Venezuela in crisis

ON ONE SIDE IS PRESIDENT MADURO and the newly elected Constituent Assembly. On the other side is the old Congress controlled by the opposition, Mesa de la Unidad Democrática (MUD), a rambling coalition of parties backed by Venezuela’s old ruling families. The leaders of MUD have carried out insurgent violent protests designed to bring down the government.

The Maduro government has reacted with arrests and a referendum to set up a rival assembly to Congress. MUD continues to appeal to the military to carry out a coup and to the ‘international community’ (i.e. the US) to support their actions. Maduro rails against this imperialist plot. It seems that the great Chavista project begun by Hugo Chavez for a Bolivarian socialist revolution may be coming to an end in disarray.

It all started so well. Chavez had improved the conditions of the poorest with increased wages, social services and reduced inequality. But these improvements were only possible within the confines of a capitalist economy by using the revenues of oil exports at a time of very high global oil prices. Venezuela remains completely dependent on its oil exports. But oil prices have started to mark time and have virtually halved in the last two years.

Since 2013, Venezuela’s output per person has fallen 40%, a sharper fall than in the 1929-1933 Great Depression in the US or in Greece in the euro crisis. As oil export revenues fell the Maduro government (Chavez’s successor) started to rack up huge foreign debts to try to sustain living standards.

The government devalued the currency to boost dollar revenues, but this has only stimulated outrageous inflation and cuts in real wages. At the same time, the government decided to ‘honour’ all its foreign debt payments and cut imports instead. This led to a collapse in agriculture and manufacturing even larger than that of overall GDP.

The minimum wage declined by 75% in real terms or 87% in calorie terms. With this minimum wage, Venezuelans could buy less than a fifth of the food that traditionally poorer Colombians could buy with theirs. Income poverty increased from 48% in 2014 to 82% in 2016. The Venezuelan Health Observatory reports a tenfold increase in inpatient mortality and a 100-fold increase in the death of newborns in hospitals in 2016.

Before Chavez, most Venezuelans were desperately poor after a series of right wing capitalist governments. But now once again, under Maduro, this is the situation for the poor and the majority of the Venezuelan working class. No wonder support for the Maduro government has subsided while the forces of reaction grow stronger.

The Maduro government is now relying increasingly not on the support of the working class but on the armed forces. And the government looks after them well. The military can buy in exclusive markets (for example, on military bases), have privileged access to loans and purchases of cars and have received substantial salary increases. So, as antigovernment protestors fight the police and army on the streets and the Maduro government moves ever closer to outright authoritarian rule, the working class is increasingly left in the cold.

What went wrong with the laudable aims of Chavismo? Could this tragedy have been avoided? Well, yes, if the Chavista revolution had not stopped at less than halfway, leaving the economy still predominantly in the control of capital. Instead, the Chavista and Maduro governments relied on high oil prices and huge oil reserves to reduce poverty, while failing to transform the economy through productive investment, state ownership and planning. Venezuelan capital was allowed to get on with it. Indeed, the share of industry in GDP fell from 18% of GDP in 1998 to 14% in 2012.

Now the right wing ‘free marketeers’ tell us that this shows ‘socialism’ does not work and there is no escape from the rigours of the market. The economic and social programme of the MUD opposition is the traditional one of national capitalism: namely, reform of the labour laws (i.e. more exploitation and sackings), privatisation or re-privatisation of state enterprises, deregulation of controls over investment (i.e. ensuring a high rate of labour exploitation) and, of course, the lifting of price controls. The implementation of this programme would impose even more losses on the majority.

The history of the last ten years is not the failure of ‘socialism’ or planning. It is the failure to end the control of capital in a weak (and increasingly isolated) capitalist country with apparently only one asset - oil. Now the option before the Venezuelan people seems to be either open rule again by the parties of capital, backed by US imperialism and probably involving the massacre of Chavistas; or increasingly authoritarian rule by a military-backed government far from the ideals of the Bolivarian revolution.