Socialist Rhetoric and Increasing Inequality

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1 BOIKE REHBEIN Laos in 2017 Socialist Rhetoric and Increasing Inequality ABSTRACT While the economy, and socioeconomic inequality, continue to grow rapidly, the leadership of Laos has returned to a rhetoric claiming to pursue the goal of establishing a socialist society. However, the social structures that have evolved historically make make it very unlikely that the country s contemporary policies will create even development and balanced socio-economic levels. KEYWORDS: socialism, inequality, social structures, development, uneven growth MOST SOUTHEAST ASIAN STATES EXPERIENCED instability in 2017, but Laos rarely made the headlines. Economic growth remained robust, the one-party state faces no serious opposition, and social conflict is comparatively rare. But the contradiction between the official socialist ideology and socioeconomic inequality has become sharper. On the one hand, the ruling Lao People s Revolutionary Party (LPRP) has begun to return to socialist rhetoric and claims again to be leading the country to socialism after decades of silence on the issue. On the other hand, the economic gap between the rich and the poor is probably larger than it has ever been. ECONOMY The Lao economy continues to grow rapidly. The rate was 6.8% in 2016 and is expected to reach 6.9% in Per capita income passed the US$ 2,000 level in 2016 and has quadrupled since Two points deserve special BOIKE REHBEIN is Professor for the Sociology of Asia and Africa at the Institute for Asian and African Studies, Humboldt University, Berlin, Germany. His book Inequality in Capitalist Societies (coauthored with Surinder Jodhka and Jessé Souza) was published by Routledge in rehbeinb@hu-berlin.de 1. Asian Development Bank, Asian Development Outlook, Manila, Asian Survey, Vol.58, Number 1, pp ISSN , electronic ISSN X by The Regents of the University of California. All rights reserved. Please direct all requests for permission to photocopy or reproduce article content through the University of California Press s Reprints and Permissions web page, DOI: AS

2 202 ASIAN SURVEY 58:1 mention in this regard. First, industry contributes 32.4% of GDP, whereas the share of services is 43.0%. Laos has thus developed a significant industrial base. Second, inflation has remained very low during the past years. Therefore, the laboring population was able to benefit from the economic growth, even though prices for many important items, especially rice, have increased disproportionately. The fact that the very poor have profited least from economic growth contributes to the increasing economic inequality. Laos s Gini coefficient stands at 37.9, not much higher than those of Scandinavian countries. 2 However, the Lao population is segmented into three million subsistence farmers, a small urban middle class of less than half a million, and a tiny elite of a few families. The intensified battle against corruption in has revealed that the elite families are rich even by Western standards, with accumulated wealth of tens or even hundreds of millions of US dollars. The sustained economic growth is partly offset not only by increasing inequality but also by the tiny fiscal base of the state. The tax rate has dropped to 13.5% of GDP, a fraction of that in Scandinavian countries. This hampers the ability of the state to combat inequality and to provide public goods. The government continues to counter its fiscal weakness by focusing on large economic projects, such as dams and mines, attracting foreign aid and investment but also selling off natural resources. This strategy fosters economic growth but limits social and ecological sustainability. POLITICS In spite of the difficult political-economic framework, the Lao government has adopted all of the Sustainable Development Goals, except number 14 concerning the oceans, while defining an additional goal, the removal of all remaining unexploded ordnance. It is working on an action plan to implement the goals and monitor their implementation. So far, no report has been submitted to the United Nations, but the government has promised to submit one in Laos continues to be a one-party state, and it is likely that the government will be able to carry out the projects linked to the SDGs as well as its own agenda. The power of the LPRP remains uncontested. However, a security issue considered resolved in 2008 has reappeared in News reports 2. UN Development Programme, Human Development Report, New York, 2016.

