Economic Debates in Vietnam: Issues and Problems in Reconstruction and Development (1975-84) 9789814345996

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ECONOMIC DEBATES IN VIETNAM Issues and Problems in Reconstruction and Development (1975-84)

by

Tan Teng Lang

Research Notes and Discussions Paper No. 55

INSTITUTE OF SOUTHEAST ASIAN STUDIES 1985

Pub II shed by Institute of Southeast Asian Studies Hang Mul Keng Terrace Pas I r Panj ang Singapore 0511 All rights reserved. No part of this publication may be reproduced, stored In a retrieval system, or transmitted In any form or by any means, electronic, mechan lea I, photocopyIng, recordIng or otherwIse, wIthout the prIor permIssIon of the Institute of Southeast Asian Studies. ~1985

Institute of Southeast Asian Studies

ISSN 0129-8828 ISBN 9971-902-91-5

CONTENTS

Page iv

ACKNOWLEDGEMENTS

v

ABSTRACT INTRODUCTION Historical Overview: Vietnam's Past Economic Paths (1954-74) II

A Period of Uncertainty: and Failure (1975-79)

11

New Economic Policies (1979)

III

A Turning Point:

IV

Policy Implementation: and Debates (1980-84)

v

Experimentation

23

Shifts 34

CONCLUSION Vietnam's Economic Options: and Prospects

Implications 48 57

BIBLIOGRAPHY

iii

ACKNOWLEDGEMENTS

This study began as a sub-thesis submitted in partial fulfilment of the requirements for the degree of Master of Arts in the Department of International Relations, Research School of Pacific Studies at the Australian National University. I initially ventured into the subject with apprehension and doubts over its manageability. Three people have been instrumental in assisting me throughout the project: Dr Carlyle Thayer, Dr John Girling and Dr David Marr. It was Dr Thayer who first proposed the topic, put forth its parameters and set me the challenge. Dr Girling and Dr Marr, through their useful suggestions and stimulating ideas, helped provide refreshing clarifications to the topic. In particular, I am thankful to my supervisor, Dr Girling, for his patient guidance and kind encouragement throughout the writing of the dissertation. To Dr Marr who had unhesitatingly given me access to his books and materia 1s on Vietnam, I deep 1y appreciate his considerate gestures. Dr Thayer, on his part, helped me locate and sometimes provided various sources, primary and secondary, useful and necessary to the study. To all three mentors, I owe a special debt of gratitude, always. Tan Teng Lang March 1985 Singapore

iv

ABSTRACT

The problems of economic development spare no country. For Vietnam, this issue is made more difficult because of the country's embroilment in a 30-year war which left a legacy of The demanding task of development incalculable destruction. therefore has to be stimultaneously managed alongside the equally Above all, formidable challenge of post-war reconstruction. Vietnam has to tackle enormous problems requ1r1ng immediate decisions within a fixed ideological framework that imposes constraints upon the choices and manoeuvres available. This study is essentially an examination of the dilemma and planning in leadership Vietnamese by the faced options of parameters the within development and reconstruction Chapters I and II trace the problems posed and socialism. approaches adopted by the decision-makers from 1954 to 1974 and after liberation from 1975 to 1979. In each period, the pressing difficulties of a war-time situation as well as post-war conditions have compelled Vietnamese leaders to make frequent shifts in policies in response to immediate circumstances. But the ultimate goal of building a centrally-planned society which satisfies every individual according to his needs is neither Nonetheless, in the short-term, neglected nor forgotten. intractable realities dictate tactical compromises to create a workable economy before proper socialist construction can be effected. Chapter Ill looks at the confluence of forces which left Vietnamese planners in September 1979 with few expedient and official endorsement was accorded to a new choices approach which appears to depart from orthodox courses acceptab 1e This is a turning point in within the socialist framework. Vietnamese politics as a reconciliation has to be found between ideological doctrines and practical considerations. Chapter IV surveys developments in policy implementation since September 1979, generally typified by cautious swings between relaxation Such a bold move at economic liberalization and tightening. v

naturally leaves its impact and Chapter V attempts to understand the imp 1 i cations and prospects Hanoi 's new economic po 1 i c i es have for Vietnamese socialism. Doubtless, it will be the top decision-makers in the Vietnamese Communist Party who will have the last say on the fate of the new liberal approach to the country's problems of reconstruction and development.

vi

INTRODUCTION

Historical Overview:

Vietnam's Past Economic Paths (1954-74)

From the outset, Vietnam's ideological world view prescribes the boundaries within which all policies may be debated, adopted, implemented and altered. The country's socialist framework forms the unquestioned basis for its leadership to draft economic guidelines to meet the people's needs and wants. In other words, there is consensus among the decision-makers on the fundamental meaning of "socialist development" and basic socialist principles are upheld in economic planning. Socialism dictates its own directions and goals. The ideology which stems from the objective of ending exploitation of man by man requires, as a first step towards attaining its objectives, the abolition of feudal and bourgeois political and economic power. The 1 atter is to be achieved by expropriation of private property of the former ruling class and transformation into public ownership of the means of production, distribution and exchange.l Much emphasis is accorded to radically changing the economic structure because, in Marxist theory, the economic structure determines the legal, political and ideological superstructure: In the social production which men carry on they enter into definite relations that are indispensable and independent of their will; these relations of production correspond to a definite stage of development of their material forces of production. The sum total of these relations of production constitutes the economic structure of society -- the real foundation, on which correspond definite forms of social consciousness With the change of the economic foundation the entire immense superstructure is more or less rapidly transformed,2

Extrapolating from Marxist theory into the Party Secretary-General Le Duan wrote:

