The Venezuelan collapse: too much capitalism?

There is always something to enjoy in the Socialist Worker. The British newspaper is a remnant from the past, a voice for the hard left which continues to read Marx and long for the 1970ies glory-days when reckless economic policies and endless industrial disputes left the UK on the verge of needing a bail-out by the IMF. The paper is generally focused on domestic politics, but in a recent article an international issue is tackled which is particularly thorny for the left: the collapse of Hugo Chavez’ Bolivarian Revolution in Venezuela. The article’s author, Dave Sewell, tries to save the day by arguing that Venezuela’s crumbling economy is the consequence of socialism not being fully implemented, and that rather it is the last remnants of capitalism that is responsible for the country’s tragedy.

Venezuela’s collapse is indeed almost complete: according to the IMF, the economy will contract by 8% in 2016 (making it the worst performing in the world), the unemployment rate is 17% and inflation is almost 500%. The problems have accelerated in recent years, after the founder of the Bolivarian Republic, Hugo Chavez, died and was succeeded by former bus driver Nicolas Maduro. This is of course primarily due to the collapse in the oil price, Venezuela’s main export and source of funding for the state. According to the article:

“The biggest problem is the collapsing price of oil, Venezuela’s main export. When the oil price was high Chavez could fund anti-poverty programmes without confronting the rich. Maduro can no longer do this. […] Of course, a decade of relying on oil revenue didn’t help. But Venezuela’s rulers were simply following the absurd capitalist logic about what a resource-rich country should do in a time of high prices.”

Mr Sewell’s apparent claim that capitalism dictates that the state should squander the accumulated wealth of a nation aside, there is an admission here that the only reason Chavez socialism didn’t leave everyone in abject poverty much earlier was because Venezuela happened to be endowed with the world’s largest oil reserves. But that, of course, is not Mr Sewell’s point, it is quite another: that Venezuela’s revolution did not go far and fast enough.

The aim here is not to dispute the preposterous claim that socialism is a viable economic system if implemented completely; it should hardly be needed. But it is striking that Mr Sewell’s defence of socialist ideology can be applied to every failed socialist state in history: none achieved a “deep socialist transformation” and as such it was not socialism, but the remnants of capitalism, which caused the collapse. In Venezuela, Chavez became the leader of a small elite which didn’t implement real socialism. To do that, the government would have had to make wholesale nationalisation of all industry, but it happened only gradually and in an economy which was not sufficiently state controlled: “without a deeper socialist transformation of the economy [nationalised companies] could not succeed.” Officials are admonished for “[following] the market’s priorities at an international level,” which is to say they sold oil at market prices. No alternative is offered by Mr Sewell, but the accusation is clear: Chavez let too much capitalism remain. Chavez didn’t “confront the rich” and relieved them of all earthy possessions.

At the same time power became centralised and officials took the opportunity to enrich themselves, but that is how it always ends. Power corrupts. Even if socialism could work in principle, it is a system based on an all-powerful centralised state, and there are no examples in recorded history where the power wielded by those in charge of such a state has not somehow become self-serving. All statist ideologies suffer from this very malaise: the inability to contain the growth of the state’s influence, and that of those in power, to what was its original purpose.

Capitalism, even in the curtailed version which has been implemented in modern Western economies, has allowed people to prosper and furthered a rise in living standards unparalleled in human history. We who believe in the ideology of free markets bemoan the restrictions laid on capitalism, as we wonder how much better the world would be absent the constraints of the state. But we can see the tangible effects of capitalism in our everyday life, and it serves as a reminder that we are right. How different it must be for socialists, looking at the ruins of Venezuela’s economy and attempting to convince themselves that their ideology is not to blame.

Mr Sewell is hoping that the Venezuelan people will rise up and demand change, that the workers will end the last remnants of a private economy which is so brutally holding Venezuela back. In the meantime, presumably he is hard at work on his follow-up article on how capitalism is also the problem in North Korea.

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