Capitalism

Rainer Zitelmann | From the May 2024 issue

Eight-year-old Phung Xuan Vu and his 10-year-old brother were responsible for fetching food for their family, which was in the constant grip of hunger. They were living in Vietnam in the 1980, so this required ration cards.

One of the family's most important possessions was a booklet of vouchers for food. As the older child, Vu's brother took care of the booklet, knowing that if he lost it, the family would have nothing to eat. The vouchers inside were printed on waxy yellow tissue paper. They meant the difference between going hungry and having something to eat, although it was never enough.

The vouchers had to be redeemed at food distribution centers. People often had to wait hours, sometimes all day, to get a little food, and those who wanted a better chance of leaving with food came at night. They were already queuing up before the food was even delivered, in the hope that it would arrive at some point. Once it was finally your turn, you often found yourself face-to-face with harsh officials. As Vu told Nancy K. Napier and Dau Thuy Ha in their 2020 book The Bridge Generation of Việt Nam: "The officials were not friendly. They were bossy and had power. We felt like we had to beg for the food that was rightfully ours."

The amount of food you got depended on your family's status. State employees received more, factory workers less. If there was not enough rice, people received wheat instead, though hardly anyone knew what to do with it: Even if they knew how to bake bread, they couldn't normally get hold of the other ingredients. In any case, they needed electricity to heat an oven, but electricity was available only a few hours a day.

Today the Vietnamese call this era Thoi Bao Cap—"the subsidy period." It was the time of a socialist planned economy, before the free market reforms of the late 1980s.

In 1990, with a per capita gross domestic product (GDP) of $98, Vietnam was the poorest country in the world, behind Somalia and Sierra Leone. Every bad harvest led to hunger, and Vietnam relied on food aid from the United Nations and financial assistance from the Soviet Union and other Eastern Bloc countries. As late as 1993, 79.7 percent of the Vietnamese population was living in poverty.

By 2020, the poverty rate had fallen to 5 percent. Vietnam is now one of the most dynamic countries in the world, with a vibrant economy that creates great opportunities for hardworking people and entrepreneurs. Once a country unable to produce enough rice to feed its own population, it has become one of the world's largest rice exporters, and a major electronics exporter too.

After the French colonists were defeated, Ho Chi Minh established a system modeled on the Soviet planned economy in North Vietnam. In 1975, after the pro-American government in South Vietnam fell and the last U.S. troops left the country, the newly united country's government decided to bring Soviet-style socialism to the south too.

The war had devastated the country. Some 14–15 million tons of bombs and explosives fell on Vietnam, 10 times as many as had been dropped on Germany in World War II. Napalm inflicted heavy civilian casualties. The South Vietnamese alone lost 1.5 million people, including 300,000 civilians. By the end of the war, there were almost a million orphans in South Vietnam and at least a million war invalids. Civilian losses in North Vietnam were lower than in the South, but it lost far more soldiers.

The planned economy meant yet more devastation.

In 1977, the government started collectivizing agriculture and nationalizing nearly 30,000 privately owned small businesses. Many peasants in the South regarded collectivization as particularly unjust because the communists had given them land during the war to secure their support and now wanted to take it away from them again. Many of them resisted collectivization, and some left their land or sold their animals rather than work in collectives. By 1980, only 24.5 percent of the rural population in the South worked in collectives, compared to 97 percent in the North.

"The peasants in South Vietnam reacted by restricting production, which was primarily oriented towards their own needs," Claudia Pfeifer explained in her book Konfuzius und Marx am Roten Fluss (in English, Confucius and Marx on the Red River). "Within a few months, the agricultural sector almost completely collapsed."

Less than 10 percent of the cultivated area for annual crops could be artificially irrigated and drained, even though pumps were available for about 40 percent of the area—power shortages and blackouts often made their use impossible. Only 30 percent of the agriculture sector's electricity demands were satisfied.

State-owned cooperatives received 40 percent of the government's funds, though they contributed only 5 percent of total agricultural production. The state collectives did not reward members for the amount of rice they produced, but instead counted how many days they had worked. If you worked 30 days, you got 30 points, which gave you the right to a defined share of the harvest. If you worked 20 days, you got 20 points and correspondingly less.

In 1980, Vietnam produced only 14 million tons of rice, though the country required 16 million tons to meet its population's basic needs. Every failed harvest led to immediate food shortages, and to rationing. The second Five-Year Plan envisaged an increase in GDP of 13 percent to 14 percent per year for 1976 to 1980. In fact, it went up only 0.4 percent—and this with a rapidly growing population. Agricultural production was to increase by 8 percent to 10 percent per year; it went up by 1.9 percent. The plan envisaged annual increases in industrial production of 16 percent to 18 percent; the actual annual average was just 0.6 percent. In the entire northern half of the country, the per capita........

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