Vietnamese

context,

In order to build socialism, we must build up right from the beginning both new productive forces and new production relations, both a new economic foundation and a new superstructure.3 For Vietnam, this ul':imate objective is to be achieved through the creation of centrally planned, modern industrial society because, as Lenin has stressed during his time "(the) only possible economic foundation of socialism is large scale machine industry".4 To build such a society entails comprehensive socialist transformation and socialist construction or what the leadership generally terms as the establishment of "new productive forces" and "new productive relations". Attention to "productive forces" involves giving due regard to those economic levers which will increase labour productivity while, The revolution in production relations consists first and foremost in eradicating the capitalist economic sector and the attendant exploitation of man by man, transforming the individual economy of the peasants and craftsmen into a collective socialist economy and instituting the collective socialist ownership of the means of production in two forms: ownership by the people as a whole and ownership by the various collectives.5 In other words, creating "new productive relations" necessitates the development of proper socialist institutions which supposedly will do away with all class antagonisms of the old bourgeois society and advance the interests of workers, peasants and other progressive forces in society. The process calls for party and state-directed efforts in nationalization of industries, collectivization of agriculture and central control of distribution, moving in short towards the elimination of private ownership of all means of production. It is within this agreed framework that Vietnam's economic strategies and tactics are outlined and deliberated. The tasks of reconstruction and development, whether posed to the Democratic Republic of Vietnam ( DRV) after 1954 or the Socialist Republic of Vietnam (SRV) after 1975 were equally formidable. In both periods, the war-torn economies were confronted with pressing problems of high unemployment, food shortage, wide spread poverty, all very much exacerbated by post-war fatigue and renewed popular expectations. The problems had to be tackled not only resolutely and quickly, but within the context of an overall socialist blueprint which imposed 2

constraints on the available courses of action. So arose debates on the best tactical responses to meet the exigencies of the short-run situation and at the same time, to provide foundations for the transition to a fully collective economy. That the basic guidelines for building a socialist society carry unanimous consensus in Vietnam's decision-making circles is established by the ideological orientation of the leadership. There is general agreement on the need to strengthen socialist institutions in management, industries and agriculture since the very foundations of the promised future society rest upon the consolidation of new relations of production. What remains open to debate is the correct means to the agreed end, that is, the timing and nature of the transitional phase to socialism. For, immediate problems demand immediate answers on the best ways to set the economy moving. The needs of reconstruction after the destruction and disorganization of war years call for flexibility and expediency. But to what degree can compromises, necessary in this era, be undertaken without adversely affecting socialist goals? Many complex questions are involved. Positions have to be taken on issues like the following: a)

Capital Formation Where are the investment resources to come from? How is capital to be generated for development?

b)

Industry and Agriculture Should priority be accorded to heavy industry or to agriculture and light industry to provide surplus for capital formation?

c)

Relations of Production What is to be the relative speed of nationalization and collectivization to avoid alienating the population and threatening production targets?

d)

Management How far can local autonomy jeopardizing central control?

be

encouraged

without

To what extent can material incentives be employed to enhance production without challenging socialist principles? Collectively, these fundamental issues time and again confront the Vietnamese leadership. While ideological orthodoxy might require a more doctrinal approach to the country's economic 3

problems, harsh realities might compel more pragmatic responses in the short-term. Thus, notwithstanding the 1 eadershi p' s consensus in overall socialist directions and goals, policy choices and shifts made are necessarily conditioned by the objective environment as well. It is in this latter sphere of tactical decisions and resolutions that economic debates largely take place. At its formation in 1930, the Indochinese Communist Party (ICP) stated in its Political Theses that "the Vietnamese revolution must go through two stages: first, the national democratic resolution; then a direct passage to socialist revolution, bypassing the stage of capitalist development. The ultimate aim to the Party remains the realization of Communism".6 The objectives of the first stage were "anti-imperialism" (which canst i tuted the "nation a 1" content and ca 11 ed for nation a 1 liberation from imperialist domination) and "anti-feudalism" or class struggle (which constituted the "democratic" content and called for destruction of the oppressor-oppressed social structure in society). In the second stage of socialist revolution, the aim involved "the attainment of the community ownership of the means of production, leading theoretically to communism, where the state as the repressive organ of contra 1 of one class and private ownership of the means of production ••• would be done away with".7 This formulation of the two-stage revolution provided the conceptual framework within which the Vietnamese leadership delineated and modified their politico-strategic as well as socio-economic moves. The first Indochinese War (1946-54) saw the "antiimperialist" mission of the revolution fulfilled with the expulsion of the French colonialists. In the war's initial stages, the Dang Lao Dong Viet Nam or Vietnam Workers' Party (VWP) had accorded its "anti-feudal" task secondary importance to the struggle for independence. However, as the VWP succeeded in liberating more and more areas in North Vietnam, the necessity to rally peasant support required the introduction of a comprehensive programme to hasten the "anti-feudal" revolution. So in 1953 an agrarian reform campaign which be~an with a two-year rent reduction programme, was implemented.ff This was quickly followed by the launching of land reforms from 1954 to 1956, intended to eradicate the economic power of "landlords" and "rich peasants" and the political power of village notables.9 Deliberations of economic planning acquired new dimensions with the communist consolidation of power in North Vietnam resulting from the Geneva Conference of 1954. The partially fulfilled victory over the French -- for in South Vietnam, a new anti-communist regime was installed -- obliged the VWP to direct its attention and efforts to the problem of socialist

