The transformation of socialist production relations during the reform period of Vietnam

Improving the leadership role of the Party, the effectiveness of

state management in the development of socialist production relations in the

reform period

Firstly, continuing to strengthen Party's leadership role and the effectiveness

of state in improving the theoretical system of socialist production relations in our

country.

Secondly, strengthening the leadership of the Party, the effectiveness of state

management in bringing into play the positive changes of the socialist production

relations in our country today by improving the mechanism of operation between

organizations within the political system.

Thirdly, improving the effectiveness of the Party's inspection and

supervision functions and the State's management and administration capacity in

promoting positive changes, limiting negative impact of socialist production

relations in our country today.

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list production relations in our country and contribute to the reference material for policymakers involved in socialist production relations in Vietnam. 8 Chapter 2 SOCIALIST PRODUCTION RELATIONS IN THE PERIOD OF REFORM IN VIET NAM- SOME GENERAL THEORETICAL ISSUES 2.1. SOCIALIST PRODUCTION RELATIONS AND ITS ROLE IN THE PERIOD OF REFORM IN VIET NAM 2.1.1. Conception of production relations and socialist production relations 2.1.1.1. Conception of Marxism-Leninism in production relations * Concept of production relations Production relations are the concept of historical materialism, which refers to the relations among people in the process of material production. This is the basic economic relations that characterize a certain socialist regime. Production relations consist of three aspects: the ownership relations on the means of production, the relations on the organization of production management, the relations on the distribution of products. * Structure of production relations The above concept shows that production relations consist of three basic aspects: relations among people on ownership of production materials, organization, production management, distribution of labor products. In those aspects of production relations, the ownership relations on the means of production materials are the starting relations, the basic relations, and characterize the production relations in each society. Ownership relations on the means of production determine relations in the organization of production management, product distribution relations, and other social relations. * Production relations in a socio-economic form A particular society usually consists of three basic types of production relations: The dominant production relations, the remnant production relations of the old society and the seed production relations of the future society, in which dominant production relations always play a leading role, dominating other productive relations; They regulate the general trend of socio-economic life and create the infrastructure of a specific society to distinguish one society from another. However, remnant production relations and seed production relations also have a certain role and interactive impact; production relations play a major role. 2.1.1.2. Conception on socialist production relations of the Marxist- Leninist classics and some communist parties * The Marxist-Leninist conception on socialist production relations The characteristic of socialist production relations on ownership, according to the Marxist, is the abolition of private regime, the establishment of a public 9 regime of production materials that demonstrate superiority, progress of socialism, creating an economic basis for building an equal, equitable, and progressive society. This is a difficult, long, complex process, can not be immediately obtained. On organization, management of socialist production relations is established on the basis of voluntariness and self-awareness differing from that of capitalist management which exploits the surplus value. Distribution relations of socialist production relations, according to Marxism-Leninism, the principle of labor distribution is the most basic principle of distribution. That is the principle of equal labor, the same enjoyment, is the principle, according to C.Mark, shows equality in socialism. * Conception of some Communist Party on socialist production relations Communist parties around the world have recognized and manipulated the doctrines of Marxism-Leninism differently on socialist production relations. The Soviet Union and Eastern Europe previously thought it was a centrally planned mechanism, while Yugoslavia considered it as a self-governing regime, while China said that both public and private regime were important. * Conception of the Communist Party of Vietnam on socialist production relations The socialist production relations in our country is a type of production relations based on: the public regime of the main production materials, that organizational relations are the socialist-oriented market economy, with the various forms of distribution; Distribution by labor, contribution and welfare, of which labor distribution is the most basic form. The socialist production relations in our country are expressed in two economic sectors: the state economy and the collective economy. The Party insists: "The state economy plays the leading role. Collective economy is constantly being strengthened and developed. State economy and collective economy are increasingly becoming a solid foundation of the national economy. " 2.1.2. The role of socialist production relations in the period of reform in Viet Nam 2.1.2.1. The role of socialist production relations for the development of productive forces in Vietnam in the period of reform Firstly, production relations strongly promote the development of production forces when they suit the level of productive forces. The relevance of production relations to the level of production forces is an objective requirement for the development of production forces; Production forces can only develop when they have proper production relations. If production 10 relations do not suit, production forces will be constrained, production will be stagnant. Secondly, production relations will constrain the production forces when it does not suit the level of production forces. From the conception of the Communist Party of Vietnam, it is not only obsolete and backward production relations that constrain, have negative effects on the productive forces, but even production relations which exceed far beyond the level of production forces also constrain, have negative effects on production forces. 