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The socialist-oriented market economy (Vietnamese: Kinh tế thị trường theo định hướng xã hội chủ nghĩa) is the official title given to the current economic system in the Socialist Republic of Vietnam. It is described as a multi-sectoral market economy where the state sector plays a decisive role in directing economic development, with the eventual long-term goal of developing socialism.
The socialist-oriented market economy is a product of the Đổi Mới economic reforms which led to the replacement of the centrally-planned economy with a market-based mixed economy based on state-owned industry. These reforms were undertaken to allow Vietnam to integrate with the global market economy.
Reforms leading to establishment
The Đổi Mới economic reforms were initiated by the Communist Party of Vietnam in 1986 during the party's 6th National Congress. These reforms allowed for private ownership of small enterprises alongside state-run and collectively-owned enterprises. Additionally, these reforms also introduced a greater role for market forces for coordinating economic activity between enterprises and government agencies.
The economic reforms aimed to restructure the Vietnamese economy away from Soviet-type central planning and towards a mixed economy intended to be a transitional phase in the development of a socialist economy. The goal of this economic system is to improve the productive forces of the economy, developing a firm technical-material base for the foundation of socialism, and to enable Vietnam to better integrate with the world economy.
The socialist-oriented market economy is a multi-sectoral commodity economy regulated by the market, consisting of a mixture of private, collective and state ownership of the means of production. However, the state sector and collectively-owned enterprises form the backbone of the economy. It is similar to the Chinese socialist market economy in that many forms of ownership, including cooperative/collective enterprises, communal, private and state ownership models co-exist in the economy, but the state sector plays a decisive role.
Compared with the Chinese model
In contrast to the Chinese model (dubbed the socialist market economy), the Vietnamese system is not officially viewed as a form of socialism or even market socialism and it is instead considered to be a multi-sectoral market economy that is in the process of undergoing a long-term transition towards socialism, with the view that socialism can only emerge once Vietnam's productive forces are developed to a point where socialism becomes a technical possibility.
The socialist-oriented market economy has aroused less controversy than the Chinese model within its perspective government because private business plays a smaller role in the Vietnamese model, with most of the means of production remaining firmly under either collective or state ownership and administration.
The Communist Party of Vietnam maintains that the socialist-oriented market economy is consistent with the Marxist view of economic development, being a key step in achieving economic growth and modernization while being able to co-exist in the modern global market economy. The Communist Party of Vietnam has re-affirmed its commitment to the development of a socialist economy with its Đổi Mới reforms.
This economic model is defended from a Marxist perspective, which states that a planned socialist economy can only emerge after first developing the basis for socialism through the establishment of a market economy and commodity-exchange economy and that socialism will only emerge after this stage has exhausted its historical necessity and gradually transforms itself into socialism. Proponents of this model argue that the economic system of the Soviet Union and its satellite states attempted to go from a natural economy to a planned economy by decree without passing through the necessary market economy phase of development.
Proponents of socialist market economies distinguish themselves from market socialists with the view of market socialism that markets are a central feature of socialism and that markets are the most feasible mechanism for a socialist economy.
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