4

reconstruction. In particular, the food shortage presented severe difficulties since North Vietnam's traditional complement of some 250,000 to 400,000 tons of rice from the Mekong Delta was cut off with the division of the country along the 17th parallel.lO In fact, a threatened famine in 1955 was only staved off by a timely Russian programme which helped import about 150,000 tons of Burmese rice to Hanoi.ll In the light of such crises, the DRV leaders broadly agreed on ways of increasing rura 1 productivity to meet the country's food needs within the framework of agricultural collectivization. Although industrialization was conceived as the priority goal in Hanoi's socialist planning, the situation dictated a compromise. For the Party Central Committee then, there was no question of retreat from the land redistribution programme since it was seen as an essential step leading to agricultural cooperativization at a later stage. Additionally, land reform was expected to "1 i berate the forces of production, rna in ly 1abour, from rent and debt bondage to the landlord class ••• (and) provide the impetus for a sharp increase in agricultural productivity since the surplus would be used by the peasantry and state in productive ways ••• ".12 The main concern of the time was over the way which the campaign was conducted. Over-zealous cadres incriminated many innocent victims by "mi sc 1ass ifi cation" and thousands of people wrongly labelled as "landlords" and "rich peasants" were killed or persecuted. The excesses brought about the resignation in September 1956 of the Party Secretary-General, Truong Chinh, who was singularly identified as the driving force behind the land redistribution campaign. Notwithstanding what might have been the introduction of "correct" relations of production in the agricultural sector between 1953 and 1956, the economic situation did not improve. In fact, it was likely that the doctrinaire application of socialist principles itself had contributed to the difficulties of this period. Arbitrary implementation of the land reforms created an atmosphere of terror and disrupted life and property. By 17 August 1956, Ho Chin Minh himself was promoted to prevent the situation from further deterioration by a public acknowledgement of the problem: Errors have been committed in the implementation of unity in the countryside The Party and the Government have taken up seriously the subject of these 1 acks and errors and have determined a p1 an for their corrections.l3 But the admission came too 1ate. The discontent was so widespread that popular peasant demonstrations erupted in Nghe-An in November 1956. With pragmatic haste, the 1eadershi p 1aunched 5

a "Campaign for the Rectification of Errors" and relaxed the pace of socialist reconstruction. That the "Campaign for the Rect ifi cation of Errors" did not have the whole-hearted support of more orthodox leaders like Truong Chi nh was evident from the latter's explicit warning against the "tendency to spontaneous capitalist development•14 attributable to the less vigilant socialist discipline of this time. This decision to emphasize agricultural production again in 1958 was essentially a response to the country's serious food shortage. There had been bad harvests in autumn 1957 and spring 1958,15 A Three-Year Plan (1958-60) reflected the pressing reality well by including among its crucial tasks the call to "accelerate the development of agriculture and industrial production by considering agricultural production as the main point. to solve tne food problem, while paying attention to industrial production ... ·.16 At tne same time, cooperativization of agriculture was scheduled for enforcement despite apprehension that the programme might upset production. at least for a while. But cooper at i vi zat ion went ahead because. as one scholar observed, the North Vietnamese leaders perceived that they had reached the crossroads between the capitalist and tne socialist way of development. The question of which way to go had not. and could not. be resolved until basic transformations had occurred in the country5ide The North Vietnamese decided to pursue the path of agricultural collectivization to bring about these transformations.17 Indeed, by early 1958, it seemed that Hanoi did reach "the crossroads between the capitalist and socialist way" because the disastrous harvests of 1957 and 1958 had compelled many poor peasants to sell tneir land, and landlessness and tne growth of a rich peasantry were well under way.18 This development probably accounted for the leadership's resolution to effect "basic transformations" to complete the national democratic stage of the revolution before embarking upon a period of transition to socialism. Cooperativization was carried out but the lessons of the Land Reform fiasco ensured that the campaign was done gradually and with minimum coercion. Altogether, the programme was achieved in nine years (1958-66) in the DRV while the same process in China took three years to involve 88 per cent of peasant families in fully socialist cooperatives.19 Witn the issue of agricultural collectivization determined, economic planning in the sixties became more and more concerned with industrialization. The earlier part of the decade saw the 6

adoption of the lJRV's first Five-Year Plan (FYP: 1961-6~) at the Party's Third National Congress in September 1960. The Plan formally endorsed, the goal to complete the transformation of the relations of production in agriculture, to complete cooperation at the elementary level , to bring all the agricultural cooperatives of lower type up to the level of the advanced type, and to merge the small cooperatives of advance type into big cooperatives.20 Nonetheless, the apparent emphasis was on the "priority development of heavy 1ndustry".21 This new shift of policy corresponded with the Party Secretary-General, Le Duan 's call for greater attention to be paid to the revolution in science and technology deemed crucial for consolidating socialist development. The consensus in the VWP's Political Bureau on economic policies for the first FYP was, however, interrupted in the latter part of the decade when American bombing of the DRV became almost a daily affair between February 1965 and April 1968. The new exigencies compelled the leadership to decentralize its control over every aspect of the economy, thus giving rise to various deviations from the official blueprint during this time. In industry, factories were dismantled and dispersed in the countryside and cadres had much leeway to employ local initiative. In agriculture, a so-called "Three Contracts System" became operational with many cooperatives subcontracting steps in agricultural production as well as cooperative land to individual member households. In short, it was a period of lax socialist discipline -- a tactical expediency conceded by the Party to meet urgent war-time requirements. Open discussions assessing the disruptive impact of the bombing on the economy emerged by late 1968. The changed circumstances -- particularly with the possibility of a peaceful settlement of the war in South Vietnam -- meant that Hanoi could now address issues of socialist planning with new expectations. Without doubt, in the Party's view, the bombing had significantly weakened overall central control of the economy thereby resulting in what Truong Chinn described as "a dangerous retreat from socialist principles·.22 In fact, Truong Chinn specifically criticized the compromises with regard to relations of production and rejected the ide a that "production can be done in any way provided the social product increases". 23 Even the more moderate Le Duan noted that growing autonomy in the cooperatives during the bombing period had "divorced" each small collective from the "unified leadership of the proletarian state and pits the interest of one collective against those of another"24 -- a development thought contradictory to the country's socialist

