Socialist-Oriented Planned Market Economies

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Charles McKelvey:

"Alberto Gabrielle and Elias Jabbour, in Socialist Economic Development in the 21st Century (London: Routledge, 2022), maintain that China and Vietnam have developed in recent decades what they call “socialist-oriented planned market economies," different from the centralized planning socialism of the Soviet Union. In socialist-oriented planned market economies, the state directs the economy, with priorities oriented to increasing the productivity of the national economy and to providing for the needs of the people; and they strive for fair distribution, in accordance with one’s contribution to the society. They mix socialist and capitalist modes of production in which there exist possibilities for private capital, for the autonomy of private and public enterprises, and for local enterprises, all of which function under state direction and state control over the national economy.

Gabrielle and Jabbour further maintain that, because socialist-oriented planned economies set the speed and direction of capital accumulation, they are superior to both neoliberal capitalism and Soviet centralized planning with respect to productivity and responding to human needs.

Although I am not in agreement with certain aspects of their formulation, I find Gabrielle and Jabbour’s creation of the category of “socialist-oriented planned economies” to be an important aid to our understanding. Such socialist-oriented planned economies have emerged in recent decades from the first efforts in human history of direction of the mode of production by delegates and deputies of the people, in accordance with the needs and interests of the majority. Following an experience of approximately thirty years, the new political processes of people’s power were able to discern limitations and weaknesses in the political-economic systems that they had created, such as simplistic and overly centralized solutions to problems, corruption and inefficiency in production, and a certain degree of unfairness in distribution. They sought to rectify these errors by expanding the role of the market in the economy and by including the principles of the market in state planning. The resulting “socialist-oriented planned market economy” is the most advanced system of production that humanity has known, advancing in science, technology, productivity, and efficiency; and at the same time, attentive to the social and public obligation to provide for fundamental human needs. "


The Three Stages of Post-1949 China

Charles McKelvey:

"The People’s Republic of China

The People’s Republic of China was declared by Mao Zedong on October 1, 1949. The period of “socialist revolution and reconstruction,” from 1949 to 1978, was characterized by the socialist transformation of agriculture and industry, in which there was central planning and large public and collective enterprises, which enabled China to feed the population (excepting certain abnormal circumstances), to accomplish basic industrialization, and to advance significantly in social and human development. However, by the late 1970s, it became evident that China had not closed the gap with the advanced capitalist economies of the West and Japan. Therefore, the Communist Party of China proposed market-oriented reforms. In the period of “reform, opening, and socialist modernization,” from 1978 to 2012, agricultural and industrial enterprises, both state-owned and private, were permitted to sell products to domestic and foreign markets, under state direction in accordance with a long-term development plan. The reform and opening had enormous success in increasing productivity in agriculture and industry.

China’s economic growth since 1978 indicates that the key to economic development is not a limited state, as bourgeois and especially neoliberal ideology have it, but a strong state, a state capable of formulating a long-term development plan and implementing interrelated economic interventions in guiding the country’s development; a state capable of commanding public and private firms in implementing nationwide coordination of the investment decisions of the state’s policymakers.

In 2012, Chinese socialism entered a third stage, launched at the 2012 National Congress of the Communist Party of Cuba and led by Xi Jinping. The focus during the third stage has been on attacking problems that intensified during the economic growth of the second stage, including inequality, poverty, environmental damage, and corruption. During this stage, basic health services have been restored in the countryside, rural economic enterprises have caught up, and absolute poverty has been eliminated. In China today, all are assured food, clothing, medical services, and housing.

In the era of Xi Jinping, China pursues a foreign policy based on the principles of cooperation among nations and the sovereignty of nations. Chinese foreign policy affirms, in theory and in practice, that all nations of the world ought to be free to control their economies, their political systems, and their foreign policies; and they ought to be free to trade among themselves, without interferences and interventions by global powers that seek control of natural resources and markets. During the third stage of Chinese socialism, China has sought to develop win-win relations with the Latin American and Caribbean region, with African nations, and with the Arab world. It has played a leading role in East Asian integration and cooperation.

