Reinventing Vietnamese Socialism : Doi Moi in Comparative Perspective 0813385903, 9780367285555

Table of contents :
Cover
Half Title
Series Page
Title
Copyright
Dedication
Contents
List of Tables and Figures
Preface and Acknowledgments
Introduction
PART ONE Origins and Dilemmas
1 Doi Moi in Comparative Perspective
2 Dilemmas of Reform in Vietnam
PART TWO Economy
3 Economic Doi Moi in Vietnam: Content, Achievements, and Prospects
4 The Fight Against Inflation: Achievements and Problems
5 The Political Economy of Vietnamese Reforms: A Microscopic Perspective from Two Ceramics Manufacturing Centers
PART THREE Agriculture
6 Doi Moi in Vietnamese Agriculture
7 Reform and Rural Development: Impact on Class, Sectoral, and Regional Inequalities
8 Agrarian Development Strategies in China and Vietnam
PART FOUR Politics
9 Party, State, and People: Political Structure and Economic Prospects
10 Political Reform and Political Change in Communist Countries: Implications for Vietnam
PART FIVE Society
11 Socio-Cultural Dimensions of Renovation in Vietnam: Doi Moi as Dialogue and Transformation in Gender Relations
12 Education, Research, and Information Circulation in Contemporary Vietnam
About the Contributors
Index

Citation preview

Reinventing Vietnamese Socialism

Economic, Social, and Cultural Change in Asia and the Pacific Series Editor, Mark Selden Reinventing Vietnamese Socialism: Doi Moi in Comparative Perspective, edited by William S. Turley and Mark Selden FORTHCOMING

Finance and lAte Development: The Political Economy of China's Financial Reforms, Paul Bowles and Gordon White Politics ofDemocratization in the East Asian Experience, edited by Edward Friedman Unofficial Histories: Chinese Reportage from the Era ofReform, edited by Thomas Moran Japanese lAbor, KumazawaMakoto The World of the Ainu, Kayano Shigeru

Sponsored by the Indochina Scholarly Exchange Program of the Joint Committee on Southeast Asia of the Social Science Research Council and the American Council of Learned Societies in cooperation with the National Center for Social Sciences, Vietnam

Reinventing Vietnamese Socialism Doi Moi in Comparative Perspective

EDITED BY

William S. Turley and Mark Selden

First published 1993 by Westview Press, Inc. Published 2019 by Routledge 52 Vanderbilt Avenue, New York, NY 10017 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Routledge is an imprint of the Taylor & Francis Group, an informa business Copyright © 1993 Taylor & Francis All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. Library of Congress Cataloging-in-Publication Data Turley, William S. Reinventing Vietnamese socialism : doi moi in comparative perspective/ edited by William S. Turley and Marlc Selden. p. cm. - (Economic, Social, and Cultural Change in Asia and the Pacific series) Includes bibliographical references and index. ISBN 0-8133-8590-3 2. Vietnam-Economic 1. Vi.:tnam-Politics and government-1975policy. 3. Socialism-Vietnam-History. I. Selden, Marie. II. Title. ill. Series. DS559.912.T87 1993 959.704'4-dc20

ISBN 13: 978-0-367-28555-5 (hbk)

92-11027

CIP

To healing the wounds of war

Contents List of Tables and Figures Preface and Acknowledgments Introduction, William S. Turley

ix xiii 1

PART ONE Origins and Dilemmas

1 Doi Moi in Comparative Perspective, David Wuifel

19

2 Dilemmas of Reform in Vietnam, David W.P. Elliott

53

PART TWO

Economy

3 Economic Doi Moi in Vietnam: Content, Achievements, and Prospects, Le Due Thuy

91

4 The Fight Against Inflation: Achievements and Problems, Vo Dai Luoc

107

5 The Political Economy of Vietnamese Reforms: A Microscopic Perspective from Two Ceramics Manufacturing Centers, Hy Van Luong

119

PART THREE Agriculture

6 Doi Moi in Vietnamese Agriculture, Chu Van Lam

151

x

7 Reform and Rural Development: Impact on Class, Sectoral, and Regional Inequalities, Ngo Vinh Long

165

8 Agrarian Development Strategies in China and Vietnam, Mark Selden

209

PART FOUR Politics

9 Party, State, and People: Political Structure and Economic Prospects, William S. Turley

257

10 Political Reform and Political Change in Communist Countries: Implications for Vietnam, Brantly Womack 277 PART FIVE

Society

11 Socio-Cultural Dimensions of Renovation in Vietnam: Doi Moi as Dialogue and Transformation in Gender Relations, Kristin Pelzer 309 12 Education, Research, and Information Circulation in Contemporary Vietnam, David G. Marr

337

About the Contributors Index

359 363

Tables and Figures Tables 4.1

Monthly Inflation Rates: January 1988 - December 1991

111

5.1

Number of Contracted Products Delivered to the Bat Trang Ceramics Enterprise

126

6.1 6.2 6.3 6.4

Land Redistribution in North Vietnam by Social Class Average Cooperative Size in the North State Capital Invested in Agriculture, 1981-1985 Agricultural Development in Vietnam, 1981-1985

152 153 154 155

7.1

Production Costs and the Value of the Workday, 1961-1965 7.2 Food Distribution by Labor Types and Age Groups: Case 1 7.3 Food Distribution by Labor Types and Age Groups: Case 2 7.4 Relationship Between Sizes of Cooperatives and Production of Rice in the Red River Delta in 1979 7.5 Per Capita Production of Food Crops by Region and Province, North to South 7.6 Income Levels and Income Sources of Various Household Categories in Five Representative Provinces of Five Different Economic Regions in 1989 7.7 Average Income per Capita in 1989 Constant dong 7. 8 Selected Indicators of Household Income Levels and Income Structures in 1990 7. 9 Living Standards of Ethnic Households 7.10 Gini Coefficients for Rural Inequalities

167 170 171 172

180-181

183-184 185 187-188 190 195

xii 8.1

Cooperative and Collective Development in China, 1950-1958 8.2 Foodgrain Production and Consumption in China, 1952-1989 8.3 Population and Quality of Life Indicators, China and Vietnam 8.4 Collectivism of Agriculture, North Vietnam, 1955-1975 8.5 Grain Production in North Vietnam, 1954-1975 and in Vietnam, 1976-1987 8.6 China's Agricultural Performance, 1957-1989 8.7 Per Capita Consumption of Major Agricultural Products, 1952-1988 (China) and 1980-1985 (Vietnam) 8.8 Net per Capita Rural Income and Income Inequality in China 8.9 Rates of Accumulation in China and Vietnam (percent of national income) 8.10 Growth of Modem Inputs in Agriculture. China, 1957-1987, Vietnam, 1979-1987 8.11 Targets and Actual Annual Growth, 1976-1977 in Vietnam

213 215-216 217 221 223-224 229 231 233 234 236-237 243

Figures 5.1

Ceramics Production in the Village of Bat Trang, 1960-1988

128

Preface and Acknowledgments Of all the books about reform socialism and its fate, few are likely to be as entangled in their subject matter as this one. In fall 1988, encouraged by the new climate of openness, the Vietnam State Commission (later National Center) for Social Sciences and the Social Science Research Council/American Council of Learned Societies agreed on a program of scholarly exchange. High on the list of mutual interests was Vietnam's economic and political reforms known as doi moi, or renovation. Discussion led to plans for a workshop on doi moi that would bring a substantial number of Vietnamese and North American scholars together in Hanoi for the first time. Final arrangements were made during a visit by SSRC staff and one of the editors to Hanoi in June 1989. That was the month that communist power began to unravel in Eastern Europe and troops massacred unarmed demonstrators in the vicinity of Beijing's Tiananmen Square. These events had no immediate visible repercussions in Vietnam, but within the Vietnam Communist Party Politburo they rekindled a dispute over the pace and scope of doi moi and prompted a decision to monitor interaction with foreigners more carefully. While the VCP proceeded with debate on the implications of these upheavals for Vietnam's own approach to reform, plans for the workshop were shelved. Not until debate died down that fall was it possible to reschedule the workshop for June 1990, and then it was with the proviso that the focus be on the economy, reflecting a consensus to press ahead with economic reform but advance more cautiously on the political front. On arrival in Hanoi, foreign participants were asked not to criticize the party's opposition to pluralism, the socialist line of development, or, redundantly, the party's leadership monopoly--at least not in open session. That the workshop took place at all owed much to Premier Do Muoi who gave it his personal endorsement at a critical stage and to Foreign Minister Nguyen Co Thach who participated in the final session. The present volume contains a selection of papers from the workshop that have been revised, expanded, and updated into chapters that are

XIV

quite different from their origins. In addition, the chapter by Ngo Vinh Long, which was not presented at the workshop, was written specially for the volume. Three members of Vietnamese research institutes overcame significant logistical and linguistic obstacles to contribute chapters that present their own understanding of reform goals and methods, not to mention a distinctive analytical style. The initial objective was to gather a variety of disciplinary, comparative, and theoretical perspectives on the problematic of reform in Vietnam, and to situate Vietnam's reforms in relation to those taking place in other countries of the socialist world. The stark contrast between communist collapse in Europe and communist persistence in Asia after the workshop, however, directed the attention of almost every author in some degree as well to the issue of Asian exceptionalism and prospects for non-revolutionary change. In this way the book not only grew out of, but also outgrew, its roots. The existence of this volume owes much to the participation in the planning and proceedings of the workshop by Pham Nhu Cuong, then director of the State Commission for Social Sciences, and David Featherman, president of the Social Science Research Council. Vo Dai Luoc, Director of the Institute of World Economy, and Duong Phu Hiep, Director of the Institute of Philosophy, were counterparts to William Turley in organizing the two groups of scholars. In Hanoi, Le Van Sanh, Nguyen Van Ku, and Dang Anh Phuong of the State Commission's International Cooperation Office handled local arrangements, while SSRC staff Toby Volkman and Mary McDonald coordinated the foreign participation, with help in Bangkok from Minh Kauffman. Some two dozen mostly Vietnamese participants made an invaluable contribution through their own presentations and criticisms. And of course, the workshop could not have moved from the drawing board without the financial support of the Christopher Reynolds and Henry Luce Foundations. For typing the manuscript, entering innumerable corrections, and generally putting up with impossible demands for perfection, a special note of thanks is owed to Darren Nix.

William S. Turley Mark Selden

Introduction William S. Turley

To describe reform under socialism in Vietnam, the Vietnamese Communist Party (VCP) coined the term doi moi, a compound meaning change and newness or, as commonly translated, renovation. Although piecemeal reforms had been introduced earlier, doi moi was a comprehensive program that the party adopted at its Sixth National Congress in December 1986, about the same time as the Soviet Union began perestroika. It survives as a search for ways to make Vietnam prosperous and strong yet socialist in a world lacking a functioning model save the ambiguous example of China. This search is eclectic, adaptive, open-ended, and leads toward new forms that not even its proponents attempt to predict. To the extent that doi moi implies a new start, it may be considered a process of reinvention. Comparative Perspectives

Vietnamese socialism began to undergo fundamental change for the same basic reasons that change occurred in the Soviet Union, China, and Eastern Europe. These reasons were an accumulation of economic difficulties, public questioning of the party's competence, loss of confidence and ideological faith within the leadership, and foreign example (Kornai 1992, 383-386). In broad outline Vietnam's reform program, too, invites comparison with what other socialist (and former socialist) countries have attempted. The economics of doi moi have opened the way to new forms of ownership and management, including a resurgent private sector and market, decentralization of management, and expansion of economic ties with the non-socialist world. The politics of doi moi have encouraged initiative at all levels of society and state, in

2 an effort to mobilize support for continued reform and to shore up the legitimacy of the existing regime through greater openness and participation. As elsewhere, this transition from the centrally planned command economy to a "market economy with a socialist direction" has created new dilemmas. Enterprise managers have more autonomy, but confront a less predictable environment; cooperative and private sectors operate legally, but remain subject to strong administrative constraints; the party stresses collective values, but change strengthens private and family ones; leaders talk of "democracy," but one-party rule continues; and so on. Nor has Vietnam escaped such well-known social costs as increased unemployment, corruption, income inequality, inflation, and immorality that have accompanied reform in every socialist country. Such dilemmas have the character of contradictions that are inherent in the reform process. Thus it would appear that the "communist dialectic" driving change in other parts of the socialist world has been at work, and works in comparable ways, in Vietnam. In other socialist countries this dialectic has led to economic dislocation and political instability, causing regimes to collapse in Eastern Europe and the Soviet Union or to take severe coercive measures as in China (Bahry & Moses 1990). Clearly, all socialist systems have shared a problematic arising from their initial construction. For years, socialist countries could be distinguished from all others by their institutional uniformity. Reform meant coping with similar consequences of bureaucratic central planning, state monopoly ownership, and single-party rule. But all this took place in countries as diverse as Vietnam, Czechoslovakia, the Soviet Union, Cuba, East Germany, and China, and in societies with quite different endowments of resources and very different historical traditions. Thus similarities may be deceiving if they are too simple. Reform attempts have differed significantly with regard to sequence, pace, and outcomes. By comparison with, say, Poland, Czechoslovakia, and Hungary, doi moi put economic restructuring and stabilization before privatization and favored gradualism and political stability over radical change. Quite unlike perestroika, which began with political and cultural reform and left economic reform for later, doi moi, broadly speaking, attempted to balance the two, beginning in rural areas. And of course unlike socialism almost everywhere else, it survives in Vietnam. In all of these respects, Vietnam resembled China more than any other socialist country. Was it coincidental that Vietnam and China entered the 1990s the only single-party socialist states with reform programs still under way? (Party

3

rule had collapsed in Eastern Europe and the Soviet Union; personality cults blocked change in North Korea and Cuba; North Korea faced possible reunification with the South.) Vietnam and China seemed to stand apart, implementing similar reform strategies, suggesting the emergence of a distinctive Asian, or at least Sino-Vietnamese, socialism. The apparent convergence was all the more striking against the background of Vietnam's long alignment with the Soviet Union, Hanoi's signing a security agreement with Moscow before intervening in Cambodia, and China's punitive attack on Vietnam in spring 1979. Not until late 1991 did Beijing consider Hanoi to have met the minimum conditions necessary to merit restoring normal diplomatic relations. Vietnamese acknowledged studying China's reforms but flatly denied imitating them. What accounts then for the similarities? The most obvious answer focuses on the ways communist parties attained power in specific social environments. Communists came to power in China and Vietnam through protracted guerrilla warfare in struggles for social revolution and national liberation. The indigenous conquest of power through revolutionary nationalism won the parties a degree of legitimacy and autonomy that communist parties installed during Soviet military occupation did not enjoy. Moreover, the two parties based their power principally on peasants within predominantly agrarian societies, rather than on the proletariat within industrial ones, and had little to fear from still small urban classes, many of whose members were mobilized by nationalism into support of the revolution anyway. By comparison with most other communist parties, those of Vietnam and China started out in power with roots struck more deeply into their nations' social fabric. This of course is the "Third World" pattern of Marxism-Leninism (Cumings 1991, 116-117). However, considering the collapse, disintegration, or anti-reformism of the other cases--North Korea, Albania, Yugoslavia, Cuba--the continuation of reform under socialism in China and Vietnam suggests these two countries may belong to a special category. Something more than similar paths to power prolongs socialism in them and at the same time propels them along parallel, possibly convergent, lines of development. Factors that might account for a distinctive Sino-Vietnamese socialism include shared culture, geographical proximity, mutual familiarity between the two parties' senior leaderships, similar domestic social environments, predominantly agrarian and rice cultivating economies, and the reverberation of Chinese experience in Vietnamese internal debates. Moreover, for both Vietnam and China the foreign example that matters most is not the West, as the

4

European Community was for Eastern Europe, but economically successful Asian neighbors. These neighbors show the apparent advantages, not of laissez faire capitalism and pluralist democracy, but of economic interventionism and single-party rule. Foreign example reaffirms rather than contradicts some basic proclivities of socialism in both Vietnam and China. In drawing such parallels, however, one must be careful not to overlook important differences. Vietnam, after all, has the population and geographical size of just one average Chinese province. Smaller size compels Vietnam to give relatively greater weight than China to external factors in making policy choices. Compared with China, Vietnam's economic "open door" and other market-oriented reforms must result in greater sensitivity to world economic forces and vulnerability to external influences. While Chinese politics continue to turn on the issue of how to keep these forces and influences at bay, Vietnamese policy reflects a stable consensus that full integration with the capitalist world economy is the only plausible option. Vietnamese leaders may share with their Chinese counterparts a distaste for certain effects of interaction with the capitalist world but feel much more constrained when it comes to doing something about them. With perhaps a third the income per capita of China, moreover, Vietnam is the poorest, least urbanized, most agrarian of countries ever to have consolidated (in the North) a party-state of the classical Soviet type. The low level of development and a twenty-year struggle for national reunification kept the North from going as far as China in any direction, whether toward communes in agriculture or gigantic projects in industry. Meanwhile, private ownership persisted under an Americansupported regime in the South and was not completely eradicated after reunification in 1975, leaving regional distinctions to fester. In the late 1970s, both countries launched reforms from very different starting points in terms of both their domestic levels of development and relations of production and the encouragement they received from abroad. Whereas China began reform with a large public industrial sector, help from a strong entrepreneurial tradition and a receptive international environment, Vietnam began with very little industry and relatively weaker entrepreneurial traditions while isolated from the West and Japan. Despite similar policies, reform in China produced double-digit rates of growth and turned the south coastal region, especially Guangdong and Jiangsu provinces around Hong Kong, into another Asian "tiger," while in Vietnam growth went from negative rates in 1979-1980 to just low single-digit rates afterward.

