While free market countries across the developing world remain deeply impoverished, China and Viet Nam have both seen impressive increases in living standards during the past several decades. Public voices in the western world give all credit for this to “liberalization,” but a recognition of other key factors seems to underlie US sluggishness in Korean Nuclear talks.
Economic discourse in the United States seems to take place almost exclusively in neoliberal terms. It is assumed that free competition and market solutions always render the best results, and state central planning has proved to be nothing but a total failure. Even among the emerging democratic socialist current in the United States, there have been no calls for state control of production. Supporters of Bernie Sanders and Alexandria Ocasio-Cortez simply call for a bigger welfare state and heavier taxes on the rich. Their respective platforms do not contain a single call for the nationalization of any industry or resource. Any advocate of the Marxist definition of socialism is simply told “Look at Venezuela” or “Look at the Soviet Union” for `proof` that free markets are the only solution for creating growth.
However, an article published in September of 2018 from the World Economic Forum gushes with praise for the economic successes of Viet Nam. The article asks: “A mere 30 years ago, the country was one of the poorest in the world. How did this southeast Asian nation grow to become a middle-income country?”
The analysis of the text gives most credit to liberalization and market reforms, but also admits some other key factors: “Viet Nam has invested heavily in human and physical capital, predominantly through public investments… Viet Nam invested a lot in its human capital and infrastructure. Facing a rapidly growing population – it stands at 95 million today, half of whom are under 35, and up from 60 million in 1986 – Vietnam made large public investments in primary education. This was necessary, as a growing population also means a growing need for jobs. But Vietnam also invested heavily in infrastructure, ensuring cheap mass access to the internet. The Fourth Industrial Revolution is knocking on Southeast Asia’s door, and having a sound IT infrastructure in place is essential preparation. Those investments paid off.”
As much as the article tries to give credit to free markets, the fact remains that Vietnam is a socialist country. The country is led by the Communist Party, and despite the huge market sector, the state ultimately controls and plans the economy. Like China, Vietnam has 5 five-year plans, and the private corporations exist at the behest of the government.
Viet Nam is not like Bangladesh, Malaysia, Indonesia, Haiti, Guatemala, Honduras, or Nigeria. In these countries, the western corporations have been given almost completely free reign. Instead, Viet Nam has followed China’s strategy of utilizing foreign investment and a market sector to strengthen socialism. As a result, Vietnam enjoys a GDP growth rate of roughly 6-7%, rivaling China’s.
Neoliberalism has Failed, Market Socialism Works
Viet Nam’s recent successes fit in with an overall pattern during the post-Cold War years. During the 1980s, the Soviet economic model of almost total state control suffered from stagnation. The Communist Bloc was effectively cut out of the computer revolution and, within the state-run apparatus, many intellectuals, engineers, technicians, and innovative people felt stifled. The revolutionary enthusiasm that had enabled Stalin to mobilize the Soviet people during the 1930s and the patriotic zeal that allowed miracles in post-war construction across Eastern Europe, had worn off. Underlying the Marxist-Leninist rhetoric of Warsaw Pact governments was a kind of cynicism and frustration that was widespread among the population.
The toppling of socialism in Poland, Czechoslovakia, East Germany, Romania, Albania, and eventually the Soviet Union was a political defeat, not an economic one. Despite stagnation, the countries maintained a decent living standard and functional economy. The much-heralded “collapse of communism” was ultimately a seizure of power by pro-western forces within the respective governments, spurned by the alienation and frustration of the intellectual strata. George Soros and western intelligence agencies effectively manipulated these factors for their own geopolitical ends.
In eastern Europe, capitalism, not socialism, brought about an economic collapse. As free market policies swept the region, the results were utterly catastrophic. Governments sold off state enterprises and let Wall Street and London set up shop. The result was mass unemployment; mass starvation accompanied a drastic rise in crimes such as the drug trade and human trafficking. However, amid the failure, the World Bank and the International Monetary Fund thundered that “free markets” and neoliberalism were the only way forward. Milton Friedman and Jeffrey Sachs became the respected voices, and their policies of deregulation and economic plunder expanded far beyond the former Eastern Bloc. In South and Central America, and in Africa, the promises of free market capitalism creating prosperity and abundance never materialized.
Russia’s recovery for these years of disaster came about as a result of a sudden break with neoliberal economics. Russia was able to restore its economic power by nationalizing oil and gas. Gazprom and Rosneft, two national champions, became the basis of the state apparatus reasserting its control over the Russian market under the Putin administration. The process was slow and complex and involved many long negotiations. Many of the newly rich Russian oligarchs fled the country, seeing that playtime was over, and the state would no longer allow them to enrich themselves at the country’s expense.
While countries across the developing world became impoverished under neoliberal policy, China continued to see extensive growth. Why? Because in China, the market was controlled. The private sector that expanded in China during the 1980s and 90s was closely controlled by the party, and forced to operate in accordance with its central plans and vision.
The Fears About Korea
The World Economic Forum article praises Viet Nam’s achievements, speculating that it could continue to see growth:
“Both domestic and international retailers are eyeing rapid expansion in the country, as more and more people gain the purchasing power to consume goods and services. It may mean that one day, instead of the hustle and bustle of small shops and scooters, Viet Nam will be characterized by large malls and cars. But for now, Viet Nam is growing, at its own pace, and in its own way.”
And while such conversations are hidden from public discourse, as the Korea talks seem to stall, and strange attacks against the North Korean embassy in Spain have taken place, a debate is happening behind the scenes. The more strategic voices within the US government do not agree with Jim Roger’s view that North Korea is a huge economic boom waiting to happen.
There is a real fear on the part of the more long-term thinking circles within the American power structure, because the facts speak for themselves:
In the 1980s, free market advocates predicted that the “reform and opening up” would lead to the Chinese Communist Party’s downfall. In fact, the opposite has happened. The Chinese Communist Party and its “Socialism with Chinese Characteristics” are stronger and more popular than ever.
The “socialist-oriented market economy” has not led to the toppling of the Communist Party of Vietnam or the restoration of capitalism, either. It has led to the opposite. The Communist Party is stronger and more popular than ever because it has delivered effective results; reducing poverty and improving living standards.
The Workers’ Party of Korea has studied these trends and would like to maneuver toward carrying out similar reforms. Western leaders, who greatly fear socialism and anti-imperialism, see this as a real danger.
The fact is that while the Soviet model of the 1980s needed to be updated, this form of socialism was not collapsing economically. The post-Cold War years have demonstrated that neoliberalism has failed to deliver growth and prosperity, and socialism, specifically a market-oriented version, works quite well. As much as their ideology states otherwise, western leaders know this on some level, and fear what it could mean for the future of geopolitics.
Originally published in New Eastern Outlook