7

spirit. But unlike Truong Chinh, Le Duan held no strong ideological opposition to less orthodox approaches in socialist production: The practice of economic building in the other socialist countries as well as in our own proves that in economic management, we must correctly utilize such levels as prices, wages, profit and credit and fully enforce the regime of cost accounting and the socialist mode of doing business.25 This pragmatic stance was clearly spelt out in a speech made on the occasion of the 40th Anniversary of the ICP in February 1970. In the same speech which was primarily concerned with the reconstruction of North Vietnam, Le Duan reiterated the "decisive role" of heavy industry in establishing the foundation of socialism and at the same time, recognized the supporting roles of agriculture and light industry in "vigorously advancing" heavy industry. It was this speech which was said to have "authoritatively set the direction•26 for economic policies in the early seventies. While the public articulations of Le Duan and Truong Chinh in the immediate years after the bombing (1965-68) did indicate certain differences in their attitudes towards the role of material incentives in regard to socialist development, there was obvious consensus between the two on the ultimate goals which the DRV fought for. That was why Le Duan, despite his apparent flexible acceptance of the use of material incentives, stressed the necessity for recentralizing economic management as well as tightening control over agricultural cooperatives at the 19th Plenum of the Party Central Committee in January 1971.27 Such a resolution was deemed essential given the less orthodox economic de vi at ions which occurred during the American bombing. However, efforts made in the early seventies to halt "a return to the individualistic ways of working•28 and to enhance the state role of planning and organizing production had little opportunity to produce substantial results. For, with the resumption of heavy bombing in 1972-73 on the one hand, and the successful liberation of South Vietnam in 1975 on the other, developmental priorities had to undergo major reinterpretations and reassessments in response to new circumstances.

8

NOTES In the simplest terms, Communists

may

property".

be

Karl

~unlst

the

summed

Marx and

up

In

the

Manifesto explained: "the theory ot the single

sentence:

AbolItion

ot

private

Frederick Engels, Manifesto of ff>e ec-unlst Party

(Moscow: Progress Publishers, 1966), p. 62. 2

"A Contribution

to the Critique ot Political

Economy"

In Karl

Marx, Selected

Works, Vol. I (London: Lawrence and Wishart Ltd., 1963), p. 356. 3

"The

VIetnamese

Revo I utI on

--

Fundamenta I

Duan, Selected Writings (Hanoi:

Prob I ems,

Essent I a I

Tasks"

Foreign Languages Publ lshlng House,

In

Le

1977), p.

232. 4

V.I.

Lenin, Collected Works,

Vol.

32 (Moscow: Progress Publishers,

1965), p.

492. 5 6

Le Duan, "The Vietnamese Revolution", op.clt., p. 236. Ibid.,

p.

170.

For

a

fuller

understanding

IndochInese CommunIst Party October

This

Nation

and

SoclaiiSII

/ll"e

ot

the

"Pol Jtlcal

One

(Chicago:

Theses

ot

the

In Tran Van Dlnh, ed.,

1930", see reprInt

Vanguard

Books,

1976>,

pp.

237-43. 7

Huynh Kim Khanh,

"Year One of Postcolonial

Vietnam",

Southeast Asian Affairs

1977 (Singapore: Institute of Southeast Asian Studies, 1977), p. 301. 8

1be

WII I Jam Dulker,

~1st

to Power (Colorado: Westview Press

Road

Inc.,

1981), p. 153. 9

For a brief

sunrnary of

"Socialist

Reconstruction

1957-1970"

(Unpublished

the

Land Reforms In

paper,

the

(1953-1956),

DRV:

Duntroon

see Carlyle A. Thayer,

Agricultural

College,

Collectivization,

University

of

New

South

Wales, n.d.l, pp. 6-8. 10

Jerry

A.

Rose,

"The

Fight

for

Rice

In Divided

VIetnam", 1be Reporter,

Vol.

25, no. 6 (2 October 1961), p. 37 quoted In Ibid., p. 3. 11

Bernard

B.

Fa II ,

1be Two Yletna.s,

2nd

rev I sed

edIt I on

(London:

Pa I I

Ma II

Press, 1967), p. 153. 12

Christine White, "Debate on VIetnamese Development Polley"

(Sussex:

Institute

of Development Studies, 1982), p. 12. 13

Fall, op.clt., p. 156.

14

Truong Chlnh, Resolutely Taking t1>e North Yl...m- Countryside to SoclallsThrough Agricultural Oooperatlvlzatlon (Hanoi: Foreign Languages Publishing House, 1959), p. 11.

9

15

Alec

Gordon,

Production

and

"North the

Vietnam's Mldd Je

Vol. 11, no. 1 (1981): 16

Nguyen Duy Trinh,

Collectivization

Peasant

Campaigns:

Class

Struggle,

Journal

of Con"'-ponry Asia,

Development"

In The Probl- Facing

Problem",

28.

"Economic and Cultural

tbe [RV In 1961 (Hanoi: Foreign Languages Pub I lshlng House, n.d.l, p. 10 17

Thayer, "Social 1st Reconstruction In the DRV", op.clt., p. 9.

18

Gordon, op.clt., p. 28.

19

Ibid., p. 21.

20

Third Hllrtlonal Congress of tbe Vltmu. llorkars 1 Party, Vol. 1, p. In Thayer, "Socialist Reconstruction In the DRV", op.clt., p. 23

21

Ibid., p. 22.