5

The comparison suggests the possible significance of Vietnam's more recent emergence from war. The Vietnam War had the effect in the North of nullifying development that would have taken place in two to three Five Year Plans and postponing efforts to build large-scale production units in both industry and agriculture (Communist Party 1977, 34). The War was not nearly so materially damaging in the South, but it left debilitating distortions and regional tensions in its wake. Furthermore, the United States tightened its economic embargo in retaliation for Vietnam's intervention in Cambodia, denied Vietnam access to credit from the International Monetary Fund, World Bank, and Asian Development Bank (Vietnam has membership in all three), and discouraged private trade and investment. Allies of the US, most significantly Japan, anxious not to exacerbate tensions over trade with the US, generally complied (Chanda 1992, 6). International support for the embargo declined after Hanoi withdrew its troops from Cambodia in 1989, but so did Soviet and Eastern European ability to provide Vietnam economic assistance and trading partners. To be sure, every socialist country began socialist construction after devastating conflict and while a Western embargo was in force, but only Vietnam began reform so soon after war and persisted in the face of such deep and enduring hostility from the capitalist hegemon. If Vietnam has enjoyed an advantage, it may be the ironic one of starting from a very low level of development. By comparison with more developed socialist states including China, this has meant relatively weaker opposition to reform from state industrial and bureaucratic establishments. Low levels of economic and technical development also have implied less pronounced discontinuities between official and popular political cultures and comparatively weaker societal pressures for regime change. Vietnam has not experienced upheaval even remotely comparable to that which came to a head in Beijing's Tiananmen Square in June 1989. Weaker internal opposition combined with a prolonged sense of crisis, along with the homogeneous character of the leadership, helped Vietnamese socialism survive not only that revolutionary year but also to emerge as the most continuously reformist and stable of the remaining socialist countries. Whether this was an effect of underdevelopment and temporary circumstances or of wise policy, and whether Vietnamese socialism can take advantage of the respite to reinvent itself in a self-perpetuating form or not, remain to be seen. Whatever the outcome, however, it will reflect forces of change already long at work. 11

11

6 Sources of Change

The reform idea did not arise in Vietnam from the same kind of economic crisis as occurred in more developed centrally planned systems, where inability to shift from extensive to intensive growth in industry, signalled by sharp declines in growth rates from the 1970s on, played a key role. Nor did it originate in public discontent with the material or moral quality of life, in leaders' loss of ideological faith, or in imitation of other socialist countries, although all of these factors were to affect the reform process once it was under way. As several chapters in this volume point out, the seeds of reform, particularly in agriculture, germinated in makeshift measures by which many communities in the North survived the air war waged by the United States up to 1973. The government suppressed these war-time experiments, however, in an effort to put socialist construction back on track. It took negative results from overhasty moves to enlarge the scale of agricultural cooperatives, including real declines in per capita food output from 273.9kg in 1976 to 238.Skg in 1978 and the virtual collapse of many cooperatives due to refractory behavior by peasants and cooperative officials, to convince party leaders of the need for change (Fforde 1989, 79-81; Tran Hoang Kim & Le Thu 1992, 23-24). Difficulty incorporating the South and economic embargo exacerbated the situation. Dysfunctional domestic policies and war's aftermath thus coincided with unfavorable international circumstances to create a crisis condition. Party leaders now saw wisdom in the war-time adaptations, began sanctioning the coping responses of enterprises and peasants in 1979, and formally authorized product contracts in agriculture in 1981. From then into the mid-1980s, the continuing crisis led to further incremental adjustments which, in effect, began haltingly to marketize a portion of the economy. As these adjustments could only arrest the decline, however, party leaders concluded that ending the crisis would require more drastic measures and a more coherent strategy. While the resemblance between specific Vietnamese policies and measures adopted in other socialist countries suggested the Vietnamese had been studying others' experiments (including those of China at a time of armed conflict between the two countries, as Mark Selden points out), reform in Vietnam had a strongly indigenous character and must be counted among the early and distinctive reform movements in the socialist world. Meanwhile, Vietnamese leaders could not ignore the very rapid economic development of other Asian countries. The sudden take-off of Thailand, Indonesia, and Malaysia, following on the heels of the rapid 11

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industrialization of Singapore, Taiwan, Hong Kong, and South Korea--all countries that Vietnamese Communists had long derided as American neo-colonies--contrasted painfully with Vietnam's economic stagnation. Nor could the Vietnamese ignore the possibility of gains derived from participation in the growth of the world's most dynamic economic region. Vietnam's best opportunity to modernize in a century was opening up right on its doorstep, but to seize it would require integration with the regional and world economies and therefore adaptation to take advantage of the opportunity. This was the background to the VCP's Sixth National Congress in December 1986, which acknowledged that the imported model the party had followed since 1954 had failed and laid the basis for the far-reaching renovation known as doi moi. After cautious beginnings, renovation soon dropped all pretense of perfecting the existing system with the launching of fundamental change in 1988. The centerpiece of this change in the economic sphere was a dramatic shift toward a market economy. Some of the main policies included payment of wages and salaries on a straight cash basis, pricing of inputs to state enteprises on the basis of costs, permission for private manufacturers to employ up to ten workers (later increased), abolition of internal customs checkpoints, a revised Foreign Investment Law, virtual decollectivization of agriculture, elimination of virtually all direct subsidies and price controls, increased autonomy for enterprise managers, devaluation of the dong to market rates, elimination of the state foreign trade monopoly, separation of central banking from commercial banking, provision for foreign participation in banking, reduced restrictions on private enterprise, creation of export processing zones for one hundred percent foreign owned enterprises, legislation on shareholding corporations, dismantling major elements of the central planning and price bureaucracies, a fifteen percent government workforce reduction, and return of businesses in the South that had been nationalized in 1975 to their former owners or relatives. Discussion was underway in 1991 on proposals for a real estate tax, stock market, and bankruptcy law. The implementation of some policies and commitment to others are open to question. Faced with a "climax" of painful adjustments and stiffening competition from the private, cooperative, and international sectors in 1989, many state enterprise managers called for a return to subsidization (Hanoi radio January 18, 1990), and a random survey of thirty-two state firms found only five of them operating in accordance with the new procedures (Hanoi radio January 12, 1990). Vietnamese leaders, moreover, seemed reluctant to privatize state enterprises or to formalize tbeir bankruptcy. But by the early 1990s the trend was clear

8 and irreversible. A return to centralized command economy would have been more disruptive than continued market-oriented reform. Once tightly controlled or suppressed cooperative and private sectors generated two-thirds of the country's gross national income and provided a broad base of support for further reform. Many southerners in particular had benefitted from looser restrictions on commerce and, in the Mekong delta, de facto private farming. If a further reason was needed for Vietnamese to believe the door had closed forever on bureaucratic central planning of the Soviet type, it was provided by the course of events in the Soviet Union, Vietnam's most important ally. Although doi moi outstripped perestroika in pace, scope, and depth, perestroika lent legitimacy to doi moi in the mid-1980s. By 1990, the Soviet Union was no longer able or willing to subsidize socialism anywhere, sharply reduced its foreign economic assistance, and began denominating trade in dollars at market prices. After years of covering twenty-five to thirty percent of its state budget with foreign aid, Vietnam suddenly in 1991 had to make do with just five percent of its revenues from this source, which the finance minister characterized as "unstable and declining dramatically" (Hoang Quy 1991). With equal suddenness Vietnam had to redirect its trade away from the former Soviet bloc and toward the hard currency area. The attempted coup in August 1991, which paved the way for Boris Yeltsin to take power and preside over the collapse of the Soviet Union--one in a sequence of horrifying events from the perspective of Vietnamese party leaders--put a definitive end to any remaining pretense of collaboration between Soviet and Vietnamese socialism. The overthrow of regimes in Eastern Europe, turmoil and repression in China, and disintegration in the Soviet Union heightened the urgency behind ex-Secretary General Nguyen Van Linh's exhortation to "renew or die." While insisting on the maintenance of stability under "socialist democracy," the party reaffirmed commitment to the construction of a multicomponent market economy under state supervision. It also confronted critical questions concerning the meaning and feasibility of socialism in Vietnam or anywhere else. Commenting on the draft platform of the Seventh National Congress in 1991, one Vietnamese scholar (and party ideocrat) argued that the transition to socialism had yet to be accomplished anywhere without eventual failure, as in the Soviet Union and Eastern Europe, or without "difficulties and mistakes," as in Vietnam. For this reason, he concluded, other countries' models and theories were "inapplicable" and even Vietnam's own past experience provided little guidance. The one certainty was that it was an "illusion

9 to wish to advance directly to socialism without going through the stage of capitalist development." To build the necessary economic premises of socialism, it would be necessary to pass through a period of "stateinitiated capitalism" (Tran Nham 1991). Doi moi understood in this way attempted to reconcile capitalist and socialist forms under state guidance, and for that reason might be considered a halfway house on the road to the completely free market system that many American and European advisors have urged Eastern European countries and the Soviet Union to adopt. But "state-initiated capitalism" has potential to be a variation of the development strategy employed successfully in non-socialist Asia. Doi moi is a highly dynamic process that responds to daily experience, failed attempts at reform throughout Eastern Europe, pressures and opportunities presented by non-socialist neighbors, and the advice of international lending institutions and foreign investors. All this means that doi moi moves in directions that are as distinctly Vietnamese and Asian as they are socialist. The Course and Effects of Renovation

In the chapters that follow, David Wurfel identifies local responses to economic conditions that were the source of "spontaneous bottom-up" reforms beginning as early as 1966. While Vietnamese policymakers have long been aware of foreign examples, negative appraisal of most of these examples and a refractory domestic environment have thrown leaders back on their own intellectual and cultural resources for policy ideas and for means to cope with unwanted side effects. These effects, David Elliott points out, place advocates of reform in a familiar quandary: how to achieve change within the framework of socialism without undermining the bases of socialism itself. Theory and evidence suggest that partial reform produces momentum toward fundamental alteration of the political structure, and Vietnam exhibits many of the same tensions from unresolved dilemmas that have bedevilled other attempts at reform within a socialist framework. Yet having embarked on doi moi, turning back, or trying to, is also fraught with peril. The question whether the Vietnamese Communists must succumb to the universal dilemmas of reform as analyzed by Elliott, or can tap into distinctive resources of resilience, looms over the entire book. Generally, the shift to markets has been more stimulating than disruptive according to Vietnamese economists Le Due Thuy and Vo Dai Luoc, whose chapters provide a sense of the constraints under which

10 reform must proceed. They also reveal some of the differences of emphasis and interpretation that fuel debate in Hanoi. According to Thuy, an adviser to the Council of Ministers, policies adopted up to 1986 produced limited results because they were piecemeal and uncoordinated, and the failure to meet expectations convinced party leaders of the need for more radical measures. The need and acceptance of change, however, tended to grow as time passed, so the reform process moved inexorably from a focused attack on "centralized bureaucratic management" toward a wholesale shift to a market economy. The more the process has moved in this direction, the more its pace, scope, and success have come to depend on foreign capital, technology, and markets. Reform outcomes thus depend in part, and perhaps increasingly, on variables the government cannot control. By comparision Luoc, Director of the Institute of World Economy, focuses more narrowly on the state's capacity to determine outcomes, at least in the area of inflation, which accelerated steadily in the mid-1980s before the simple device of raising bank interest rates pulled money out of circulation and restored a semblance of price stability. Blaming state subsidies to industry, "closed-door" economic policies, and heavy dependence on foreign aid for fueling inflation, Luoc admits that manipulating interest rates was not a permanent solution and lists a number of sweeping structural changes that are still needed to maintain macro stability. As in any mixed economy, the legally sanctioned components of Vietnam's economy• operate interdependently, and firms from different components may compete in the same markets. Through the late 1980s, the state component produced thirty to forty percent of the gross national product, a share that actually rose after 1986 as local governments took advantage of decentralizing reforms to set up enterprises under their own jurisdiction. Nearly 4,600 of the 12,000 public enterprises, mostly small and local, operated at a loss in 1989, and many received direct or indirect subsidies despite the central government's aim to abolish these (fran Hoang Kim & Le Thu 1992, 13-14). The collective component, which depends on the state for a large share of its inputs and markets, did not fare much better, leaving individual and private business the only component showing much capacity for unsubsidized growth. In a field investigation of two ceramics centers, North American anthropologist Hy Van Luong finds the private sector more efficient than the state and collective ones, not just because of different incentive structures, but also because of state policies that hamper state enterprises and a sociocultural environment that works to the advantage of small, family-centered

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enterprise. Although Luong is careful not to generalize, his findings point to the effects of a Confucian cultural base and suggest that different patterns of ownership cannot alone account for differences of performance. Perhaps nowhere has doi moi had greater impact both on output and the way people organize their lives than in agriculture. Accounting for seventy percent of the work force and fifty percent of national income, agriculture remains the single most important economic activity. It is also one in which reform has accentuated regional differences. Chu Van Lam, the third Vietnamese contributor, argues that the inability of collectivization to sustain growth in the North would have become apparent even earlier had it not been for state investment and the introduction of high yield rice strains. The party remained committed to the Northern collective model at war's end in 1975 and even pushed to increase the size while reducing the number of cooperatives in the North at the same time that it initiated a cooperativization movement based on this model in the South. This effort encountered strong local resistance in the South and caused production to stagnate everywhere. If any single dimension of the country's deepening economic crisis persuaded party leaders of the need for significant change, it was the situation in agriculture, which led to the embrace of a product contract system. When this reform reached its peak in the late 1980s, the party virtually abandoned collectivization and accepted the need to sustain growth by placing primary reliance on a household-centered agriculture. The price of household-centered reform, according to Ngo Vinh Long, an American scholar, includes the exacerbation of regional, class, and sectoral inequalities. Regions that began with larger capital resources, more favorable land/labor ratios and more land in private hands (i.e., the Mekong deJta) were quickest to take advantage of the market. Reform also benefitted rural households that engaged in commerce and handicraft production more than households that did not, an effect that was more pronounced near urban areas than in remote rural ones. Although rural income inequalities remain the least significant in Asia, the trend provoked a backlash from officials who had most at stake in the cooperative system. These consequences of reform in Vietnamese agriculture invite comparison with China. Despite broadly similar institutional choices and analogous results with respect to growing income differentiation, significant ctifferences in productive outcomes in the two countries suggest important differences between them. In both countries, as Mark Selden points out, product contract systems sharply increased agricultural

12

output, but Vietnam has been much less successful than China in promoting rural sidelines and industry. Consequently, Vietnam has not matched China's rapid gains in rural productivity and income, or its progress toward reducing the urban-rural disparity. Considering that Vietnam began reform with a much weaker collective system, even in the North, than that of China and probably surpassed China in reducing collective and state controls on household farming in the late 1980s, it would be premature to conclude that the only viable path to agrarian development lies in an immediate transition to an unfettered free market economy. What are Vietnam's economic prospects within the existing political system and in what ways will the forces emerging from this mixed economy stimulate political change? Focusing on the trilateral relationship of party, state, and people, William Turley argues that the overlooked political side of doi moi mingles elements of Eastern European/Soviet "openness," increased state autonomy and limited electoral competition with war-time practices of mass mobilization. These institutions are not necessarily incompatible with rapid growth in a market economy. On the contrary, as diverse Asian examples suggest, they may be better able than pluralist ones to impose the painful adjustments needed to pursue an efficient growth strategy. That doi moi continued without interruption, while reform in other socialist countries either ended in regime collapse or experienced a sequence of political repression and freezing of reform momentum, is evidence of the regime's strength, the absence of plausible alternatives either to the regime or to doi moi, and the weakness of civil society. Over the long-term, however, reform should increase pressure on the political system by stimulating the growth of autonomous classes and occupational groups, increasing contact with international business, and spreading knowledge and culture through electronic communications. Such effects are likely to produce demands for change in the political system. The conjuncture in time of upheavals throughout almost all of the communist world in 1989 strongly suggested to many observers that democratization was an ineluctable historical trend, withstood only temporarily and at great cost by Vietnam along with China, North Korea, and Cuba. But Brantly Womack observes that the factors underlying the conjuncture of collapse in European communist countries had a different effect on Vietnam, if they were present at all. Liberalization as currently practiced, combined with an essentially cooptive, corporatist approach to potential oppositionist forces appears a viable tactic under present

13 conditions. Womack suggests that in the long term three alternative futures seem possible: stable liberalization, crises and democratic transition, or chaos and civil war. The outcomes will depend in large measure on how the Vietnamese come to grips with some formidable social problems. These range from high unemployment and demographic pressures to a weakening of public order and declining consensus on moral norms. Reform is directed principally at economic and political structures, but it unleashes change in areas outside these realms, with profound impact on individual behavior. Marketization draws people into new patterns of interpersonal relations, while the economic "open door" connects the domestic market with the world economy and the knowledge of other lifeways that comes with it. The consequences are often threatening or repugnant from the normative perspectives of the revolution, the traditional society, or both. Kristin Pelzer vividly captures the point in an analysis of changing images of women and gender and generational relations. These images, according to Pelzer, have all become points of friction in society as well as in the party as a result of the expanding cash nexus and Vietnam's intensified interaction with the outside world. Prostitution and beauty contests receive the most attention abroad, but the displacement of moral/ethical ties by instrumental ones is more disturbing to many Vietnamese. Nostalgia for traditional ways; confusion over gender roles; and struggle between concepts of tradition, socialism, and modernity-themselves subject to reinterpretation--suggest to Pelzer that gender and generational relations in Vietnamese urban society have entered a period of severe crisis. This crisis provokes some to argue that reform paves the way for degeneration. Isolation, however, is not a viable option. There is broad official recognition that integration into the world economy implies Vietnam's becoming more not less susceptible to the information revolution. This recognition signifies an important turning point its own right, for as David Marr points out, Vietnam's response to foreign ideas and technology historically was erratic and ambiguous. Under the VCP, efforts to control the influx of information available at all levels of society were progressively less successful after war's end, though not for lack of will in some quarters of the party. New technologies and the broadening of relations with countries outside the Soviet bloc enabled more and more citizens to conduct their lives with less and less reference to what the party said and did. Reform and Soviet disintegration merely accelerated this trend. As Vietnam strives to overcome its inherited

14 shortcomings in education, research, and media--as it must do to develop synergistically with the world economy--people's knowledge of the outside world, participation in cross-cultural communication and understanding of international norms of behavior cannot but increase, continuously challenging Vietnamese socialism to reinvent itself if it is to survive. Notes 1. The new Constitution of the Socialist Republic of Vietnam adopted April 15, 1992, listed these as the state, collective, individual, private capitalist, and state capitalist economic components.

References Bahry, Donna L. and Moses C., Joel. 1990. "Communist Dialectic: Toward a New Model of Socialism?,• in Bahry and Moses (eds.), Political Implications ofEconomic Reform in Communist Systems: Communist Dialectic. New York: New York University Press. Chanda, Nayan. 1992. "US Is Planning to Ease Its Embargo on Vietnam,• 1he Asian Wall Street Journal Weekly April 27, 1992, 1, 6. Communist Party of Viet Nam. 1977. 4th National Congress: Documents. Hanoi: Foreign Languages Publishing House. Cumings, Bruce. 1991. "Illusion, Critique, and Responsibility: The Revolution of '89' in West and East,• in Daniel Chirot (ed.), The Crisis of Leninism and the Decline of the Left: The Revolutions of 1989. Seattle: University of Washington Press. Fforde, Adam. 1989. The Agrarian Question in North Vietnam, 1974-1979: A Study of Cooperator Resistance to State Policy. Armonk, New York: M.E. Sharpe, Inc. Hanoi radio, January 12, 1990. News conference of minister of labor, war invalids and social welfare; translated in Foreign Broadcast Information Service, Daily Report: East Asia (FBIS-EAS) January 23, 1990. Hanoi radio, January 18, 1990. "Report on the performance of the state economic sector in 1989;" translated in FBIS-EAS January 23, 1990. Hoang Quy, Hanoi radio, December 11, 1991; translated in FBIS-EAS December 23, 1991. Komai, Janos. 1992. The Socialist System: The Political Economy of Communism. Princeton, N.J.: Princeton University Press. Tran Hoang Kim and Le Thu. 1992. Cac thanh phan kinh te Viet Nam: 1huc trang, xu the va giai phap (Economic sectors in Vietnam: situation, tendency, and solutions). Hanoi: Statistical Publishing House.

15 Tran Nham. 1991. "Resolutely Follow the Socialist Path... , • Nhan Dan (People's Daily), January 24, 1991; translated in FBIS-EAS, February 19, 1991.