2.1.2.2. The role of socialist production relations for the reinforcement and improvement of superstructure and socialist orientation in Vietnam in the period of reform Socialist production relations play an important role, consolidating the improvement of superstructure in Vietnam. The economic basis in the transitional period determined by the Party and State in the period of reform is: to develop a multi-sector commodity economy, to operate with the market mechanism under the leadership of the Party and socialist orientation. In the multi-sector economy in our country, there are many types of production relations, many economic sectors, in which the Party determines the socialist production relations must gradually become the foundation of the national economy. This is the basis for consolidating and improving superstructure in our country. The role of socialist production relations in the socialist-oriented development process in Vietnam. The conception of the Party and State has always affirmed the leading role of the state economy, while considering assurance and promotion of the leading role of the state economy is one of the basic contents for maintaining socialist orientation in our market economy. 2.2. AFFECTING FACTORS TO THE TRANSFORMATION OF SOCIALIST PRODUCTION RELATIONS IN VIETNAM IN THE PERIOD OF REFORM 2.2.1. Production forces The transformation of production relations results from many factors that is, first and foremost, a production force. The tendency of material production is to constantly move, transform and develop. That transformation and development ultimately come from the transformation and development of productive forces. The movement, development of the production forces determines and transforms the suitable production relations. 11 Along with the development of production forces, the production relations have suitable movement, development. The relevance of the production relations to the level of the production force is an objective inevitability given the level of production forces. In the process of building socialism in our country, our Party is well aware of our shortage of modern production force in the construction of socialism. Then, the Party has issued many policy guidelines to promote the development of production force, such as: accelerating the industrialization and modernization of the country, science and technology together with education and training as the top national policies. Along with the conception of "leapfrog", we have applied the new achievements of the revolution in science and technology to production, such as: information technology, biotechnology, new material technology...This, in turn, makes the production force in our country develop strongly, the level of production force is constantly raised. According to the rule of material production, the production force determines the transformation of the production relations; thus, when the production force has developed strongly, the demand for adjustment of socialist production relations is necessary in order to ensure the relevance with the new level of current production force in Vietnam. 2.2.2. Superstructure The superstructure has a strong impact on the transformation of production relations, particularly the direct leadership of the Party and the management of the State. Especially, in the transitional period of socialist construction in our country, the socialist production relations are greatly affected by the Party's orientation role and the leadership process of the State. 2.2.3. Globalization, international and regional economic integration In our country, globalization affects the socialist production relations on three aspects: ownership, management organization, and product distribution. In terms of ownership of production materials, the process of globalization has attracted a considerable amount of capital into our country, including both ODA and FDI, and billions of dollars of foreign investment into Vietnam has formed the transformation on ownership which led to an increase of the mixed ownership form. Foreign investment can be linked to state-owned enterprises on a number of areas such as oil and gas, electricity, banking, electronics, textiles, etc, which results in the formation of the state capitalist economic sector. When participating in the globalization, the increasingly fierce competition with the ineffective business of state-owned enterprises force us to equities, divest capital to restructure state-owned enterprises, thereby reducing the amount of state-owned capital, but the use is more efficient. 12 In terms of management organization, when participating in globalization with the association, joint-ventures with foreign enterprises, we can learn the experience of organization and management from advanced countries. On the other hand, due to the competition with large transnational companies, we have to change management, form corporations and state-owned economic groups in order to create sufficient power to compete. Thus, the organizational and managerial model of socialist production relations has been transformed to suit the realities. In terms of product distribution, it is also affected, since foreign capital invests in our country to compete, attract workers, talents, they often pay higher wages than state-owned enterprises. Therefore, it forces state-owned enterprises to increase wages for workers and improve the living standards of workers. In addition, foreign enterprises always take into account the economic efficiency so that they pay the right and proper labor; therefore, our state-owned enterprises also learn about better labor distribution to stimulate the positive, creative work of the workers. 