22

Truong ChI nh, CooperatIves", (Saigon:

"Weaknesses,

VI atm.:

In Agricultural Shortcoml ngs and Ml stakes and Res111n:h Nrrtas, Document No. 63,

Doc.-.1"5

US Mission In Vietnam, January 1969), p. 9.

23

Ibid.

24

Le Duan, "The Vietnamese Revolution", op.clt., p. 265.

25

Ibid., p. 275.

26

Thayer, "Social 1st Reconstruction In the DRV", op.clt., p. 63.

27

David

Ell lott,

"North

Vietnam

Since

Ho",

Probl- of

~1511,

July-August

1975, p. 41. 28

12 quoted

Truong Chlnh, "Weaknesses, Shortcomings and Mistakes", op.clt., p. 13.

10

II

A Period of Uncertainty:

Experimentation and Failure (1975-79)

The problems of peace were no less than the problems of war. For the 1eaders of the Vietnam Workers' Party ( VWP) as we 11 as their revolutionary counterparts of the Provisional Revolutionary Government (PRG) of South Vietnam, the unconditional surrender of the Republic of Vietnam forces on 30 April 1975 marked the rea 1 i zat ion of a course to which they had devoted a greater part of their 1 i ves. The euphoria of victory cou 1d not 1ast 1ong, harsh realities of post-war reconstruction had to be faced at once. To rebui 1d a country after 30 years of warfare was without doubt an arduous task. For a start, the Democratic Republic of Vietnam (DRV) leadership had to cope with an almost double increase in territory and an additional 21 million people after the 1i be ration of the South. There was the urgency of providing subsistence, order and employment to a war-weary population. Furthermore, fundamental issues of reunification and socialist transition had to be met. One scholar, Huynh Kim Khanh, summarized the situation as follows: Whi 1e in the North, Hercu 1ean efforts were required to replace damage or destroyed material installations and then develop them according to accepted principles, procedures and institutions, it is not possible to talk of rehabilitation or reconstruction in the South in similar terms. What was required in the South was the founding, if not to say creation, of a totally new policy on the basis of the ruins of an old sociopolitical regime built upon concepts and standards diametrically opposed to revolutionary change.1 That the two Vi etnams,

regardless of their differences, must be ll

united and that South Vietnam must be transformed from capitalism to socialism were constants for the leadership. The questions in point were the timing and the pace of accomp 1 ish i ng these two missions. Initial post-war uncertainties invited caution in dealing with South Vietnam • s economy. Le Duan, in his victory speech to the VWP Central Committee in May 1975 took pains to stress that "a fine national democratic regime, a prosperous national and democratic economy ••• " would be established in the South, the North, however, had to "step up socialist construction",2 The same spirit of caution prevailed in Pham Van Dong's message on the occasion of the 30th anniversary of the founding of the ORV in September 1975 when he remarked that the new regime would encourage "the norma 1 operation of all enterprises and all factories of all sizes (in the South) in order to cant ri bute to economic rehabilitation and development".3 Even Truong Chinh, generally considered the guardian of ideo 1ogi ca 1 orthodoxy, gave his support to the gradua 1 approach with his emphasis on the need "to gradually do away with the differences and dissimilarities arising in the process of the socialist revolution and socialist construction".4 He elaborated: to 1eve 1 step by step the economic and soci a 1 differences between the two zones, the south must gear its private and capitalist economy towards business activities beneficial to national interests; gradually trans form the private capita 1 i st industry and commerce, agriculture, handicrafts and small trade along the socialist line and set up the economic sectors under the state and collective management or under joint state-private management.5 This prudent attitude was necessary since the capitalists would almost certainly not cooperate with the new regime if they were sternly warned that the state would foreclose on them at some unspecified time. Measured tones were therefore amplified during the early days of consolidation and recovery throughout 1975. leadership's step-by-step approach in Complementing the handling South Vietnam's economic transition was its initial decision to effect only a very gradual reunification of the two parts of the country. In this way, it would be possible for the separate zones to proceed at a different pace towards similar socialist goals.6 Furthermore, it was thought that the recognition of two economically different Vietnams by the international community would secure from various sources a greater amount of reconstruction and otherwise less readily available to a socialist Vietnam.7 12

The urgent need to deal with the tood shortage in the immediate aftermath of liberation left little time for planners to chart elaborate socialist courses tor the people on both sides of the 17th parallel. Absolute priority had to be accorded to food production in the first instance. To expand cultivation and at the same time to reduce the 3. 5 mi 11 ion unemp 1oyed, d a two-pronged programme was implemented. On the one hand, displaced peasants were encouraged to return to their native villages and on the other, new economic zones were created to facilitate resettlement ot the unemployed in rural areas. In particular, the resettlement policy was intended not only to enlarge the number of people engaged in agricultural production. Equally important, it was devised to relieve urban areas of population pressure. This new emphas1s on agriculture, no doubt dictated by the exigencies of the post-war situation, also marked a shi tt from the general VWP direction ot granting key attention to heavy industries, a direction adopted since 1960. And unlike the agrarian reforms of l953-J6, the leadership was careful to avoid outright coercion in the resettlement campaign. However, after some months of experimentation with gradualism in the South, some members of the Party realized that separate developmental paths for the two zones might create more difficulties for national reintegration at a later stage. This issue was probably a source of intense debate then and formal discussions on reunification were held in November 1975. Truong Chinn explained why reunification could not be held back: ... delaying or bungling (national reunification) is likely to create difficulties and obstacles. For instance, in the absence of a reunified state there will be difficulties in planning and developing the national economy throughout the country, in unifying the national defence, in broadening democracy, upholding the people's right of being masters of their country ••• ,9 Accordingly then, it would seem that reunification would bring about obvious advantages and so should be hastened. But failure to have PRG's United Nations (UN) membership application approved as a result of the American veto (twice) possibly also accounted for the decision to proceed with reun ifi cation ,10 At the same time, border altercations with Democratic Kampuchea (OK} coupled with a growing concern over Sino-Vietnamese relations might be additional reasons prompting the leadership to integrate domestic po 1 it i cs in order to devote greater attention to torei gn policy problems. In the light of such expediencies, the country was officially reunified in July 1976 to become the Socialist Republic of Vietnam (SRV). With reunification, the Party saw 13