PART ONE

Origins and Dilemmas

1 Doi Moi in Comparative Perspective David Wurfel

Among senior bureaucrats at the 19th century imperial capital in Hue there was often the hope that study of the latest shipment of Chinese statutes from Beijing would lead to the solution of their own administrative problems (Woodside 1971, 112). Fierce Vietnamese pride, of course, rules out admission of similar behavior today, but attention to policy changes in China is much greater in Hanoi than could be learned by the ordinary visitor. In fact, several research institutes have had units quietly monitoring internal Chinese developments. Nor are the spectacular changes in the Soviet Union and Eastern Europe unimportant to Vietnam. Hundreds of Vietnamese students and many thousands of workers have studied and worked there, communicating their observations to friends and family at home. In addition there have been frequent high level missions of both party and government traveling between Hanoi and COMECON capitals. Soviet TV news is rebroadcast in Vietnam. Given the closeness of the SovietVietnamese alliance it is not surprising that Nguyen Van Linh himself should say that the Sixth Congress of the Communist Party of Vietnam in December 1986 which "brought into play the sense of renovation" was "inspired by the 27th CPSU Congress and the restructuring in the Soviet Union" (Nguyen Van Linh 1988, 130). In fact, Vietnamese officials and researchers had also been closely watching reforms in Hungary and Poland much earlier. Nevertheless, despite the proliferation of foreign models and even the pressure from allies, it is probably fair to say that the timing and sequence of Vietnamese reforms was derived primarily from Vietnamese experience. The content of policies was similar to some of those in other

20 command economies largely because the problems they faced and the institutional frameworks in which they worked were so much alike. There may have been some direct borrowing as well. But Vietnamese officials in Hanoi often spoke of "learning from the South;" in fact, many of the ideas and the policy models for reform did come from southern Vietnam--which had experienced a capitalist economy more recently than any region in other Communist-ruled states. Before we describe doi moi (renovation) and try to compare it with restructuring in other socialist states we must remember that Vietnam is unique in a number of ways. The uniqueness of Vietnamese experience can best be summarized in four categories. First, the recency of the revolution is probably the most far reaching in its implications. But like the other factors this one has both positive and negative consequences for doi moi. As already noted this has meant that in the South there is a large reservoir of entrepreneurial experience which, unlike in the Soviet Union, reformers can unleash, quickly benefiting from the skills and the energy that are eager to grasp new opportunities. Furthermore, the recency of the revolutionary struggle that won, under the leadership of the party--as the party itself is quick to point out--both independence and national unity, actually contributes to the legitimacy, and thus the stability of the regime, at least when compared with the situation of parties in Eastern Europe, placed in power by Soviet troops (except, of course, Yugoslavia). This also means that nationalism, in contrast to the Soviet Union, serves to strengthen the central government. Despite these advantages there are also some noticeable handicaps that derive from the recency of the revolution. For one, in the immediate aftermath the bureaucracy became filled with "heroic fighters" who felt, with some justification, that they had made their sacrifices and that the time had come to reap their rewards. They were good at command, but lacked technical or administrative skills, and many became corrupt. Another handicap is the legacy of a war damaged economy, though not emphasized by the party leadership (see Kolko 1988, 473). For instance, transportation infrastructure in the North has never been fully restored. Perhaps even more significant is the psychological exhaustion (Elliott 1987, 223) that became so evident in the first decade after the achievement of reunification. The high expectations of peace and welfare that was to follow were not realized; in fact, in some respects conditions got worse. This worsening was due in part to a second unique factor: the result of Chinese efforts to bring to heel an overly independent Vietnam

21 through support of Pol Pot, leading to the "Third Indochina War." This included a Vietnamese invasion and occupation of Kampuchea and a Chinese invasion of Vietnam. With some reluctance a new generation of troops was drafted to go to Kampuchea, but this effort did help rekindle anti-Chinese nationalism as a source of regime legitimacy, just when it was sagging. On the other hand, the negative consequences of this new struggle were substantial. A US embargo of trade and investment in Vietnam linked to Vietnam's Kampuchean occupation, in which Japan and most Western powers, at least in part, concurred, closed off economic resources and opportunities for growth which at the same time China was beginning to enjoy. Though expanded Soviet aid compensated in a major way for diminished economic contact with the West, it also propped up a command economy which was in desperate need of broad reform despite the fact that it had already taken some steps in the late 1970s. Implementation of more fundamental reforms was thus delayed to the late 1980s. The recency of the nationalist struggle against the US, revived in the Kampuchean setting with US backing for Pol Pot and other antiVietnamese factions, provided still another negative legacy for Vietnam, which helped block political reform. The US never stopped backing opposition in Vietnam. After 1975 it not only maintained contact with internal dissidents but found new opportunities for cooperation with a growing overseas Vietnamese community largely hostile to Hanoi. This reality helped sustain a siege mentality among the more conservative elements in the Hanoi elite, who perceived an even more insidious American role, and thus helped justify a relatively hard line against anything like glasnost even before Tiananmen or the upheavals in Eastern Europe. The hint of factionalism--even though not clearly defined--within the ruling elite, was indeed intended. The influence of reformers and conservatives within the party Central Committee and the Politburo seems to have been fairly evenly balanced in the last decade, with appointments and policy decisions sometimes revealing the strength of one group and sometimes that of the other, though there has been a broadening over the years of awareness of the necessity for rather sweeping economic restructuring. Factional struggles are, of course, inevitable in any elite. But what is unique about Vietnam is the degree to which, among Communist-led states, the principle of collective leadership has actually been followed. Again this has had advantages and disadvantages for reform.

22 For instance, there has been no strong leader--either charismatic figure or senior manipulator, as in the Soviet Union or China--to push reform. Nguyen Van Linh got out in front as the champion of reform in 1987, but this role lasted little more than a year. Certainly the impatient reformers are looking for a champion, but the system has not allowed it. Important decisions have been delayed by intense factional infighting. Yet in one respect this may be seen as an advantage. Vietnam has not suffered the sharp swings in policy that China has. And from the standpoint of economic progress, stability is crucial. The maintenance of collective leadership, even though flawed by factionalism, has often been explained in terms of the survival of the comraderie among old revolutionaries. And in 1986 all the top-echelon leaders were indeed among those who had joined the anti-colonial movement as students and were founding members of the Indochina Communist Party under Ho Chi Minh (Khanh 1986). But old revolutionaries do die, and the remarkable thing in Vietnam is the smoothness with which generational transition has been handled. There has been a consistent pattern of leadership turnover since the Fourth Party Congress in 1976. Approximately forty-five percent of the Central Committee have been retained at each Congress (Thayer in Marr and White 1988, 183). By the Sixth Party Congress in 1986 ninety-two percent of the Central Committee had held office for ten years or less, less experienced than the US Senate. At the same time new blood has been brought in, and many at the top have retired. Six members of the Politburo resigned in 1986, while in 1991 nine resigned (Elliott 1991). In our opening paragraphs we noted the extent to which Vietnam was attentive to and influenced by events in both China and the Soviet Union. This is symptomatic of the last unique characteristic that needs mention. No other Communist-led state has been as open to the impact of events both in China and in what was, until recently, called the Soviet bloc. While the divergence of these models may help fuel debates between factions in the Politburo, on balance this situation is probably to Vietnam's benefit, if we recognize that it gives Vietnam the option to learn from the mistakes of others, a marvelous advantage if the lessons learned are the right ones. It was thought useful first to call attention to the unique aspects of Vietnam's situation before launching into a history of its reform, and the subsequent international comparisons. We will return to the broader implications of some of these points in the conclusion.

23 Economic and Political Reform in Vietnam

The First Period: 1979-81

The commitment to Marxism-Leninism, shaped by both Stalinism and Maoism, was great enough that it took a rude collision with reality to bump Vietnam off the rails of the command economy. Economic necessity was the mother of reformist invention (See de Vylder & Forde 1988, ch. 3; Kimura 1989, ch. 2). The economic crisis of 1979 had both domestic and foreign causes. On the one hand, Vietnam suffered from unusually bad luck with weather, cutting agricultural output, and from the overhasty socialist transformation of the South which depressed industrial, and commercial as well as agricultural activity. Chinese merchants were hurt in the state takeover of private enterprise, but so also were Vietnamese entrepreneurs and middle peasants. In the North also collective agriculture exhibited declining productivity. During the Second Five Year Plan, 1976-1980, the growth of national income averaged only 0.4 percent per annum, meaning a sharp decline in per capita terms (de Vylder & Fforde 1988, 61). There was a sudden fall in the delivery of staple foods to the state in 1978 and 1979. So in 1979 the drive to collectivize agriculture in the Mekong was temporarily abandoned. At the same time the conflict with China was brewing. After the Vietnamese invasion of Kampuchea in late December 1978, most Western and all Chinese aid and trade was cut off--though a number of European countries did not adhere to the American embargo. By 1982 imports from capitalist countries had dropped to forty-eight percent of their 1979 value, while imports from socialist countries had risen from fifty-two percent to eighty-one percent of Vietnam's total. Overall imports dropped fourteen percent in 1980, thus cutting supplies to state enterprises. Since political leadership did not respond rapidly or creatively enough to these changes, the first steps to adjust to the new economic conditions were "spontaneous bottom-up reforms" (de Vylder and Forde 1988, 62). They took place in both industry and agriculture. The innovation in agriculture was first, leading eventually to party endorsement of the "output contract" (/moan san pham) (de Vyler and Forde 1988, 69-71; Kimura 1989, 36-38). The essential characteristic of this contract was that the cooperative, which had its own production quota, agreed with farm families on quotas for set pieces of land, to be delivered at the state price, with the family free to sell any excess over the quota on the open

24 market. These assignments of family plots originally lasted only three years, but were subsequently extended. Obviously, families had greater incentive than ever to increase production. On contract land output typically rose by thirty percent in the first couple of years. The output contract had its earliest, and abortive, origins in Vinh Phu province in 1966, when the provincial party head was subject to house arrest for his innovative effort to raise production. The experiment reemerged at a time of declining production in Do Son district of Haiphong City. The district party secretary discovered that one cooperative had been secretly practicing output contracting from 1977. But since land preparation and water control, as well as lesser functions, remained the responsibility of the cooperative, the secretary decided that it was not contrary to the party line. In fact, since it was such a successful system for raising production, it was implemented throughout the province in 1980. On January 13, 1981, the party Central Committee in Hanoi issued Instruction 100 CT/TU making the contract system national policy; in December the policy was specifically extended to the South, thus reducing opposition to the further collectivization of the land. Bottom-up reform in industry may have begun as early as 1977, but there are no recorded instances. The term "fence-breaking" (pha rao) came to be applied to the efforts of individual factories to break through the constraints of the central planning system. For instance, when materials were short, goods could be sold in the open market to raise cash to buy supplies, or perhaps to pay bonuses to workers and thus raise productivity (de Vylder & Fforde 1988, 68). Though largely illegal, these initiatives became more and more widespread. Thus the first key reform decree for state industry in January 1981 required factories to register all activities they conducted outside the plan at the same time that it allowed them to acquire and dispose of resources as needed to increase their supply of inputs. State factories were also allowed to diversify their products outside the plan as long as they met their quotas. These relatively cautious reforms helped to trigger a fairly rapid economic recovery in the early 1980s. The index of gross agricultural output jumped from 101 in 1979 to 120 in 1982, while gross industrial output rose even more rapidly from 100 in 1980 to 143 in 1982 (Kimura 1989, 11). But with renewed economic growth, the urgency of reform declined. Furthermore, the reforms themselves produced a new problem, inflation. The contract system raised agricultural production and expanded the range of products on the free market; greater autonomy for

25 state enterprises also led to a larger percentage of sales at market prices. But demand grew more rapidly than supply. Thus inflation in 1979 nearly doubled to forty-three percent and by 1982 had reached eightythree percent (ninety-six percent in grain and food prices) (Kimura 1989, 42). The gains from a series of wage and salary increases were wiped out. And alongside inflation were the so-called "negative phenomena," speculation, smuggling and various forms of corruption. In the eyes of many leaders in Hanoi, "negative phenomena" were especially associated with Ho Chi Minh City which by 1982 had captured thirty-seven percent of the nation's gross industrial product, compared with only seventeen percent in 1976 (Kimura 1989, 51). Already in September 1981 a Council of Ministers resolution moved to limit the free market activities of state enterprises, which fell most heavily on Ho Chi Minh City. Second Period: 1982-1985 It is thus not surprising that the Fifth Party Congress in March 1982 veered away from the reformist tendency. This was symbolized in the removal of Nguyen Van Linh, party secretary in Ho Chi Minh City, from the Politburo and the Central Committee secretariat. Subsequent decisions and commentaries made the conservative mood even more clear. Vice-Premier To Huu, speaking on the 1982 national day, said "Localities in the south ... must provide close guidance for the cooperativization movement in order to ensure that the socialist transformation will be basically completed within this 5-year plan ... Simultaneously, we must step up socialist transformation vis-a-vis trade, transportation and private industry ... " (quoted in Kimura 1989, 48). Reflecting the Politburo mood, Nhan Dan (People's Daily, the national party newspaper) ran a series of editorials in December, beginning with "Restore socialist order in the market." During 1983 reforms were trimmed and central control reestablished over distribution. In August 1983 Hoang Tung, Central Committee spokesman, explained what was happening in ideological terms: "In the struggle between [socialism and capitalism at home and in the entire world] rightism is currently the main obstacle. Rightism is a rather prevalent phenomenon in the struggle to eradicate private ownership." (quoted in Kimura 1989, 49). While the conservatives battling "rightism" may have won the ideological battle, at least temporarily, the economy was slowing down. Paddy yield per hectare leveled off between 1984 and 1985 and foodstuffs production was only up 1. 7 percent, indicating a per capita

26 decline (Kimura 1989, 16, 57). By 1985, the inflation rate was climbing more rapidly, since previous reforms had pushed up some prices and the state bank continued to expand currency supply, oblivious to its impact on prices (Kimura 1989, 53-54). It may be some time before we discover what the Soviet impact on Vietnamese policy was in 1985. Though Gorbachev came to power in March, he gave little indication of his future reforms during his first year in office. But there are indications that the Soviets were pushing for greater economic efficiency and favored Vietnamese reform. The poor performance of the Vietnamese economy also created pressure for further reform. In any case, 1985 did mark the end of conservative resurgence and the beginning of a new drive for reform. Third Period: 1985-1989

The eighth plenum of the Fifth Central Committee, meeting in June 1985, again combined leadership change with new policy initiatives. Nguyen Van Linh was reinstated as a member of the Politburo, and shortly thereafter in the Central Committee secretariat as well. New policies dealt head-on with basic inefficiencies in the economy and took a major step from central planning toward a market system (Kimura 1989, 53-54). State subsidies were to be abolished with wages and salaries to be paid on a straight cash basis, while state enterprises, required to do "socialist accounting," were to fix prices on the basis of costs. Both of these moves were inflationary. While there was an explicit recognition that the volume of currency in circulation was a cause for concern, actual currency reforms were clumsy and ineffectual-especially the redenomination of the dong on September 14th. They simply exacerbated the inflation. In August Nhan Dan again reflected the shift in party line: "Simplistic and narrow thinking, meaning the desire to maintain total control over all of society's production and distribution by means of administrative directives, needs to be abolished ... " (quoted in Kimura 1989, 55). Nhan Dan had already insisted that "Expanding market transactions in compliance with objective economic laws is an essential element in promoting the development of production." Inflation, as a number of observers had predicted, did in fact gallop. Between September 1985 and September 1986 it reached seven hundred percent. This could have been the cause of a major defeat for the reformers. In fact, in January 1986 the rationing of several food items was reinstated, and some in-kind payments in lieu of wages were

27 resumed. At the same time there was a reinvigorated crack down on graft, speculation and profiteering (Kimura 1989, 58). But this was not an abandonment of reform. Though the free market already accounted for more than forty percent of retail trade, in March authorities took steps to expand the role of private business to handicrafts and small scale industry. In Ho Chi Minh City a private entrepreneur in manufacturing was allowed to employ up to ten persons, with no limit on capital. At the tenth plenum of the Fifth Central Committee in May 1986 the maneuvering between conservative and reformist forces ended in a further victory for the latter. Vice Premier To Huu and other conservatives lost their seats in the Council of Ministers. The power struggle was even more intense by the time the Sixth Party Congress assembled in Hanoi in December. Le Duan, the Party General Secretary, had died in July and been replaced by Truong Chinh, mildly reformist. With the December replacement of the elderly Truong Chinh by the committed reformer, Nguyen Van Linh, linked to the strong reformist bloc in the South, the party clearly took the option for change. In a speech to the congress, Linh even argued that the centralised system of resource allocation was against the principles of Marxism-Leninism (de Vylder & Fforde 1988, 73). Soon after the congress the government belatedly took the crucial step of creating internal free trade by closing the customs posts, or checkpoints, that had been erected by so many cities and provinces to tax commerce; though popular among the public, it was not an easy reform to enforce. It is fortunate that reformers were so clearly in control of the Politburo at this time, because economic conditions became so bad that conservative critics of the reform could have had a field day. Estimates of inflation reached one thousand percent per annum. (The IMF, using official data, reported only 487 percent for 1986 and 301 percent for 1987). Per capita grain output, which had been 304kg in 1985 fell to 280kg in 1987. By 1988 grain production was nearly a million tons less than in 1986. 1 While grain production was indeed plagued with bad weather and insect infestation, and inflation seems to be endemic midway in the changeover from command to market economies, government policies and cadre behavior were still largely to blame. (Vietnamese cynics note that poor harvests are always due to bad weather, while good ones are invariably the result of "the brilliant policies of our great party.") The Ministry of Agriculture could not deliver to cooperatives even fifty percent of the farmer's requirements for fertilizers. And the pressure for grain deliveries on the cooperatives was so great that quotas for

28 individual families were often raised to the point that they abandoned the land--for it was not unusual that after deductions for inputs supplied by the cooperative, taxation to support education and social services, plus various other exactions devised by local cadre (often to feather their own nests), the poor farmer was left with only twenty percent of the compensation he was to receive for his quota grain delivery. Inflation was, in part, the natural result of a shift from artificially low administered prices to a free market; it was also caused by some absurd credit and monetary policies. Since credit was primarily for the benefit of state enterprises, it was kept cheap. In fact, with the advent of inflation in the late 1980s, the State Bank charged negative interest rates, creating an insatiable appetite for credit. That appetite was further whetted by the unusual arrangement of interest rates on loans being lower than those on deposits! 2 If official figures are to be believed that wage levels grew somewhat more rapidly than prices, then this was also a cause for inflation. And to meet the needs of inflated wages and credit, the State Bank continued to print more currency. With food shortages and runaway inflation, one would have imagined that Nguyen Van Linh might have been afraid of public expressions of opinion. Yet it was in 1987 that he first introduced political reforms. Perhaps it was the influence of glasnost, but it may simply have been a calculation--accurate as it turned out--that allowing greater public expression would undermine the position of the conservatives, especially in times of great hardship. In fact, this had already happened in the process of selecting the Sixth Party Congress, which declared its commitment to "democratization" of the party. In early 1986 a draft political report was prepared for presentation to local and provincial party meetings, which in the past had always been given "unanimous" approval before going on to become the final document of the congress. But in this case it was sharply criticized for failing to reflect the real situation of the party and the country, and was ultimately rewritten (Khanh 1988, 3). The critical mood within the party extended to the selection of delegates to the congress. In some localities as many as half of the official nominees were rejected. The most celebrated case was that of General Van Tien Dung, former Minister of Defense and Chief of Staff, whose party local within the Army refused to choose him as a delegate! After intervention by the top leadership he was finally selected, but he lost important posts in the party and government. Openness within the party had clearly benefited the reformers; other types of political reform seem also to have been designed to draw on the

29 popular desire for participation and to discredit the recalcitrant bureaucrats who were sometimes able to block or distort important reform measures. The state bureaucracy, even the local party cadre, were far from perfect instruments for carrying out the will of the nation's political leaders. One type of reform was also designed to implement one of the lesser themes in doi moi, the rule of law, which could also be understood as a mechanism for helping to regulate the behavior of party cadre.

The National Assembly An enhanced role for a democratized legislature had more than one function. In the Seventh National Assembly the spirit of reform had already begun to affect the actual proceedings. An earlier tendency to rubber stamp was replaced by vigorous debate which often delayed decision and even led to substantial alteration of legislative drafts as first introduced. The Foreign Investment Law was delayed for nearly a year by debate and amendment attempting to strengthen it. In April 1987 there was an election for the National Assembly in which for the first time more than 1.5 candidates were nominated for each of the 496 positions to be filled (Beresford 1988, 109). To be sure, nominations were all channeled through the Fatherland Front, which was said to "welcome suggestions" from various individuals and groups. (interview, Nguyen Thi Binh, Hanoi, May 5, 1988). Ho Chi Minh City, with eighty candidates for thirty-five seats (interview, Ly Chanh Truong, Ho Chi Minh City, May 7, 1988), had more intense competition than was true nationwide. In fact, a Central Committee member there was defeated in his election bid. While the total of Assemblymen elected included nine Buddhist priests and only forty-nine from the military, sixty percent were Communist Party members. But reform in the Eighth National Assembly was probably even more noticeable after it began sitting in June, than in its method of selection, which nevertheless produced an unusually large turnover in membership. The length of the sitting was, in fact, much longer than before, and members' responsibilities were extended by the formation of standing committees with public hearings held around the country after sessions closed. According to a member of the Education Committee these hearings sometimes produced lively debates and sweeping criticisms of government policy. For instance, teachers complained of salary reduced to a pittance by inflation and of a curriculum so politicized that ideology even intruded on mathematics.