2.2.4. Other production relations In our country, in the transitional period to socialism, there are many kinds of production relations, which are due to the level of production forces in our country. Due to the different nature of production relations, they are both united and conflicting. That affects both socio-economic forms in transitional period. The production relations in our country are both united and conflicting, having interactive effect on each other, promoting each other to develop together to create an infrastructure of the transitional period to socialism in our country, under the guidance and support of socialist production relations. Summary of chapter 2 Theory on production relations and the role of production relations for the productive forces development and superstructure are the basic contents of historical materialism. According to Marxist-Leninist, production relations have a dual-acting role in a socio-economic form, on the one hand promoting or constraining the development of productive forces; on the other hand, production relations are also the basis, the foundation for the formation of a corresponding superstructure. For our country, in the transitional period to socialism, there are still many different forms of production relations, the socialist production relations play an especially important role in promoting the development of production forces, laying the foundations for the leadership of the Party, the management of the State, and leading forms of other production relations to socialism. 13 Today's reality shows that the movement and transformation of socialist production relations in our country are influenced by many different factors, which is, first and foremost, the productive forces. Production forces are constantly moving and transforming, which require production relations to be transformed to ensure the relevance. The superstructure, which is under the direct leadership and direction of the Party and the management of the State, has a strong impact on the movement and transformation of socialist production relations in our country. Other types of production relationships in our country are both united and conflicting, have an interactive effect on each other, creating typical infrastructure of the transitional period in our country, thus also affecting the transformation of socialist production relations. Globalization factors, regional and international cooperation, international factors also contribute to the transformation of socialist production relations which creates both opportunities and challenges in the process of integration in Vietnam. The clarification of these theoretical issues is an important basis for the research and transformation of socialist production relations in our country today. Chapter 3 STATUS OF THE TRANSFORMATION OF SOCIALIST PRODUCTION RELATIONS DURING THE REFORM PERIOD OF VIETNAM AND ISSUES OF CONCERN 3.1. STATUS OF THE TRANSFORMATION OF SOCIALIST PRODUCTION RELATIONS DURING THE REFORM PERIOD OF VIETNAM 3.1.1. Status of the transformation of socialist production relations during the reform period of Vietnam in state economy In a broader sense, State economy consists of two main areas: state-owned enterprises and non- business state economy such as national resources, national reserves, the state banking system, state insurance system in which state-owned enterprises play a key role. In a narrow sense, the state economy is synonymous with the system of state-owned enterprises. There has been changes and mobilization of the state economy through different stages: * From1986 to 2001 The socialist production relations in our country has been marked by landmark reform which was reflected in the documents of the VI, VII, VIII Congress and other legal documents of the Party and State. They are reflected in 14 all three aspects of production relations: ownership, management and distribution. The followings provide more detail: Firstly, with regard to ownership relations. The economy with multi-ownership, many economic components have been formed and developed. There has been a transformation from an economy with only two forms of ownership: people ownership and collective ownership and two economic sectors: state economy and collective economy. At the ninth congress, we have 6 economic components: Public sector, collective economy, private economy, private capitalist economy, foreign-invested economy, and state capitalist economy. We have equitized state-owned enterprises in order to transfer ownership in SOEs. Especially, in 1992 we piloted equitization which is an important turning point in trying to find a new direction to improve investment efficiency and improve business results of state-owned enterprises. The equitization of state-owned enterprises has been strongly implemented. According to statistics, in the period "from 1992-2000, we have equitized 588 state-owned enterprises, with a particular concentrated on the period 1996-2000. (About 583 companies). Most of the equitized enterprises do their businesses better than before." Secondly, with regard to on organizational and management relations, management. We have stepped up the rearrangement of state-owned enterprises to gradually reduce the number of state-owned enterprises, such as assigning, selling, leasing and bankrupting enterprises. After the reform, State-owned SOEs in this period declined rapidly. According to statistics, 12,000 enterprises in 1986 was reduced to 5280 enterprises in 2000. Despite the decline, contributions to GNP remained stable at rates of 30.5% and 31.01% in the 1998-2000 period respectively. The restructuring of state-owned enterprises also reduced the number of enterprises but increased the size of enterprises. "The number of enterprises with capital of VND 1 billion fell by almost 50% in 1994 to 33% In 1996, and 26% in 1999. The number of enterprises with capital of more than 10 billion increased to 10%, 15% and 20% in 1999 respectively. At the same time, the average capital for a business has also increased from 3.3 billion more than 11 billion in 1996 and over 18 billion in 1999". In this stage we have established 17 general corporations of 91 and 76 general corporations of 90 operating in important sectors of the country such as iron, cement, oil and gas, food. Through this, general corporations have mobilized 15 capital to renovate technology, expand production and increase competition