On Capitalism and Communism

Stele Pavilion, Near Hue, Vietnam
Stele Pavilion, Near Hue, Vietnam

I had a long conversation today with a friend who immigrated from Vietnam.  She has lived in the United States since about 1973, leaving just as the North Vietnamese were taking over the South after the US pulled out troops and the South were unable to hold off the encroaching forces.  The people in the South who had supported the US during the war were brutalized by the forces of the North after the US left.  (Unfortunately, this same thing seems to be happening again in Iraq and Afghanistan.)

Her family stayed in Vietnam.  Her father decided to leave the city he was living in before the war and return to the village in which he grew up.  It appears that the Communist forces in the North simply took all of the houses and useful land from the people in the South, turning them out into the streets and taking their fields.  Her father knew that he and his family would starve in the city, while he could fish in the river (by hand since he had no pole or net) and gather roots and such in the countryside.  The twelve of them moved into a dirt floor hut.  There were no beds, no showers, no toilets.

They were forced to hunt and gather for food in a country with hundreds of people per square mile.  The people of the South could work in the rice fields that they once owned, but for very little money.  I asked if the government didn’t give them food and shelter.  I thought the whole point of Communism was that everyone did what they could and received what they needed.  I knew that Communist societies were far poorer that Capitalist societies since there is no incentive to produce more than the bare minimum needed and there is a lot skimmed off the top by the ruling party and corruption, but I thought at least the government would give them something.  Apparently they do not, essentially leaving the people of the South to do what they can with no land and no possessions.

I asked if they produced things for trade, and she indicated that they do, but that does not produce much since they have no tools and few materials.  I also asked if they were able to start a business or if the money would be taken away from them if they were successful.  Apparently they are able to start businesses without immediate confiscation – in fact starting businesses is encouraged since it provides employment if successful, but it is very difficult starting from such poverty.  Some have tried to start a busienss unsuccessfully (her brother tried to grow and sell fish, but they were wiped out when the weather didn’t cooperate and he lost everything).  She said that some businesses do fairly well – there are some restaurant that the tourists visit that eek out a living – but unless you have some property to begin with it is difficult to advance.

She was amazed to see what her family looked like when she visited in 1992, not having been in Vietnam for about 20 years.  Her family was extremely emaciated and living in squalid conditions.  There was no toilet – people went in a central location in the village with little privacy.  Things have improved to some extent since that time, particularly since relations with the US improved and there has been some investment by American companies and the companies of other nations.  Still, wages are very low (her sister makes $1 a month for sewing for a company that sells goods to the US.  Prices are low, but still her salary will buy only about 2 meals in a restaurant).

My friend helps out where she can, buying a house for her mother and sister and sending over money, but even her American wages can only go so far.  She still has brothers who live in tin shacks, sleeping in hammocks underneath the main room which is on a platform structure since it is too hot to sleep in the shack with its tin roof.

What really strikes me is how much like the “evil Capitalism” caricature promoted by those advocating Communism or Socialism the conditions are.  You always hear that under unchecked Capitalism you will have starving workers ruled by evil workmasters.  This seems to be the exact scenario being played out in Communist Vietnam for many of the people who are not in the party.  It is true that work conditions under Capitalism can become deplorable, as they were in the US during the 19th century.

The cure for this, however, isn’t Socialism or Communism as some Marxist college professors will tell you.  The cure is to ensure that there is adequate competition.  Competition for workers just as there is competition for customers.  So long as the employee has the ability to change jobs if he or she is mistreated or underpaid, and so long as the employers don’t collude together to artificially keep wages low, people should be able to get fair compensation for the value that they provide through their work.  With adequate freedom and the access to capital that a strong economy can provide, some can also start their own companies and become their own bosses if they so choose.

Communism may well sound like a paradise in a Berkeley classroom, but the reality is that those who want wealth and power use Communism as a way to control people.  It is much easier to simply starve a village who speaks out against you than it is to send soldiers to hold down the masses.  To bring people out of poverty we need to have free markets with large amounts of competition.  There people are rewarded by taking care of the needs of others.  In such a society, even the poor are rich by comparison.

Please contact me via vtsioriginal@yahoo.com or leave a comment.

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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

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