Understanding Communist Government without a Communist Economy

Is there a country that can call itself communist while maintaining a capitalist economy? The simple answer is no, but this article will explore the nuances and unique cases, particularly focusing on Vietnam.

Defining Communism

By definition, communism is a worldwide system of political, social, and economic theories derived from the writings of Karl Marx and Friedrich Engels. It is not simply a label for a political party or a government. A true communist system aims to eliminate class distinctions and state control over production. However, in practice, many countries that once claimed to be communist have implemented mixed economies with significant capitalist elements.

Communist Governments and Mixed Economies

Communist governments, in the theoretical sense, must have a state control over the means of production and distribution without market mechanisms. Yet, countries that officially claim to be communist often have economies that are mixed, with both capitalist and state-run components.

Cambridge Example: Vietnam

Vietnam is often cited as a country that fits this description. It has a "communist party" that serves as the foundation for governance—and it's a single-party state, too. The economy, however, is not entirely communist. It has a significant capitalist component. For instance, Vietnam ranks higher in terms of economic freedom compared to countries like Cuba or North Korea, which are true socialist states.

Household Businesses in Vietnam

Vietnam's approach to small businesses is markedly different from that of many Western countries. During my recent visit, I discovered that turning a household into a business is relatively straightforward. Anyone can start a "household business" without any formal paperwork, and these businesses are numerous, estimated at over five million.

This is in stark contrast to my home country, Cyprus, where setting up a food business requires extensive bureaucratic procedures including fire safety measures, sanitation inspections, and even special contracts with pest control companies. In many areas of Vietnam, the regulatory burden is significantly lighter, which suggests a higher level of economic freedom.

Economic Freedom and Growth

Despite some residual communist policies, Vietnam's economy is experiencing growth. They have their first billionaires, and with a population of 95 million, this is quite an achievement. For context, Cyprus, with a population of around 800,000, has nine billionaires. However, when foreigners owning businesses in Vietnam are excluded, Vietnam still has three fully Cypriot billionaires in their population.

The Path to Success

So, while Vietnam is not a model of a purely communist economic system, it has managed to integrate market reform effectively. This blend of state control and private enterprise has contributed to its economic success and growth.

For Vietnam, the importance lies not in proclaiming a fully communist system but in fostering economic freedom and fostering growth. This balance between centralized planning and market mechanisms has allowed Vietnam to achieve remarkable economic success, making it an interesting study for those interested in alternative economic models.