Developmental state: Some theoretical and practical issues

1. Concept of developmental State

The concept of Developmental State (DS) was first introduced in 1982 by Chalmers Johnson in his book “MITI and the Japanese Miracle”. The concept of DS was termed so to distinguish itself from two popular forms of States - “commanding state”, which means the centrally planned States in socialist countries and “regulatory state” according to the theory of free market in capitalist countries.

Johnson studied the State of Japan from 1925 to 1975; he found that the Japanese were able to develop their economy at such a high speed, because they actively and effectively intervened in the market. This exponential growth in the economy had not yet been done within the “commanding state” and “regulatory state” models. Johnson, thus, formed a third model - developmental state.

According to Johnson, for a state to implement the Japanese model of DS, they need four elements. First, public servants are restricted to small scale endeavours (so that the wage fund is not too big); however, public servants are still expected to be smart and have managerial talent. Second, the political system must gurantee that public servants have sufficient political power to implement State policies effectively. Third, the State must be aware of market forces when they intervene in the economy. Fourth, there must be an organization, similar to “the pilot organization” under the Ministry of International Trade and Industry of Japan(1), to lead economic development.

To date, the concept of DS has been used to refer to the state model in countries where the governments actively intervene in the markets in order to achieve outstanding economic growth. The criterion for considering a DS is long-term GDP growth. Today, countries such as Korea, China, Sweden, and Denmark are utilizing the DS model.

DS means that a state overcomes the limitations of the models of “commanding state” and “regulatory state”. This kind of state neither replaces the market nor takes a laissez-faire approach; it actively intervenes in the market to a reasonable degree to promote the development and realize the goals of the country(2). For market participants, DS not only provides the legal framework for them but also guides and facilitates the development of their stakeholders in the economic field.

The development process of DS consists of three periods: the first period is from the 20s to the 80s of the XX century - the DS 1.0; the second period is from the 90s of the XX century - the DS 2.0; the third period is from 2000 up to now - the DS 3.0(3).

2. Approaching DS from the perspective of Marxism - Leninism

According to Marx and Engels, the state has both a class function and a social function. The class function is manifested in the protection of the interests and dominant position of the ruling class. The social function is to ensure the stability and development of society, meeting the needs of the members of society, first through economic development. This is shown in the following. First, the state must take care of the general affairs of the entire society; all stakeholders and classes of society receive benefits when the state performs such work. Second, the state must meet all the legitimate needs and interests of individuals and organizations that do not belong to the ruling class in society, in which economic needs and interests are met first.

Thus,DS is a state in favour of performing social functions, which consequently strengthens the effectiveness and quality of social functions. The differences between the function of DS and those of the “controlling State” and “regulatory State” is that DS must be effective in leading, promoting and maintaining economic development at a higher speed.

Class functions and social functions have a close relationship, in which social functions are the foundation for political dominance; political dominance only lasts as long as it performs the social functions(4). The State’s effective performance of social functions promotes the development of society. Then, the interests of the ruling class are realized, which means the class functions are best performed. Therefore, DS also contributes to the performance of the class functions and the interests of the ruling class.

According to Marxism - Leninism, different types of States work within socio-economic formation and are regulated by the mode of prodution. The history of human development has undergone four socio-economic formations including slavery, feudalist, capitalist and communist ones. Correspondent types of States are slavery, feudalism, capitalism and socialism. The form of the State is the basis for how state power is organized and exercised. According to the regime-based approach, there are monarchic and republic States. According to the State structure approach, there are unitary, federal States, etc. Each country depending on its specific historical conditions may choose one form of state model.

Forms of state may affect how state power is organized and exercised, but it does not change the nature of the state, which means it does not change the type of state. A state form may be working within a number of state types. For example, the democratic republic form can be implemented in the slavery, bourgeois and even socialist states.

Applying Marxist - Leninist points of views on the state shows that, DS is not a type of state; it is a state model because it brings about a relatively new way of organizing and exercising state power, especially in market intervention.

The concept of DS was first introduced in the study of a capitalist country, Japan. Although the Japanese State is called a DS, it is, by nature, a bourgeois state-a state based on the private ownership of fundamental means of production. This concept has been widely used in countries following socialism today. DS of China is a typical example. Since the opening-up reform, the Chinese State has reasonably intervened in the market, which has led to extreme levels of economic development. In 1980, the Chinese economy was ranked 13, but in 2010, it became the second largest economy in the world. It is estimated that in the next 20 years, China will surpass the United States and become the largest global economy. China’s success in shifting from commanding State into DS has been studied by western scholars.

DS is the product of capitalism, but it is also the quintessence of humankind. Consequently, socialist countries can inherit DS during the development process. Vietnam is now developing a socialist-oriented market economy, thus, it can completely succeed in building a DS.

