Introduction
Economic philosophies are one of the most fundamental studies that can be used to gather information that can help in understanding the forces that shaped the economies of different regions in the world. This paper aims to explore Vietnam as the region of study in reference to three prominent philosophers, Adam Smith, Karl Marx, and John Maynard Keynes. By analyzing their theories, it will be possible to understand the current economic situation of Vietnam and also understand the challenges facing the economy of the country. Vietnam is geographically located in Southeast Asia, and it possesses a significant historical background and a vibrant economic environment. It faces a range of complex obstacles as it strives to establish its position in the global economy. Despite experiencing significant economic growth in recent decades, the growth is not immune to hurdles, which mirror the difficulties of managing the continuously expanding global economic environment. Vietnam faces a notable economic problem in the current global economy.
Adam Smith’s concept of the “invisible hand.”
Adam Smith played a pioneering role in the development of political economics. According to Smith, the most effective way to support economic progress is to create an environment that is characterized by free competition and that functions in accordance with universal “natural laws.” (Roselli, 2020,10) The philosophy of free markets prioritizes the reduction of government intrusion and taxation in the functioning of free markets. Smith espoused the idea of a government with restricted powers while he acknowledged its role in overseeing the education and defense domains of a nation. The concept of the “invisible hand” that governs the dynamics of supply and demand in an economy originates from Smith (Betül et al., 2023,133). According to this theory, individuals unintentionally contribute to the optimal outcome for everyone by prioritizing their interests. Smith’s theory posits that a prosperous nation is characterized by a diligent citizenry who engage in productive work to improve their well-being and meet their financial requirements. According to Smith, under this particular economic system, an individual would allocate their resources towards the business that is most likely to generate the largest financial gain for a given amount of risk. The invisible hand idea is commonly depicted as a natural force that steers free markets and capitalism towards efficiency by means of supply and demand and competition for limited resources rather than as a mechanism that directly benefits individuals’ welfare.
Practical Application: State Intervention
The experiences of Vietnam in the past years have demonstrated that reforming state-owned enterprises (SOEs) is frequently a controversial and intricate undertaking. This process involves implementing many changes to legislation, government institutions, and fiscal and regulatory policies, as well as conducting individual firm restructuring on a case-by-case basis. Vietnam has implemented significant initiatives to restructure state-owned enterprises (SOEs) in response to the Doi Moi reforms initiated in 1986 (Dini et al., 2022, p. 566). The restructuring of State-Owned Enterprises (SOEs) is a key focus of Vietnam’s socio-economic development policies. It serves as a fundamental element for the national economy to achieve its objective of attaining high-income status.
Although there has been some progress and new ambitious goals have been established, there are still several obstacles preventing the complete realization of the advantages of SOE reform. Initially, the rate at which state-owned enterprise (SOE) equitization is occurring has significantly decreased. The process of restructuring state-owned businesses (SOEs) continues to provide a substantial obstacle. Certain organizations have inefficiencies and financial challenges, requiring modifications to enhance performance and competitiveness. The implementation of the policy adjustments, particularly regarding the equitization and further divestment of State-Owned Enterprises (SOEs), is still falling short of the set targets. One factor contributing to this is the perception among potential investors that the government has an inflated estimation of the State-Owned Enterprises (SOEs) and that the system used to assess the value of assets is not dependable (Hege et al. Khánh, 2021). The government is trying to maximize revenue to fund essential infrastructure projects, which will stimulate economic and social progress and facilitate the transition towards socialism. However, such policies pose a great danger to economic development, according to Smith.
Karl Marx’s Theory of Marxism
Karl Marx was a German philosopher who created the theory of Marxism. Marxist economics centers on the significance of labor in the progression of an economy and critiques the classical perspective on wages and productivity developed by Adam Smith. Marx contended that the division of labor, along with an expanding population, drives wages downwards (van Ree, 2020,275). He further asserted that the valuation of commodities and services fails to adequately reflect the actual labor costs involved. According to Marxian theory, production refers to the creation of value. Economic development refers to the process of generating additional value, with labor being the source of this value. However, achieving a high level of productivity can be accomplished by increasing capital accumulation and implementing technological advancements.
Marx’s theory presents capitalism as a single stage in a chronological succession of economic systems that occur in a natural order. He suggested that they are motivated by immense impersonal historical forces that manifest through the actions and conflicts among different social strata. Marx posits that all societies are characterized by the presence of distinct social classes, whose members have greater similarities amongst themselves than with those belonging to different social classes.
Practical application: Economic disparity
The adoption of a market-oriented economic model in Vietnam has resulted in the development of a capitalist class that is actively involved in the operation of private businesses. Marx posits that the capitalist class is the one that owns the means of production and strives to maximize profits, which has the potential to result in economic inequality and conflict between different classes. A study of income distribution trends in Vietnam from 2016 to 2020 revealed that the incomes of both the low 20% and high 20% income groups experienced growth throughout this period (Ha, 2016). From 2016 to 2020, the income disparity between these two groups had been steadily increasing, indicating a widening gap between the wealthy and the impoverished. The low-income group experiences a slower rate of income growth compared to the high-income group, resulting in an expansion of the wealth disparity between the rich and the poor. In urban settings, the disparity between the lowest and highest income brackets tends to diminish from a ratio of 7.6 in 2016 to 7.2 in 2019 and further to 5.3 in 2020 (Ha, 2016). This reduction can be attributed to the effects of the COVID-19 pandemic, which led to a decrease in the high-income group while the low-income group continued to grow.