itself confronted with a new "strategic task" which called for the "North (to) give a strong impulse to the building of socialism and perfect the socialist production relations; the South must carry out at the same time socialist transformation and socialist construction" ,11 The move towards introducing "socialist transformation and socialist construction" in the South represented a sharp departure from Le Duan's earlier assurance of establishing a "prosperous national and democratic economy" in that zone. Significantly too, the new line also unmistakably deviated from the soft-pedal approach enunciated in the Party's theoretical journal, Hoc Tap (April 1976). The journal had called for well-prepared, gradual and methodical reform and reiterated that "as an immediate goal, it is necessary to guide and encourage and help the private economic sector, so that it will devote its capabilities to developing production and business activities to the benefit of national welfare and the people's livelihood",12 Such uncertainty over the "proper" pace of socialist development in the southern economy constituted a very real dilemma within the Party. It was an issue which extended to the question of the most suitable treatment to be meted out to various sectors in order to maximize the productive capacity of the economy. The "suitable" policies that evolved had to satisfy two potentially conflicting demands for practical benefits and ideological purity. Whether in industry, agriculture or trade and commerce, the Vietnam Communist Party (VCP)13 had to carefully assist and encourage those features which were conducive to economic growth without jeopardizing socialist principles. This delicate balance had to be maintained alongside different priorities accorded to each sector to ensure that firm foundations were laid for a socialist economy. The belated presentation of the country's Second Five-Year Plan (FYP: 1976-80) at the Fourth Party Congress in December 1976 disclosed evidence of compromises resulting from intra-Party debates. While the call at the reunification conference in July 1976 for accelerating socialist transformation and construction in the South seemed to set the tone for economic development in the SRV, the guidelines in the Second FYP were certainly more flexible. Seven essential tasks were outlined:14

1. Rapid development of agriculture to provide food, improve living standards and accumulate capital for industrialization. 2. Development of heavy industry, in the first instance to serve agriculture and then to increase capital construction capabilities in the next stage. 14

3. Utilization of the social work forces through the better organization and management of labour, particularly by organizing each district into a basic agriculturalindustrial economic unit. 4. Basic socialist transformation of the South. 5. Rapid increase in exports, industrial products.

particularly

farm

and

light

6. Transformation of education and technical training. 7. Building of a new system of economic management for the whole country. A total outlay of US$7,500 million was earmarked for the Plan with US$2, 250 million or 30 per cent of the total appropriated for agriculture -- the highest percentage ever allocated to agriculture.l5 The obvious pre-eminence given to agriculture was further reflected in the qualification that although 35 per cent of the budget would go to industry, a large portion of it would be devoted to producing agricultural essentials.l6 The reason for concentrating attention on agriculture was concisely spelt out in response to the urgent need "to provide food, improve living standards and accumulate capital for industries". The new Plan did not stop relegating heavy industry to a lower priority than agriculture and light industry (including fishing and forestry). Equally noteworthy, it offered a more gradualist approach to socialist development in the country, again on pragmatic grounds. As Agriculture Minister Vo Thuc Dong pointed out at the Fourth Congress when the Second FYP was outlined, "there must be policies ••. to encourage the peasants to produce and obtain profits from production". More specifically, he stressed that in view of the "individualistic production methods in the South, agriculture could be accelerated only by mixing political education with material incentive".l7 For the private sector, the leadership acknowledged it to be "still beneficial to the national economy and people's life".l8 So, in the Political Report to the Fourth Party Congress the need to differentiate between "negative and reactionary aspects of capitalist management" in the South and the "positive and national" aspects which ought to be preserved, was understood.l9 Although the distinction was not clarified, presumably large industrial and enterprises of the "comprador bourgeoisie" were commercial perceived to be "negative and reactionary" since the Report pointed out that they would be "nationalized immediately".20 On the other hand, those "small enterprises" which could be more easily brought under "close supervision" would be allowed to continue their activities.21 15

In short, the Second FYP was a significant document. It established future economic directions for a newly reunified country and set the standards by which results could be measured against fixed goals. Compared to the DRV's First FYP (1961-65), the Second Plan contained some marked shifts in emphasis, especially that related to the long-standing focus on heavy industry. That the change had provoked intra-Party disagreement was evident from Pham Van Dong's remarks to the Fourth Congress:22 ••• some cadres might be concerned that because we are concentrating our forces in the 1976-1980 Five-Year Plan on developing agriculture and the several sectors above (forestry, fishing and light i ndust ri es) that we are giving light attention to heavy industries. Such is not the case at all, because: 1.

Assembling forces for the development of agriculture primarily means assembling the forces of the various heavy industrial sectors in order to equip agriculture, if this were not done agriculture would surely be unable to move forward.

2.