3. Some directions for building a Developmental State in Vietnam

In his inargural address to the National Assembly in 2016, Prime Minister Nguyen Xuan Phuc affirmed, “Vietnam should build a developmental, incorruptible, active government that serves the people”. This orientation is perfectly suited to the practical requirements of the country and the participation of the entire Party and people. Building DS is a current issue in Vietnam. In order to successfully build the model of DS, a few things must be achieved.

First, the construction of a DS must be combined with the perfecting of a socialist law-ruled State.

The development of a DS must be done according to the process of perfecting the socialist law-ruled State. DS and a socialist law-ruled State are two forms of states, which are mutually compatibile and supplementative. In Vietnam today, these two forms are unified in terms of goals and methods. Both strive towards the goal of turning Vietnam into, “a rich people, a strong country, and a democratic, equitable and civilised society”. To reach this goal, democracy and development must be created in the economic field. DS leads to rapid and sustainable economic growth and vice versa, the perfection of the law-ruled State helps to create rapid economic development. Regarding methods, in order to perfect the socialist law-ruled State, it is necessary to perfect the law, mechanisms of law, and policies. The perfection of these institutions is aimed at creating economics development, which is also the way to build DS.

Second, the building of a DS must be synchronized in three spheres-legislative, executive and judicial.

The government has the most responsibility in building a DS. However, in the State model of Viet Nam, the State power is unified with the legislative, the executive and the judicial bodies. Thus, building a DS is not only the responsibility of the executive body, which is the government, but it also is the responsibility of both the legislative and judicial bodies. The legislature must build a legal system in line with social reality in order to promote the rapid and sustainable socio-economic development. The judiciary must deal with tasks in the area of jurisdiction, dispute settlement, trial, etc in a fair, transparent and quick manner to ensure and facilitate the stable development of society.

Third, the development of DS is associated with the process of streamlining the apparatus.

The DS of Japan as well as other current DS models in the world have proved that a DS must have a streamlined apparatus so that the salary fund does not become a burden on the budget. At present, the practical situation of the State of Vietnam shows that, “the structure of the State apparatus is cumbersome; functions and duties of many units are overlapped and not specified enough. Individual responsibilities, particularly the responsibilities of the head, have not been clarified. The streamlining of the staff has not met the demand. Salaries and allowances make up the majority of the total operation expenditure of agencies and units”(5). This situation is not compatible with a DS. Consequently, it is necessary to continue the streamlining of the State apparatus during the process of building a DS in Vietnam.

Fourth, it is necessary to enhance the efficiency of the market by the State apparatus.

In the market economy, the State plays a very important role. The effectiveness and efficiency of the State are shown in its adjustment of the market. The DS model requires the State’s intervention and direction at the most reasonable level in order to promote the smooth development of the market. Over the past years, the State has made great efforts to regulate the market; however, the effectiveness and efficiency has been modest. Documents from the 12^th National Party Congress clearly point out, “the economic growth rate is lower than the past 5 years, not meeting the target; the productivity, quality, effectiveness and compatitiveness of the economy remains low. The socialist-oriented market economy regime has been slowly developed with no breakthrough mechanism for promoting the development”(6). Thus, enhancing the effectiveness of the State in regulating and directing the market is a requirement for building a DS in Vietnam.

Fifth, it is imperative to increase the effectiveness and quality of the State’s exercise of social functions in the economic area.

To that end, the State is required to create a healthy environment for production and business to promote the capabilities of all economic components, especially the private sector. The 12^th National Party Congress affirmed, “The private sector is an important driving force of the economy”(7). Therefore, the State must highlight the private sector in every policy in order to help the private sector to develop, consequently, creating an important driving force for the general development of the country.

Sixth, building a DS must selectively inherit the contemporary values of current DS models in the world.

Currently, there are a number of DS models in the world such as the DS models in South Asia including those of Japan, Korea, Taiwan (China), China; and the Scandinavian model in Sweden and Denmark, etc. Apart from common features of DS, each model has its own characteristics depending on the specific conditions of each country. DS models are not “unchangeable once they are formed”; they move and develop. As a result, experience and lessons on building a DS are relatitvely diversified. Countries, such as Vietnam, who have just begun building a DS, can learn from other countries experiences in order to successfully build a DS in line with the specific conditions of Vietnam at present.

_____________________

(1) Chalmers Johnson: MITI and the Japanese Miracle: The Growth of Industrial Plicy. 1925-1975, Stanford University Press, 1982, pp.18-19.

(2) See Nguyen Si Dung: “Developmental State”, Nhan Dan (People)monthly newspaper.

(3) Hoang Tong Hao (黄宗昊): “Theory on developmental State and model of China”, Journal of Contemporary World and Socialism (Chinese language), Chinese, issue 4, 2016, p.173.

(4) Marx - Engels: Complete works, vol. 20, National Political Publishing House, Hanoi, 2002, p.253.

(5), (6), (7) The CPV: Documents of the 12th National Party Congress, Office of the Party Central Committee, Hanoi, 2016, p.29, 60, 174.

Dr. Dinh Van Thuy

Institue of Philosophy,

Ho Chi Minh National Academy of Politics