China is making a bid today, not to dominate the world, but to lead the world. In 2021, Xi presented to the General Assembly of the United Nations a Global Development Initiative, based in the principle of mutually beneficial trade and cooperation among nations. At the Boao Forum for Asia Annual Conference 2022, Xi proposed a Global Security Initiative, based on the principle that the security needs of each nation are protected by attention to the security needs of all nations. On March 15, 2023, at an online dialogue among political parties of the world convened by the Communist Party of China, Xi put forth a proposal for a Global Civilization Initiative, which maintains that all countries should refrain from imposing their values or political-economic models on other countries, and they should avoid ideological confrontation. Xi maintained at the online dialogue that all countries have the goal of the modernization of their countries, because modernization is the key to development; however, each country must forge its own modernization path, in accordance with its national conditions."


Vietnam: The Post-1986 Doi Moi model

Charles McKelvey:


Following the reunification of Vietnam in 1975, the leaders of the Communist Party of Vietnam initially were oriented to a centrally planned economy, which had been applied with success in the Democratic Republic of Vietnam (North Vietnam) since 1955. However, Party leaders soon recognized that the centralized planning approach was not adequate for responding to the serious problems that related to challenges presented by the reunification and by the destruction of more than thirty years of war. Initial departures from the centralized planning model were ad hoc and experimental responses to emergency situations, many of which were not legal. The central government, seeing their effectiveness, legalized them, but setting limits. Meanwhile, in the North, agricultural cooperatives that had been progressively formed by peasants had been productive and efficient in 1960s and 1970s, but during the 1980s, they declined in productivity, due to insufficient incentive to work, leading to the launching in 1981 of a Contract System.

Vietnam’s policy of economic renewal was formally proclaimed at the Sixth National Congress of the Communist Party of Vietnam on December 15-18, 1986, when the various economic reform initiatives of the 1980s were formulated into a coherent and radical reform strategy, which the Party called Doi Moi (renovation). It established a socialist-oriented market economy, in which state-owned economic enterprises would co-exist with private enterprises, both domestic and foreign, and in which state planning would utilize market forces. The goal of the Doi Moi is to increase productivity with respect to food, consumer goods, and export products.

The Doi Moi policy was successful in overcoming macroeconomic imbalances, and it led to exceptionally fast economic growth. At the same time, with the state directing the distribution, significant advances have been made with respect to poverty, malnutrition, public health, and education. Key indicators such as growth in GDP, GDP per capita, labor productivity and wages has been faster in Vietnam than in other countries in Southeast Asia, which is one of the best performing regions in the Global South."


Cuba: The Post-2012 Model

Charles McKelvey:

"The exodus of the Cuban national bourgeoisie following the triumph of the Cuban Revolution in 1959 and the refusal of the U.S. government to cooperate with Cuba in the financing of compensation for U.S.-owned nationalized properties meant that the Cuban socialist economy in its early years had a much higher percentage of state-owned property than was initially intended by the revolutionary leadership.

In the early 1990s, following the collapse of the socialist bloc, Cuba reinserted itself into the capitalist world-economy, under highly regulated and controlled conditions. It established international tourism as the key economic sector, developing it with joint ventures by the Cuban state and foreign capital. And it expanded space for small scale Cuban private capital, particularly in restaurants and lodging related to tourism.

In 2012, a new socioeconomic model was launched. The new model further expands space for private property, seeing privately-owned enterprises as an engine that helps to drive the economy. In addition, the new model establishes a salary structure that incentivizes work and productivity. The new model was politically necessary, inasmuch as the increasing standard of living since the early 1990s (as a result of tourism and family remittances) has generated rising expectations with respect to the material conditions of life. The new model is conceived by the Communist Party of Cuba and the Cuban Revolutionary Government as a socialist model, but one in which the role of private property is recognized. The various forms of property were given juridical foundation in the new Cuban Constitution of 2019.

In Cuba, the expansion of private property during the last ten years does not mean a reduction of state regulation and control of the economy. Private enterprises operate in the context of an economy planned, directed, and regulated by the state, which includes an active role by the government ministries is seeking creative ways to integrate the public and private sectors and to integrate science and the economy, in order to increase agricultural and industrial production. In Cuba, the state, and not the market, directs the economy."