The rapid development of agriculture, along with the rapid development of forestry, fishing and the consumer goods sectors wi 11 provide the foundation for the rapid development of the heavy industrial sectors

Notwithstanding dissenting voices, there was general consensus that immediate problems of supplying food for the population had to be met. For this, it was essential to direct efforts to improve agricultural production and, at the same time, to carry our socialist transformation at a moderate pace so that the people's motivation to work would not be dampened. In implementing the Second FYP, the Vietnamese leadership had several considerations. Firstly, sufficient resources had to be found to finance the outlay of the Plan. In this respect, the decision makers had anticipated substantial foreign assistance from both communist allies as well as Western sources and international lending agencies. In fact, Nguyen Lam, VicePremier and Chairman of the State Planning Commission revealed in a subsequent interview that Vietnam had optimistically counted on US$3.2 billion reconstruction aid from the United States -privately promised by Nixon in 1973.23 Secondly, agricultural production had to increase to the extent not only of ensuring Vietnam's self-sufficiency in food but ot generating a surplus for exports too. To do this would involve a massive programme of 16

rural resettlement and a gradual transformation of the relations of production in the South along socialist lines. Thirdly, the Party intended to make fu 11 use of the productive capacity of the private sector perceived as crucial for providing consumer goods and foreign exchange for the economy. In this respect, an attitude of compromise and tolerance had to be adopted towards the cant i nued operation of some capitalist enterprises. The overall approach in the early months after the enunication of the Second FYP was later summarized by Pham Van Dong in a speech commemorating the SRV's National Day in September 1978: We have applied a series of fair and reasonable policies aimed at transforming private capitalist trade and industry and shifting capitalist traders to the production sector by means of persuasion and help. In this connection, there has been no confiscation, only purchase by the state, no coercion, only explanation and persuasion. In agriculture, we have launched a broad movement for taking the southern countryside into the path of agricultural collectivization by appropriate measures, going step by step from low level to a high level from simple form to complex ones.24 However, the "fair and reasonable policies" were not implemented for long since dismal results obliged the leadership to rethink its efforts at socialist construction. After a year's experimentation with the policies outlined in the Second FYP, the Government Council 's report to the National Assembly in December 1977 assessed the situation as one of "many difficulties ••• and unbalanced development".25 Reasons for the unsatisfactory conditions were chiefly ascribed to the consequences of the 30-year war and natural cal amities. 26 But there was a 1 so "another very important reason" -- "shortcomings ••• in management and leadership".27 In agriculture, a combination of ambitious targets, poorly-trained cadres, arbitrary management and paucity of incentives was blamed for the lack of improvement in productive capacity. Additionally, repeated natura 1 disorders, insufficient foreign assistance, the growing border conflict with DK and hostility from China were deemed equally responsible for adversely affecting agricultural production and the resettlement and collectivization programmes. In the private sector, the leeway given did not prove as "beneficial" to the economy as the p 1anners had expected. If anything, the continued existence of capitalist traders badly disrupted central control and distribution of essentials. This was because private businessmen were able to offer higher prices 17

to secure agri cu 1tura 1 produce from farmers who might otherwise be compelled to sell their entire output to the state. Such a situation contributed to the price inflation of basic necessities in the country making life difficult especially for fixed-salary employees. The failure of the policies to meet goals projected in the State Plan possibly opened up further debates in the VCP. On the one hand, advocates of gradualism could attribute the poor performance to insufficient incentives to produce and called for still more moderate policies. On the other hand, opponents of gradualism could ascribe the poor performance to inadequate discipline and argued for greater tightening. In 1977, these Party leaders who put forth their suggestions for more rapid socialist transformation in the South seemed to carry the day -at least at that period. As early as July 1977 at the VCP's Second Plenum, the first major decision to accelerate agricultural cooperativization in South Vietnam was already taken. In September the same year, a Committee for Reform of Agriculture in the South, chaired by Vo Chi Cong, was created with the intention to a chi eve "unprecedented development" in agriculture.28 However, it was only at a conference he 1d in Ho Chi Minh City in January 1978 that deta i 1s of the acce 1erated cooper at i vi zat ion programme were made clear, The conference resolved to "basically complete the stage of familiarizing peasants with the initial forms of cooperative organizations like the Production Solidarity Teams and Production Collectives within a year".29 Unlike the pre-1977 period when farmers were able to retain ownership of land and had only to join labour exchange teams if they chose to, a timetable was now set for completing the basic step in agricultural collectivization by the end of 1978. The new directive evidently spe lt an end to the gradua 1i st approach proposed at the Fourth Congress. Shortly after the announcement to hasten the pace of agricultural cooperativization in the South, a similar decision was made to rapidly transform the commercial sector as well. On 23 March 1978 the government ordered that "a 11 trade and business operations of bourgeois tradesmen (were) to be abolished" while sma 11 merchants cou 1d "retai 1 those goods not controlled by the state".30 Apparently, the leadership had little choice but to resort to such a drastic move given the fact that 65 per cent of the southern market was under private control in 1978.31 A Nhan Dan editorial tried to justify the change of pol icy: "so long as it (the private sector) exists, the reorganization of agri cu 1ture and handicrafts along the socialist line will be very difficult. Similarly, as long as capitalist trade survives, it will be impossible to build a strong socialist trade".32 More specifically, private trade was denounced for corrupting Party cadres who accepted bribes and treated capitalist businessmen 18