30 In the 1988 session legislators acted like their counterparts worldwide by demanding a reduction of taxes on peasants, which at the time amounted to nearly thirty percent of net production for first class land. The Education Committee was asking for an increase of funds for education to ten percent of the national budget. But perhaps the most remarkable change in the decision-making process was the selection of a prime minister by secret ballot. And, in fact, when Do Muoi was elected, there was strong support for then Vice Premier Vo Van Kiet, one of the most committed and knowledgeable reformers. But despite the changes actually accomplished, many legislators continued to insist: "We must democratize."

The Press The move to unleash the press as a mechanism to pinpoint criticism of the bureaucracy and channel public complaints began soon after the Sixth Party Congress. But its formal launching was seen in May 1987 with the appearance of a column in Nhan Dan entitled "Things That Must be Done Immediately," signed simply "N. V. L. "--though it was quickly understood to be the work of the party General Secretary. The column exposed a number of cases of bureaucratic waste, corruption and inefficiency, and named names. The pattern was set for renovation in the press. Nhan Dan reported over four hundred cases of corruption in 1987, and was considered by readers to be more cautious than some of the other nearly forty dailies. In early 1988 Nhan Dan was receiving nearly three hundred letters a day, of which they usually printed more than ten (interview, Ha Dang, Hanoi, May 4, 1988). Most of these were also complaints about party policy or cadre. Nhan Dan exposed a judge who issued a decision unfair to the people, a police captain who was involved in a murder, as well as innumerable frauds. In some cases they succeeded in getting the removal or conviction of high ranking officials, but in nearly eighty percent of the cases the exposees were simply ignored. And in a few, investigations triggered by the press hurt the wrong people. For instance, the party secretary of Thanh Hoa province was attacked in the press and by the public for two years, during which time the Central Committee sent fourteen different inspection teams to investigate. When he was finally dismissed and indicted, the members of the fourteenth inspection team were also expelled from the party (Khanh 1988, 5). Still, in the first six months of 1988, more than one thousand party cadres were tried for corruption.

31 An expansion of press freedom did not extend to the right to criticize top leaders by name. And though Nhan Dan was freed of pre-censorship by the Central Committee in 1987, it still accepted its primary responsibility as "making the people understand the party line." Nevertheless, the editors also believed in the importance of democratizing the policy process. They often published various views by scholars on draft policy statements and thereby sometimes contributed to amendment of the draft. It is probably fair to say that press reform in 1988, though limited, was quite significant.

The Peasant Union The third development, which at first appeared to be institutional reform, has received less press and scholarly coverage. It was designed to give peasants a stronger voice in the implementation of policy, but it may also have been expected to become a more effective channel of party influence in the countryside, since the cooperatives were of declining significance after the introduction of the contract system and, in the south especially, were always seen as an oppressive imposition from outside the village. After a year of preparatory organizational work the first congress of the Vietnam Peasants Union (Hoi Nong Dan Viet Nam) was held in Hanoi on March 28, 1988 (Pham Thinh 1988). (Previous peasant unions had been restricted to cooperative members and had apparently become inactive). Its purpose, according to the vice-chairperson of the Ho Chi Minh City branch (interview, Ho Chi Minh City, May 11, 1988), was to provide information to the peasants on party policy and to strengthen the "family economy," to act "as a bridge between peasant and government." In more specific terms emphasis was put on exposing and stopping corruption and malpractice in the management of cooperatives. In fact, it was said that cooperative cadre sometimes "exploited" the poor peasants. In speeches at the inaugural congress, following that of Nguyen Van Linh, it was said that in the countryside there had emerged "a new class of oppressors and tyrants who apportioned perks and privileges to their relatives and cronies, .. .in defiance of all state regulations, openly trampling upon the rights and interest and even the right to live of simple citizens." Yet this was an organization most of whose officers were members of the party! Apparently the combination of legal and illegal exactions on peasants delivering quota rice to the cooperative were so great that violence sometimes erupted, with farmers resisting and cooperative officials, sometimes aided by armed thugs, extracting the levies. The Peasant

32 Union set as its goal the farm family being able to retain thirty to forty percent of the value of the quota delivery. Reduction of agricultural input prices--an issue for farmers around the world--was also stressed. The strategy of forming a new organization to mobilize and service a segment of the population no longer adequately reached by existing organizations is widespread. Nasser used it to implement land reform when he was dissatisfied with his own party (Migdal 1988, 197ft). Mao's Red Guards were in some ways similar. These groups sometimes acted beyond the intentions of their creators. But in Vietnam by 1990 the Peasants Union seemed to have been tamed by local party cadre, who had interests to protect, and was inactive in most areas. While mobilizing peasants, the Hanoi regime was also attempting to clarify and expand the reforms in agriculture. The most important single document was the Land Law of January 10, 1988 enacted by the National Assembly, on a subject which had previously been covered by a plethora of not entirely consistent decisions by the Council of Ministers, Prime Minister, Politburo and Central Committee. Most importantly, the law ensured land users, i.e. those who have contracted to use a particular piece of land, the ownership and thus the right to sell (if someone else is assigned the land) "the fruits of their labor," i.e. improvements, buildings, or trees. Farm families were also given the right to own outright the land on which their house was built. Renting out assigned land or using it for non-farming purposes--as well as other practices with which the drafters seemed to be familiar--was prohibited. The major lacunae in the law was filled in April by Politburo Decision 10, which also set other broad policies. Land allocation for annual crops was to be for ten to fifteen years, and for forest land up to one hundred years (Bloch and Oeterberg 1989, appendices C, D, E). Farmers were to be assured at least forty percent of the product of the land they cultivated; "and no egalitarian income distribution ... shall be in force." No new state farms were to be established. But neither the land law, Decision 10 or any other regulation sets forth the procedures to be followed when a land allocation is terminated. For the South, Party Directive 47 of August was even more important. It called for the return of land to previous owners if "illegally or arbitrarily appropriated" in the earlier collectivization campaign. 3 In the brief period of implementation so far it appears that Land Tenure certificates, a few of which have already been issued, will be given to individual households only for their house plot, vegetable garden, and "five percent land," i.e. private plots allowed families even before the contract system totaling five percent, or more, of the

33 cooperative's land area. The rest of the cooperative's land, would be covered by a certificate issued to the cooperative. Households receive certificates clarifying long term usage rights. The considerable progress in both economic and political reform, despite severe economic conditions, lasted only to the end of 1988. Then the policy shift seemed to be more affected by external factors than had been true of previous transitions.

Fourth Period: 1989In early 1989 there were important signs of economic progress. Perhaps most remarkable, the inflation rate began to drop so that by the end of the year it was only one-fifth the rate in 1988.4 Interest rates were raised high enough to slow down the demand for credit, with saving made more attractive than borrowing. Vo Van Kiet, while talking about the new interest rates in July revealed, "We have worked with international currency experts," undoubtedly meaning the IMF, since Vietnam was then still hoping for substantial credits from that source. s Perhaps the most spectacular development, after the disastrous harvest of 1988, was the bumper crop of rice, the highest ever. Given the hunger for foreign exchange, soaring world prices, and the hoarding of rice in 1988 as a hedge against inflation, there was a surge of exports. In fact, exports totaled over one million tons, making Vietnam the third largest supplier to the world market. 6 Exports of all commodities jumped by fifty percent. 7 The Foreign Investment Law was also being implemented, more rapidly than some had feared. By November investment licenses had been given for eighty-five percent projects with a total capital of US $832 million; half of the projects were already in operation. Capital came from Western Europe, from Singapore, South Korea, Thailand, Hong Kong, and Japan, as well as Australia, India, Czechoslovakia, the Soviet Union, and overseas Vietnamese. 8 All was not well, however, since estimates of unemployment reached twenty percent of the workforce and more, and many veterans returning from Cambodia could not find jobs. But progress was sufficient for Do Muoi to claim in December "we have laid down correct domestic and external policies to solve the socioeconomic problems of the country," a long way from the orgies of self-criticism of the Sixth Party Congress. There was to be no trimming of economic reforms. But even in early 1989 there began to be new restrictions on the press and on cultural freedom. Without a change of leadership, as in other

34

cases of policy shifts, the party backtracked, worried about events in Eastern Europe. Nguyen Van Linh's speech at the sixth plenum of the party Central Committee in late March was a harbinger of things to come. He praised economic successes, even though "acute difficulties" remained, and he urged the party to "accelerate the cause of renovation. "9 But he gave the term a slightly different twist: "Renovation in thinking is aimed to overcome what is incorrect. .. not to deviate from the principles of Marxism-Leninism." The plenum ended with a communique which warned: Renovation of the political system "is aimed at strengthening the party's leading role. We do not allow those who take advantage of democracy and openness to attack the party and its leadership." A month earlier, in February, Linh had already warned media heads in Ho Chi Minh City to tone down criticism of the government and the party and to emphasize "good models of renovation." He added: "I do not mean that the press should avoid reporting difficulties." But he reminded his listeners "The press .. .is also a tool of the party." He warned as well against "the tendency of a bourgeois democracy," explaining, "It is necessary to make clear that the implementation of democracy must be well guided." He was worried that, especially in the south, some people "have talked about pluralism." (Hiebert 1989) These themes were to be frequently reiterated in the year following. Linh had already stopped writing his own muckracking column in late 1988. By September 1989 foreign commentators noted that "So-called exposes have grown very tame, and usually don't name names or locations as they did for two years. 1110 One daring journalist did name names and places as late as July 1989. But in November a military court martial convicted this correspondent of a Ho Chi Minh City weekly, Tien Phong, of libel for publishing "Consequences of the Black Video Evil." The action was initiated by the Seventh Military Region, which, we learn from other sources, was stung by revelations of military units showing pornographic videos for profit. The journalist, who "admitted that the contents of his article are false," was given a one-year suspended jail term. Many other journalists from around the country attended the court hearing. They learned that investigative reporting was becoming more risky. 11 After a long delay in completing the draft, the government presented a bill on the press to the National Assembly. Some deputies quickly objected because the draft law had been made public only one month before, thus giving the people no time to present their views. Debate continued, however, with members from Ho Chi Minh City spearheading

35 the opposition. The most controversial issue was the bill's prohibition on privately owned newspapers, making it more restrictive than the previous 1957 law. Deputy Ly Chanh Trung claimed that a ban on private newspapers would contravene the Constitution which recognizes the freedom of the press. Madame Ngo Ba Thanh, on the other hand-surprising some of her long time foreign friends--took the party line, arguing, "The passing of the draft law on the press is a necessity aimed at consolidating our current struggle on the ideological and cultural front. "12 Madame Thanh also suggested that private newspapers would only speak for the capitalist class. The vote on that article was 354 to thirty-three. The full draft was then adopted, 422 to twenty-two. Constitutional processes were used to severely restrict the freedom of the press, as has happened in some other Southeast Asian countries. It was in this atmosphere that on December 3rd at 6:00 a.m. "all provinces, cities and special zones throughout the country began to vigorously suppress all types of crimes ... restoring public order and discipline. "13 In the first week of this national campaign nearly ten thousand criminals were arrested, of whom 1340 were "caught in the act." Those arrested included robbers, hooligans, nearly 870 "on the wanted list," and "those who have escaped from reeducation camps. "14 The Minister of the Interior, Mai Chi Tho, reported confidently on December 17th1s that as the result of the recent drive the crime rate had dropped by twenty percent. When he intoned that "Only by suppressing crime can we broaden and perfect our democracy," he surely found resonance in big cities around the world. But he also added a comment that helped lend political color to the entire exercise: "A rightist attitude of tolerance toward crime can only help crime to intensify." By word and deed the dimensions of Politburo thinking, of a new party line, began to emerge. In part this was probably a result of pressure from groups within the party. For instance, local and provincial party cadre after 1986 made up the largest sectoral grouping in the Central Committee, forty-one percent of 173 full members (Elliot, 1991), and thus must have had considerable ability to mount a counterattack against an "unleashed" press that exposed many of their number. (After the Seventh Party Congress this group grew further to forty-seven out of 146.) Though the military by 1986 constituted only seven percent of full members of the Central Committee--less than half their percentage of a decade earlier--they were nonetheless a very important segment of Vietnamese society, with special strengths and skills. (The military percentage of the Central Committee went up again slightly in 1991.)

36 The military have accepted a cut in troop strength of nearly a half million in the last few years, but are clearly unhappy with continuing budget cuts. Said Gen. Le Due Anh, Minister of Defense, 16 "In 1989 the Finance Ministry could barely ensure for the army a budget equal to only sixty-seven percent of the amount prescribed by the Political Bureau's resolution .... The result was [that] ... soldiers' allowances for the purchase of the necessities of life were cut by thirty to forty percent. Many units had ... no beds for troops to sleep on." He concluded with a warning that "the livelihood of soldiers... [has] now become a political problem of society." (Prime Minister Do Muoi recognized this problem implicitly when he addressed a group of senior army officers in November. He "repeatedly urged the cadre... to ensure absolute, direct, centralized, unified and comprehensive party leadership over the army. ") 17 In an interview Gen. Anh had already indicated some dissatisfaction with economic renovation, "In carrying out renovation ... there emerge many problems ... , neglecting the national defense task. "18 The army newspaper reported in late 1989 that only thirty-five percent of those soldiers demobilized had found full time jobs. 19 The pursuit of social order and the attack on "bourgeois tendencies" by the party would at least mollify the military point of view, without costing any money. But whatever the pressures upon them, it would appear that Linh and the Politburo acted primarily on the basis of the new domestic and international realities which they perceived to be emerging. Domestically the potential for unrest among a large unemployed segment of the population, especially demobilized soldiers, was troubling, a feared source of instability. More immediately the leadership was concerned about the feisty political mood in the South; both the media crackdown and the anti-crime campaign were concentrated there. The government's eagerness to implement the agreement for the emigration to the US of those released from reeducation camps was also tribute to this concern. There were growing expressions of opposition both inside the party and out. The most dramatic evidence of internal opposition was the Club of Former Resistance Fighters, which first gathered in Ho Chi Minh City in late 1987. One of its first overt acts was to send a letter to the Central Committee and the National Assembly in June 1988 urging that there be a truly democratic election of a new prime minister, by secret ballot. (That procedure was followed, in fact, but the group's apparent favorite, Vo Van Kiet, did not win.) The letter had been signed by more than one hundred retired generals, ambassadors, cabinet ministers, and high party officials, e.g. Tran Bach Dang, former Saigon party committee secretary. Despite this prestige, however, the first issue of the club's magazine,

37

Tradition of Resistance, published in September 1988, was immediately confiscated. The second issue was secretly printed in a Mekong delta town and was similarly distributed around the country. The harsh criticism of party leadership and policies was a statement of men who felt they had nothing to lose. The dismissal of several high officials was specifically requested, including the director of the State Bank--who was, in fact, removed soon afterwards. Club statements repeatedly asserted a commitment to Marxism-Leninism, but demanded openness, intra-party democracy and effective implementation of reform. (Chanda 1989, 2425.) Yet the theme of deep humiliation felt by the old revolutionaries because of Vietnam's abject poverty led them to look at East Asia's "four dragons" as economic models. Among southerners there was also a deep and lingering resentment of Hanoi's hasty reunification of the country in 1976 with little recognition for the South's socio-economic differences, yet the club found allies and supporters in the North. In a late 1989 issue of the club's publication, a speech of Tran Xuan Bach was printed, which clearly made the group a player in the jockeying leading up to the next round of leadership change, then expected to take place at the Seventh Party Congress in 1991. (Linh had hinted he would like to step down.) Bach, then a member of the Politburo, was often mentioned as a candidate for General Secretary--until he was dismissed from top party posts in March 1990. Bach was in charge of the party's foreign relations and in that capacity traveled a great deal; he was especially knowledgeable about events in Eastern Europe. He believed that the dramatic events in Eastern Europe were simply prompted by the abuses and mistakes of Communist leaders there. In a speech broadcast by Radio Hanoi in mid-January he called on his party colleagues to recognize that political reform must accompany economic liberalization. But this was not the official party view; one reason it was not is that there is a very different kind of opposition, also concentrated in the South, which could be a greater threat to stability than the Club of Resistance Fighters. Though the overseas Vietnamese community has been a welcome source of capital in the last few years, it is also the base for numerous well-funded anti-Communist organizations. These groups, some with overt ties to former CIA figures involved in the Iran-Contra scandal, have supported armed resistance to the regime in the South and were reported to have stepped up shipments of anti-Communist propaganda tight after the Tiananmen Massacre (Hiebert 1989b). They continue to raise funds for these purposes, especially in Vietnamese communities in the US, sometimes with coercive methods. These are men determined to disrupt society in the SRV, eager to exploit any signs

38 of unrest. Conservatives in the Politburo may have exaggerated the threat, but their concerns are understandable. This situation helps them believe the official Chinese explanation about the foreign instigation of student demonstrations in Beijing. Though the Vietnamese media have had only sparse reports and very little direct commentary on events during 1989-91 in China, the Soviet Union and :Ea.stem Europe, the leadership has undoubtedly been examining them very closely. (Much has appeared on Soviet TV news in Vietnam). In the literature available it appears that there are two divergent images of what has happened, one that emphasizes the mistakes made by Communist party leaders, e.g. Tran Xuan Bach, and the other, found especially among military figures that stresses "imperialist sabotage." Pres. Vo Chi Cong and party Secretary Nguyen Van Linh have incorporated both elements in their assessments. Speaking to National Assembly delegates in December 1989, Vo Chi Cong identified three main causes of "acute difficulties" found in socialist countries. First, "... the Communist parties in their leadership have seriously violated socialist democracy and ... failed to understand and to win the support of the masses. "20 Second, in economic policy "they have committed errors .... ; did not care to develop the commodity economy; ... the economic mechanism remained heavily bureaucratic and ... international cooperation relations were late to expand." Although he made the orthodox obeisance to Marxism-Leninism and the need to apply it to "the concrete realities," he also made a very pragmatic observation: "At present, no new model has taken shape, so all the countries are still experimenting on their own ... .In fact nobody can say he has truth in hand. Here lies actually the crisis in theory and ideology." The third cause he listed was in the international system. "Imperialism ... now sees this as the golden opportunity to make the best of the socialist countries' mistakes and difficulties .... This is a lesson to which our party has to pay particular attention." He concluded with, first, realistic and then ideologically optimistic comments. "The crisis in some socialist countries is badly affecting the whole socialist system, including our country." Then he added: "If the socialist countries ... step by step overcome errors and mistakes, correctly lead ... reform and renovation ... ; they ... may regain the people's confidence and consolidate the party's leading role." Nguyen Van Linh was speaking in Hanoi to some three hundred veteran revolutionaries and high-ranking retired cadres in early February, 1990. 21 According to the Radio Hanoi summary: "The comrade touched on current developments of the world situation, and cited once again the

39 party leadership's assessment of the political situation in the fraternal socialist countries. According to the comrade general secretary, errors in economic development, slow improvement of socioeconomic management procedures, despotism, lack of democracy, violations against Marxist-Leninist principles and the imperialist forces' sabotage activities are the causes leading to this situation." He was quick to add: "The developments ... are very complicated. We are far away and do not have timely, accurate information," thus implying openness to new interpretations. Nevertheless, he warned: "We should heighten our vigilance and stand ready to cope with the imperialist forces' multifaceted sabotage activities and dark schemes .... Noteworthy is the fact that. . .imperialist forces have helped the opposition factions [in these countries] and instigated the masses to conduct subversive activities from within." The analyses were similar, but the weighting on "imperialist forces" seemed slightly heavier in the speech by Linh. The essential question, however, was, given these analyses, what was the Vietnamese party to do? Was it to accelerate reform or hang back? Was it to tighten social order or expand democracy? As we have noted, answers began to be given by early 1989. But by the end of the year the concerns of the leadership were so focused on the necessity of maintaining the leading role of the Communist Party that discussion of the particulars of economic reform faded considerably. Whether the priorities were well designed to achieve desired goals will receive comment later, but let us first review what party leaders were saying about "What is to be done?" To focus on the party's "leading role," it was first necessary to reject pluralism. Nguyen Van Linh stated his position clearly: "A genuine democratic system is not determined by the existence of one or many parties. The question is whether this democracy is formal or genuine... .In the present conditions in Vietnam, and in the future too, there is no objective necessity for the creation of opposition political parties. "22 Radio Hanoi added a further rationale for the objection: "We reject pluralism and multiparties because... it is the enemies' scheme to ... deny the leading role of the party. "23 Another radio commentary made the charge more specific: "The imperialist and reactionary forces have never given up their attempt to set up and foster well-organized opposition parties and factions to oppose the Communist regime. "24 Maj. Gen. Tran Xuan Truong elaborated: "Using pluralism [imperialism] demands that no political parties be allowed to establish their bases in the army and that the Communist Party's organization in the army be eliminated ... "25

