Socialist-oriented market economy
Encyclopedia
The socialist-oriented market economy (Vietnamese
Vietnamese language
Vietnamese is the national and official language of Vietnam. It is the mother tongue of 86% of Vietnam's population, and of about three million overseas Vietnamese. It is also spoken as a second language by many ethnic minorities of Vietnam...

: Kinh tế thị trường theo định hướng xã hội chủ nghĩa) is the official name given to the current economic system in the Socialist Republic of Vietnam, as a product of the Đổi mới economic reforms, which led to the displacement of the centrally-planned economy with a market socialist
Market socialism
Market socialism refers to various economic systems where the means of production are either publicly owned or cooperatively owned and operated for a profit in a market economy. The profit generated by the firms system would be used to directly remunerate employees or would be the source of public...

 system based on commodity
Commodity
In economics, a commodity is the generic term for any marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services....

 production.

Description

Vietnam's 6th Party Congress of the Communist Party initiated market-oriented reforms in 1986, known as Doi moi, which allowed for private ownership of enterprises engaged in commodity production alongside state and collectively run enterprises, and introduced market elements in the distribution of such goods and services. The result is what Vietnam calls a socialist-oriented market economy, a new economic model intended to be a transitional phase in the development of a full socialist economy, with the goal of improving productive forces and developing a firm material base for the foundation of socialism. The socialist-oriented market economy is a multi-sectoral commodity economy regulated by the market, but under state management and largely under state ownership. It is similar to the Chinese Socialist market economy
Socialist market economy
The socialist market economy or socialist market economy with Chinese characteristics is the official term used to refer to the economic system of the People's Republic of China after the reforms of Deng Xiaoping. It is also referred to as socialism with Chinese characteristics...

 in that many forms of ownership, including cooperative/collective enterprises, communal, private and state ownership models, co-exist in the economy, with the state sector playing a decisive role. Government officials maintain that the socialist-oriented market economy is consistent with Marxist theory, and is the key for Vietnam to solve the relations between growth and development, while being able to operate and co-exist in the modern global market
Globalization
Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...

. The socialist-oriented market model has aroused less controversy than the Chinese socialist market economy because private business plays a much smaller role in the Vietnamese system, with most the means of production remaining firmly under state control., The Communist Party of Vietnam has re-affirmed its commitment to the socialist economic orientation with its Doi Moi reforms.

Theoretical basis

Proponents of socialist market economic systems defend their position from a Marxist perspective, stating that a planned socialist economy can only be brought about by first establishing the necessary comprehensive commodity market economy, letting it fully develop until it exhausts its historical stage and gradually transforms itself into a planned economy. Proponents argue that the economic system of the former USSR and its satellite states
Eastern bloc
The term Eastern Bloc or Communist Bloc refers to the former communist states of Eastern and Central Europe, generally the Soviet Union and the countries of the Warsaw Pact...

 attempted to go from a natural economy to a planned economy by decree, without passing through the necessary market economy phase of development. Proponents of socialist-directed market economies distinguish themselves from market socialists by stating that market socialists believe that only through utilizing the market mechanism can socialism be achieved, and that market socialists believe planned economies are ineffective or undesirable.

See also

  • Doi Moi
  • Socialist market economy
    Socialist market economy
    The socialist market economy or socialist market economy with Chinese characteristics is the official term used to refer to the economic system of the People's Republic of China after the reforms of Deng Xiaoping. It is also referred to as socialism with Chinese characteristics...

  • Market socialism
    Market socialism
    Market socialism refers to various economic systems where the means of production are either publicly owned or cooperatively owned and operated for a profit in a market economy. The profit generated by the firms system would be used to directly remunerate employees or would be the source of public...

  • Economy of Vietnam
    Economy of Vietnam
    The economy of Vietnam is a developing planned-market economy. Since the mid-1980s, through the "Đổi Mới" reform period, Vietnam has made a shift from a highly-centralized planned economy to a socialist-oriented market economy which use both directive and indicative planning . Over that period, the...

  • Mixed economy
    Mixed economy
    Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. Most mixed economies can be described as market economies with strong regulatory oversight, in addition to having a variety...

  • Social market economy
    Social market economy
    The social market economy is the main economic model used in West Germany after World War II. It is based on the economic philosophy of Ordoliberalism from the Freiburg School...

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