and exploit domestic and foreign markets. Thirdly, with regard to the distribution relationship. During this period, the distribution mechanism based on average, ration cards and products was gradually eliminated. We have gradually shifted to the cash-pay system and wages were paid by productivity, quality, economic efficiency, and by market mechanisms. In addition to the positive changes, the socialist production in the state economy has revealed some negative changes such as: Firstly, the efficiency of SOEs is low, according to statistics: "By 2000 the number of enterprises with real profits accounted for 40%, the number of enterprises with losses accounted for 20%, the rest was unstable with losses and gain and low profits". Secondly, there was a heavy influence of subsidy thinking. According to Ngo Quang Minh: "The state must regularly support state-owned enterprises in the period 1997-1999. The state budget that was invested directly for the enterprise reached to VND 8,000 billion, of which VND 6482 billion was allocated to enterprises, VND 1464 billion is to offset losses and support enterprises. In addition, the state had provided a tax reduction of 2288 billion, debt cancellation of 1088 billion, debt free of 3392 billion, debt rescheduling of 540 billion, preferential credit loans of 8685 billion. Summing up the reform process at this stage, the 9th Congress confirmed: "There was some limitation of production relations that caused the limitation the liberation and development of production forces. There has been no significant change in the renewal and development of SOEs. " * From 2001 to 2017 At the 9th Congress, we identified the general economic model in the transitional period to socialism as "socialist-oriented market economy". State- owned enterprises continue to be reform to play its key role in the economy. Firstly, with regard to ownership relations. Through the process of reforming, the re-arranging of SOEs, ownership of socialist production relations in the state economy has been changed. Relevant sectors and areas of state-owned enterprises with 100% state ownership and shares are narrowed. According to statistics: State-owned sectors with a 100% share of capital fell significantly from 42 in 2002 to 30 in 2004 and 19 in 2007 and 20 in 2011. The state sector holds more than 50% Decreased from 48 in 2002 to 26 in 2004, 27 in 2007 and 27 in 2011. This has created condition and location for the development of other economic sectors. 16 Equitization of businesses took place strongly. At the conference on implementation of enterprise reorganization and reform of enterprises in 2016-2020 on 6 December 2016, Prime Minister Nguyen Xuan Phuc evaluated equitization that: "the majority of enterprise can make profit after equitization. Total capital of state-owned enterprises has increased from VND810,000 billion to VND1,234,000 billion. In fact, it is seen from the equitization in 2015 that 350 equitized enterprises made good profits, contributed to 49% of the pre - tax profit, increased by 27% of contribution to state budget, increased by 72% of charter capital. The income of workers increased by 33%... This is an example to show that the equitization process, and the re-arranging of SOEs is very beneficial. The Prime Minister emphasized that "the task of restructuring and reforming of state-owned enterprises is an important political task in 2017". Secondly, with regard to organizational and management relations In this period, the relationship of state-owned enterprise management has been carried out in the direction of re-organizing and re-arranging state-owned enterprises so as to reduce the number of employees and increase the quality. The re-arrangement reform has contributed to reduce the number of state- owned enterprises. "In 2001, there were totally about 6,000 SOEs in the whole country. By 2011, there were 1,369 SOEs and by the end of October 2016 there were 718 state-owned enterprises. Basically, state-owned enterprises have focused on key sector and areas that providing essential public-utility products and services". Thus, the number of state-owned enterprises has decreased by more than eight times, leaving only large state-owned enterprises playing a pivotal role in ensuring macroeconomic stability. During this period, we have rearranged Corporations 90 and 91 to form 12 economic corporations. Such as Electricity Group, Petroleum Group, Chemical Group, Coal and Mineral Group, Post and Telecommunications Group, Rubber Group, Viettel Military Telecom Corporation, Construction Industry Group, Shipbuilding Industry Group, Housing and Urban Group, Bao Viet Group. These corporations play the core role of state-owned enterprises and are the basis for the state to regulate the economy and increase the competitiveness of the enterprises outside. Thirdly, with regard to the distribution relations. In this stage we have eliminated the centralized planning mechanism, implemented salaries, bonuses and other payments under the market mechanism. Market-based pay for salary has stimulated the interests of workers, thereby helping to develop the production. 17 In addition to the positive changes in the socialist production relationship in the state sector, state-owned enterprises have also experienced negative changes: Firstly, although the number of state ownership and state-owned enterprises has decreased, they are still accounted for a very large share in the GDP structure of the whole country. The state-owned economy has been reduced but still accounted for 28.69% of the country's GDP, there is a need to decrease this number to 15% - 20% for other economic sectors to develop. Secondly, many businesses suffered losses. Some economic corporations, state-owned corporations suffered heavy losses of up to trillions of VND, causing public outrage and government rescue such as Vinaship, Vinalie, Thai Nguyen iron and steel expansion project, Ninh Binh fertilizer plan, Dinh Vu fiber plan, etc. 3.1.2. The status of transformation of socialist production relations is reflected in the collective economy * From1986 to 2001 The process of collective economy reform during this period is reflected in the documents of the VI, VII, VIII Congress and other documents.

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