 19, 2022), “Milestones of Vietnam’s trade after more than 35 years of Doi Moi,” https://www.tuyengiao.vn/nhung-dau-an-cua-thuong-mai-viet-nam-sau-hon-35-nam-doi-moi-146918.

(15) Nguyen Trong Nghia (2023), “Achievements in the development of Vietnam’s socialist-oriented market economy after more than 35 years of renewal,” Communist Review, No. 1008 (2-2023), p. 3.