‘LANDLORDS ARE TAKING BACK THE LAND’: THE AGRARIAN TRANSITION IN VIETNAM A Haroon Akram-Lodhi1 November 2001-11-14 Working Paper 353 1. Institute of Social Studies, PO Box 29776, 2502 LT The Hague, The Netherlands ([email protected]) and University of Economics, 1 bis Hoang Dieu, P10, Phu Nhuan District, Ho Chi Minh City, Vietnam (ha- [email protected]). The research for this paper has been carried out under the auspices of the Vietnamese- Dutch Project for MA Programme in Development Economics and in conjunction with the Centre for the Study of Transition and Development at the Institute of Social Studies. 1 The Institute of Social Studies is Europe's longest-established centre of higher education and research in development studies. Post-graduate teaching programmes range from six-week diploma courses to the PhD programme. Research at ISS is fundamental in the sense of laying a scientific basis for the formulation of appropriate development policies. The academic work of ISS is disseminated in the form of books, journal articles, teaching texts, monographs and working papers. The Working Paper series provides a forum for work in progress which seeks to elicit comments and generate discussion. The series includes the research of staff, PhD participants and visiting fellows, and outstanding research papers by graduate students. For further information contact: ORPAS - Institute of Social Studies - P.O. Box 29776 2502LT The Hague - The Netherlands - FAX: +31 70 4260799 E-mail: [email protected] ISSN 0921-0210 Comments are welcome and should be addressed to the author: CONTENTS 1. INTRODUCTION.................................................................................................1 2. CONCEPTUALIZING TRANSITION PAST AND PRESENT..........................3 3. AGRARIAN TRANSITION IN VIETNAM, 1975-2000.....................................7 3.1 Collective agriculture and agrarian crisis, 1975-1979.....................................7 3.2 The decollectivization of land in the 1980s...................................................15 3.3 Agrarian structure in the 1990s.....................................................................21 3.4 Debt and investment in the 1990s.................................................................25 3.5 Non-land inputs and the technical coefficients of production in the 1990s..29 3.6 Productivity and accumulation in rural Vietnam...........................................32 3.7 Poverty and inequality...................................................................................41 3.8 Rural politics in the 1990s.............................................................................42 4. Conclusions.........................................................................................................50 5. REFERENCES....................................................................................................51 6. FIGURES AND TABLES...................................................................................57 2 ABSTRACT This article applies the concepts associated with agrarian political economy to re- cent Vietnamese economic development. Differences in access to land that underpin trans- formation in rural relations of production are documented. Differences in the technical co- efficients of production are also demonstrated amongst farms when grouped on the basis of size of land. The impact of these changes is demonstrated to be an impressive supply re- sponse, which suggests that dynamic productive efficiency gains have been fostered as a result of rural restructuring. Differences in the extent to which farm households, when grouped on the basis of expenditure quintiles, are integrated into markets, when considered alongside differential agrarian productivity, suggests that the benefits of rural restructuring are being inequitably distributed. Cumulatively, processes of peasant class differentiation appear to be underway in rural Vietnam. 3 1. INTRODUCTION Over the course of the last 20 years, Vietnamese agriculture has shifted from a centrally planned economy to a market-led, state-regulated economy increasingly domi- nated by the logic of the law of value. This process is commonly described as constituting a ‘transition’ from ‘socialism’ to ‘capitalism’. As a consequence, Vietnam is often grouped alongside the ‘transitional economies’ of central and eastern Europe, the former Soviet Union, Mongolia, China and Laos (see, for example, World Bank 1996). However, placing Vietnam in such a grouping is deeply problematic because it fails to accommodate the unique characteristics of specific transitions. As has been succinctly stated by two leading Vietnam scholars, ‘the particular process of transition actually adopted, by creating capital and processes of accumulation, will have an important influence on the nature of the re- sulting market economy’ (Fforde and de Vylder, 1996: 38). It is insufficiently appreciated that classical political economy in general, and marxist political economy in particular, offers an analytical framework that allows an ex- amination of the particularities of a transition from socialism to capitalism (for an excep- tion, see Watts, 1998). This is because it offers an approach that can explain structural changes in the mode of production. In one of the most famous statements of historical ma- terialism, from the Preface to a Critique of Political Economy, Marx argued that In the social production of their existence, men inevitably enter into definite rela- tions, which are independent of their will, namely relations of production appro- priate to a given stage in the development of their material forces of production. The totality of these relations of production constitutes the economic structure of society, the real foundation, on which arises a legal and political superstructure and to which correspond definite forms of social consciousness…At a certain stage of their development, the material productive forces of society come into conflict with the existing relations of production, or—this merely expresses the same thing in legal terms—with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an era of social revolu- tion…(Marx, 1998: 7) Using this analytical framework, consideration of processes of transition between modes of production requires an examination of two sets of fundamental issues: transfor- mation in the relations of production; and transformation in the forces of production. The former emphases the process under which surplus is produced, extracted, and controlled. The latter emphasizes processes that affect the rate of technological change, the