Socialist Worker

Does the crisis in Venezuela show that socialism can’t work?

As a crisis grips Venezuela, right wingers are gloating because they say it shows socialism doesn’t work. But as Alistair Farrow argues, it isn’t socialism that has failed—but the idea that socialism can be delivered from above

Issue No. 2619

Celebrations after Nicolas Maduro is elected in 2013

Celebrations after Nicolas Maduro is elected in 2013 (Pic: JokaMadruga-Flickr)


The right in Britain and internationally have held up the economic and social crisis in Venezuela as evidence that any kind of economic alternative to capitalism is impossible.

The scale of the chaos is undeniable. The economy is in ­freefall, gripped by hyper-inflation. The International Monetary Fund predicts that inflation will hit 1,000,000 percent this year.

This follows protracted economic problems ­following the sharp drop in oil prices in 2014. That’s on top of the effects of the global 2008 financial crisis.

And ordinary people are paying the price, with basic foods and medicines ­staggeringly expensive or completely unavailable.

Despite the crisis ­surrounding the government, nobody should underestimate the vicious nature of the right wing vultures that are circling them.

They want to turn the clock back to the era before 1999 when Hugo Chavez became president. They bitterly resent any challenge to their power and their wealth.

They have spent nearly two decades trying to undermine left governments and to create the conditions for a coup.

International economic sanctions target Venezuela because it does not follow the line of the United States.

Venezuela is not allowed to interact with the US financial system, meaning it can’t restructure its £45 billion national debt.

And US president Donald Trump has raised the prospect of banning the importation of Venezuelan oil.

The right hypocritically point to the violence used by Nicolas Maduro’s regime as evidence of the totalitarian way all left governments deal with dissent.

This wholly ignores the ­savagery of the right.

There will be a lethal wave of violence if the right is allowed to seize control of the ­government once more.

Challenge

Nicolas Maduro

Nicolas Maduro (Pic: newsonline/Flickr)


Despite the claims of the right, the Venezuelan crisis is not a demonstration of the failings of socialism.

It shows what happens when there is a challenge to the rich, but they are allowed to stay in control of key areas of the ­economy and society.

The politics of Chavez, and then Maduro since 2013, is centred on the idea that socialism can be delivered from above through controlling the state.

Throughout the period from 1999 to today there has been a tension in the Venezuelan process.

There have been the official policies from the top, sometimes in the interests of workers and the poor, sometimes defending the bosses.

And then there have been the most positive movements when the masses themselves entered the stage and sought to take charge.

In 2002 sections of the army, urged on by the ruling class, took over the presidential palace and arrested Chavez.

He was saved only because hundreds of thousands of ordinary people took to the streets, breaking the confidence of the plotters and forcing them to abandon their coup.

Later in 2002 Venezuela’s bosses tried again to remove Chavez by shutting down large parts of the economy.

Again workers were decisive as they restarted oil production, and kept transport and food distribution going.

Two years later Chavez’s rich enemies tried to remove him through a “recall referendum”. Again the masses organised to defeat the right.

During this period the government sought to make far-reaching changes in the interests of the majority.

But far from building on the glimpses of how workers could organise, Chavez and Maduro sought to maintain control from the top.

While oil prices were high it was possible to implement reforms without challenging the capitalist elite.

Between 1999 and 2011, the private sector’s share of economic activity actually increased from 65 percent to 71 percent.

Once the oil price fell, reform without confrontation was no longer tenable. Without an assault on the right and their system, chaos was inevitable.

Oil makes up 95 percent of the country’s total exports, so Venezuela is particularly vulnerable to fluctuations in the price of the commodity.

The failure of both Chavez and Maduro to diversify the economy is being felt now. But this is not the root cause of Venezuela’s crisis.

In a May 2018 interview Labour shadow chancellor John McDonnell argued that Maduro’s government took a wrong turn after the death of Chavez in 2013.

McDonnell also attended the World Economic Forum in Switzerland early in 2018 where he again spoke about the Maduro government.

McDonnell argued that the state should have set up a sovereign wealth fund to divert oil money to different sectors of the economy.

But he is wrong if he thinks that Maduro’s failure was because of one or two decisions rather than the whole government strategy.

Socialism cannot be ­delivered from the top, it must come from below.

But the government increasingly made an enemy of the poorest people.

A right wing protest against Maduro in 2014

A right wing protest against Maduro in 2014 (Pic: Globovision/Flickr)


A striking example of how the government set itself against workers can be found in the link between workers and Maduro’s ruling PSUV party.

Hollowing

The PSUV has been refusing to renew collective bargaining agreements between workers and bosses for years, leaving changes to conditions and pay to be done by law. This has led to the hollowing out of trade union structures in many industries.

Maduro hopes this will lead workers to look to the state to protect their rights.

That strategy is rapidly coming undone. In response to the economic crisis Maduro has launched an attack on workers to get them to pay for it.

Under the cover of a minimum wage rise, Maduro is launching a series of economic attacks on ordinary Venezuelans to placate the rich.

He claimed his changes would “dismantle neoliberal capitalism’s perverse war and instead install a virtuous, balanced, sustainable, healthy and productive economic system”.

The attacks will do nothing of the kind.

The oil subsidies that millions of ordinary Venezuelans rely on have been scrapped, further devaluing the new minimum wage.

Attempts at similar measures have previously been met with rioting in the capital Caracas.

Included in Maduro’s plan is a rise in the VAT rate from 12 to 16 percent. VAT is a flat rate tax, which poor and rich alike pay—any rises will hit the poorest the hardest.

On top of this, Maduro has tied the value of the new sovereign bolivar to the petro, a fictional currency linked to the price of oil.

The new minimum wage is equivalent to £23 a month. It had previously been less than £1 a month.

It is still estimated to be just half the amount required to meet basic needs such as ­groceries and bills.

The government even had to mediate this lukewarm ­proposal—it said it would pay workers’ wages for bosses for the first 90 days after the change.

Even this was still not enough for the bosses. They have already begun to complain the wage hike will bankrupt them and they will have to shut down their businesses.

Earlier this month Maduro introduced a new currency. It is likely to just be a temporary relief to the “­economic war” he describes being waged by “imperialist forces”.

Seeing its opportunity, the Venezuelan right called a ­general strike.

Many shops and workplaces were shut down, although to what extent because of the strike or the general chaos caused by the currency switch is hard to determine.

The right wing, along with the US foreign policy establishment, is rubbing its hands with glee.

They see the crisis as an opportunity to break a key link in the chain of left wing governments elected in Latin America in the late 1990s and early 2000s.

Many of these have been crushed under the weight of economic sanctions that ushered in new right wing governments or changed the policies of existing ones.

The lesson of Venezuela is that left wing governments are placed under incredible pressure to back down by the capitalist class. A socialist government would be under even greater pressure.

The conclusion must be to push back against that pressure from below and to look to the strength of the international working class to deliver solidarity across borders.


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