40 But neither the force of the language nor the strength of the argument really settled the question. In February 1990 NHK reported that before a Central Committee plenum Linh criticized "a number of opportunists" inside the Politburo who advocated a multiparty system. This was the first indication that there were supporters of multiple parties in the Politburo, with some therefore remaining after Bach's dismissal. When Gen. Le Due Anh talked about democracy he commented, "Of course, the term democracy here means socialist democracy. It implies democratic centralism. "26 This was indeed the party line. The army theoretical journal explained that to expand socialist democracy it was necessary to "strengthen all the more intensively the leading role of the Communist party and efficiency of proletarian dictatorship. "27 Linh himself helped revive usage of the term "proletarian dictatorship." Said he, speaking to the Nguyen Ai Quoc Institute for training party cadre: "There is no reason for the proletarian dictatorship to lose its significance... There is but one alternative: capitalist dictatorship or proletarian dictatorship" 28 Without trying to reconcile "proletarian dictatorship" and "socialist democracy" a symposium at that same institute a few months later called on the party to "lead democratically ... within the framework of the Constitution. 29 Some participants accused certain party executives of "oppressing the masses." Closing the symposium, Politburo member Dao Duy Tung called on the party to "Broaden democracy--democracy in discussion, democracy in the adoption of party resolutions, democracy in personnel work, democracy toward persons of different views ... " There were obviously different conceptions of socialist democracy. Linh saw democratic centralism as a basis for restricting the press, but he also praised the increased power for elected bodies. And the practice of multiple candidates elections for local and provincial People's Councils continued into 1989, but with less competition and more effective party "leadership." Since the renovation of the party to strengthen its leading role was seen as a requisite of socialist democracy there was also considerable talk about the need to intensify ideological work, affirm the historic inevitability of socialism and ensure political stability. 3° Closely related to rekindling ideology was the renovation of the party's mass motivation work which the Politburo, as in China, decided to emphasize. An editorial in Nhan Dan was the only guideline offered for party renovation which seemed to have any connection to the earlier theme of economic reform, i.e. limiting the party's role in the economy. Said Nhan Dan, "The party is a political organization and not a state organ of power or

41

an economic management or professional service organ. It is necessary to do away with the phenomena of party organizations taking on those jobs that rightly belong to the administration or to managers. "31 Indeed in the flurry of rhetoric about "the party's leading role" it was good to know that doi moi had not been forgotten. In his speech on the occasion of the party's 60th anniversary Nguyen Van Linh confirmed that "As in the past, we stand for parallel renovation in both economic and political fields, with emphasis on economic renovation. Renovation in the political sphere ought to be carried out... steadily... causing no political instability. "32 Also reassuring was evidence that the general secretary had come to an appreciation of the difficulties of economic reform. Said he, "The relations between plan and market are a complex, delicate issue.... Now, we clearly see that market. . .is an important planning factor. The question is what kind of mechanism we are going to design to improve these relations. "33 His comments created confidence that economic renovation would continue, if gradually. What is not clear is whether party leaders had the same sophisticated understanding of the interaction of political and economic factors. There was no significant shift made in the policies of doi moi at the Seventh Party Congress. The new secretary general, former premier Do Muoi, said that the "outstanding result of our congress is the unanimity of views on all major issues. "34 But unanimity was achieved at the expense of innovation or specificity. He only reaffirmed "that our party is determined to persistently and positively continue to accelerate the renovation undertaking," in which "economic renovation [is] the key task." Though Do Muoi added that "the party must vigorously accelerate renovation in the political system," the congress actually continued to support the concepts of democratic centralism, proletarian dictatorship-though intellectuals were added to the "peasant-worker alliance"--and, of course, "the leading role of the party." So the scope for "political renovation" is very narrow. As Nguyen Van Linh said in his closing report, "We should not belittle factors that can cause political instability. "3.5 Linh had been quite specific in endorsing the necessity "to shift... to a multisectoral commodity economy based on the market-oriented mechanism under state management." But his qualification was a response to widespread criticism: "While the market-oriented economy is helping to stimulate production, it has also created ... many types of social vices." And many official commentaries on the congress emphasized its continued commitment to "socialist transformation." So it is probably fair to say that the congress constituted neither a step

42 forward nor a step backward for doi moi. It seemed to continue policies that had emerged in 1989. While ideological cant is confusing and often unconvincing, the public rhetoric of the Vietnamese elite surely conceals as much as it reveals. Thus we do not yet have a very precise idea of how party leaders have really assessed recent developments in other socialist countries, though there must have been considerable learning. Whether by skill or chance, Vietnam, alongside Laos, has enjoyed greater political stability than any other Communist-led state which has yet embarked on fundamental economic reform. Pending our ability to evaluate Hanoi's true comparative analysis, however, let us look at China, the USSR and Eastern Europe to gain insights as to Vietnamese prospects. The Comparative Context

While Vietnam was earlier very much interested in the Hungarian model, which suggested the possibility of long term economic reform without much political change, the events of 1989 emphasized how very different Eastern Europe is from Vietnam. Though conservatives in the regime seem to fear the impact of European examples on Vietnamese dissidents, three contrasts are so great as to lessen the utility of comparison: (1) Except for Yugoslavia the Communist parties were placed in power directly or indirectly by the Soviet army, thus denying them any nationalist legitimacy. (2) The level of social and economic development, except perhaps in the southern tier, places Eastern Europe much closer to Western Europe than to Vietnam, in terms of the size of the middle class, the development of technology and managerial skills and the level of industrialization and urbanization. Whether one uses Marxist or liberal analysis, this surely has a profound impact on the pace and outcome of reform. (3) The intellectual and cultural contact with the West, again with the southern tier states excepted, has been so great that, coupled with the sense of economic deprivation, the widespread desire for pluralist democracy was probably inevitable. China and the Soviet Union, however, are two models which, either for reasons of cultural tradition or political alliances Vietnamese have needed to examine closely. To structure a comparison between them we will look very briefly at their political, social and economic systems as

43 well as their international setting (See Brown 1989; Cockburn 1989; Aslund 1991; Huan 1988; Oi 1989; Parker 1989; Reynolds 1988; Riskin 1987; Shue 1988; Vogel 1989).

Political. Systems In both China and the Soviet Union the party, the bureaucracy and the military have been the most powerful institutions, though not necessarily in that order in all periods. In contrast to Ea.stem Europe, but like Vietnam, both parties came to power through armed struggle, albeit quite different ones. The impression until. 1991 of a more entrenched party in the USSR was probably not only the result of greater institutional age, but also the avoidance in the last generation of a trauma such as the Cultural Revolution. The Chinese bureaucracy was seriously damaged by that experience and is only beginning to recover. Thus it is probably fair to say that in the Soviet Union--like Vietnam--both party and state bureaucracies were, as reform began, in a stronger position than in China to obstruct basic changes that threatened their interests--and so the need for political reform. Because of the greater recency of the armed struggle in China, the military appears to be better integrated into the party than in the case of the CPSU. In the Soviet Union there has been a longer time for the military to develop and refine their own distinct institutions; there the military plays a less significant economic role than in China. The Chinese military, an important force within the party thus stands closer to the Vietnamese pattern.

Social Systems A dimension of societies in Communist-ruled countries that has been somewhat neglected until recently is ethnic composition and its consequences. In fact, Western scholars may have earlier overestimated the success of "nationalities policies." But now we know better. And we also discover that federalism, a tool of Russian dominance, rather than being part of the solution in the USSR was part of the problem. In any case, the difference on this dimension between China and the Soviet Union is sharp and of the greatest significance. And Vietnam is again quite comparable to China, with the dominant ethnic group making up over ninety percent of the population even while it suffers from regional cleavages. Ethnic conflict is most unlikely to be the cause of collapse of either the Chinese or Vietnamese state, or be a major factor in

44 undermining Communist rule there. (Regional cleavage in Vietnam is more problematical.) The Soviet Union can also be contrasted with China--and Vietnam--as a dominantly urban, industrial society, and one with a somewhat larger middle class, in income terms. The more volatile political movements concentrated in large cities have thus been a more serious problem for Soviet leaders.

Economic Systems The Soviet Union, which started a massive program of industrialization much earlier, was until 1990 more economically developed than China. The Chinese economy is dominantly agricultural, which has turned out to be a great advantage in initiating market reforms. But there are also important differences in the structure of the two agricultural economies. Stalin not only crushed the independent peasantry but moved "resolutely" to create large-scale, mechanized state farms, a legacy which has survived intact. In China large-scale mechanization hardly made a dent, both because of the nature of rice culture and for lack of capital. This has meant that agricultural reforms which exploit the possibilities of increased labor inputs in family units have moved much faster in China--and Vietnam. There is also an important difference between the two non-agricultural sectors. While the Soviet Union may have a larger middle class, identified by level of living, China has a much larger reservoir of entrepreneurial experience, largely due to the greater recency of the collapse of the capitalist system. Thus opportunities for private enterprise were more quickly and widely grasped in China than in the Soviet Union. Again Vietnam is much closer to the Chinese pattern.

International Setting There is much that could be said about the implications of this factor, but let it suffice to mention here only a few points. The Soviet Union was until recently a superpower, while China, like Vietnam, views itself as part of the Third World, having shared with Vietnam historical exploitation by the West. As a superpower the USSR had neither the opportunity nor the desire to accept large scale Western investment and educational exchange in the 1970s and 1980s, as did China. Until the late 1980s the Vietnamese and the Soviets had much in common. The advent of Tiananmen certainly

45 raised further doubts in Vietnam about the viability of the Chinese model. But since 1991 the lessons have been all in favor of the Chinese. The Chinese have brought under control the Western intrusion, or so it appears to Vietnamese officials, and the Soviets, for a variety of reasons, have collapsed. Soviet influence through favorable trade and aid linkages have evaporated. With the sharp curtailment of the number of Communist-ruled powers, not only Vietnamese economic progress, but the very survival of the regime is viewed as requiring a return to close relations with China, both state and party. It appears, for instance, that a rapprochement with China was key to a settlement in Cambodia which is in tum increasing the chances of massive Japanese and Western aid and investment.

The Dynamics of Refonn We have seen in the Vietnamese case how the ups and downs of reform were often linked to leadership change. That linkage is obviously even stronger in China and the Soviet Union. Chinese reform depended on Deng and Soviet reform on Gorbachev far more than doi moi relied on Nguyen Van Linh. In fact, contrary to the most common perception, there had been some accomplishments before Linh became general secretary in 1986, and doi moi seems to have survived his retirement. The Chinese began at least six years before the Soviets, and have achieved prices determined primarily by market forces. Production has soared in both agriculture and industry. But political repression is greater than it was a decade ago. This is not because the Chinese leadership ignored the question of political reform. There was, in fact, a multicandidate election in 1980 at the local level. But some candidates who were openly critical of Deng were elected, so that experiment was not repeated. Subsequent upsurges of popular discontent seemed to be linked to power struggles inside the Central Committee. Even the student movements of May 1989 probably began that way. Thus it is fair to say that the lack of elite cohesion, and the preeminence of a manipulator of factions, made wider political participation seem threatening to the leadership, long before Tiananmen. Nor, for reasons discussed above, was there the urgency to create popular movements that could undermine an obstinate and entrenched bureaucracy. Bradford (1989, 16-17) contends that in China surges in economic reform were accompanied by periods of political retrenchment, and vice versa. He attributes the countercyclical pattern of surge-and-retrench to factional

46 struggles between moderate and radical reformers in the elite. (Though it might equally be regarded as a coherent strategy of a unified elite to control political change most severely at times when the populace is most satisfied with economic progress or, alternatively, when rapid economic change is most likely to create discontent.) It is hard to plot a similar and consistent Vietnamese pattern. The interplay of intra-elite competition with economic and political reform thus seemed to have different dimensions in China from the experience in Vietnam, though there is a great need for further investigation. Some do see similarities. But in the Soviet Union the contrast with Vietnam has been greater. A charismatic leader assumed power in Moscow in 1985 who until 1991 proved to be highly skilled at intra-elite maneuver. He saw the urgency of economic reform, but was frustrated by the in-depth defense against change in the bureaucracy. Thus, at first confident that he could direct an upsurge of political participation, or at least survive it, he saw political liberalization as a necessary means for economic liberalization. In Vietnam, however, while there was ample need to use the people against the bureaucracy, no one in the leadership felt confident of controlling or directing a rapid expansion of participation, except perhaps Nguyen Van Linh, in 1987-88. Gorbachev badly underestimated the disruptive force of ethnic nationalism, so whatever pressures for glasnost there were from Moscow, they did not have a lasting effect in Hanoi. Conclusion We have noted that Vietnam's experience of reform has been flanked by two powerful models, one on the doorstep and one distant but influential. By 1989 all of Eastern Europe became more a nightmare for the Vietnamese elite than an object of emulation. China historically has been Vietnam's model and today it has not only cultural, but some profound economic and social similarities. In fact, though the contract system in agriculture did emerge out of provincial experience in both China and Vietnam, the timing suggests the possibility of some influence on Vietnamese national policy, since national approval of the policy in Hanoi took place only a few months after a similar approval in Beijing. The Chinese embrace of Western investment may also have helped make Vietnamese Marxists less reticent. But on the whole China has probably had less influence on Vietnamese policy than many Western observers imagine. Vietnam, for instance, has not followed the Chinese pattern of extending the

47 agricultural contract to a lifetime. And the Vietnamese struggle with inflation seems to have been a special mix of Vietnamese banking incompetence, the pressure of experienced voices from the South, and IMF intervention. Nor can the timing or the extent of political reform have had much to do with earlier China watching; in 1987-1988 Vietnam was somewhat ahead of China. By 1990, however, events had conspired to push Vietnamese conservatives, and even some moderates, toward renewed admiration for the Chinese model. Beijing quiet was contrasted with Moscow turmoil. And the felt need to come to some accommodation with Beijing, especially on Cambodia, was symbolized by Nguyen Van Linh's secret trip to China in the fall. On the other hand, even though Vietnam by certain criteria can be said to have been dependent on the Soviet Union until 1990, it was far from a willing puppet. We have noted how very different the social, economic and political contexts for reform have been in the Soviet Union, and the Vietnamese are certainly aware of this as well. Thus while the leverage derived from their massive aid program may have allowed the Soviets to give some boost to doi moi in 1986, particular initiatives for economic reform in the Soviet Union were usually behind the Vietnamese. Nor did the inevitable tensions in the Soviet-Vietnamese relationships prepare the Vietnamese to be eager students of Soviet tutors. The frequent snide remarks that one hears today in Vietnam about Soviet technology would indicate quite the contrary. So much has happened in so many once "Communist states"--none of it as Marxism-Leninism predicted--that the Vietnamese observer can learn every kind of "lesson," and thus none that are persuasive. Despite the influence of the Chinese model, Vietnamese leaders are thus primarily thrown back on their own intellectual and cultural resources. It is probably inevitable that they will be forced to recognize and to grapple with some of the same policy dilemmas that have plagued many other Third World countries. Some of the cruel choices that have to be made in the process of reform and development are not basically different whether a Communist party is in power or not. The most fundamental dilemmas involve the contradictions between economic reform and bureaucratism, between growth and equity and between political participation and stability. 36 The prospect of rapid growth in a market economy producing increased inequality is well known in the literature. It seems apparent that in order to achieve growth Vietnamese economic reformers, so familiar with the deadening hand of extreme egalitarianism, have been prepared to accept both the emergence of new wealth and even declining living standards for some.

48 Neither industrial rationalization or military demobilization has been stopped just because of rising unemployment. Without opportunities for free political expression, the political costs of increased inequality in the short run are few. But they will surely rise. At the moment the dominant group in the Politburo seems to have decided to tolerate bureaucratic malfeasance and ineptitude, as well as inequality, in the hopes of achieving growth and avoiding instability. But will those choices permit future economic growth and true stability? Surely one has to admit that there have been cases in the Third World of rapid growth and inequity within authoritarian frameworks. One has to look no farther than South Korea or Taiwan models which have clearly intrigued Vietnamese. But Vietnam is not setting off from the same starting block. For one, it has a legacy of decades of indoctrination with an ideology centered on egalitarianism, and a population which is highly politicized. It is also launching its most ambitious plans for growth in the 1990s, when international transportation and communication quickly make the triumphs and tragedies of one nation known to the whole world. The collapse of Communist-led systems from 1989 cannot be swept under the rug; those examples may make it more difficult to sustain the legitimacy of the CPV without some democratization. (Even the official talk about the need for intraparty democracy is yet to be transformed from rhetoric into reality.) Thirdly, neither South Korea nor Taiwan suffered the deep regional cleavage that Vietnam does today, a cleavage which can never be healed by repression, or even just cooptation. And finally, for all of their faults, the bureaucracies of South Korea and Taiwan in the 1950s and 1960s did not try to control the economy to the degree that the Vietnamese one still does. In sum, Korea and Taiwan did not experience at a comparable period the same demands for participation, or the same obstacles posed to entrepreneurship by their bureaucracies that Vietnam does today. The best foundation for stability is not the same as it was forty years ago. Social science research has produced few exact certitudes, but it does strongly suggest that economic growth, or reform, can only be achieved under the proper political conditions. In the 1990s any regime must allow some expansion of popular participation in government if it is to gain, or maintain, legitimacy. For without legitimacy it will not have the capacity to guide the economy or even to maintain order. However, too much participation, too fast, without political institutions to channel it, is indeed destabilizing. And any country needs stability to achieve economic progress.

49 The leadership of every state must find the proper balance of order and stability, on the one hand, and legitimacy through democratic participation, on the other. But what leaders sometimes forget is that policies which appear to achieve order and stability in the short run may undermine that very stability in the longer run. Vietnam has great potential, but its present position is not enviable. It must steer between the Scylla and Charibdis of uncontrolled political change and stasis. On the basis of past experience it would appear that not until the economy again slows down will there be elite openness to either more extensive economic or renewed political reform. And even then there probably needs to be new evidence of the economic utility of certain political changes. A renewed upheaval in China despite efforts to keep on the lid would be a useful stimulus. But the future chance for glasnost also requires some breaking out of old ideological prisons in Hanoi, allowing a clear and realistic distinction to be made between enemies and friends--and some restraint on the part of those overseas Vietnamese troublemakers who have foreign backers. The tension between North and South is destabilizing enough without overseas troublemakers. But neither should the role of such troublemakers be exaggerated to justify a blocking of those minimal political reforms that are required for greater legitimacy, and thus stability. Full normalization of relations with the US would thus contribute greatly to a stable process of economic and political reform. Notes 1. The Nation (Bangkok), Oct. 5, 1989. 2. The Nation, and other unofficial sources, not confirmed by the IMF report based on official data. 3. Far Eastern Economic Review (FEER), November 17, 1988, 110. 4. Report to National Assembly by Do Muoi translated in Foreign Broadcast Information Sevice-East Asia Service, December 18, 1989, 65. (Hereafter FBIS-EAS). 5. Interview with Saigon Giai Phong translated in FBIS-EAS, July 26, 1989, 69. 6. FEER, August 3, 1989, 56; May 10, 1990, 32-33. 7. Speech by Do Muoi trans. in FBIS-EAS, December 18, 1989, 68. 8. Hanoi International Service trans. in FBIS-EAS, November 9, 1989, 57. 9. FEER, April 13, 1989, 34. 10. Bangkok Post, September 27, 1989. 11. Nhan Dan trans. in FBIS-EAS, December 19, 1989, 41-2. 12. FBIS-EAS, December 28, 1989, 70. 13. FBIS-EAS, December S, 1989, 69. 14. FBIS-EAS, December 12, 1989, 82.