Despite Vietnam’s remarkable track record of achieving equitable growth, concerns over inequality have emerged. The issues partly stem from the significant variations in economic conditions based on geographical location and ethnic background. They also demonstrate the disparity between the extremely affluent individuals and the majority of Vietnamese citizens, highlighting the substantial inequity in access to opportunities.
Inequality among children in Vietnam continues to be a cause for worry. Those from impoverished Vietnamese families, especially those belonging to ethnic minority groups, face limited opportunities compared to those from affluent backgrounds. The prevalence of malnutrition among ethnic minority children is twice as high as that among the majority. Children from low-income families exhibit a higher probability of experiencing malnutrition and a significantly lower likelihood of enrolling in secondary education.
A significant concern regarding increasing inequality is mostly centered around the disparity between the extremely affluent and the majority of the Vietnamese population. Roughly one out of every million Vietnamese individuals has immense wealth. In 2013, Vietnam was predicted to have 110 individuals who were classified as super-rich, a significant increase from the 34 super-rich individuals reported in 2003(World Bank, 2014). the World Bank and the Institute of Labour Science and Social Affairs conducted a poll to assess people’s opinions of inequality. The majority of respondents, including 80% of urban residents, expressed concern regarding discrepancies in living standards in Vietnam(World Bank, 2014). The majority of respondents assert that inequalities between the affluent and the impoverished are influenced, to some extent, by aptitude and diligence. Concern for inequalities between the affluent and impoverished is heightened when an individual perceives that illegitimate practices fuel these discrepancies. The respondents of the public opinion poll expressed their endorsement of government redistributive measures as a strategy to mitigate social inequality. The World Bank contends that prioritizing the reduction of obstacles to equal opportunities is a rational approach to address mounting apprehensions around equality.
Thomas Robert Malthus of population
The Malthusian Theory of Population posits that population expansion follows an exponential pattern, whereas food supply growth follows an arithmetic pattern. Robert Malthus argued that a harmonious equilibrium between population expansion and food provision can be achieved by using preventive and positive measures. The Malthusian idea states that population growth follows a geometric pattern. However, the food supply increases in a linear pattern. The rate of population growth surpasses the rate of increase in food supply. In a few years, the availability of food will be constrained. The scarcity of food supply signifies a growing population.
Disequilibrium occurs when the population growth rate surpasses the availability of food. Consequently, people will be deprived of sufficient sustenance necessary for their life. There will be fatalities as a result of insufficient food provision. Preventive checks are implemented by people in order to regulate the pace of population growth. Some of the mentioned checks include foresight, delayed marriage, celibacy, and moral restraint. Suppose society neglects to control the expansion of the population through the implementation of preventive measures. In that case, positive checks come into effect in the shape of vices, suffering, starvation, conflict, illness, epidemics, floods, and other natural disasters that serve to decrease the population and therefore restore equilibrium with the food supply. Malthus posits that preventive checks are consistently active in a civilized society, as positive checks are rudimentary. Malthus advocated for the implementation of preventative measures to prevent the occurrence of vice or unhappiness that arises from the positive checks.
Practical Application: Overpopulation
The population of Vietnam has had a twofold increase during the 48 years since its reunification, surging from 47 million to 100 million. Vietnam has consistently had stronger annual population growth than the global average during the past century. However, there was a change in this pattern throughout the 2000s, which came after a period of implementing family planning rules that imposed a restriction on the maximum number of children allowed per household to two.
Rising populations have far-reaching effects on society, one of which is people’s standard of living. One of the primary mechanisms by which it achieves this is by the inflationary effect on the pricing of essential commodities and services, hence resulting in adversity for the most economically disadvantaged segments of society. Vietnamese living in Urban areas with high population densities exert pressure on infrastructure, resulting in congested cities, insufficient housing, and swamped healthcare and educational systems. The scarcity of resources leads to increased poverty rates and elevated levels of unemployment, further aggravating social disparities in the country.
There are many ways that Vietnam can use to mitigate the problems of rapid population growth and overpopulation. Implementing preventive steps such as delaying marriage, practicing self-restraint, and adopting a modest lifestyle can effectively mitigate the challenges posed by growing populations. These procedures serve the purpose of both monitoring population increase and mitigating the potentially disastrous consequences of positive checks.
Conclusion
Vietnam is just but a representative of many countries on the globe facing economic challenges, especially third-world countries. To mitigate Vietnam’s economic issues, a comprehensive examination is necessary, incorporating the perspectives of both classical thinkers and contemporary economists. The emphasis on state intervention by Adam Smith, the critique of economic disparity by Karl Marx, and the advocacy of population by Robert Malthus each offer distinct viewpoints. Through a comparative analysis of various philosophical viewpoints on the challenges facing Vietnam, policymakers can formulate a comprehensive strategy to tackle its economic environment. Though facing challenges, Vietnam has the potential to emerge as one of the most rapidly expanding economies in Asia, while other economies in the region fall short of expectations. In the future, the country has a favorable position to become a prominent economic center in the Asian region.
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