3 REHBEIN / LAOS IN documented several attacks on buses and security forces in Saysomboun Province in the country s northwest and around the city of Kasi, north of Vientiane. These had traditionally been strongholds of the Hmong groups opposing communist rule. In the 1990s, they ceased to be a political threat, and in 2008, the last fighters were rounded up, expelled to Thailand, and then resettled in two villages in Laos near the Mekong. The recent eruption of violence has occurred in their former strongholds, but it is very unlikely that it will lead to a political uprising. At the same time, the government has tightened its grip on civil society. Decree 115, allowing civil society organizations, was revised in Each registered organization has to seek approval from the government annually. This further constrains the options for critical activities. However, most of the registered organizations work on local and developmental issues, which are not controversial. After three decades of market liberalization, the LPRP has returned to socialist rhetoric. The party congress in 2016 clearly confirmed this tendency, which had already surfaced in the preceding years. The socialist old guard with strong ties to Vietnam has taken charge again and publicly proclaimed a return to the socialist agenda, with a communist state as the long-term goal. Prime Minister Thongloun Sisoulith and President Bounnhang Vorachith are the new (old) faces of the return to socialist rhetoric. It is interesting to note that Thongloun proves the point by actually making use of the State Inspection Agency. The agency is supposed to prosecute corruption within the state apparatus but has been rather ineffective. This has changed under Thongloun. In , atleast30 high officials were arrested on corruption charges. Several million US dollars of black money have been returned to the state. The crackdown was appreciated by Transparency International, which ranked Laos around 20% higher than in However,it remains unclear how much the prosecutions are linked to intra-party conflicts. SOCIETY The State Inspection Agency prosecutions revealed extreme wealth among the elites. At the same time, the poverty rate in Laos increased in for the first time in decades. 3 Even to a casual visitor, it is evident that Laos 3. Ibid.

4 204 ASIAN SURVEY 58:1 has a problem with economic inequality like almost any other country. Most of the subsistence farmers get by on less than US$ 1 per day, but any tourist will see luxury cars in the streets of the few major cities in Laos. The economic inequality results in part from the transition to a market economy, which began in However, it is not the outcome of competition between free and equal individuals on a level playing field. Instead, we see that the leadership of the LPRP intermarries with members of the presocialist elites and the new capitalists, while engaging in capitalist activities itself. Many of the family names that appear in the pre-socialist elites 4 and among the leaders of the revolution also appear in the lists of the largest owners of capital today. A more detailed analysis reveals that contemporary economic inequality is rooted in the hierarchies that existed before the revolution and under socialism. 5 The pre-socialist hierarchy was basically a mandala social structure, 6 consisting of ethnic minorities outside the structure, peasants in a difficult environment (often indicated by slash-and-burn agriculture), peasants in a favorable environment, urban population, and the nobility. The socialist hierarchy consists of ranks: village cadres, administration, leading cadres, and party leadership. The capitalist hierarchy comprises the marginalized class (unemployed, beggars, day laborers), the working class, commercial farmers and traders, the new urban middle class, and the capitalists. The three types of hierarchy coexist, but they are slowly transforming into the capitalist structure. The socialist revolution of 1975 offered social mobility to peasants of all ethnic groups, but this mobility stopped once the socialist hierarchy was established in the 1990s. The transition to a market economy opened up business opportunities and thereby some social mobility, but most of the new entrepreneurs were members of the old and new elites, plus businesspeople from neighboring countries. The majority of Laotians remain in the professional group of their parents. The fathers of most peasants today were peasants themselves, while almost half of state employees had a father who was 4. See e.g. Joel M. Halpern, Observations on the Social Structure of the Lao Elite, Asian Survey 1 (1961): Boike Rehbein, Society in Contemporary Laos: Capitalism, Habitus and Belief (London: Routledge, 2017). 6. Oliver W. Wolters, History, Culture, and Region in Southeast Asian Perspectives (Singapore: Institute of Southeast Asian Studies, 1982).

5 REHBEIN / LAOS IN a state employee. 7 The same tendency to reproduce the family s social position is visible in education. If the father occupied a higher social position, his children inevitably have a high level of education. In contrast, almost all those who have primary education or less are children with a rural or lower-class background. The leader of the revolution, Kaysone Phomvihane, clearly recognized that older inequalities persist under socialism, because they are incorporated in people s patterns of thinking and acting (or habitus ), and he prioritized education over other measures on the path to socialism. 8 The current leadership of the LPRP does not seem to give these issues any thought. But it is obvious that the current gaps between the different social groups will reproduce social and economic inequality, and this will increase the divergence between their habitus. Under these conditions, attaining full socialism in Laos appears to be an increasingly remote prospect, not an immediate goal. 7. Rehbein, Society in Contemporary Laos. 8. Phomvihane, Kaysone, Niphon Leuak Fen [Selected Papers], 4 volumes (Vientiane: State Press, 1985), I: 106, II: 18.

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