50 15. FBIS-EAS, December 18, 1989, 69. 16. FBIS-EAS, December 28, 1989, 67. 17. FBIS-EAS, November 15, 1989, 59. 18. FBIS-EAS, December 7, 1989, 74. 19. PEER, October 19, 1989, 21. 20. FBIS-EAS, December 20, 1989, 68. 21. FBIS-EAS, February 7, 1990, 71-72. 22. FBIS-EAS, February 5, 1990, 52. 23. FBIS-EAS, September 29, 1989, 71. 24. FBIS-EAS, December 7, 1989, 69. 25. FBIS-EAS, September 27, 1989, 70. 26. FBIS-EAS, December 7, 1989, 72. 27. FBIS-EAS, December 14, 1989, 58. 28. FBIS-EAS, October 3, 1989, 70. 29. FBIS-EAS, February 2, 1990, 55. 30. FBIS-EAS, November 8, 1989, 44. 31. FBIS-EAS, December 14, 1989, 56. 32. FBIS-EAS, February 5, 1990, 53. 33. FBIS-EAS, October 5, 1989, 54. 34. "Closing Speech" trans. in FBIS-EAS, July 2, 1991, 20-21. 35. Nguyen Van Linh, "Abridged Political Report," translated in FBIS-EAS, June 26, 1991, 15-28. 36. One "dilemma" posited by Michael Leifer, between doi moi and support of the Hung Sen regime in Phnompenh, was resolved in 1991 apparently in favor of doi moi. A new factor in that year was the collapse of the USSR and the enhanced desirability of rapprochement with China. But Hanoi may also have understood the inevitability of the UN in Cambodia working through the Phnompenh administration, especially given the Hun Sen-Sihanouk alliance, thus actually strengthening the regime. (Leifer and Phipps 1991, 20ft).

References Aslund, Anders. 1991. Gorbachev's Struggle for Economic Reform. Ithaca: Cornell University Press. Beresford, Melanie. 1988. Vietnam: Politics, Economics and Society. London: Pinter. Bloch, Peter and Tommy Oesterberg. 1989. "Land Tenure and Allocation Situation and Policy in Viet Nam--with Special Reference to the Forest Development Area." Madison: Land Tenure Center, University of Wisconsin. Bradford, Colin I., Jr. 1989. "The Reform Process in Socialist Economies: Toward a Framework for the Comparison of Economic Policy Reforms in an Open World Economy.• Washington, D.C.: World Bank, Strategic Planning Division, Strategic Planning and Review Department. Brown, Archie. 1989. "Political Change in the Soviet Union," World Policy Journal, VI, 3 (Summer), 469-502. Chanda, Nayan. 1989. "Force for change,• Far Eastern Economic Review, October 5, 24-25.

51 Cockburn, Patrick. 1989. "Gorbachev and Soviet Conservatism," World Policy Journal, VI, 1 (Winter), 81-106. de Vylder, Stefan and Adam Fforde. 1988. Vietnam: An Economy in Transition. Stockholm: Swedish International Development Authority. Dao Xuan Sam. 1986. "Socialist Undertaking and the Business Right to Self-Mastery," World Economic Problems (Hanoi), December, 18-31. Duiker, William. 1989. Vietnam Since the Fall of Saigon: Updated Edition. Athens, Ohio: Ohio University Monographs in International Studies, Southeast Asia Series, No. 56A. Elliott, David W.P. 1987. "Waiting for the East Wind: Revolution and Social Change in Modem Vietnam,• The Vietnam Forum, 9 (Winter/Spring), 222-251. Elliott, David. 1991. "Vietnam's Party Election," September, unpublished MS. Fallenbuchl, Zbigniew M. 1989. "Economic Restructuring in the Soviet Union and the World Economy," in Lisa Allbutt (ed.), Perestroika, Glasnost and International Security. Winnipeg: University of Manitoba, Programme in Strategic Studies, Occasional Paper #8. Fforde, Adam and Su:zanne Paine. 1987. The Limits of National Liberation: Problems of Economic Management in the Democratic Republic of Vietnam. London: Croom, Helm. Foreign Broadcast Information Service (FBIS), East Asian Service (EAS). Goldman,Marshall. 1987. Gorbachev's Challenge. New York: Norton. Hiebert, Murray. 1989. "One step backwards,• Far Eastern Economic Review, May 4. Hiebert, Murray. 1989b. "Mixed Signals,• Far Eastern Economic Review, October 26. Hiebert, Murray. 1990. "Pluralism awaits success of economic reform,• Far Eastern Economic Review, January 11, 18-19. Ho Hai. 1988. "In Tan Long Village," Vietnam, August, 356 5-7. Huan Guocang. 1988. "China after Tiananmen: The Roots of the Political Crisis," World Policy Journal, VI, 4 (Fall), 609-620. Huu Tho. 1988. "Agricultural Work Contract System in Ha Bae Province,• Vietnamese Studies, 18 (88), 5-21. Indochina Chronology (a publication of the Institute of East Asian Studies, University of California, Berkeley.) International Monetary Fund. 1988. Viet Nam: Recent Economic Developments (prepared by N. Choudhry, S. Shah, H. Tokumaru, and M. Bell). Kim Ninh. 1989. "In the Era of Renovation: Leadership and Security in Vietnam,• Contemporary Southeast Asia, Vol. 11, No. 2 (September), 213-235. Kimura Tetsusaburo. 1989. The Vietnamese Economy, 1975-86. Tokyo: Institute of Developing Economies. Kolko, Gabriel. 1988. "The Structural Consequences of the Vietnam War and Socialist Economic Transformation,• Journal of Contemporary Asia, 18, No. 4, 473-482. Leifer, Michael and John Phipps. 1991. Vietnam and Doi Moi: Domestic and International Dimensions of Reform. London: RIIA Discussion Paper No. 35. Le Phuoc Tho. 1989. "How to Solve a Number of Urgent Land Problems,• World Economic Problems June, 3-16. Le Quang Tan. 1989. "To Provide Our Working People with Full and Efficient Employment," World Economic Problems December, 28-41.

52 Marr, David. 1988. "Vietnamese Perestroika Slowly Realizes Change," FEER, November 3, 26. Marr, David and Christine White, eds. 1988. Postwar Vietnam: Dilemmas in Socialist Development. Ithaca: Cornell University, Southeast Asia Program. Migdal, Joel. 1988. Strong Societies and Weak States. Princeton: Princeton University Press. Nguyen Van Linh. 1988. Vietnam: Urgent Problems. Hanoi: Foreign Languages Publishing House. Oi, Jean. 1989. State and Peasant in Contemporary China: The PoliticalEconomy of Village Government. Berkeley: University of California Press. Parker, Richard. 1989. "Assessing Perestroika: Half Full or Half Empty?," World Policy Journal, VI, 2 (Spring), 265-296. Pham Thinh. 1988. "The First Congress of Vietnamese Peasants," Vietnam, June 354, 2-3. Reynolds, Bruce, ed. 1988. Chinese Economic Reform: How Far, How Fast! Boston: Academic Press. Riskin, Carl. 1987. China's Political Economy. New York: Oxford University Press. Shue, Vivenne. 1988. The Reach of the State: Sketches of the Chinese Body Politic. Stanford: Stanford University Press. Tran Due. 1989. "Some Burning Problems in Cooperativisation in Our Country," World Economic Problems December, 19-27. Van Atta, Don. 1989. "The USSR as a 'Weak State': Agrarian Origins of Resistance to Perestroika," World Politics October, 129-149. Van Chuc. 1988. "Once Land is in the Tiller's Hands," Vietnam, December 360, 5-9. Vo Dai. 1988. "Renovation of Economic Thought: The Condition Ensuring a Successful Settlement of Vietnam's Urgent Economic Problems," World Economic Problems December, 10-26. Vogel, Ezra. One Step Ahead in China: Guangdong under Reform. Cambridge: Harvard, U.P., 1989. Vo Nhan Tri. 1987. Socialist Vietnam's Economy, 1975-85: An Assessment. Tokyo: Institute of Developing Economies. Vu Tuan Anh. 1989. "Economic Situation in the Last Two Years and Recommendations for the Coming Future," World EconomiC Problems December, 3-18. Woodside, Alexander. 1971. Vietnam and the Chinese Model. Cambridge: Harvard University Press. Wurfel, David. 1989. "Perestroika Vietnamese Style: Problems and Prospects" 27-42, in Richard Stubbs (compiler), Vietnam: Facing the 1990s. Toronto: Joint Centre for Asia Pacific Studies. Asia Papers No. 1. Zweig, David. 1989. "China after Tiananmen: Peasants and Politics," World Policy Journal, VI, 4 (Fall), 633-645.

2 Dilemmas of Reform in Vietnam David W. P. Elliott

In the midst of sweeping transformation in what was only recently still "the communist world," Vietnam's reforms may not seem particularly noteworthy. Compared to the dramatic changes in F.astern Europe and the Soviet Union, Vietnam's current internal policy debate has a curiously antiquarian ring. The proposals that would have seemed shockingly novel even five years ago seem tame by the standards of the ferment now. In one sense Vietnam has fallen far behind the curve of socialist reform. But in another sense the fact that reform in F.astern Europe and the Soviet Union has irrevocably broken out of the framework of Marxism-Leninism, means that Vietnam along with China, North Korea, and Cuba are the last remaining practitioners of "socialist" reform in the Marxist mold. For the beleaguered Vietnamese leadership, it is precisely the experience of fundamental transformation in other socialist countries that reinforces a fear that the processes may spin out of control and threaten the very foundations of the regime. The collapse of communism in the Soviet Union, added to the earlier dissolution of communist institutions in F.astern Europe, adds a special urgency to this concern and illustrates the central dilemma faced by Vietnam's leaders: how to achieve change within the framework of socialism without eroding the bases of socialism itself. Nearly every other dilemma of reform stems from this core issue. When the conference at which these essays were first presented was held in the summer of 1990, it was still well within the bounds of probability to consider that the case of the Soviet Union illustrated the point that there were many roads to socialist reform, and that planned and deliberate reform of longstanding Marxist-Leninist institutions was

54 at least conceivable. The collapse of these institutions underlines the deep concern expressed by the Vietnamese leadership at the time about the dangers of "pluralism" and political democracy. It also sharpens the "dilemmas" discussed in this chapter, and poses even more clearly the question of whether "socialist reform" is, in fact, possible. The focus of this chapter is on three issues. First, the feasibility of partial reform. Second, the interconnections between economic and political reform. And, third, the ways in which these two issues are themselves related. Many other problems of reform will be touched on, but they all fall within the scope of the three main issues. F'inally, this chapter will attempt to reflect the Vietnamese discussion of these issues and outline the parameters of the public debate on reform in Vietnam. Vietnamese Reform in Comparative Perspective

A survey of the literature on reform of socialist systems will quickly reveal that "dilemmas of reform" is a recurrent implicit or explicit theme (e.g. Colton 1986; Zweig 1988). This suggests that some of Vietnam's dilemmas may be generic features of socialist reform. A brief overview of some of relevant literature on socialist reform may indicate these generic problems as well as help to identify those dilemmas where there is a tension between competing objectives or a problem of "chicken and egg" sequences which are distinctive to Vietnam. In reforming socialist systems, the interplay between politics and economics is a crucial element of the reform process. Reform disrupts the established pattern of distribution of benefits within society and, as growth increases the potential differential between those who have more and those who have less new questions arise about the basis on which this distribution is made. Maintaining or reestablishing a societal consensus on how its resources are to be shared is essential. We might term this "distributional legitimation. "1 This suggests that economic reform alone is not enough. Political adjustment, whether in the guise of reform or not, will likely be required to maintain a societal consensus on distributional issues. In the traditional centralized planning system with its associated subsidies, the state and its agents largely determine who gets what. To the extent that the reform process changes the basis on which distribution is made, a corresponding political readjustment is inevitable. This will redefine both the way in which access to and distribution of goods is legitimized and the mechanisms by which it is done.

55 These issues have been aptly summarized in one of the most comprehensive studies of economic reform in communist systems in the following way: Not only does the centralil.ed, command model of economic planning and management have its internal contradictions; so, too, does the quest for economic reform. The very comprehensiveness of the reforms gives rise to a dilemma: the changes may need to be all-embracing to succeed, but the more comprehensive the reforms, the more difficult to design a package that is consistent and workable. The question for the reformers is whether leaders possess the political resources to sustain a continuing experiment with the uneven results and the social and political costs experiments inevitably bring (Bahry and Moses 1990, 24).

As the co-editors of this volume point out, the difficulties of sustaining long term reform through scarcities and inequalities is a political challenge of formidable proportions. It is the lag between promise and payoff that provides the most severe challenge to the political leadership and the advocates of reform. In many cases the short term situation may get worse rather than better. The temptation to slow down or curtail reforms becomes great as the opponents of reform are emboldened, the advocates of reform find it harder to argue their case, and the provisional or uncommitted supporters of reform lose confidence and withdraw. This problem highlights the dilemma of partial reform--doing enough to disrupt the existing system but not enough to provide immediate payoffs, or retaining features of the old system which contradict the reform's objectives. Indeed, in some analyses "partial reform" and "dilemma" are almost synonymous or, rather, dilemmas stem from partial reform. Explaining the failures of the 1965 Soviet reform, Anders Aslund writes, "The design of the reform of 1965 contained numerous inconsistencies. Several were typical dilemmas of limited reform," for example extending enterprise rights in theory while not reducing central control in these areas (Aslund 1989, 1). To some, the Polish reformers for example, this is an argument for doing all reforms immediately and simultaneously. This too has its costs, both economic and political. As the experience of the Soviet Union and Eastern Europe has shown, the alternative to partial reform is not comprehensive reform but a transformation of the entire system. This poses the ultimate dilemma for the dwindling group of communist elites: partial reform which may not succeed, or comprehensive reform which may collapse the entire framework of the regime, and may still fail to achieve its economic objectives. Typically, reforms have been introduced piecemeal not only out of elementary caution and a desire to keep the process under control, but

56

also because one has to start somewhere. There is, however, a problem of circularity. One of the central problems in all developing societies is the sequence in which things are done. Some aspects of development require that certain institutions and procedures be in place in order to be effective. But for reasons of politics or expediency, reform is often begun where possible, not where desirable, and is limited because the consequences of moving on a broad front are too threatening to the existing authority structure. Yet a pure status quo option is also unacceptable because of the demonstrated failures of the existing system and the clear costs of falling further behind in a competitive and rapidly changing world. Thus partial reform is for most reforming socialist economies an inherent part of the process. Partial reform, as will be discussed below, gives rise to several concerns. The first, already mentioned is the disruptive effect of halfway measures without commensurate returns. A second is the difficulty of politically adjusting as the reform process proceeds. And a third is the question of the sequence in which reforms are introduced. Reforms can be partial in two senses. Economic without political reform may be considered partial or incomplete. Second, economic reforms which are incremental or isolated are partial in the sense of "not comprehensive." Both these aspects of partial reform are reflected in Anders Aslund's account of the lessons Soviet reformers drew from previous attempts at reform. Soviet reform economists see far-reaching democratisation as the only way of breaking the harmful power of the bureaucracy over the economy--a lesson well learnt by reform economists in Eastern Europe... The other principal conclusion was that the reform had to be comprehensive, involving all aspects of management and the economic mechanism... Finally, the reforms of 1965 had been introduced so slowly they fizzled out. .. In short reformist economists learnt that the reform had to go further and faster (Aslund 1989, 180-181).

In the eyes of the Soviet reformers, the Stalinist system and its remnants in the Brezhnev period had been discredited. They could no longer even maintain the status quo. But if reform had to be comprehensive, the risks were enormous, the short term burdens heavy, and the costs to entrenched interests extremely high. The disruptions of reform raise the question of how social stability can be maintained during the process of reform. Early on in his tenure Gorbachev stated that "the strict implementation of the principle of social justice is an important condition for the unity of the people, the political stability of society, and the dynamism of its development" (Evans 1990, 169).

57

In the Soviet Union both the legacy of several generations socialized to communitarian values and traditional culture make it difficult to justify the apparent advantages which reform confers on some at the perceived expense of others. A review of the reform debates in the Soviet Union 1977-1987 notes the negative side of trying to promote reforms in the areas of private and collective ownership: One new-and worrying--development over the last two years has been the emergence of widespread public opposition to these innovations, on the grounds that they charge unfair prices and generate unfairly high incomes for their operators. It is also believed that they serve as a front for black marketeers seeking to launder illegally acquired cash (Rutland 1990, 94).

David Shipler writes that The lust for the free market runs up against a strong countercurrent in Soviet society however. For many Soviet citi7.ellS, including even some liberal politicians, the notion of individuals' making profits triggers a revulsion on ethical grounds. It seems simply immoral for someone to charge handsome amounts for scarce services or to buy goods at one price or sell them for more, even if consumers are willing to pay (Shipler 1991, 6).

Deng Xiaoping argued that inequities are inevitable in the course of reform, but that they are justified by an ultimate return to greater equity under conditions of greater general prosperity--implied by his famous statement that the goal was "to make some people rich first, so as to lead all the people to wealth." There is a tendency for many outside observers to regard the backlash against the atomistic and disruptive aspects of reform as a last gasp effort by conservative ideologists to defend their turf. The "spiritual pollution" campaigns of the mid-1980s in China are a case in point. The lead role was taken by Deng Liqun, head of the Central Committee's propaganda department. But it seems possible that his criticism of "efforts to seek personal gain, indulgences in individualism, anarchism, liberalism, etc.," resonates with many in China, not because of the "ideological correctness" of this view but because it accords with deeply rooted traditional attitudes. Partial reform or simply reform in process result in consequences that offend both the revolutionary and the traditional norms in China. Some suggest that the problem is structural in Leninist systems and not confined to China, though the traditional values reinforce the contradictions. With respect to popular beliefs about right and wrong, corruption has perennially been politically problematic in the PRC, due in part to contradictions inherent in

58 Leninist systems in general. Paradoxically, these systems structurally generate clientalism and market corruption while constantly delegitimating them politically. Clientalism and networks of particularistic relationships create special kinds of legitimacy problems for Leninist systems ... A second element affecting beliefs about right and wrong in the case of China is the heritage of Confucianism. This heritage compounds the contradiction between universalistic and particularistic values inherent in Leninism.... Thus the values and behaviors associated with China's political culture both in its Leninist and Confucian/traditional aspects made corruption politically explosive (Meaney 1991, 136-137).

The structural contradictions have two causes. The first is the tension between official values and actual behavior resulting from the incentives built into official policy. The second relates to the reasons that these policies give rise to undesirable behavior, namely the coexistence and overlapping of two different incentive systems in a context of partial reform. As Jean Oi writes, "the introduction of market reforms is not the direct cause of many of the types of corruption discussed above. Rather it is the incompleteness of the institutional reforms that has bred new forms of malfeasance" (Oi 1991, 15). The specific structural problem of partial reform at issue here is the fact that, "Market reforms left critical areas, notably prices, under state control. This created a kind of hybrid, two-track economy of plan and market in which those with official connections could benefit from disparities in prices, inside information, and access to goods" (Meaney 1991, 12). Partial reform does not eliminate, and may expand the hidden or shadow economy, termed "the second economy" in the Soviet Union. The clientalist networks that take advantage of the underground economy appear to constitute a sort of parallel underground political system, one which is authoritarian but self interested, and acts on its own behalf not that of the central government. Reformers in both China and the Soviet Union/Russia are thus faced with a political dilemma: the forces of democracy and political liberalization which might be assumed to be the natural allies of the reformers may be repelled by the immediate consequences of partial reform. In the Chinese case, however, societal attitudes toward unequal profits and rewards to individuals and groups seem less pronounced than in the Soviet Union. The more serious problem seems to be a disjuncture between the goals of the regime and the evolving societal attitudes and values, and the prospect of a fragmented and atomized society whose cohesion could not be assured by the cash nexus. Orville Schell's generally skeptical account of reform in China through the mid-1980s noted that

59 Like a gardener nipping off the tops of weeds and leaving the roots undisturbed, the Party seemed hopeful of rectifying the problem of "spiritual pollution" by requiring workers in the capital to undergo a couple of weeks of "ideological study.• But it was hard to imagine that such a measure would be effective. Most of the Chinese I met had become almost totally preoccupied with leading their own lives. . . . The private side of life had gained a momentum of its own, a momentum initiated by the Party itself (Schell 1986, 2).