organic 1 composition of capital, the volume of the surplus that is produced, and thus the rate of ac- cumulation. In terms of empirical analysis, the investigation of the transition between modes of production is perhaps most fully developed in agrarian political economy. Agrarian politi- cal economy has exhaustively investigated the transition from feudalism to capitalism in western Europe (Brenner, 1977; Hilton, 1990), the agrarian origins of capitalism in the United States and Japan (Byres, 1996, 1991), as well as the agrarian constraint to economic development in late industrializing and poor economies (Brenner, 1986). This article there- fore uses the concepts and methodologies of agrarian political economy to explore and il- luminate the agrarian transition to capitalism in Vietnam. While this article is not the first to attempt to use agrarian political economy to examine transition in Vietnam (see, for ex- ample, Watts, 1998), previous efforts focus on the period up to the mid-1990s. This article is the first to attempt to apply the concepts associated with agrarian political economy to more recent Vietnamese economic development. The article is structured as follows. Fol- lowing this introduction, section II critically interrogates concepts of transition. Section III examines at length the process of agrarian transition in Vietnam since the late 1970s, and documents the outcome of this process for agricultural production, agrarian accumulation, and rural politics. Differences in access to land that underpin transformation in rural rela- tions of production in Vietnam are documented. Differences in the technical coefficients of production are also demonstrated amongst farms when grouped on the basis of size of land. The impact of these changes is demonstrated to be an impressive supply response, which suggests that dynamic productive efficiency gains have been fostered as a result of rural restructuring. Differences in the extent to which farm households, when grouped on the basis of expenditure quintiles, are integrated into markets, when considered alongside dif- ferential agrarian productivity, suggests that the benefits of rural restructuring are being inequitably distributed. Cumulatively, processes of peasant class differentiation appear to be well underway in rural Vietnam. Section IV offers some conclusions. 2 2. CONCEPTUALIZING TRANSITION PAST AND PRESENT ‘Transition’ is now a very widely used word in economics. However, like ‘sustainability’, the meaning attached to the word can be very difficult to pin down. Ac- cording to the World Bank (1996: 1, 4-5) the long-term goal of transition is…to build a thriving market economy capable of delivering long-term growth in living standards…[S]ystemic change [is] involved: reform must penetrate to the fundamental rules of the game, to the institutions that shape behavior and guide organizations. This makes it a profound social transition as well as…a passage from one mode of economic organization to a thoroughly different one…[It] must unleash a complex process of creation, adaptation, and destruction. This approach appears to offer a perspective rooted in institutional and evolutionary eco- nomics. Appearances are deceiving. In practice both the World Bank and the International Monetary Fund (IMF) have remained resolutely neoclassical in their approach to transi- tion. Borrowing from the experience of structural adjustment programs in Latin America in particular (Lavigne, 1999: 277), the two institutions have emphasized four components of transition (IMF, 2000). The first component is liberalization, encompassing both dramatic reductions in barriers to international trade and internal market de-regulation. This is done in order to ensure that domestic prices are determined in national and international mar- kets. The second component is macroeconomic stabilization, which is needed to tame the inflation set off by liberalization. Stabilization requires strict control over the government budget, in order to minimize deficits, severe restrictions on the growth of money and credit, and reform of the capital account in order to stabilize the balance of payments at a sustainable level. The third component is the restructuring of production and finance through privatization, so that goods and services that are capable of being sold in func- tioning national and international markets are produced. The fourth component are the le- gal and institutional reforms necessary to redefine the role of state so that it enables mar- kets, rather than restricts them, and the concomitant establishment of the rule of law. Clearly, for the Bretton Woods institutions, neoliberal economic rationalism con- tinues to structure their conceptualization of transition. However, just as the economics of adjustment can be seriously questioned (Cornia, Jolly and Stewart, 1987; United Nations Economic Commission for Africa, 1989; Tarp, 1993; Taylor, 1991, 1996), so too can the ‘orthodox’ economics of transition. The cut in domestic demand suggested by macroeco- nomic stabilization can have severe consequences on growth processes, while the supply 3 response that was supposed to be forthcoming from liberalization, privatization and the compression of the state has, in many instances, been illusory (Lavigne, 1999). As a con- sequence, many economies in transition have become caught in low growth ‘traps’. The reason for this is clear. Too many vocal economists have offered policy advice that is based upon trying to construct an idealized end state witnessed only in neoclassical eco- nomics textbooks. Far, far less attention has been paid to those economists that have fo- cused upon the distorted pattern of development currently witnessed in many economies during the transition process. Focusing upon the current distortions of ‘actually existing transition’ rather than the envisaged end results produce a very different analysis, and a very different set of policy recommendations. Current distortions largely reflect the pro- found ‘structural rigidities’ (Spoor and Visser, 2001: 3) witnessed in transitional econo- mies. In particular, transitional economies often witness the partial absence of the complex web of social relations and institutions necessary for the fully formed emergence of capital, for the production of surplus value, and for the realization of exchange-value. It is not so much that institutions must be reformed, as suggested in the quote above; rather, the social relations necessary to foster the emergence of key institutions are incomplete, and as a consequence the institutions do not exist. This absence is ‘often more