with leniency, and contributing to speculation, hoarding and price instability. But these "blameworthy" aspects of private commerce had existed for some time. And the Party had, since independence, adopted a tolerant attitude towards this sector because it recognized private business as a source of much-needed consumer goods and foreign exchange. Yet, in early 1978, the authorities decided upon a stern crackdown even though the sector's activities remained important to the economy. While domestic developments in the sector certainly contributed to the impatience shown by the VCP, a significant prec i pi tat i ng cause could be found in the politico-strategic environment. At this time, Hanoi's growing confrontation with Beijing had heightened the leadership's sense of insecurity, making it seem more urgent to tighten contra l s over the economy. Such a reaction was not unexpected in view of the fact that those who posed the strongest resistance to socialist transformation in the South were ethnic Chinese (Hoa). The Haas also constituted a sizeable (albeit not the only) group in the private sector. In other words, the shift away from gradualism was not merely on economic grounds, it was equally a political response. For, in dealing with socialist detractors (among whom were many Chinese), the VCP saw itself dealing with a potential enemy whose loyalty had always been suspect. So, in two successive operations in March and May 1978 in Cholon, more than 30,000 private businesses in Southern Vietnam were closed, privately accumulated wealth controlled with the i nt roduct ion of a new currency and thousands of "bourgeois tradesmen" relocated to the countryside to engage in farming or small-scale industries.33 The change towards a tougher, more doctrinaire economic approach beginning in mid-1977 and especially from early 1978 could hardly prevent an already bad situation from getting worse. At the end of 1978, SRV 's annua 1 growth rate had p1 unged to two per cent from nine per cent in 1976.34 There was a pool of unemployed who formed 13 per cent (3 million people) of a workforce of 23 million.35 More drastic was the fall in food grain production from 13 million tons in 1976 to only 11 million tons in 1978.36 A host of factors, both internal and external, combined to account for the grim state of affairs. The weather, for one, had seldom been kind and at times was disastrous. The renewed preoccupation with military affairs a 1ong the VietnameseKampuchean border as we 11 as the Sino- Vietnamese border diverted attention, manpower and resources which might otherwise have been invested in the economy. Furthermore, the failure to normalize relations with the United states (and thus open the door to Western aid, investment and trade) coupled with the reduction and then termination of Chinese aid jeopardized many economic projects which remained in the pipeline stage. Additionally, the massive exodus of economically active and productive refugees from North and South Vietnam had disruptive effects which 19

exacerbated the chaotic state of the economy. The overall conditions in the country between 1977 and 1979 were so bad that it prompted one observer to write: During the height of the war and American bombing, Vietnamese in the North ate and lived considerably better than in the post-war years. What was grown in North Vietnam itself from 1965 to 1973 provided 312 k i l agrams of 'ood per person per year. If one adds the average of half a million tons of rice that Peking gave to the North annually, it would be 324 kilograms of food per person. But in 1978, with food output at its lowest in Vietnam's recent history, only 251 kilograms of food were available to Vietnamese citizens -- a 22 per cent drop from the war years.37 The more flexible post-war economic policies had failed to produce results; yet subsequent decision to accelerate socialist transformation and construction could not prevent the country from plunging into 'In economic cr1s1s. By mid-1979, it was clear that new approaches were needed to forestall an economic collapse.

NOTES Huynh Kim Khanh,

1977 (SIngapore: details

of

the

I I beratl on, Soutflees~

see

Asian

"Year One of Postcolonial

Vietnam",

Soutlleas~

Asian Affairs

InstItute of Southeast As I an AffaIrs, 1977 l, p, 294, For Immediate problems Vietnam encountered In the aftermath of Khanh,

"RestructurIng

Affairs

1976

the

(Singapore:

Economy Institute

of

South

of

V letnam",

Southeast

Asian

Studies, 1976), pp, 467-84, 2

Le Duan, "Forward to the Future", VI~ Courlor, No, 37, June 1975, p, 7,

3

Pham Van Dong, 1975, p, 3,

4

Truong

Chlnh,

Objectives Pol !tical session p, 4, 5

"The

Nat ion's

"Toward

and on

Completion

Urgent Problems

Consultative held

New

Tasks",

of

Vletn- Court or,

National

to

be

Solved"

Conference

on

National

14 November

1975,

Ibid,, p, 5.

20

VI~

No,

Reunification: -- A Political Reunification,

Courier,

No,

43,

The

41,

October

Substance,

Report at

to

the

the

first

December

1975,

6

The PRG had advocated the establishment of a democratic and non-aligned state In South Vietnam and a period of some 12 to 14 years transition was envisaged necessary

before

nation a I

reunification

cou I d

take

pI ace.

Khanh,

"Year One

of Postcolonial Vietnam", op.clt., p. 299. 7

Carlyle

A.

Saigon",

Thayer,

CSAAR

"Bui I ding

Research

Social ism:

Paper

No.

20

South

Vietnam

(Brisbane:

Since

Centre

the

for

the

Fall

of

Study

of

Australian-Asian Relations, Griffith University, August 1982), p. 8. 8

The figure of 3.5 mi II ion unemployed included the

Saigon

regime

disintegration forces.

In

Wilfred

of

supplemented

the

addition

Burchett,

Republic

were

half

"Invitation

by

of

Vietnam

a mi Ilion to

1.5 mi Ilion jobless people from

another

1.5

army,

mi I I ion

prostitutes

and

and

the

pol ice

black marketeers.

Vle-tn- Quarterly,

Invest",

after

parami I itary

I,

No.

Winter

1976, p. 47. 9

Truong Chlnh, "Toward Completion of National Unification", op.clt., p. 4.

10

Thayer, "Building Socialism", op.clt., p. 19

11

Khanh, "Year One of Postcolonial Vietnam", op.clt., p. 304.

12

Nayan

Chanda,

"Towards

Socialism

--

On

the

Double",

Far

Eas-tern

Ec:ona.ic

Review {hereafter cited as FEER), 9 July 1976, p. 11. 13

The VWP was formally renamed the Vietnam Communist Party In 1976.

14

Ken Mcleod,

"Building Socialism In VIetnam",

Vlenw- Today, No. 5, April-June

1978, p. 11. 15

To Huu Phuong and Guy Vietnam",

Soutfleas1"

Ta,

Asian

"The Postwar

Affairs

Economic Planning and Development of

1978