Schell' s nostalgic lament for the passing of Maoist communitarian values in China may be overdrawn. Many of his most pointed vignettes, though, underline the extent to which social forces once set in motion by the regime are no longer controllable by it. Instead of leading to comfort, prosperity, and greater individual choice, he warns, reform leads to the worst of all worlds--social anomie. Indeed To Get Rich is Glorious could be read as a primer on the dangers of partial reform. One of the real dangers of a decoupling of state and society and a slackening of the bonds that hold them together is vividly portrayed by a Western diplomat cited by Schell: "It's as if a person who had carefully collected a box of marbles suddenly decided to spill them all out onto the middle of a wide street, where they could roll off in every direction .. .It's actually quite brave of the leadership. But it does make you wonder if they had any notion of how to control so many individuals all going their own different ways" (Schell 1986, 2).

From the perspective of the post Tiananmen period, this statement seems especially significant. Combining these themes, one of the early studies of the reform process in China focused on the tension between three fundamental objectives of the regime; growth, equity, and control--another way of formulating the dilemma(s) of reform (see Perry and Wong 1985). While everyone is united on the objective of growth and greater prosperity, the extent to which the societal value of equity and the regime's demand for control may be sacrificed in the process are central elements of the debate on reform. The very measures required to produce growth tend to exacerbate the tensions between state and society by creating more diverse and pluralistic interests in society and without at the same time creating mechanisms to reconcile the competing claims of these interests. This problem has been cogently summarized by Stanley Rosen in his research on attitudinal change in China: ... the reform process with its broad emphasis on expansion of the market, has created an environment which promotes greater permissiveness in society and

60 provides the freedom to pursue materialistic goals .... Indeed, in a sense, the reform program of the party has become dependent on the unified support of an increasingly heterogeneous society .... the party is seeking to unify public opinion and harmonize interests, politically and ideologically, at a time when economic and social forces are pulling society away from the state (Rosen 1990, 265).

One crucial dimension of comparison across reforming socialist systems is the depth of this fissure between state and society. Another is the extent to which the reformers recognize the risks of reform, acknowledge them to be a cost of reform, and are willing to accept them. And, of course, there are differences in the variety and feasibility of measures available to minimize or counteract these risks. A major issue of reform is the question of whether or not economic reform can succeed without political reform. Since both China and Vietnam insist that their attempts to rationalize political institutions and procedures while not changing the essential nature of the political system constitute political reform, the question is whether or not democratization is compatible with socialism and socialist reform or is an indispensable prerequisite for successful economic reform. The lessons of reforming socialist systems are not conclusive on this point. Eastern Europe has fundamentally abandoned the Leninist variant of socialism and the economic picture remains mixed, the Soviet Union promoted some radical political innovations which have not been accompanied by any dramatic success in the economic area, and China has had modest success in its economic reforms while relapsing into greater authoritarianism. A review of the literature on the newly industrializing economies casts the problem in a somewhat different light. In these authoritarian "democracies" the question is reversed, not whether or not political liberalism is necessary for economic success, but rather the extent to which authoritarian rule has created the conditions for successful economic policy. An equally dark conclusion is that "successful" economic development requires institutions that restrain, control, weaken or encapsulate the independent organizational strength of social forces, thereby insulating decision makers from group pressures and expanding the range of their directive powers (Haggard 1990, 4).

Focus on the link between democratization and market reform is natural, given the logical parallels between systems based on voter preference and systems based on consumer preference and the natural assumption that political and economic markets are somehow related. Yet much of the literature on reform and development also notes the concern for a

61 "strong" state and effective institutions and the problem of "governability"--which may or may not be a corollary of expanding effective political participation. A study of the remarkable economic record of the four Asian "tigers" (Korea, Taiwan, Singapore, and Hong Kong) notes the distinctiveness of the historical and external factors which contributed to this success, and also the reasons why it is difficult to generalize from these cases about the connection between political and economic development. On the one hand, it is clear that democratization cannot be the prime explanation for economic success since in each case greatest economic success occurred during periods of greater authoritarianism (Haggard 1990, 26). On the other hand there is no clear evidence that authoritarianism is a necessary or sufficient explanation for the economic successes these countries have enjoyed (Haggard 1990, 26). As far as Vietnam is concerned, the differences between it and the "tigers" far outweigh the similarities, but this does focus on the problem of the interplay between internal and external pressures or incentives for reform, and the consequences for understanding the connection between the politics and the economics of reform. Stephen Haggard's analysis of reform dilemmas in non-socialist systems notes that, "Since authoritarian political arrangements give political elites autonomy from distributionist pressures, they increase the government's ability to extract resources, provide public goods, and impose the short-term costs associated with efficient economic adjustment" (Haggard 1990, 262). This formulation does not address the problem of political elites acting in the name of the state but actually engaged in self-interested behavior. Nor does it raise the issue of the moral or political basis on which the distributional legitimacy mentioned earlier rests. Simply stated, the capacity of elites to justify their privileges and disproportionate access to resources is related to the authority they command in society. As classical political theory has it, authority is not just coercive capacity but the ability to coerce reinforced by a perception of legitimacy in this elite exercise of power by the society at large. Here we encounter one of the most difficult dilemmas in the politics of reform: how to give political elites who benefit from the existing system the incentive to reform while not at the same time undermining the basis of distributional legitimacy. Timothy Garton Ash records that during the tumultuous Spring of 1989 in Eastern Europe the question of how to give the existing power structure a stake in changing the system was hotly debated:

62 There have been many suggestions as to how communism might be turned back into capitalism. But this is the simplest of all: communist bosses become capitalist bosses! the simplest, though hardly the most attractive.... [Solidarity] specifically warns against. .. the nomenklatura becoming owners. But others in both Hungary and Poland, argue that this process also has its advantages: compensating some members of the nomenklatura for their loss of political power, and dividing this ruling class between those who stand to lose and those who stand to gain. One might call this the "nomenklatura buyout" theory (Ash 1990, 31).

While this is practical, if cynical advice, it also raises some serious problems. In a society already split by the legacy of war and revolution, this seems guaranteed to compound the problem of redefining distributional legitimacy in a way that will not further distance state from society and discredit the political and moral basis of the reforms. In addition, the weakly rooted nature of the socialist system in Eastern Europe contrasts with the strong nationalist antecedents of the Vietnamese regime. It is one thing to tum "communist bosses into capitalist bosses" if that is the price to be paid for a popularly mandated abandonment of the existing socialist system. It is quite another matter if this development takes place within the existing political framework, and simply consolidates the monopoly on privilege enjoyed by the current political elite. Perhaps the incentive to change will not be internal but external, as Haggard's studies on the Asian "tigers" suggests. Just as Soviet conservative opposition to reform was diluted by the obvious fact that prolonged economic weakness in the context of general economic advance by other states could not assure the security of the Soviet Union, so in Vietnam stagnation in a region of economic dynamism has its clear costs. More than this, the realization that far from being in history's vanguard, Vietnam is now languishing in a historical backwater is an affront to national pride. The pride in defeating the world's greatest power is offset by the humiliation of being one of the world's poorest countries. This external challenge may be more persuasive than the internal incentives in producing significant reform. In the context of the comparisons with other socialist countries, the unique cultural, societal, institutional, and political features of Vietnam must be weighed against the experiences of other reforming socialist states. This task lies beyond the scope of this chapter, but a few points might be mentioned, and some questions for further research noted. The differences in terms of role played by nationalism--especially in contrasting Vietnam with the cases of Eastern Europe--has frequently been noted.

63 Less often remarked on is the disparity in size between Vietnam and the two cases which have produced most of the literature on socialist reform, China and the Soviet Union. This is clearly a central element in analyzing the consequences of decentralization, as well as weighing the risks of regional fragmentation. The question of size even extends to the smallest unit of social control. It might be interesting to test the hypothesis that the "work unit" which has served as the basic unit of social control in China has been relatively less important in Vietnam, possibly due to differences in the scale of administration in the two countries. In Vietnam's more intimate social scale, family, and personal connections may offer more of an alternative to the work unit than is the case in China. Since one of China's basic control dilemmas has been that reform has undermined the work unit, it may be that (to the extent that this institution plays a lesser role in Vietnam) Vietnam's political problems are somewhat different from those of China. China's vast administrative scale has resulted in a tradition of legalistic and administrative controls that can be drawn on in the attempt to reestablish a legal framework for economic development and commercial activity. While Vietnam has shared in this tradition, the density of personal connections and the tradition of guerrilla independence (parallel to China's "mountaintop-ism" but perhaps more pervasive) may make it more difficult to establish universalistic codes and institutions necessary for the rational functioning of the market. Peter Katzenstein' s study of small states in world markets has perceptively analyzed the different responses to external challenges of large and small capitalist states, underlining the fact that smaller states are more vulnerable to the external environment and that these vulnerabilities may overcome internal barriers to adjustment by sheer force of necessity. He observes in passing that "dependence and economic backwardness have created true examples of social corporatism in small socialist countries undergoing rapid development, countries such as Romania" (Katzenstein 1985, 20). Thus both the responsiveness to external challenge and the internal possibilities of adjusting to it are in some ways conditioned by the factor of size, setting the Vietnamese case aside from that of the Soviet Union and China. The Eastern European cases, more comparable to Vietnam in the size dimension, are more distant in terms of historical circumstances. Yet while there are significant differences between reforming socialist systems, echoes of the problems which surface in the literature of these reforms may be found in Vietnam's own debate on the subject. It is to this debate that we now tum.

64 Is "Socialist Reform" Possible?

From opposite political perspectives, some have concluded that there is no middle ground between socialism and capitalism. Reflecting the views of conservative Western analysts of the Soviet Union, the pretentiously anonymous "Z" article of Fall 1989 asserted that "There is no third way between Leninism and the market, between Bolshevism and constitutional government. Marketization and democratization lead to the revival of civil society, and such a society requires rule of law. But civil society under the rule of law is incompatible with the preservation of the lawless leading role of the party" ("Z" 1990). In a September 1989 speech, Vietnam's party Secretary General Nguyen Van Linh said, "There is but one alternative: capitalist dictatorship or proletarian dictatorship. There is no middle of the road path" (FBIS-EAS October 3, 1989, 7). Linh admitted that "previously, when speaking of a capitalist society, we merely saw its corrupt aspects and didn't recognize its progresses (sic) in technology and management organization. Now, some people who have just begun to recognize the capitalist society only see its good aspects and pour out one-way praise. These are two deviations that must be overcome" (FBIS-EAS October 3, 1989, 7). The political debate leading up to the Seventh Party Congress raised fundamental questions concerning the applicability of a socialist course of development for Vietnam. Some wanted to reaffirm socialism as an aspiration, while acknowledging that its low level of development rendered it an impractical guide for near term economic development strategy. The question of whether or not Vietnam could bypass the stage of capitalist development, a theoretical dead issue in the Marxist-Leninist world for decades, has once again emerged. Not surprisingly the idea of a temporary stage of capitalist development has been rejected, especially as a political system and social ideology, but its contributions to developing economic forces of production and technology are held to be a "consequence of the intellect of humanity" (Nguyen Kien Phuoc and The Gia 1991). What Is Socialism? How can socialism adapt to encompass the efficient aspects of capitalism without losing its identity? If the objective is "socialist reform" there must be a clear understanding of what socialism is in order to gauge what reform measures are compatible with it. Linh cautioned that "Nothing is more harmful and dangerous than oscillation

65 and mistakes concerning issues of fundamental principles. Reform and renovation do not negate or dismiss these principles because they are the boundaries between communists and noncommunists, socialist and nonsocialist societies, and revolution and reformism" (FBIS-EAS October 3, 1989, 70). But the key question is, what are these principles, and can they constitute a clear line of demarcation between acceptable socialist renovation and a reform which would transform socialism into something else. Having implied that there is such a line, Linh concludes ambiguously, "Principles are merely major guidelines. How common principles are manifested specifically in space and time in life must be answered through life itself. General abstract principles do not exist. Truth is always concrete and revolution creative" (FBIS-EAS October 3, 1989, 70). To clarify this pragmatic formula, Linh might have issued a formula like the "Four cardinal principles" of Deng Xiaoping, but did not. It is clear, however, that the bottom line of the current leadership is, as in China, the preservation of the leading role of the communist party. To some extent, this also involves the preservation of at least some of the core values of the revolution which validated the political legitimacy of the communist party. Clinging to power for its own sake without either a clear program or a reaffirmation of political objectives is clearly a risky course of action. Perhaps in recognition of this problem, the draft program for the "transition to socialism" preparatory to the Seventh Party Congress attempted the following definition of socialism: The socialism that our people are building is a society of people who have been liberated, of a working people who have taken control of their country; which has a highly developed economy and advanced rich and national culture; in which everyone is fed and clothed, free and happy, with the requisites to pursue their individual fulfillment; social justice (cong bang xa hoi) and guaranteed democracy; unity among all ethnic groups, equality (binh dang) and mutual help, and friendly relations with all people of the world (Nhan Dan December 1, 1991).

These general aspirations do not appear to constitute a definition of socialism that would provide a reference point in drawing the line between what lies within the sphere of acceptable change and what is considered to undermine the foundations of socialism. A vague reference is made to the "basic contradiction" of Vietnamese society in the transitional period between the inevitability of advance to socialism and the forces that are impeding this advance, but these forces are not identified.

66 In the absence of a clearly stated official position, the only way of drawing the line between what socialism is and is not is a sort of case law approach, in which examples are made of people and ideas that are viewed as going "too far," as was the case of six prominent intellectuals invited to contribute their criticisms of the draft political and economic programs for the Seventh Party Congress. The articles, which "blamed Vietnam's continuing crisis on the unimaginative application of outdated Marxist-Leninist principles," resulted in a harsh and immediate response from the authorities (Hiebert 1991, 1). But the draft progrcllll's vague generalizations about values and aspirations of the revolution provide no clear answer to this critique, nor any clear guidance about what is acceptable within the framework of Marxism-Leninism. The values of the revolution do not always point toward the same policies. As in the case of China, this reflects a central problem in the reform of socialist systems, the tension between the objectives of growth, equity, and control. Measures which enhance some of these goals may be at cross purposes with others. Socialist Equality or the Protestant Ethic?

In a 1990 speech on the occasion of Ho Chi Minh's birthday, former Premier Pham Van Dong said, "I think that our house has too much dirty garbage. We must consider sweeping our house as a foremost task to make it cleaner every day. Only by doing so can we have an environment and a favorable opportunity to perform other political, socio-economic, domestic and foreign tasks ... " (FBIS-EAS March 9, 1990, 6). It should not be forgotten that the political base of support for the socialist regime in Vietnam were the beneficiaries of a social revolution as well as a national liberation struggle. The ethos of this movement is succinctly expressed by the often repeated statement of Ho Chi Minh "We shouldn't fear being poor, but should only fear injustice. "2 The view that economic crimes against the state result from moral failings rather than the often perverse incentives of a socialist economy is one way of explaining economic failure and denying that the socialist system is at fault. The problem is not only reconciling growth with equity but in severely punishing illegal economic activities as "treason," as serious a threat to the state in peace as collaborating with the enemy was in war. (l)n wartime the party did not hesitate to justly charge those who surrendered to or sided with the enemy with treason against that party and the fatherland and impose

67 the death sentence on them. At present there are people who commit similar crimes against the party and socialism through theft, smuggling, and coercion and repression of the masses. Their wrongdoings have caused everyone to feel disappointed and to lose interest in work. As a result, the pace of national economic development has been reduced. Surprisingly, instead of being accused of treason against the party and the fatherland as was the case with their accomplices in the past, these people still go unpunished. Eventually, the party loses prestige among the people (FBIS-EAS March 12, 1990, 67).

In this view, the problems in economic development are the result of moral defects of the cadres and corruption which has "made our recovery almost insignificant compared to the amount of wealth that criminals have illegally deprived our society of... Opposing negativism does not mean eradicating negative people. It means opposing their motives, their lust for good and luxurious clothing which they acquire not through their own labor" (FBIS-EAS March 12, 1990, 67). The main problem is not one of structures and incentives to engage in such behavior, but of moral failure. Such egalitarian and moralistic analyses of Vietnam's economic problems reflect the Confucian heritage of suspicion of private interests and their impact on the public good. The assumption that corruption has eaten away the results of an otherwise satisfactory economic performance certainly shifts attention away from the real sources of Vietnam's developmental problems, and the deep seated aversion to a "lust" for the good life through goods acquired "not through their own labor" sounds very much like the Confucian disdain of the commercial (and in their view non-productive) sector of the economy, and has striking echoes of a similar scorn for the profit motive in the Soviet Union that has led to the serious decline of the cooperative sector of the economy which tried to combine features of socialism (collective ownership) and capitalism (the profit motive). How widespread this view is throughout society is open to question, but a reasonable assumption would be that it applies to many retired party cadres and many supporters of the revolution who are not beneficiaries of the reforms. The 1990 credit union collapse in the South is an example of a byproduct of reform that may lead to disenchantment. These credit unions, offering higher interest rates than state banks, have "sprouted up in (Ho Chi Minh) city without any legal status in the past year to the detriment of state banks .... But in the last few months, more than ten percent of the some 170 credit unions have stopped paying returns to savers ... due to either risky investments by inexperienced owners or investments that have yet to pay off." In this case, rather than retreating and retrenching, the authorities decided to plunge further ahead and invite foreign experts from "non-socialist countries" to "set up

68 a judicial framework to fill the void which had led to the present 'anarchy'" (FBIS-EAS March 16, 1990, 5). In this instance, at least, the problem is identified as a structural one, requiring legal codes as a measure of what is permissible rather than recourse to moralism or exhortation. A key question is whether or not Vietnam's reforms will venture beyond this legalist response and recognize the necessity of structuring incentives in such a way that economic ventures will be encouraged, but will not be self destructive. This is a question of policy design as much as law, though this does not yet seem to be a central preoccupation of the reformers. The draft report on the economic plan designed for the Seventh Party Congress starts the section on economic development with the traditional nineteenth and early twentieth century East Asian reformers' slogan of "strong country, rich people." In its analysis of the motive forces underlying economic development, the draft says "economic interest cannot be separated from moral motivations" and lists a number of linked factors, such as social justice, democratization, working within the confines of the law, patriotism, cooperative spirit, and the like. Despite the fact that the report recognizes that appealing to individual self interest can play a direct role in contributing to the social good, the Vietnamese do not seem to have directly addressed the question of how individual interest and social justice can be reconciled, but have merely surrounded the mention of the concept of self interest with some communitarian terminology (Nhan Dan December 3, 1990). Along with the stress on equality, however, Ho Chi Minh also mandated that revolution should improve the welfare of the populace. On the sixty-first anniversary of the Communist Party of Vietnam, General Secretary Nguyen Van Linh commented that Ho's admonition that "if the people have an independent country but do not have happiness, then that independence is meaningless" should "give every cadre, every party member, and every citizen pause for deep reflection" (Nlzan Dan February 2, 1991). Upholding Principle or Resisting Change?

