Recently, I was on my hands and knees at home putting together some chairs that my wife ordered through Amazon.com. Each chair displayed a sticker that said, “Made in Vietnam.”

How ironic, I thought: 40 years after the end of the war in Vietnam, where the United States suffered a humiliating defeat to the communists in a vain attempt to support democracy, capitalism and a corrupt government, and here I am assembling chairs manufactured in Vietnam by a company perhaps financed by U.S. investors and sold (presumably for a profit) to a U.S. citizen.

Most people would take this for granted and not give it much thought, but not I. Is Vietnam now capitalist or communist? I did a little investigating, and it appears to me that it is neither.

After the war, the Vietnamese communists instituted strict controls on property and commerce, with the result of increased poverty and suffering for the Vietnamese people. “A bowl of rice had to last a week,” according to one account.

The well-educated fled the country. Not until the 1990s did the authorities begin to invite foreign investment and move toward some market liberalization.

Politically, the country is still communist, with restrictions on speech and the press and with large sectors of the economy state-owned. But, like China, the government now allows private ownership of some businesses.

Due to a trade agreement in 2001, the U.S is one of Vietnam’s largest export markets – hence my chairs. However, economic problems abound today.

Access to “free-flowing credit” has caused a rash of construction and real estate speculation. Now there is unsustainable debt in many sectors of the Vietnamese economy and numerous unfinished and deteriorating construction projects.

While the increased tolerance of private ownership and entrepreneurship has surely benefited the Vietnamese people — economic growth has been high — resources are yet largely under the control of an inept and corrupt government. Government owned enterprises are inefficient, kept on life support by the government.

Because of arbitrary enforcement of laws, foreign investors are becoming reluctant to invest. Younger people are finding it increasingly difficult to find employment.

This story, it seems, sounds rather familiar. Malinvestment — evidenced by unfinished, deteriorating construction projects — due to artificially low interest rates and credit expansion, bailouts and the subsequent effects on employment and investment mirrors appear to mirror what we’ve experienced in the United States in recent years.

The New York Times describes the situation this way: “Vietnam’s problems could be described as crony capitalism with a communist twist. State owned enterprises are stacked with friends and allies of the communist party.”

To call it a “communist twist” is to make a distinction without a difference, in my view. “Cronyism” occurs when individuals use connections with political authorities to leverage special privilege. Granting of privilege is more likely whenever government is heavily involved in deciding what gets produced, how goods are produced and who has access to markets. To paraphrase the humorist P.J. O’Rourke, when politicians decide what is to be bought and sold, it is politicians who will be bought and sold.

The late economist Milton Friedman pointed out that capitalism was in its essence a system of profit and loss. The prospect for profit induces individuals to take risks, while the possibility of loss disciplines decision-makers and provides an incentive to carefully calculate the risks.

Governments can, and almost universally do, subvert this process. The consequences are often benefits for the few at the expense of the many.

The irony is that, in many ways, in spite of being “victorious,” the Vietnamese ended up with an economic system that is not unlike our own.

Editor’s note: Dr. Gary McDonnell is an associate professor of economics at NMU.