important than the structure of relative prices’ (Spoor and Visser, 2001: 3). The importance of the web of social relations necessary for the capitalist mode of production can be highlighted by the emphasis usually offered to the role and extent of the market as an indicator of the extent of transition. For example, Fforde and de Vylder (1996: 34) define transition as ‘the establishment of an economic system in which the typi- cal transaction in based upon voluntary exchange between independent producers and con- sumers’. The problem with this type of emphasis is that market exchange is predicated upon the production of commodities for exchange (Sawyer, 1993). This in turn suggests that understanding the process of transition requires understanding not so much the terms and conditions governing exchange as rather the social processes that structure the produc- tion that is necessary prior to an exchange taking place. As is stressed in marxist political economy, the social processes that structure production can be reduced to two essential phenomena. The first is the private ownership of productive assets and, more particularly, an ongoing process of differentiation of asset ownership between those with large quanti- 4 ties of productive assets and those with limited quantities of productive assets. The struc- ture of asset ownership determines class location, the capacity to extract surplus, and in so doing results in the establishment of a set of relations of production predicated upon ex- ploitation. Moreover, asset differentiation can allow some agents to ‘regulate’ the market (Bernstein, 1996). The second is a structural shift in dynamic productive efficiency, which indicates an unleashing of the development of the forces of production and which thus serves as the foundation upon which sustained accumulation is facilitated. Unleashing the forces of production can allow capitalist enterprises to generate higher profits even in ‘regulated’ markets. This is because markets act as a coercive discipline upon capitalist production, forcing enterprises to cut unit costs, enhance innovation and invest if they are going to retain market share. Of course, enhancing dynamic productive efficiency is con- tingent upon differentiated control of productive assets so that capital can utilize the domi- nant relations of production to capture the benefits of developments in the forces of pro- duction. Thus, while the dominance of markets in resource allocation may be a necessary condition of transition, it is in no way a sufficient condition of successful transition. The sufficient conditions of successful transition are a transformation in the relations of pro- duction and an unleashing of the forces of production. Marxist political economy was primarily developed to explain industrial econo- mies, and the general emphasis on the articulation of relations and forces of production ap- pears salient to transitional economies whose structure is, to a greater or lesser degree, in- dustrial. What however of poorer agrarian transitional economies? Does the general ana- lytical framework of marxist political economy have relevance for a poorer agrarian econ- omy such as Vietnam? The answer is a resounding ‘yes’. Agrarian political economy offers a guide, in the form of the insights that it has derived from the investigation of the transi- tion from a pre-capitalist mode of production to capitalism. These insights deepen the un- derstanding of the processes that facilitate transformations in the relations and forces of production in a comparatively poorer agrarian economy. In agrarian political economy the occurrence of ‘those changes in the countryside of a poor country necessary to the overall development of capitalism’ (Byres, 1996: 27) is defined as an ‘agrarian transition’. Byres stresses interrelated changes in three sets of social processes in particular if an agrarian transition is to succeed: production; accumulation; 5 and politics (Akram-Lodhi, 1998). Changes that may or may not affect the structural trans- formation of petty commodity producing peasant labour into its commodified form, la- bour-power, through both the restructuring of rural labour processes and processes of peas- ant class differentiation clearly affect production. So too does the shift, contingent on the commodification of labour into labour-power, from the petty commodity production typi- cal of peasant farming to generalized commodity production, as the latter is a precondition of the production of surplus value (Lenin, 1968). Changes in the production system can thus both effect and reflect deeper transformations in the relations of production and the forces of production. Moreover, changes in production affects the capacity of agriculture to supply a net marketed surplus to meet the resource costs of industrialization, the ways by which such a surplus can be appropriated, and the ease with which such an appropriation may occur. Thus, changes in production, in that they effect and reflect transformations in the relations and forces of production, clearly affect accumulation. Changes in production and in accumulation at the same time have implications for rural politics, because the focus of rural politics is usually production and accumulation (Akram-Lodhi, 2000a). Thus, in terms of production, accumulation, and politics agriculture has the capacity to constrain structural transformation and economic development by acting as a fetter upon the meta- morphosis of the relations and forces of production. The eradication of this constraint un- leashes agrarian transition and creates the preconditions upon which the capitalist mode of production can become dominant in a social formation. From the above discussion, marxist political economy offers five ‘parameters of transition’ that can be investigated for a poorer, agrarian economy such as Vietnam. The first parameter is the differentiation of productive assets that, in a poorer, rural economy will mean, to a large extent, land. The second, related, parameter is the extent to which the organization of the production process sustains the emergence of generalized commodity production, as this is the precondition of the production of surplus value. The third pa- rameter is a structural shift in dynamic productive efficiency, as such a shift may be in- dicative of seismic changes in the forces of production. The fourth parameter is the process of accumulation unleashed by these changes in the production system. The fifth parameter is the development of rural politics that will, to a large extent, reflect and effect changes in production and accumulation. 6