In contrast to the voices demanding a sterner reassertion of the morality and principles of the national liberation struggle and a reaffirmation of the need for self sacrificing and altruistic behavior, a realist view reflects the lessons of Eastern Europe. The key concept here is the need to deal with "irresistible demands by the people"--presumably of both a material and a political nature, seeking both a better standard of living and more democracy. Ironically, one of the clearest statements

69 of this perspective comes from the army newspaper Quan Doi Nh tu san}, of which two were later reclassified ~ petty capitalist (tieu chu). Six other households (twelve entrepreneurs) with or without kilns who directly engaged in production processes and hired only a small number of workers were classified as petty capitalist. Figures of capitalist firms from oral and written sources are not fully consistent. For example, Vii QUy Vy (1980, 136) mentions twelve capitalist households and nineteen petty capitalist ones. One of my oral sources mentioned twelve petty capitalist firms. The numerical differences may have resulted from the confusion between households and individuals (thirty-three individuals, but only nineteen households), the re-classification of two households as petty capitalist, and possibly from the inclusion or exclusion of figures from the originally separate and neighboring village of Giang Cao which later merged with Bat Trang. 7. In the state classification, individual artisans did not necessarily belong to the private sector, which was equated with capitalist exploitation of labor and profit orientation. 8. Fforde and Paine have referred to this model in Vietnam as the Democratic Republic of Vietnam model (Fforde and Paine 1987). It should be added that private rural markets remained open, although the transaction volume in those markets seems to have significantly declined due to competition from the state's trading network with its monopoly over the products of state firms. 9. The demanded unemployment benefits amounted to seventy percent of workers' regular pay. 10. No data are available for Bat Trang. 11. State employees contributed thirty percent of the labor in household production; their children, fifty percent; and the elderly, twenty percent (P.V.T. 1972, 47). 12. The contract rates offered by the Bat Trang state enterprise were fifteen to fifty percent higher than those for state workers performing the same tasks at the firm, although there was no evidence that the contracted work was of higher quality. Management argued that it had to compensate contractors for indirect production costs (management expenses), depreciation of property and tools, the higher percentage of damaged and rejected semi-products due to the longer distance between household sites and the kilns, and the lack of welfare contributions and other fringe benefits to household laborers (P.V.T. 1972, 48). 13. Cooperative members received work points for the tasks they performed. After taxes, expenses, and cooperative fund allocation, the crop was divided on the basis of the total number of points accumulated by members. As the membership and labor points grew without a corresponding increase in crop yield, the value of each labor point decreased.

144 14. In the nearby village of Hoa An, the state appropriated a large private pottery firm two years earlier (in 1982). In the Vietnamese system, appropriation means nationalization with compensation to owners, while no compensation is provided in the case of confiscation. 15. Food subsidies had been removed in South Vietnam and incorporated into state employees' wages by 1987. Gough reported that subsidies were abolished and that salaries had been indexed to inflation in the southern province of Long An as early as 1981 (Gough 1990, 160). 16. It is not always possible to differentiate a private from a family enterprise because the number of paid non-family workers in an enterprise may fluctuate with the production cycle and market demands. 17. In Tan Van, the amount of rented space was calculated in the number of jars because the large water jars, the original products of the cannon-shaped kilns of Tan Van, served as saggars for such decorative ceramic items as twenty-two inch-high elephants, eighteen inch-high stools, among others. The firing fees charged to decorative ceramics producers were sufficient to cover the costs of fuel and the wages of the kilnfiring team at a kiln-owning firm. 18. Five of the Tan Van kilns produced both decorative fine ceramics and coarse pottery. Two kilns (one state and one nominally cooperative) produced only decorative ceramics. Among the other five, only coarse pottery (large water and sugar jars) was manufactured directly by the involved enterprises, while the water and sugar jars were leased for use as saggars to the approximately forty decorative ceramics enterprises in Tan Van. Two of these decorative ceramics enterprises owned small kilns. However, with the rising cost of wood fuel, they found it more economical to lease jar space for firing their wares then to operate their own kilns. 19. At the provincial decorative ceramics factory in Tan Van, the chamber kiln was fired once every two weeks during the rainy season and once every twelve days during the dry one. If operating at full capacity, it could be fired once every eight or nine days. 20. The low percentage of exportable products at the Bat Trang state enterprise seems to have resulted partly from the more rigorous export quality control in the north. According to a ranking staff member at the Bat Trang state enterprise, many ceramic items rejected by the state export firm in Hanoi were actually exported through a state firm in Ho Chf Minh City. 21. In 1989, thirty percent of the northern state enterprises reported profit; forty percent, broke even or operated with small losses; and the other thirty percent operated at significant loss and were to be removed from the state ~tor (Fforde 1990, 17 and Le Dang Doanh 1990, 9). The dominant Vietnamese view attributed the difficulties of industries in general and state enterprises in particular to smuggled consumer goods from Thailand and China (cf. Le Trang 1990, 177). However, the smuggling ofhighpriced Chinese porcelain cups and bowls had minimal impact on the ceramics industry which produced coarse porcelain and earthenwares at low price for the domestic market. Chinese products were purchased primarily by a small number of well-off urban households. 22. By July 1989, almost half of its workers had requested employment termination in order to obtain severance pay, since they were already gainfully employed in family firms. In the first half of 1989, the state enterprise granted many of these requests and terminated the employment of almost forty percent of its 1,272 workers. In contrast, 53.5 percent of the members of the oldest cooperative in Bat Trang gave up their

145 membership between July 1988 and July 1989. Two thirds of the remaining members were also laid off in July 1989. At another cooperative, the workforce was cut by twenty-five percent in the same period, and only seventy percent of the remaining members worked on a regular basis in July 1989. 23. State workers' ranks and corresponding salary bases determined not only their actual earnings, but their incomes during holidays, sick or maternity leaves, and retirement. The main exception involved menial workers engaged in cleaning or fuelmoving. 24; By the summer of 1988, according to the director of the Bat Trang state enterprise, the firm had started giving financial rewards and penalties to each plant in order to increase quality. The payments for first- and third-rate domestic products were respectively 120 percent and seventy percent of second-rate ones. As to export ceramics, according to the director, the payment for first-rate products was two and a half times more than that for second-rate items. In light of the plant manager's emphasis on the lack of material rewards, it is conceivable that the new policy discussed by the director had not been fully implemented. 25. Virtually all of the mobile workers in the cooperative sector of the Tan Van economy moved within the cooperative and private sectors, and not to the state enterprises. 26. When workers took a sick leave or a holiday, they were paid a daily wage depending on rank and technical level, normally well below the daily piecework payment. As to New Year bonuses, at the provincial decorative ceramic firm in the Tan Van area, the workers were voted into three categories, depending on productivity, solidarity with others, the number of working days, and quality consciousness. The bonuses for second- and third-category workers were respectively seventy percent and fifty percent of those in the top category. 27. Only thirty-seven percent of the 105 workers at the Tan Van factory of the decorative ceramics state enterprise came from Tan Van (13.3 percent) and the neighboring ward of Buu Hoa (23. 7 percent). In contrast, the percentages of Tan Van and Buu HO. personnel ranged from 55.8 percent to 62.4 percent at the three largest firms outside the state sector. 28. Authorized by a 1988 directive, one state firm in Tan Van also employed contractual workers in order to increase its flexibility and competitiveness with other firms. 29. The advances to jar potters in Tan Van averaged two to four months' income, depending on the skills of the recruited workers. The advances to firemen and wheel potters seldom exceeded one month's pay. Although these advances were regularly deducted from the workers' wages, at the lunar New Year and/or during the year, skilled workers regularly received new advances equal to or exceeding the owners' deductions. These craftsmen had to settle their credit accounts only upon their resignation from the firms. Should their employment be terminated, the outstanding wage advances would no longer be collected (see Luong and Diep-Dlnh-Hoa 1991). 30. The higher bonus for the moulder at the Tan Van plant of the provincial ceramics enterprise reflects the recognition that in the highly specialized production process, greater uncertainty exists in the final firing stage of the process--a factor beyond the moulder's control but directly affecting the si:r.e of his/her bonus. The basic salary of the factory manager was set at only 37 ,000 d/Jng a month (US $8.20), while

146 those of technical and support staff (security guards, glaze specialists), at 30,000 32,000 dong (respectively $6. 70 and $7 .10 dollars). 31. In July 1988, the Bat Trang state enterprise also attempted to simplify the organization of the production process and to increase monetary incentives to direct producers. It reduced the number of plants from thirteen (three specialized in electromechanics, and glaze and saggar production, and ten general plants) to nine (three specialized and six general plants). The enterprise also attempted to reduce the indirect labor force from twenty percent to eight-to-ten percent, and merged its eight general offices into five (security, administrative, and organization; planning and construction; technical; quality control; and marketing). 32. Besides the revenue from manufactured products, a pottery firm with its own kiln in Tan Van also earned an additional fifty percent of its product revenue from the rental of kiln space for the firing of decorative ceramic items. 33. The Vietnamese state imposed a manufacturing tax of ten percent on domestic products, five percent on export ceramics; an employer-paid income tax of thirty percent on a worker's monthly income below 50,000 dong, and fifty percent on an income above fifty thousand dong; and workers' compensation fund contributions reportedly at five to seven of the revenue from the sale of products. 34. A Vietnamese writer has estimated that the manufacturing taxes (thue buon chuyen) collected in Dong Nai amounted to only twenty percent of the taxes actually due (Minh Quan 1989, 2). 35. In a period of high demand, wholesalers might have to make advance payments in order to be guaranteed the delivery of products. 36. In the context of labor shortage in Bat Trang, and the alternative and highly remunerative use of labor in large non-state enterprises, it is unlikely that the low prices of family kiln products resulted from family members' self-exploitation and acceptance of minimal return on their family labor (This is Chayanov's principle, applied here to non-farm households. See Chayanov 1966). 37. According to Le Dling Doanh (1990, 5), the inflation rate was only 306 percent in 1988. 38. Interest rates varied with regions and industrial sectors. They ranged from 71.4 percent to 73.2 percent for manufacturing and commercial enterprises in food, maritime transportation, construction materials, fertilizer, insecticides, publications and films, as well as firms located in islands and the highlands. The rates increased to 76-78 percent for many other commercial and service enterprises (including those in tourism) (Nhan Dan April 17, 1989, 1,4). However, without providing specific sources, Vo Dai Luoc (1990, 9-10) reported annual interest rates from forty-eight percent to seventy-two percent in the second quarter of 1990, and in the 36-48 percent range thereafter. A newspaper report in June 1989 also mentioned interest rates of 54-55.8 percent for a state firm in the leather-processing industry (Nhan Dan June 20, 1989, 2). By the summer of 1991, interest rates had dropped to 32.4-33.6 percent for firms in priority industries and regions, while remaining at eighty-four percent for others. 39. David Dapice and Borje Ljunggren (personal communication) have suggested the possibility that the capital subsidy to state firms after April 1989 still exceeded the tax differential between state and non-state enterprises. However, if the state subsidized the interest on the operating fund of the municipal factory in Tan Van at the annual rate of nine percent, and if the operating fund remained approximately one-third of the annual revenue (an unusually slow turnover), the interest subsidy amounted to only three

147 percent of the product revenue of the factory. It did not at all justify the approximate tax differential of twenty percent. Even if we consider the subsidy to be forty-five percent (the difference between the bank rate of seventy-five and the upper-limit market rate of 120 percent), the inflated capital subsidy still amounted to only fifteen percent of a factory's product revenue. Since 1990, governmental capital subsidy to state enterprises has increased with the decline of the capital loan interest rate to 32-34 percent (D8-Hoai-Nam, personal communication, 1991 ). Interest rates have actually became negative with inflation rising to seventy percent in 1990 and to the annual rate of over one hundred percent in the first quarter of 1991 (Dollar 1991, 3).

References Chayanov, A.V. 1966. 1he Theory of Peasant Economy. Homewood, Illinois: Irwin. Cole, Robert. 1979. Work, Mobility, and Participation: A Comparative Study of American and Japanese Industry. Berkeley: University of California Press. Dollar, David. 1991. "Vietnam: Successes and Failures of Macroeconomic Stabiliz.ation," paper presented at the colloquium on Indochina at the Harvard Institute for International Development, May 1991. de Vylder, Stefan and Adam Fforde. 1988. Vietnam: An Economy in Transition. Stockholm: Swedish International Development Authority. Dore, Ronald. 1973. British Factory--Japanese Factory: 1he Origins of National Diversity in Labor Relations. Berkeley: University of California Press. Fforde, Adam. 1989. 1he Agrarian Question in North Vietnam, 1974-1979. Armonk, New York: M.E. Sharpe. _ _ _ _ 1990. "Major Policy Changes and Socio-Economic Development in Vietnam since Mid-1988," in Per Ronnis and Orjan Sjoberg (eds.), Dbi Mai: Economic Reforms and Development Policies in Vietnam, 7-29. Stockholm: Swedish International Development Authority. _ _ _ _ and Suz.anne Paine. 1987. 1he Limits of National Liberation. London: Croom Helm. Gordon, Andrew. 1985. 1he Evolution of Labor Relations in Japan: Heavy Industries, 1853-1955. Cambridge: Harvard University Press. Gough, Kathleen. 1990. Political Economy in Vietnam. Berkeley: Folklore Institute. Komai, Janos. 1989. "The Hungrarian Reform Process: Visions, Hopes, and Reality,• in David Stark and Victor Nee (eds.), Remaking the Economic Institutions of China and Eastern Europe, 32-94. Stanford: Stanford University Press. U Ding Doanh. 1990. "Economic Renovation in Vietnam: Achievements and Prospects," paper presented at the Australian National University, September 1990. U Due Thuy. 1990. "Economic Renovation in Vietnam: History, Content, and Results,• paper presented at the Workshop on Economic Renovation in Vietnam, Hanoi, June 1990. U Trang. 1990. "Renewal of Industrial Management Policy and Organisation," in Per Ronnas and Orjan Sjoberg (eds.), Doi Mai: Economic Reforms and Development Policies in Vietnam, 153-181. Stockholm: Swedish International Development Authority.

148 Luong, Hy V. 1992. Revolution in the Village: Tradition and Transformation in North Vietnam, 1925-1988. Honolulu: University of Hawaii Press. _ _ _ _ and Diep Dlnh Hoa. 1991. "Culture and Capitalism in the Pottery Enterprises of Bien Hoo, South Vietnam (1878-1975), •Journal of Southeast Asian Studies 27 (1), 16-32. Minh Quin. 1989. "Sau nguyoo nhin lam cho thue oong nghiep va thuong nghiep Dong Nai thit thu Ion" (Six Reasons for the Low Commercial-Industrial Tax Collection in Dl>ng Nai), Nhan Ddn June 28, 2. Ngo Vinh Long. 1988. "Some Aspects of Cooperativization in the Mekong Delta,• in Postwar Vietnam: Dilemmas in Socialist Development, David Marr and Christine White (eds.), 163-173. Ithaca: Cornell University Southeast Asia Program. Nguyen Anh Dung. 1989. "Thue cl>ng thuong nghi8p -- T'mh hlnh va giai phap" (Commercial and Industrial Taxes: The Current Situatfon and Solutions), Nhan Dan June 21, 2. P.T.V. 1972. "MC>t hlnh thuc het hop giua x! nghi8p oong nghiep dia phuong va gia d'mh" (A Form of Cooperation between a Local Industrial Enterprise and Households), Nghien cuu kinh te 60, 45-52. Pham vin Kinh. 1977. "Thu oong nghiep va lang xi Viet Nam" (Handicrafts and Vietnamese Villages), in Vien Su hoc, Nong thOn Viet Nam trong lich su (Rural Vietnam from an Historical Perspective), 212 Rohlen, Thomas. 1974. For Harmony and Strength: Japanese White-Collar Organization in Anthropological Perspective. Berkeley: University of California Press. Ronnas, Per and Orjan Sjoberg. 1990. "Introduction" in Per Ronnas and Orjan Sjoberg (eds.), Doi Moi: Economic Reforms and Development Policies in Vietnam, v-xv. Stockholm: Swedish International Development Authority. Stark, David and Victor Nee. 1989. "Toward an Institutional Analysis of State Socialism,• in David Stark and Victor Nee (eds.), Remaking the Economic Institutions of China and Eastern Europe, 1-31. Stanford: Stanford University Press. Trin Khlinh Chuong. 1985. "Tu dit nung den dit su" (From Terra Cotta to Porcelain), Nghien cuu nghe thuat (Arts Research) 63, 42-50. Vietnam, General Statistical Office. 1991. Nien gitim thOng ke, 1989 (Annual Statistics, 1989). Hanoi: Nha xuit ban thOng ke. Vo Dai Luoc. 1990. "Fighting Inflation in Vietnam: Achievements and Prospects," paper presented at the Workshop on Economic Renovation in Vietnam, Hanoi, June 1990. Vogel, Erza (ed.). 1975. Modern Japanese Organization and Decision-Making. Berkeley: University of California Press. Volker, T. 1954. Porcelain and the Dutch East India Company. Leiden: E. J. Brill. Vu QUy Vy. 1980. "La fabrique de ceramique de Bat Trang," Etudes Vietnamiennes 62, 136-150. White, Christine. 1988. •Alternative Approaches to the Socialist Transformation of Agriculture in Postwar Vietnam,• in Postwar Vietnam: Dilemmas in Socialist Development, David Marr and Christine White (eds.), 133-146. Ithaca: Cornell University Southeast Asia Program.

PART THREE

Agriculture

6 Doi Moi in Vietnamese Agriculture Chu Van Lam

Doi moi in agriculture involves a change in the organizational model of production, that is, a change in the manner of cooperativization. An analysis of that change must address at least three questions: Why did the model have to change? What were the sources of change and the foreign influences? And what are doi moi's present stage and future prospects? To answer the first two questions, it is necessary to review the background and historical development of agricultural cooperatives. The third one requires an analysis of views and policies since the Communist Party's Sixth Congress and their effects on the organization and development of agricultural production in Vietnam today. The Original Model

Land reform in 1955 changed the situation of northern rural areas by liberating the peasants from feudalism, making them independent, and redistributing land more or less equally among· social classes. Agricultural production developed briskly at this stage, 1 but certain contradictions and problems demanded resolution. Among these were the limited capabilities of individual rural families, stemming particularly from the average landholding of less than 0.4 hectare in the northern lowlands. Social differentiation also resumed. After land was distributed, families that lacked sufficient financial resources or experience in farming had to give up their land or work it at a low level

152

Table 6.1 Land Redistribution in North Vietnam by Social Class (square meters per person)

Landlords Rich peasants Middle peasants Poor peasants Farm Laborers Other workers

Before Land Reform

Before Land Reform

After Land Reform

10,093 3,975 1,372 431 124 336

6,393 3,345 1,257 490 262 237

738 1,547 1,610 1,437 1,413 403

of production. This differentiation became a burning issue, as over ninety percent of the people were peasants, while urban heavy and light industries were too weak to attract labor from the countryside. In different degrees, peasant families therefore felt a need to cooperate. To resolve these contradictions, the government pushed cooperativization by the quick route of collectivizing labor and the means of production. This process took place with considerable speed. Cooperativization was basically completed in just two years. By December 1960 there were 414,000 cooperatives containing 2.4 million peasant families, accounting for 85.8 percent of the total agricultural population and seventy-six percent of the cultivated area. The consolidation and centralization of production through collectivization continued from the basic completion of cooperativization to the late 1970s. Several major policies promoted this tendency. The first was the conversion of low level cooperatives to high level ones.2 By 1965 upwards of ninety percent of peasant families had joined cooperatives, and eighty percent of these were in high level ones. In 1975, the figures were ninety-seven percent and eighty-eight percent respectively. Second came the consolidation of cooperatives and the redivision of labor to allow for specialization following the example of industrial enterprise. This policy was carried out with particular energy after the Thai Binh agricultural conference in 1974, with the consequences shown in Table 6.2. Compared with 1960, the number of families in cooperatives by 1980 had increased five times and the cultivated area in them six times.

153

Table 6.2 Average Cooperative Sble in the North 1980

1975

Cultivated

Cultivated

&&lim

North Lowlands Midlands Highlands

area

~tares}

113 16S 112 71

F!!milies

119 41S 21S SS

area